TECHNICAL SUPPORT DOCUMENT:

PROPOSED REGULATION FOR IN-USE ON-ROAD DIESEL VEHIC LES

Mobile Source Control Division Heavy-Duty Diesel In-Use Strategies Branch

October 2008State of California

AIR RESOURCES BOARD

TECHNICAL SUPPORT DOCUMENT:

REGULATION FOR IN-USE ON-ROAD DIESEL VEHICLES

Public Hearing to Consider

ADOPTION OF THE PROPOSED REGULATION FOR

IN-USE ON-ROAD DIESEL VEHICLES

To be considered by the Air Resources Board at a tw o-day meeting of the Board that will commence December 11, 2008, and may continue t o December 12, 2008, at

California Environmental Protection Agency

Air Resources Board Byron Sher Auditorium

1001 I Street Sacramento, CA 95814

Mobile Source Control Division: Robert Cross, Chief

Heavy-Duty Diesel In-Use Strategies Branch:

Erik White, Chief

In-Use Control Measures Section: Tony Brasil, Manager

This report has been prepared by the staff of the A ir Resources Board. Publication does not signify that the contents reflect the view s and policies of the Air Resources Board, nor does mention of trade names or commercia l products constitute

endorsement or recommendation for use.State of California

AIR RESOURCES BOARD

PROPOSED REGULATION FOR IN-USE ON-ROAD VEHICLES

Contributing Authors

Gloria Lindner Jessica Dean Sherrie Sala-Moore Boons Baythavong John Hironaka Nesamani Kalandiyrer Barry Ho Mohan Krishnamurthy Adam Gerber Joseph Gormley

Ron Nunes John Gruszecki Jacqueline Johnson Mike Sutherland Brandon Rose Pingkuan Di Richelle Bishop Nicole Dolney

Todd Sax Reza Mahdavi Jon Taylor Hien Tran Kathy Jaw Seungju Yoon Matthew Malchow Krista Fregoso Earl Landberg Ben Ly Peter Christensen David Kennedy Corey Bock Alvaro Alvarado

Cherie Rainforth Lisa Williams

Legal Counsel

Michael Terris, Office of Legal Affairs

Supporting Divisions Planning and Technical Support Division

Research Division Stationary Source Division

Acknowledgements

This report was prepared with the assistance and su pport from the other divisions and offices of the Air Resources Board. In addition, w e would like to acknowledge the assistance and cooperation that we have received fr om many individuals and organizations.i TABLE OF CONTENTS

I. Overview and Recommendation ........................ ............................................... 1

A. I NTRODUCTION

................................................... ................................................... . 1

B. O VERVIEW

................................................... ................................................... ........ 2

C. R ECOMMENDATION

................................................... .............................................. 7

D. R EFERENCES

................................................... ................................................... .... 7

II. Regulatory Authority...............................

................................................... ........ 9

III. Public Outreach and Environmental Justice.......... ........................................ 13

A. E NVIRONMENTAL J USTICE

................................................... ................................... 13

B. O UTREACH E FFORTS

................................................... ......................................... 13

C. F UTURE E FFORTS

................................................... .............................................. 16

D. R EFERENCES

................................................... ................................................... .. 17

IV. Need for Emission Reductions....................... ................................................. 19

A. O ZONE AND ITS P RECURSORS

................................................... ............................. 19

B. P ARTICULATE M ATTER

................................................... ....................................... 22

C. T OXIC A IR C ONTAMINANTS

................................................... ................................. 25

D. H EALTH I MPACTS OF E XPOSURE TO D IESEL E XHAUST AND D IESEL PM ..................... 26

E. D IESEL PM R ISK R EDUCTION

................................................... .............................. 32

F. S TATE I MPLEMENTATION P LAN C OMMITMENTS

................................................... ..... 33

G. R EFERENCES

................................................... ................................................... .. 34

V. Vehicle Descriptions and Manufacturers ............. .......................................... 39

A. O VERVIEW

................................................... ................................................... ...... 39

B. V EHICLE C LASSES

................................................... ............................................. 39

C. E NGINE AND V EHICLE M ANUFACTURERS

................................................... .............. 40

D. V EHICLE T YPES

................................................... ................................................. 42

E. R EFERENCES

................................................... ................................................... .. 54

VI. Estimated Emissions from On-Road Diesel Trucks and Buses ................... 57

A. M ETHODOLOGY

................................................... ................................................. 57

B. P OPULATION AND A CTIVITY

................................................... ................................. 58

C. E MISSIONS R ATES

................................................... ............................................. 68

D. S TATEWIDE B ASELINE E MISSIONS E STIMATES

................................................... ...... 69

E. U PDATING EMFAC WITH THIS N EW A NALYSIS

................................................... ...... 73

F. R EFERENCES

................................................... ................................................... .. 74

VII. On-Road Diesel Retrofit Technology ................. ............................................. 75

A. D IESEL E MISSION C ONTROL S TRATEGIES

................................................... ............ 75ii

B. V ERIFICATION OF D IESEL E MISSION C ONTROL S TRATEGIES ...................................... 83

C. L IST OF ARB V ERIFIED T ECHNOLOGIES

................................................... ............... 86

D. S UMMARY OF O N -R OAD I NSTALLATIONS OF E XHAUST R ETROFITS ............................. 88

E. A NTICIPATED A VAILABILITY OF R ETROFITS

................................................... ........... 92

F. R EFERENCES

................................................... ................................................... .. 93

VIII. Current and Future Engine Technology ............... .......................................... 95

A. N EW O N -R OAD D IESEL E NGINE S TANDARDS

................................................... ........ 95

B. N EW D IESEL E NGINES

................................................... ........................................ 99

C. A VAILABILITY OF V EHICLES WITH C LEANER E NGINES .............................................. 102

D. R EPOWERS

................................................... ................................................... .. 102

E. H YBRID V EHICLES

................................................... ............................................ 103

F. A LTERNATIVE F UELED V EHICLES

................................................... ....................... 105

G. A LL E LECTRIC H EAVY -D UTY V EHICLES

................................................... .............. 106

H. R EFERENCES

................................................... ................................................... 106

IX. Existing Diesel Emission Reduction Regulations ..... .................................. 109

A. I N -U SE O N -R OAD D IESEL V EHICLE R EGULATIONS ................................................. 10 9

B. I N -U SE O FF -R OAD D IESEL V EHICLES AND E QUIPMENT .......................................... 112

C. P ORTABLE E NGINES AND E QUIPMENT

................................................... ................ 115

D. D IESEL F UEL S TANDARDS

................................................... ................................. 116

E. O FF -R OAD E NGINE S TANDARDS

................................................... ....................... 117

F. R EFERENCES

................................................... ................................................... 119

X. Proposed Regulation for In-Use On-Road Diesel Vehic les......................... 121

A. P ROPOSED R EGULATION O VERVIEW

................................................... .................. 121

B. P URPOSE

................................................... ................................................... ..... 122

C. A PPLICABILITY

................................................... ................................................. 12 2

D. D EFINITIONS

................................................... ................................................... . 124

E. P ERFORMANCE R EQUIREMENTS

................................................... ........................ 126

F. O THER R EQUIREMENTS

................................................... .................................... 131

G. S PECIAL P ROVISIONS AND C OMPLIANCE E XTENSIONS ............................................ 134

H. R EPORTING

................................................... ................................................... .. 140

I. E LECTRONIC T RACKING S YSTEM

................................................... ....................... 141

J. R ECORDKEEPING

, R ETENTION AND A UDITS

................................................... ........ 142

K. R IGHT OF E NTRY

................................................... ............................................. 142

L. D ISCLOSURE OF R EGULATION A PPLICABILITY

................................................... ..... 143

M. P ENALTIES

................................................... ................................................... ... 143

XI. Proposed Changes to Other Diesel Emissions Control Regulations ........ 145

A. P ROPOSED M ODIFICATIONS FOR C RANES AND S WEEPERS ..................................... 145iii

B. P ROPOSED A MENDMENTS TO E XISTING R EGULATIONS ........................................... 147

C. C HANGES TO I DLING R EQUIREMENTS FOR C ERTAIN O N -R OAD V EHICLES ................ 152

XII. Environmental Impact ...............................

................................................... .. 153

A. L EGAL R EQUIREMENTS

................................................... ..................................... 153

B. R EASONABLY F ORESEEABLE E NVIRONMENTAL I MPACTS ........................................ 154

C. H EALTH B ENEFITS A NALYSIS

................................................... ............................ 162

D. C LIMATE C HANGE I MPACTS

................................................... ............................... 165

E. W ELFARE I MPACTS

................................................... .......................................... 168

F. R EASONABLY F ORESEEABLE M ITIGATION M EASURES ............................................ 168

G. A LTERNATIVE M EANS OF C OMPLIANCE WITH THE P ROPOSED R EGULATION .............. 168

H. R EFERENCES

................................................... ................................................... 168

XIII. Cost Summary and Methodology....................... ........................................... 171

A. L EGAL R EQUIREMENTS

................................................... ..................................... 171

B. M ETHODOLOGY FOR E STIMATING C OSTS

................................................... ........... 171

C. R EPORTING C OST

................................................... ............................................ 189

D. T OTAL S TATEWIDE C OSTS

................................................... ................................ 190

E. C OST E FFECTIVENESS OF THE P ROPOSED R EGULATION ........................................ 191

F. C OST M ODEL M ETHODOLOGY FOR I NDUSTRY S ECTORS ......................................... 192

G. S ENSITIVITIES IN E STIMATING S TATEWIDE C OSTS .................................................. 1 94

H. R EFERENCES

................................................... ................................................... 196

XIV. Economic Impacts...................................

................................................... .... 197

A. B ACKGROUND

................................................... .................................................. 1 97

B. E CONOMIC I MPACTS ON THE C ALIFORNIA E CONOMY .............................................. 198

C. E CONOMIC I MPACT ON I NDIVIDUAL B USINESS S ECTORS ......................................... 200

D. E CONOMIC I MPACT ON C ALIFORNIA C ONSUMERS

................................................... 226

E. R EFERENCES

................................................... ................................................... 227

XV. Availability of Incentive Funding.................. ................................................. 22 9

A. S TATE S OURCES OF F UNDING

................................................... ........................... 229

B. H OW AN I NTEGRATED G RANT AND L OAN P ROGRAM C OULD A SSIST F LEETS ............. 240

C. F EDERAL F UNDING S OURCES

................................................... ........................... 241

D. L OCAL A GENCY P ROGRAMS

................................................... .............................. 242

XVI. Rationale for Regulatory Provisions and Changes to Other Regulations. 245

A. L OW U SE E XEMPTION

................................................... ...................................... 245

B. F LEET A VERAGE AND BACT P ERCENT L IMITS

................................................... .... 245

C. D ELAYS TO THE NO X P ERFORMANCE R EQUIREMENTS ........................................... 246

D. C AB O VER E NGINE T RACTORS WITH 57 FOOT T RAILERS ........................................ 253iv

E. S MALL F LEET P ROVISIONS

................................................... ................................ 253

F. C REDIT FOR H YBRID AND A LTERNATIVE F UEL V EHICLES ........................................ 254

G. E NFORCEABILITY P ROVISIONS

................................................... ........................... 255

H. E XCLUSION OF P ERSONAL U SE M OTOR H OMES

................................................... . 256

I. S AFETY C ONSIDERATIONS

................................................... ................................ 256

J. S CHOOL B USES

................................................... ............................................... 257

K. D RAYAGE (P ORT ) T RUCKS

................................................... ................................ 259

L. T WO -E NGINE C RANES

................................................... ...................................... 260

M. P RIVATELY -O WNED T WO -E NGINE S TREET S WEEPERS ........................................... 262

N. P RIVATELY -O WNED U TILITIES A LTERNATIVE P ROPOSAL ......................................... 263

O. W ORKOVER R IGS

................................................... ............................................. 264

P. O THER C HANGES

................................................... ............................................. 264

Q. R EFERENCES

................................................... ................................................... 266

XVII. Enforcement........................................

................................................... ......... 267

A. O VERVIEW

................................................... ................................................... .... 267

B. P LANNED E NFORCEMENT A CTIVITIES FOR P ROPOSED R EGULATION ........................ 267

C. N EED FOR A DDITIONAL R ESOURCES

................................................... .................. 269

XVIII. Alternative Considered .............................

................................................... .. 271

A. R ETROFIT O NLY R EGULATION

................................................... ........................... 271

B. A UGUST 2007 ARB S TAFF P ROPOSAL

................................................... .............. 272

C. J ANUARY 2008 ARB S TAFF P ROPOSAL

................................................... ............. 273

D. S TREET S WEEPER I NDUSTRY P ROPOSAL

................................................... ........... 277

E. D RIVING T OWARD A C LEANER C ALIFORNIA P ROPOSAL ........................................... 279v LIST OF TABLES

Table III-1: Public Workshop Dates and Locations................ .............................. 14

Table III-2: Companies, Associations, and other Organizations Co ntacted......... 15

Table IV-1: State and National Ozone Ambient Air Quality Standa rds ................ 20

Table IV-2: State and National PM Ambient Air Quality Standards (μg/m 3 )......... 23

Table IV-3: Substances in Diesel Exhaust Listed by California a s Toxic Air

Contaminants ....................................... ............................................. 25

Table IV-4: Statewide Health Impacts Associated with In-Use On- Road Diesel

Vehicles (Baseline Year 2008) ...................... .................................... 30

Table IV-5: Non-Cancer Health Impacts Associated with In-Use On -Road Diesel

Vehicles Operating in the Southern California Study Area (2003 Emissions)......................................... ................................................ 31

Table V-1: Weight Classification Defined by U.S. DOT.......... ............................. 40

Table V-2: Common Manufacturer of On-Road Engines ............. ....................... 40

Table V-3: Common Manufacturers of Trucks and Tractors ........ ....................... 42

Table V-4: Common Manufacturers of Buses and Shuttle Buses.... ................... 42

Table VI-1: Data Sources Used to Develop Population and Activit y Estimates ... 59

Table VI-2: 2008 Population, VMT, and VMT-Weighted Average Age by Inventory

Category, Fleet Size, and Mileage Thresholds....... ........................... 60

Table VI-3: Percentage of Population and VMT by Vehicle Type ... ..................... 63

Table VI-4: Distribution of Population and VMT by Mileage Thres hold (2008)..... 64

Table VI-5: Fraction of Miles Traveled in California for Out-of -State Categories . 65

Table VI-6: Statewide Emissions by Truck and Bus Inventory Cate gory (2008).. 70

Table VI-7: Baseline Emissions by Fleet Size and Mileage Thresh old (2008)..... 71

Table VI-8: Statewide PM and NOx Baseline Emissions ............ ......................... 71

Table VII-1: Passive DPF........................................ .............................................. 77

Table VII-2: Wall Flow Filter................................... ............................................... 78

Table VII-3: Active DPF ......................................... ............................................... 79

Table VII-4: Fuel-Water Emulsion................................ ......................................... 80

Table VII-5: Diesel Emission Control Strategy Warranty Period ... ........................ 84

Table VII-6: Diesel Emission Control Strategy Verification Level s (as adopted by

the Board in January 2008) ......................... ...................................... 85

Table VII-7: Verified Level 3 DECS (as of October 2008)......... ............................ 87

Table VII-8: Verified Level 2 DECS (as of October 2008)......... ............................ 87vi

Table VII-9 Summary of Carl Moyer Projects..................... .................................. 89

Table VIII-1: U.S. EPA Heavy-Duty Diesel Engine Emission Standard s................ 96

Table VIII-2: Exhaust Emission Standards and Phase-In Schedule fo r 2007 and

Later Model Year Heavy-Duty Diesel On-Road Engines. .................. 97

Table IX-1: Regulations Requiring Retrofits of On-Road Diesel V ehicles.......... 110

Table IX-2: Implementation Schedule for Most Municipal and Util ity Fleets

Vehicles........................................... ................................................ 112

Table IX-3: Regulations for In-Use Off-Road Diesel Vehicles.... ........................ 113

Table IX-4: TRU In-Use Performance Standards................... ............................ 115

Table IX-5: ARB and U.S. EPA Off-Road Compression-Ignition (Die sel) Standards

(NMHC+NOx/CO/PM in g/bhp-hr where applicable) ...... ................. 118

Table X-1: Best Available Control Technology Compliance Schedu le.............. 126

Table X-2: Percent of Fleet That Must Comply with PM and NOx B ACT Standard128

Table X-3: PM Emissions Factors by Engine Model Year (g/mile). ................... 129

Table X-4: NOx Emissions Factors by Engine Model Year (g/mile) .................. 129

Table X-5: Fleet Targets for PM and NOx (g/mile).............. .............................. 130

Table X-6: PM and NOx Equivalency Standards ................... ........................... 131

Table X-7: Proposed PM BACT Schedule for School Buses ......... ................... 132

Table X-8: Agricultural Vehicle Mileage Threshold ............. .............................. 135

Table XII-1: Emission Benefits from Implementation of the Propos ed Regulation155

Table XII-2: Statewide PM Emissions Benefits from the Proposed R egulation... 156

Table XII-3: Statewide NOx Emissions Reductions from the Propose d Regulation157

Table XII-4: South Coast SIP Emission Reduction Targets for Truc ks ............... 159

Table XII-5: San Joaquin SIP Emission Reduction Targets for Truc ks ............... 159

Table XII-6: Total Health Benefits Associated with Reductions in Emissions from

the Implementation of the On-Road Truck and Bus Reg ulation (2010- 2025)*............................................. ................................................. 16 3

Table XIII-1: PM Filter Costs.................................... ............................................ 175

Table XIII-2: Average Vehicle Replacement Age by Average Fleet Ag e Group... 176

Table XIII-3: Statewide Weighted Average Vehicle Replacement Age . ............... 177

Table XIII-4: In-state Heavy-Heavy Duty Vehicles by Fleet Age for Fleets with more than 3 vehicles (excluding fleets qualifying for sp ecial provisions).. 182

Table XIII-5: Vehicles by Fleet Average Age ...................... ................................. 183

Table XIII-6: Summary of Average Increased Capital Costs......... ....................... 184vii

Table XIII-7: Cumulative Increased Retrofit Maintenance Costs ($2 008) ............ 187

Table XIII-8: Initial Reporting Costs (2010)..................... ..................................... 189

Table XIII-9: Total Annual Reporting Costs....................... ................................... 190

Table XIII-10: Total Reporting Costs.............................. ........................................ 190

Table XIII-11: Summary of Average Increased by Statewide Fleet Gro ups........... 191

Table XIII-12: Comparison of the Average Cost-Effectiveness of the Proposed

Regulation to Average Cost Effectiveness of Recentl y Adopted Air

Toxic Control Measures............................. ...................................... 192

Table XIII-13: Increased Costs by Business Sector................. .............................. 194

Table XIII-14: Cost Sensitivity Analysis for Use of NOx Retrofits. .......................... 195

Table XIII-15: Cost Sensitivity Analysis for Increased Retrofit Co sts ..................... 195

Table XIV-1: Estimates of Total Capital Costs of Proposed Regula tion by Affected

Industries in 2013 (Millions of 2008 Dollars)...... .............................. 199

Table XIV-2: Impact on the California Economy of Proposed Regula tion in the Year

2013 (Billions of 2006 Dollars).................... ..................................... 200

Table XIV-3: 2008 Land Line Reader Survey Results on Gross Incom e per Mile 206

Table XIV-4: Percentage of Transportation Fleets Reporting Equip ment HP Subject

to Other Rules ..................................... ............................................ 210

Table XIV-5: Total Off-Road Vehicle Fleet Characteristics....... ............................ 216

Table XIV-6: Percent of Vehicles in Construction by Category .... ........................ 216

Table XV-1: Proposed Carl Moyer Program Guidelines Changes..... .................. 235

Table XV-2: Future Carl Moyer Program On-Road Funding Options .. ................ 236

Table XV-3: Credit Risk........................................ ............................................... 238

Table XVI-1: Emissions Comparison of Low Mileage Vehicle and Typ ical Fleet

in 2014............................................ ................................................. 24 7

Table XVI-2: Alternatives Emission Loss Compared to Staff Propos al (tpd) ........ 248

Table XVI-3: Specialty Agricultural Vehicle Population Estimates ........................ 251

Table XVI-4: Distances from the Facility Boundary wherein the Ri sk is 10 in a

Million for Different Agricultural Vehicle Volumes. ........................... 252

Table XVIII-1: August 2007 ARB Staff Proposed BACT Schedule....... .................. 272

Table XVIII-2: January 2008 ARB Staff Proposed BACT Schedule ...... ................. 274

Table XVIII-3: January 2008 ARB Staff Proposed Compliance Schedule for Small

Fleets............................................. .................................................. 2 75

Table XVIII-4: NAPSA July 2008 Proposal for Street Sweepers ....... ..................... 278

Table XVIII-5: DTCC Proposal for Mileage Exemptions............... .......................... 280viii

Table XVIII-6: DTCC Proposed BACT Schedule........................ ............................ 281

Table XVIII-7: DTCC Proposed BACT Percent Limits.................. .......................... 282ix LIST OF FIGURES

Figure IV-1: Federal and State Area Designations for Ozone...... ......................... 21

Figure IV-2: Federal and State Area Designations for PM2.5 ...... ......................... 24

Figure IV-3: State Average Potential Cancer Risk from Outdoor Am bient Levels of

Toxic Pollutants for the Year 2000 ,,

................................................... 28

Figure V-1: Market Shares of Diesel Engine Manufacturers ....... ......................... 41

Figure VI-1: The Historic and Projected Relationship between VMT and GDP on a

Nationwide Level................................... ............................................ 66

Figure VI-2: Estimated Future New Vehicle Sales by Calendar Year ................... 67

Figure VI-3: California Statewide NOx Emissions from Trucks, Bas eline 2008-202372

Figure VI-4: California Statewide PM2.5 Emissions from Trucks, B aseline 2008-

2023 ...............................................

................................................... 72

Figure VI-5: California Statewide CO 2 Emissions from Trucks, Baseline 2008-202373

Figure VII-1: Wall Flow Filter................................... ............................................... 76

Figure VII-2: Flow Through Filter ................................ ........................................... 79

Figure VII-3: Cleaire Longview Lean-NOx Catalyst System.......... ......................... 82

Figure VII-4: Johnson Matthey SCRT System ........................ ............................... 83

Figure VII-5: Under Chassis Horizontal DPF Muffler Installation.. .......................... 89

Figure VII-6: Horizontal DPF Installation for Vertical Exhaust... ............................. 90

Figure VII-7: Donaldson Horizontal DPF Installation on School Bus ...................... 90

Figure VII-8: Vertical DECS Installations on Tanker and Tractor .. ......................... 91

Figure VII-9: Vertical SCRT® System on Tractor – 50 to 90 percent NOx reduction92

Figure VIII-1: Vehicle with Oversized Fuel Tank to Accommodate the Lower Energy

Density of Alternative Fuels....................... ...................................... 106

Figure X-1: NOx Exempt Areas of California..................... ................................. 137

Figure XII-1: Projected PM Emissions With and Without the Regulat ion ............. 156

Figure XII-2: Projected NOx Emissions With and Without the Regula tion............ 157

Figure XII-3: Statewide CO 2 Baseline and With Regulation Emissions............ .... 166

Figure XIII-1: In-state Heavy-Heavy Duty Vehicle Age Distribution. ...................... 173

Figure XIII-2: Example Vehicle Prices (in thousands of dollars)... ......................... 174

Figure XIII-3: Annual Compliance Flowchart........................ ................................. 179

Figure XIII-4: Average Increased Cost for In-state Heavy-Heavy Dut y Vehicles in

Fleets with 4 or more Vehicles (excluding special p rovisions)......... 180x

Figure XIII-5: Average Increased Cost for In-state Medium-Heavy Du ty Vehicles in

Fleets with 4 or more Vehicles (excluding special p rovisions)......... 181

Figure XIII-6: Average Increased Cost for In-state Heavy-Heavy Dut y Low Use NOx

Exempt Vehicles (<7500 Miles)...................... ................................. 181

Figure XIII-7: Number of DPFs in Statewide Fleet Resulting from Pr oposed

Regulation ......................................... .............................................. 186

Figure XIII-8: Estimated Fuel Economy of Diesel Vehicles by Vehicl e Model Year188

Figure XIII-9: Percentage of Vehicle Population by Business Sector from National

2002 VIUS Data ..................................... ......................................... 193

Figure XIV-1: Vehicles from Non-Neighboring States ............... ............................ 203

Figure XIV-2: California IRP ..................................... ............................................. 204

Figure XIV-3: California In-state Registered Tractors............ ................................ 205

Figure XIV-4: California Interstate Registered Owner Operators... ........................ 206

Figure XIV-5: In-state Registered Owner Operator Tractors (Exclud ing Low Mileage

Vehicles).......................................... ................................................ 207

Figure XIV-6: California Gross Domestic Product: Truck Transport ation.............. 208

Figure XIV-7: California Employment: Transportation and Warehous ing ............. 209

Figure XIV-8: California Gross Domestic Product: Agriculture .... ......................... 213

Figure XIV-9: California Employment: Agriculture ................ ................................ 213

Figure XIV-10: California Gross Domestic Product: Construction ... ....................... 217

Figure XIV-11: California Employment: Construction ............... .............................. 218

Figure XIV-12: California Construction Total Valuation Dollars (in billions) ............. 219

Figure XIV-13: California Gross Domestic Product: Manufacturing.. ...................... 222

Figure XIV-14: California Employment: Manufacturing.............. ............................. 222

Figure XIV-15: California Gross Domestic Product: Retail and Whol esale Trade .. 224

Figure XIV-16: California Employment: Retail and Wholesale Trade . .................... 224

Figure XV-1: Proposition 1B Fiscal Year 2007/2008 Allocation.... ........................ 231

Figure XVI-1: Number of Vehicles by Fleet Size (California Depart ment of Motor

Vehicles, 2006).................................... ............................................ 254

Figure XVI-2: California K-12 Students Transported at Public Expe nse................ 259

Figure XVI-3: NOx Emissions Benefits of Staff Proposal........... ............................ 261

Figure XVI-4: PM Emissions Benefits of Staff Proposal ............ ............................ 262

Figure XVI-5: NOx Emissions with Staff Proposal .................. ............................... 263

Figure XVIII-1: August 2007 ARB Staff Proposed Fleet Average PM and NOx

Emission Targets................................... .......................................... 273xi

Figure XVIII-2: January 2008 ARB Staff Proposed Fleet Average Emiss ion Targets275

Figure XVIII-3: ARB January Proposal (NOx Emissions) ............... ......................... 276

Figure XVIII-4: ARB January Proposal (PM Emissions) ................ .......................... 277

Figure XVIII-5: DTCC Stakeholder Proposal (NOx Emissions) .......... ..................... 283

Figure XVIII-6: DTCC Stakeholder Proposal (PM Emissions) ........... ...................... 283xiixiii APPENDICES

A. Proposed Regulation for In-Use On-Road Vehicles

A1. Outline of Proposed In-Use On-Road Diesel Vehi cle Regulation

B. Proposed Amendments to Existing Diesel Regulati on

C. Public Outreach

D. Health Impacts from Off-Road Diesel Vehicles

E. Health Risk Assessment Methodology

F. Tactical Support Vehicle Letter

G. Emissions Inventory – Methodology and Results

H. Exhaust Retrofit Technologies

I. School Bus Regulatory Requirements

J. Cost and Economic Analysis Methodology

K. School Bus Cost Methodology

L. Requirements of Two-Engine Cranes

M. Street Sweeper Vehicles

N. Regulatory Alternatives

O. List of Acronymsxiv-1-

I. O VERVIEW AND R ECOMMENDATION

A. Introduction

The California Air Resources Board's (ARB or Board) mission is to protect public health, welfare, and ecological resources through the effec tive and efficient reduction of air pollutants, while recognizing and considering the e ffects on the economy of the State (ARB, 2002). ARB’s vision is that all individuals in California, especially children and the elderly, can live, work, and play in a healthfu l environment – free from harmful exposure to air pollution. To achieve this, ARB has adopted numerous regulations to control emissions from many different sources, incl uding diesel engines. Reducing health risk from diesel particulate emissions is on e of the Board's highest priorities. Diesel engine exhaust is a health concern because i t is a source of unhealthful air pollutants including gaseous and particulate-phase toxic air contaminants (TAC), particulate matter (PM), oxides of nitrogen (NOx), carbon monoxide, and hydrocarbons. Reducing health risk from diesel particulate emissi ons is one of the Board's highest priorities.

Staff is proposing a regulation to reduce emissions from in-use on-road diesel vehicles. Such vehicles include various types and sizes of tr ucks that haul products throughout the state, vehicles used in agricultural operations , and drayage trucks used at California’s ports and intermodal rail facilities.

Staff is also proposing a number of changes to exis ting in-use diesel vehicle and engine regulations to reduce overlapping requirements for the same vehicles, to clarify a number of issues with the existing regulations, to provide additional compliance flexibility, and to generally improve enforceabilit y of the existing regulations.

This technical support document is an addendum to t he Initial Statement of Reasons and includes the following chapters:

• Background information, the purpose of the regulat ion (Chapter I)

• ARB’s legal authority to adopt the regulation (Cha pter II);

• Summary of outreach to inform the public and solic it public participation in the development of the proposed regulation (Chapter III );

• Discussion of the need for control of diesel PM an d NOx from in-use on-road diesel vehicles (Chapter IV);

• Discussion of the various types of vehicles subjec t to the proposed regulation and their manufacturers (Chapter V);

• Describes the emissions inventory that was develop ed for the proposed regulation (Chapter VI);

• Discussion of retrofit strategies available for re ducing diesel emissions from in-use on-road vehicles (Chapter VII);

• Discussion current and future engine technologies that will be available to meet the NOx and PM performance standards (Chapter VIII);-2-

• Summaries of the requirements of ARB’s regulations that reduce the emissions and risk from new and existing on-road and off-road die sel engines as well as portable engines and equipment (Chapter IX);

• Summary and discussion of the proposed regulation (Chapter X);

• Discussion of modifications proposed for a number of existing ARB diesel regulations (Chapter XI);

• Environmental impact of the proposed regulation (C hapter XII);

• Discussion of the statewide cost of the proposed r egulation and on affected business sectors (Chapter XIII);

• Discussion of the economic impact of the proposed regulation on the economy of the state and on certain affected business sector (Chap ter XIV);

• Discussion of availability of incentive funding (C hapter XV);

• Discussion of the rationale for proposing special provisions, such as the requirements for small fleets and the less stringen t requirements for low mileage thresholds (Chapter XVI);

• Discussion of preliminary plans for enforcement (C hapter XVII);

• Alternatives considered and the reasons they were not chosen over the proposed regulation (Chapter XVIII); and

• Proposed text of the regulation and other suppleme ntary information (Appendices).

B. Overview

Staff of the Air Resources Board (ARB or Board) is proposing a regulation that would reduce emissions of diesel particulate matter (PM) and oxides of nitrogen (NOx) from over 400,000 diesel vehicles registered in the Stat e, and another half a million out-ofstate vehicles that visit California each year. Th e regulation would achieve these emission reductions by requiring fleet owners to mo dernize their fleets and install exhaust retrofits. The regulation is projected to achieve significant emission reductions, but at a significant cost to affected fleets.

The scope of the proposed regulation is broad. It would affect about 170,000 California businesses (including over 150,000 small businesses ) in most sectors of the State’s economy, and almost a million vehicles. Some commo n industry sectors that operate trucks and buses subject to the regulation include: for-hire transportation, construction, manufacturing, retail and wholesale trade, vehicle leasing and rental, bus lines, and agriculture. Within each of these broad sector cat egories, there is a wide variety of vehicle types. The potential impact of this regula tion on various business sectors depends on the number, type and age of the affected vehicles operated by each sector. A copy of the regulation is provided in Appendix A, and a simplified summary is provided in Appendix A1.

The proposed new regulation would apply to any pers on, business, or federal government agency that owns or operates affected ve hicles in California. Affected-3-

vehicles include heavy-duty diesel-fueled vehicles with a gross vehicle weight rating (GVWR) greater than 14,000 pounds, yard trucks with off-road certified engines and certain diesel-fueled shuttle vehicles regardless o f weight. The proposed regulation would be applicable regardless of where the vehicle is registered. However, the proposed regulation would not apply to military tac tical support vehicles, authorized emergency vehicles, or private motor homes not used for commercial purposes.

In general, the regulation would require owners to reduce PM and NOx emissions from their fleets by upgrading the vehicles to meet spec ific performance standards for these pollutants (defined as best available control techn ology, or BACT). The BACT standard for PM is generally an engine equipped with a diese l particulate filter, and the BACT standard for NOx is an engine newly manufactured in 2010 or later. A fleet may meet these performance requirements by retrofitting a ve hicle with a verified diesel emission control strategy (DECS) 1 that will achieve PM or NOx reductions or both as required, replacing an engine with a newer cleaner one, or re placing a vehicle with one having a cleaner engine. This replacement vehicle can be ei ther new or used.

The proposed regulation begins in 2010, and require s the installation of verified PM DECS on certain vehicles depending on their model y ear. Then, beginning in 2012, fleets would need to begin replacing their vehicles with newer used or new vehicles that meet the most stringent 2010 model year engine emis sion standards. Through this, by the beginning of 2014, nearly all on-road diesel en gines operating in California will either have a verified DECS installed, or will be e ngines that came with a diesel particulate filter (DPF) from the engine manufactur er. Then, between 2012 and 2022, the remaining older vehicles would be need be repla ced such that by 2023, all on-road diesel vehicles operating in California would have the cleanest engines available - that is, they would meet the 2010 model year emission st andards.

Each year, the proposed regulation provides three o ptions for complying with the performance requirements. First, a fleet could ret rofit and replace vehicles in its fleet, according to a prescriptive schedule, based on each vehicle’s engine model year. Second, a fleet could meet a limit that sets an ann ual cap on the number of retrofits to be installed and the minimum number of engines repl aced required to meet the 2010 engine requirements each year. Third, a fleet coul d meet a fleet average option, with targets that decline over time. Each fleet has the flexibility to meet any one of these options each year, and is not required to meet the same option for both pollutants. That is, a fleet could met the BACT schedule for PM, but meet the fleet average for NOx, and be fully compliant with the proposed regulation.

The proposed regulation also contains special provi sions to address the unique issues facing small fleets. Under staff’s proposal, small fleets, those with one to three vehicles, are exempt from any clean up requirements until 201 2. Then, in 2013, small fleets would need to show they cleaned up one vehicle to a lesser requirement. That vehicle

1 A retrofit device that has been verified under AR B’s Verification Procedure, which ensures the effectiveness and durability of diesel engine r etrofits.-4-

would then not need to meet the 2010 engine require ment until 2018. In fleets of two or three, additional time is then provided for the sec ond or third vehicle to meet the PM and NOx performance requirements.

Because of the wide variety of fleets and vehicles subject to the proposed regulation, certain special provisions have been included. Fir st, the proposed regulation would exempt certain lower use vehicles from some or all of the clean up requirements. The proposed regulation would establish requirements to clean up diesel PM emissions from school buses, although it would not require the rep lacement of any school buses newer than 1977. Also, special provisions would be provi ded for unique vehicles and certain types of agricultural vehicles. The regulation wou ld provide credits for actions which

reduce emissions from these vehicles earlier than r equired, as well as for the early adoption of hybrid vehicle technology and for the u se of alternative fuels. Staff is also proposing to address a number of regulatory issues with two-engine cranes and twoengine street sweepers which are subject to a numbe r of different ARB regulations.

To aid in its enforcement, the proposed regulation would impose certain reporting and recordkeeping requirements. The proposed regulatio n would also establish requirements for any in-state or out-of-state motor carrier, California based broker, or any California resident who hires or dispatches veh icles subject to the regulation. Also, California sellers of vehicles are subject to the p roposed regulation and would have to disclose the regulation’s potential applicability t o buyers of the vehicles.

The proposed regulation would provide significant d iesel PM and NOx emissions reductions that would have a substantial positive a ir quality impact throughout California. By reducing emissions of pollutants th at contribute to elevated ambient levels of particulate matter and ozone, the regulat ion would help achieve attainment of

the federal and state clean air standards for PM an d ozone. In 2020, the regulation is expected to reduce diesel PM2.5 emissions by 5.2 to ns per day and NOx emissions by about 79 tons per day statewide, which represents a 43 percent reduction in diesel PM and a 23 percent reduction in NOx from emission lev els that would be anticipated in the absence of the regulation. In addition, the propos ed regulation would provide a slightly positive change in emissions of greenhouse gases, a nd would reduce emissions of black carbon – a component of diesel PM and a likel y contributor to global warming.

In addition, the proposed regulation is the critica l piece in California’s efforts to meet federal clean air standards. In 2007, the State ap proved its blueprint to attain the federal clean air standard for fine particulate (PM 2.5) and ozone. This document, known as the State Implementation Plan or SIP, comm itted to significant emission reductions from vehicles operating throughout the s tate, in particular in the South Coast and San Joaquin Valley air basins. The proposed re gulation would meet or exceed the combined NOx and PM2.5 SIP fleet rule targets in bo th the South Coast and San Joaquin Valley air basins for all years. In 2014, in the South Coast Air Basin, the SIP target would be met by achieving slightly more PM2. 5 reductions and slightly less NOx than expected. The proposed regulation would also help achieve the SIP reduction-5-

goals in 2020 for attainment in regions downwind of the South Coast and the San Joaquin Valley air basins.

Also, significant additional health benefits would also be obtained with the reductions of

ambient levels of diesel PM. The emission reductio ns from the regulation are expected to prevent approximately 9,400 premature deaths ove r the course of the regulation (2,800 to 17,000, 95 percent confidence interval), and would result in about 150,000 fewer asthma-related cases and 950,000 fewer lost w ork days. The economic valuation of these health benefits is estimated to range from $48 to $68 billion.

However, while the proposed regulation would not qu ite achieve the overall goal set forth in the 2000 Diesel Risk Reduction Plan (RRP) of reducing diesel PM by 85 percent, from 2000 baseline levels, staff projec ts that the proposed regulation would

reduce in-use on-road vehicle diesel PM emissions f rom the 2000 baseline by 80 percent in 2020. These reductions represent the maximum achievable reductions of

diesel PM emissions from in-use on-road diesel vehi cles.

While the benefits of the proposed regulation are s ignificant, so are the costs. Staff estimates that the total cost of the proposed regul ation is about $5.5 billion, in 2008 expenditure equivalent dollars (2008 dollars). Of this, about $4.5 billion will be incurred by California based fleets, and $1 billion will be borne by out-of-state fleet operators. These costs will be spread out over 16 years, from 2010 through 2025, with costs varying between years; in its highest year, 2013, t he capital costs of the proposed regulation are expected to be about $566 million. Overall, about 40 percent of the cost of the proposed regulation is expected to be incurr ed directly by the transportation and warehousing industry, more than 20 percent by the c onstruction industry, and about 10 percent by the wholesale and retail trade industry. The remaining costs are spread among various other affected industries.

Costs to individual fleets would vary depending on the size of each fleet, vehicle types, vehicle ages, and its normal purchasing practices. Costs also would vary depending on the compliance strategy chosen by each fleet (retro fit, repower, buy new, and/or buy used). For newer fleets, the costs will be minimal , while for older fleets that need to upgrade a significant number of vehicles, the cost will be significantly more substantial. The same holds true for small fleets, where some wo uld experience no increased costs while others would experience higher costs. The to tal estimated cost over the lifetime of the regulation for small fleets is approximately $1 .7 billion (2008 dollars).

Staff expects many, if not most, affected businesse s to pass through the proposed regulation’s costs to their customers. This could be achieved, for example, through higher shipping rates, or higher costs for manufact ured goods, resulting in higher revenue (but not necessarily higher profits) for af fected fleets. However, the ability to pass on costs will vary by business sector. While the overall impact on most business sectors covered by the proposed regulation is small , generally averaging less than one tenth of one percent of their overall gross domesti c product, some companies may not be able to pass through these costs, and will have to absorb them out of their gross-6-

revenues. While the extent of the ability for flee ts to absorb the costs of the proposed regulation is unclear, this may likely impact the p rofitability of companies that cannot pass through their compliance costs.

Despite affected fleets passing through these costs , consumers can expect to pay a negligible additional amount for common consumer go ods such as food, produce,

consumables and other commodities as a result of th e proposed regulation.

In considering the ability of fleets to handle the compliance requirements associated with the proposed regulation and other ARB regulati ons, staff believes this issue is addressed in that ARB’s various regulations have di fferent compliance dates, regulatory requirements, and flexibility, which staggers the c ompliance dates and requirements for various regulations such that any overlap is typica lly minimal. Also, while many fleets subject to the proposed regulation are also subject to other ARB regulations, staff does not believe the cumulative cost impacts of these va rious regulations will impact affected fleets’ ability to comply overall. For example, fo r construction fleets subject to the proposed regulation, the cumulative impact of the p roposed regulation and the In-Use Off-Road Diesel Vehicle Regulation is an additional 6 percent over the anticipated costs of the off-road regulation.

While the cost of the proposed regulation is signif icant, there are also significant amounts of incentive money available for fleets to assist in cleaning up and modernizing their vehicles. In November 2006, California voter s approved Proposition 1B, which included $1 billion to reduce emissions from the mo vement of goods throughout the state. ARB has earmarked over $300 million towards vehicles covered by the proposed regulation, and in particular vehicles operated by small fleets. California’s Carl Moyer Program provides $140 million per year to help redu ce emissions from existing diesel engines, and has historically funded a significant number of projects targeting on-road vehicles. Finally, with the approval of Assembly B ill (AB) 118, ARB has been allocated up to $50 million per year to achieve emission redu ctions from vehicles and equipment, as well as research for on the air quality impacts of alternative fuels and advanced technology vehicles. In fiscal year 2008/2009, $48 million has been allocated for the establishment of a heavy-duty vehicle air quality l oan program. While these programs, and the dollars they provide, are significant, they are not enough to cover the anticipated costs of the regulation. However, for those that take advantage of them, the combined assistance these programs could provide wi ll be significant. For example, a truck owner/operator could obtain a 2010 model year engine truck, which would comply with all of the requirements of the proposed regula tion, for about $500 to $800 per month in loan payments.

Staff has made an enormous effort to notify affecte d fleets and interested parties about the proposed regulation, and to solicit their input on the regulation. Staff held 54 public workshops and workgroup meetings throughout the sta te, dozens of site visits and private meetings with fleet owners, vehicle dealers , and industry groups, and sent a mailing to nearly 300,000 owners of registered dies el vehicles in California notifying-7-

them of the proposed regulation, how to participate in an online survey, and how to obtain additional information about staff’s proposa l.

C. Recommendation

Staff recommends the Board adopt a new section 2025 in title 13, California Code of Regulations. In addition, staff recommends that th e Board approve the proposed amendments to the existing regulations identified C hapter XI of this technical support document. The proposed regulation and the accompan ying amendments to other existing regulations, are set forth in the proposed regulation order in Appendix A.

D. References

ARB, 2002. California Air Resources Board. Califor nia Air Resources Board Strategic Plan. January 2002. http://www.arb.ca.gov/planning/plan01/plan01.htm-8--9-

II. R EGULATORY A UTHORITY

ARB has been granted both general and specific auth ority under the Health and Safety Code (HSC) to adopt the proposed regulation. HSC s ections 39600 (General Powers) and 39601 (Standards, Definitions, Rules and Measur es) confer on ARB, the general authority and obligation to adopt rules and measure s necessary to execute the Board’s powers and duties imposed by State law. HSC sectio ns 43013 and 43018(a) provide broad authority to achieve the maximum feasible and cost-effective emission reductions

from all mobile source categories, including both on-road a nd off-road diesel engines. Regarding in-use motor vehicles, HSC sections 43600 and 43701(b) respectively grant ARB authority to adopt emission standards and emiss ion control equipment requirements. ARB is proposing amendments to the P ortable Equipment Registration Program (PERP) pursuant to authority granted in HSC sections 41750-41755.

Additionally, California's Air Toxics Program, esta blished under California law by AB 1807 (stats. 1983, ch. 1047, the Tanner Act) and se t forth in the HSC sections 39650 through 39675, mandates that ARB identify and contr ol air toxics emissions in California. The identification phase of the Air To xics Program requires ARB, with participation of other state agencies such as the O ffice of Environmental Health Hazard Assessment (OEHHA), to evaluate the health impacts of, and exposure to, substances and to identify those substances that pose the grea test health threat as toxic air contaminants (TACs). ARB's evaluation is then made available to the public and is formally reviewed by the Scientific Review Panel (S RP) established under HSC section 39670. Following the ARB's evaluation and the SRP's review, the Board may formally identify a TAC at a public hearing. Follo wing the identification of a substance as a TAC, HSC section 39665 requires ARB, with the participation of the local air pollution control and air quality management distri cts (districts), and in consultation with affected sources and interested parties, to prepare a report on the need and appropriate degree of regulation for that substance. Based upo n the findings of the report, ARB is vested with authority under sections 39666 and 3966 7 to adopt and enforce airborne toxic control measures (ATCM) that will respectivel y achieve emission reductions using best available control technology (BACT) for nonveh icular and vehicular sources, the latter of which includes in-use on-road heavy-duty vehicles.

1. Preemption under the Clean Air Act

The proposed regulatory actions would not be preemp ted by the federal Clean Air Act (CAA) section 209. Section 209(a) preempts states from adopting emission standards relating to the control of emissions from new motor vehicles or new motor vehicle engines. Section 209(b) provides that the Administ rator of the United States Environmental Protection Agency (U.S. EPA) shall gr ant California a waiver of preemption, unless those challenging the waiver can show that certain specified criteria for denying the waiver have been met. Section 209( e)(1) preempts all states from adopting emission standards for new nonroad engines under 175 horsepower used in farm and construction equipment and vehicles and ne w locomotives and locomotive-10-

engines. 2 Section 209(e)(2) impliedly preempts all states o ther than California from adopting new and in-use emission standards and othe r requirements relating to the

control of emissions of all nonroad not otherwise e xpressly preempted under section 209(e)(1). California can adopt and enforce regula tions for these other nonroad engines upon receiving authorization from the Admin istrator of U.S. EPA. As with a section 209(b) waiver, the Administrator must grant authorization unless those challenging the authorization can demonstrate that certain specified criteria for denying

the authorization have been satisfied.

The proposed in-use on-road diesel vehicle regulati on would not be preempted under CAA section 209(a). The proposed regulation would not establish emission standards for new motor vehicles or engines; rather the propo sed regulation would establish inuse performance requirements that must be met by in -use on-road vehicles. To the extent that fleets elect to meet those performance standards by replacing in-use vehicles and engines with new vehicles and engines, those emission standards have previously been adopted and granted waivers under s ection 209(b).

The proposed amendments to ARB’s previously adopted heavy-duty vehicle idling requirements are also not preempted by section 209. The idling requirements are inuse operational control measures that are specifica lly permitted under section 209(d), which provides that states have the right “to contr ol, regulate, or restrict the use, operation, or movement of registered or licensed mo tor vehicles.” The right to adopt inuse operational controls has been extended to nonro ad engines. See Engine

Manufacturers Association v. EPA , (D.C. Cir. 1996) 88 F.3d 1075.

The proposed amendments to California’s off-road re gulations are not preempted under section 209(e)(1) in that they do not apply to new off-road engines under 175 hp used in

farm and construction vehicles or to new locomotive s and locomotive engines. To the extent that ARB is proposing amendments to its in-u se off-road programs, ARB has pending authorization requests before U.S. EPA for its previously adopted off-road regulations. Upon adoption of the proposed amendme nts, ARB intends to file a request

with U.S. EPA that it confirm that the amendments f all within the scope of the previously submitted authorization requests.

2. Interstate Commerce Clause

The Commerce Clause of the United States Constituti on (U.S. Const., Art. I, §8, cl. 3) grants Congress the power “[t]o regulate Commerce w ith foreign Nations, and among the several States. . . .” In addition to granting Congress an affirmative grant of authority, courts have found that the clause create s an implied restraint on state authority to enact legislation that imposes signifi cant burdens on interstate commerce. (See United Haulers Ass'n, Inc. v. Oneida-Herkimer Solid Waste Management Authority (2007) 127 S.Ct. 1786; Healy v. The Beer Institute (1989) 491 U.S. 324, 326, fn.1.) The proposed regulation of in-use on-road diesel ve hicles would not be in violation of

2 The federal term “nonroad” and California term “of f-road” refer to the same types of engines and are used interchangeably.-11-

this so-called Dormant Commerce Clause. The propos ed regulation would not be per

se unlawful in that it would not expressly discrimina te against out-of-state heavy-duty vehicle fleets, have the practical effect or purpos e of protecting California economic interests at the expense of out-of-state interests, or have an impermissible

extraterritorial effect on other states.

When a state statute or regulation is neutral on it s face, has only indirect or incidental effects on interstate commerce, and regulates evenh andedly, the courts have applied a balancing test that weighs the state’s legitimate i nterests in adopting the regulation against the burden that the regulation may have on interstate commerce. ( Pike v. Bruce Church, Inc. (1970) 397 U.S. 137.). Here, the proposed regulatio n, which achieves significant reductions in diesel PM, an identified TAC, and NOx, with concomitant reductions in health risks to the public (i.e., res ulting in fewer fatalities, hospitalization, lost school and work days), would provide great hea lth and welfare benefits to the public. The benefits of the regulation, which woul d be adopted under the police powers granted to the State, clearly outweigh any burdens that the regulation would impose on

interstate commerce.

3. Regulatory Takings

Some stakeholders have commented during the course of this regulation’s development that the proposed regulation would result in a regu latory taking. Specifically, they argue that the proposed regulation forces the replacement of older, dirtier vehicles, and would significantly devalue the resale market for these v ehicles. ARB staff does not agree that the regulation would result in an unconstitutional taking. The “Takings Clause” of the Fifth Amendment to the United States Constitution p rovides that the federal government shall not take private property for public use, wit hout just compensation. 3 The prohibition was extended to the states by the Fourt eenth Amendment. 4

Generally, in real property regulatory takings clai ms, courts have found a compensable taking if a regulation does not substantially advan ce legitimate state interests or has permanently deprived an owner of “all economically beneficial or productive use” of the land ( Lucas v. South Carolina Coastal Council (1992) 505 U.S. 1003, 1015; TahoeSierra Preservation Council, Inc. v. Tahoe Regional Planning Agency (2002) 535 U.S. 302). In determining whether a state may avoid com pensation when it has used its police powers for public health and welfare purpose s, and the action has resulted in

3 The Fifth Amendment provides in full:

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except i n cases arising in the land or naval forces, or in the Militia, when in actual service i n time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness agai nst himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

4 The Fourteenth Amendment provides in relevant part that “[no State shall] deprive any person of life, liberty, or property, without due process of law; n or deny to any person within its jurisdiction the e qual protection of the laws.”-12-

depriving an owner of all beneficial or productive use of his land, the courts have looked to see if the proscriptions of the regulation were, in fact, covered by preexisting implied limitations on the property owner’s title. ( Lucas v. South Carolina Coastal Council

, supra, 505 U.S. at 1027.) In Lucas , the Court acknowledged that where such implied limitations exist, “the property owner necessarily expects the uses of his property to be restricted, from time to time, by various measures newly enacted by the State in legitimate exercise of its police powers.” ( Id.)

Of significance to the instant proposed regulation, the Court went on to clarify that implied limitations on ownership rights almost alwa ys exist with regard to the commercial value of personal property. The Court s tated:

[I]n the case of personal property, by reason of th e State's traditionally high degree of control over commercial dealings, [the personal property owner] ought to be aware of the possibility that new regulation might even render his property economically worthless. ( Id. , at 1027-1028.)

In line with the Supreme Court’s decisions with reg ulatory takings, the proposed regulation cannot be considered as unconstitutional . First, the regulation will not deprive the stakeholder of all beneficial value of the regulated engines and vehicles. Even those engines and vehicles that must be retire d under the proposed regulation will

continue to retain fair market value in domestic an d international markets outside of California. Second, consistent with Lucas, even in the unlikely event the regulated engines and vehicles lost all of their beneficial v alue, ARB is exercising its vested police power authority to regulate in-use on-road fleets. Over the past 40 years, ARB has adopted a panoply of air quality regulations affect ing nearly every vehicular source category. Given the extreme air quality problems c onfronting most areas of the state,

owners of in-use on-road vehicles should be well aw are that regulation of their fleets was likely to occur, especially given the high leve l of emissions associated with the operation of such vehicles.-13-

III. P UBLIC O UTREACH AND E NVIRONMENTAL J USTICE

ARB is committed to ensuring that all California co mmunities have clean, healthful air by addressing not only the air quality issues confront ing our cities by also the localized air quality impacts that are generated within our commu nities. ARB works to ensure that all individuals in California, especially the children and elderly, can live, work, and play in a healthful environment that is free from harmful exp osure to air pollution. The proposed regulation's relationship to environmental justice is described in Section A below.

Staff conducted various outreach efforts to notify affected stakeholders of the proposed regulation and to give them opportunities to partic ipate in the regulatory development process. These efforts are described further below in Section B.

A. Environmental Justice

As a matter of policy, ARB is committed to integrat ing environmental justice in all of its activities. On December 13, 2001, the Board approv ed Environmental Justice Policies and Actions, which formally established a framework for incorporating environmental justice into the ARB's programs, consistent with th e directives of State law. Environmental justice is defined as the fair treatm ent of people of all races, cultures, and incomes with respect to the development, adopti on, implementation, and enforcement of environmental laws, regulations, and policies (ARB, 2001). These policies apply to all communities in California, bu t recognize that environmental justice

issues have been raised more in the context of low- income and minority communities. As the proposed regulation would require cleaner fl eets of in-use on-road diesel vehicles to be used throughout the state, it would reduce emissions in all communities in California, including those with environmental j ustice concerns. Staff are currently working to inform those in environmental justice co mmunities of the proposed regulation and how final implementation would reduce exposure to diesel PM and protect public

health in their communities.

B. Outreach Efforts

As part of the public process, staff conducted vari ous outreach efforts to notify interested and affected stakeholders of the propose d regulation and to give them opportunities to participate in the regulatory deve lopment process. Staff held numerous public workshops at various locations throughout th e state. Staff also met with

individual stakeholders and contacted various indus tries, associations, individual businesses, and other organizations to inform them of the proposed regulation. A mailing to all owners of registered diesel vehicles in the State notifying them of staff’s proposal was conducted. Fact sheets were developed in English, Spanish and Punjabi to inform affected stakeholders of the proposed reg ulation, health impacts, and contact

information. Additional information can be found i n Appendix C.

1. Public Workshops

Since April 2006, staff held 9 sets of workshops, f or a total of 54 public workshops, to discuss development of the proposed regulation. In August 2007, workshops were held-14-

to specifically discuss updates to the emission inv entory. In July 2008, workshops were specifically held to discuss methodologies for esti mating costs and emissions attributed to the proposed regulation. The workshops were hel d in various locations throughout the State to allow stakeholders to participate in p erson. The workshops held in Sacramento were also webcast to provide even greate r opportunity for stakeholder involvement. In many instances, staff held both da y and evening workshops to allow

stakeholders to attend at their convenience.

Table III-1 shows the dates and locations of the wo rkshops. The dates, locations, and times of the workshops are listed in Appendix C.

Table III-1: Public Workshop Dates and Locations

Dates Locations April 2006 Sacramento, El Monte, Fresno April 2007 Sacramento, El Monte July 2007 Sacramento, El Monte August 2007 Sacramento, El Monte, Fresno

October 2007 Redding, San Diego, Sacramento, Fresno, El Monte, Oakland January - February

2008 Sacramento, Fresno, El Monte, Riverside, San Diego, El Centro, Redding, Berkeley

May – June 2008 El Monte, San Diego, El Centro, Riverside, San Jose, Redding, Sacramento, Fresno July 2008 Fresno, El Monte, Sacramento

July – August 2008 San Diego, El Centro, El Monte, Redding, San Jose, Sacramento, Riverside, Fresno, Arvin

2. Other Outreach Efforts

Due to the wide variety of industries that use on-r oad diesel-fueled vehicles and would be impacted by the proposed regulation, staff perfo rmed outreach to many different

industries and associations. Table III-2 lists com panies, associations, and organizations that were contacted by staff, notifying them of the proposed regulation. In addition, staff sent a mailing to nearly 300,000 owners of register ed diesel vehicles in California notifying them of the proposed regulation, how to p articipate in an online survey, and

how to obtain additional information about staff’s proposal (See Appendix C).-15-

Table III-2: Companies, Associations, and other Org anizations Contacted

Allied Weed Control

American Car and Bus Rental

Association

American Rental Association

American Bus Association American Trucking Association The Better World Group Blackmun Equipment and Vehicle Leasing Blagg Food Services Boyd Commodities

British Petroleum Bud Line Trucking

California Bus Association

California Cotton Ginners and Growers

Association California Dump Truck Owners

Association

California Farm Bureau California Forestry Association California Highway Patrol California Independent Oil Marketers

Association California School Transportation

Association California Trucking Association

California Tow Truck Association

Calstart

Cattlemen’s Association

CCEEB Central Valley Air Quality Coalition

Citrus Growers Association

Coca Cola Construction Industry Air Quality

Coalition Engine Manufacturers Association

Environmental Defense Fund Federal Express Ganduglia Trucking

Granite Construction

Gibbs Truck Centers

Holt International Logistics and Warehousing

Foundation

Interstate Truck Center

ITEC Jim Seal Consulting Services Kajai Trucking Lawson Drayage

Local Air Pollution Control Districts

Mid-Pacific Industries Mountain Valley Express National Association of Fleet Managers Nisei Farmers League Northern American Power Sweepers

Association Northern Refrigerated Transportation Owner-Operator Independent Drivers

Association
PACCAR Pacific Coast Companies

Pacific Gas and Electric Pape’ Machinery Pat Cramer Insurance Agency Pepsi

Port of Stockton

Ritchie Brothers Auctioneers Roadrunner Manufacturing

Save Mart

SelectTrucks Sempra

Sierra Research Storer Transportation Szeremi Sweeping Service

Teamsters Union

Union of Concerned Scientists

United Motorcoach Association

United Postal Service

West Coast Collaborative Westar Transport Western Firefighters Association Western Propane Gas Association Western Trucking School Western United Dairymen Association Yellow Roadway Corporation-16-

Staff also sent letters to diesel vehicle business owners in California (including truck stops and repair facilities throughout the Western United States) notifying them of the proposed regulation, and included a fact sheet so t hat they could notify their customers of the proposed regulation. Staff also provided AR B contact information (See Appendix C) so that additional information could be obtained . An existing toll free phone number, 866-6DIESEL, was expanded to assist affected stakeh olders in obtaining information about the proposed regulation and the survey by ena bling them to directly contact staff working on the proposed regulation.

Over the last two and a half years, staff held over 100 meetings with individual companies and organizations to discuss the proposed regulation. The meeting attendees ranged from just one company representati ve to over 100 attendees. This included over 50 meetings with individual companies to discuss how the proposed regulation will impact their businesses and to gath er additional information about their business operations. The meetings also provided st aff with additional information on how the proposed regulation will affect different t ypes of companies that operate heavyduty diesel vehicles. Staff met at various locatio ns throughout the state and also traveled to locations in other states, such as Flor ida, Arizona, Michigan, and Texas, to discuss the proposed regulation to fleet owners tha t travel through California.

Staff also made presentations at several trucking, motorcoach, and heavy equipment shows. Listed in Appendix C are presentation appea rances, the dates, names of companies or organizations, and locations where sta ff met with or made presentations about the proposed in-use on-road diesel vehicle re gulation.

C. Future Efforts

If the proposed regulation is adopted, staff plans to continue and expand its outreach

efforts to associations and other affected stakehol ders. Staff would also look to expanding its existing toll free phone number, 866- 6DIESEL, to assist stakeholders in obtaining information on how to comply with the reg ulation. During implementation,

staff would work with affected stakeholders to educ ate them on complying with the requirements of the regulation in the least costly manner. This effort would include holding public workshops, seminars, and individual meetings throughout the State. Staff would also look to strengthen enforcement and compliance to ensure there is a level playing field in California. Also, staff pla ns to create a reporting system and tools to assist fleets in determining what compliance opt ions are available and to develop their own compliance plans. Staff also plans to co ntinue to work with industry representatives and associations on additional ways to educate different stakeholders.

Staff would also build on the efforts already made to educate affected stakeholders about the in-use off-road regulation and would look to coordinate those efforts to ensure that owners of off-road and on-road equipment recei ve the information they would need about both regulations at the same time. Staff als o plans to track the implementation of the In-Use Off-Road Diesel Vehicle Regulation and u se that effort as a model for this regulation. This includes conducting training sess ions throughout the state and developing guidance material and fact sheets for af fected fleets. Staff also will-17-

consider forming an advisory group representing fle ets of all sizes and types, retrofit manufacturers and installers, consultants, engine m anufacturers, and other affected industry groups. The overall mission of the adviso ry group would be to enhance outreach efforts, training and implementation mater ials for the regulation, and assist staff in being aware of needs of affected stakehold ers and address specific issues.

D. References

ARB, 2001. California Air Resources Board, Policie s and Actions for Environmental Justice Staff Report. December 13, 2001.-18--19-

IV. N EED FOR E MISSION R EDUCTIONS

California’s mobile source emissions control progra ms have provided significant

statewide reductions in emissions of carbon monoxid e (CO), PM, sulfur oxides (SOx), and ozone precursors – NOx and volatile organic com pounds (VOCs, also called reactive organic gases or ROG). However, even with the success of existing programs, over 90 percent of Californians still experience un healthy levels of air pollution. Many

areas in the State still exceed state and federal a mbient air quality standards (AAQS); that is, they are non-attainment areas. Substantia l new reductions in mobile source

emissions are essential if the state is to attain a nd maintain the state and national AAQS. In addition, reducing diesel PM emissions fr om mobile sources is critical to reducing overall public exposure to ambient air tox ic contaminants.

A. Ozone and its Precursors

Ground level ozone is the primary constituent of sm og. Ozone is formed in the atmosphere as a result of reactions involving sunli ght and two classes of precursors. One class of precursors includes nitric oxide and n itrogen dioxide, collectively referred to as NOx, and the other precursors or ROG. The hi ghest levels of ozone are produced when both NOx and ROG emissions are present in sign ificant quantities on clear summer days. Control measures that reduce the emis sions of ozone precursors will

also reduce the ambient concentration of ozone.

1. Ambient Air Quality Standards for Ozone

State and federal AAQS have been established for oz one, as shown in Table IV-1. Currently, there are two State standards for ozone: a one hour standard which has been in effect since 1987, and a new 8 hour standard tha t became effective May 17, 2006.

This new 8 hour standard was based on the results o f an evaluation of the adequacy of the 1987 standard, as required by the Children’s En vironmental Health Protection Act (Senate Bill 25, Escutia, 1999). Senate Bill 25 (S B 25) directed the ARB, in consultation

with the Office of Environmental Health Hazard Asse ssment (OEHHA), to “review all existing health-based ambient air quality standards to determine whether these standards protect public health, including infants and children, with an adequate margin of safety.

In July 1997, U.S. EPA promulgated a new 8 hour ozo ne national standard (replacing the previous federal one hour standard) effective S eptember 1997, and in 2004 issued new area designation maps for the new standard. Th e new standard was set at a lower level to address the cumulative impact of ozone exp osure at lower levels for a longer period of time and is more protective of human heal th. The national one hour ozone standard was revoked effective June 15, 2005, for a ll areas except the 8 hour ozone non-attainment Early Action Compact areas that have deferred effective dates for their designations under the 8 hour ozone standard.-20-

Table IV-1: State and National Ozone Ambient Air Qu ality Standards 5

Averaging Time California Standard National Standard

1 hour 0.09 ppm (180 μg/m 3 ) -- 6

8 hour 0.070 ppm (137 μg/m 3 ) 0.08 ppm (157 μg/m 3 )

Because the new 8 hour State standard is more healt h protective than the one hour standard, it tends to determine the ozone area desi gnations. As a result, a large number of areas that were formerly designated as at tainment, unclassified, or

transitional-attainment for ozone based on the one hour standard are now classified as nonattainment based on the 8 hour standard (ARB, 20 06a).

In November 2006, the Board approved needed changes to the State area designations

based on the new 8 hour ozone standard. As shown i n Figure IV-1, most of California
does not meet the State’s AAQS for ozone. The Lake County Air Basin and in the North Coast Air Basin: Del Norte, Humboldt, Trinity, and Mendocino counties continue to be in attainment, but Sonoma County has changed from atta inment to nonattainment.

Figure IV-1 also shows that many areas in the state violate the federal 8 hour ozone standard. U.S. EPA has designated 15 areas in Cali fornia as nonattainment for the

federal 8 hour ozone standard. These areas include San Joaquin Valley, South Coast Air Basin, Sacramento region, San Diego, Ventura, t he San Francisco Bay Area, and a

number of air districts downwind of urban areas. F ederal law mandates development of SIPs documenting the actions the state will take to attain the standard.

Substantial new ozone precursor emission reductions are needed not only to achieve

attainment for the 8 hour state and federal ozone s tandards, but also to meet progress requirements for the ozone standard required under California law. The greatest

emissions reductions are needed in the South Coast and San Joaquin Valley Air Basins. Both the South Coast and San Joaquin Valle y air districts have requested

reclassification to “extreme” nonattainment for ozo ne, with an attainment date in 2024.

5 ppm= parts per million, μg/m 3 =micrograms per cubic meter

6 The U.S. EPA revoked the national 1 hour ozone sta ndard (0.120 ppm) effective
June 15, 2005

.-21- Figure IV-1: Federal and State Area Designations fo r Ozone

2. Ambient Air Quality Standards for Nitrogen Dioxi de (NO

2 )

The primary sources of nitrogen dioxide (NO 2 ) are internal combustion engines, both gasoline and diesel powered, and point sources such as power plants. NO 2 is also formed indirectly from emissions of nitric oxide (N O) that are converted photochemically

to NO 2 . Both NO and NO 2 are involved in a series of chemical reactions in the ambient air to produce additional pollutants such as ozone, nitric acid, nitrate aerosols, and other nitrogen containing compounds that are toxic. Of t he nitrogen oxide compounds (NOx) in the atmosphere, NO 2 represents the greatest risk to human health (Fram pton, 2000).

The U.S. EPA has established a national AAQS for NO 2 of 0.053 parts per million (ppm) averaged over one year. The ARB established a shor t term (one hour) standard for

NO 2 of 0.25 ppm, averaged over one hour. As required by SB 25, staff of ARB and

OEHHA reviewed the scientific basis for California’ s ambient standard for NO 2 to determine its adequacy to protect public health, in cluding the health of infants and children. Staff found that health effects may occu r at levels near the existing standard of 0.25 ppm, and recommended that the level of the California ambient air quality

standard for NO 2 be lowered to 0.18 ppm, averaged over one hour. O EHHA staff also recommended the addition of an annual average stand ard of 0.03 ppm (ARB, OEHHA, 2007).

Though the state and federal NO 2 standards are not exceeded, NO 2 is still a concern because it is a precursor to both ozone and particu late matter. Secondary ammonium

nitrate is formed from the oxidation NOx to nitric acid followed by the reaction of nitric acid with gaseous ammonia. The oxidation of NOx to nitric acid can occur during the daytime through reactions involving the hydroxyl (- OH) radical and during the nighttime-22-

through reactions with ozone and water. Secondary ammonium nitrate is a significant component of particulate emissions in the South Coa st. Therefore, reducing ammonium nitrate through controls on NOx sources is a critic al part of the State’s PM strategy.

3. Health Effects of Ozone

Ozone is a powerful oxidant that can have substanti al health impacts even at very low levels. Scientific studies show that exposure to o zone can result in reduced lung function, increased respiratory symptoms, increased airway hyperreactivity, and increased airway inflammation. Exposure to ozone i s also associated with premature death, hospitalization for cardiopulmonary causes, emergency room visits for asthma, and restrictions in activity (ARB, 2005a).

Short term exposure to high ambient ozone concentra tions have been linked to increased hospital admissions and emergency visits for respiratory problems (U.S. EPA, 2000). Repeated exposure to ozone can make people more susceptible to respiratory infection and lung inflammation and can aggravate p re-existing respiratory diseases, such as asthma. Prolonged (6 to 8 hours), repeated exposure to ozone can cause inflammation of the lung, impairment of lung defens e mechanisms, and possibly irreversible changes in lung structure, which over time could lead to premature aging of the lungs and/or chronic respiratory illnesses such as emphysema and chronic

bronchitis.

Those most susceptible to ozone health effects incl ude individuals exercising outdoors, children and people with pre-existing lung disease such as asthma, and chronic pulmonary lung disease. Children are more at risk from ozone exposure because they typically are active outside during the summer when ozone levels are highest. Also,

children are more at risk than adults because their respiratory systems are still developing. Adults who are outdoors and moderately active during the summer months,

such as construction workers and other outdoor work ers, also are among those most at risk. These individuals, as well as people with re spiratory illnesses such as asthma, especially asthmatic children, can experience reduc ed lung function and increased respiratory symptoms, such as chest pain and cough, when exposed to relatively low ozone levels during prolonged periods of moderate e xertion.

Reducing emissions of ozone precursors would reduce the prevalence of the types of respiratory problems associated with ozone exposure and would reduce hospital admissions and emergency visits for respiratory pro blems.

B. Particulate Matter

Ambient PM is a complex mixture of very small parti cles and liquid droplets in the air. Ambient PM is comprised of directly emitted PM such as dust and soot, known as primary PM, as well as secondary PM formed in the a tmosphere from the reactions of precursor gases, such as NOx, SOx, VOCs, and ammoni a (ARB, 2005b). NOx, SOx, and ammonia combine to form secondary ammonium nitr ate and sulfate. Volatile organic compounds (VOCs) can form secondary organic aerosols as well as participate-23-

in the production of secondary ammonium nitrate. P articles with diameter less than or equal to 10 microns are referred to as PM10 and par ticles up to 2.5 microns in diameter are referred to as PM2.5. Those particles with dia meter between 2.5 and 10 microns are referred to as coarse particles while PM2.5 are described as fine particles. PM2.5 is therefore a subset of PM10. In general, combustion processes form fine particles, while emissions from dust sources tend to be predominantl y coarse particles.

The health and environmental effects of PM are rela ted to the size of the particles. Fine particles can remain in the atmosphere for days to weeks and travel through the atmosphere for hundreds to thousands of kilometers, while coarse particles deposit to

the earth within minutes to hours and within 10 kil ometers from the emission source. Particles in the PM2.5 size range can penetrate int o the deepest regions of the lungs.

1. Ambient Air Quality Standards for PM

ARB and the U.S. EPA have adopted health based ambi ent air quality standards for PM10 and PM2.5. In September 2006, the U.S. EPA lo wered the short term ambient air quality standard for PM2.5 from 65 μg/m 3 to 35 μg/m 3 and revoked the annual standard for PM10. The annual average state standard for PM 10 was lowered in 2002 from 30 ug/m 3 to the current standard of 20 ug/m 3 after an evaluation by ARB and OEHHA

staff of the literature on health effects associate d with PM at or below 30 ug/m 3

.

Table IV-2 shows the current federal and state stan dards. California’s ambient air quality standards for PM are more stringent than th e national standards and, like the ozone standards, are intended to provide protection for the most sensitive groups of citizens, including infants and children, the elder ly, and persons with heart or lung

disease.

Table IV-2: State and National PM Ambient Air Quali ty Standards (μg/m 3 )

Standard California National

Annual Arithmetic Mean 20 -- 7 PM10 24 Hour Average 50 150

Annual Arithmetic Mean 12 15 PM2.5 24 Hour Average -- 8 35

Most of California is designated as non-attainment for the State PM10 standard. Currently, the only areas that attain the State PM1 0 standard are the Lake County Air Basin and Siskiyou County in the Northeast Plateau Air Basin. The portion of Sonoma County in the North Coast Air Basin has been recomm ended for redesignation as attainment for PM10 (ARB, 2006a). With respect to the national 24 hour PM10 standard, the San Joaquin Valley, the South Coast a nd several desert air basins are in non-attainment. As shown in Figure IV-2, most urba n areas and several isolated sub-

7 The U.S. EPA recently rescinded the annual PM10 st andard of 50 μg/m3

. 8 No separate State standard.-24-

areas are in nonattainment for the State PM2.5 stan dard. However, the only federal nonattainment areas for the national annual average PM2.5 standard are the San Joaquin Valley and the South Coast.

Figure IV-2: Federal and State Area Designations fo r PM2.5

Because of the State’s nonattainment status, PM emi ssions reduction remains one of California’s highest public health priorities. The nonattainment areas with serious problems will require substantial reductions of dir ectly emitted PM2.5 pollutants and PM2.5 precursors. Based on atmospheric modeling pe rformed by ARB staff, control of the emissions of ozone precursors (and in particula r NOx) may provide significant

benefit due to the reduction in ambient concentrati ons of nitrate – an important component of ambient PM2.5.

2. Health Effects of Particulate Matter

There are strong and consistent associations betwee n daily exposure to PM (measured as PM10, PM10-PM2.5, or PM2.5) and a range of adver se health outcomes. These include premature mortality, aggravation of respira tory and cardiovascular disease (as indicated by increased hospital admissions and emer gency room visits, school absences, work loss days, and restricted activity d ays), asthma exacerbation, chronic and acute bronchitis, and reductions in lung functi on. The more severe outcomes are experienced primarily by the elderly and people wit h pre-existing chronic heart and lung disease. Children under age five may also experien ce serious adverse outcomes from exposure to PM10, including premature mortality and hospitalization for respiratory conditions (ARB, OEHHA 2002).

Almost all of diesel PM is in the PM2.5 fraction. Because of its significance also as a toxic air contaminant, diesel PM is discussed separ ately later in this chapter.-25-

C. Toxic Air Contaminants

1. Components of Diesel Exhaust

Diesel engines emit a complex mixture of inorganic and organic compounds that exist in gaseous, liquid, and solid phases. The composition of this mixture will vary depending on engine type, engine age and horsepower, operatin g conditions, fuel, lubricating oil, and whether or not an emission control system is pr esent. The primary gas or vapor phase components of diesel exhaust include typical combustion gases and vapors such as CO, carbon dioxide, sulfur dioxide, NOx, ROG, wa ter, and excess air (nitrogen and oxygen).

Diesel exhaust contains over 40 substances (shown i n Table IV-3) that have been listed as TACs by the state of California and as hazardous air pollutants by U.S. EPA. Fifteen of these substances are listed by the International Agency for Research on Cancer (IARC) as carcinogenic to humans, or as a probable or possible human carcinogen (ARB, 1998). U.S. EPA also classified diesel exhau st as likely to be carcinogenic to humans by inhalation at environmental exposures (U. S. EPA, 2002).

Table IV-3: Substances in Diesel Exhaust Listed by California as Toxic Air

Contaminants

Acetaldehyde Formaldehyde
Acrolein Inorganic lead Aniline Manganese compounds Antimony compounds Mercury compounds

Arsenic Methanol Benzene Methyl Ethyl Ketone Beryllium compounds Naphthalene Biphenyl Nickel Bis[2-ethylhexyl]phthalate 4-Nitrobiphenyl 1,3-Butadiene Phenol Cadmium Phosphorus

Chlorine Polycyclic organic matter, including polycyclic aromatic hydrocarbons (PAHs) and their derivatives Chlorobenzene Propionaldehyde Chromium compounds Selenium compounds Cobalt compounds Styrene

Creosol isomers Toluene Cyanide compounds Xylene isomers and mixtures Dibutylphthalate o-Xylenes Dioxins and dibenzofurans m-Xylenes
Ethyl benzene p-Xylenes

2. Diesel Particulate Matter

Diesel PM is either directly emitted from diesel po wered engines (primary particulate matter) or is formed from the gaseous compounds emi tted by a diesel engine (secondary particulate matter). Diesel PM consists of both solid and liquid material and-26-

can be divided into three primary constituents: the elemental carbon fraction (ECF); the soluble organic fraction (SOF), and the sulfate fra ction.

Many of the diesel particles exist in the atmospher e as a carbon core with a coating of organic carbon compounds, or as sulfuric acid and a sh, sulfuric acid aerosols, or sulfate particles associated with organic carbon (Kittelson et al., 1999). Diesel PM can be distinguished from noncombustion sources of PM2.5 b y the high content of elemental carbon and the high number of ultrafine particles ( organic carbon and sulfate).

The SOF consists of unburned organic compounds whic h condense into liquid droplets

or are adsorbed onto the surfaces of the elemental carbon particles. Several components of the SOF have been identified as indiv idual TACs. The organic fraction of the diesel particle contains compounds such as a ldehydes, alkanes and alkenes, and high-molecular weight polycyclic aromatic hydrocarb ons (PAH) and PAH-derivatives. Many of these PAHs and PAH derivatives, especially nitro-PAHs, have been found to be potent mutagens and carcinogens. Nitro-PAH comp ounds can also be formed during transport through the atmosphere by reaction s of adsorbed PAH with nitric acid and by gas phase radical initiated reactions in the presence of NOx. Atmospheric reactions of these gas phase PAH and nitro-PAH deri vatives may lead to the formation of several mutagenic nitro-PAH, and nitro-PAH compo unds, including nitrodibenzopyranones, 2 nitroflouranthene and 2 ni tropyrene (Arey et al., 1988).

Almost all of the diesel particle mass is in the PM 10 fraction, and approximately 94 percent of the mass of these particles is less t han 2.5 microns in diameter (PM2.5). The particles have a very large surface area per un it mass which makes them excellent carriers for many of the organic compounds and meta ls found in diesel exhaust. Because of their small size, the particles are read ily respirable and can effectively reach the lowest airways of the lung along with the adsor bed compounds, many of which are known or suspected mutagens and carcinogens (ARB, 1 998).

Diesel PM was identified by the Board as a TAC in 1 998 after an extensive review and evaluation of the scientific literature by OEHHA an d subsequent review by the Scientific Research Panel (SRP). In 2001, the U.S. EPA identi fied diesel PM and diesel exhaust organic gases as a Mobile Source Air Toxic (MSAT) ( U.S. EPA, 2001).

D. Health Impacts of Exposure to Diesel Exhaust and Diesel PM

Diesel PM, with the associated organic compounds, p lays a key role in the carcinogenicity and chronic noncancer effects of ex posure to diesel exhaust. The findings from more than 30 human epidemiological st udies indicate that on average, long term occupational exposures to diesel exhaust were associated with a 40 percent increase in the relative risk of lung cancer (OEHHA , 1998). However, there is limited specific information that addresses the variable su sceptibilities to the carcinogenicity of diesel exhaust within the general human population and vulnerable subgroups, such as infants and children and people with pre-existing h ealth conditions. The carcinogenic potential of diesel exhaust was also demonstrated i n numerous genotoxic and-27-

mutagenic studies on some of the organic compounds typically detected in diesel exhaust (OEHHA, 1998).

Health impacts from exposure to the PM2.5 component of diesel exhaust have been calculated for California, using concentration-resp onse equations from several epidemiologic studies. Both mortality and morbidit y effects could be associated with exposure to either direct diesel PM2.5 or indirect diesel PM2.5, the latter of which arises

from the conversion of diesel NOx emissions to PM2. 5 nitrates. It was estimated that 2000 and 900 premature deaths resulted from long te rm exposure to either 1.8 μ g/m 3 of

direct PM2.5 or 0.81 μ g/m 3 of indirect PM2.5, respectively, for the year 2000 (Lloyd and Cackette, 2001). The mortality estimates are likel y to exclude cancer cases, but may include some premature deaths due to cancer, becaus e the epidemiologic studies did not identify the cause of death. Exposure to fine particulate matter, including diesel PM2.5, can also be linked to a number of heart and lung diseases. Another highly significant health effect of diesel exhaust exposur e is its apparent ability to act as an adjuvant in allergic responses and possibly asthma (Diaz-Sanchez et al., 1996, 1999, Takano et al., 1998). However, additional research is needed at diesel exhaust concentrations that more closely approximate curren t ambient levels before the role of diesel exhaust exposure in the increasing allergy a nd asthma rates is established.

Diesel PM is a major contributor to potential ambie nt risk levels. Using the cancer unit risk factor developed by OEHHA for the TAC program, it was estimated that for the year 2000, exposure to ambient concentrations of diesel (1.8 μ g/m 3 ) could be associated with a health risk of 540 potential cancer cases pe r million people exposed over a 70 year lifetime. This diesel PM cancer risk accou nted for approximately 70 percent of

the total risk associated with all known ambient ai r toxics as shown in Figure IV-3.-28-

Figure IV-3: State Average Potential Cancer Risk fr om Outdoor Ambient Levels of

Toxic Pollutants for the Year 2000 9,10,11

The South Coast Air Quality Management District (SC AQMD) Multiple Air Toxics Exposure Study II (MATES II) estimated that the ave rage potential cancer risk in the South Coast Air Basin from diesel PM was about 1,00 0 excess cancers per million people, or 71 percent of the average cancer risk fr om all air toxics in the South Coast Air Basin. For localized or near source exposures to diesel exhaust, such as might occur near busy roads and intersections, the potent ial risks will be much higher.

The Multiple Air Toxics Exposure Study III (MATES I II) has been completed and is a follow up to previous air toxics studies in the Bas in. The scope of the monitoring was from April 2004 to March 2006. The SCAQMD held a p ublic consultation meeting on August 26, 2008, to discuss the revised draft of th e MATES III report. The final report has not been posted, but the Draft Final Report (Ju ly, 2008) is available at: http://www.aqmd.gov/prdas/matesIII/MATESIIDraftFina lReportJuly2008.html

.

1. Health Impacts of Exposure to Diesel PM from On- Road Diesel Vehicles

A substantial number of epidemiologic studies have found a strong association between exposure to ambient PM and adverse health effects ( ARB, OEHHA, 2002). Staff quantified seven non-cancer health impacts associat ed with diesel PM emissions from

9 ARB, 2000.

10 Diesel exhaust PM10 potential cancer risk based o n 2000 emission inventory estimates. All other potential cancer risks based on air toxics ne twork data. Used 1997 data for paradichlorobenzene. Used 1998 monitoring data for all others. Assumes measured concentrations are equivalent to annual average con centrations and duration of exposure is 70 years, inhalation pathway only.

11 Includes carbon tetrachloride (4 percent), formalde hyde (2.5 percent), hexavalent chromium (2.2 percent), para-dichlorobenzene (1.2 percent), acetaldehyde (0.7 percent), perchloroethylene (0.7 percent), and methylene chlo ride (0.3 percent). Diesel Exhaust PM 10 71% 1,3

- Butadiene

10% Benzene

8% Other Toxics

11%-29-

on-road diesel engines in California in 2008. The non-cancer health effects include premature death, asthma attacks, acute bronchitis, hospital admissions, work loss days, and minor restricted activity days. Staff also qua ntified the non-cancer health impacts associated with exposures to diesel PM resulting fr om on-road diesel vehicle activities in an urban study area in Southern California.

a) Statewide Non-Cancer Health Impacts

The health outcomes take into account a number of f actors including the relationship between air pollutant concentrations and the effect found in health studies, the relative contribution of emission sources to the pollutant i n a region, and the population in a region. The regional impacts, by air basin, were a dded together to provide a statewide total. Appendix D provides a description of the me thodology used to quantify the health impacts reported in this section.

Staff estimates that in the year 2008, approximatel y 4,500 premature deaths can be

associated with the estimated baseline emissions fr om in-use on-road diesel vehicles subject to the proposed regulation. Table IV-4 sho ws the range of cases statewide in 2008 for each health impact evaluated by staff. As shown, staff estimates that there would be about 1,210 hospital admissions due to res piratory and cardiovascular causes; 71,000 cases of asthma-related and other lo wer respiratory symptoms; 450,000 days of work loss; and 2,600,000 minor rest ricted activity days. The analysis included health impacts of direct diesel PM and ind irect diesel PM – nitrates formed from precursor NOx emitted by on-road diesel engine s. The impacts of direct and indirect sources of PM are listed separately in Tab le IV-4. The health impacts of NOx as a precursor to ozone are not included in the est imates. Because only a subset of health outcomes was considered, the estimates in Ta ble IV-4 should be considered an underestimate of the total public health impact of diesel PM exposure. Appendix D provides a description of the methodology used to g enerate these estimates.

The statewide health impacts from in-use on-road di esel vehicles are significant. To put the magnitude of the impact of on-road diesel vehic les covered by the proposed regulation in context, the number of premature deat hs estimated for 2008 is similar to

the number of deaths due to environmental tobacco s moke (secondhand smoke) and to

the number of deaths due to motor vehicle accidents . Secondhand smoke is estimated to cause about 4,000 premature deaths per year in C alifornia (ARB, 2006b), while motor vehicle accidents killed 4,236 people in California in 2006 (NCSA, 2007).-30-

Table IV-4: Statewide Health Impacts Associated wit h In-Use On-Road Diesel Vehicles (Baseline Year 2008)

Endpoint Pollutant Number of Cases (Mean) Range (95% C.I.)

PM 1,100 330 – 2,000
NOx 3,400 1,000 – 6,000 Premature Mortality
Total 4,500 1,400 – 8,000

PM 21 8 – 35

NOx 560 320 – 830 Hospital admissions (Respiratory) Total 590 330 – 865

PM 90 47 – 130

NOx 530 330 – 780 Hospital admissions (Cardiovascular) Total 620 380 – 910
PM 18,000 6,900 – 28,000
NOx 53,000 21,000 – 83,000 Asthma & Lower Respiratory Symptoms Total 71,000 28,000 – 111,000
PM 1,500 0 – 3,200
NOx 4,200 0 – 8,700 Acute Bronchitis
Total 5,700 0 – 12,000
PM 110,000 93,000 – 130,000
NOx 340,000 290,000 – 390,000 Work Loss Days
Total 450,000 380,000 – 520,000
PM 640,000 520,000 – 760,000
NOx 2,000,000 1,600,000 – 2,300,000 Minor Restricted Activity Days Total 2,600,000 2,100,000 – 3,100,000

b) Localize Non-Cancer Health Impacts from In-Use O n-Road Diesel

Vehicles

To evaluate the health impacts from in-use on-road heavy-duty diesel vehicles at a local level, staff performed a localized urban study in a nd around the city of Commerce (Commerce Study). This study area was a 10 mile by 10 mile region with Commerce as

its center.

This study area was selected due to the large numbe r of freeways and major arterials in the area which historically have had high volumes o f on-road diesel vehicle traffic. This area contains a broad mix of land uses including in dustrial; light industrial; commercial; and residential and about 1.1 million people reside in the study area. The expected concentrations for the vehicle activity are high en ough and there is a sufficiently large exposed population to allow quantification of the n on-cancer health impacts of direct diesel PM in the urban study area.

Vehicle speed, vehicle miles traveled (VMT), and em ission factors were used to

estimate emissions from in-use on-road diesel vehic les. Dispersion modeling was used-31-

to estimate the ambient concentration of diesel PM resulting from in-use on-road diesel vehicles travelling on the freeways and local stree ts within the modeling domain. For this study, ARB staff selected the U.S. EPA’s appro ved air dispersion model AERMOD to estimate the impacts associated with diesel PM e missions on major freeways, as well as major and minor arterials within the domain. AE RMOD has been successfully used in many applications including several recent healt h risk assessments of rail yards located in California. A detailed description of t he model domain, source characterization, and meteorological data used are listed in Appendix E.

As shown in Table IV-5 below, staff estimates that in 2003, approximately 42 premature deaths were associated with exposure to the baselin e uncontrolled emissions of directly

emitted diesel PM from in-use on-road diesel vehicl es operating in the study area. Table IV-5 shows the range of cases for this area i n 2003, for each health impact evaluated by staff. As shown, staff estimates that there would be about 32 hospital admissions due to respiratory and cardiovascular ca uses; 1,400 cases of asthmarelated and other lower respiratory symptoms; 7,400 days of work loss; and 43,000 minor restricted activity days. The health impacts of indirect PM (nitrates formed from precursor NOx emissions) and NOx as a precurso r to ozone are not included in the estimates. Because only a subset of health outcome s was considered, the estimates in

Table IV-5 should be considered an underestimate of the total public health impact in this area from diesel PM exposure.

Table IV-5: Non-Cancer Health Impacts Associated wi th In-Use On-Road Diesel Vehicles Operating in the Southern California Study Area (2003 Emissions)

Endpoint Number of Cases per Year (Mean) Number of Cases per Year

(Range: 95% Confidence Interval) Premature Mortality 42 12 – 72 Hospital admissions (Respiratory and Cardiovascular) 32 13 – 50

Asthma – Related & Lower Respiratory Symptoms 1,400 540 – 2,200

Acute Bronchitis 120 0 – 260 Work Loss Days 7,400 6,200 – 8,900

Minor Restricted Activity Days 43,000 36,000 – 50,000

c) Localize Potential Cancer Risk from Exposure to Diesel PM

Emissions from On-Road Diesel Vehicles

As part of the Commerce Study, staff estimated the localized potential cancer risk in 2003 from exposure in this community to ambient lev els of directly emitted diesel PM

emitted from on-road diesel vehicles that would be subject to the proposed regulation. The results from this analysis provide a quantitati ve estimate for this community, as well-32-

as a qualitative indicator for other similar urban areas. The Commerce study area was selected so staff could use transportation data pro vided from the Southern California Association of Government (SCAG).

The potential cancer risks were estimated using sta ndard risk assessment procedures based on the annual average concentration of diesel PM predicted by the model and a health risk factor (referred to as a cancer potency factor) that correlates cancer risk to the amount of diesel PM in the air. The methodolog y used to estimate the potential cancer risks assumes that an individual is exposed to an annual average concentration of a pollutant continuously for 70 years. 12 The potential cancer risk is expressed as chances per million people. Appendix E provides th e details of the scenarios and the methodology used to determine the risk.

A cancer risk of 10 in a million is the most common ly used threshold above which facilities are required by the Air Toxics Hot Spots Information and Assessment Act to notify all exposed persons (ARB, 2005c). By compar ison, an estimated cancer risk of 500 per million occurs at approximately 500 to 5,00 0 feet from the edges of the major freeways. At about a quarter to several miles from the edges of the major freeways, the estimated cancer risks drop to about 200 in a milli on.

The overall average potential cancer risk within th e study area is about 375 in a million. This represents a significant portion of the overal l estimated regional potential risk level in the South Coast Air Basin, which was estimated t o be about 900 to 1000 in a million for all diesel PM emissions in 2000 (SCAQMD 2000).

E. Diesel PM Risk Reduction

To begin to address the adverse health impacts for diesel PM, in 1998, the Board

identified diesel PM as a toxic air contaminant and in 2000 adopted the Risk Reduction

Plan to Reduce Particulate Matter Emissions from Di esel-Fueled Engines and Vehicles (Diesel Risk Reduction Plan or RRP) (ARB, 2000). T he Plan identified Airborne Toxic Control Measures (ATCMs) and regulations that would set more stringent exhaust emission standards for new diesel-fueled engines an d vehicles, establish retrofit requirements to reduce emissions from existing engi nes, vehicles, and equipment, and require the sulfur content of diesel fuel to be red uced to no more than 15 parts per million by weight (ppmw). The new sulfur standard was needed to enable the effective performance of the emission control technologies. The goal of the RRP was to reduce the risk of exposure to diesel PM by 75 percent by 2010, and by 85 percent by 2020, from the 2000 baseline. The scope of the RRP was b road, addressing all categories of engines, both mobile and stationary, and included c ontrol measures for private and public fleets of on-road and off-road diesel vehicl es.

12 According to the OEHHA Guidelines, the relatively h ealth-protective assumptions incorporated into the Tier 1 risk assessment make it unlikely th at the risks are underestimated for the general population.-33-

Since 2000, the Board has adopted a series of regul ations to reduce risk from diesel particulate matter emissions. The regulations list ed below have either been structured to require that each engine be equipped with the be st available control technology (BACT) to reduce diesel PM emissions or require tha t fleets meet increasingly stringent fleet average emission rates.

• Solid waste collection vehicles (ARB, 2003a);

• Transit buses (ARB, 2005d);

• Transit fleet vehicles (ARB, 2005e);

• On-road public fleets and utility fleets (ARB, 200 5f);

• Cargo handling equipment at ports and intermodal r ail yards (ARB, 2005g);

• Stationary diesel engines (ARB, 2003b);

• Portable equipment (ARB, 2004);

• Ship auxiliary engines (ARB, 2005h);

• Transport refrigeration units (ARB, 2003c);

• School bus idling (ARB, 2002);

• Commercial vehicle idling (ARB, 2005i);

• In-use off-road diesel vehicles (ARB, 2007a);

• Commercial harborcraft (ARB, 2007b);

• Drayage trucks (ARB, 2007c);

Diesel engines have long useful lives with the capa bility of being rebuilt several times. Retrofit programs and the accelerated replacement o f older engines with newer cleaner engines must play an important role in achieving th e ARB’s near term and long term air quality goals. The proposed regulation incorporate s elements of both approaches to cleaning up the in-use on-road diesel fleet.

F. State Implementation Plan Commitments

In addition to playing a significant role in contri buting to adverse health impacts to California’s, diesel engines, and in particular on- road vehicles, are a significant contributor to poor air quality throughout the stat e. Fifteen areas in California are designated nonattainment of the federal ozone stand ard, including South Coast Air Basin, San Joaquin Valley, Sacramento region, San D iego, Ventura, and a number of

air districts downwind of urban areas. In addition , the South Coast Air Basin and the San Joaquin Valley are designated nonattainment of the federal PM2.5 standard. Federal law mandates the development of SIPs docume nting the actions the state will take to attain the federal air quality standards in these areas.

In September 2007, ARB adopted a SIP committing the State to develop measures to

achieve emission reductions from sources under Stat e regulatory authority. While multiple areas across the State exceed federal air quality standards, air quality in the South Coast and the San Joaquin Valley poses the gr eatest challenge and defines the-34-

amount of reductions needed. Reductions are needed by 2014 to meet the PM2.5 attainment deadline and by 2023 to meet the ozone a ttainment deadline. An interim target date of 2017 was adopted by ARB for the San Joaquin Valley as part of an effort to accelerate progress toward ozone attainment befo re 2023.

The largest share of new emission reductions in the 2007 SIP is expected from in-use on-road diesel vehicles. In 2014, reductions from both NOx and PM2.5 are needed to meet the PM2.5 standard. In 2023 and 2017, the foc us from an ozone air quality standard attainment perspective is NOx. Therefore, ARB adopted 2014 reduction commitments for both NOx and PM2.5, and NOx commitm ents in 2017, 2020 and 2023. As part of the overall SIP commitment, ARB staff is also obligated to bring measures to

the Board for its consideration. Board considerati on of this proposed is one of these commitments. ARB staff has used the targeted reduc tions estimated in the SIP as the goal for this rulemaking.

G. References

ARB, 1998

. California Air Resources Board. Report to the Air Resources Board on the Proposed Identification of Diesel Exhaust as a Toxi c Air Contaminant

. Appendix III, Part A. Exposure Assessment. As Approved by the S cientific Review Panel on April 22, 1998. http://www.arb.ca.gov/toxics/id/summary/diesel_a.pd f

ARB, 2000. California Air Resources Board. Risk Reduction Plan to Reduce Particulate Matter Emissions from Diesel-Fueled Engines and Veh icles . October 2000, p. 15 http://www.arb.ca.gov/diesel/documents/rrpapp.htm

ARB, 2002. California Air Resources Board. Staff Report: Airborne Toxic Control Measure to Limit School Bus Idling and Idling at Sc hools. October 2002.

ARB, 2003a. California Air Resources Board. Staff Report: Proposed Diesel Particulate Matter Control Measure For On-Road Heavy-Duty Resid ential and Commercial Solid

Waste Collection Vehicles. June 6, 2003.

ARB, 2003b. California Air Resources Board. Staff Report: Airborne Toxic Control Measure for Stationary Compression-Ignition Engines . September 2003.

ARB, 2003c

. California Air Resources Board. Staff Report: Airborne Toxic Control Measure for In-Use Diesel-Fueled Transport Refriger ation Units (TRU) and TRU Generator Sets, and Facilities Where TRUs Operate. October, 28 2003.

ARB, 2004. California Air Resources Board. Staff Report: Airborne Toxic Control Measure for Diesel-Fueled Portable Engines. January 2004.

ARB, 2005a. California Air Resources Board. Revie w of the California Ambient Air Quality Standard for Ozone. Staff Report, Initial Statement of Reasons for Proposed Rulemaking. October, 2005 http://www.arb.ca.gov/research/aaqs/ozone-rs/revstaff/rev-staff.htm#Summary-35-

ARB, 2005b. California Air Resources Board. Characterization of Ambient PM10 and PM2.5 in California. Technical Report . June 2005. http://www.arb.ca.gov/pm/pmmeasures/pmch05/stateove r05.pdf

ARB, 2005c. California Air Resources Board. "Hot Spots" Public Notification, District Prioritization Scores and Risk Threshold Values, La st Updated on August 25, 2005

. http://www.arb.ca.gov/ab2588/district_levels.htm

ARB, 2005d. California Air Resources Board. Staff Report: Proposed Amendments to

the Exhaust Emission Standards For 2007-2009 Model- Year Heavy Duty Urban Bus Engines. July 29, 2005.

ARB, 2005e. California Air Resources Board. Staff Report: Proposed Modifications to the Fleet Rule for Transit Agencies and New Require ments For Transit Fleet Vehicles. January 5, 2005.

ARB, 2005f. California Air Resources Board. Staff Report: Proposed Diesel Particulate Matter Control Measure For On-Road Heavy-Duty Diese l-Fueled Vehicles Owned Or Operated By Public Agencies and Utilities. October 25, 2005.

ARB, 2005g. California Air Resources Board. Staff Report: Regulation for Mobile Cargo Handling Equipment at Ports and Intermodal Ra il Yards. October 2005.

ARB, 2005h

. California Air Resources Board. Staff Report: Proposed Regulation For Auxiliary Diesel Engines and Diesel-Electric Engine s Operated on Ocean-Going

Vessels Within California Waters and 24 Nautical Mi les of the California Baseline.

October 2005.

ARB, 2005i. California Air Resources Board. Staff Report: Notice of Public Hearing to Consider Requirements to Reduce Idling Emissions Fr om New and In-Use Trucks, Beginning in 2008. September 1, 2005.

ARB, 2006a. California Air Resources Board. Area Designations and Maps 2006. Staff Report, Initial Statement of Reasons for Prop osed Rulemaking

, September 29, 2006. http://www.arb.ca.gov/regact/area06/adisor.pdf

ARB, 2006b. California Air Resources Board . Environmental Tobacco Smoke: A Toxic

Air Contaminant. October 18, 2006. ftp://ftp.arb.ca.gov/carbis/regact/ets2006/isor.pdf

ARB, 2007a. California Air Resources Board. Staff Report: Proposed Regulation for

In-Use Off-Road Diesel Vehicles. April 2007. http://www.arb.ca.gov/regact/2007/ordiesl07/ordiesl 07.htm-36-

ARB, 2007b. California Air Resources Board. Staff Report: Proposed Regulation for

Commercial Harbor Craft . September 2007. http://www.arb.ca.gov/regact/2007/chc07/chc07.htm

ARB, 2007c. California Air Resources Board. Staff Report: Regulation to Reduce Emissions from Heavy-Duty On-Road Drayage Trucks in California Port and Intermodal

Rail Service . October 2007. http://www.arb.ca.gov/regact/2007/drayage07/drayage 07.htm

ARB, OEHHA, 2002. California Air Resources Board a nd Office of Environmental

Health Hazard Assessment. Staff Report: Public Hearing to Consider Amendment to the Ambient Air Quality Standards for Particulate M atter and Sulfates . May 3, 2002. ftp://ftp.arb.ca.gov/carbis/regact/aaqspm/isor.pdf

ARB, OEHHA, 2007. California Air Resources Board a nd Office of Environmental

Health Hazard Assessment. Review of the Ambient Air Quality Standard for Nitr ogen Dioxide. Staff Report January 5, 2007. http://www.arb.ca.gov/research/aaqs/no2- rs/no2-doc.htm#TechSuppDoc

Arey J., Zeilinska, B., Atkinson, R. and A.M. Winer , 1988. Formation of Nitroarenes During Ambient High-Volume Sampling. Environ. Sci. Technol., 22:457-462.

Diaz-Sanchez et al., 1999. Diaz-Sanchez, D.; Garci a, M.P.; Wang, M.; Jyrala, M.; Saxon, A. Nasal Challenge with Diesel Exhaust Particles Ca n Induce Sensitization to a Neoallergen in the Human Mucosa ; J. Allergy Clin. Immunol. 1999, 104: 1183-1188.

Diaz-Sanchez et al., 1996. Diaz-Sanchez, D.; Tsien , A.; Casillas, A.; Dotson, A.R.; Saxon, A. Enhanced Nasal Cytokine Production in Human Bein gs after in vivo Challenge with Diesel Exhaust Particles; J. Allergy Clin. Immunol. 1996, 98, 114-123.

Frampton, 2000. Frampton, Mark W. Prepared for Ca lifornia Air Resources Board,

California Office of Environmental Health Hazard As sessment. Nitrogen Dioxide: Evaluation of Current California Air Quality Standa rds with Respect to Protection of

Children . September 1, 2000.

Kittelson et al., 1999. Kittelson, D.B., Arnold, M ., Watts, W.F. Review of Diesel Particulate Matter Sampling Methods. Final Report . University of Minnesota, 1999. www.me.umn.edu/centers/cdr/Proj_EPA.html

.

Lloyd, A.C.; Cackette, T.A., 2001. Diesel Engines: Environmental Impact and Control ; J Air Waste Manage. Assoc. 2001, 51: 809-847 http://www.arb.ca.gov/research/seminars/lloyd/AWMA2 001/JAWMADieselCriticalRevie w.pdf

NCSA, 2007. National Center for Statistics and Ana lysis. 2006 Traffic Safety Annual Assessment – A Preview. July 2007. http://www-nrd.nhtsa.dot.gov/pubs/810791.pdf-37-

OEHHA, 1998. Office of Environmental Health Hazard Assessment. Proposed

Identification of Diesel Exhaust as a Toxic Air Con taminant: Health Risk Assessment for

Diesel Exhaust

; Appendix III, Part B. Sacramento, CA, 1998

SCAQMD 2000, Multiple Air Toxics Exposure Study in the South Coast Air Basin (MATES-II), Final Report, Chapter 5. March, 2000)

Takano et al., 1998. Takano, H.; Ichinose, T.; Miy abara, Y.; Shibuya, T.; Lim, H.B.; Yoshikawa, T.; Sagai, M., 1998. Inhalation of Diesel Exhaust Enhances Allergen-rela ted Eosinophil Recruitment and Airway Hyperresponsivene ss in Mice ; Toxicol. Appl. Pharmacol. 1998, 150, 328-337.

U.S. EPA, 2000. United States Environmental Protec tion Agency, Assessment and Standards Division, Office of Transportation and Ai r Quality. Regulatory Impact Analysis: Heavy-Duty Engine and Vehicle Standards and Highway Diesel Fuel Sulfur Control Requirements . EPA420-R-00-026, December 2000, Chapter II.

U.S. EPA, 2001. United States Environmental Protec tion Agency. Control of Emissions of Hazardous air Pollutants from Mobile Sources; Fi nal Rule (66FR 17230 – 17273, March 29, 2001.

U.S. EPA, 2002. United States Environmental Protec tion Agency. Office of Research and Development, Health Assessment Document for Diesel Engine Exhaus t

. EPA600/8-90/057F, May 2002.-38--39-

V. V EHICLE D ESCRIPTIONS AND M ANUFACTURERS

This chapter describes the diverse array of on-road vehicles typically used by businesses operating in California and that would b e subject to the proposed regulation. It includes tables of engine, truck and bus manufac turers, descriptions, and photographs of various vehicle types with a range o f body types.

A. Overview

Trucks and buses are used to both transport both pe ople and goods and to provide services. They are used in almost every industry s ector. Trucks and buses are configured differently for each application, thereb y optimizing operational and fuel efficiency. Trucks and tractors (trucks designed s pecifically for pulling or hauling trailers) are configured differently depending on i f they are being used to support a particular vocation or to primarily transport goods

.

There are two basic truck configurations: tractor- trailer combinations and single unit trucks. Within each of these configurations, the v ehicles will be designed differently depending on how they will be used. For example, t ractors used to transport heavy equipment will have 500 to 600 horsepower (hp) engi nes, heavy frame construction, heavy front axles, 18 speed transmission, and tande m rear axles. The gross combination weights of these vehicles are 80,000 po unds or more. This compares with a standard tractor used locally to deliver beverage s, which will have a 200 hp engine, a light frame configuration, single rear axle, and a 6 speed transmission.

Single unit vehicles range in weight class from 14, 000 to well over 33,000 pounds. In addition, single unit trucks are generally sold as a cab and chassis, and can have hundreds of different bodies attached to transport dry goods, liquids, or perform a given service function such as cleaning out sewers, servi cing equipment, or feeding cattle. Some single unit vehicles are also configured to ca rry its load and pull a trailer.

Similarly, buses range widely in size and configura tion generally based on the number of passengers that can be carried. Shuttle buses c arry a small number of passengers and operate locally, whereas motorcoaches are built to carry large number of passengers and travel longer distances.

B. Vehicle Classes

On-road vehicles are grouped by their gross vehicle weight rating (GVWR), ranging

from class 1 to class 8. Class 1 to 3 are consider ed light-duty vehicles and weigh less than 14,000 pounds. Class 4 to 8 are vehicles with GVWR over 14,000 pounds and are subject to the on-road proposed regulation. In the trucking industry, GVWR is the gross vehicle weight (GVW) of a single unit truck plus it s cargo weight or the GVW of a tractor plus the rated pulling capacity. These classificat ions are used consistently throughout the industry. Table V-1 shows the weight classific ations as defined by the U.S. Department of Transportation (DOT).-40- Table V-1: Weight Classification Defined by U.S. DO T

Weight Class Minimum

GVWR (lbs) Maximum

GVWR (lbs) VIUS*

Category Common

Category

Class 1 6,000 Light-duty Light- Duty

Class 2 6,001 10,000 Light-duty Light-Duty

Class 3 10,001 14,000 Medium-duty Light-Duty Class 4 14,001 16,000 Medium-duty Medium-Duty Class 5 16,001 19,500 Medium-duty Medium-Duty Class 6 19,501 26,000 Light-heavy Medium-Duty Class 7 26,001 33,000 Heavy-heavy Heavy-Duty Class 8 33,001 Heavy-heavy Heavy-Duty

*VIUS 2002 Vehicle Inventory and Use Survey

C. Engine and Vehicle Manufacturers

1. On-Road Diesel Engines Manufacturers

On-road diesel engines are manufactured globally fo r various duty ratings by different manufacturers. Some engine manufacturers produce e ngines for their own vehicles,

but most sell them to other vehicle manufacturers. Engine manufacturers certify specific engine families to meet California engine emission standards within a specific service class or duty rating that is slightly diffe rent than the DOT vehicle rating. The engine service class used by vehicles rated greater than 14,000 pounds GWVR is the heavy-duty service class. The heavy-duty service cl ass has three subclasses. Light heavy-duty engines are certified for use in vehicle s up to 19,500 pounds GVWR, medium heavy-duty engines are certified for use in vehicles up to 33,000 pounds GVWR and heavy-heavy duty engines are certified for use in vehicles above 33,000 pounds. Operation of engines in these weight range s ensures that the engine emissions meet California’s engine exhaust emission standards. Table V-2 shows a list of common on-road engine manufacturers.

Table V-2: Common Manufacturer of On-Road Engines

Caterpillar Cummins Daimler Benz

Detroit Diesel GMC Ford Hino Hyundai International

Isuzu Mack Mitsubishi

Navistar Volvo

In 2005 (the most recent year for which data is ava ilable), Caterpillar, Cummins and Detroit Diesel accounted for the majority of the en gines produced to power class 8 vehicles. This is shown below in Figure V-1.-41- Figure V-1: Market Shares of Diesel Engine Manufact urers

Cummins

25% Caterpillar

29% Mack

& Volvo

26%

Detroit

Diesel

20%

As can be seen in Figure V-1, their respective mark et shares were 29 percent, 25 percent, and 20 percent (Diesel Progress, 2005). H owever, none of these engine manufacturers manufacture vehicles. The remaining market share of 26 percent was primarily divided between Mack and Volvo trucks who utilize their own engine in the vehicles they manufacture. Also small percentage o f Daimler Benz diesel engines were used in Freightliner and Sterling class 8 trucks.

For class 4 through 7 vehicles, it is much more com mon for truck manufacturers to produce their own engines. Common class 4 through 7 truck manufacturers that produce their own engines include Ford, GMC, Hino, Isuzu, Mitsubishi, and

International.

2. On-Road Vehicle Manufacturers

Presently, nearly 75 percent of vehicle manufacture rs purchase engines from engine manufacturers, such as Caterpillar and Cummins, to fit their applications (Ward’s, 2007). Truck and bus manufacturers design and manu facture their vehicles by integrating the engines into the frame of a complet e vehicle or into a cab and chassis configuration with no bed or body attached.

All vehicle manufacturers produce different body ty pes for a variety of applications. Most new tractors are sold with a wide range of spe cial order options for the buyer to optimize the tractor for its intended application. In contrast, single unit trucks are primarily manufactured in somewhat more standardize d cab and chassis configurations where the buyers select the configuration that most closely meets their needs, and add on the aftermarket bed and other equipment for voca tional applications.

Many vehicle manufacturers tend to specialize in a particular weight class range or body style. For example, Ford, GMC and Mitsubishi produ ce light- to medium-duty trucks,-42-

while Freightliner and Peterbilt primarily offer he avy-duty (class 8) tractors. Table V-3

list the common manufacturers of trucks and tractor s.

Table V-3: Common Manufacturers of Trucks and Tract ors

Amertek Autocar Brockway Capacity
Champion Chevrolet Diamond Reo Dodge
Eagle Ford Freightliner GMC

Hino Hyundai International Isuzu
Kenworth Lodal Mack Magnum

Marmon Mercedes-Benz Mitsubishi Fuso Nissan
Oshkosh Ottawa Peterbilt Sterling

UD Volvo Western Star White

Similarly, bus manufacturers also service particula r market segments. For example, Prevost and MCI primarily manufacture motorcoaches, Ford and GMC manufacture various shuttle buses, and Bluebird specializes in producing school buses. Table V-4

list the common manufacturer of buses and shuttle b uses.

Table V-4: Common Manufacturers of Buses and Shuttl e Buses

Bluebird Carpenter Champion

Collin Eldorado National Federal Ford Freightliner Gillig

Girardin Minibus Glaval Bus GMC

Gosher Coach Grumman IC International Krystal Koach MCI Millennium New Flyer North American Bus

Nova Bus Orion Prevost

Setra Starcraft Thomas

TMC Trident Van Hool Williams Bus & Specialty World Trans

D. Vehicle Types

There are thousands of vehicle types that will be s ubject to the proposed regulation. The following section provides an overview of a lim ited number of common vehicle types affected. Typical prices for new and used ve hicles described below are provided in Appendix J.

1. Overview of Conventional Trucks

a) Over the Road Tractor

The most common tractors have either single or tand em rear axles. A single drive axle tractor is often used to pull shorter trailers or l ighter loads and is easier to maneuver.-43-

Day cabs are mostly single axle vehicles, and frequ ently used for shorter trips that can be completed during the course of a day. Tandem ax le tractors are commonly used in long haul operations and for transporting heavier l oads. Tractors with sleeper and tandem axles are predominately used for longer trip s that require overnight stays. As conventional tractors age, they are typically sold into the secondary truck market. Here, they may be used locally or modified to become sing le unit vehicles with an attached

bed.

Most conventional tractors are optimized for specif ic tasks, i.e., meaning that for a specific application like long haul, the tractor ha s a properly sized engine and drive train. The performance of a tractor can be altered by chan ging the engine size, and by changing the transmission and rear differential gea r ratios. For example, a “heavy hauler”, which hauls heavy loads at low speed, may trade speed for load carrying power by utilizing a lower gearing transmission and highe r differential ratio without modifying the engine size. Various engine and drive train co mbinations allow the conversion of tractors from one application to another.

b) Cab Over

A cab over is a body style of tractor that has a vertical front or “flat face”, with the cab of the truck above the engine. The cab over design makes the tractor shorter than a conventional design where the engine is placed in front of the cab. Typically, the cab over is used in certain operations because it allows the operator to tow a longer trailer or have a longer cargo area while providing the same overall length as a conventional tractor trailer, thereby satisfying California vehicle length law restrictions. Compared to a conventional tractor, the cab over has the advantage of being more maneuverable. However, it also has disadvantages in that the enti re cab needs to be tilted forward to access the engine, and it is somewhat more difficul t to enter and exit. Demand for cab Cab Over Tractor Tandem Axle Tractor with Sleeper Single Axle Day Cab-44-

over tractors in the United States has declined to a point where truck manufacturers ceased production of cab over tractors in 2006.

(1) Glider Kit for Cab Over

A glider kit is a complete assembly of cab, front a xle, wheels, and frame, plus all standard equipment (less the engine) that can be or dered from the manufacturer. The power train components and a new or remanufactured engine will need to be installed to make the complete vehicle. In some cases, the m anufacturer will install the engine if it is purchased at the same time as the glider kit. Since the glider kit is not considered a new truck, the kit is exempt from federal excise ta x.

c) Cab and Chassis

The cab and chassis is a single unit truck without a bed or body attached. Cab and chassis are available in all weight classes. While nearly all single unit trucks have fairly simple bolt-on bodies that are supported by the tru ck frame, there are literally thousands of different body types. In some applications the body will be replaced at least once

before the end of the truck’s useful life. In othe r instances, the body may be transferred

to another truck.

The truck bed or body may vary from a simple flatbe d or dry van (as described later in this chapter) with no moving parts to a body attach ment with a tilt bed or having other Cab and Chassis Box Van Body

Cab and Chassis with Dump Body Cab and Chassis with Tank Body-45-

moving parts such as a live floor or boom for lifti ng cargo. Power to operate the body is typically provided through a power take off (PTO) s ystem (which draws power from the vehicles’ main engine), which is a fairly common ac cessory to the existing transmission for most trucks. In only rare instances, such as w ith cement mixers, is the body welded to the frame for added strength.

Cab and chassis trucks also serve as the foundation for some manufacturers to produce complete vehicles (such as where the body is fully integrated with the rest of the truck), such as with street sweepers.

2. Common Vehicle Types

a) Dump Trucks

A dump truck (or production truck) is used for tran sporting loose material such as sand, gravel, or dirt for construction activities. There are several configurations of dump trucks, including standard dump, superdumps, transf er dumps, end dumps, and bottom dumps.

A standard dump truck is a full truck chassis with a dump body mounted to the frame. The dump body is raised by a hydraulic ram mounted forward of the front bulkhead, between the truck cab (traction unit) and the dump body. The tailgate can be configured to swing on hinges or it can be configured in the “High Lift Tailgate” position, wherein pneumatic rams lift the gate up and open above the dump body. The short wheelbase of a standard dump truck makes itmore maneuverable than the higher capacity tractortrailer combination of end dumps and bottom dump

trucks.

A superdump truck is a standard dump truck equipped with an additional liftable, load-bearing axle. The additional axle increases the gross weight allowing for additional payload. When the truck is empty, the additional axle toggles up off the road surface on two hydraulic arms. A typical superdump truck is equipped with a hydraulically operated open-box bed hinged at the rear, the front of which can be lifted up to allow the contents to be deposited on the ground behind the truck at the delivery

site. Medium Duty Standard Dump Truck

Superdumps-46-

A transfer dump is a combination of a standard dump truck pulling a separate trailer whose rear box is capable of being transferred from the trailer frame rails onto the empty dump bed on the truck. It is predominantly used to transport asphalt, aggregates, or other small

material. The second container on the trailer

rides on small wheels and rolls on rails off of the trailer frame and into the empty main dump box. The rear box locks onto the dump bed on the truck allowing it to be dumped as a single unit

. After the load is dumped the second container is

rolled out of the truck and back on to the trailer rails.

The key advantage of this configuration is to maxim ize payload capacity without sacrificing the maneuverability of the standard dum p truck. Transfer trucks are uniquely configured for operation in California and are not used in other parts of the country.

End dump and bottom dump trucks

are both tractor-trailer combinations. Both configurations utilize either single rear axles or tandem rear axles to tow the dump trailers. The end dump trailer uses a hydraulic hoist on the trailer to dump and is powered by the tractor. Its advantage is rapid unloading. The bottom dump trailer can be a single long trailer or a double trailer with a metal hopper configuration with angled sides. It pours m aterials out of the bottom as it moves along the road. This is used whenever small amount s of material are needed over a large area, such as on a roadway under construction

.

b) Body Load

The body load truck is a truck with equipment integrated directly into the frame of the truck. The equipment is built on the truck piece by piece (above and below the frame rails) as opposed to having it installed on a bed that is bolted on top of the truck rails. These trucks usually have heavy

frame with two or more axles. The integrated equipment can cost more

than a half million dollars and would have to be dismantled piece by piece to be Bottom Dump Truck

Body Load Blend er Transfer Dump Truck-47-

moved to a different cab and chassis. An example o f a body load application is a vehicle used for the fracturing operation performin g in the oil field to increase well production.

c) Tank Truck

A tank truck is a vehicle designed to carry liquefied loads, dry bulk cargo or gases. Many variants exist due to the wide variety of liquids that can be transported. The tank on the trucks may be insulated or non-insulated, pressurized or non-pressurized, and for single load or built with internal divisions for multiple loads (such as to carry different grades of gasoline). A large tank truck typically has a capacity of up to 8,000 gallons. A smaller tank truck typically has a capacity of less than 3,000 gallons, but can be increased to as much as 9,000 gallons through the use of a trailer, commonly refe rred to as a “pup”.

A tank truck is distinguished by its shape, usually a cylindrical tank upon the vehicle lying horizontally. Some other less visible distinctions among tank

trucks are their intended use: compliance with human food regulations, refrigeration capability, acid resistance, pressurization capability, etc.

d) Vacuum Truck

A vacuum truck is a tank truck with a pumping system to pump and store fluid for transporting from one location to another. The pumping system and the accessories are normally mounted on the truck and power by a PTO unit. The vacuum tank may have internal divisions to store both the cleaning fluids to be used at the job site, as well as the generated waste.

e) Box Truck (Dry Van)

A box truck, also known as a cube truck, cube van, bob truck, or box van, is a truck with a cube shaped cargo area. These types of truck vary in length, and some have tandem axles. They Water Trank Truck

Fuel Tank Truck with Pup

Dry Van Vacuum Truck-48-

usually have a garage like rear door that rolls up. On some box trucks, the cargo area is

accessible from the cabin via a small door. Box tr ucks are used by companies to haul a wide variety of items locally. They are also commo nly used as retail rental moving

trucks.

f) Refrigerated (Reefer) Truck

A refrigerated truck is a highly insulated van truc k designed to carry perishable freight at lowtemperatures. Refrigerated trucks can be icecooled, be equipped with any one of a variety of mechanical refrigeration systems, or can utilize carbon dioxide (either as dry ice or in liquid form ) as a cooling agent.

g) Motorcoach

Motorcoaches are generally designed and operated to transport passengers over long distances. To make the trip comfortable, these coaches often have reclining upholstered seats, a toilet, and air-conditioning. Because they are designed for long distance travel (instead of having to take on and discharge many passengers over very short runs), it is rare for a motorcoach tohave more than one door (save for a wheelchairlift access) or standing room. As these vehicles age, their use tends to change such that they are used for shorter trips.

h) Flatbed Truck

A flatbed truck is a type of truck that has an entirely flat, level body with no sides or roof. This allows for quick and easy loading of goods using a crane or forklift, and is typically used to transport heavy loads that are not delicate or vulnerable to precipitation. They are also used for unusually shaped loads that require more space than is available on a closed body.

i) Concrete (Cement) Truck

A concrete truck (also known as in-transit mixers) is designed to transport concrete from a factory/plant to a construction site. Typically, they are charged with dry materials and water at the factory/plant, with the mixing occurring Reefer Truck

Motorcoach

Concrete Truck Flat Bed Truck-49-

Lattice Boom Truck Crane Two

- Engine All Terrain Crane Bucket Truck during transport. The interior of the drum on a co ncrete truck is fitted with a spiral blade. The drum is typically powered by a PTO unit . In one rotational direction, the concrete is pushed deeper into the drum while the c oncrete is being transported to the building site. When the drum rotates in the other direction, the screw-type arrangement “discharges”, or forces the concrete out of the dru m, typically into a chute.

j) Bucket Truck

A bucket truck has a working platform, such as like a bucket at the end of a hydraulic lifting system. These vehicles are also known as a boom (or man) lift truck. They are used to support work at a hig h elevation above ground. The bucket is designed for a person to stand in and work from. The controls f or manipulating the position of the bucket are in or

near the bucket. Another set of controls are on th e truck for controlling the lifting system when the operator is on the ground.

k) Cranes

Lattice boom cranes can be both truck mounted or cr awler (truck) mounted. With the truck mounted version, the crane's upper structure is mounted on a truck style carrier and can travel at highway speeds. Major sections o f the crane’s boom are usually removed and transported separately on some larger u nits.

A lattice boom crane is typically the best choice when the job requires long, vertical reaches, or significantly large lifts. The advantage of a lattice boom crane is that the mast is relatively light in comparison to a telescope crane, making it much stronger in terms of working radius. A lattice boom crane typically provides higher liftin g capacity for less vehicle weight, making a 100

Two Engine Truck Mounted Crane-50- Single Engine Boom Truck

ton capacity lattice boom crane outperform a 200 to n capacity telescopic crane.

Two-engine all terrain cranes combine truck crane h ighway speeds with the off-road performance characteristics of rough terrain cranes . Multiple axles (steer, drive and tag) distribute the load. Capacity on these machin es can reach 1,000 tons.

Two-engine truck mounted cranes have a long reach, high capacity booms and highway speed capabilities. Truck mounted cranes sit on a commercial truck chassis with a motive engine or secondary engine to power the cran e operation.

l) Boom Truck

Single engine boom trucks look similar to twoengine truck mounted cranes. They utilize a telescoping boom and perform the same

functions as all-terrain and truck mounted cranes, and have a lift capacity of about 40 tons. The boom is powered by the motive engine, eliminating the need for a secondary engine. Boom trucks come with fixed operator control stations or cabs that swing with the cranes.

m) Street Sweepers

Sweepers are designed to removed dirt and debris fr om roadways, and can be categorized into two main types: mechanical and ai r sweepers. Mechanical sweepers are equipped with water tanks and sprayers used to loosen particles and reduce dust. The brooms gather debris into a main collection are a from which it is vacuumed and pumped into a collection bin.

An air street sweeper uses forced air to create a swirling knifing effect inside a contained sweeping head and then uses the negative pressure on the suction side

to lift the road debris into a containment hopper. The debris laden air is then filtered and discharged. Sweepers may have a single engine with that provides power to propel the sweeper and to operate the broom or vacuum, or may have a second (auxiliary) engine to separately operate the broom or vacuum. Two Engine Regenerative Air Sweeper-51- n) Tow Truck

A tow truck (also called a wrecker) is a vehicle used to transport disabled vehicles from one location to another (generally a repair garage), to recover disabled vehicles, and to assist in clearing streets and highways of breakdowns and collisions. Businesses and government agencies with a large fleet of vehicles may

own one or several tow trucks for the purposes of towing their own vehicles. They are also used to impound vehicles for various reasons such as parking violations. The towing and lifting mechanisms on a tow truck are powered by a PTO unit.

o) Drill Rig

A drill rig is a machine which drills holes (usually called boreholes) and/or shafts into the ground. Drill rigs are used to drill water wells, oil wells, or natural gas extraction wells. They are used to sample sub-surface mineral deposits, test rock, soil and groundwater physical properties, and to install sub-surface fabrications, such as underground utilities, instrumentation or tunnels. Drill rigs can be mobile equipment mounted on trucks, tracks or trail ers, and can vary significantly in size. In some drill rigs, the drilling operations are supported by the drive engines using PTO. In other cases, dedicated secondary engines a re used to provide the power.

p) School Buses

School buses are generally classified in one of fou r categories. Type-A school buses are the smallest school buses, and they are typically gasoline-fuele d, although they can also be diesel-fueled. They, typically, tend to be below 14,000 pounds GVWR, and have a driver side door. Type-B school buses are larger, typically greater than 10,000 pounds GVWR, and can be gasoline or diesel-fueled. Type-B schoo l buses are normally used for special needs student transportation. Type-C school buses, also called conventional school buses, are typically diesel fue led and have the engine in the front of bus. These sch ool buses tend to be above 14,000 pounds GVWR. Wrecker Truck

Two Engine Drill Rig

School Bus-52-

Type-D school buses, also called transit style scho ol buses, are almost always dieselfueled, having a rear-mounted engine. Type-D schoo l buses can be greater than 33,000 pounds GVWR, and having the ability to trans port up to 90 students and

passengers.

3. Agricultural Vehicles

Agricultural vehicles include a wide variety of veh icles used on and off the farm for a number of different purposes.

a) Farm Vehicles

Farm use vehicles are typically single unit trucks with bodies uniquely designed for farming operations such as fertilizing, feeding, sp raying, etc. While on farm vehicles typically have on-road engines and can travel on ci ty streets, they spend a majority of their time operating off-road on the farm. Some ha ve special equipment (SE) plates while others are not registered at all.

When a single unit truck needs replacement, typical ly the truck bed can be removed and transferred to another new or used single unit truck. However, it is not uncommon for some on farm vehicles having a new truck body i nstalled on a used single unit truck or a used tractor that has been converted to a sing le unit truck.

Farm Sprayer Livestock Feeder

Spreader Silage-53- b) Farm to First Processing

Farm vehicles also include vehicles used to transpo rt commodities to processing facilities. For transporting commodities, tractor trailer combinations are typically used. This would include the use of tractors and refriger ated trailers to transport lettuce as well as transporting cattle in livestock trailers.

A cotton module truck is either a single unit truck or a tractor-trailer that is used to transport the compacted cotton block from the field to the cotton gin for processing. Single unit cotton module trucks have a long chassi s design to accommodate the length of the cotton module. The body or trailer has a bu ilt-in mechanism that pulls the vehicle underneath the compacted cotton module (bale) while in the field. In California, cotton module trucks mostly have SE plates allowing for sh ort distance, on-highway travel. Normal commercial plates are needed only if the cot ton module is used for long distance hauling on a major freeway.

The wheelbase for a single unit cotton module vehicle is over 300 inches, which is longer than most other single unit trucks.

This means that the frame needs to be special ordered prior to configuring a new cotton module truck. It also requires a double frame to strengthen the chassis due to its overall length.

A new truck with a cotton module body costs about $190,000. Transferring an existing cotton module body to a used single unit t ruck is possible, but finding an existing truck with an appropriate wheelbase and fr ame is challenging. An existing cotton module body can be transferred to a properly configured new truck for about $130,000. Cotton Module-54- c) Chemical & Fertilizer Delivery Truck

Chemicals used on the farm include pesticides and f ertilizer among others. Both come in dry or wet form and are generally transported to the farm with either single unit trucks

or truck-tractor and trailer combinations. Certain types of fertilizers are considered hazardous materials and their transportation is hig hly regulated and all pesticides and other crop protection chemical are considered hazar dous materials. Transportation of these products requires special vehicles markings i n the form of U.S. DOT placards and transportation vessels must meet strict safety regu lations.

4. Logging Truck

The transportation of raw, harvested logs from a

forest is done via tractor trailer. This combinati on consists of a tractor and a long metal beam connecting the trailing two-axle set. This beam is typically small in diameter, and several feet above the road surface. The operational requirements of a logging truck make it different from a conventional

tractor.

Although it may be used to transport lumber products to a specific location (similar to work do ne by a conventional tractor), the majority of the tim e it is utilized to move harvested logs from a fell site in the forest to the saw mill for processing. Log tru cks are somewhat unique in that they work in the forest and negotiate steep dirt logging roads. To perform this work, they have larger frame rails, 18 speed heavy duty transm issions, 46,000 pounds rear differential/axle sets, heavy duty rear wheels, sev ere service cabs, and heavy duty rear suspensions.

E. References

Diesel Progress, 2005. Diesel Progress North Ameri can Edition. Heavy Truck Sales on

a Roll in ’05. October 2005.

National 2002 VIUS. U.S. Census Bureau 2002 Econom ic Census: Vehicle Inventory and Use Survey. EC2TV-US. Issued December 2004 Chemical & Fertilizer Truck

Logging Truck-55-

Ward’s, 2007. Ward’s Automotive Group. U.S. Truck Sales by GVW Class and Source, 2007, Copyright 2008. Subscription Service. http://www.wardsauto.com-56--57-

VI. E STIMATED E MISSIONS FROM O N -R OAD D IESEL T RUCKS AND B USES

This chapter describes the emissions inventory that was developed for the proposed regulation for heavy-duty diesel vehicles operating in California. It summarizes how multiple data sources were utilized to develop esti mates of both the vehicle population and VMT in California; how ARB’s on-road emissions inventory model (EMFAC) was used to assess emission rates, and how the emission s estimates were developed. The chapter presents statewide emissions estimates in t he baseline, without regulation. Additional details are provided in Appendix G.

A. Methodology

Emissions are calculated as the product of a popula tion of vehicles, the number of miles each vehicle travels, and the emission rates per mi le. Beneath this simple equation lies a series of data and assumptions about the populati on, miles traveled, and emission rates per vehicle model year in a given calendar ye ar, growth and attrition estimates, deterioration, and other factors that affect emissi ons estimates. Staff updated approach for estimating commercial in-use on-road heavy-duty diesel vehicle emissions builds on the below equation by applying it separately for se lected categories of vehicles. These categories were selected by evaluating different gr oups of vehicles that have travel, service, size, age or other characteristics in comm on. Staff’s methodology used the following equation:



# ∑
MY, C 

# ( POP MY, C X AC MY, C X ER MY, C 

# ) = EMS CY ,

where: POP MY, C is the population of vehicles for model year MY wi thin each

inventory category C for a given calendar year;

AC MY, C is the accrual rate (miles traveled per year) per vehicle by model year MY and inventory category C in a given calendar yea r; ER MY, C is the calculated emission rate, in grams pollutant per mile driven, assuming statewide speed travel distributions in EM FAC2007 and fleet specific cumulative mileage accrual over the life o f the vehicle, by model year MY and inventory category C;

EMS CY is the emissions calculated in tons per day for a given calendar year.

In this new analysis, staff assessed a population a nd model year distribution for each vehicle category. Staff also estimated accrual rat e by model year for the category and cumulative mileage accrual (odometer) by model year . Because vehicles can move between categories as they age, staff assessed the movement of vehicles between categories in order to develop more accurate cumula tive mileage accrual estimates. As a result, cumulative odometer readings by model yea r will not necessarily be consistent with accrual schedules for each specific category. Criteria pollutant emission rates are developed using the 2007 version of EMFAC (EMFAC200 7) and statewide speed distributions, and emission rates were adjusted for modeled odometer readings, by category. Carbon dioxide (CO 2 ) emission rates were developed based on analysis o f fuel economy trends over time and across engine con trol technologies.-58-

B. Population and Activity

For the purposes of this regulation, the truck and bus population was divided into four broad inventory categories. Heavy-heavy duty diese l trucks were those trucks that exceed 33,000 GVWR. They may be combination trucks (tractor-trailer) or single unit trucks. Medium-heavy duty diesel trucks were those trucks with a GVWR between 14,000 and 33,000 pounds. These trucks are most of ten single units, although some are combination trucks. The third category represe nted two types of buses: school buses and other buses. The ‘other’ bus category in cluded primarily intercity, charter, or private buses that are not used to transport school children and are not operated as public transit buses. The final category was power take off, which represents the use of on-road engines to power auxiliary applications, su ch as a drill rig or concrete truck.

1. Base Year Population, Age Distribution, and Mile age Accrual

Table VI-1 summarizes the data sources that were us ed to develop estimates of vehicle population and activity, including annual average m ileage accrual.-59-

Table VI-1: Data Sources Used to Develop Population and Activity Estimates

Type / Category Population Activity

Heavy-Heavy /

Out-of-State CA Department of Motor Vehicles (DMV)

International Registration Plan (IRP) reports; adjusted to account only for vehicles that enter California. Model-year distribution from IRP data and UC Davis survey. Category split between neighboring states (WA, OR, NV, AZ, ID) vs non-neighboring states. Vehicle Inventory and Use Survey (VIUS) (2002) data analyzed to assess accrual for vehicles in any

state that travel across state lines (registered in IRP program). Fraction of mileage accrued in California estimated using IRP data samples. Total activity in out-of-state vehicles by state of registration from International Fuel Tax Agreement Data (IFTA).

Heavy-Heavy /

CaliforniaInterstate DMV CA IRP reports provide population by

model year VIUS for nationally registered

vehicles in IRP as above. CA IRP reports fraction of mileage accrued in CA, and IFTA reports for total mileage.

Heavy-Heavy /

In-State Tractor DMV registration data provides population by

model year and body type. Adjusted to subtract specific fleets such as utility, drayage,

and others. VIUS data for California-registered

tractors.

Heavy-Heavy / In-State Single DMV registration data provides population by

model year and body type. Adjusted to subtract specific fleets such as utility and

others. VIUS data for California-registered single unit vehicles.

Heavy-Heavy / Drayage

Tractors Population and age distributions estimated

using license plate and gate count surveys conducted at the Ports of Los Angeles, Long Beach, and Oakland. Total mileage estimated using tripbased model developed for ARB Drayage Truck Regulation. Mileage accrual assumed equivalent to the total miles traveled by drayage trucks divided by the total number of trucks.

Heavy-Heavy / Agricultural

Vehicles Age distribution from survey; population

extrapolated from survey results; specialty vehicles estimated from survey and DMV registration data. Accrual from in-use on-road diesel vehicle survey

Heavy-Heavy / Utility Vehicles Population and age of vehicles registered to

public and private utilities in DMV database. Surveys conducted for ARB Public Agency & Utility Fleet Rule. Medium-Heavy /

In-State

Vehicles Population and age distribution in DMV

registration data VIUS 2002 data representing California registered medium-heavy duty diesel vehicles. Medium-Heavy /

Interstate

Vehicles Population estimated from IRP reports VIUS 2002 data representing California-registered medium-heavy duty diesel vehicles.

Medium-Heavy / Agricultural

Vehicles Age distribution from survey; population

extrapolated from survey results; specialty vehicles estimated from survey and registration data. Accrual from in-use on-road diesel vehicle survey

Medium-Heavy / Utility Vehicles Population and age of vehicles registered to

public and private utilities in DMV database. Surveys conducted for ARB Public Agency & Utility Fleet Rule. Buses / School California Highway Patrol data ARB s chool bus surveys

Buses / Other EMFAC2007 EMFAC2007

Other / Power

Take-Off No population estimated. Total fuel usage

provided by California State Board of Equalization; age distribution assumed same as in-state single unit vehicles Fuel usage converted to equivalent mileage assuming EMFAC speed distributions and fuel economy.-60-

2. Base Year Population and VMT by Category and Fle et Size

Most of the inventory categories described in Table VI-1 are further split by fleet size. To achieve the fleet size split by inventory catego ry, ARB staff reviewed California Department of Motor Vehicles (DMV) registration dat a by name and address and grouped vehicles by fleet. This resulted in an age distribution by fleet size (fleets of one vehicle, two or three vehicles, and four or greater ) for inventory categories in the DMV registration database. Neighboring out-of-state ve hicles (those registered in Arizona, Nevada, Oregon, and Idaho) were assumed to have the same fleet size distribution as California registered IRP vehicles; for non-neighbo ring out-of-state vehicles, staff analyzed sample International Registration Program (IRP) data. Mileage accrual was assumed to be the same within each inventory catego ry regardless of fleet size. Table VI-2 provides the population, VMT-weighted average age, and total VMT in calendar year 2008, by inventory category and fleet size.

Table VI-2: 2008 Population, VMT, and VMT-Weighted Average Age by Inventory

Category, Fleet Size, and Mileage Thresholds

Fleet Source Population VMT/day VMT-Weighted Average Age
Heavy-Heavy Non-Neighboring Out-of-State Vehicle 450,658 12,194,654 3.1 Owner-operator vehicle above 7500 miles/yr 6,955 192,875 3.1 Owner-operator vehicle below 7500 miles/yr 180 188 8.3 2 vehicle fleet above 7500 miles/yr 2,125 58,926 3.1 2 vehicle fleet below 7500 miles/yr 55 58 8.3 3 vehicle fleet above 7500 miles/yr 1,505 41,740 3.1 3 vehicle fleet below 7500 miles/yr 39 41 8.3 Large fleets above 7500 miles/yr 428,702 11,889,217 3.1 Large fleets below 7500 miles/yr 11,097 11,610 8.3

Heavy-Heavy Neighboring State Out-of-State Vehicle 41,682 3,947,672 5.2 Owner-operator vehicle above 7500 miles/yr 5,056 501,599 5.1 Owner-operator vehicle below 7500 miles/yr 252 1,149 11.1 2 vehicle fleet above 7500 miles/yr 1,571 155,808 5.1 2 vehicle fleet below 7500 miles/yr 78 357 11.1 3 vehicle fleet above 7500 miles/yr 1,147 113,815 5.1 3 vehicle fleet below 7500 miles/yr 57 261 11.1 Large fleets above 7500 miles/yr 31,928 3,167,429 5.1 Large fleets below 7500 miles/yr 1,592 7,253 11.1

Heavy-Heavy California Registered IRP Vehicle 60,263 8,282,725 5.2 Owner-operator vehicle above 7500 miles/yr 15,980 2,198,998 6 Owner-operator vehicle below 7500 miles/yr 883 5,804 10.8 2 vehicle fleet above 7500 miles/yr 5,850 812,823 5.8 2 vehicle fleet below 7500 miles/yr 318 2,096 10.9 3 vehicle fleet above 7500 miles/yr 3,297 460,037 5.7 3 vehicle fleet below 7500 miles/yr 183 1,223 11.4 Large fleets above 7500 miles/yr 32,273 4,791,942 4.6 Large fleets below 7500 miles/yr 1,479 9,801 11.3-61-

Fleet Source Population VMT/day VMT-Weighted Average Age

Heavy-Heavy Duty In-State Tractor 63,684 10,413,751 8.0 Owner-operator vehicle above 7500 miles/yr 16,792 3,031,868 10.1 Owner-operator vehicle below 7500 miles/yr 4,089 44,925 15.2 2 vehicle fleet above 7500 miles/yr 4,928 902,069 9.7 2 vehicle fleet below 7500 miles/yr 1,189 12,992 15.4 3 vehicle fleet above 7500 miles/yr 2,876 529,836 9.5 3 vehicle fleet below 7500 miles/yr 673 7,370 15.3 Large fleets above 7500 miles/yr 28,859 5,835,899 6.4 Large fleets below 7500 miles/yr 4,278 48,792 13.6

Heavy-Heavy Single Unit In-State Vehicles 43,275 3,410,860 8.4 Owner-operator vehicle above 7500 miles/yr 7,819 766,081 10.3 Owner-operator vehicle below 7500 miles/yr 3,358 37,585 15.6 2 vehicle fleet above 7500 miles/yr 2,826 279,769 9.9 2 vehicle fleet below 7500 miles/yr 1,171 13,153 15.5 3 vehicle fleet above 7500 miles/yr 1,857 185,491 9.2 3 vehicle fleet below 7500 miles/yr 703 7,951 14.8 Large fleets above 7500 miles/yr 20,001 2,057,340 7.1 Large fleets below 7500 miles/yr 5,540 63,491 13.5

Heavy-Heavy Drayage Vehicles 21,650 2,898,907 11.8

Serving Non-South Coast and Bay Area Facilities 1,513 236,542 9.1 Owner-operator vehicle above 7500 miles/yr 813 127,097 9.1 2 vehicle fleet above 7500 miles/yr 90 14,122 9.1 3 vehicle fleet above 7500 miles/yr 102 15,887 9.1 Large fleets above 7500 miles/yr 508 79,436 9.1

Serving Bay Area Facilities 3,032 391,868 9.7 Owner-operator vehicle above 7500 miles/yr 1,629 210,556 9.7 2 vehicle fleet above 7500 miles/yr 181 23,395 9.7 3 vehicle fleet above 7500 miles/yr 204 26,319 9.7 Large fleets above 7500 miles/yr 1,018 131,597 9.7

Serving South Coast Facilities 17,105 2,270,498 12.4 Owner-operator vehicle above 7500 miles/yr 9,191 1,219,969 12.4 2 vehicle fleet above 7500 miles/yr 1,021 135,552 12.4 3 vehicle fleet above 7500 miles/yr 1,149 152,496 12.4 Large fleets above 7500 miles/yr 5,744 762,481 12.4

Heavy-Heavy Agricultural Vehicle 11,998 878,486 11.4
Non-Specialty Agricultural Vehicle Above 1st mileag e limit (15-25k miles/yr depending on age) 4,098 645,375 10.5
Non-Specialty Agricultural Vehicle Below 2nd mileag e limit (10,000 miles/yr) 5,258 82,489 17.1-62-

Fleet Source Population VMT/day VMT-Weighted Average Age

Agricultural Non-Specialty Vehicle greater than 10,000 miles/yr, less than 1st threshold 1,442 62,773 12.5 Agricultural Specialty Vehicle 1,200 87,849 11.4

Heavy-Heavy Duty Utility Vehicle 1,357 33,801 8.2

Medium-Heavy Out-of-State Vehicles 7,235 42,871 4.6 Owner-operator fleet above 5000 miles/yr 824 5,552 4.3 Owner-operator fleet below 5000 miles/yr 87 54 8.2 2 vehicle fleet above 5000 miles/yr 519 3,450 4.3 2 vehicle fleet below 5000 miles/yr 57 35 8.4 3 vehicle fleet above 5000 miles/yr 519 3,407 4.5 3 vehicle fleet below 5000 miles/yr 63 39 9.2 Large fleet above 5000 miles/yr 4,594 29,980 4.7 Large fleet below 5000 miles/yr 572 353 9.4

Medium-Heavy California Registered IRP Vehicles 1,661 74,777 4.6 Owner-operator fleet above 5000 miles/yr 189 9,684 4.3 Owner-operator fleet below 5000 miles/yr 20 95 8.2 2 vehicle fleet above 5000 miles/yr 119 6,018 4.3 2 vehicle fleet below 5000 miles/yr 13 61 8.4 3 vehicle fleet above 5000 miles/yr 119 5,943 4.5 3 vehicle fleet below 5000 miles/yr 14 68 9.2 Large fleet above 5000 miles/yr 1,054 52,292 4.7 Large fleet below 5000 miles/yr 131 616 9.4

Medium-Heavy California Registered In-State Vehicle s 198,525 12,731,247 6.4 Owner-operator fleet above 5000 miles/yr 51,066 3,786,410 7 Owner-operator fleet below 5000 miles/yr 11,592 80,942 13.4 2 vehicle fleet above 5000 miles/yr 16,710 1,244,223 6.8 2 vehicle fleet below 5000 miles/yr 3,621 25,478 13.1 3 vehicle fleet above 5000 miles/yr 9,964 740,914 6.9 3 vehicle fleet below 5000 miles/yr 2,143 15,111 13 Large fleet above 5000 miles/yr 88,520 6,731,027 5.7 Large fleet below 5000 miles/yr 14,908 107,142 11.6

Medium-Heavy Agricultural Vehicles 9,438 342,652 10.5
Non-Specialty Agricultural Vehicle Above 1st mileag e limit (15-25k miles/yr depending on age) 1,750 183,598 9.2
Non-Specialty Agricultural Vehicle Below 2nd mileag e limit (10,000 miles/yr) 4,799 46,021 16
Agricultural Non-Specialty Vehicle greater than 10,000 miles/yr, less than 1st threshold 1,946 78,768 10.3 Agricultural Specialty Vehicle 944 34,265 10.5

Medium-Heavy Utility Vehicle 2,798 55,942 6.7

School Bus 16,469 633,823 11.6-63-

Fleet Source Population VMT/day VMT-Weighted Average Age

Other Bus 9,974 574,946 6.7

Power Take Off -- 492,322 10.2

TOTAL 940,667 57,009,437 6.4

In 2008, staff estimates that heavy-heavy duty dies el vehicles are responsible for 73.8 percent of the population and 74.2 percent of the V MT in vehicles covered by this inventory. Medium-heavy duty vehicles are responsi ble for 23.4 percent of the population and 23.4 percent of the VMT, while other categories including buses are responsible for 2.8 percent of the population and 2 .3 percent of the VMT. Within the heavy-heavy duty vehicle category, interstate vehic les, which include California registered (CA IRP) and out-of-state registered veh icles that operate inside and outside of California, are responsible for 59 percent of th e population and 43 percent of the VMT, while in-state heavy-heavy duty vehicles, thos e vehicles which travel only within California, are responsible for 15 percent of the p opulation and 31 percent of the VMT.

These results are summarized in Table VI-3.

Table VI-3: Percentage of Population and VMT by Veh icle Type

Vehicle Type % of Population % of VMT Heavy-heavy duty vehicles (CA IRP and out-of-state registered) 59 43

Heavy-heavy duty vehicles (CA registered) 15 31

Medium-heavy duty vehicles 23.4 23.4

Buses 2.8 2.3

The age distribution of vehicles in a given calenda r year has a significant impact on emissions estimates. For comparison purposes, it i s useful to evaluate the VMTweighted average age of vehicles across inventory c ategories. The VMT-weighted age metric accounts for both the age of the vehicles in each category, and the fact that in most categories, newer vehicles drive more than old er vehicles. The average VMTweighted age of the truck and bus fleet operating i n California, including both in-state and out-of-state vehicles, is 6.4 years. Inventory categories that contain the highest fraction of vehicles in large fleets and in long ha ul routes, such as out-of-state and California registered interstate vehicles, are youn ger than this average. Inventory categories that contain the highest fraction of sma ll fleets and do not travel outside of California are older than average. Within given in ventory categories, vehicles and fleets that accrue more mileage per year tend to be newer, while vehicles accruing less mileage per year are older. On average, small flee ts are older than large fleets.-64-

3. Mileage Thresholds

Once VMT was calculated, staff estimated the propor tion of total VMT that was above and below mileage thresholds relevant to the regula tion. To calculate this, ARB staff started with data from Vehicle Inventory and Use Su rvey (VIUS) 2002 and/or other surveys used to develop mileage accrual schedules f or each category. Staff sorted data from lowest to highest mileage by model year a nd inventory category. Each mileage threshold was then assessed; for example to estimate the 7,500 mileage threshold in each category the total population of vehicles in the accrual data was calculated, as was the population of vehicles repor ting miles above and below the threshold. At the same time, staff estimated the t otal accrued mileage for all vehicles in the category, as well as for vehicles above and bel ow the 7,500 mile threshold. The result was a statistic for each category that indic ated the percentage of population and VMT in the category that is estimated to represent vehicles in fleets below the assessed mileage threshold.

Table VI-4 provides the percent of population and V MT below the mileage thresholds, by inventory category, in 2008. For this analysis, staff assumed the fraction of population and mileage below the mileage threshold was not impacted by fleet size.

Table VI-4: Distribution of Population and VMT by M ileage Threshold (2008)

Type / Category Mileage

Threshold Percent of VMT

Below Mileage

Threshold Percent of Population

Below Mileage

Threshold Heavy-Heavy / Out-of-State 7,500 0.1% 2.7%Heavy-Heavy / CaliforniaInterstate 7,500 0.2% 4.8%

Heavy-Heavy / In-state Tractor 7,500 1.1% 16.1% Heavy-Heavy / In-state Single 7,500 3.6% 24.9% Heavy-Heavy / Drayage Tractors 7,500 0% 0%

15/20/25* 16.5% 55.8 % Heavy-Heavy / Agricultural

Vehicles 10,000 9.4% 43.8% Medium-Heavy / In-state Vehicles 5,000 1.8% 16.3% Medium-Heavy / Interstate

Vehicles 5,000 1.1% 10.8%

15/20/25* 36.4% 71.5% Medium-Heavy / Agricultural

Vehicles 10,000 13.4% 50.8%
* 15,000 miles/yr would apply to pre-1996 model ye ar vehicles; 20,000 miles/yr would apply to 1996-20 05 model year vehicles; and 25,000 miles/yr would apply to 2006 a nd newer model year vehicles.

4. Fraction of Mileage Accrual in California

Out-of-state vehicles operating in California drive only a portion of their miles in California. Staff analyzed IRP data from 12 states (Alabama, Arizona, Idaho, Indiana, Nebraska, New Jersey, Nevada, Oklahoma, Oregon, Tex as, and Wisconsin) to assess

the fraction of miles traveled in California from o ut-of-state vehicles. Staff then compared this to International Fuel Tax Agreement ( IFTA) data which provided estimates for the total miles traveled in 2005, 200 6, and 2007 for vehicles registered in each of the fifty states and eight Canadian jurisdi ctions that are a party to that program.-65-

Estimates of the fraction of out-of-state vehicle V MT that is accrued in California in 2008

are shown in Table VI-5.

Table VI-5: Fraction of Miles Traveled in Californi a for Out-of-State Categories

Type / Category Fraction of Mileage Accrued in California
Heavy-Heavy / Non-Neighboring Out-of-State 9.9% Heavy-Heavy / Neighboring Out-of-State 39.3% Heavy-Heavy / CA IRP 57.0% Medium-Heavy / Interstate Vehicles 18.7%

5. Forecasting Population and VMT

In order to forecast emissions in the future, staff assessed growth in population and VMT. Staff started by comparing growth rates embed ded in EMFAC2007. Those growth rates are composited from individual estimat es made by regional transportation planning agencies and provide a statewide growth he avy-duty vehicle VMT growth rate of approximately 2 percent per year. Staff found t his statewide average growth rate to be consistent with the historical national growth i n transportation related gross domestic product through 2006, as shown in Figure VI-1. The growth rates developed by transportation agencies are designed to represent a verage growth over long periods of time and are not designed to forecast periods of ec onomic growth or recession.-66-

Figure VI-1: The Historic and Projected Relationshi p between VMT and GDP on a

Nationwide Level

0 50,000 100,000 150,000 200,000 250,000

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025VMT (Millions)

Observed truck miles, combination Nationwide projected truck miles VMT ~ 48,000 + 900*Trucking GDP where GDP is in $billions

VMT is in millions

Since the beginning of 2007, the price of diesel fu el has increased dramatically, and the state as well as the national economy has slowed. Diesel fuel prices can have a major impact on driving patterns, and freight transportat ion choices between trucks and rail, especially for longer haul and non-perishable commo dities. Staff does not yet have sufficient data to determine what the impact of the current fuel price spike has been on statewide vehicle VMT, and staff is continuing to e valuate the issue to determine if future growth rate projections should be refined. Until that work is completed, staff is continuing to rely on historical growth trends that are consistent with regional growth estimates developed by regional transportation plan ning agencies.

Typically, mobile source emissions inventory models , including EMFAC, estimate attrition (the number of vehicles dropping out of t he fleet) as part of applying growth. Consistent with EMFAC, this inventory includes vehi cles up to age 44 in any given calendar year. This means that in 2008, 1964 is th e oldest vehicle model year in the inventory. Under typical attrition algorithms, the population of vehicles 44 years old would be removed from the inventory each year, and that population of older vehicles would be replaced by an equivalent number of new ve hicle sales. However, through our analysis of vehicle populations for this invent ory, staff realized that tractors are typically sold new to national fleets, operated for several years, and then sold to regional fleets. This results in a larger increase in the number of older vehicles in the population of in-state tractors than would be predi cted by the traditional attrition algorithms. To correct this, staff used a simplifi ed approach of holding model year

distributions constant over time.-67-

In addition to general economic growth, the impleme ntation of new emission standards can have a significant impact on new vehicle purcha se rates, and therefore penetration of different vehicle model years into the statewide vehicle population. To evaluate how emissions standards impact vehicle sales, staff dev eloped a model that accounts for the relationship between economic growth and national v ehicle sales, as well as the relationship between vehicle sales and the penetrat ion of new emissions standards. To accomplish this task, staff first developed a histo rical regression model between national heavy-heavy duty vehicle sales and economi c trends (as measured by national trucking industry gross domestic product). The res ults from this model are shown in Figure VI-2 where actual heavy-heavy duty diesel ve hicle sales from 1985-2007 (solid line) are plotted against the economic regression m odel (dotted line) over the same period. Results show that economic trends explain a substantial amount of the historical variability in vehicle sales.

Figure VI-2: Estimated Future New Vehicle Sales by Calendar Year

0 50,000 100,000 150,000 200,000 250,000 300,000

1985 1990 1995 2000 2005 2010 2015 2020Truck Sales Actual

truck

sales

Originally predicted

truck sales Predicted truck

sales after first adjustment

Predicted truck

sales after

second adjustment

Next, staff projected economic growth into the futu re and applied staff’s regression model to estimate future vehicle sales without any impact from emissions standards. This is represented as a “first adjustment” on the chart. Staff then extrapolated 2008 vehicle sales based on sales through June 2008, and found that staff’s model was over estimating 2008 sales, likely due to both an over e stimate of future economic performance and pre-buy trends. Most economic indi cators used in this model do not reflect the very latest economic conditions. To ad just the regression model for the likely short term over estimate of economic performance, a s well as pre-buy trends, staff

assumed the same differential between the 2002-2004 model year results and sales-68-

would also apply to the 2008-2009 model years. Whe n actual sales data for the first half of 2008 was obtained by staff, the predicted v ehicle sales for the entirety of 2008 decreased. Because of the projected significant de crease in demand for vehicles in calendar years 2007 through 2009, and the expected fuel economy benefit of 2010 standard compliant vehicles (as described in sectio n D), staff assumed steady growth in vehicle sales from 2009 through 2016, at which poin t sales are assumed to revert to historical average trends. This is shown in Table VI-2 as a “second adjustment”.

C. Emissions Rates

Estimating emissions requires the use of an emissio n factor, which relates the number of miles traveled by a vehicle to that vehicle’s em issions on a per mile basis. Emission rates are a function of engine size, vehicle size, technology, driving conditions, speed, load, loaded weight, temperature, relative humidity , and many other factors. Emission rates deteriorate, which reflects an increase in em ission rates over time as the engine and vehicle ages. Deterioration in diesel engines is modeled as a function of tampering, malmaintenance, and malfunction of various engine c omponents.

To develop emission rates used in this inventory, s taff used the EMFAC model. EMFAC2007 contained a number of significant improve ments to heavy-heavy duty diesel vehicle emission rates, including updated ba se emission rates developed from recent academic studies (Coordinating Research Coun cil (CRC), 2007) and revisions to assumptions behind tampering, malmaintenance, and m alfunction of engine components. Staff then made a number of significan t adjustments to emission rates which are described briefly here; more information is available in the emissions inventory technical discussion in Appendix G.

1. Medium-Heavy Duty Diesel Vehicle Emission Rates

Staff used test results from the CRC E55/59 test pr ogram to update medium-heavy duty diesel vehicle running emission rates and speed cor rection factors. Staff used the same analysis method as developed for the heavy-heavy du ty diesel vehicle update integrated into EMFAC2007. The integration of thes e updated emission rates led to slight changes in NOx and PM2.5 emissions which var ied by calendar year.

2. Banking Provisions in Emissions Standards

Staff evaluated the penetration of diesel particula te filter (DPF) equipped 2007 model year vehicles, and the model years in which the new technology was sold. This led to negligible changes in emission rates for the 2006-2 009 model year engine emission factors. Staff also estimated the expected penetra tion of the cleanest 2010 compliant engines in 2010-2012 based on multiple discussions with engine manufacturers and review of their public statements. Overall, based on the latest information, staff found that because selective catalytic reduction (SCR) te chnology (used to meet NOx emission standards in 2010 compliant engines) provi des a fuel economy benefit relative to previous technologies, the vast majority of 2010 model year engines will be equipped

with SCR.-69-

3. Carbon Dioxide Emission Rates

Staff conducted a thorough review of CO 2 emission rates based on test data in the CRC E55/59 program, U.S. Department of Energy (U.S. DOE ) annual fuel economy data, IFTA data, and West Virginia University In-Use Cons ent Decree data. Staff analyzed fuel economy data due to the limited CO 2 dataset for heavy-duty vehicles and converted

the results into CO 2 emissions rates based on fuel carbon content. Res ults indicate vehicles driving in California have slightly higher average fuel economy (~5.7 miles per gallon (mpg)) and therefore lower CO 2 emissions relative to what is assumed in EMFAC2007 (5.4 mpg). Staff found that fuel economy does vary on average across model years, with the highest fuel economy in 2010 standard compliant engines. Staff assumed a 3 percent fuel economy penalty associated with 2007 standard vehicles due to increased back-pressure on the engine caused by the DPF and use of exhaust gas recirculation (EGR) technology. Staff assumes a 2 percent fuel economy penalty associated with retrofit diesel particulate filters . Staff assumes a 4 percent fuel economy benefit in the 2010 emission standard vehic les due to better engine mapping for fuel efficiency coupled, with the SCR. These a ssumptions regarding fuel economy affect the assumption of CO 2 emissions.

D. Statewide Baseline Emissions Estimates

Staff estimated trucks and buses included in the in ventory in 2008 will emit 859 tons of NOx on an average annual day, 33 tons per day of PM 2.5, and 108,000 tons of CO 2 on an average annual day, as shown in Table VI-6. Abo ut 40 percent of the statewide annual average NOx and PM2.5 emissions from on-road vehicles are generated by interstate vehicles, while vehicles that operate on ly within California generate the remaining 60 percent of statewide NOx and PM2.5 emi ssions.-70-

Table VI-6: Statewide Emissions by Truck and Bus In ventory Category (2008)

CY Inventory Category Vehicle

Population Vehicle CA

VMT/day NOx

(tons/day) PM2.5

(tons/day) CO 2

(tons/day)

2008 HH Out-of-State 492,340 16,142,326 221.9 8.0 3 2,766
2008 HH CA IRP 60,263 8,282,725 139.6 5.2 16,783

2008 HH Tractor 63,684 10,413,751 194.1 7.9 20,897
2008 HH Single Unit 43,275 3,410,860 57.8 1.9 6,876
2008 HH Drayage 21,650 2,898,907 70.0 3.2 6,006
2008 HH Agriculture 11,998 878,486 17.3 0.7 1,788
2008 HH Utility 1,357 33,801 1 0 79

2008 MH In-state 198,525 12,731,247 125.0 4.6 19,06 7

2008 MH Interstate 8,896 117,648 1.0 0.0 176
2008 MH Agriculture 9,438 342,652 4.0 0.2 521
2008 MH Utility 2,798 55,942 1 0 85

2008 Buses 26,443 1,208,769 15.0 0.4 2,036
2008 PTO 0 492,322 12.2 0.8 1,349

2008 All 940,667 57,009,437 859.3 33.1 108,429

Table VI-7 shows statewide truck and buses emission s by fleet size and mileage threshold for calendar year 2008. Results show tha t small fleets (those with three or fewer vehicles) are responsible for roughly 36 perc ent of NOx and PM2.5 emissions, while large fleets (four or more vehicles) are resp onsible for 64 percent of baseline

emissions in 2008. Results also show that while lo w mileage vehicles represent roughly 8 percent of the vehicles, they contribute only 0.9 percent of vehicle miles traveled and less than 2 percent of emissions.-71-

Table VI-7: Baseline Emissions by Fleet Size and Mil eage Threshold (2008)

CY Fleet Size Vehicle Population Vehicle

CA VMT/day NOx

tpd PM2.5

tpd CO 2

tpd

2008 1 vehicle/above threshold 116,314 12,050,689 2 09.5 8.26 22,460
2008 1 vehicle/below threshold 20,462 170,742 3.4 0 .17 331
2008 2 vehicle/above threshold 35,941 3,636,157 59. 0 2.30 6,701
2008 2 vehicle/below threshold 6,502 54,229 1.1 0.0 5 105
2008 3 vehicle/above threshold 22,739 2,275,887 37. 2 1.46 4,215
2008 3 vehicle/below threshold 3,876 32,062 0.6 0.0 3 62
2008 4+ vehicle/above threshold 643,202 35,528,640 493.5 18.36 68,191
2008 4+ vehicle/below threshold 39,598 249,058 5.0 0.22 505
2008 Ag non specialty higher VMT 5,848 828,973 14.5 0.58 1,579
2008 Ag non specialty lower VMT 10,057 128,510 2.6 0.14 251
2008 Ag non specialty midrange VMT 3,388 141,541 2.2 0.10 248
2008 Ag specialty vehicle 2,144 122,114 2.1 0.09 23 1
2008 Unspecified 30,597 1,790,835 28.5 1.30 3,549

2008 All 940,667 57,009,437 859.3 33.07 108,429

Figure VI-3, Figure VI-4 and Figure VI-5 show basel ine emissions forecasted to 2023 for NOx, PM2.5, and CO 2 , respectively. Results show that while CO 2 emissions are expected to increase over time, NOx and PM2.5 emiss ions are projected to decrease as new vehicles equipped with the latest emission cont rol technologies enter the fleet due to natural replacement, and as previously adopted r ules are implemented. Even though emissions are decreasing, staff estimates suggest t hat in the absence of the proposed regulation it would take several decades for all ve hicles operating in California to meet the 2010 emissions standard through natural replace ment alone. The proposed regulation is necessary to reduce emissions to leve ls that would ensure attainment with federal ozone and PM2.5 ambient air quality standar ds. A summary of PM and NOx

emissions baseline is shown summarized below in Tab le VI-8.

Table VI-8: Statewide PM and NOx Baseline Emissions

Emissions (ton per day) Calendar

Year PM Baseline NOx Baseline

2010 27.8 749

2014 19.0 500

2017 14.4 401

2020 12.1 346

2023 10.5 319-72-

Figure VI-3: California Statewide NOx Emissions fro m Trucks, Baseline 2008-2023

0 100 200 300 400 500 600 700 800 900 1,000200720082009201020112012201320142015201620172018201920202021202220232024NOxemissions (tons/day)

Figure VI-4: California Statewide PM2.5 Emissions f rom Trucks, Baseline 2008-

2023

0 5 10 15 20 25 30 35200720082009201020112012201320142015201620172018201920202021202220232024PM2.5emissions (tons/day)-73-

Figure VI-5: California Statewide CO 2 Emissions from Trucks, Baseline 2008-2023

0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000200720082009201020112012201320142015201620172018201920202021202220232024CO2emissions (tons/day)

E. Updating EMFAC with this New Analysis

It is important to emphasize that any emissions inv entory is our best assessment of emissions based on what is known today. This asses sment necessarily evolves over

time. The ARB maintains an on-road emissions inven tory model, called EMFAC, which provides official emissions inventory estimates tha t are used for planning and SIP purposes. The most recent version of this model, E MFAC2007, was released in early 2007 to support development of the ARB’s statewide and regional air quality attainment plans. Since the release of EMFAC2007, staff has d eveloped an expanded approach to assess vehicle operations in California that greatl y enhances their ability to understand operations of different vehicle categories in Calif ornia. Whereas EMFAC2007 separated heavy-duty vehicle operations only by wei ght and fuel, the emissions inventory developed for this proposed regulation se parates trucks and buses into categories based on weight, fuel, body type, regist ration status, and in some cases

vocation. This work is the culmination of several years of evaluation as a result of regulatory development and research.

Because EMFAC is ARB’s official on-road emissions i nventory model, staff is working towards integrating the new inventory developed for this regulation into the model. One of the most critical questions that must be answere d when integrating this new inventory into EMFAC is spatial allocation, which is the dist ribution of statewide emissions into air basins and air districts. The assessment of engine emissions on a regional level is important for assessing regional compliance with ai r quality standards. To develop an improved assessment of regional vehicle travel staf f is conducting a field study focusing on more than 60 locations throughout California. T o date, this study has generated-74-

more than 6,000 origin-destination surveys and 120, 000 pictures of vehicle license plates. Staff is currently in the process of evalu ating the data, and while preliminary regional emissions estimates were presented in publ ic workshops in July 2008, staff believes more work is necessary to develop and eval uate regional activity and emissions estimates. Over the next year staff will be working with regional transportation and air quality agencies to evaluate regional activity and emissions estimates. Staff intends to complete this in 2009 as part of the EMFAC update process, and release an updated version of EMFAC in the 2010 timeframe.

F. References

Coordinating Research Council, Inc., 2007. Heavy-D uty Vehicle Chassis Dynamometer Testing for Emissions Inventory, Air Quality Modeli ng, Source Apportionment and Air Toxics Emissions Inventory. August 2007. Available at: http://www.crcao.com/reports/recentstudies2007/E-55 -59/E55_59_Final_Report_23AUG2007.pdf

National 2002 VIUS. U.S. Census Bureau 2002 Econom ic Census: Vehicle Inventory and Use Survey. EC2TV-US. Issued December 2004-75-

VII. O N -R OAD D IESEL R ETROFIT T ECHNOLOGY

The proposed regulation would require in-use on-roa d diesel fleets to install verified DECS and to accelerate replacement of existing vehi cles to those with a engines meeting the 2010 MY engine emission standards. Thi s chapter discusses retrofit strategies potentially available for reducing diese l emissions from in-use on-road diesel

vehicles.

A. Diesel Emission Control Strategies

Reducing emissions from diesel engines is an area o f active research and development. While on-road diesel engine manufacturers are optim izing technologies to reduce PM

and NOx emissions to meet future California and fed eral new engine exhaust standards, the fields of retrofitting with exhaust aftertreatment devices and engine repowering are also growing rapidly. This activity is spurred both by the ongoing research and development for new engines, and by Ca lifornia’s control measures for inuse diesel fleets.

1. Exhaust Retrofits

A variety of retrofit strategies can be used for co ntrolling emissions from in-use diesel engines (Diesel Forum, 2006). The main types of te chnologies discussed here are addon hardware, additives, combinations of hardware an d additives, and NOx control. The hardware retrofit technologies that are most likely to be employed, i.e., diesel particulate filters (DPFs) and flow through filters (FTFs), are retrofitted onto the exhaust pipes downstream of the engine. Additive based systems r educe emissions by introducing an additive, typically precious metal, into the fuel, air intake, or exhaust system, depending on the type of additive employed. Combinations of hardware and additives could include a device retrofitted to the exhaust system and an additive introduced into the fuel stream. The most common NOx control systems u se open channel catalysts together with a chemical reductant (usually urea or diesel fuel) that is injected into the exhaust stream. These technologies are discussed i n more detail below.

Technical suitability of a particular type of DECS will depend on the engine and vehicle

to be retrofit. Technical considerations include s pace constraints inside the engine compartment, operator visibility, weight of the DEC S, vibration, backpressure, exhaust temperatures, and safety. For instance, for very l arge engines, two devices in parallel (dual) may be required to avoid excessive backpress ure and allow sufficient exhaust

flow.

a) Hardware Diesel Emission Control Strategies

There are a number of hardware diesel emission cont rol strategies available to reduce diesel PM emissions from in-use diesel vehicles, in cluding DPFs and FTFs. Some DPFs also reduce CO and HC emissions through cataly tic oxidation and filtration. Most

DPFs sold in the United States use substrates consi sting either of a ceramic wall flow

filter or a silicon carbide substrate. These subst rates are either coated with a catalyst material, typically a platinum group metal, or a se parate catalyst that is installed-76-

upstream of the particulate filter. The filter is positioned in the exhaust stream to trap or collect a significant fraction of the particulate e missions while allowing the exhaust gases to pass through the system.

Effective operation of a DPF requires a balance bet ween PM collection and PM oxidation, or regeneration. The volume of PM gener ated by a diesel engine will fill up (load) a DPF over time; thus the trapped PM must be burned off or "regenerated" periodically. Regeneration is accomplished by eith er raising the exhaust gas temperature or by lowering the PM ignition temperat ure through the use of a catalyst. In contrast, FTFs employ a catalyzed wire mesh substra te that has an intermix of flow channels creating turbulent flow conditions.

(1) Passive Diesel Particulate Filter (Passive DPF)

A passive DPF is one in which a catalytic material, typically a platinum group metal, is applied to the filter itself or some other substrat e upstream of the filter. The catalyst lowers the temperature at which trapped PM will oxi dize to levels that are often reached in diesel exhaust, generally 250 to 400 degrees Cel sius (oC), depending on the vehicle’s duty cycle. No additional source of energy is requ ired for regeneration, hence the term “passive”. Most verified passive DPFs require exha ust temperatures of at least 225 to 280 oC for about 25 to 50 percent of the vehicle’s duty cycle. Verified passive DPFs have demonstrated reductions of at least 85 percent for PM, and are verified as Level 3 devices. A passive catalyzed DPF also reduces CO a nd HC by approximately the same amount as the PM reduction. A passive catalyzed DP F (See Figure VII-1) is an attractive means of reducing diesel PM emissions on certain engines and duty cycles because of the combination of high reductions in PM emissions and minimal operation and maintenance requirements.

Figure VII-1: Wall Flow Filter

The following passive devices have been verified th rough ARB’s verification procedure

and include devices that also meet the 2009 NO 2 limits as designed with the “+” symbol. All of these devices achieve a least an 85 percent reduction in PM emissions and are-77-

therefore designed as Level 3 devices. Each device is certified to operate on certain engine families as listed in the Executive Order. These devices are described below in

Table VII-1.

Table VII-1: Passive DPF

Product Name Technology Type P

L

U

S PM

Reduction NOx

Reduction Applicability

Cleaire Longview Wall Flow Lean NOx Catalyst and DPF 85% 25% Most 1993-2006 model year on-road engines

Donaldson DPM Wall Flow DPF 85% N/A. Most 1993-2006 model year on-road engines
Engine Control System

Purifilter Wall Flow DPF + 85% N/A Most 1993-2006 model year on-road engines

International Truck and Engine Corporation DPX Wall Flow DPF 85% N/A. Most 1994-2003 model year on-road Navistar engines

Johnson Matthey EGRT Wall Flow EGR/DPF + 85% 40 % Most 1998-2001 model year International, Cummins and DDC on-road engines

Johnson Matthey CRT Wall Flow DFF 85% NA Most 1994-2006 model year on-road engines

(2) Active Diesel Particulate Filter (Active DPF)

Unlike passive DPFs, active DPFs use a source of en ergy for regeneration beyond the heat in the exhaust stream itself. Active DPF syst ems can be regenerated electrically, with fuel burners, or with the aid of additional fu el injection to increase exhaust gas temperature. Some active DPFs induce regeneration automatically on-board the vehicle when a specified backpressure is reached. Others simply indicate to the operator when regeneration is needed, and require t he operator to initiate the regeneration process. Some active systems collect and store diesel PM over the course of a full day or shift and are regenerated a t the end of the day with the vehicle or equipment shut off. The time between regeneration can range from a single, 8 hour shift to several weeks depending on a number of fac tors. Some systems are designed such that the filters can be removed and regenerate d externally at a “regeneration

station”.

For applications in which the engine-out PM is rela tively high, and/or the exhaust temperature is relatively cool, actively regenerati ng systems are more effective than a passive DPF. Because active DPFs are not dependent on the heat carried in the exhaust for regeneration, they potentially have a b roader range of application than passive DPFs, and passive DPFs have more flexibilit y on where, they are installed since they are not required to be close to the engi ne.

Two active systems have been verified through ARB’s verification procedure. The Cleaire Horizon uses electricity, through an integr ated heating element, to heat up and burn off the collected PM while the vehicle is park ed overnight. The HUSS MK--78-

SYSTEM used a small diesel burner to heat up the DP F and burn off the collected PM while the engine is off. This process, known as re generation, can take anywhere from a

few minutes to over a half and hour. These devices are described below in Table VII-2.

Table VII-2: Wall Flow Filter

Product Name Technology Type P

L

U

S PM

Reduction NOx

Reduction Applicability

Cleaire Horizon Wall Flow DPF + 85% N/A Most on-road engines

HUSS

Umwelttechnik FS_MK Wall Flow DPF + 85% N/A Most on-road engines

(3) Catalyzed Wire Mesh Flow Through Filter

FTF technology is a form of aftertreatment that ach ieves PM reductions less than that of a DPF. There are several different FTF designs, bu t they tend to share the characteristic that they do not trap and accumulate PM like a DPF. Instead, FTF (See Figure VII-2) have a medium (such as a wire mesh) t hat forces the exhaust into a complex flow pattern that gives rise to turbulent f low conditions, or in some cases a partial trapping of PM. The medium is typically tr eated with an oxidizing catalyst that is able to reduce emissions of PM, HC, and CO. The pa rticles that are not oxidized within

the FTF flow out with the rest of the exhaust and t end not to accumulate. FTF performance can be highly variable and sensitive to exhaust temperature, but is normally consistent with a 25-50 percent reduction in PM emissions.-79- Figure VII-2: Flow Through Filter

There is only one device that uses the flow through technology that has been verified through ARB’s verification process. The Donaldson DPM uses a multi-stage passive flow through filter incorporated in a muffler unit to achieve 50 percent reduction of particulate matter. This device is shown below in Table VII-3.

Table VII-3: Active DPF

Product Name Technology Type P

L

U
S PM

Reduction NOx

Reduction Applicability

Donaldson DPM Flow Through Filter + 50% N/A Most 1991-2002 model year on-road; CARB diesel; biodiesel.

b) Additive Diesel Emission Control Strategies

Additive DECS utilize a substance, other than diese l fuel, which is added during the operation of the vehicle, either pre-combustion or post-combustion, to reduce diesel

exhaust emissions. Pre-combustion additives includ e fuel based and intake air based additives that utilize the fueling system or air in take systems, respectively, to introduce

an additive. Post-combustion additives include exh aust based additives that introduce an additive directly into the exhaust system to red uce exhaust emissions. Most additive systems are designed to work in conjunction with a hardware component and are often-80-

offered as a combined hardware and additive system as discussed in the next

subsection.

Additive DECS must undergo an assessment of multime dia toxicity effects by the California Environmental Policy Council, as require d by HSC section 43830.8 prior to

ARB verification.

(1) Fuel-Water Emulsion

Alternative diesel fuel is a fuel that can be used in a diesel engine without modification to the engine and that is not a reformulated diesel fuel. For example, alternative diesel fuels may include emulsified fuels, biodiesel fuels , Fischer Tropsch fuels, or a combination of these fuels with regular diesel fuel . The emissions effects of these fuels can vary widely.

Fuel-water emulsion, a demonstrated alternative to diesel fuel that reduces both PM

and NOx emissions is an emulsion of diesel fuel and water. The process blends water into diesel fuel, along with an emulsion additive t o keep the mixture from separating. The water is suspended in droplets within the fuel, creating a cooling effect on the fuel that decreases NOx emissions. Also, a fuel-water e mulsion creates a leaner fuel environment in the engine, thus lowering PM emissio ns as well (U.S. EPA, 2002).

PuriNOx, produced by Lubrizol, is a low emission di esel fuel system comprised of commercial diesel fuel, water, and additives. It h as been verified by ARB to reduce NOx emissions by 15 percent and PM emissions up to 50 percent. PuriNOx can be used in any older or newer diesel engines without m odification to fuel systems or engine hardware. It is be blended in the field using port able and automated PuriNOx blending units that combines the PuriNOx additive package, w ater, diesel fuel and, when necessary, seasonal components like freeze depressa nts. This product is described

below in Table VII-4.

Table VII-4: Fuel-Water Emulsion

Product Name Technology Type P

L

U

S PM

Reduction NOx

Reduction Applicability

Lubrizol PuriNOx Emulsified Fuel + 50% 15% 1988-2003 on-road

(2) Fuel Additives

A fuel additive, such as a fuel-borne catalyst, is a substance designed to be added to fuel or fuel system so that it is present in cylind er during combustion and its addition

causes a reduction in exhaust emissions. Additives can reduce the total mass of PM, with variable effects on carbon monoxide, NOx, and gaseous hydrocarbon production. The range of PM reductions that have been published in studies of fuel additives is from 15 to 50 percent reduction in mass. Most additives are fairly insensitive to fuel sulfur content and will work with a range of sulfur concen trations as well as different fuels and other fuel additives (ARB, 2003). No fuel additive is currently verified by ARB.-81- c) Combinations of Hardware and Additive Diesel Emi ssion Controls

Devices

While not currently verified in California, systems combining hardware and an additive strategy are used in other parts of the world. In order to receive ARB verification, the hardware and additive strategy must be approved tog ether as a system.

(1) Fuel-Borne Catalyst (FBC)

A fuel-borne catalyst (FBC) is a substance that is added to diesel fuel in order to aid in soot oxidation in DPFs by decreasing the ignition t emperature of solid carbon. An FBC can be used in conjunction with both passive and ac tive filter systems to aid system performance, and decrease mass PM emissions. FBC/D PF systems are in widespread use in Europe in on-road, mobile and stationary app lications, and typically achieve a minimum of 85 percent reduction in PM emissions. T he ARB has not verified any system using an FBC as of October 2008.

d) NOx Control Strategies

Although not as mature as PM control strategies in general, significant research into NOx control strategies that may be suitable for ret rofit use is being conducted and a number of NOx control strategies for diesel engines are nearing commercial readiness.

(1) Exhaust Gas Recirculation (EGR)

EGR is an effective engine control method for reduc ing NOx emissions that has been used in many new engine applications for the past f ive years. A valve connected to the exhaust system allows a controlled portion of spent combustion gases to circulate back into the intake system where it mixes with precombu stion air. The exhaust serves as a diluent to lower the in cylinder oxygen concentrati on and also to increase the heat capacity of the air/fuel mixture. This reduces pea k combustion temperature and the rate of combustion, thus reducing NOx emissions. Though much less prevalent than EGR systems for new engines, EGR retrofits are in use b oth in Europe and in the United States. One such system which is combined with a p assive DPF is currently verified for certain on-road engines in California. Typical NOx reductions achieved by EGR retrofits are about 40 to 50 percent.

The Johnson Matthey EGRT emission control system combines their CRT® system with EGR technology. Engine exhaust flows through a 2-st age CRT diesel particulate filter to reduce CO, PM, and HC. The EGR system re-circulate s cooled, particulate-free exhaust back into the engine intake – resulting in a significant NOx reduction with no efficiency loss in the engine.

(2) Lean-NOx Catalyst Systems

Another aftertreatment-based NOx control technology is referred to as a lean-NOx catalyst (LNC). Similar in principle to an SCR sys tem, an LNC system relies on injection of a reductant, typically diesel fuel, up stream of the catalyst to reduce NOx-82-

emissions. The NOx reductions achievable by LNC te chnology are sensitive to the exhaust temperature and type of hydrocarbon used, b ut is typically in the neighborhood of 20 to 30 percent.

The Cleaire Longview integrates a NOx reduction cat alyst and catalyzed wall flow silicon carbide DPF to provide simultaneous reducti on of NOx, PM, HC, and CO. The Longview system monitors various parameters and con trols the amount NOx reductant injected into the system to achieve a verified 25 p ercent reduction of NOx emissions (See Figure VII-3).

Figure VII-3: Cleaire Longview Lean-NOx Catalyst Sy stem

(3) Selective Catalytic Reduction (SCR)

SCR systems are just now emerging as a retrofit opt ion in the United States and are expected to be widely used to meet U.S. EPA new on- road engine standards starting in 2010. SCR systems are a form of aftertreatment tec hnology that uses a reductant, typically urea, to convert NOx to nitrogen and oxyg en over a catalyst. A precise amount of reductant is injected into the exhaust upstream of the catalyst. If the reductant is well mixed with the exhaust and the exhaust temperature is adequate, (typically between 250 and 450oC) an SCR system can achieve NOx reduct ions on the order of 50 to 90 percent. SCR technology is already mature in stati onary applications, and is beginning to emerge as a NOx control solution for in-use mobi le sources. One of the challenges facing SCR technology is the practical need to ensu re that the end-user maintains a continuous supply of reductant. Urea, as reductant , is currently is not as commercially available as diesel fuel. However, with the antici pated widespread introduction of SCR in new 2010 and later diesel engines, staff expects that urea availability will quickly expand. Also, if urea is not present in the SCR un it, it will not cause any intrinsic engine or vehicle operational problems.-83-

Although not as widely applicable as DPFs, SCR syst ems may be suitable for certain retrofit applications, and a number of demonstratio n programs in California and across the country are underway. A discussion of SCR demo nstration programs currently underway is provided later in this chapter.

Despite the potentially significant NOx reductions SCR can provide, exhaust temperatures (or duty cycle limitations) will likel y dictate the actual suitability of certain vehicles to use SCR or other NOx control technologi es in exhaust retrofit applications. In general, SCR systems need to operate in temperat ure ranges similar to those required for passive DPF systems. No level 2 or 3 systems in conjunction with SCR are currently verified.

Johnson Matthey has developed a 4-Way emission cont rol technology system called the SCRT, which reduces NOx by 70-90 percent and PM by over 90 percent (See Figure VII-4). It also reduces CO and HC. The ure a based SCR technology is combined with Johnson Matthey’s 2-stage CRT® partic ulate filter system where the engine exhaust flows through to reduce CO, PM, and HC. A controlled amount of urea is then injected into the exhaust before it enters the SCR catalyst bed providing the necessary chemical conditions for the SCR catalyst to reduce NOx.

Figure VII-4: Johnson Matthey SCRT System

B. Verification of Diesel Emission Control Strategi es

1. ARB’s Diesel Emission Control Strategies Verific ation Program

ARB’s verification program evaluates the applicabil ity, durability, and effectiveness of PM and NOx control technology. Verification is an approval from ARB which assures

end users that a verified retrofit device achieves its advertised emission reductions and is durable (based on in-use field testing). ARB ad opted a procedure to verify DECS in 2003 (title 13, CCR, sections 2700 et seq.). A DEC S is a device that is installed onto an in-use engine to reduce emissions for that engine, is not part of the new engine-84-

certification program, and is not covered through t he new engine or emission warranty from the engine manufacturer. The purpose of the v erification procedure is to verify strategies and systems that reduce diesel PM and/or NOx emissions from in-use engines. Under the verification program, the devic e manufacturer is required to provide a warranty against engine damage caused by the DECS . The minimum warranty period for on-road devices is listed in Table VII-5. To p rotect the end user, only ARB verified

DECS can be used in all of ARB’s mandated and most of its voluntary retrofit programs.

Table VII-5: Diesel Emission Control Strategy Warra nty Period

Engine Size Minimum Warranty

Period Light-heavy-duty, 70 to 170 hp, GVWR less than 19,500 lbs. 5 years or 60,000 miles

Medium-heavy duty, 170 to 250 hp, GVWR from 19,500 lbs. to 33,000 lbs. 5 years or 100,000 miles

Heavy-heavy duty, exceeds 250 hp, GVWR exceeds 33,000 lbs. 5 years or 150,000 miles

Heavy-heavy duty, exceeds 250 hp, GVWR exceeds 33,000 lbs., and the vehicle is: 1. Typically driven over 100,000 miles per year, and

2. Has less than 300,000 miles on the

odometer at the time of installation. 2 years, unlimited miles

ARB’s verification procedure is a multi-level verif ication program consisting of three broad levels used to establish PM reductions, which are defined by a lower bound in performance, and optional NOx reduction levels. Cu rrently, reductions in NOx are not required for verification, but ARB’s procedure reco gnizes and verifies NOx reductions that are greater than or equal to 15 percent in 5 p ercent increments.

To enable more broadly defined verifications, staff proposed amendments to the verification program at the Board’s January, 2008, meeting to use a verification ranking for NOx reductions similar to that used for PM (See Table VII-6) (ARB, 2007). Staff’s proposal is to use five levels, called Marks, defin ed by lower bounds of NOx reduction performance. To be eligible for verification, devi ces which achieve NOx reductions must also achieve PM reductions. Although, systems that achieve NOx reductions alone are currently not candidates for verification under the Procedure, staff proposed to change this on a limited basis. Under this amendme nt, staff proposed to allow for the verification of NOx only systems that are intended to be used on engines that are certified to a 0.01 grams per brake-horsepower (g/b hp-hr) PM standard. The proposed amendments where adopted by the Board January 24, 2 008, and are expected to take effect by the end of 2008. To view more on the pro posed changes visit the ARB website http://www.arb.ca.gov/regact/2008/verdev200 8/verdev2008.htm

.-85-

Table VII-6: Diesel Emission Control Strategy Verif ication Levels (as adopted by the Board in January 2008)

Pollutant Reduction Classification

< 25% Not verified

> 25% Level 1

> 50% Level 2 PM

> 85%,

or < 0.01g/bhp-hr Level 3

< 25% Not verified

> 25% Mark 1

> 40% Mark 2

> 55% Mark 3

> 70% Mark 4 NOx

> 85% Mark 5

Many diesel emission control systems, in particular catalyzed DPFs, increase the

amount of NO 2 in the exhaust in order to burn off soot that has collected in the filter.

Because NO 2 has adverse health impacts arising from direct exp osure as well as from its role in the formation of ozone and secondary pa rticulate matter, the allowable

increase of NO 2 to total NOx emitted from a DECS to be verified wa s capped by the Board in 2006. Under these provisions, a 20 percen t NO 2 limit takes effect on January 1, 2009. Devices that meet the 20 percent NO 2 limit are designated as “Plus” systems. Because the NO 2 limit will decrease at the end of 2008, manufactur ers of a number of currently verified devices will have to r eformulate their devices and submit an application for re-verification, or their devices w ill no longer be verified.

The verification program has broadened both the spe ctrum of control technologies

available for use in California’s diesel emission c ontrol effort and the number and types of vehicles and engines that can be controlled. Th is multi-level approach to verification is consistent with the goal of achieving the maximu m reductions in diesel PM emissions that are economically and technologically feasible. At this time, nearly all the verified emissions control strategies are exhaust aftertreat ment devices.

The verification procedure requires considerable da ta to demonstrate emission reductions and durability. Any DECS that uses a fu el additive must demonstrate that it is non-toxic in all media by going through a multim edia assessment.

2. United States Environmental Protection Agency's (U.S. EPA's) Voluntary Diesel Retrofit Program

The U.S. EPA has also established its own Voluntary Diesel Retrofit Program, which also verifies DECS using criteria which are similar to the ARB’s verification program. To facilitate the exchange of information between prog rams, ARB and U.S. EPA signed a Memorandum of Agreement (MOA) for the Coordination and Reciprocity in Diesel

Retrofit Device Verification. The MOA establishes reciprocity in verifications of hardware or device-based retrofits, and further rei nforces U.S. EPA's and ARB's-86-

commitment to cooperate on the evaluation of retrof it technologies. Under the MOA, U.S. EPA and ARB are committed to work toward accep ting PM and NOx verification levels assigned by the other's verification program s. Additionally, as retrofit manufacturers initiate and conduct in-use testing, U.S. EPA and ARB agreed to coordinate this testing so data generated may satis fy the requirements of each program. This MOA is intended to expedite the verification a nd introduction of innovative emission reduction technologies.

3. European Union Exhaust Emission Requirements

A diesel exhaust emission requirement in the Europe an Unions (EU) has existed since the late 1980s for heavy vehicles. The current req uirement regulates four groups of compounds, NOx, HC, CO, and PM. Heavy vehicles are measured in relations to the engine power (g/kWh) and are subject to two test cy cles used since 2000, one transient and one stationary, consisting of a sequence of con stant engine speed and load modes. In December 2003, the EU, United States, Japan, and China agreed to draw up a common scientific platform to measure and benchmark air pollution from vehicle traffic. When the EU adopted the Euro 4 requirement in 2005, DPFs were necessary on most larger engines. Today, the EU requirements permit somewhat higher PM and NOx emissions than the requirements in the U.S. and Jap an (Acid News, 2004).

C. List of ARB Verified Technologies

Table VII-7 and Table VII-8 show a summary of DECS verified by ARB as of October 2008. The proposed regulation would not recognize a Level 1 device as BACT. As

such Level 1 devices are not shown in the table.-87- Table VII-7: Verified Level 3 DECS (as of October 2 008)

Product Name Technology

Type P

L

U

S PM

Reduction NOx

Reduction Applicability

Cleaire Horizon DPF + 85% N/A Most on-road engines

Cleaire Longview Catalyst and

DPF 85% 25% Most 1993-2006 model year on-road engines

Donaldson DPM DPF + 85% N/A. Most 1993-2006 model year on-road engines

HUSS FS_MK DPF + 85% N/A Most on-road engines

International

Truck DPX DPF 85% N/A. Most 1994-2003 model year on-road Navistar engines
Johnson Matthey
CRT DPF 85% N/A. Most 1994 - 2006 model year onroad engines

Johnson Matthey

EGRT EGR/DPF + 85% 40% Most 1998 – 2001 model yearInternational, Cummins and DDC onroad engines
ECSystem

Purifilter DPF + 85% N/A Most 1993-2006 model year on-road engines

Table VII-8: Verified Level 2 DECS (as of October 2 008)

Product Name Technology Type P

L

U

S PM

Reduction NOx

Reduction Applicability

Donaldson DPM Flow Through Filter + 50% N/A Most 1991-2002 model year on-road engines

Lubrizol PuriNOx Emulsified Fuel + 50% 15% Most 1988-2003 model year on-road engines

Environmental

Solutions Worldwide

Particulate ReactorTM DOC 50% N/A Most 1991-1997 model year on-road engines

Whenever a verification is approved, an Executive O rder (EO) is issued describing the engine conditions of the verification. To determin e if a particular DECS will work with a specific engine and vehicle combination, the condit ions contained in the EO must be followed. The EO lists the engines by engine famil y and other conditions of verification, such as minimum engine exhaust temperature. Additi onal evaluations may then be needed, such as data logging the duty cycle of the vehicles to determine its temperature profile, or opacity test to determine the engine ou t PM loading of the vehicle.

This list is subject to change as additional system s are verified. The most current list of verified DECS, applicable engine families, as well as the EO letters may be found on the ARB web site, http://www.arb.ca.gov/diesel/verdev/vt/cvt.htm

.-88-

D. Summary of On-Road Installations of Exhaust Retr ofits

Retrofit technology programs have been initiated wo rldwide including in Sweden, Switzerland, United Kingdom, Hong Kong, Japan, Kore a, Mexico, and other countries throughout the world.

1. PM Exhaust Retrofits

The interest in new programs for DPF has significan tly grown in the last few years. A limited number of DPF installations began in the 19 80s. However, today over 200,000 DPFs have been installed internationally (MECA, 200 6a). Presently, under the ARB verified technologies, several manufacturers have v erified DPFs providing a PM reduction of around 85 percent (Level 3). DPFs hav e been installed in many urban

buses and sanitation vehicles statewide and across the country. In California alone over 720 DPFs have been installed through the Carl Moyer program and because of ARB’s fleet rules. Internationally, more than 4,00 0 buses have been retrofitted in Sweden, and heavy-duty vehicles in Europe, Mexico, and Japan also have been retrofitted (MECA, 2006b). Additionally, DPFs have been retrofitted on heavy-duty vehicles in Great Britain, Germany, Finland, Denmar k, Switzerland, Austria, and France.

California has several projects utilizing DPFs on d iesel vehicles currently underway.

School buses were one of the first vehicle classes to be retrofitted. Generally, school bus engines manufactured before 1987 cannot be retr ofitted with either a passive or active DPF due to the lack of availability of verif ied devices for 2 stroke diesel engines. Depending on the year manufactured, school bus engi nes manufactured after 1987 are good candidates for active and passive DPFs.

2. Retrofits Funded through California Incentive Pr ograms

ARB has provided funding for many projects through the Carl Moyer Memorial Air Quality Standards Attainment (Carl Moyer) Program. Originally, the primary objective of the program focused on NOx emissions reductions, bu t changes were enacted by the Legislature in 2004 to allow consideration of proje cts designed to reduce exclusively PM or HC emissions retrofits of virtually all on-road and off-road diesel engines. A sample of Carl Moyer projects in the Sacramento, South Coa st and Bay Area Air Quality Management Districts is identified in Appendix H fo r 2004-2005, or Year 7 of the Carl Moyer Program, and the devices listed reflect the n ewest generation of devices applicable to recent projects. A summary of 280 re trofits installed on engine model years is shown in the Table VII-9 below.-89- Table VII-9 Summary of Carl Moyer Projects

Engine Model Year Total

Pre 1994 17

1994-2002 237

2003-2006 26

Total 280

Since 2001, through the Lower Emission School Bus P rogram, ARB has successfully dispersed funds to equip about 3,800 diesel buses w ith verified DECS, of which 2,800 are verified level 3 devices. In addition, the pro gram partners with school districts and local air districts who have equipped an additional 871 verified level 3 devices. Additional program funding is available through Pro position 1B, the Highway Safety, Traffic Reduction, Air Quality, and Port Security B ond Act of 2006. Through the use of Proposition 1B funds, it is estimated that up to an additional 3,500 existing diesel buses will be retrofitted with ARB verified pollution con trol equipment.

The following photos in Figure VII-5, Figure VII-6, Figure VII-7, and Figure VII-8 demonstrate the wide variety of applications and in stallations possible for DPFs.

Figure VII-5: Under Chassis Horizontal DPF Muffler Installation-90- Figure VII-6: Horizontal DPF Installation for Vertic al Exhaust

Figure VII-7: Donaldson Horizontal DPF Installation on School Bus-91- Figure VII-8: Vertical DECS Installations on Tanker and Tractor

3. NOx Retrofits

DPFs can be combined LNC, EGR, or SCR to achieve si gnificant combined NOx and PM reductions. LNC technology is attractive becaus e it does not require core engine

modifications or additional infrastructure and can be installed on older engines. There have been more than 1,000 LNC placed systems in ser vice in the U.S.

Low pressure EGR retrofits have been installed in m ore than 1,000 engines in the U.S. and over 450 have been installed in engines in Hong Kong and on some existing Swedish urban buses (Meca, 2006a).

SCR technology has been equipped in numerous new ve hicles in Europe. The rate has increased from 30,000 vehicles in 2006 to 500,000 h eavy-duty SCR clean diesel trucks in 2008 (Diesel Progress, 2008). The rate is conti nuing to climb as more companies upgrade their fleets. In addition, SCR systems hav e successfully been installed on 30 line-haul trucks in Germany. In the United States, most engine manufactures have announced that they will add SCR aftertreatment to their heavy-duty and new midrange engines products beginning 2010.

In addition, many SCR retrofit projects are current ly underway in the U.S. (CCJ Magazine, 2008). In 2008, the Sacramento Metropoli tan Air Quality Management District and the Sacramento Emergency Clean Air and Transportation program provided a $500,000 grant to retrofit a fleet of 16 older cl ass 8 trucks owned by northern California grocery store chain Raley's with Johnson Matthey's latest diesel emissions technology, the SCRT® system. A picture of one of their installations is provided in Figure VII-9. Johnson Matthey is conducting a simi lar demonstration in southern California (in partnership with the South Coast Air Quality Management District) using-92-

the same number of trucks, ranging from 4 to 10 yea rs old owned and operated by Ralph’s Supermarkets.

The preliminary findings on this technology after 1 ,000 hour testing were that the SCRT® system reduced engine-out NOx in the Raley's trucks by an average of 84 percent (compared to pre-retrofit levels). The tru cks involved were EGR-equipped 2004 Cummins, 400-horsepower ISM engines (Johnson Matthe y, 2008).

A summary of on-road vehicle (and equipment) or exh aust retrofit projects completed or underway worldwide can be found in Appendix H. The projects are organized by geographical location, the sponsor of the project, and project timeframe. A description of each project is given (Emissions Advantage, 2005 ; Environment Canada, 2004; Ministry of Environment, 2004; U.S. EPA, 2005; Dies elNet, 2002).

Figure VII-9: Vertical SCRT® System on Tractor – 50 to 90 percent NOx reduction

E. Anticipated Availability of Retrofits

During the first few years of the proposed regulati on, the projected increase in demand for verified PM DECS (typically diesel particulate filters) in California is less than 38,000-93-

units per year, which is about 15 percent of the to tal number of diesel particulate filters sold nationally each year (including those sold wit h new engines). Staff has contacted several diesel particulate filter manufacturers inq uiring about their manufacturing capacities, and they have indicated that their manu facturing facilities are capable of producing over a million diesel particulate filters on an annual basis. However, in the unlikely event that there is an unanticipated disru ption in the manufacturing, distribution and supply for diesel particulate filters, the prop osed regulation contains a provision to allow for manufacturing delays such that fleets are not penalized for such

circumstances.

F. References

Acid News, 2004. Acid News. Emission Standards fo r Light and Heavy Road Vehicles. September 2004. http://www.acidrain.org/pages/publications/factshee t/factsheet17.htm

ARB, 2003. California Air Resources Board. Staff Report: Initial Statement of Reasons for Proposed Rulemaking, Airborne Toxic Control Mea sure For In-Use Diesel-Fueled Transport Refrigeration Units (TRU) And TRU Generat or Sets, And Facilities Where TRUs Operate: Appendix B. October 2003. http://www.arb.ca.gov/regact/trude03/appb.doc

ARB, 2007. California Air Resources Board. Staff Report: Initial Statement of Reasons for Proposed Rulemaking, Proposed Amendments the Ve rification Procedure, Warranty and In-Use Compliance Requirements for In-Use Strat egies to Control Emissions from Diesel Engines. December 7, 2007. http://www.arb.ca.gov/regact/2008/verdev2008/isor.p df

CCJ Magazine, 2008. Commercial Carrier Journal Mag azine. Cummins to use SCR in 2010. August 2008. http://www.etrucker.com/apps/news/article.asp?id=71 547

Diesel Forum, 2006. Diesel Forum. Retrofitting Am erica’s Diesel Engines: A Guide To Cleaner Air Through Cleaner Diesel. November 2006. http://www.dieselforum.org/fileadmin/templates/Reso urces/RetrofitMaterialsFactSheets/ Retrofitting_America_s_Diesel_Engines_11-2006.pdf

DieselNet, 2002. DieselNet. Sweden: Environmental Zones Program (Trucks and Buses). April 2002. http://www.dieselnet.com/standards/se/zones.html

Diesel Progress, 2008. Diesel Progress. Power Gen erations Sets and Systems. pages 32 – 36. May 2008.

Emissions Advantage, 2005. Final Draft: Diesel Re trofit Technology and Program Experience. Submitted to U.S. Environmental Protec tion Agency. Submitted by Emissions Advantage, LLC. July 29, 2005.-94-

Environment Canada, 2004. Environment Canada. Low Sulphur Diesel and Transit Bus Retrofits Lessons Learned by the Region of Waterloo . October 10, 2004. http://www.ec.gc.ca/cleanair-irpur/CAOL/OGEB/ecolog y/LSF/LowSulphur_diesel_e.cfm

Johnson Matthey, 2008. Press Release: Johnson Mat they Technology Enables

World's Cleanest Class 8 Diesel Trucks to Hit the R oad in Sacramento. March 26,

2008. http://ect.jmcatalysts.com/applications-trucksandbu ses-news.php

MECA, 2006a. Manufacturers of Emission Controls As sociation. Retrofitting Emission Controls on Diesel-Powered Vehicles. April 2006.http://www.meca.org/galleries/defaultfile/MECA%20Diesel%20White%20Paper%200406%20(revise d).pdf

MECA, 2006b. Manufacturers of Emission Controls As sociation. Clean Air Facts: Emission Control Retrofit of Existing Diesel Engine s. February 2006. http://www.meca.org/galleries/default-file/dieselre trofact % 200106.pdf

Ministry of Environment, 2004. Ministry of Environ ment of Republic of Korea. MoE Launches Pilot Emission Reduction Project on Diesel Vehicles. May 11, 2004. http://eng.me.go.kr/docs/news/press_view.html?seq=2 64

U.S. EPA, 2002. United States Environmental Protec tion Agency. Impacts of Lubrizol’s

PuriNOx Water/Diesel Emulsion on Exhaust Emissions from Heavy-Duty Engines.

December 2002. http://www.epa.gov/OMS/models/p02007.pdf

U.S. EPA, 2005. United States Environmental Protec tion Agency. Diesel Retrofit Project in China. November 10, 2005. http://www.epa.gov/OMS/retrofit/china2.htm-95-

VIII. C URRENT AND F UTURE E NGINE T ECHNOLOGY

This chapter discusses new on-road engine standards , and current and future engine technologies that will be available to meet the NOx and PM performance standards of the proposed regulation. This includes the use of n ew diesel engines, as well as hybrid and alternatively-fueled engines.

A. New On-Road Diesel Engine Standards

1. Emission Standards Overview

Heavy-duty vehicle (HDV) gaseous emissions were fir st regulated by California in 1969, and later by the U.S. EPA in 1974 (ARB, 1998a). Ov er the years, California had set its own diesel emission standards, apart from U.S. EPA, until ARB approved a State Implementation Plan (SIP) for ozone in 1994. The S IP contained measures calling for new state and national emission standards for highw ay heavy-duty diesel vehicles beginning in 2004. In June 1995, ARB, U.S. EPA, an d the manufacturers of heavy-duty vehicle engines signed a statement of principles (S OP) agreeing on the harmonization of ARB and U.S. EPA heavy-duty vehicle or engine re gulations. In October 1997, U.S. EPA adopted 2004 emission standards, along with cha nges to the existing federal averaging, banking, and trading program (ABT), for heavy-duty diesel engines sold in the other 49 states. ARB then adopted the U.S. EPA 2004 emission standard in 1998 (ARB, 1998b). Table VIII-1 shows the U.S. EPA heav y duty diesel engine emission standard changes over the years (U.S. EPA, 2007).-96-

Table VIII-1: U.S. EPA Heavy-Duty Diesel Engine Emi ssion Standards

Engine

Model Year Hydrocarbon

(HC) Carbon

Monoxide (CO) Oxides of

Nitrogen (NOx) HC+NOx Particulate

Matter (PM)

1974-78 13 --- 40 --- 16 ---

1979-83 14 1.5 25 --- 10 ---

1984-87 1.3 15.5 10.7 --- ---

1988-89 1.3 15.5 10.7 --- 0.6

1990 1.3 15.5 6.0 --- 0.6

1991-93 1.3 15.5 5.0 --- 0.25

1994-97 1.3 15.5 5.0 --- 0.1

1998-2003 1.3 15.5 4.0 --- 0.1

2004-06 15, 16 0.5 15.5 2.0 2.4/2.5 15, 16 0.1

2007 + 17 0.14 15.5 0.20 --- 0.01

To meet lower NOx emissions standards in 2004, engi ne manufacturers primarily used exhaust gas recirculation technology along with oth er design changes. The 2007 engine standard required additional reductions in N Ox emissions and a 90 percent reduction in particulate matter emissions. The U.S EPA took a “systems” approach when adopting the 2007 or later model year emission standards by also adopting diesel fuel standards with very low sulfur content. To me et the new engine standard, engine manufacturers further reduced NOx emissions by impr oving enhanced exhaust gas recirculation and by incorporating other design cha nges. However, to meet the PM standard, the widespread introduction of exhaust af ter treatment technology was required. Nearly all heavy-duty diesel engines man ufactured in 2007 had exhaust after treatment control technology.

2. Consent Decree

In the 1990s, 7 large manufacturers of heavy-duty d iesel engines (HDDEs) violated certification regulations by turning off, or defeat ing, emission control equipment during in-use highway driving. To address this violation, the Department of Justice, the United States Environmental Protection Agency and the ARB signed consent decrees with the 7 engine manufacturers. In the consent decrees, th e settling manufacturers were

13 Combined HC+NOx standard of 16 g/bhp-hr.

14 Combined HC+NOx g/bhp-hr.

15 Under a consent decree with EPA, many engine manu facturers implemented the 2004

standards in October 2002.

16 Emission Standard allows for the options of 2.4 g /bhp-hr non-methane.

17 Emission standards phased in between 2007 and 201 0 for NOx and Nonmethane Hydrocarbons. Phase-in compliance is based on a per cent-of-sales: 50 percent compliance between 2007 and 2009 and 100 percent compliance in 2010. No phase-in schedule applies to particulate matter emission standards which must be met starting with the 2007 engine model year.-97-

required, among other things, to produce HDDEs that comply with prescribed emission standards that are lower than those required in the y state and federal regulations at that time (U.S. DOJ, 1998). Specifically, these engines were required to meet a 2.5 gram per brake horsepower-hour (g/bhp-hr) standard for n on-methane hydrocarbons (NMHC) plus oxides of nitrogen (NOx) emissions no later th an October 1, 2002 (about 50 percent lower than the engines produced at the time ). In addition, because it was found that the Federal Test Procedure (FTP) was not adequ ate to ensure that exhaust emissions were controlled during all in-use driving , it was agreed that compliance with supplemental test procedures would be necessary. T hus, the majority of the settling manufacturers agreed to produce engines by October 1, 2002, that would meet supplemental test procedures including the Not-To-E xceed test and the EURO III European Stationary Cycle (ESC) test. The consent decree states that these requirements were to be met for a period of 2 years . Together with the FTP test, the supplemental test procedures required control of em issions during the majority of real world operating conditions to ensure that in the fu ture defeat devices would no longer be employed.

3. U.S. EPA 2007 and Later MY Emission Standards

In January of 2001, the U.S. EPA followed the 2004 Final Rule with another rule to reduce emission standards for 2007 and subsequent m odel year heavy-duty engines, in light of the advance development of the aftertreatm ent technologies. When fully implemented, these emission standards represent a 9 0 percent reduction of NOx emissions, 72 percent reduction of non-methane hydr ocarbon (NMHC) emissions, and 90 percent reduction of PM emissions compared to th e 2004 emission standards (ARB, 2001). The emission standards are applicable to bo th natural gas-fueled engines and liquefied petroleum gas-fueled engines derived from the diesel cycle engine.

The standards for NOx and NMHC emissions are phased in from 2007 to 2010, and provide engine manufacturers an average banking and trading program to encourage the early introduction of cleaner engines. The pha se in schedules shown in Table VIII-2, which represents the percentage of new engi nes produced for sale in California that are required to meet the more stringent emissi on standards beginning in 2007. Full implementation is required starting with the 2009 m odel year.

Table VIII-2: Exhaust Emission Standards and Phase- In Schedule for 2007 and

Later Model Year Heavy-Duty Diesel On-Road Engines

Phase in by Model Year (percent of sales) Pollutant Standard

(g/bhp-hr) 2007 2008 2009 2010

NOx 0.20 50% 50% 50% 100%

NMHC 0.14 50% 50% 50% 100%

PM 0.01 100% 100% 100% 100%-98- a) Ultra-Low Sulfur Diesel Requirement

The U.S. EPA’s 2007 Final Rule began to phase-in in model year 2007 (full compliance not required until 2010) and applied to heavy-duty highway engines and vehicles (CFR, 2007a). These standards were based on a “systems” a pproach. It relied on the use of low sulfur fuel and the use of high efficiency cata lytic exhaust emission control devices or comparably effective technologies. ULSD (ultra low sulfur diesel) enables advanced pollution control technology for trucks and buses s o that engine manufacturers can meet the 2007 emission standards. EPA has required the sulfur content to be reduced to 15 parts per million. Refiners began producing the cleaner burning diesel fuel, ULSD, for use in highway vehicles nationwide beginning Ju ne 1, 2006 (U.S. EPA, 2000).

b) California Adoption of U.S. EPA 2007 and Later M Y Emission

Standards

The California amendments include nearly identical emission standards, test procedures, and other requirements contained in the U.S. EPA’s 2007 Final Rule (ARB, 2001b). In addition to the emission standards and test procedures, other requirements include the elimination of the current exemption th at allows turbocharger-equipped engines to vent crankcase emissions to the ambient air. The amendments ensure that the requirements for 2007 and subsequent model year HDDEs are identical to those adopted by the U.S. EPA in January 2001.

c) Credit for Early Compliance of U.S. EPA 2007 Emi ssion Standards

The U.S. EPA’s 2007 Final Rule provides incentives for early introduction of lower emitting engines (CFR, 2007b). Engines that satisf y the adopted requirements and that are introduced into the marketplace before 2007, wi ll receive credits equal to 1.5 times the number of diesel-cycle engines that are introdu ced prior to 2007. For example, two early introduction engines will reduce the number o f required phased in engines during 2007-2009 by three. Each early engine must meet al l requirements applicable to the 2007 model year engines. If the engine complies onl y with the PM requirements, then the offsets may be used only for 2007 PM credits. Engines that can meet one half of the adopted NOx emission standard (0.10 grams per b rake horsepower-hour) earlier than the phase in period, in addition to all other requirements applicable to the 2007 model year engines, will be classified as “Blue Sky Series” engines. 18 These engines

will receive a credit of 2.0 times the number of 20 07 model year compliant engines. For example, two “Blue Sky Series” engines will reduce the number of required phased in engines by 4.

d) Averaging, Banking, and Trading program

The U.S. EPA adopted a special provision for the Av eraging, Banking, and Trading program in the final rule that allows a manufacture r to create a single engine family meeting both the phase out and phase in standards d uring 2007-09 through averaging (CFR, 2007b). These provisions allow a manufacture r to split an engine family,

18 Engines with lower emission levels than the manda tory standards (U.S. EPA, 2002).-99-

declaring half of the engines in it to be “phase ou t” engines, generating credits against the 2.5 g/bhp-hr NMHC+NOx standard, and half to be “phase in” engines, using these credits to demonstrate compliance with the 0.20 NOx standard. A single set of Family Emission Limits (FELs) would be declared for both s ubfamilies, and no banked credits or credits from other engine families could be used , or vice-versa. As a result, a manufacturer could, if desired, produce only engine s meeting approximately a 1.2 g/hphr NOx FEL during the 2007-09 model years. 19, 20 This corresponds to a roughly 50 percent NOx reduction on a 2.5 g/hp-hr NOx+NMHC eng ine. None of these split family provisions affect the separate requirement to demon strate compliance with the 0.01 g/bhp-hr PM standard. Some manufacturers have suff icient credit so that they will not need to produce engines meeting the 0.2 g/bhp-hr NO x standard until 2011 or 2012. The NTE limits require the engines to be certified to a maximum of 0.5 g/bhp-hr.

B. New Diesel Engines

As discussed in above, since 2007, both ARB and U.S . EPA have required that the new diesel engines meet a more stringent PM and NOx emi ssion standards.

1. Controls to Meet PM Requirements

For PM, all engines must meet the same PM standard of 0.01 g/bhp-hr. This has meant that since 2007, most medium-heavy and heavy-heavy duty diesel engines produced have been equipped with DPFs from the engine manufa cturer. Typical DPF designs have included systems that are a hybrid of a purely active and passive system, which allows for better control of filter regeneration ov er a much wider set of engine operating parameters than either type of system could handle individually. For example, such a system would operate in an active mode during prolo nged low temperature applications, while later operating similar to a passive system u nder high load, high temperature applications.

2. Controls to Meet NOx Requirements

While the requirements for PM controls were not pha sed in, for NOx, the 2007 and later standard of 0.2 g/bhp-hr is phased in between 2007 and 2010 (when 100 percent of production must meet this standard). Under the sta ndards, only a percentage of each model year’s production (50 percent) is required to meet the standard, or as an alternative, all production from a particular manuf acturer must meet an equivalent average. This has meant that most engines produced between 2007 and 2009 have actually met a 1.2 g/bhp-hr NOx standard, which is halfway between the 2006 standard of 2.5 g/bhp-hr and the 2010 standard of 0.2 g/bhp- hr. This has allowed engine

19 The NOx FEL of the split family could vary somewh at depending on the NMHC emissions level, from 1.16 for an engine emitting at the 0.14 g/bhp-hr NMHC standard, to 1.22 for an engine emitting no NMHC.

20 It should be noted too that this level is within the threshold values for application of the in-use add-on standards (1.3 g/bhp-hr NOx threshold) and t he 1.5x NTE NOx and NMHC multipliers (1.5 g/hp-hr NOx threshold) (see 40 CFR 86.007-11(a )(3) and (4)).-100-

manufacturers to phase in the introduction of new N Ox control technology, which has been a mix of engine and combustion changes. Howev er, to meet the 0.2 g/bhp-hr NOx standard, the use of exhaust aftertreatment will mo st likely be required.

a) Controls to Meet the 1.2 g/bhp-hr NOx Average

To reduce engine out NOx emissions to meet a 1.2 g/ bhp-hr NOx average, engine manufacturers in the recent years utilized a number of different emission control strategies, including:

• turbocharging;

• cooled exhaust recirculation;

• high pressure fuel injection;

• changes to injection timing, and;

• combustion chamber design optimization.

Turbocharging is a system that utilizes engine exha ust gases, coupled with an air pump, to supply higher pressure intake air to engine, pro viding a higher air fuel ratio. Generally, an intercooler would be also used to red uce the compressed air temperature. This would permit more air to enter the combustion chamber producing better engine efficiency and performance.

The use of cooled EGR will lower the peak flame tem perature by diverting small amounts of exhaust gases to mix with the incoming a ir/fuel charge. Typically, the recirculated gas would be cooled by an EGR cooler bef ore mixing with the incoming fuel.

Changes to the combustion process, such as increase d fuel injection pressures, changes (delays) to engine timing, and optimization of combustion chamber design will effectively control the temperature and pressure of the air/fuel mixture and the timing of the fuel injection to produce improved combustion c haracteristics and lower emissions.

The use of these technologies has had the effect of decreasing cylinder intake air temperatures, reducing peak flame temperature, and creating more uniform combustion propagation in the cylinder, which reduce overall e ngine out NOx emissions. In using these technologies, it was not necessary for engine manufacturers to use higher level NOx control technologies, such as SCR or other exha ust aftertreatment systems.

b) Controls to Meet the 0.2 g/bhp-hr NOx Average

Beginning in 2010 when all engines must meet the 0. 2 g/bhp-hr NOx standard, it will be increasingly more difficult for the engine manufact ures to meet the requirements by just engine modification alone. Consequently, engine m anufacturers have implemented or are considering implementing aftertreatment technol ogy to meet these very low NOx standards. As will be discussed later in this chap ter, this also includes the use of alternative fueled and hybrid engines.-101-

EGR has been commonly used in 2004-2009 model year engines for NOx control, and one engine manufacturer had indicated that it is ab le to meet the 2010 NOx emission requirement by hardware improvement based on the EG R. Through an enhanced cooled EGR, coupled with the high pressure fuel inj ection systems, it is believed that

sufficient NOx control can be achieved without the use of aftertreatment control in heavy-duty diesel engine applications.

However, most other engine manufacturers have indic ated that they intend to utilize SCR to achieve the required reductions in NOx emiss ions from 2010 and later diesel engines. The selection of this technology is based on a number of reasons, including:

• the high level of NOx control it provides;

• the maturity of the technology, and;

• substantial improvements in fuel economy.

Currently in Europe, there are over 300,000 commerc ial vehicles equipped with SCR systems (VDA, 2008). SCR systems can provide engin e out NOx reductions of 85 percent or greater when properly designed. In addi tion, heavy-duty vehicles equipped with SCR systems have demonstrated fuel economy sav ings of 5 percent or more. Cummins has built and shipped over 45,000 SCR engin es to date and Cummins Emission Solutions has built and shipped over 200,0 00 SCR systems (Cummins, 2008).

Currently, Cummins, Daimler (Detroit Diesel), Pacca r, Volvo, and Mack have announced their intention to use SCR system in thei r 2010 model year and later product offerings. Staff estimates that this mean that nea rly 80 percent of new engine production beginning in 2010 will have SCR installe d (Ward’s, 2007).

3. Impact of ABT on 2010 Engine Emissions

As part of the 2007 on-road engine standards, U.S. EPA adopted a special provision for the ABT program in final rule that allows a manufac turer to create a single engine family meeting both the phase out and phase in standards t hrough averaging during 2007- 2009 engine model year period. The ABT program per mits the engine manufacturers to generate emission credits from cleaner engines to o ffset the emissions from new manufactured engines that are dirtier.

Under this program, some manufacturers have acquire d sufficient credit so they will not need to produce engines meeting the 0.2 g/bhp-hr NO x standard until 2011 or 2012. In other words, there will be engines manufactured bey ond 2010 that, while certified to the 2010 model year emission standard, will actually pr oducing emissions higher than 2010

emission standards because of the use of emission c redits. The ABT program does cap the amount of credits that can be used for any given engine family, and no engine may be certified to a NOx level above 0.5 g/bhp-hr beginning in 2010.

Despite the availability of credits with many engin e manufacturers, as previously discussed, nearly all have are announced that they will use SCR in their 2010 and later-102-

product offerings, greatly minimizing the potential for less NOx reductions than anticipated from these engines.

C. Availability of Vehicles with Cleaner Engines

Between 2010 and 2014, staff estimates that demand for new or near-new vehicles as a result of the proposed regulation will increase to about 20,000 each year. Of this, staff expects that about 7,000 of these vehicles each yea r will be purchased new, with 2010 and later model year engines. The remaining 13,000 vehicles are expected to be nearnew used vehicles, having engines that are 5 years old or newer.

To evaluate whether there are sufficient vehicles a vailable to meet this demand, staff evaluated the availability of both new and used veh icles. In evaluating the availability of new vehicles, staff relied on data that shows that while new class 8 truck production has, as recently as a few years ago, been as high a s over 250,000 per year, recent demand has reduced this to about 150,000 annually. Medium-heavy duty vehicle sales in 2006 were over 200,000 trucks (Ward’s, 2007). S ince the proposed regulation will result in an incremental increase of only about 7,0 00 new vehicles a year, staff believes there is sufficient engine and vehicle production c apacity to meet this increased

demand.

Staff also considered the currently available avail ability of near-new used vehicles. In its evaluation, staff found over 100,000 used truck s for sale on just two popular used vehicle websites (Truckpaper.com, 2008) (Commercial trucktrader.com, 2008), with about 60 percent of the listings being vehicles tha t were 8 years old or newer. Based on the rate of new vehicle listings that are posted each month, staff estimates that over the course of year, over 150,000 used vehicle listi ngs for near-new used vehicles would be made on just these two websites alone. Since st aff estimates that the proposed regulation will necessitate the purchase of an addi tional 13,000 near-new used vehicles each year, and considering that California represen ts about 10 percent of the vehicle market, staff believes that there will be sufficien t used vehicles to meet the demands of fleets to comply with the regulation. When one con siders that this assessment did not

include vehicles that are available for sale each d ay at thousands of dealerships across the country, this assessment is highly conservative

.

Beyond 2014, staff expects the incremental demand f or replacement vehicles to decrease, reducing pressure on the used and new veh icle market to supply additional

vehicles to California.

D. Repowers

Repowering is often an attractive strategy for owne rs of vehicles whose engines have

reached the end of their useful life before the oth er vehicle components need retirement. Repowering is most cost effective when a new or newer vehicle replacement costs are much higher than the costs of repowering.-103-

While repowering is sometimes an attractive complia nce option for using newer, cleaner engines, it is not always a viable option for all v ehicle types and configurations due to space limitations and other requirements associated with newer, more advanced model year engines. In many cases, the existing engine c ompartment may be too small to physically fit the new engine, or does not allow fo r proper air circulation within the allowable space. In addition, repowers may often r equire significant changes or modifications to the cooling system, wiring harness , engine control module, exhaust system, and transmission. While some vehicles repo wered to 2004 to 2006 model year engines have been funded through the Carl Moyer Pro gram, the feasibility of repowering with vehicles to 2007-2010 model year en gines is unclear, and may be limited due to higher costs and limited space.

E. Hybrid Vehicles

Hybrid technology utilizes a combination of an engi ne and onboard energy storage system that provides motive power for starting and accelerating a vehicle, and recapturing energy when the vehicle is decelerated. Hybrid vehicles not only can provide reductions in diesel PM and NOx, typically through reduced fuel consumption, but can also reduce greenhouse gas emissions. In t he future, hybrid vehicles may become even more effective platforms for additional improvements in fuel efficiency and air quality. This would arise from the use of elec trification, more efficient components, the use of down-sized, optimized engines and combus tion schemes, and through enhanced energy storage systems.

1. Status of Industry and Availability

Hybrid truck technology has made significant stride s in the last several years and is now commercially available for certain vehicle types. However, unlike passenger cars where hybrid technology has been in production for nearly a decade, the first hybrid production trucks are only now just starting operation in the medium- and heavy-duty vehicle sector. Integrating hybrid technology into truck p latforms presents very different challenges than for passenger cars, and requires di fferent strategies and solutions involving packaging and weight concerns, system des igns, and component sizing.

So far, unlike the automotive industry, the leaders in medium- and heavy-duty hybrids are U.S. based manufacturers (WestStart-CALSTAR, 20 08). Many truck and system manufacturers are now developing heavy hybrid proto types or pre-production units; but this effort has not yet achieved critical mass. On e of the key early barriers to success is that production volumes are low, so (incremental) p rices remain high. Currently, truck and bus manufacturers produce a limited quantity of medium-duty hybrid vehicles for

sale in North America. Kenworth’s class 6 T270 and class 7 T370 hybrids, International’s medium duty DuraStar hybrid, Freigh tliner Business class M2e hybrid, and Peterbilt’s class 7 Model 335 are just few of t he hybrid vehicles available in the market today. The costs of hybrid vehicles are exp ected to decrease as production

volumes increase.-104-

2. Hybrid Application

Diesel engines are predominant in the heavy-duty ve hicle sector because of the power, efficiency, durability, and reliability they provid e. In certain applications, a diesel-electric hybrid system can increase several of these importa nt advantages, in that it can add more power at low engine speeds and improve diesel’ s already high efficiency. Since hybrids create some of their efficiency gains throu gh regenerative braking and poweron-demand, the applications that benefit most from diesel-electric hybrid technology are those that are driven in stop and go conditions, su ch as transit buses and urban delivery vehicles, or applications where diesel engines woul d otherwise idle to perform work while stationary, such as in utility boom trucks. Moreover, such fleets are often subject to public policy initiatives that require or encour age actions to reduce heavy-duty vehicle emissions, and diesel-electric hybrid technology is proving to be an effective means to meet those goals.

Studies have shown that in an urban test cycle, a h ybrid vehicle can produce fewer emissions (Barker and Hitchcock, 2003) and consumes less fuel (Electric Mobility Canada, 2007) than a comparable conventional diesel vehicle. Since hybrid vehicles use stored energy to assist or perform work, there is less energy demand on the engines. As a result, engine size can be reduced r elative to a conventional vehicle performing a similar function. Furthermore, regene rative braking can recover otherwise lost kinetic energy for use later, instead of relea sing it to the environment as heat. A utility truck is a good example of an application w here stored energy is used to perform on-site work and the activation of the diesel engin e during the on-site work is only needed to replenish the battery when the state of c harge becomes low. In this example, laboratory testing has shown an average fuel saving s of more than 25 percent (SwRI, 2007).

While long-haul, interstate tractor-trailer seldom apply their brakes (relative to more urban truck applications), and travel mostly on the open road, the benefit of hybrid technologies, which typically recoup energy “wasted ” when the brakes are applied, does not seem to be advantageous. However, hybrid vehic le manufacturers are making efforts to introduce hybrid technology to this mark et segment by taking advantage of changes in terrain a vehicle would see while travel ing. Using such an approach, a longhaul truck with hybrid technology could outperform a conventional tractor-trailer in terms of fuel savings. A good example would be a tractor -trailer transporting cargo across the mountains. In such case, the hybrid system on the vehicle will assist the tractor-trailer in climbing uphill, while recovering energy while t he vehicle is descending. The first class 8 prototype hybrid truck using hybrid technol ogy is expected to be placed into service in early 2009 (Buchholz, 2008).

3. Future of Hybrids

Staff believes that hybrid technology can and will play an important role in meeting AB32’s GHG emission reduction goal and California’s cleaner air needs. There are few technologies that can achieve the hybrid’s benefits of increasing efficiency while reducing emissions. While the production of hybrid diesel vehicles is low today, as fuel-105-

costs increase and hybrid technology matures, incre ased use of hybrid vehicles in the future is anticipated.

F. Alternative Fueled Vehicles

The use of alternative fueled vehicles provides ano ther viable method for fleet operators to reduce emissions from their fleet. Typically, a lternative fuels burn cleaner than diesel fuel leading to reduced emission. Alternative fuel s include natural gas, both liquefied and compressed, as well as propane, amongst the mos t common diesel fuel replacement (See Figure VIII-1). As of 2006, over 634,500 alternative fueled vehicles were in use in the United States, and over 105,000 of them were in California (U.S. DOE, 2008a).

Natural gas, both compressed and liquid form, is th e most widely used alternative fuel in medium- and heavy-duty vehicle applications. Natur al gas is primarily produced in North America and costs less per equivalent gallon of diesel. While the commercial refueling network is relatively well developed with in California, many stations remain open for private use only (CEC, 2008a). Several typ es of vehicles commonly operate on natural gas, including buses, street sweepers, vari ous tractors, step vans, yard trucks, and solid waste collection vehicles. Currently, Ca lifornia has over 30,000 alternative fueled buses using compressed and liquid natural ga s in transit fleet service. These types of buses typically have an incremental cost ( relative to a comparable diesel vehicle) of around $30,000 to $40,000, but this cos t can typically be recovered through lower per mile operating costs (UCS, 2008).

Major vehicle manufacturers have offered natural ga s buses in their product lines for many years. In 2007, 15 vehicle manufacturers prod uced heavy-duty trucks and buses utilizing alternative fuels (U.S. DOE, 2008b). Ove r the next several years, staff anticipates an increase in the number of alternativ e fueled vehicle engines available that are certified to the 0.2 g/bhp-hr NOx standard. Fo r example the Cummins Westport ISL G engine, certified in 2008, was the first engine t o meet the 0.2 g/bhp-hr NOx standard (Cummins Westport, 2008). In addition, certain air quality management jurisdictions require the use of alternative fuel vehicles in cer tain applications. For example, the SCAQMD actively requires many vehicles subject to t heir fleet regulations to operate on

alternative fuels.-106-

Figure VIII-1: Vehicle with Oversized Fuel Tank to A ccommodate the Lower Energy Density of Alternative Fuels

G. All Electric Heavy-Duty Vehicles

With continuing improvements in battery technology, the development of heavy-duty allelectric trucks is becoming a reality. All electri c vehicles can be ideal for short distance and inner city applications. Currently, the Port o f Los Angeles, working in conjunction with the SCAQMD, is conducting tests on a prototype heavy-duty all electric truck. This electric truck is designed to pull up to 60,000 pou nds with a top speed of 40 miles per hour. The battery on the truck can be recharged in a few hours, and the truck has a 60 mile range. Funding has been appropriated for tech nology improvements, manufacturing and testing of an additional 20 elect ric trucks. Testing for the additional vehicles is planned to begin in mid-2008.

H. References

ARB, 1998a. California Air Resources Board. Staff R eport: Initial Statement of Reasons for Proposed Amendments to Heavy-Duty Vehicle Regul ation: 2004 Emission Standards; Averaging, Banking and Trading; Optional Reduced Emission Standards; Certification Test Fuel; Labeling; Maintenance Requ irements and Warranties; March 6,

1998.

ARB, 1998b. California Air Resources Board. Final S tatement of Reasons for Proposed Amendments to Heavy-Duty Vehicle Regul ation: 2004 Emission Standards; Averaging, Banking and Trading; Optional Reduced Emission Standards; Certification Test Fuel; Labeling; Maintenance Requ irements and Warranties; April 23,

1998.-107-

ARB, 2001. California Air Resources Board. Staff Report. Initial Statement of Reasons for Proposed Rulemaking, Public Hearing to Consider Amendments Adopting More Stringent Emission Standards for 2007 and Subsequen t Model Year New Heavy-Duty Diesel Engines ; September 7, 2001.

Barker and Hitchcock, 2003. Barker, W and Hitchcoc k, D. Houston Advanced Research

Center. Assessment of Potential Emission Reduction s of Prototype Diesel/Electric Hybrid Pickup/Delivery Vehicles in the Houston-Galv eston Region. November 12,

2003.

Buchholz, 2008. Buchholz, K. Automotive Engineerin g International Online. Hybrid Class 8 trucks coming soon from Wal-Mart. June 19, 2008.

CEC, 2008a. California Energy Commission: Consumer Energy Center. Compressed Natural Gas (CNG) as a Transportation Fuel. August 2008. http://www.consumerenergycenter.org/transportation/ afvs/cng.html

CEC, 2008b. California Energy Commission: Consumer Energy Center. Alternative Fueled Vehicles. August 2008. http://www.consumerenergycenter.org/transportation/ afvs/index.html

CFR, 2007. Code of Federal Regulations. §86.004-4 0 Heavy-duty engine rebuilding practices. July 1, 2007.

CFR, 2007a. Code of Federal Regulations. Emission S tandards and Supplemental Requirements for 2007 and Later Model Year Diesel H eavyduty Engines and Vehicles; Title 40, Chapter 1, Part 86, Section 86.007-11; Ju ly 1, 2007.

Commercialtrucktrader.com, 2008

Cummins, 2008. Cummins 2010 Heavy Duty Customer Q & A, October 11, 2008

Cummins Westport, 2008. Cummins Westport, Inc. Ever y Alternative: ISL G. August

2008. http://www.cumminswestport.com/products/islg.php

Electric Mobility Canada, 2007. Electric Mobility Canada. Hybrid Vehicles in

Commercial Fleets in the Greater Toronto Area. Mar ch 2007.

SwRI, 2007. Southwest Research Institute. Emissio ns and Fuel Economy Testing of Three Utility Trucks. SwRI Project No. 03.11602. March 9, 2007.

Truckpaper.com, 2008-108-

UCS, 2008. Union of Concerned Scientists: Clean Veh icles. FAQ Natural Gas Vehicles. August 2008. http://www.ucsusa.org/clean_vehicles/big_rig_cleanu p/natural-gas-vehicles.html

U.S. DOE, 2008a. United States Department of Energy : Energy Information Administration. Alternatives to Traditional Transpo rtation Fuels 2006 (Part II - User and Fuel Data). Released May 2008. August 2008. http://www.eia.doe.gov/cneaf/alternate/page/atftabl es/afvtransfuel_II.html http://www.eia.doe.gov/cneaf/alternate/page/atftabl es/afvtrans_v14.xls http://www.eia.doe.gov/cneaf/alternate/page/atftabl es/afvtrans_v1.xls http://www.eia.doe.gov/cneaf/alternate/page/atftabl es/afvtrans_v2.xls

U.S. DOE, 2008b. United States Department of Energy : Alternative Fuels & Advanced

Vehicles Data Center. Vehicle Make and Model Search . August 2008. http://www.eere.energy.gov/afdc/progs/vehicles_sear ch.php

U.S. DOJ, 1998. United States Department of Justice . DOJ, EPA Announce One Billion Dollar Settlement with Diesel Engine Industry for C lean Air Violations; October 22,

1998.

U.S. EPA, 2000. United States Environmental Protect ion Agency, Office of Transportation and Air Quality. Regulatory Announce ment: Heavy-Duty Engine and Vehicle Standards and Highway Diesel Fuel Sulfur Co ntrol Requirements, EPA420-F00-057, U.S. EPA, December 2000.

U.S. EPA, 2002. United States Environmental Protect ion Agency, Office of Transportation and Air Quality. Program Update: Blu e Sky Series Engines, EPA420-F02-036, U.S. EPA, September 2002.

U.S. EPA, 2007. United States Environmental Protect ion Agency, Office of Transportation and Air Quality. Selecting Buses wit h the Most Up-to-Date Environmental Controls and Safety Measures, 2007. http://www.epa.gov/otaq/schoolbus/selecting.htm

VDA, 2008. Verband der Automobilindustrie. Symposi um at the 62nd IAA Commercial Vehicles. September 15, 2008.

Ward’s, 2007. Ward’s Automotive Group. U.S. Truck Sales by GVW Class and Source, 2007, Copyright 2008. Subscription Service. http://www.wardsauto.com

WestStart-CALSTAR, 2008, WestStart CALSTAR. Testim ony for the U.S. House Committee on Science and Technology Energy and Envi ronment Subcommittee June
10, 2008.-109-

IX. E XISTING D IESEL E MISSION R EDUCTION R EGULATIONS

A number of ARB regulations exist to reduce the emi ssions and risk from new and existing mobile diesel vehicles and equipment, and portable equipment powered by diesel engines. They include:

• Public transit agency - urban buses

• Public transit agency - transit fleet vehicles

• Solid waste collection vehicles

• Public agency and utility vehicles

• Drayage trucks

• Cargo handling equipment

• In-use off-road vehicles

• Transport refrigeration units

• Portable engines and equipment

• Diesel fuel standards

• Off-road engine standards

A. In-Use On-Road Diesel Vehicle Regulations

Because diesel engines can be rebuilt to extend the ir useful life, as a result, diesel engines typically have useful lifetimes in excess o f 1,000,000 miles. Current regulations allow the engine to be rebuilt to standards in effe ct at the time of manufacture rather than at the time of rebuild. This practice of rebu ilding older engines does not provide the emissions reductions that replacement with a ne wer cleaner engine (repowering) does. To address this issue, the Diesel RRP recomm ended a large-scale program to retrofit diesel particulate filters, and other feas ible technologies, on existing diesel engines.

Since 2000, the ARB has adopted five regulations re quiring the retrofit of in-use on-road

diesel vehicles with verified DECS to reduce emissi ons of PM and other criteria pollutants. Five of those regulations apply to on- road diesel vehicles. These regulations have been adopted to reduce emissions f rom urban buses, transit fleet vehicles, solid waste collection vehicles, public a gency and utility fleets, and drayage trucks. Table IX-1 lists the five regulations with their date of adoption, and the number of vehicles subject to each regulation.-110-

Table IX-1: Regulations Requiring Retrofits of On-R oad Diesel Vehicles

Regulation Adoption Date Number of Vehicles Regulated Urban Bus February 2000 9,000 Transit Fleet Vehicles February 2005 4,000 Solid Waste Collection Vehicles September 2003 13,0 00 Public Agencies and Utility Fleets February 2005 31 ,000 Drayage Trucks December 2007 100,000

1. Transit Urban Bus Fleets

In February 2000, the ARB adopted the Fleet for Tra nsit Agencies – Urban Bus requirements. Under the rule, urban bus operators were required to reduce NOx emissions from the urban bus fleet to meet a 4.8 g/ bhp-hr NOx fleet average and meet

fleet wide PM reductions relative to a baseline est ablished in 2002. Urban bus engine manufacturers were required to meet a more stringen t California urban bus exhaust emission standard through the 2006 model year, then starting with the 2007 model year, the standard would align with the California heavy- duty engine exhaust emission

standards.

Also, transit agency operators were required to cho ose between a diesel and an alternative fuel path. If a transit agency chose a diesel fuel path, then the transit agency was required to reduce the diesel PM emissions of i ts diesel urban bus fleet relative to its January 1, 2002, emissions by 40 percent in 200 4, 60 percent in 2005, and 85 percent in 2007.

The alternative fuel path option has both a purchas ing and emissions reduction component. For fleets on the alternative fuel path , at least 85 percent of annual urban bus purchases must be fueled by alternative fuels, which include CNG, propane (LPG), ethanol, methanol, gasoline/electric hybrid, electr icity, fuel cells, or advanced technologies that do not rely on diesel fuel. For transit agencies on the alternative fuel path, the 85 percent exhaust PM emission reductions requirement does not have to be met until January 1, 2009.

2. Transit Fleet Vehicles

In February 2005, the ARB adopted a regulation for transit fleet vehicles. These are vehicles that are not urban buses, that are greater than 8,500 pounds GVWR, powered by a heavy-duty engine, fueled by diesel or alterna tive fuel, and owned and operated by a transit agency. Like the urban bus regulation, t he transit fleet vehicle regulation has a NOx fleet average requirement and a requirement for PM emissions reduction. Each transit agency must reduce the fleet average NOx fo r its transit fleet vehicles to at least 3.2 g/bhp-hr by December 31, 2007, and further redu ce the average to at least 2.4 g/bhp-hr by December 31, 2010. The regulation also requires each transit agency

to reduce the total diesel PM emissions for its tra nsit fleet vehicles by 40 percent as of December 31, 2007, and by 80 percent as of December 31, 2010, compared to baseline-111-

emissions as of January 1, 2005. To allow for grow th, a transit agency may also meet a fleet PM average of 0.01 g/bhp-hr, in lieu of achie ving the final percent reduction requirement. Transit agencies may comply with the regulation’s requirements by using alternative fuels, retrofitting engines with verifi ed DECS or by replacing with engines or vehicles that meet the 2007 heavy-duty engine exhau st emission standards.

3. Solid Waste Collection Vehicles

This regulation, adopted in September 2003, reduces diesel PM emissions from dieselfueled commercial and residential solid waste and r ecycling collection vehicles. It applies to owners of heavy-duty diesel-fueled vehic les over 14,000 pounds GVWR, with model year engines from 1960 to 2006, that are used to collect residential and

commercial solid waste for a fee. Each fleet is di vided into three groups based on engine model year: Group 1 (1988-2002), Group 2 (1 960-1987), and Group 3 (2003-2006). Vehicle owners are required to apply best available control technology (BACT) to their vehicles according to a specified i mplementation schedule that sets compliance deadlines and the percentage of each gro up that must be equipped with BACT by each deadline. BACT is defined in this reg ulation as:

• an engine certified to the 2007 model year standar d of 0.01 g/bhp-hr PM standard;

• an engine certified to the 0.10 g/bhp-hr PM standa rd that is then equipped with the

most effective ARB-verified diesel emission control strategy such as a diesel particulate filter;

• application of the highest level ARB verified DECS to a diesel engine, or

• an alternative-fuel engine, or any diesel or dual- fuel engine retrofitted with an ARB verified DECS that reduces PM by the greatest amoun t possible for the particular engine and application.

4. Public Agency and Utility Fleets

In February 2005, ARB adopted a fleet regulation to reduce diesel PM emissions from vehicles operated by municipalities and utilities. The regulation applies to any municipality or utility that owns, leases, or opera tes on-road diesel-fueled heavy-duty vehicles with a 1960 to 2006 model year medium-heav y duty or heavy-heavy duty engine and a manufacturer’s GVWR greater than 14,00 0 pounds.

Each fleet is divided into three groups based on en gine model year: Group 1 (1960-1987), Group 2 (1988-2002), and Group 3 (2003 -2006). The municipalities and utilities are required to apply BACT to their vehic les according to a specified implementation schedule that sets compliance deadli nes and the percentage of each group that must be equipped with BACT by each deadl ine. BACT can be an alternative fuel engine, a diesel engine certified to a 0.01 g/ bhp-hr PM standard, or application of the highest level ARB verified DECS to a diesel eng ine. The implementation schedule for most fleets covered by the regulation is summar ized below in Table IX-2.-112-

Table IX-2: Implementation Schedule for Most Munici pal and Utility Fleets

Vehicles

Group Engine Model

Years Percentage

of Group to

use BACT Compliance

Deadline, as of

December 31st

1 1960 –1987 20%

60%

100% 2007

2009

2011

2 1988-2002 20%

60%

100% 2007

2009

2011

3 2003-2006

(Includes dualfuel and bi-fuel engines) 50%

100% 2009

2010

5. Drayage Trucks

In December 2007, the ARB adopted a regulation to r educe emissions from dieselfueled drayage trucks – described as trucks that tr ansport containers, bulk, and breakbulk goods to and from ports and intermodal rail ya rds. The regulation applies to owners and operators of diesel-fueled drayage tract ors having a GVWR greater than 33,000 pounds that operate at California ports, int ermodal rail yards, or both. There are approximately 20,000 of these tractors frequently s ervicing the ports and intermodal rail yards. The requirements of the regulation will be implemented in two phases. In Phase 1, by December 31, 2009, all drayage trucks m ust be equipped with a 1994 to 2003 model year engine and a level 3 verified DECS for PM emissions or they must be equipped with a 2004 mode year or newer engine. In Phase 2, all drayage tractors are required to meet the 2007 model year engine standar d by December 31, 2013. All drayage trucks involved in work at affected ports a nd rail yards must be registered in a drayage truck registry (DTR) by late 2009.

B. In-Use Off-Road Diesel Vehicles and Equipment

Since 2005, the ARB has adopted two regulations req uiring reductions of emissions of PM and other criteria pollutants from in-use off-ro ad diesel vehicles. The types of vehicles subject to these regulations include cargo handling equipment at California's ports and intermodal rail yards and off-road heavy- duty diesel vehicles, such as those used in construction, mining, and industrial operat ions. The ARB has also adopted a regulation for transport refrigeration units (TRU) which are refrigeration systems powered by diesel internal combustion engines desig ned to refrigerate or heat perishable products that are transported in various containers, including semi-trailers, truck vans, shipping containers, and rail cars. Ta ble IX-3 lists the regulations with the adoption date, and the number of engines subject to each regulation.-113- Table IX-3: Regulations for In-Use Off-Road Diesel Vehicles

Regulation Adoption Date Number of Engines Regulated Cargo Handling Equipment February 2005 4,000 In-Use Off-Road Diesel Vehicles July 2007 180,000 Transport Refrigeration Units February 2004 40,000

1. Mobile Cargo Handling Equipment

In December 2005, the ARB adopted a regulation to r educe emissions of diesel PM and NOx from mobile cargo handling equipment at ports a nd intermodal rail yards. Mobile cargo handling equipment is any motorized vehicle e quipped with a diesel-cycle engine that is used primarily off-road to handle cargo or to perform scheduled or predictable maintenance or repair activities. Equipment types include, but are not limited to, yard trucks, top handlers, mobile cranes, sweepers, side handlers, rubber-tired gantry (RTG) cranes, forklifts, dozers, and loaders.

Beginning January 1, 2007, newly purchased, leased, or rented (new) cargo handling equipment must meet the following performance stand ards:

• new yard trucks that are registered on-road vehicl es must meet the certified on-road engine standards for the current year;

• new yard trucks that are not registered on-road ve hicles must meet the current certified on-road engine standards or the final Tie r 4 off-road emission standards for the rated horsepower of the engine; and

• new non-yard truck equipment must ultimately meet the current certified on-road diesel engine standards or the Tier 4 off-road dies el engine standards. If the current model year off-road engine standard is pre-Tier 4, the off-road engine must be equipped with the highest level verified DECS withi n one year of acquiring the new equipment.

The regulation also establishes in-use performance standards for yard trucks and nonyard truck equipment. In-use yard trucks must meet the 2007 or later current model year certified on-road engine standards, the certif ied final Tier 4 off-road engine standards, or apply verified DECS that will result in emissions that are less than or equal to the final Tier 4 off-road engine standards . Compliance begins on December 31, 2007, for pre-2003 model year engines and is phased in based on the

size of the fleet.

In-use non-yard truck equipment must comply through engine replacement and/or by retrofitting with the highest level available verif ied DECS. Replacement engines must meet current model year on- or off-road engine stan dards, and for pre-Tier 4 off-road engines, the highest level available verified DECS must be installed within one year. If retrofitting in lieu of engine replacement, a secon d compliance step may be required depending on the engine certification and the level of verified DECS installed.-114-

Compliance begins on December 31, 2007, for pre-198 8 model year engines and is phased in based on the size of the fleet.

2. In-Use Off-Road Diesel Vehicles

In July 2007, ARB adopted a regulation to reduce di esel PM and NOx emissions from in-use off-road heavy-duty diesel-fueled engines wi th maximum power of 25 horsepower (hp) or greater. These engines are used to provide motive power in a workover rig or to provide motive power in any othe r motor vehicle that cannot be registered and driven safely on-road, and is not an implement of husbandry or recreational off-highway vehicle. The proposed regu lation only addresses engines that drive self-propelled vehicles (i.e., does not apply to stationary equipment or portable equipment like generators). Examples include loade rs, crawler tractors, skid steers, backhoes, forklifts, and airport ground support equ ipment.

The regulation establishes increasingly stringent f leet average emission rate targets for PM and NOx for all off-road vehicles operating in t he state. By the applicable compliance each year, the regulation requires each fleet to meet the fleet average emission rate targets for PM or apply the highest l evel verified DECS to 20 percent of its horsepower. Each year, the regulation also require s large and medium fleets to meet the fleet average emission rate targets for NOx or to turnover a certain percent of their horsepower (8 percent in early years, and 10 percen t in later years). “Turnover” means repowering with a cleaner engine, rebuilding the en gine to a more stringent emissions configuration, retiring a vehicle, replacing a vehi cle with a new or used piece, or designating a dirty vehicle as a low use vehicle. If retrofits that reduce NOx emissions become available, they may be used in lieu of repla cement as long as they achieve the

same emission benefits.

Large fleets are subject to the PM and NOx requirem ents beginning in 2010. Medium fleets are subject to the PM and NOx requirements b eginning in 2013. Small fleets are subject only to the PM requirements beginning in 20 15.

Off-road diesel vehicles that are exempt from the r egulation include those operated 100 hours or less per year, vehicles used in agricultur al operations, and vehicles used for personal use only. Vehicles that are operated for 100 hours or less have reporting requirements but no performance requirements.

3. Transport Refrigeration Units

In February 2004, the ARB adopted a regulation to r educe diesel emissions from in-use diesel-fueled TRUs and TRU generator set equipment used to power electrically driven refrigerated shipping containers and trailers that are operated in California. The regulation applies to owners and operators of both California–based and non-California-based TRUs. The engines are require d to meet the in-use PM performance standards shown in Table IX-4 according to a schedule that is phased in starting December 31, 2008. The proposed in-use pe rformance standards are aligned

with the federal interim Tier 4 standards for new n onroad engines.-115- Table IX-4: TRU In-Use Performance Standards

Engine Horsepower (hp) Emission Category Engine Certification (g/hp-hr) DECS

Retrofit

<25 hp Low Emission TRU (LETRU) 0.30 Level 2

<25 hp Ultra-Low Emission TRU

(ULETRU) NA

(pick another option) Level 3

≥ 25 hp Low Emission TRU (LETRU) 0.22 Level 2

≥ 25 hp Ultra-Low Emission TRU

(ULETRU) 0.02 Level 3

The performance standards may be met by using a cer tified engine meeting the applicable standard, installing the required level of verified DECS, or using an alternative technology. The TRU emission requireme nts apply to in-use engines older than seven years. Owners/operators must meet the T RU engine performance standards on the following schedule.

• MY 2001 and earlier engines must meet LETRU standa rds by December 31 2008, and ULETRU standards by December 31, 2015.

• MY 2002 engines must meet LETRU standards by Decem ber 31, 2009, and ULETRU standards by December 31, 2016.

• MY 2003 and later engines must meet ULETRU standar ds by December 31 of the seventh year past the engine’s model year (i.e., MY 2003 engines must meet ULETRU standards by December 31, 2010, MY 2004 by D ecember 31, 2011, and so on).

C. Portable Engines and Equipment

Portable engines and equipment units are used for a variety of applications, such as: pumps, ground support equipment at airports, cranes ; oil well drilling and workover rigs, and dredging equipment. ARB has adopted the two re gulations described below that apply to portable engines and equipment units. One regulation establishes a uniform, voluntary system of statewide registration and regu lation of portable equipment, while the other is an ATCM to minimize the public’s expos ure to diesel PM emitted from diesel-fueled portable engines. Once registered in the voluntary program, owners and operators of portable engines and equipment units c an operate throughout the State without having to obtain permits from individual ai r pollution control and air quality management districts (district). If the owner of a n engine or equipment unit chooses not to register under the Statewide program, the engine or equipment is then subject to district permitting requirements.-116- 1. Statewide Portable Equipment Registration Progra m

Sections 41750 through 41755 of the HSC required th e ARB to create and maintain a program for the voluntary registration and regulati on of portable engines and equipment units in California. In March 1997, the Board adop ted a regulation establishing the PERP which became effective on September 17, 1997. The Board has since approved amendments to the PERP Regulation on December 11, 1 998, February 26, 2004, June 22, 2006, and March 22, 2007. The regulation includes recordkeeping and reporting requirements and sets fee schedules for r egistration and inspection of portable engines and equipment registered through the progra m. Most of the engines associated with portable equipment are diesel-fuele d, making these engines also subject to the requirements of the Portable Engine ATCM.

2. Portable Engine Air Toxic Control Measure

In February 2004, the ARB adopted an ATCM that requ ires a phase in of cleaner technology engines that would result in the reducti on and eventual elimination of high emission engines. The ATCM requires that most port able engines larger than 50 horsepower (hp) to be certified to Tier 1, 2, or 3 U.S. EPA/ARB off-road engine standards by January 1, 2010. Uncertified (Tier 0) diesel engines that are designated as emergency use or low use may operate beyond 2010 if they will be replaced with Tier 4 engines within 2 years of them becoming avai lable. In addition, starting in 2013, all fleets of portable engines would have to meet d iesel PM emission averages that become progressively more stringent in 2017 and 202 0. Options available to satisfy the fleet requirements include replacing engines, using add-on control devices, switching to alternative fuels, and receiving credit for electri fication.

In March of 2007, the ATCM was amended to allow sta tewide registration and district permitting of Tier 1 and Tier 2 engines that had be en operating in California between March 1, 2004 and October 1, 2006. These amendment s also allowed local air districts to permit resident Tier 0 engines at their discreti on. In order to be newly registered in PERP or permitted by a district after January 1, 20 10, the ATCM requires that the engines must be certified to the most stringent ARB or U.S. EPA nonroad emission standards in effect at the time of application.

D. Diesel Fuel Standards

Since 1993, California’s diesel fuel regulations ha ve limited statewide the allowable

sulfur content of California motor vehicle diesel f uel to 500 parts per million by weight (ppmw) and the aromatic hydrocarbon content to 10 p ercent by volume with a 20 percent limit for small refiners. These regulat ions reduce emissions from diesel engines and equipment: 7 percent NOx, 25 percent P M, 80 percent sulfur oxides (SO 2 ), and several toxic substances, such as benzene and p olynuclear aromatic hydrocarbons (PAHs). These standards apply to all diesel fuel s old in California, regardless of the application into which it is sold.

The regulation limiting aromatic hydrocarbon conten t allows refiners to sell proprietary formulations with aromatic hydrocarbon content grea ter than the basic limits, provided-117-

these formulations have been certified as meeting A RB emission requirements. Most refiners have taken advantage of the regulation’s f lexibility to produce alternative diesel formulations that provide the required air quality benefits at a lower cost.

In July 2003, the ARB amended the diesel fuel regul ations to reduce the maximum sulfur content allowed in diesel fuel from 500 ppmw to 15 ppmw. This low sulfur diesel regulation was needed for two primary reasons: to enable the effective use of the emissions control technology required by heavy-duty diesel vehicles and engines that

must meet the U.S. EPA/ARB 2007 PM and NOx emission standards, and to enable the use of the exhaust treatment technologies required by new and retrofitted diesel engines to meet the diesel PM reduction targets est ablished by the Diesel RRP. As of September 1, 2006, all diesel fuel sold at retail l ocations in California must meet the sulfur content of 15 ppmw. Beginning January 1, 20 07, the requirement to use low

sulfur diesel fuel was extended to intrastate locom otives and marine vessels.

E. Off-Road Engine Standards

ARB has the authority to regulate engines in new of f-road equipment equal to or greater than 175 hp and non-preempted off-road equipment le ss than 175 hp. ARB and U.S. EPA have worked closely to harmonize the off-road c ompression ignition (CI) engine standards. ARB is preempted from regulating new fa rm and construction equipment less than 175 hp, as the U.S. EPA has the sole auth ority to regulate this type of equipment. However, ARB is not preempted from regu lating in-use equipment regardless of engine horsepower.

Emissions from engines utilized in off-road equipme nt between 175 and 750 horsepower were uncontrolled prior to 1996. Estima tes of NOx emission rates from uncontrolled off-road engines range from 8.2 grams per brake horsepower-hour (g/bhphr) to 14 g/bhp-hr. In January 1992, the Board ado pted exhaust emission standards for off-road dieselcycle engines 175 hp and greater, ef fective beginning with 1996 model year engines.

In August 1996, U.S. EPA, ARB, and off-road diesel engine manufacturers signed a Statement of Principles which called for harmonizat ion of ARB and U.S. EPA off-road diesel engine regulations, as appropriate, in excha nge for an accelerated introduction of progressively more stringent standards. U.S. EPA a dopted emission standards in 1998 and again in 2004 that provided for new NOx plus no n-methane hydrocarbons (NMHC), PM and CO emissions standards for engines within di fferent power categories in a four tiered approach, commonly referred to as “Tier” sta ndards. In California, these standards, which are harmonized with U.S. EPA, are contained in Title 13, California Code of Regulations (CCR), sections 2423(b)(1). Ta ble IX-5 summarizes the emission standards for these engines.

The date upon which each tier takes effect depends on the engine horsepower (size). As of January 1, 2000, all engine sizes were subjec t to Tier 1 standards. In 2006, all engine sizes were subject to Tier 2, while some Tie r 3 standards also took effect (engines less than 75 horsepower or greater than 75 0 horsepower do not have a Tier 3-118-

standard). The Tier 4 standards are divided into t wo stages: interim, which begins between 2008 and 2012 for most engines, and final, which is effective for all off-road engines by 2015. The final Tier 4 standards will r esult in diesel engines that will be over 90 percent cleaner than 1988 vintage engines. The Tier 4 standards require most engines to meet a 0.01 g/bhp-hr diesel PM emission rate and a 0.3 to 0.5 g/bhp-hr NOx

emission rate in the 2011-2015 timeframe.

Table IX-5: ARB and U.S. EPA Off-Road Compression-I gnition (Diesel) Standards (NMHC+NOx/CO/PM in g/bhp-hr where applica ble)-119-

F. References

ARB, 1998b. California Air Resources Board. Final S tatement of Reasons for Rulemaking, Including Summary of Comments and Agenc y Response: Public Hearing to Consider Amendments to Heavy-Duty Vehicle Regula tions: 2004 Emission Standards; Averaging, Banking and Trading; Optional Reduced-Emission Standards; Certification Test Fuel; Labeling; Maintenance Requ irements and Warranties; April 23,

1998.

ARB, 2001b. California Air Resources Board. Final S tatement of Reasons for Rulemaking, Including Summary of Comments and Agenc y Responses: Public Hearing to Consider Amendments to Adopt Reduced Emission St andards for 2007 and Subsequent Model Year New Heavy-Duty Diesel Engines ; October 25, 2001.

CFR, 2007b. Code of Federal Regulations. NOX and Pa rticulate Averaging, Trading, and Banking for Heavy-Duty Engines; Title 40, Chapt er 1, Part 86, Section 86.007-15; July 1, 2007

Diesel, 2005. Diesel Technology Forum: Farming, M ining & Construction; http://www.dieselforum.org/where-is-diesel/farming- mining-construction ; 2005-120--121-

X. P ROPOSED R EGULATION FOR I N -U SE O N -R OAD D IESEL V EHICLES

The chapter provides an overview of the proposed re gulation and explains its major requirements and provisions. This chapter also des cribes how the proposed regulation applies to owners of vehicles, those who hire or di spatch vehicles, rental fleets, and

vehicle dealers.

This chapter is intended to satisfy the requirement s of Government Code section 11343.2, which requires that a non-controll ing “plain English” summary of the regulation be made available to the public.

A. Proposed Regulation Overview

The proposed regulation would apply to any person, business, or federal government agency that owns or operates affected vehicles in C alifornia. Affected vehicles include on-road heavy-duty diesel fueled vehicles with a ma nufacturer’s GVWR greater than 14,000 pounds, on-road and off-road yard trucks ove r 14,000 pounds GVWR, and diesel fueled shuttle vehicles of any GVWR that hav e a capacity of 10 or more passengers and routinely drive an average of 10 tri ps per day to or from airport terminals, marine terminals, and rail based station s. The proposed regulation would apply to these vehicles regardless of where the veh icle is registered – that is, it affects intrastate, interstate, and international vehicles. Also, any vehicle that is designed to be driven on-road would be subject to the regulation e ven though it might not be registered to be driven on-road. The proposed regulation woul d not apply to military tactical support vehicles, authorized emergency vehicles, an d private motor homes not used for commercial purposes.

The proposed regulation establishes PM and NOx emis sions requirements for the vehicles subject to the regulation. These requirem ents will be discussed in greater detail later in this chapter. The regulation is in cluded in Appendix A, and an outline of the subsections of the regulation is provided in Ap pendix A1.

In general, the regulation would require owners to reduce PM and NOx emissions from their fleet by upgrading the vehicles to meet BACT standards for PM and NOx. The BACT standard for PM is an engine equipped with the highest level verified DECS for PM or an engine originally equipped with a diesel p articulate filter (DPF) by the engine manufacturer. The BACT standard for NOx is an engi ne newly manufactured in 2010 or later, or a 2010 emissions equivalent engine. A fl eet may meet these performance requirements by retrofitting a vehicle with a verif ied DECS that will achieve PM or NOx reductions or both as required, replacing an engine with a newer cleaner one, or replacing a vehicle with one having a cleaner engin e.

The regulation provides three options for complying with the performance requirements. A fleet would be able to comply with a prescribed B ACT schedule that would determine, based on the vehicle’s engine model year, which eng ines would be required to have the highest level verified DECS and which would be requ ired to be replaced. A fleet could also meet a BACT percent limit option. This option specifies the minimum number-122-

engines each year that must have applied the highes t level verified DECS to meet the PM performance requirements regardless of engine mo del year, and the minimum number of engines required to meet the 2010 engine requirements to satisfy the NOx performance requirements. Engines originally equip ped with a DPF by the

manufacturer would count towards the number of veri fied DECS. The third option is the fleet average option. The owner would use PM and N Ox emission factors established by the regulation to calculate the average emission s of the fleet. By the applicable compliance date each year, the owner would have to demonstrate that the fleet met the PM and NOx fleet average emission rate targets set by the regulation. The targets would decline over time, requiring fleets to reduce their emissions further as time goes

on.

During the first two years of the regulation, start ing January 1, 2011, fleets would be required to install PM verified DECS for certain en gine model years. The regulation would then require owners to reduce both PM and NOx emissions from the fleet by accelerating engine or vehicle replacement between January 1, 2013 and the end of 2022 so that by January 1, 2023, all engines would be the cleanest available – that is,

manufactured in 2010 or later or be retrofitted to achieve equivalent emission

reductions.

The proposed regulation would also establish requir ements for any in-state or out-ofstate motor carrier, Californiabased broker, or any California resident who hires or dispatches vehicles subject to the regulation. In addition, California sellers of a vehicle subject to the proposed regulation would have to no tify vehicle buyers that the regulation may apply.

B. Purpose

As stated in subsection (a) of the proposed regulat ion, the purpose of the regulation is to reduce emissions of diesel PM, NOx, other criter ia pollutants, and greenhouse gases

from in-use on-road diesel-fueled vehicles. While the regulation contains performance requirements for PM and NOx emissions reductions, i t does not require the reduction of greenhouse gas emissions. Reductions of greenhouse gas emissions will be achieved through credits to promote the use of hybrid diesel vehicles and alternative fuels, and through the replacement of older vehicles with newe r, more efficient vehicles.

C. Applicability

The proposed new regulation would apply to any pers on, business, or federal government agency that owns or operates affected ve hicles in California. Affected vehicles include heavy-duty diesel fueled vehicles with a GVWR greater than 14,000 pounds, on-road and off-road yard trucks over 14,00 0 pounds GVWR, and diesel fueled shuttle vehicles of any GVWR that have a capacity o f 10 or more passengers and routinely drive an average of 10 trips per day to o r from airport terminals, marine terminals, and rail based stations. The proposed r egulation would be applicable regardless of where the vehicle is registered.-123-

The proposed regulation would not apply to military tactical support vehicles, authorized emergency vehicles, and private motor homes not use d for commercial purposes. The regulation would also not apply to vehicles subject to the following regulations:

• Solid waste collection vehicle as defined by title 13, CCR, section 2021(b);

• Municipality and utility owned vehicles as defined by title 13, CCR, section 2022(a), except that vehicles owned or operated by a private ly owned utility would become subject to the regulation on January 1, 2021;

• Urban buses as defined by title 13, CCR, 2023(a)(1 3);

• Transit fleet vehicles as defined by title 13, CCR , 2023(a)(12);

• Mobile cargo handling equipment at ports and inter modal rail yards;

• Off-road vehicles subject to title 13, CCR, sectio ns 2401, 2421, 2411, 2432, and 2449;

• Dedicated snow-removal vehicles, as defined in sec tion 2025(d)(12)

• Two-engine cranes, as defined in title 13, CCR, se ction 2449(c)(56); and

• Historic vehicles as defined in section 2025(d)(28 ).

1. How Regulation Applies to Sellers and Dealers of Vehicles

The proposed regulation applies differently to sell ers of affected vehicles, such as vehicle dealers and auction houses or financing com panies who do not operate the vehicles, than to other fleet operators. The only part of the regulation that would apply

to such sellers of vehicles is the disclosure of re gulation applicability requirement in section 2025(v). That is, sellers must notify buye rs that the regulation may apply.

Vehicles that are temporarily owned by dealerships or are incidentally owned by financing companies and are awaiting sale would not be subject to the recordkeeping, reporting, or performance requirements of the regul ation provided the vehicles are not being operated (other than operation for sales demo nstration or maintenance). Thus, dealers and financing companies that do not operate vehicles and that do not offer them for rent would not need to report their vehicles an d need not comply with any performance requirements of the regulation. Dealers that hold vehicles for sale and also rent them out or lease them would be responsible fo r compliance as described below for rental and lease companies.

2. How Regulation Applies to Rental and Lease Compa nies

The regulation would treat rental and lease compani es just like any other fleets. Thus, the default situation in the regulation is that ren tal vehicles are the responsibility of the rental company rather than the user.

For vehicles leased for a period of a year or more, if a rental or lease company and the lessee agree in the lease agreement that the vehicl e will be the responsibility of the lessee, it may be excluded from the rental company’ s fleet that year and included in the fleet of the lessee. If rental and leasing compani es are selling vehicles which were-124-

formerly part of their rental fleet and the rental vehicle was operated less than 1,000 miles and 100 hours in the past year, such vehicles may be treated like other vehicles being held for sale, as described in the section ab ove.

Vehicles under a long term lease of period of a yea r or more that was in place before the regulation takes effect would be the responsibi lity of the lessee rather than the leasing company.

D. Definitions

The proposed regulation provides definitions of all terms that are not self-explanatory. There are approximately 70 definitions to help clar ify the regulation’s requirements. The definitions listed in subsection (d) of the propose d regulation were either developed by staff, with input from the public during workshops and workgroup meetings, or the California Code of Regulations, California Vehicle Code (VC) or existing ARB regulations or other sources. Please refer to Appe ndix A, subsection (d) for a list of

definitions.

1. Combat and Tactical Support Equipment

Combat and tactical support equipment means equipme nt that meets military specifications, is owned by the U.S. Department of Defense and/or the U.S. military services or its allies, and is used in combat, comb at support, combat service support, tactical or relief operations or training for such operations. Such equipment would be exempt from the proposed diesel regulation for nati onal security reasons. Appendix F contains a letter from the Department of the Navy l isting the equipment types included as combat and tactical support equipment.

2. Fleet

A fleet is defined as all of the vehicles under com mon ownership by a person, business, or governmental agency. A fleet may consist of one or more vehicles. This definition in the proposed regulation also includes additional cl arification for federal fleets, rental and lease fleets, fleets owned by school bus operators and school districts, and small fleets.

a) School Bus and School Bus Sub-Fleets

A school bus fleet is a fleet of school buses desig ned, used or maintained for the transportation of an pupil to or from school or sch ool activities, which meets the definition outlined in the VC, section 545. School bus sub-fleets means the school buses in a fleet comprised of school buses and vehi cles other than school buses.

b) Small Fleets

This definition also includes a definition of a sma ll fleet, which is a fleet of 3 or fewer vehicles under common ownership. Common ownership or control means a vehicle being owned or managed by the same person or entity or controlled by a single board of directors. This would include vehicles being operat ed by different legal subsidiaries under a corporate umbrella. Therefore, a fleet unde r common ownership or control-125-

could not be split into smaller regional fleets aro und the state to utilize the small fleet provisions.

3. Agricultural Operations

Agricultural operations are defined in the proposed regulation as the activity of growing or harvesting crops for the primary purpose of maki ng a profit or providing a livelihood including any horticultural, viticultural, aquacult ural, forestry, dairy, livestock, poultry, bee or farm product. However, raising plants at nu rseries that sell exclusively retail are

not included in the definition.

The definition also includes the cutting or removin g of both of timber, other solid wood products, including Christmas trees, and biomass fr om forestlands for commercial purposes. The services also include all the relate d work associated such as construction and maintenance of roads, fuel breaks, firebreaks, stream crossings, landings, skid trails, beds for falling trees, fire hazard abatement, and site preparation that involves disturbance of soil or burning of veg etation following forest removal activities. Forest operations include the cutting or removal of trees, tops, limbs and or brush which is processed into lumber and other wood products, and or for landscaping materials, or biomass for electrical power generati on. Forest operations do not include

conversion of forestlands to other land uses such a s residential or commercial developments.

4. Agricultural Vehicle

Agricultural vehicles are those that are used exclu sively for agricultural operations.

These vehicles include dedicated fertilizer and cro p protection chemical delivery trucks, farmer owned vehicles used to support the farm, veh icles that come to the farm to perform specialized farm work, and vehicles that tr ansport harvested crops to first processing centers. Vehicles that perform other fu nctions in addition to agricultural operations do not fit the definition of an agricult ure vehicle.

Vehicles that are used exclusively for delivering f ertilizer or crop protection chemicals to farms can be considered agricultural vehicles if th e company holds the proper license and the vehicles display the required placards. Th ese chemical or fertilizer supply trucks are limited to those that are required by th e United States DOT to have certain placards, and whose owners are licensed to sell pes ticides or fertilizers by the California Department of Pesticide Regulation or the Californi a Department of Food and Agriculture, respectively. Trucks exclusively invo lved in agricultural operations, including flatbed trucks, logging trucks, silage tr ucks, or water trucks that are owned by a farming business, are also considered agricultura l vehicles. Additionally, vehicles that are not owned by a agricultural business but exclus ively perform a agricultural function on a farm, such as spreading manure, also fall unde r the definition of an agricultural vehicle. Finally, vehicles used exclusively to tra nsport harvested agricultural products from the field or ranch to first point of processin g such as packinghouse or a creamery are deemed agricultural vehicles. Such vehicles wo uld include tomato trucks, milk trucks, grain trucks, trucks hauling grapes and oth ers.-126-

E. Performance Requirements

The proposed regulation provides three options for complying with the NOx and PM performance requirements. These three options are described below. Once a fleet meets any one of these compliance options for NOx a nd PM, they have met the performance requirements for that year. In additio n, the proposed regulation allows fleets to meet the NOx and PM performance requireme nts separately, using different compliance options for each pollutant. For example , a fleet may choose to meet the fleet average option for NOx, and separately comply with the BACT percent limit for PM.

1. BACT Schedule

The proposed regulation provides that a fleet would be able to comply with the proposed NOx and PM performance requirements by com plying with a prescribed BACT schedule that would determine, based on the ve hicle’s engine model year, which engines would be required to have the highest level verified DECS and which would be required to be replaced. The proposed BACT schedul e is provided below in Table X-1. A fleet may meet these requirements by retrofitting a vehicle with a verified DECS, replacing an engine with a newer cleaner one, or re placing a vehicle with one having a cleaner engine.

Table X-1: Best Available Control Technology Compli ance Schedule

Compliance Deadline, as of January 1 Engine Model-Years BACT Requirements

2011 Pre-1994 PM BACT

2012 2003 – 2004 PM BACT

2005 – 2006 PM BACT 2013 1994 – 1999 NOx and PM BACT

2000 – 2002 NOx and PM BACT 2014 All Model Years PM BACT

2015 Pre-1994 NOx and PM BACT

2016 2003 - 2004 NOx and PM BACT

2017 2005 - 2006 NOx and PM BACT

2018 All pre-2007 No new requirements

2019 All pre-2007 No new requirements

2020 All pre-2007 No new requirements

2021 2007 or equivalent NOx and PM BACT

2022 2008 NOx and PM BACT

2023 2009 NOx and PM BACT

The BACT requirement for PM is an engine equipped w ith the highest level verified DECS for PM or an engine originally equipped with a DPF by the engine manufacturer. To install the highest level verified DECS, a fleet owner must install all available Level 3 verified DECS on their engines first. If no Level 3 DECS is verified for the vehicle’s-127-

engine, then the fleet owner must install Level 2 v erified DECS to meet the PM BACT requirement. No regulatory credits provided for Le vel 1 DECS. The BACT requirement for NOx is an engine newly manufactured in 2010 or later or a 2010 “emissions equivalent engine”. A discussion of emission equiv alent engines is provided below.

For fleets using this compliance option, starting J anuary 1, 2011, any vehicle with a model year engine older than 1994 would have to mee t the PM BACT requirements. This requirement would expand to include 2003 and 2 004 model year engines in 2012. Then, beginning January 1, 2013, the regulation wou ld require owners to reduce both PM and NOx emissions from the fleet by accelerating engine or vehicle replacement through the end of 2022, such that by 2023, all eng ines would be the cleanest available – that is, manufactured in 2010 or later or be retr ofitted to achieve equivalent emission

reductions.

2. BACT Percentage Limits

A fleet may also choose to comply with the proposed NOx and PM performance requirements by meeting a BACT percent limit option . This option specifies the minimum number of engines each year that, as a perc entage of all the vehicles in a fleet, must have the highest level verified DECS in stalled to meet the proposed PM BACT requirements, regardless of engine model year. Engines in the fleet that were originally equipped with a DPF by the manufacturer would count towards the number of

verified DECS installed.

In addition, this option also specifies the minimum number of engines that, also as a percentage of all the vehicles in a fleet, are requ ired to meet the proposed BACT requirement for NOx. Like in the BACT Schedule opt ion described above, the proposed BACT requirement for NOx is an engine newly manufac tured in 2010 or later, or a 2010 emissions equivalent engine (See Table X-2).-128-

Table X-2: Percent of Fleet That Must Comply with P M and NOx BACT

Standard

Percent of Total Fleet Complying with

BACT Compliance Deadline as of January 1 PM BACT NOx BACT

2011 25% N/A

2012 50% N/A

2013 75% 25%

2014 100% 50%

2015 100% 50%

2016 100% 60%

2017 100% 80%

2018 100% 80%

2019 100% 80%

2020 100% 90%

2021 100% 90%

2022 100% 90%

2023 100% 100%

The use of this option allows a fleet to select the order of vehicles that will be retrofit and replaced, regardless of their age. This will provi de additional flexibility to fleets such that they may be able to keep older vehicles in the ir fleet longer than would be allowed

under the BACT schedule.

3. Fleet Averaging Option

The third option to meet the proposed NOx and PM pe rformance requirements is through the use of a fleet average. Under this opt ion, the fleet owner would use PM and NOx emission factors established by the regulation to calculate the average emissions of the fleet. The appropriate NOx and PM emission factors are shown below in Table X-3 and Table X-4, respectively.-129-

Table X-3: PM Emissions Factors by Engine Model Yea r (g/mile)

Engine Certification

Standard Model Year Medium-Heavy Duty (MHD) Heavy-Heavy Duty (HHD)

Pre-1991 1.65 3.36

1991-1993 0.84 1.25

1994-2006 0.43 0.81

2007-2009 0.06 0.11

2010 and newer 0.06 0.11

Table X-4: NOx Emissions Factors by Engine Model Ye ar (g/mile)

Engine Certification

Standard Model Year Medium-Heavy-Duty (MHD) Heavy-Heavy Duty (HHD)

2003 and older 14.2 22.0

2004-2006 6.7 12.0

2007-2009 4.0 7.0

2010 and newer 0.8 1.6

Using these emission factors for each vehicle, a fl eet owner would have to demonstrate that the fleet met the proposed PM and NOx fleet av erage emission rate targets set by the regulation by the applicable compliance date ea ch year. The targets decline over time, requiring fleets to reduce their emissions fu rther as time goes on. The fleet average targets for PM and NOx are shown in Table X -5 below.-130- Table X-5: Fleet Targets for PM and NOx (g/mile)

PM Targets for each compliance deadline NOx Targets for each compliance deadline Compliance Deadline, as of January 1 MHD HHD HHD HHD

2011 0.38 0.710 - - 2012 0.29 0.530 - - 2013 0.17 0.320 8.5 14.4

2014 0.06 0.110 5.8 9.8

2015 0.06 0.110 5.8 9.8

2016 0.06 0.110 4.6 7.8

2017 0.06 0.110 4.0 6.0

2018 0.06 0.110 4.0 6.0

2019 0.06 0.110 4.0 6.0

2020 0.06 0.110 3.2 4.4

2021 0.06 0.110 3.2 4.4

2022 0.06 0.110 1.6 3.0

2023 0.06 0.110 0.8 1.6

Similar to the BACT percent limit option discussed above, the use of this option allows a

fleet to select the order of vehicles that will be retrofit and replaced, considering their relative emissions. This will provide additional f lexibility to fleets such that they may be able to keep older vehicles in their fleet longer t han would be allowed under the BACT schedule, so long as they have cleaner vehicles (wi th lower emissions) to offset the older vehicles that have higher emissions.

4. Emission Equivalency for Older Engines

In meeting the performance requirements of the prop osed regulation, staff intends to

allow for the use of verified DECS to achieve reduc tions for both PM and NOx emissions. To provide clarity to fleets as to how these DECS would compare to certified engines, staff’s proposal includes specific standar ds to establish emission equivalency. Staff has proposed emission equivalency standards t o 2004, 2007, and 2010 certified engines. These equivalency standards are provided in Table X-6 below.-131- Table X-6: PM and NOx Equivalency Standards

Performance Standard Using DECS Engine Emission

Performance

Standard (Model Year) Actual Engine

Model Year NOx PM

2010 and newer Met by definition DPF equipped by engine manufacturer

2007-2009 70% reduction Met if equipped with DPF by engine

manufacturer 2010 and newer

2004-2006 85% reduction Highest Level DECS 1

2007-2006 Met by definition DPF equipped by engine manufacturer

2004-2006 40% reduction Highest Level DECS 1 2007-2009

2003 and prior 70% reduction Highest Level DECS 1

2004-2006 Met by definition N/A 2 2004-2006 2003 and prior 55% reduction N/A 2

1 As defined by title 13, CCR, section 2025(d)(34).

2 These engines do not meet PM BACT since they were n ot equipped with a DPF from the engine manufacturer.

As can be seen in Table X-6, to meet a 2010 emissio n equivalency standard, a 2007 model year vehicle would need a verified DECS that achieved a 70 percent reduction of NOx provided the vehicle was equipped with a DPF by the manufacturer. If no DPF is in place then the highest level verified DECS is re quired. Similarly, to meet a 2007 emission equivalency standard, a 2004 engine would need a verified DECS that achieved a 40 percent reduction of NOx and the high est level verified DECS. To meet a 2004 emission equivalency standard, a 2003 engine w ould need to have a verified DECS that achieved a 55 percent reduction of NOx. No PM reduction would be needed, since these engines were not produced or ce rtified using a DPF.

F. Other Requirements

1. School Bus Fleets

Diesel-fueled school buses as defined in the VC, se ction 545 with a GVWR above 14,000 pounds will need to install a verified DECS to meet the requirements of the proposed regulation. Unlike all the other vehicle sectors subject to the NOx and PM performance requirements of the proposed regulation , school buses would only be required to meet the proposed PM requirements, and would be subject to several special provisions and timetables specifically desi gned for this sector. School buses manufactured prior to April 1, 1977, before minimum federal safety standards were established, will be required to be removed from se rvice by January 1, 2012. All remaining diesel-fueled school buses must meet one of the following three proposed compliance options:-132-

• BACT Compliance Schedule (See Table X-7)

• BACT Percentage Limits Compliance Option

• Fleet Average Compliance Option

School buses would be considered in compliance with the proposed regulation when they have installed the highest level verified DECS by the designated compliance date under the option selected. Depending on the compli ance option chosen and the verified DECS that is installed, a school bus fleet may be s ubject to proposed reporting requirements.

If it is not technologically feasible for the schoo l bus engine to be retrofitted with a Level 2 or Level 3 verified DECS by the compliance deadline, then compliance may be delayed annually until January 1, 2018 provided no verified DECS becomes available. By January 1, 2018, these school buses that cannot be retrofitted would need to have their engines replaced with an engine that is equip ped with a highest level DECS or the school bus would need to be replaced with one meeti ng the PM BACT criteria.

Table X-7: Proposed PM BACT Schedule for School Bus es

Compliance Deadline as of January 1 Engine Model Year

2011 2000 and newer

2012 1994 – 1999

2013 1987 – 1993

2014 Pre – 1997

Engines equipped with a DPF by the engine manufactu rer as original equipment are considered in compliance with the requirement. Sch ool buses registered as historic vehicles or designated as low use vehicles are exem pted from performance requirements; however, there are reporting requirem ents for these vehicles. Low use school buses are vehicles operated less than 1,000 miles per year.

As discussed later, Proposition 1B, approved by Cal ifornia voters in 2006, will provide $200 million, through the Lower Emission School Bus Program, to replace all remaining eligible pre-1977 model year school buses. Additio nally, these bond funds will replace approximately 1,000 model year 1977 to 1986 school buses, and install DPFs on about 3,500 buses. All buses replaced or retrofitted thr ough the Lower Emission School Bus Program will be in compliance with the proposed reg ulation.

2. Drayage Trucks

Drayage trucks are diesel-fueled, heavy-duty trucks that transport containers, bulk, and break-bulk goods to and from ports and intermodal r ail yards to other locations. Drayage trucks are already subject to requirements of title 13, CCR, section 2027, (known as the drayage truck rule) which requires al l vehicles entering ports and intermodal rail yards to have PM controls by Decemb er 31, 2009, except for 2004 to 2006 model year engines.-133-

The proposed regulation will add a phase one requir ement for drayage trucks with 2004 to 2006 model year engines. The proposed regulatio n requires that 2004 model year engines be equipped with the highest level verified DECS by January 1, 2012, and that 2005 to 2006 model year engines be equipped with th e highest verified DECS by January 1, 2013. This requirement would align the drayage truck rule with the proposed regulation. In addition, the proposed regulation w ould require that all drayage trucks comply with the PM and NOx performance requirements starting January 1, 2021.

3. Privately-Owned Utilities

In addition to other changes that are applicable to municipalities, as described in Chapter XI, the proposed regulation would require t hat all utility vehicles comply with the PM and NOx performance requirements starting Januar y 1, 2021.

4. Verified DECS Installation and Maintenance

Fleet owners choosing to comply using verified DECS , they would have to meet installation requirements for verified DECS. Befor e installing a verified DECS on a vehicle, the fleet owner should be familiar with th e Executive Order for the verified

DECS and would need to:

• Ensure that the verified DECS is verified for use with the engine and vehicle, as
described in the Executive Order for the verified D ECS;

• Ensure that use of the vehicle is consistent with the conditions of the Executive Order for the verified DECS;

• Ensure that the diesel emission control strategy i s installed in a verified configuration; and

• Ensure that the engine to be retrofit is tuned up so that it meets engine manufacturer’s specifications prior to verified DEC S installation.

This requirement also specifies that the owner of a vehicle with a verified DECS would

have to ensure that the maintenance on the verified DECS and engine is performed as specified by each manufacturer.

5. Labeling

The proposed regulation would include requirements for the application of labels on certain agricultural vehicles and two-engine sweepe rs. Agricultural vehicles that operate below specific mileage thresholds (limited- use and low-use agricultural vehicles) would need to be labeled within 30 days o f required reporting date. Similarly, two-engine sweepers that have Tier 0 auxiliary engi nes would be limited to operating less than 250 hours per year until January 1, 2014 would also need to be labeled within 30 days of their required reporting date. No other labeling requirements are proposed.-134-

6. Requirements for Entities Hiring and Dispatching Vehicles

The proposed regulation would require in-state and out-of-state motor carriers,

California-based brokers and California residents t hat operate or direct the operation of any vehicle to retain records documenting that all of the drivers they hire or dispatch are in compliance with the proposed regulation. These motor carriers or brokers would have an affirmative defense for violations by an op erator they dispatched if they can demonstrate that they verified the compliance statu s of the operator at the time they were hired or dispatched.

7. Adding Vehicles

For fleets not meeting the “BACT Schedule” requirem ents, fleet owners must report to the ARB within 30 days the addition of any vehicle to the fleet; and the fleet may not operate that vehicle in California prior to reporti ng. The fleet owner must also demonstrate that the fleet complies with the requir ements of the proposed regulation. A fleet owner who selects the BACT percentage limits option may not add vehicles that cause the percentage calculated for the fleet to fa ll below the percentage for the previous compliance date. Furthermore, a fleet own er who selects the fleet averaging option may also not add vehicles that cause the fle et to exceed the fleet average target rates for the previous compliance date.

G. Special Provisions and Compliance Extensions

The following special provisions and compliance ext ensions are proposed. Fleets utilizing these special provisions and compliance e xtensions must meet, as appropriate, all the record keeping and reporting requirements, as described later in this chapter.

1. Small Fleets

Fleets with three or fewer vehicles would be exempt from the proposed 2010 and 2011 PM exhaust retrofit requirements. By January 1, 20 13, a small fleet would need to show that it has at least one vehicle equipped with a 20 04 model year or newer engine having a verified highest level DECS installed. By Januar y 1, 2018, that vehicle would need to meet the proposed PM and NOx performance requiremen ts of the regulation. If these requirements are met with a vehicle that has a 2010 or equivalent engine, no more action is required. If these requirements are met with a vehicle that has a 2007 to 2009 engine or equivalent, the engine will need to meet 2010 performance standard between 2021 to 2023. For fleets with two vehicles, the se cond vehicle would be required to meet the PM and NOx performance requirements by Jan uary 1, 2014.

For fleets of three vehicles, two compliance paths are available. After having shown that it equipped its first vehicle with a 2004 mode l year or newer engine with a highest level verified DECS, a fleet of three vehicles coul d comply by:

• having its two remaining vehicles meet the PM and NOx performance requirements by January 1, 2014, or;-135-

• electing to have the second vehicle meet the 2010 engine emissions requirements by January 1, 2014, and the third vehicle meet the PM and NOx performance requirements by January 1, 2016.

2. Agricultural Vehicle Provisions

The proposed agricultural vehicle provisions provid e additional time for certain agricultural vehicles to be upgraded to meet 2010 e ngine emission performance requirements, and allows them to operate without PM exhaust retrofits up to specified dates. By January 1, 2023, all agricultural vehicl es must meet the 2010 model year engine emissions requirements.

Agricultural vehicles that operate below the mileag e thresholds would be exempt from the PM and NOx performance requirements for a speci fied period provided they remain

below the thresholds shown in Table X-8. These are defined as either Low-Mileage Agricultural or Limited-Mileage Agricultural vehicl es, based on their annual mileage as shown in Table X-8. Vehicles that operate over the se thresholds would have to meet the same requirements as any other vehicle subject to the proposed regulation.

Table X-8: Agricultural Vehicle Mileage Threshold

Type of Exempt

Vehicle Model Year

Engine Mileage Threshold

(Less Than) Expiration Date of January 1 Low-Mileage Ag Any 10,000 2023

1995 and older 15,000
1996 to 2005 20,000 Limited-Mileage Ag
2006 and newer 25,000 2017

To qualify, an agricultural fleet operator must rep ort, by January 31, 2010, the number of low-mileage and limited-mileage agricultural veh icles that operated in 2009. Once reported, the number of each type of these may not increase in any fleet. Until January 1, 2017, an agricultural fleet operator may operate no more than this number of vehicles below each of their respective mileage thr esholds. Then, beginning in 2017, the agricultural fleet operator is limited to opera ting only that number of vehicles reported in 2010 as being low-mileage agricultural vehicles. Vehicles that had been designated as limited-mileage agricultural vehicles must meet the NOx and PM performance standards of the proposed regulation, o r replace a retiring low-mileage agricultural vehicles that will be retired. For th e purposes of this provision, retire means that the vehicle is scrapped, rendered inoperable, or sold out of the agricultural fleet.

Also, vehicles qualifying as specialty agricultural vehicles would be exempt from the PM and NOx performance requirements until January 1, 2 023. Specialty agricultural vehicles include a specific subset of agricultural vehicles, including:

• nurse rigs;

• cotton module trucks;

• feed trucks used by cattle and calf feed lots, and ;-136-

• water trucks owned and operated by farmers for dus t control and irrigation.

However, under these provisions, the number of spec ialty agricultural vehicles operating in the San Joaquin Valley Air Basin cannot exceed 1 ,100 trucks, and the total number operating statewide cannot exceed 2,200, as reporte d to the ARB. Once these thresholds are reached, a vehicle that would otherw ise meet the definition of specialty vehicle would not be eligible for consideration as a specialty agricultural vehicle, and would have to meet the other provisions of the prop osed regulation.

3. Exemption from the Performance Requirements

a) Low Use Vehicles

A vehicle that is operated less than 1,000 miles an d 100 hours per year would be exempt from all performance requirements. Staff ha s also proposed to allow an out-ofstate vehicle the option, available only to be used once each year per fleet, to operate a single vehicle in California for a 3 day period reg ardless of miles travelled .

b) Delay from the NOx Performance Requirements

Staff proposes to delay the proposed NOx performanc e requirements for vehicles operated more than the low use thresholds (1,000 mi les), but below a specified higher mileage threshold. However, these vehicles would s till remain subject to the proposed PM requirements. For truck-tractors and vehicles w ith a GVWR greater than 33,000 pounds, the higher mileage threshold would be 7,500 miles per year. In addition, yard trucks, as well as vehicles that use power take off to perform work while stationary must also demonstrate that they operate less than 250 ho urs per year. All other vehicles would be eligible to delay the proposed NOx perform ance requirements if operated less than 5,000 miles per year. These same vehicles tha t use power take off to perform work while stationary must also operate less than 1 75 hours per year. This delay in meeting the proposed NOx performance requirements w ould expire on January 1, 2021.

Vehicles that operate exclusively in less polluted areas of the State would not be required to meet the engine replacement requirement s until January 1, 2021, but would remain subject to the PM requirements. These vehicl es would remain subject to the reporting requirements, and would require to comply with the electronic tracking system requirements described later in section (I). These areas are shown below in Figure X-1.-137- Figure X-1: NOx Exempt Areas of California

Also, vehicles that are defined as unique vehicles would not be subject to the replacement requirements until January 1, 2021, but would still be included in determining the fleet average or the BACT percent l imit. However, these unique vehicles would remain subject to the proposed PM pe rformance requirements. For a vehicle to be eligible for the delay of the NOx per formance requirements, the owner would need to demonstrate the following:

• A used vehicle having a 2007 model year or newer e ngine and, that performs a

similar function is not available.

• A suitable cab and chassis upon which the vehicle bed could be mounted is not

available

• A verified NOx emissions control device that could reduce the vehicle’s exhaust NOx

emissions is not available.

• The vehicle’s engine has been equipped with the hi ghest level verified DECS, if one is available and can be safely installed.-138-

Staff is also proposing that truck-tractors exclusi vely pulling 57 foot trailers be eligible to delay the NOx performance requirements until Januar y 1, 2018, provided the engine is a 2004 model year engine and the highest level veri fied DECS is installed. All other vehicles in a fleet having such tractors would need to meet the proposed NOx and PM performance standards on the prescribed schedule.

4. Requirements for Valid Operator Number

Fleets that opt to comply with the proposed perform ance standards of the regulation by using the BACT percent limit or the fleet average o ptions, as well as fleets that utilize the small fleet provisions, or any other special pr ovisions of section 2025(l), (o)(1), (2), (8) or (9) must possess one of the following:

• a valid California motor carrier of property numbe r,

• a valid identification number assigned by the Unit ed States DOT, or

• a valid operating authority number issued by the P ublic Utilities Commission, or other applicable valid operating authority number a pproved by the Executive Officer.

5. Credit for Hybrid and Alternative Fuel Vehicles

A fleet would receive credit towards compliance wit h the proposed fleet average requirements for using hybrid vehicles as long as i t can be demonstrated that the fuel economy of the hybrid vehicle is at least 20 percen t better than an equivalent vehicle. The credit would expire January 1, 2018. The credi t would “double count” the number of hybrid vehicles in the fleet that are used to ca lculate the PM and NOx fleet emissions average and the target rates, or for determining co mpliance with the percent limit requirements.

Also, for fleets using vehicles equipped with alter native fuel or heavy-duty pilot ignition engines, credit would be granted for the purpose of calculating the NOx and PM fleet average target rates towards compliance with the fl eet average. In using this credit, the PM emission factor would be zero, and the NOx facto r would be based on the emission factor corresponding to the engine standard for whi ch the engine is certified.

6. Special Provisions for Certain Two-Engine Sweepe rs

Staff is proposing that the auxiliary engine of a p rivate two-engine sweeper be treated the same as the propulsion engine of any other vehi cle subject to the proposed regulation. In doing so, staff is proposing that t he auxiliary engine in these vehicles be required to meet the PM performance requirements on the same schedule as the propulsion engine.

However, to provide more time for certain sweepers that are used infrequently, staff is proposing that private two-engine sweepers that hav e Tier 0 auxiliary engine not be allowed to operate more than 250 hours per year unt il January 1, 2014, and thereafter be allowed to keep the sweeper and operate it up to 100 hours per year.-139-

Additional discussion about provisions applicable t o private two-engine sweepers is provided in Chapter XI and XVI.

7. Credit for Early Action

Vehicles that are retrofit with the highest level D ECS before January 1, 2010, would be exempt from meeting the NOx BACT replacement requir ements until January 1, 2014. This provision incentivizes vehicle owners to insta ll verified DECS before the required

deadlines.

8. Verified DECS Failure

If a verified DECS fails or is damaged during the w arranty period and it cannot be repaired, then it must be replaced with the same le vel or higher verified DECS. Should a DECS fail or be damaged outside of its warranty p eriod and it cannot be repaired, then replacement depends on if the fleet still meet s applicable targets without the failed

device. If the fleet does not meet the most recent compliance target without the damaged device, then the DECS must be replaced with the highest level verified DECS within 90 days.

9. Fuel-Based Strategy for Verified DECS and Use o f Experimental Strategies

The proposed regulation contains special provisions that would allow a fleet to use a Level 2 fuel based strategy across its whole fleet if the highest level verified DECS for a large portion of its fleet would be a Level 2. The rule also contains a special provision that would give up to a two year extension for flee ts that used a fuel-based strategy but

find that it had been discontinued.

Also in the proposed regulation, an owner could app ly to the Executive Officer to use an experimental, or non-verified, DECS. This complian ce method can be used if a verified

DECS is not available or if the owner can demonstra te that an existing verified DECS is not feasible for their vehicle or application, or i f use of the non-verified strategy is needed to generate data to support verification of the strategy

10. Vehicles Used for Emergency Operation

The proposed regulation defines vehicles used for e mergency operations, and proposes to exempt them from the proposed NOx and PM perform ance requirement, but they still must be reported. For vehicles used both for emerg ency operations and for other purposes, hours of operation and mileage accrued wh en the vehicle is used for emergency operations would not need to be included when determining whether the

vehicle meets the low use vehicle definition of sec tion (d)(38). Records documenting dispatch by a governmental emergency management age ncy for travel to and from an emergency event must be kept.-140-

11. Compliance Extension for Manufacturer Delays

A vehicle owner would not be penalized for equipmen t manufacturer delays for verified DECS or vehicles, as long as the owner placed the o rder for the required equipment or vehicle at least four months prior to the required compliance date or within 60 days of a verified DECS failure. The new equipment or vehicl es would, however, need to be immediately placed into operation upon receipt.

12. Verified DECS That Impair Safe Vehicle Operatio n

The proposed regulation provides for instances wher e a owner may request the

Executive Officer to determine if a verified DECS s hould not be considered the highest level available because it cannot be safely install ed or operated on a particular vehicle or its use would violate occupational safety and he alth requirements or local air district permit conditions. The requesting party would have to provide documentation to support its claims that the verified DECS cannot be safely installed or operated. Documentation would have to include reports and findings of feder al, state or local government agencies, independent testing laboratories, engine or equipment manufacturer studies, or other equally reliable source. The Executive Of ficer would review the documentation

submitted and make his or her determination based u pon the totality of the evidence.

The Executive Officer would send a written determin ation letter to the requesting party within 60 days of the request being submitted. The section also provides details on hearing and appeal procedures.

H. Reporting

For the proposed fleet average and BACT percent lim it compliance options in the proposed regulation, accurate and effective enforce ment of the proposed regulation will depend on ARB getting an accurate depiction of the entire fleet from each fleet owner. That is, an inspector will not be able to gauge com pliance by looking at any one vehicle. Thus, accurate reporting will be essential. To thi s end, the reporting requirements in subsection (q) of the regulation are thorough.

Owners who choose a compliance option other than th e BACT schedule would be required to notify the ARB of this selection. Thes e owners would be required to submit annual compliance reports that demonstrate complian ce with the requirements of the proposed regulation. The first annual compliance r eport would be due January 31, 2011 (for the period of January 1, 2010 through December 31, 2010), and annually thereafter. Compliance reports must inclu de the following information:

• Fleet owners name;

• Name of company or agency;

• Motor carrier identification number;

• Corporate parent name (if applicable);

• Company parent taxpayer identification number (if applicable)

• Company taxpayer identification number;-141-

• Street address and mailing address;

• Name of responsible person;

• Title of responsible person;

• Contact name;

• Contact telephone number;

• Contact email address (if available)

Fleets owners would also need to report a list of e ach vehicle subject to this regulation, along with the following information for each vehic le:

• Vehicle type;

• Vehicle identification number;

• Vehicle manufacturer;

• Vehicle model;

• Loaded vehicle weight rating as defined in section 2025(d)(31);

• Vehicle model year;

• License plate number;

• Where the vehicle is registered and type of regist ration plate;

• Whether the vehicle will be designated as a low-us e vehicle;

• Whether the vehicle is used for emergency operatio ns;

• Whether the vehicle is a specialty vehicle as defi ned in section 2025(m)(2);

• Whether the vehicle is a hybrid vehicle as defined in section 2025(d)(29);

• Whether the vehicle is an alternative-fueled vehic le as defined in section 2025(d)(6).

For each engine, the manufacturer, model, family, s erial number, and model year must also be reported. For reporting the verified DECS installed, fleet owners must report the type, manufacturer, family name, serial number, dat e installed, and verification level and year of verification.

To ease reporting, staff intends to develop and pro vide electronic reporting forms via the internet for both the initial and annual reporting requirements. Fleets would also be able to report via hard-copy if preferred. In addition, staff plans to conduct outreach to fleet owners to explain and clarify these reporting requi rements.

I. Electronic Tracking System

Fleet owners may be required to use an electronic t racking device, such as a global positioning system (GPS), to comply with some of th e requirements of the proposed regulation. The tracking device must acquire date, time, and engine-on data at a minimum of 15 minute intervals, with no more than 3 0 minute data gaps. The tracking device must also acquire location data for vehicles claiming to operate exclusively in NOx exempt areas and for out-of-state vehicles that must document low-use in-142-

California when their total miles of operation exce eds 1,000 miles and total hours of operation exceed 100 hours. Tracking records must also be collected by an independent entity with no business relationship to the owners of the vehicles being tracked, other than to provide the tracking service

.

J. Recordkeeping, Retention and Audits

Fleet owners would be required to maintain all appl icable records for all vehicles subject to the proposed regulation. For vehicles meeting t he proposed BACT schedule, the

fleet owner would maintain verified DECS records wh ere these are used to comply with the BACT schedule, or records of any verified DECS failure and replacement, or records to document a manufacturer delay. In addit ion to these records, fleet owners complying with the BACT percent limits or the fleet averaging option would have to maintain copies of the all information previously d iscussed.

The proposed regulation requires owners to maintain records to document changes they have made since the last reporting. For examp le, if a vehicle is added to a fleet, the owner has 30 days to demonstrate that the fleet is still in compliance with the requirements for the previous compliance date. If an inspector views a fleet in the interim period before the fleet has submitted the d ocumentation, and finds a vehicle that was not included in the last reporting, the owner w ould have to demonstrate, using bills of sale, purchase orders, shipping records, or othe r documentation, when the vehicle

entered the fleet.

The fleet owner or responsible person shall maintai n the records for each vehicle subject to the reporting and record keeping require ments of the proposed regulation and until 3 years after the vehicle is retired or Janua ry 1, 2025, whichever is earlier. If the ownership of the fleet is transferred, the seller i s required to transfer the fleet records to the buyer. Dealers must also maintain records of t he disclosure of regulation applicability for three years after the sale.

ARB staff can request an audit to verify the accura cy of a fleet owner’s records. The proposed regulation describes the responsibility of the fleet owner to make the requested records available to ARB. If the records are not made available within 30 days of the request, the ARB may assess penalties f or non-compliance. This includes reimbursing the ARB auditor per diem and travel exp enses under certain conditions as determined by the Executive Officer.

K. Right of Entry

The proposed regulation would provide ARB inspector s the right, for the purpose of inspection to determine compliance with the regulat ion, to enter any facility where vehicles are located or vehicle records are kept. Inspectors would need to first obtain any necessary safety clearances and present proper credentials.-143-

L. Disclosure of Regulation Applicability

The proposed regulation would require vehicle selle rs disclosure to vehicle purchasers that they are potentially affected by the regulatio n. Any person residing in California selling a vehicle with an engine subject to this re gulation must provide the following disclosure in writing to the buyer on the bill of s ale:

“An on-road heavy-duty diesel or alternative-diesel vehicle operated in California may be subject to the California Air Resources Boar d Regulation to Reduce

Particulate Matter and Criteria Pollutant Emissions from In-Use Heavy-Duty Diesel Vehicles. It therefore could be subject to exhaust retrofit or accelerated replacement requirements to reduce emissions of air pollutants. For more information, please visit the California Air Resour ces Board website at http://www.arb.ca.gov/dieseltruck”.

M. Penalties

Any person who fails to comply with the regulation or who submits false information will be treated under sections 39674, 39675, 42400, 4240 0.1, 42400.2, 42402.2, and 43016 of the Health and Safety Code. The Executive Offic er, in assessing penalties, will consider factors, including but not limited to the willfulness of the violation, the length of time and magnitude of noncompliance, and whether th e fleet made an attempt to comply.-144--145-

XI. P ROPOSED C HANGES TO O THER D IESEL E MISSIONS C ONTROL R EGULATIONS

This chapter discusses modifications proposed for a number of existing ARB diesel regulations. These changes are intended to ensure that these existing regulations and the proposed regulation do not create overlapping r equirements for the same vehicles, as well as to clarify a number of issues with the e xisting regulations, to provide additional compliance flexibility, and to generally improve enforceability of the existing regulations.

The other existing regulations proposed to be amend ed are:

• Diesel Particulate Control Measure for Public Agen cy or Utility On-road Heavy- duty

Diesel-fueled Vehicles

• In-Use On-Road Diesel-Fueled Heavy-Duty Drayage Tr ucks

• Regulation for In-Use Off-Road Diesel Vehicle Regu lation

• Regulation to Establish a Statewide Portable Equip ment Registration Program

• Regulation for Mobile Cargo Handling Equipment at Ports and Intermodal Rail Yards

• Airborne Toxic Control Measure to Limit Diesel-Fue led Commercial Motor Vehicle Idling

• Exhaust Emissions Standards and Test Procedures – 1985 and Subsequent Model Year Heavy-Duty Engines and Vehicles

• Airborne Toxic Control Measure for Diesel Particul ate Matter from Portable Engines Rated at 50 Horsepower and Greater

A. Proposed Modifications for Cranes and Sweepers

Cranes with two engines and private sweepers with t wo engines are subject to multiple regulations, with varying compliance dates and diff erent levels of stringency. To better regulate these vehicles, and ensure that the clean- up of these vehicles is conducted efficiently, staff is proposing a number of changes to other regulations currently regulating cranes and sweepers with two engines. T his will ensure that achieving emissions reductions from both engines on these veh icles does not create unnecessary overlapping requirements or add unnecessary costs. Details on the basis for the proposed changes are discussed in Chapter XVI.

1. Cranes

Two-engine cranes are mobile diesel-powered machine s with a hoisting mechanism mounted on a specially constructed truck chassis or carrier; one engine is used for propulsion, and a secondary engine is used to lift and move materials and objects. There are three general categories of two-engine cr anes: lattice boom (conventional), all terrain, and truck mounted. All terrain and tr uck mounted cranes are very similar and can be both categorized as truck mounted hydraulic cranes. The motive or drive engine is typically an on-road engine. The secondary engi ne is an off-road engine.-146-

Without the proposed modifications, two-engine cran es would continue to be required to meet varying requirements in the following regulati ons:

• Portable Engine and Equipment Regulation

• Statewide Portable Equipment Registration Program

• Mobile Cargo Handling Equipment at Ports and Rail Yards Regulation

• In-Use Off-Road Diesel Vehicle Regulation

To establish a better regulatory structure that wou ld reduce emissions from these vehicles more effectively and at a lower cost, staf f is proposing the following changes to existing regulations:

• Add both engines of two-engine cranes to the off-r oad vehicle regulation (the drive engine would be included regardless if it is certif ied as an on-road engine or as an off-road engine)

• Remove the upper engine of a two-engine crane from the scope of the Portable Engine Equipment Regulation and exclude the same en gine from most performance requirements in the PERP. However, the proposal wo uld not remove the registration and inspection requirements of PERP.

• Remove all cranes (excluding rubber tire gantry cr anes) from the scope of the Cargo Handling Equipment regulation, thereby placing the control of two-engine and offroad cranes used at ports and intermodal rail yards in the In-Use Off-Road Diesel Vehicle Regulation, and single engine cranes in the proposed regulation. No changes would be made regarding rubber-tired gantry cranes.

Excluding single-engine cranes from the Cargo Handl ing Equipment regulation would further support consistency in complying with one r egulation, since many owners only provide crane service to the ports on a temporary b asis but have fleets that would be required to comply with other overlapping regulatio ns.

2. Proposed Modifications for Sweepers

Private two-engine sweepers have many of the same r egulatory issues as two-engine cranes. To address this, staff is proposing to con trol the emissions from the drive engines and auxiliary engines on private two-engine sweepers (that is, they are not subject to the Fleet Rule for Public Agency and Uti lities) somewhat differently, in that both engines in two-engine sweepers are proposed to be included in the proposed regulation. This change would ensure the requireme nts of cleaning-up both engines

would not conflict.

Under staff’s proposal, the drive (propulsion) engi ne of a private two-engine sweeper would be treated the same as the propulsion engine of any other vehicle subject to the proposed regulation. In doing so, staff is proposi ng that the auxiliary engine in these vehicles be required to meet the proposed PM perfor mance requirements on the same schedule as the propulsion engine, and that private two-engine sweepers that have an-147-

uncertified Tier 0 auxiliary engine not be allowed to operate more than 250 hours per year through January 1, 2014, and up to 100 hours p er year thereafter.

Without the proposed changes, privately owned two-e ngine sweepers are impacted by the following regulations:

• Portable Engine and Equipment Regulation

• Statewide Portable Equipment Registration Program (PERP)

• Mobile Cargo Handling Equipment at Ports and Rail Yards Regulation

• Public Agency and Utility Fleets Regulation

To establish a better regulatory structure that wou ld reduce emissions from these vehicles more effectively and at a lower cost, staf f is proposing the following changes to existing regulations:

• Remove the upper engine of a privately owned two-e ngine sweeper from the scope of the Portable Engine and Equipment Regulati on and exclude the same engine from most performance requirements in PERP. However, the proposal would not remove the registration and inspection re quirements of PERP.

• Amend the Public Agency and Utility Fleet regulati on to allow municipalities to

receive retirement credit for the sale of used two- engine sweepers having 2004- 2006 model year propulsion engine to businesses in California.

• Remove all sweepers from the scope of the Cargo Ha ndling Equipment regulation, making them subject to the proposed reg ulation.

Removing these vehicles from the Cargo Handling Equ ipment regulation would provide consistency for owners and operators in complying w ith only one regulation and would address other issues such as safety, certification, and compliance flexibility.

B. Proposed Amendments to Existing Regulations

1. Purpose and Definitions of Diesel Particulate Ma tter Control Measures

Definition

This regulation (title 13, CCR, section 2020) defin es terms that apply generally to several regulations that control diesel PM emission s. The proposed amendments would modify the definition of the term “municipality”. The current definition includes agencies of the United States of America, thereby making fed eral agencies subject to the regulation for Public Agency and Utility Fleets. T he proposed amendment would modify the definition of municipality to exclude Federal a gencies and consequently exclude fleets owned by the Federal government from the Pub lic Agency and Utility Fleet Regulation. Tribal (Indian) reservations and ranch erias are also proposed to be excluded in the revised definition of “municipality ”. Fleets owned and operated by these entities would be subject to the proposed regulatio n.-148-

2. Public Agency and Utility Fleets

Staff is proposing modifications that would expand the scope of this regulation and would add new language to address ambiguities and o missions in the regulation when initially adopted.

a) Scope and Applicability

Staff’s proposed revision of section 2022(a) would expand the scope and applicability of the regulation to include light heavy-duty engines that were inadvertently omitted from the original scope of the regulation. Staff is als o proposing to expand the scope to include 2007 model year and newer engines certified under the ABT provisions at PM levels greater than the 2007 model year standard of 0.01 g/bhp-hr. This revision is consistent with the original intent of the regulati on to require upgrades of all engines that did not meet the PM BACT standard of 0.01 g/bhp-hr. This revision would ensure that any 2007 MY engines certified under the ABT provisi ons to a higher PM emissions levels would be subject to the BACT requirement.

b) Compliance Extensions

In conjunction with the expanded scope and applicab ility, a new provision section (2022.1(d)(7)) would allow municipalities and utili ties to apply for a one-year extension of the intermediate 2009 compliance deadline for li ght heavy-duty engines. The municipality or utility would have to document that the addition of the light heavy-duty engines to the fleet would prevent the fleet from c omplying with the 2009 compliance

deadline.

Staff does not expect many municipalities and utili ties to apply for this extension since a telephone survey of 38 municipalities and public ut ilities indicated that most fleets had already accounted for all of their heavy-duty vehic les over 14,000 pounds GVWR, including those with light heavy-duty engines, in t heir total fleet for the regulation.

c) Retirement Credit for Out-Of-State Sales

A municipality or utility may receive credit toward their BACT requirement by retiring a vehicle according to the provisions of the rule. R etirement credit is granted if any of the following apply:

• the engine is dismantled for scrap;

• the vehicle is sold outside of California;

• the vehicle is transferred to another person or en tity in California after it has been brought into compliance with the BACT requirements, or;

• the vehicle has been converted for use as a low us age or low-population low usage

vehicle.

Staff’s proposed amendments provide a means of ensu ring that owners receive BACT credit for vehicles sold out-of-state, and that veh icles sold out-of-state for retirement credit cannot be re-sold in California unless they met the BACT requirements.-149-

New language proposed in section 2022.1(f)(1)(k) wo uld establish a process for qualifying a vehicle for retirement through out-of- state sales. This process requires the municipality or utility to obtain a “VIN Stop” – a Department of Motor Vehicles (DMV) registration hold based on a vehicle identification number that prevents a vehicle from being re-registered in California after it is retir ed. A municipality or utility would not be granted BACT credit for a retired vehicle re-regist ered in California if the municipality or utility sold the vehicle prior to the VIN Stop bein g issued. This proposal formalizes an informal process that was initiated earlier by staf f in cooperation with the DMV.

Proposed language in section 2022.1(h) establishes contract requirements for out-ofstate sales through a third party vehicle seller. The contract language would ensure that the seller informs buyers of the prohibitions against re-registering or operating

retired vehicles in the state.

Staff is also proposing to modify the definition of “retirement” in section 2022(b)(8) to grant credit for the sale within California of two- engine sweepers with 2004 – 2006 model year propulsion engines, provided that, in th e case of private sector buyers, they comply with the proposed regulation. This would ma ke cleaner used sweepers available for purchase by private fleets.

d) Optional Delay of Immediate and Final Compliance Date for Group 2 and Group 3 Privately Owned Utility Vehicles

For privately-owned utilities, staff is proposing a n optional two-year delay of the intermediate and final BACT PM requirement deadline s, accompanied with a requirement that by December 31, 2013, 30 percent o f their total fleet vehicles meet a 2010 engine emission performance standard, and that an additional 20 percent of their total fleet vehicles meet a 2007 or newer engine em ission standard.

e) Other Changes

Staff is proposing to add new definitions for “leas e”, “operate”, “sold outside of the State of California”, “third party vehicle seller”, “dual engine street sweeper”, and “VIN stop” to support the changes being proposed.

3. Mobile Cargo Handling Equipment at Ports and Int ermodal Rail Yards

As discussed above, staff is proposing to exclude s weepers and mobile cranes from the scope of the Cargo Handling Equipment regulation. No changes would be made regarding rubber-tired gantry cranes.

4. Drayage Trucks

Staff is proposing modifications to the drayage tru ck regulation to add a phase one requirement for drayage trucks with 2004 – 2006 mod el year engines, a change in liquefied natural gas (LNG) fueled truck applicabil ity, and clarifications on the applicability of alternative and dual-fueled diesel trucks.-150-

Staff is proposing to require that 2004 model year engines be equipped with the highest level verified DECS for PM by January 1, 2012, and that 2005-2006 model year engines be equipped with the highest level verified DECS fo r PM by January 1, 2013.

Staff is also proposing additional changes to be co nsistent with the proposed regulation. Staff is proposing to define pilot injection LNG fu eled trucks consistent with the alternative fueled vehicle definition in the propos ed regulation. This change would exempt pilot injected LNG fueled trucks from the em issions requirements of the drayage truck regulation. Staff is also proposing to inclu de ‘alternative diesel-fueled and dualfueled’ trucks in the applicability section (b)(1).

Finally, staff is proposing to add or modify the fo llowing definitions: ‘Dual-Fueled Engine’, ‘Alternative Diesel Fuel’, ‘Compression Ig nition Engine’, and ‘Diesel-Fueled’. All definition additions or changes would not modif y the applicability or intent of the drayage truck regulation.

5. In-Use Off-Road Diesel Vehicle Regulation

Staff is proposing to change the scope of the regul ation for in-use off-road diesel vehicles to include both the drive engine and the s econdary engine of all two-engine cranes operated in California. The drive engine wo uld be included regardless of whether it is certified as an on-road engine or as an off-road engine. Because of this, staff is proposing to add a definition of “two-engi ne crane,” in title 13, CCR, section 2449(c)(56)

Staff is also proposing to modify section 2449.3(b) (2)(c) to exclude the horsepower from cranes from a fleet’s maximum horsepower.

In addition, just as other on-road vehicles are req uired to have on-road engines when sold new and if operated on the road, on-road vehic les subject to the In-Use Off-Road Diesel Vehicle Regulation (such as workover rigs an d on-road two-engine cranes) must have on-road engines in them when sold new. New la nguage is proposed in section 2449(e)(15) that would clarify the repower requirem ents for workover rigs and other onroad vehicles subject to the regulation. The propo sed amendments would require that any replacement engine must be an on-road engine if the workover rig or other on-road vehicle is to be registered and driven on public ro adways.

Staff is proposing to modify section 2449 (e)(7) to clarify the exemption provision for low-use vehicles. The current regulatory language in the section exempts low-use vehicles from all of the performance requirements i n section 2449(d). The proposed modifications would require low-use vehicles to com ply with the requirements for adding vehicles to the fleet and with the idling requireme nt. This is consistent with staff’s original intent in proposing the regulation.-151-

6. Portable Engine and Equipment

Staff is proposing amendments to the Portable Engin e and Equipment Regulation as it applies to two-engine cranes and two-engine sweeper s. Under the Portable Equipment Regulation, currently these engines must be replace d by December 31, 2010, if they do

not meet U.S. EPA or ARB emission certification sta ndards. In many cases these vehicles have Tier 0 engines and it is not feasible , if not impossible, to repower these vehicles with new certified engines. Meaning, the only alternative would be to replace the entire vehicle with a new vehicle having a cert ified engine. To address this, staff is proposing to amend the Portable Equipment Regulatio n to exclude the secondary engines on two-engine cranes and privately owned tw o-engine sweepers from the requirements of the Regulation. The Regulation wou ld also be amended to delete the diesel PM standards and fleet requirements of title 17, CCR, section 93116.3(b)(4) for

lattice boom cranes. Lattice boom cranes would be included in the proposed definition of two-engine cranes that would be added to the In- Use Off-Road Diesel Vehicle Regulation.

Additionally, staff is proposing that two new secti ons be added to the Portable Equipment Regulation. New section 93116.1(b)(8), w ould require the auxiliary engine on a two-engine crane to comply with the requiremen ts of the regulation for in-use offroad diesel vehicles, and new section 93116.1(b)(9) would require the secondary engine on a privately owned two-engine sweeper to c omply with the requirements of the proposed regulation.

Staff is also proposing to amend the Portable Equip ment Regulation by adding a new

definition for “crane” which would cross-reference the proposed new definition of twoengine crane in the In-Use Off-Road Diesel Vehicle Regulation. A new definition for “street sweeper”, which references the new proposed definition of “dual-engine street sweeper” in the regulation for Public Agency and Ut ility Fleets will also be added.

7. Statewide Portable Equipment Registration Progra m (PERP)

The PERP requirements are proposed to be amended in order to establish new performance requirements for registered secondary d iesel engines on two-engine cranes and privately owned two-engine sweepers. Wi th this change, these secondary engines would be exempt from the performance requir ements of the PERP regulation, except for the limits on opacity of emissions.

For two-engine cranes, the secondary engine would b e required to comply with the applicable requirements of the In-Use Off-Road Dies el Vehicles Regulation. In addition, the PERP regulation would define “crane” by referen cing Section 2449 (c) of the In-Use Off-Road Diesel Vehicle Regulation and its definiti on of a “two-engine crane”.

For privately owned two-engine sweepers, the PERP r egulation would define “street sweeper” such that it would cross-reference the def inition of “dual engine street sweeper” in the Public Agency and Utility Fleets Re gulation. The secondary engine of a-152-

two-engine sweeper would have to comply with the ap plicable performance requirements of the proposed regulation.

In addition, currently non-registered Tier 0 second ary engines on cranes and sweepers would be allowed to be newly registered under PERP, and would then be subject to the inspection requirements and fees listed in the PERP regulation.

Under the proposed amendments, an owner who chooses to continue to register the secondary engine of a crane or street sweeper under PERP would be exempt from its recordkeeping and reporting requirements, but would remain subject to the inspection and testing fees. In addition, they would, respect ively, be required to comply with the applicable recordkeeping, reporting and other admin istrative requirements of the regulation for in-use off-road diesel vehicles and of the proposed regulation.

C. Changes to Idling Requirements for Certain On-Ro ad Vehicles

Staff is proposing changes to title 13, CCR, sectio n 2485 (ATCM to Limit Diesel-Fueled Commercial Motor Vehicle Idling) and section 1956.8 (Exhaust Emissions Standards and Test Procedures – 1985 and Subsequent Model Hea vy-Duty Engines and Vehicles) to exempt armored cars and workover rigs from the v ehicle idling limits.

When an armored car is at a pick-up location, at le ast one guard must stay inside the

vehicle. Since the environment inside of an enclos ed armored car can become extremely uncomfortable, idling of the engine for c limate control is essential to the health and safety of the onboard guard. For this r eason, staff is proposing to add new section 2485(d)(2)(M) to exempt armored cars idling while providing services for which the vehicle was designed.

Staff is also proposing that the idling requirement s for workover rigs be amended. Staff is proposing to add a new provision in section 2485 (d)(2)(N) to exempt workover rigs from the motor vehicle idling limit while they are performing the work for which the vehicle was specially designed. This proposal woul d allow a workover rig to carry out its specialized function when the vehicle is statio nary and the engine is working

Staff is proposing to modify the engine requirement s of title 13, CCR, section 1956.8 to be consistent with the change proposed to the Comme rcial Vehicle idling ATCM for workover rigs and armored cars. The proposed chang es to these engine requirements would add armored cars and workover rigs to the lis t of exempted vehicles in section 1956.8(a)(6)(B).-153-

XII. E NVIRONMENTAL I MPACT

This chapter discusses the potential impacts that t he proposed regulation may have on public health and the environment, including air, w ater and soil. Based on our analysis, staff expects significant environmental benefits an d does not anticipate any significant adverse public health or environmental impacts asso ciated with the proposed regulation.

The proposed regulation will provide significant PM and NOx emission benefits by accelerating the introduction of newer cleaner engi nes and the installation of retrofits for PM exhaust emissions control on existing engines. While verified DECS can have a fuel economy penalty, this is expected to be offset by improvements in fuel economy from accelerated introduction of newer engines.

A. Legal Requirements

The California Environmental Quality Act (CEQA) and ARB policy require an analysis to determine the potential environmental impacts of pr oposed regulations. Because the ARB’s program involving the adoption of regulations has been approved by the Secretary of Resources pursuant to Public Resources Code, section 21080.5, the CEQA environmental analysis requirements may be inc luded in the Initial Statement of Reasons (ISOR or Staff Report) for this rulemaking in lieu of following the CEQA format of an Initial Study and an Environmental Impact Rep ort or Negative Declaration. In addition, ARB staff will respond, in the Final Stat ement of Reasons for the regulation, to all significant environmental issues raised by the public during the public review period or at the Board public hearing.

Public Resources Code section 21159 requires that t he ARB’s environmental impact analysis include the following:

• An analysis of the reasonably foreseeable environm ental impacts of the methods of compliance;

• An analysis of reasonably foreseeable mitigation m easures; and

• An analysis of reasonably foreseeable alternative means of compliance with the regulation.

Compliance with the proposed regulation is expected to directly affect air quality and potentially affect other environmental media. Our analysis of the reasonable foreseeable environmental impacts of the methods of compliance is presented below. Regarding mitigation measures, CEQA requires the le ad agency to identify and adopt feasible mitigation measures that would minimize an y significant adverse environmental impacts described in the environmental analysis.

The proposed regulation is designed to primarily re duce emissions of diesel PM – a

toxic air contaminant – and NOx. The diesel PM red uctions are needed to reduce the public health impacts from exposure to diesel PM as required by Health and Safety Code (HSC) sections 39666 and 39667, and to fulfill the goals of the October 2000-154-

Diesel Risk Reduction Plan (ARB, 2000). The NOx em issions reductions are needed to provide the ozone and particulate matter precursor emissions reductions necessary to

achieve attainment in those areas of the State that violate the National and State ambient air quality standards for ozone and particu late matter. The regulation is also necessary to fulfill ARB’s obligations under HSC 43 013 and 43018 to achieve the

maximum feasible and cost effective emission reduct ions from all mobile source categories, including on-road diesel engines.

Alternatives to the proposed regulation are discuss ed in Chapter XVIII of this report.

ARB staff has concluded that there are no alternati ve means of compliance that would

achieve similar diesel PM and NOx emission reductio ns at a lower cost.

B. Reasonably Foreseeable Environmental Impacts

Staff has identified both benefits and potentially adverse environmental impacts of compliance with the proposed regulation.

1. Statewide Air Quality Impacts

On-road engines are major contributors to PM2.5 and ozone pollution. The proposed regulation will provide diesel PM and NOx emissions reductions that will have a substantial positive air quality impact throughout California. By reducing ambient levels of PM2.5 and ozone, the regulation will help with t he progress towards attainment of National and State ambient air quality standards fo r PM2.5 and ozone. Significant

health benefits will be obtained with the reduction s of ambient levels diesel of PM, a

toxic air contaminant.

The emissions benefits of the proposed regulation a re summarized in Table XII-1 below and discussed in more detail later in this chapter. Staff estimates that between 2010 and 2025, as older engines are replaced with newer engines or retrofitted with diesel exhaust control systems, PM emissions will be reduc ed by an average of 2,160 tons per year and NOx by an average of 30,000 tons per year.

The PM and NOx emissions reductions from the propos ed regulation and the resulting reduction in ambient levels of these compounds will help with efforts to achieve ambient air quality standards for both PM2.5 and ozone in n on-attainment areas of the State.-155-

Table XII-1: Emission Benefits from Implementation of the Proposed Regulation

Benefits of Regulation (2010 – 2030) PM NOx

Emissions Removed (total tons) 34,600 480,000

Annual Average Reductions (tons per year) 2,160 30,000

a) Methodology

The proposed regulation would initially require old er vehicles to install DPFs; several years later, it would require replacement of that v ehicle with a compliant vehicle. Applying the proposed compliance schedules amongst fleets requires assessing compliance within each inventory category by fleet size, and then assessing the fraction of VMT subject to low-mileage provisions.

To assess potential compliance patterns staff evalu ated previous vehicle buying patterns by fleets based on survey data collected, as well as the cost model developed for this regulation. Using these data, staff asses sed the likely model year truck or bus that would be purchased in a given calendar year. Based on an analysis of historical buying patterns, the largest fleets were most likel y to purchase new vehicles, even if the regulation does not require it -- while smaller fle ets operating older vehicles were likely to comply by doing the minimum that the regulation requires. For example, if the regulation requires that a fleet purchase a 2010 co mpliant vehicle to replace a 2007 non-compliant vehicle in 2021, staff assumed a smal ler or older fleet would purchase a 2010 vehicle, an average in-state fleet would purch ase a 3-5 year old vehicle, and an out-of-state truck fleet would purchase a new vehic le. Details on these assumptions are provided in Appendix G.

b) Reduction of PM and NOx Emissions

The projected PM emissions reductions from implemen tation of the proposed regulation are presented in Table XII-2 and Figure XII-1, whil e the NOx emissions reductions are shown in Table XII-3 and Figure XII-2

As the baseline inventory estimates show, a decline in overall PM and NOx emissions from on-road diesel engines is expected as the on-r oad fleet becomes increasingly dominated over time by engines that comply with exi sting emission regulations. However, this decline in emissions is not sufficien t to meet ambient air quality

standards. Without additional emissions reductions from these engines, this downward trend in emissions is expected to reverse and emiss ions are expected to rise in the future as the effect of growth in the population of the on-road sector surpasses the effect of the existing standards.

Staff estimates that with implementation of the pro posed regulation, diesel PM emissions will be reduced by about 13 tons per day (tpd) in 2014 and 3.5 tpd in 2023-156-

relative to baseline levels. These reductions repre sent a 68 percent decrease in PM emissions in 2014 and a 33 percent decrease in 2023 . Also, the projected PM emission rate in 2020 (6.9 tpd) will be 79 percent lower tha n the 2000 baseline level of 33.1 tpd. Therefore, while the proposed regulation comes clos e, but does not achieve the goal of the Diesel RRP of reducing diesel PM by 85 percent by 2020. It does achieve the

maximum feasible PM emission reductions.

Table XII-2: Statewide PM Emissions Benefits from t he Proposed Regulation

PM Emissions (tons per day) Projected Reductions Calendar

Year Baseline With the Regulation (tons per day) Percent from

Baseline

2010 27.9 27.9 — —

2014 19.0 6.1 12.8 68%

2017 14.4 6.6 7.8 54%

2020 12.1 6.9 5.2 43%

2023 10.5 7.1 3.5 33%

Figure XII-1: Projected PM Emissions With and Witho ut the Regulation

0 5 10 15 20 25 30 35

20 0 8 2009 20

1 0 20 1 1 2 0 12 2013 2014 20

1 5 20 1 6 20 17 20 1 8
2 0 19 2020 2021 20

2 2 20 2 3PM2.5 Tons per Day

Baseline With Regulation

The projected NOx emissions reductions from the pro posed regulation are 124 tpd and 98 tpd, for 2014 and 2023, respectively. NOx emiss ions would be 25 percent lower in-157-

2014 and 31 percent lower in 2023 than they would b e in the absence of the proposed regulation.

Table XII-3: Statewide NOx Emissions Reductions fro m the Proposed Regulation

NOx Emissions (tons per day) Projected Reductions Calendar

Year Baseline With the Regulation (tons per day) Percent from

Baseline

2010 749 749 — —

2014 500 377 124 25%

2017 401 296 105 26%

2020 346 266 79 23%

2023 319 221 98 31%

Figure XII-2: Projected NOx Emissions With and With out the Regulation

0 100 200 300 400 500 600 700 800 900 1000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 202 0 2021 2022 2023NOx Tons per Day

Baseline With Regulation

Overall, staff estimates that California registered trucks, which account for 57 percent of statewide truck and bus VMT, will provide roughly 9 1 percent of total NOx benefit,

because those trucks tend to be older than trucks e ntering California from other states. In addition, staff found that small fleets of three trucks or fewer comprise 35 percent of VMT but provide nealry 50 percent of NOx benefits a chieved through this regulation.

This is because smaller fleets tend to be older tha n larger fleets, across all inventory categories.-158-

2. Impact on the State Implementation Plan

The 2007 SIP was based on the applicable version of ARB’s on-road motor vehicle emissions model, EMFAC2007. Staff, in support of t his rulemaking, has undertaken comprehensive efforts to update and improve the tru ck inventory since the SIP was adopted. New data not available at the time of SIP development was used in assessing the costs and benefits of this statewide rulemaking . However, assessing the proposed regulation benefits in terms of meeting the regiona l SIP targets must be done with the SIP inventory, since the SIP inventory is the offic ial inventory for judging SIP compliance.

The 2007 SIP truck measure envisioned modernizing t ruck fleets operating in California to the equivalent of the cleanest adopted new engin e (2010) standards. This proposed regulation meets that goal on the pace necessary to meet all the SIP target dates. While the quantification of benefits with the new i nventory is different than with the SIP inventory, the difference is in accounting not rule effectiveness. A primary reason for

the difference is that new data shows there is more travel by newer, cleaner out-of-state trucks than previously estimated in EMFAC2007. As a result, fewer benefits can be attributed to the proposed regulation for out-of-st ate trucks because they will already employ 2010 compliant engines. The proposed regula tion benefits are primarily

attributed to the modernization of in state fleets that are older and dirtier. In short, the proposed regulation accomplishes the modernization of truck fleets as envisioned in the

SIP.

Table XII-4 and Table XII-5 show, using the regiona l SIP inventories, the proposed regulation benefits compared to the expected reduct ions. The SIP targets in these tables refer to the fleet modernization portion of the truck SIP measure. The second part of the SIP measure for trucks, a program to address excess emissions, will be developed separately. The proposed regulation meet s or exceeds the combined NOx and PM2.5 SIP fleet proposed regulation targets in both the South Coast and San Joaquin Valley for all years. In 2014, in the Sout h Coast, the SIP target is met with slightly more PM2.5 reductions and slightly less NO x than expected. The PM2.5 modeling used in the South Coast Air Quality Manage ment District SIP shows that direct PM2.5 emission reductions are relatively mor e effective in reducing ambient particulate levels than are NOx reductions. As sho wn in Table XII-4 the proposed regulation achieves 60 tons per day of NOx in 2014 and the equivalent of six tons per day of NOx from the extra PM2.5 reductions that exc eed the PM2.5 SIP target. The SIP also included reductions in 2020 to support attainm ent in regions downwind of South Coast and the San Joaquin Valley. These 2020 goals are met for both regions.-159-

Table XII-4: South Coast SIP Emission Reduction Tar gets for Trucks

NOx (tpd in SIP inventory) PM2.5 (tpd in SIP inventory)

Calendar Year SIP Target for

Rule 1 Rule SIP Target for

Rule 1 Rule

2014 66 2 60 3 plus 6 equivalent tons 2.3 3.5 3

2020 23 27 -- --

2023 15 22 -- --

1 The truck measure reductions estimated in the SIP include the benefits of programs to reduce excess emissions. The numbers presented here are the SIP goals for the modernization rule only.

2 This target represents expected benefits from the enhanced truck measure designed to provide

additional reductions in 2014 for South Coast PM2.5 attainment and to accelerate ozone attainment in the San Joaquin Valley.

3 SIP compliance assessment includes agricultural t ruck compliance option.

Table XII-5: San Joaquin SIP Emission Reduction Tar gets for Trucks

NOx (tpd in SIP inventory) PM2.5 (tpd in SIP inventory)

Calendar Year SIP Target for

Rule 1 Rule SIP Target for

Rule 1 Rule

2014 48 66 2.5 4.3

2017 49 2 49 3

-- -- 2020 17 29 -- --

2023 8 23 -- --

1 The truck measure reductions estimated in the SIP include the benefits of programs to reduce excess emissions. The numbers presented here are the SIP goals for the modernization rule only.

2 This target represents expected benefits from the enhanced truck measure designed to provide

additional reductions in 2014 for South Coast PM2.5 attainment and to accelerate ozone attainment in the San Joaquin Valley.

3 SIP compliance assessment includes agricultural tr uck compliance option.

3. Potential Negative Impacts

Staff has identified two potential negative impacts resulting from the potential use of catalyzed DPFs to comply with the proposed regulati on. They are: 1) increased NO 2 emissions resulting in increased NO 2 exposure, and 2) the need to manage the

hazardous ash that accumulates on the filter.

a) Increased Nitrogen Dioxide Emissions with Passiv e Catalyzed Diesel

Particulate Filters

Unlike active diesel particulate filters, most cata lyzed diesel particulate filters (CDPF) form NOx as part of their normal operation. The CD PF works by mechanical filtration of PM from the exhaust through a ceramic or metallic f ilter followed by oxidation of the captured PM – mostly elemental carbon particles – t o CO 2 which is released to the atmosphere. The oxidizing agent for this process ( filter regeneration) is NO 2 which is-160-

produced through the catalytic oxidation of the nit ric oxide (NO) formed in the engine combustion process.

Typically, more NO 2 is created than is actually used during the regene ration process,

and the excess is emitted. Emissions measurements have shown an increase in the

NO 2 fraction of NOx emissions (NO plus NO 2 ) from heavy-duty diesel vehicles equipped with passive catalyzed diesel particulate filters e ven though total NOx emissions remain approximately the same. The NO 2 to NOx ratios downstream from a CDPF could range from 20 to 70 percent, depending on factors such as the DPF systems, the sulfur level in the diesel fuel, and the duty cycle (DaMassa, 20 02). On average, for diesel engines not equipped with a CDPF, about 7 percent of the em itted NOx is in the form of NO 2 (ARB, 2006).

The ARB’s Verification Procedure sets limits for se condary emissions from verified diesel emission control systems. The limit on NO 2 emissions is intended to limit

increases in ambient NO 2 , secondary nitrate PM, and ozone, and adverse publ ic health impacts. The regulation allows a maximum NO 2 increase equivalent to 30 percent of the total baseline NOx. Beginning January 1, 2009, the maximum increase will be reduced to 20 percent. Chapter VII discusses the i mpact of this new limit on currently

verified DECS.

Higher NO 2 emissions will result in a very small increase in ambient levels of NO 2 and ozone – pollutants associated with adverse health e ffects including respiratory symptoms, cardio-respiratory hospital admissions, a nd reduced lung function (ARB, 2007a). Currently, all of California is in c ompliance with the State 1 hour ambient

NO 2 air quality standard, often by a wide margin. Sta ff analyzed the impact on microscale exposures such as at schools where school bus es idle and on freeways with heavy diesel traffic. The analysis showed no viola tions of the 1 hour standard (ARB 2006). The anticipated reductions in NOx, and associated ozone and ambient

NO 2 from the proposed regulation, are expected to more than offset any increases in

ozone formation from increased NO 2 emissions from CDPFs.

b) Ash Management

The PM trapped by a DPF includes solid carbonaceous material or soot, semi-volatile organic matter (SOF), and inorganic solid particles . During the regeneration of the DPF, the captured soot and other combustible organic mat ter are oxidized to carbon dioxide and water, but the inorganic material is not typica lly combusted. Instead, it accumulates in the DPF as an ash. The DPF provides an environm ental benefit by filtering metallic ash from the exhaust, but for effective operation o f the DPF, the accumulated ash, which could be classified as a hazardous waste, mus t be periodically removed from the

filter.

The principal sources of ash are fuel additives, en gine lubricating oil, salts from environmental air, and motor wear. It primarily co nsists of oxides, sulfates and phosphates of iron, calcium, and zinc. Depending o n the concentration of zinc, the ash may be classified as a hazardous waste. Title 22, CCR, section 66261.24, establishes-161-

two limits for zinc in a waste: 250 milligrams per liter for the Soluble Threshold Limit Concentration and 5,000 milligrams per kilogram for the Total Threshold Limit Concentration. The presence of zinc at or above th ese levels would cause a sample of

ash to be characterized as a hazardous waste.

According to California law, it is the generator’s responsibility to determine whether or not their waste is hazardous. This, in general, wo uld require a chemical analysis of the collected ash sample to determine the zinc content. Applicable California regulations concerning the management and disposal of hazardous waste are contained in title 22 of the California Code of Regulations and are enfor ced by the Department of Toxic Substances Control (DTSC). Owners planning to disp ose of ash from a DPF should

contact both the manufacturer of the DPF and DTSC f or advice on waste management. They should also consult with local environmental a gencies to determine acceptable disposal methods. Diesel fuel ash is not listed as a hazardous waste by EPA in the Code of Federal Regulations (40 CFR Part 261). Fed eral regulations also conditionally exempt small quantity generators who generate less than 220 pounds per month of solid waste from federal hazardous waste regulation s.

The amount of ash collected from a filter during a typical cleaning procedure is relatively small. For example, ARB reports that the amount of material collected from a single filter in a single cleaning procedure is in the ran ge of 10-20 grams of ash. ARB extrapolated this ash collection amount to 10-20 kg (22-44 pounds) of ash collected per year for a fleet of 1,000 transit buses (ARB, 2002)

.

Most of the ash is formed from the inorganic materi als in engine oil, particularly from zinc-containing additives necessary to control acid ification of engine oil – due in part to

sulfuric acid derived from sulfur in diesel fuel. The need for acid neutralizing additives in engine oil has decreased as the sulfur content of d iesel fuel has decreased. American Petroleum Institute (API) CJ-4, which was introduce d in October 2006, limits the oil's sulfated ash, phosphorus, and the amount of zinc di thiophosphate-containing detergent in the diesel engine oil to insure adequate service life of the DPF. It reduces ash accumulation rates in DPFs and prevents premature p lugging

4. Environmental Justice and Neighborhood Impacts

The objectives of ARB’s statewide regulatory progra ms are better air quality and reduced health risk for all residents throughout Ca lifornia. The Board has a policy that community health and environmental justice (EJ) con cerns be addressed in all of ARB’s regulatory programs. Chapter III of this Staff Rep ort gave an overview of ARB’s commitment to integrating environmental justice in all its activities.

With implementation of the proposed regulation, PM and NOx emissions as well as associated cancer risks and other health impacts wi ll decrease over time as on-road

vehicle fleets become cleaner. This is consistent with the ARB’s EJ policy of reducing exposure to air pollutants and reducing the adverse impacts from toxic air contaminants in all communities, including low-income and minori ty communities. Although vehicles-162-

would be cleaned up on different schedules, staff e xpects emissions to decline in all

areas.

C. Health Benefits Analysis

The emissions reductions obtained with implementati on of this proposed regulation will

result in lower ambient PM and ozone levels and red uctions in public exposure to these pollutants. The potential health impacts of PM and NOx emissions from on-road engines and the consequent need for emissions reduc tions were discussed in Chapter

IV. This section describes the statewide health be nefits and the benefits to the targeted southern California urban study area of reducing em issions of PM and NOx from engines subject to the proposed regulation. It als o provides the societal cost savings of the proposed regulations.

1. Reduced PM and NOx Emissions

a) Statewide Non-Cancer Health Benefits

The proposed regulation is projected to reduce PM2. 5 emissions from heavy-duty diesel vehicles statewide by approximately 34,600 tons bet ween 2010 and 2025. The projected NOx emission reduction over the same time period is 480,000 tons. The effect of reducing these emissions would be a reduc tion in the prevalence of the diseases attributed to diesel PM, reduced incidence s of hospitalizations, and prevention of premature deaths.

Staff quantified the statewide cumulative impact of the total emissions removed from 2010 through 2025 through the implementation of the proposed regulation. The analysis used the same non-cancer health endpoints reported in Chapter IV for the impact of the 2008 baseline emissions. Appendix E provides a description of the methodology used to estimate the health benefits.

The estimates reported in Table XII-6 demonstrate t hat the health benefits of implementing the proposed regulation are substantia l. Staff estimates that the

cumulative emissions reductions from 2010 to 2025 w ould result in approximately 9,400 fewer premature deaths, 1,100 fewer hospital admissions due to respiratory causes, 1,200 fewer hospital admissions due to card iovascular causes, 150,000 fewer cases of asthma-related and other lower respiratory symptoms, 12,000 fewer cases of acute bronchitis, 950,000 fewer work loss days, and 5,400,000 fewer minor restricted activity days. Table XII-6 also shows the range fo r each estimated benefit.

The analysis of the impact of the regulation includ es the benefits of reductions of direct

diesel PM and indirect diesel PM – nitrates formed from precursor NOx emitted by diesel engines. The impacts of direct and indirect sources of PM are listed separately in Table XII-6. The health benefits of reducing NOx a s a precursor to ozone are not included in the estimates. Because only a subset o f health outcomes was considered,

the estimates are conservative.-163-

Table XII-6: Total Health Benefits Associated with Reductions in Emissions from the Implementation of the On-Road Truck and Bus Reg ulation (2010-2025)*

Endpoint Pollutant Number of Cases (Mean) Range (95% C.I.)

PM 3,300 990 – 6,000
NOx 6,100 1,800 – 11,000 Premature Mortality
Total 9,400 2,800 – 17,000

PM 64 23 – 110
NOx 1,000 580 – 1,500 Hospital admissions (Respiratory) Total 1,100 600 – 1,600

PM 270 140 – 400
NOx 960 590 -1,400 Hospital admissions (Cardiovascular) Total 1,200 730 – 1,800
PM 53,000 20,000 – 85,000
NOx 96,000 39,000 – 150,000 Asthma & Lower Respiratory Symptoms Total 150,000 59,000 – 240,000
PM 4,400 0 – 9,600
NOx 7,600 0 – 16,000 Acute Bronchitis
Total 12,000 0 – 26,000
PM 330,000 280,000 – 380,000
NOx 620,000 520,000 – 710,000 Work Loss Days
Total 950,000 800,000 – 1,100,000
PM 1,900,000 1,600,000 – 2,300,000
NOx 3,500,000 2,900,000 – 4,200,000 Minor Restricted Activity Days Total 5,400,000 4,500,000 – 6,500,000

* Health effects from primary and secondary PM are labeled PM and NOx, respectively. The sum of PM and NOx impacts may not equal the total given due t o rounding. Estimates for premature deaths are based on an updated relative risk of 10% per 10 μg/ m3 change in long term PM2.5 exposure, with a confidence interval of 3% - 20% (ARB, 2008).

b) Local Non-Cancer Health Benefits

On a local level, as part of the Commerce Study, st aff also estimated these same health benefits between 2010 through 2020. Such benefits would be a subset of the statewide numbers reported above; that is, these benefits are due only to the reduction in emissions expected from implementation of the propo sed regulation within the Commerce study area. Statewide, much greater benef its are expected to be realized as reported above. The anticipated benefits in and ar ound the City of Commerce are:

• 78 avoided premature deaths ( 20 to 130, 95 percen t CI)

• 60 avoided hospital admissions – respiratory and c ardiovascular (24 to 90, 95 percent CI)

• 2,600 avoided asthma attacks (1,000 to 4,000, 95 p ercent CI)-164-

• 220 avoided acute bronchitis ( 0 to 48, 95 percent CI)

• 14,700 avoided work loss days (11,500 to 16,500, 9 5 percent CI)

• 80,000 avoided minor restricted activity days (70, 000 to 93,000, 95 percent CI)

2. Potential Localize Cancer Risk Reduction

On a local level, using the results from the Commer ce study, staff’s analysis estimates that risk levels in and around the city of Commerce will be reduced by over 80 percent, to less than 70 in a million, by 2015. However, lo calized cancer risks will begin to increase as growth begins to surpass the reductions realized by the regulations, with the predicted remaining cancer risk in the 2020 tim eframe rising to about 75 in a million in and around the city of Commerce. As vehicle mil es traveled in the future continues, this increase in cancer risk will continue, albeit at a significantly lower rate of increase than would occur in the absence of the proposed reg ulation. Appendix E provides a more detailed description of the methodology and re sults.

3. Benefits of Reduced Ambient Ozone Levels

Emissions of NOx and ROG are precursors to the form ation of ozone in the lower atmosphere. On-road diesel engines contribute a su bstantial fraction of ozone precursors, particularly NOx, statewide. Therefore , reductions in NOx from on-road diesel engines are a considerable contribution to C alifornia’s efforts to reduce exposure to ambient ozone. Controlling emissions of ozone p recursors reduces the prevalence of the health effects associated with ozone exposure, such as coughing, chest tightness, inflammation and irritation of the respiratory trac t, worsening of wheezing and other asthma symptoms, and reduced lung function, and wou ld reduce hospital admissions and emergency visits for respiratory problems.

4. Economic Benefit

The proposed regulation would provide significant e conomic benefits as well. During the 2010 to 2025 period, the estimated statewide cu mulative economic benefits from the proposed regulation is $69 billion using a 3 percen t discount rate or $48 billion using a 7 percent discount rate. ARB follows U.S. EPA prac tice in reporting results using both 3 percent and 7 percent discount rates. A large po rtion of the monetized benefits results from avoiding premature death. The estimat ed benefits from avoided morbidity are approximately $510 million with a 3 percent dis count rate and nearly $350 million with a 7 percent discount rate. Approximately 68 p ercent of the benefits are associated with reduced PM from NOx emissions, and the remaini ng 32 percent from direct PM emissions. Appendix E discusses the methodology st aff used to monetize the value of avoiding the adverse health impacts using valuation s compiled from ARB and U.S.EPA publications, updated to 2007 dollars.-165-

D. Climate Change Impacts

This section provides a general discussion of the i mpact of the projected emissions reductions on climate change and provides an estima te of the impact based on changes

in CO 2 emissions with implementation of this regulation.

1. Greenhouse Gases

The most important class of climate forcing agents responsible for global warming are greenhouse gases (GHG) which are predominantly comp rised of CO 2 , methane (CH4) and nitrous oxide (N 2 O). Other GHGs include water (H 2 O), CO and ozone. These gases are known as GHGs, due to their transparency to high frequency solar radiation and their opacity to low frequency infrared radiati on emitted from the Earth’s surface. The gases differ in their atmospheric warming poten tial, and as a result, the contribution of each gas is determined as equivalent CO 2 emissions using conversion factors approved by the Intergovernmental Panel on Climate Change. For example, methane has 21 times the warming potential of carbon dioxid e and N 2 O has 310 times the warming potential of CO 2

.

In evaluating the potential GHG emissions changes a nd their impacts on climate change, it is relevant to examine changes in CO 2 emissions associated with fuel economy impacts, as well as impacts of particle and aerosol formation and emissions.

a) Fuel Economy

A vehicle owner who complies with the regulation by retrofitting the vehicle with a DPF could potentially experience a decrease in the vehi cle’s fuel economy of about 2 percent. However, as the fleet is modernized to co mply with the regulation, SCR is expected to replace EGR as the primary NOx emission s control technology. SCR for 2010 model year engines permits operation of the en gine at more optimal combustion temperatures to provide better power and fuel effic iency improvements, as well as lower PM generation.

The expected improvements in fuel economy from the use of SCR, estimated 3 to 5 percent, would offset the potential climate change impacts of the widespread installation of DPFs on the overall fuel economy of the fleet.

Staff expects fuel economy to improve over time wit h the introduction of engines meeting the 2010 emission standard and as a result, CO 2 emissions will increase at a slower rate than the predicted increase in VMT. St aff does not anticipate a significant

reduction of CO 2 emissions as a result of the proposed regulation ( Figure XII-3).-166-

Figure XII-3: Statewide CO 2 Baseline and With Regulation Emissions

0 20000 40000 60000 80000 100000 120000 140000 160000

2008 2009 2010 2011 2 012 2013 2014 20

15 2016 2017 2018 2019 2020 2021 2022 2023CO2 Tons per Day

Baseline With Regulation

The proposed regulation would also reduce emissions of black carbon – a component of diesel PM and a likely contributor to global warmin g – which would further reduce climate change impacts attributed to the overall im pact on fuel economy.

b) Net Effect on Greenhouse Gases

The overall impact of the regulation on climate cha nge would be negligible. Staff expects a negligible decrease in CO 2 emissions of less than one percent after taking into account the fuel economy benefit of SCR for 20 10 and later model year engines, and the relatively small CO 2 increase associated with the fuel economy penalty for DECS installed to comply with the regulation.

In assessing the climate change impact of the propo sed regulation, staff examined only the direct emissions from operation of the vehicles . In addition to CO 2 , on-road diesel engines emit significant amounts of at least two po llutants associated with climate change – black carbon and ozone-forming NOx. Howev er, it is difficult at this time to estimate the impacts of reductions of these polluta nts on climate change since there is no global warming potential yet assigned to black c arbon.

2. Aerosols

Particles, especially those with diameters smaller than 1 micron (μm), can affect the earth’s temperature and climate by altering the rad iative properties of the atmosphere.-167-

“Reflective aerosols” will scatter solar radiation so that a substantial portion of the radiation incident to the Earth’s troposphere is re turned to space, thereby cooling the climate. Examples of these are sulfates, nitrates, and organic carbon particles.

“Absorbing aerosols” will absorb solar radiation, t ransfer the energy to the atmosphere, and prevent sunlight from reaching the ground. The se aerosols warm the atmosphere, but cool the surface. Black carbon aerosols, or so ot, formed by incomplete combustion are absorbing aerosols and cause a positive climate forcing of uncertain magnitude. Current investigations indicate that black carbon a nd associated organic matter play a major role in climate change, but this role has not been quantified reliably. Modeled estimates for radiative forcing by black-carbon-con taining aerosols range widely. It may be the second or third largest individual warming a gent, following CO 2 and perhaps methane (Bond and Sun, 2005).

Since diesel PM is composed largely of black carbon and associated organic matter, the diesel PM emissions reduction obtained with the pro posed regulation would have a positive climate change impact by reducing the blac k carbon component of global warming. Also, because the lifetime in the atmosph ere for most black carbon is short compared to CO 2 , the control of black carbon emissions can bring a n immediate environmental benefit compared to the slower respon se to CO 2 emissions controls.

3. Ozone Precursors

It is estimated that tropospheric ozone has had the third largest impact on radiative forcing (1750 to present) of all GHGs. Changes in tropospheric ozone are due to anthropogenic increases in the emissions of ozone p recursors – NOx and VOCs. However, the effect of reducing these precursors is still uncertain, as there are no agreed-upon methods for estimating the Global Warmi ng Potential of ozone precursors. Also, ozone production leads to the formation of pa rticulate nitrate and secondary organics which enhance cooling. However, there are no methods for accounting for the indirect effects of changes in tropospheric chemist ry. Ozone is short lived in the troposphere (an average lifetime on the order of we eks) and is typically treated as a regional pollutant with direct and indirect climate effects that vary considerably by

location.

4. Alternative Fuels

The proposed regulation gives credit for the use of hybrid electric and alternative fuel vehicles and systems to replace diesel vehicles. T his provision of the rule could have a positive impact on climate change to the extent tha t it is effective in encouraging owners to purchase low-GHG vehicles or use low GHG fuels w here they are cost effective

alternatives to conventional diesel vehicles or fue l. This will result in a clear GHG advantage from the need for reduced power generatio n and fuel production.

For electric vehicles, there are greenhouse gas imp lications in battery manufacturing, replacement and disposal. However, on a lifecycle basis, electric vehicles have lower associated emissions than diesel vehicles (Delucchi , 2005). Over the longer term,-168-

expanding the use of electric vehicles would provid e the benefit of zero tailpipe emissions, and reduced climate change impacts.

E. Welfare Impacts

In addition to the public health effects of fine pa rticulate pollution, fine particulates including sulfates, nitrates, organics, soot, and s oil dust contribute to regional haze that impairs visibility.

In 1999, the U.S. EPA promulgated a regional haze r egulation that calls for states to establish goals and emission reduction strategies f or improving visibility in 156 mandatory Class I national parks and wilderness are as. California has 29 of these national parks and wilderness areas, including Yose mite, Redwood, and Joshua Tree National Parks. Reducing diesel PM from diesel-fue led on-road vehicles would help improve visibility in these Class I areas.

F. Reasonably Foreseeable Mitigation Measures

ARB staff has concluded that no significant adverse environmental impacts should occur from adoption of and compliance with the prop osed regulation. Therefore, no mitigation measures would be necessary.

G. Alternative Means of Compliance with the Propose d Regulation

Alternatives to the proposed regulation are discuss ed in Chapter XVIII of this report. ARB staff has concluded that the proposed regulatio n provides the most effective and least burdensome approach to reducing exposure of c hildren and the general public to diesel PM and other air pollutants emitted from on- road diesel-fueled engines.

H. References

ARB, 2002. Air Resources Board. Initial Statement of Reasons: Proposed Modification

to the Public Transit Bus Fleet Rule and Interim Ce rtification Procedures for the HybridElectric Urban Transit Buses. Appendix F – Staff An alysis of PM Emission Reductions and Cost-Effectiveness. September 6, 2002. http://www.arb.ca.gov/regact/bus02/bus02.htm

ARB, 2006. California Air Resources Board. Proposed Regulation for the Verification Procedure for In-Use Strategies to Control Emission s from Diesel Engines. Staff Report, Initial Statement of Reasons for Proposed R ulemaking . March 29, 2002.

ARB, 2007a. California Agency, Air Resources Board and Office of Environmental

Health Hazard Assessment. Review of the Ambient Air Quality Standard for Nitr ogen Dioxide. Staff Report January 5, 2007. http://www.arb.ca.gov/research/aaqs/no2- rs/no2-doc.htm#TechSuppDoc-169-

ARB, 2008. California Air Resources Board. Methodo logy for Estimating the Premature Deaths associated with Long-term Exposure to Fine A irborne Particulate Matter in

California. http://www.arb.ca.gov/research/health/pm-mort/pm-mo rt.htm

Bond, T.C., Sun, H. Can Reducing Black Carbon Emissions Counteract Glob al Warming ? Environ. Sci. Technol. 2005, 39:5921-5926.

DaMassa, J

. California Air Resources Board. Presentation: Air Quality Effects of TrapRelated Emissions (Updated); February 6, 2002.

Delucchi, 2005. A Multi-Country Analysis of Lifecy cle Emissions from Transportation Fuels and Motor Vehicles. Mark A. Delucchi, Instit ute of Transportation Studies, University of California, Davis. UCD-ITS-RR-05-10.-170--171-

XIII. C OST S UMMARY AND M ETHODOLOGY

This chapter discusses the methodology staff develo ped to estimate the costs associated with the proposed regulation. These cos ts relate to the installation and maintenance of verified DECS and the early replacem ent of vehicles to newer vehicles (beyond what fleets have historically done). To co nduct this analysis, staff developed a cost model to estimate the capital expenditures of normal vehicle replacement compared to the capital expenditures required to co mply with the proposed regulation. The cost model examines actual individual company f leet actions each year between 2009 and 2030, with and without the proposed regula tion. The results for each fleet included in the cost model are then scaled up to re flect the impacts on the statewide heavy-duty diesel vehicle population, including out -of-state vehicles operating in

California.

A. Legal Requirements

Sections 11346.3 and 11346.5 of the Government Code require state agencies to assess the potential for adverse economic impacts o n California business enterprises and individuals when proposing to adopt or amend an y administrative regulation. The assessment shall include a consideration of the imp act of the proposed regulation on California jobs, business expansion, elimination, o r creation, and the ability of California businesses to compete.

State agencies are also required to estimate the co st or savings to any state or local agency and school districts in accordance with inst ruction adopted by the Department of Finance. This estimate is to include any nondiscre tionary costs or savings to local agencies and the costs or savings in federal fundin g to the state.

B. Methodology for Estimating Costs

1. Overview

The cost and economic impacts of this regulation ar e based on the anticipated compliance paths of the affected statewide fleets. To perform this analysis, staff estimated the cost that fleets are already incurrin g under their normal vehicle replacement practices. Staff then estimated the co sts that fleets would incur to meet the requirements of the proposed regulation. The d ifference between these two numbers is the regulatory costs of staff’s proposal . These costs have been estimated for the years between 2010 and 2030.

Staff developed the ARB On-Road Compliance Model (c ost model) to estimate the capital expenditures of normal vehicle replacement during the analysis period compared to the capital expenditures required to comply with the proposed regulation over the same period. Using actual fleet data reported in t he ARB fleet survey on over 13,000 vehicles, the costs to the statewide fleets were ca lculated by predicting and evaluating the compliance paths for real individual fleets usi ng the cost model.-172-

Staff used the cost model to analyze over 6,700 veh icles from 688 actual individual company fleets for each calendar year from 2009 to 2030, both with the regulation and without the regulation. The fleets evaluated varie d by fleet age, vehicle type and weight class, and provided a representation of in-state an d out-of-state fleets operating in California. The analysis determined the costs beyo nd those of estimated normal vehicle replacement; all costs calculated are additional co sts fleets would incur by complying with the regulation.

In addition to capital costs, various annual operat ional and maintenance costs are attributable to the regulation. Operational and ma intenance costs associated with NOx

and PM controls would include annual PM filter clea ning expenses, changes in fuel economy, urea costs for SCR systems, and costs asso ciated with regeneration of active PM systems. Potential cost savings include fuel ec onomy improvements with replacement of older vehicles with newer vehicles. In addition, companies would incur annual reporting costs when required to report to A RB. These annual costs were modeled separately and added to the capital cost es timates to arrive at an overall cost estimate. The cost and economic methodology is desc ribed in more detail in Appendix J.

a) Fleet Data Collection Approach

First, the cost estimate of the proposed regulation was developed through the use of a

number of sources of data. Staff met with several individual companies and obtained information about their normal business practices. Staff also conducted a detailed fleet information survey with participation by fleet orga nizations and individual stakeholders. An ARB fleet survey collected information from flee ts throughout the state regarding their company’s business operations, such as the fl eet’s primary business use categories and number of vehicles in each fleet. T he survey data also included vehicle specific information for heavy-duty diesel vehicles , including model year, weight ratings, and annual mileage data. See Appendix J for summar y information obtained by the survey regarding reported counts by vehicle body ty pe and by fleet size and age.

b) Vehicle Replacement

Heavy-duty diesel engines are extremely durable and can operate 750,000 to 1,000,000 miles before needing to be rebuilt. Although there are exceptions, few fleets operate vehicles significantly above 1,000,000 miles becaus e repairs at this age often exceed

the value of the vehicle and the loss in reliabilit y adds indirect costs for most

businesses.

Normal vehicle replacement practices are dependent on a number of factors, but in general are best correlated to annual miles travele d and how a vehicle is used. Fleets with vehicles travelling over 100,000 miles per yea r generally have vehicle replacement rates that are much higher than fleets with vehicle s averaging less than 20,000 miles per year. For example, a long haul trucking operat ion that averages well over 120,000 miles per year may replace all of their vehicles wi th new vehicles in a 3 to 7 year period. In contrast, a less than truckload carrier who may average 70,000 miles per year may-173-

normally buy 3 year old vehicles and keep them for 10 years, and a local construction fleet may average 20,000 miles per year and purchas e a range of new and used vehicles and will often keep them for over 20 years

.

Statewide emission inventory data includes vehicle counts by model year for various fleet population groups (such as in-state vehicles, out-of-state vehicles, etc.). The age distribution of a population group provides an indi cation of how long vehicles remain in those groups, how they might transfer between group s and the ages at which they are

retired.

As shown below in Figure XIII-1, very few heavy hea vy-duty vehicles remain in the statewide fleet after 25 years; only 3.4 percent of the tractors, 2.2 percent of the single (non-tractors) and 0.23 percent of the CA IRP vehic les are expected to remain in the fleet with an age over 25 years. Staff used the ca pital cost model to reflect these differences in normal purchase practices to better understand the economic impacts on a wide range of businesses and industry groups.

Figure XIII-1: In-state Heavy-Heavy Duty Vehicle Ag e Distribution

2. Capital Cost Inputs

a) Vehicle Prices and Replacement Costs

New and used vehicle prices were used as inputs to model company fleet operations for a range of vehicle types and ages. Staff developed price curves for over 50 vehicle body types by using for-sale vehicle price data dow nloaded from Truckpaper.com and other online sources. Some example price curves ar e shown in Figure XIII-2 below.

Staff also confirmed this data with data from the N ational Automobile Dealers Association (NADA) that the “for sale” vehicle pric e information collected compared 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00%

-1 1 3 5 7 9 11 13 15 17 19 21 23 2 5 2 7 2 9

Vehicle Age% of Vehicle Population CAIRP Vehicles

Single Unit Trucks-174-

favorably for a conventional tractor. However, NAD A data was not used in staff’s analysis because the range of vehicle ages and body type configurations was limited, and staff believes the Truckpaper.com data is more appropriate. While heavy heavyduty vehicles regularly cost more than most medium heavy-duty vehicles, prices for all vehicle types decline fairly quickly with vehicle a ge.

Figure XIII-2: Example Vehicle Prices (in thousands of dollars)

Staff also assessed whether a vehicle body type cou ld be transferred to a new cab and chassis, and what the costs of the body transfer wo uld be. If a body transfer is feasible and costs less than a replacement vehicle, the esti mated transfer costs for the truck body was included, in addition to the cab and chass is price. If it was less costly to replace a vehicle instead of transferring the body to a new cab and chassis, the replacement vehicle cost was used. The vehicle pri ce data and body transfer costs used in the cost model are provided in Appendix J.

b) PM Filter Capital Costs

Staff determined PM filter cost inputs for the cost model based on data received from internal and external sources, and is shown in Tabl e XIII-1. Research included reviewing data developed for other ARB regulatory e fforts, evaluating data collected through ARB’s Carl Moyer program, and through discu ssions with local air districts, emission control installers and dealers, and variou s stakeholder groups (such as the non-profit organization Cascade Sierra Solutions). The cost model assumes passive filters would be used for post-1993 model year vehi cles and that active filters would be used for pre-1994 model year vehicles. Conventional Truck Without Sleeper

0 20 40 60 80 100 120

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Vehicle AgePrice (thousands of $)

GVRW > 33,000 lbs

Flatbed Truck

0 10 20 30 40 50 60

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Vehicle AgePrice (thousands of $)

GVRW < 33,001 lbs Cab & Chassis Truck

0 10 20 30 40 50 60

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Vehicle AgePrice (thousands of $)

GVRW < 33,001 lbs

Dry Van

0 20 40 60 80 100 120

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Vehicle AgePrice (thousands of $)

GVRW > 33,000 lbs-175- Table XIII-1: PM Filter Costs

Type of Vehicle Passive Filter Active Filter Medium Heavy-Duty $11,000 $15,000
Heavy Heavy-Duty $12,000 $15,000

Although no action would be required if a PM contro l device were not available for a particular vehicle, staff conservatively modeled co st assuming that PM filters would be available for all vehicles. Annual operating and m aintenance costs associated with the

use of exhaust after treatment devices were estimat ed, and are discussed later.

c) Other Capital Costs

Staff also estimated a loss in real value for vehic les covered by the proposed regulation. This estimate is dependent on a number of factors, such as the need for modifications to a vehicle and the need to transport a non-compli ant vehicle out-of-state for resale. Staff estimates that, on average, this cost would n ot exceed $5,000 per vehicle for heavy heavy-duty vehicles, $2,000 for medium heavy- duty vehicles, and $1,000 for

interstate vehicles. This estimate is conservative , as costs should be significantly lower for most tractors, as no vehicle modifications are required for most of these vehicles to

be used outside of California.

In addition, new engines manufactured in 2010 will be considerably cleaner than their predecessors and are likely to cost more than those currently being produced. Staff estimates that engines manufactured after 2009 will typically have SCR, which may increase the price of new and used vehicles by up t o $5,000 for heavy heavy-duty vehicles and $2,500 for medium heavy-duty vehicles. Though the majority of vehicle manufacturers will be using SCR emission control de vices for engines manufactured in 2010, some manufacturers have indicated they do not plan to use SCR. Engine manufacturers that plan to include SCR in their 201 0 engines have indicated an expected 3 to 9 percent fuel economy improvement wh ich would offset any increased cost for their vehicles very quickly.

Annual operating and maintenance costs, including c hanges in fuel economy, urea supply, annual filter cleanings, reporting and othe r ongoing costs are estimated separately from the capital investment costs and ar e discussed later. Other costs that are included in the staff’s analysis include Califo rnia state sales taxes of 8 percent on used and new vehicle purchases, and federal excise taxes of 12 percent on new vehicle purchases.

3. Fleet Cost Model

The cost model uses Microsoft Access and Visual Bas ic to model normal vehicle replacement, compliance strategies and the resultin g costs for fleets subject to the proposed regulation.-176- a) Modeling Normal Vehicle Replacement

To determine the baseline fleet costs without the r egulation, the cost model calculates an average normal vehicle replacement rate for each company’s fleet to reflect its normal business practice. The normal replacement r ate is a function of the fleet age and the age of the replacement vehicle, and will va ry for different fleets. For example, a fleet with an average age of 10 years that purchase s new vehicles and keeps them for 20 years would have an average replacement rate of five percent per year. Whereas a fleet with the same average age that normally purch ases 5 year old vehicles and keeps them for 10 years would have an average replacement rate of 10 percent per year. The replacement rate is calculated per Equation XIII-1 below.

Equation XIII-1: Replacement Rate = 1 / ((2*Fleet Average Age) - Veh icle Purchase Age)

Staff used the fleet survey responses to determine the normal vehicle replacement ages for 688 fleets. An average replacement vehicle age was calculated for each average fleet age group, by fleet population group, as show n in Table XIII-2 below.

Table XIII-2: Average Vehicle Replacement Age by Av erage Fleet Age Group

Average Vehicle Replacement Age (Year) Average Fleet Age Group (Years) CA IRP In-state

Tractor HHD In-state

NonTractor HHD In-state

MHD

0 to 3 N/A (0.92) 0.00 0.00

>3 to 6 1.05 (0.22) 1.00 0.01

>6 to 10 1.50 1.88 1.79 1.57

>10 to 13 2.93 3.33 2.00 1.39

>13 to 16 5.97 8.02 6.20 5.02

>16 to 20 N/A 8.19 9.71 8.21

>20 N/A 14.36 11.94 7.14

Because new model year vehicles can be purchased in the prior year, a new vehicle can have a purchase age of -1 (for example, a 2010 model year vehicle can be purchased in 2009). The CA IRP fleets tend to repl ace vehicles more quickly than the other in-state fleets, and in doing so will purchas e newer vehicles with lower replacement ages. Fleets with an older average veh icle ages tend to purchase older

used vehicles.

Data reported in the ARB fleet survey was used rega rding the year each vehicle was purchased and the year each vehicle would have been replaced, as shown in Table XIII-3. The cost model assigns a replacement vehic le age based on the average age of

the individual fleet.-177-

Table XIII-3: Statewide Weighted Average Vehicle Re placement Age



### Fleet Average Age Replacement Vehicle Age

0 to 3 0

>3 to 6 0

>7 to 10 1

>11 to 13 2

>14 to 16 5

>17 to 20 8

>20 10

As the average age of a fleet increases, the averag e replacement vehicle age increases. For example, if an individual company f leet has an average age of 8 years, then the cost model would select a 1 year old vehic le as the normal replacement for the vehicles in that individual company’s fleet. This, on average, represents the practice of buying some new vehicles and some used vehicles. F or a company with an average vehicle age of 15 years, the replacement vehicle ag e would be five years old.

The data collected by staff indicates that certain vehicles are kept longer than others. To account for this, the model establishes the like lihood that a particular vehicle would be replaced based on the vehicle age characteristic s and vehicle category reflected in the emissions inventory. For example, a fleet with interstate registered tractors and instate heavy-duty vehicles is more likely to replace their interstate tractors more frequently because interstate vehicles generally tr avel more miles and are newer than other types of vehicles. This likelihood is identi fied as the vehicle’s relative age. A vehicle’s relative age takes into account the usefu l life of the fleet category and sequences that vehicle for replacement based on the amount of useful life it has left. For example, a CA IRP vehicle that accumulates high annual miles may have a short life of 7 years while an in-state tractor that trav els moderate miles each year may have a longer life of 14 years. A vehicle that is 7 years old would have a higher relative age if it is in a CA IRP fleet that would replace vehicles at 7 years of age, than if it was in an instate tractor fleet that would not be replaced unti l 14 years of age. For each calendar year, vehicles in an individual company’s fleet are sequenced for replacement based on the vehicle’s “relative age”. The relative age is computed by taking the ratio of the age of the vehicle compared to the half-life for the ve hicle category most representative from the statewide emissions inventory.

The cost model evaluates one company at a time and each year replaces vehicles at the normal historical rate of vehicle replacement a s indicated from the fleet survey data. The cost model continues this process from 2009 to 2030. Then, as described below, the model evaluates the actions taken to comply wit h the proposed regulation, using the same normal replacement rate and replacement vehicl e age.-178- b) Modeling Compliance with the Proposed Regulation

As shown in Figure XIII-3, for each year, the cost model determines if the normal actions taken by the fleet would comply with the pr oposed regulation. If not, the cost model will first replace one vehicle at a time unti l the NOx criteria are met, and then will apply PM exhaust retrofits until the PM criteria ar e met. Staff programmed the model to replace the vehicle with the oldest relative age fi rst, while vehicles with the newest relative age would be the first to receive verified DECS. This reflects the likelihood that

fleet owners would install verified DECS on vehicle s they intend to keep longer and would replace the vehicles that are closest to the end of their useful life.

The entire procedure is then repeated for each year from 2009 to 2030 for each fleet. Due to accelerated replacement from the requirement s of the proposed regulation, an individual company fleet may be newer than normal a nd no actions may be needed for a number of years. After 2023, the model steps thr ough each year using each company’s normal fleet average replacement rate and average vehicle replacement age. The cost associated with the “regulation run” is compared with the “baseline run” cost to determine any increased cost due to the pro posed regulation. This is needed to

ensure that the baseline costs and costs with the r egulation are compared for actions taken over the same period. This is also important in evaluating the vehicle age distribution and resulting impact on emissions in t he years after the regulation period.

The replacement sequence is not optimized to reduce costs, and vehicles are not purchased older than normal to lower the estimated cost of compliance. In actuality, many fleets will be required to purchase newer than normal vehicles between 2012 and 2023 in order to meet the proposed regulatory requi rements. Staff also modeled that fleets would purchase 2007 model year or newer vehi cles through calendar year 2013 and then starting in 2014 would not buy vehicles ol der than one with a 2010 model year. This assumption only changed the vehicle purchase a ge if the fleet being modeled would normally buy older vehicles in the given year . This conservatively reflects that fleet owners would buy newer than normal when a veh icle needed to be replaced even before the regulation would require it. Also, most fleet owners indicated they would minimize the purchase of aftermarket verified DECS and would rather purchase vehicles with OEM equipped filters.-179- Figure XIII-3: Annual Compliance Flowchart

Determine normal vehicle replacements for
next compliance date

W ill fleet meet BACT requirements? Yes

No

Will fleet meet NOx fleet average target? Yes Will fleet meet PM fleet average target? Yes

No No

Will minimum 2010 MY requirement be met? Yes W ill minimum PM retrofit requirement

be met? Yes

No No

Modfiy replacement with
a newer purchase or
replace another vehicle Install another PM

retrofit Done for

Year

4. Model Results

The costs for each fleet are then determined by com paring the modeled costs for normal vehicle replacement with that required under the proposed regulation. The increased cost is then divided by the number of veh icles to determine the average increased cost per vehicle. This information is th en input into the statewide analysis where the increased per vehicle costs for each indi vidual company are grouped by fleet age and fleet size. These average increased costs reflect that companies with newer fleets will have little or no increased costs, whil e companies with older fleets will have more substantial increased costs due to the propose d regulation. As shown in Figure XIII-4, Figure XIII-5 and Figure XIII-6, the averag e increased cost per vehicle associated with the proposed regulation varies by the average age of the fleet.-180-

Figure XIII-4: Average Increased Cost for In-state Heavy-Heavy Duty Vehicles in Fleets with 4 or more Vehicles (excludi ng special provisions)

$0 $10 $20 $30 $40 $50 $60 $70 $80

0 5 10 15 20 25 Average Fleet Age (Years)Average Increased Cost (Thousands $/Vehicle)-181-

Figure XIII-5: Average Increased Cost for In-state Medium-Heavy Duty Vehicles in Fleets with 4 or more Vehicles (excludi ng special provisions)

$0 $10 $20 $30 $40 $50 $60 $70 $80

0 5 10 15 20 25 Average Fleet Age (Years)Average Increased Cost (Thousands $/Vehicle)

Figure XIII-6: Average Increased Cost for In-state Heavy-Heavy Duty Low

Use NOx Exempt Vehicles (<7500 Miles)

$0 $5 $10 $15 $20 $25 $30

0 5 10 15 20 25

Average Fleet Age (Years)Average Increased Cost (Thousands $/Vehicle)-182-

5. Scaling to Statewide Results

The following table shows sample results from staff ’s modeling of heavy heavy-duty vehicles that would not qualify for any of the prop osed special provisions of the regulation. Registration data from the DMV provide s the weighting percentages (based on vehicle age) that are applied to the total state wide vehicle population to get the number of vehicles in each fleet age group. The DM V weighting percentages in the table below do not match the percentages in Table X III-5, as the vehicle population for Table XIII-4 excludes small fleets (less than 4 veh icles).

Table XIII-4: In-state Heavy-Heavy Duty Vehicles by Fleet Age for Fleets with more than 3 vehicles (excluding fleets qualifying for sp ecial provisions)

Fleet Age Number of

Vehicles Percentage

of Vehicle Population Average Increased

Cost $/Vehicle (Per Model Output) Statewide Cost (millions of dollar)

0 to 3 5,772 12.3% $0 $ 0

>3 to 6 7,933 17.0% $7,688 $61

>6 to 10 13,567 29.0% $13,981 $190

>10 to 13 8,765 18.8% $20,274 $178

>13 to 16 6,126 13.1% $25,668 $157

>16 to 20 3,003 6.4% $31,961 $96

>20 1,372 2.9% $40,052 $55

Unknown 209 0.4% $15,756 $3

TOTALS 46,750 100.0% $740

Overall Average Increased $/Vehicle $15,827

The statewide cost estimate for these vehicles can then be estimated by multiplying the number of these vehicles in the state by the increa sed cost per vehicle ($/vehicle in Table XIII-4) for each age group, and then summing the statewide cost (statewide cost in Table XIII-4) for each fleet age. In this examp le, the highest increased costs due to the regulation are found in “the over 20 years” (>2 0) fleet age category, with an average cost per vehicle of $40,052. The least cost impact due to the proposed regulation is found in the 0 to 3 fleet age category with no aver age increased costs. Medium heavyduty vehicles and vehicles qualifying for the speci al provisions, including low use vehicles, would have separate population counts and lower costs.

The cost model output provides the average increase d costs per vehicle by fleet age and fleet size for individual company fleets (see A ppendix J for more information). For determining the statewide costs, staff matched vehi cle types from real fleets who responded to the ARB survey to the emission invento ry. Staff used DMV and IRP data to determine the distribution of medium duty vehicl es, heavy duty vehicles, fleet size, and fleet age distributions. The vehicle population counts were derived from statewide emissions inventory database and include the follow ing population categories:-183-

• Intrastate

o Heavy Heavy-Duty Vehicles (HHD) – Tractors

o Heavy Heavy-Duty Vehicles – Non Tractors

o Medium Heavy-Duty (MHD) Vehicles

o Ag vehicles

• Interstate

o California International Registration Plan (CA IRP ) Vehicles

o Out-of-state neighboring vehicles (AZ, BC, ID, NV, OR, WA)

o Out-of-state non-neighboring vehicles

In addition to the statewide vehicle population gro ups, there are some additional subgroup vehicle counts needed because the regulatory requirements differ, such as for:

• Low Mileage (<7500 for HHD & <5000 for MHD) Vehicl es

• Small Fleets (1-3 Vehicles)

• Exempted Vehicles

The characteristics of the fleet and vehicle inform ation were used to match each vehicle to the emissions inventory categories. For example , a company may have some vehicles that are registered in the CA IRP, and als o some that are medium and heavy heavy-duty vehicles that are registered instate. B ased on DMV instate and CA IRP data, weighting percentages were developed by fleet age and size group to apply to the statewide emissions inventory populations to get th e vehicle counts by fleet age and size groups. The statewide cost can be calculated for each fleet age group by multiplying the increased average cost per vehicle by the population vehicle counts. The number of vehicles by average fleet age used in staff’s analysis is shown in Table

XIII-5.

Table XIII-5: Vehicles by Fleet Average Age

Vehicle Counts by Fleet Average Age

Fleet Age In-state*

pop. HHD In-state*

pop. MHD CA IRP*

pop. HHD Neighboring*

pop. HHD Non-Neighboring

IRP** pop. HHD

0 to 3 12,263 41,864 9,244 6,394 327,572
>3 to 6 18,693 42,183 19,368 13,396 31,636
>6 to 10 38,245 57,594 20,028 13,853 38,844
>10 to 13 27,054 26,049 4,182 2,892 2,002
>13 to 16 18,044 19,137 935 647 400
>16 to 20 13,455 13,593 660 457

- >20 10,224 9,625 550 381

- Unknown 763 447 55 38

- Totals 138,741 210,492 55,022 38,057 400,455 Sources: *DMV 2006 age distribution **IRP 2006 age distribution based on data from 1 2 states

In general, newer fleets that normally replace thei r vehicles in a short period would incur little to no increased costs to comply with the pro posed regulation, while older fleets that buy older vehicles and keep them longer would incur higher increased costs to comply.-184-

Finally, as shown in Table XIII-6 below, the estima ted statewide capital costs for vehicle replacements is $2.3 billion for in-state vehicles and $700 million for out-of-state vehicles. Similarly, the estimated statewide capit al costs for installation of verified DECS are $1.4 billion for in-state vehicles and $20 0 million for out-of-state vehicles. The total regulatory capital costs of the proposed regulation are $4.6 billion.

Table XIII-6: Summary of Average Increased Capital Costs

Capital Costs Only (billions of dollars)

Vehicle Replacements Verified DECS Totals

In-state 2.3 1.4 3.7

Out-of-state 0.7 0.2 0.9

Totals 3.0 1.6 4.6

Additional information on the anticipated number of retrofit needed for compliance with the proposed regulations is provided in the next se ction of this chapter.

6. Annual Costs

In addition to capital costs of the proposed regula tion, various annual operational and

maintenance costs will also be incurred. In determ ining the total regulatory costs of staff’s proposal, these annual costs are added to t he total statewide capital cost estimates. Operational and maintenance costs assoc iated with verified DECS include annual filter cleaning expenses, fuel economy losse s and costs associated with regeneration of active systems. Other costs or sav ings include fuel economy improvements with replacement of older vehicles wit h newer vehicles and urea costs for SCR. At this time, staff has not included anticipa ted cost savings associated with lower

maintenance and less down time with newer vehicles compared to older vehicles.

The operating and maintenance costs associated with the use of verified DECS are determined using the anticipated population of vehi cles equipped with aftermarket PM controls, as well as the population of 2007 and new er engines. The number of PM controls in each calendar year was estimated by ext rapolating the results of the capital cost model to the affected vehicle population.

Operating and maintenance costs attributable to the proposed regulation were broken into four main categories: regeneration cost for ac tive DPFs, changes in fuel economy, urea usage, and annual maintenance. Regeneration c osts for active filters are incurred for electricity or fuel usage for a vehicle to rege nerate the filters on a regular basis.

Annual maintenance costs for vehicles with PM contr ol devices are for the cleaning servicing of the filters by external parties. Engi nes manufactured after 2009 with SCR

would also have annual costs associated with the us e of urea. Also, there is likely to be a fuel economy improvement and associated cost savi ngs through the use of 2004- 2006 MY engines utilizing EGR.-185- a) Annual DPF Costs

When calculating the statewide costs, additional co sts due to DPFs were also incorporated. These include the costs associated w ith regeneration of active PM exhaust retrofits on pre-1994 vehicles, the expecte d number regenerations per week, and the cost of electricity or fuel used per regene ration. In addition, PM exhaust retrofits are expected to decrease fuel economy by 2 percent. The total statewide fuel costs associated with DPFs are estimated by the ave rage fuel economy and annual miles traveled by vehicles with aftermarket PM cont rols. Finally, annual maintenance includes an estimated average filter cleaning cost of $400.

i. Estimated Number of Retrofits

The estimated incremental number of DPFs that will need to be installed because of the proposed regulation in the statewide fleet is shown in Figure XIII-7. The filter retrofits begin in 2010 and are completed by the end of 2013. Also displayed are the estimated

number of increased vehicles with OEM installed DPF s as a result of the proposed regulation. It is expected that after 2021, the in cremental number of vehicles having DPFs because of the accelerated vehicle replacement required with the proposed regulation will slowly decrease as these vehicles a re replaced and the statewide fleet goes back to normal vehicle age distribution.-186-

Figure XIII-7: Number of DPFs in Statewide Fleet Re sulting from Proposed Regulation

0 50,000 100,000 150,000 200,000 250,000201020112012201320142015201620172018201920202021202220232024202520262027202820292030

Calendar YearPM Filter Counts Vehicle Retrofit

Accelerated Vehicle Replacement

ii. Regeneration Costs

Staff expects the majority of vehicles needing to b e retrofit will use passive DPFs. However, because of temperature requirements with p assive DPFs, active fuel-based systems, will also be needed. Staff believes that active fuel-based systems may be preferable for fleets so that they may avoid the ne ed to plug in electrically regenerated DPFs because many vehicles (dump trucks, being a go od example) may not have on the job access to electricity nor the extended time for a full electricity-based regeneration cycle, which can take as long as 8 hou rs. Electricity-based regeneration should remain commonplace in day-use applications w here the vehicle returns to the same facility each night, such as shuttle bus and l ocal delivery fleets.

Given the similarity in regeneration costs between the two technologies, staff estimated these costs by using fuel-based DPFs exclusively in the analysis. To estimate the number of active DPFs expected to be installed as a result of the proposed regulation, the retrofit population was scaled by the weighted in-state percentage of pre-1994 medium heavy-duty and heavy heavy-duty vehicles, wh ich is 15 percent of the population. The staff estimates is based on two re generations per week and 0.2 gallons of diesel fuel consumed per regeneration, and one h alf hour of employee time to plug-in or wait for the system to regenerate. A vast major ity of the cost is attributed to the down time and the total cost is insensitive to fuel pric e. The total cost to the statewide fleet was estimated to be $181.7 million at a diesel fuel price of $3.69 per gallon. At $4.00 per gallon of diesel, the cost would increase to $1 82.3 million; and at $5.00 per gallon, this cost would further increase to $184.2 million.-187- iii. Maintenance Costs

Between 2010 through 2013, the proposed regulation would require the retrofit installation of DPFs on existing vehicles that do n ot already have them. After 2013, the incremental population of vehicles having retrofit filters will decrease because of the replacement of these vehicles with vehicles meeting the NOx and PM performance standards of the proposed regulation. The proposed regulation will also accelerate the replacement of vehicles to vehicles that have a DPF installed by OEM engine

manufacturers. This will result in an increased nu mber of vehicles in the statewide fleet

with their DPFs relative to what would occur withou t the proposed regulation. The total

estimated number of retrofits in the statewide flee t, by year, was previously shown Figure XIII-7.

Staff has estimated that each retrofit will result in maintenance costs of about $250 per year for pre-installed OEM Devices and about $400 p er year for post-installed PM retrofits. Using their estimate, the total statewi de costs due to retrofit maintenance was calculated using Equation XIII-2

.

Equation XIII-2: Total Maintenance Costs = Σ (maintenance cost/year per vehicle x # of vehicles in the state retrofitted)

The total increased in maintenance costs for the st atewide fleet from 2010 to 2030 is estimated at $430 million (in 2008 equivalent dolla rs), as shown in Table XIII-7 below.

Table XIII-7: Cumulative Increased Retrofit Mainten ance Costs ($2008)

Per Filter Costs Cumulative Costs (millions) OEM equipped DPFs $ 190

Aftermarket DPFs $ 240

Total $ 430

iv. Changes in Fuel Economy

Statewide fleets with vehicles subject to the propo sed regulation use over 3 billion gallons of diesel fuel per year (for their Californ ia miles traveled) at an average cost of approximately $4.00 21 per gallon (California Energy Commission, Septembe r 2008).

The use of retrofit DPFs can result in a small loss of fuel efficiency (about 2 percent), resulting in increased fuel costs.

As part of the ARB fleet survey, fleets reported ve hicle fuel usage and miles traveled. Data used in the development of the statewide emiss ion inventory (including vehicle miles traveled) was then used to compute the costs associated with fuel economy penalty DPFs. Figure XIII-8 shows the estimated fu el economy of medium and heavy heavy-duty diesel vehicles without DPFs. The fuel usage for statewide vehicles was calculated both with and without the proposed regul ation using the estimated fuel

21 Price of California No 2 Diesel in September 2008 (http://energyalmanac.ca.gov/gasoline/).-188-

economy shown in Figure XIII-8. Overall, replacing older vehicles with newer vehicles results in a net savings from increased fuel effici encies. However, most of the fuel efficiency savings are offset by a two percent fuel penalty for vehicles with PM filter

retrofits.

Figure XIII-8: Estimated Fuel Economy of Diesel Veh icles by Vehicle Model

Year

The total statewide fuel economy penalty costs betw een 2010 and 2030 due from DPF retrofits is estimated to be approximately $113 mil lion ($2008). The total statewide cost

benefit in 2010 to 2030 due to decreased fuel consu mption from the accelerated

introduction of more fuel efficient vehicles is abo ut $126 million (2008 dollars). Thus, there is a net reduction in costs of approximately $13 million at a fuel price of $4.00 per gallon. At a price of $3.69 per gallon, the net re duction in costs would be about $12 million and at a price of $5.00 per gallon the net reduction in costs would be about $17

million.

b) Selective Catalytic Reduction Costs

The proposed regulation will also accelerate the re placement of existing vehicles to newer vehicles that utilize SCR technology. The re sult is an increased number of

vehicles in the statewide fleet that have SCR relat ive to what would occur without the proposed regulation. SCR technology utilizes urea t o reduce NOx emissions, so an additional cost will be realized. It is expected t hat after 2023, the increased number of vehicles having SCR because of the accelerated vehi cle replacement requirement will slowly decrease as the statewide fleet returns to n ormal vehicle replacement cycles. Projecting in 2008 equivalent dollars, and consider ing urea costs of $4.00 per gallon and that urea consumption in SCR is expected to be about 3 percent of the diesel fuel used, the estimated cost is approximately $240 mill ion.



### 0 2 4 6 8 10

1980 1983 1986 1989 1992 1995

1 998
2 001 2 004
2 007
2 010
2 01 3 20 1 6 20 1 9



### Model YearMiles per Gallon HHDDT, MPG

MHDDT, MPG-189-

C. Reporting Cost

For small fleets, staff estimates that the initial reporting will cost between $0 and $100 (for up to 2 hours needed to compile fleet data). This assumes a cost of $50 per hour for either work time lost, or to hire a consultant. For larger fleets, the cost was estimated to vary between $200 and $400 (assuming an average of 4 to 8 hours to compile larger fleet data).

For estimating the total statewide costs, the numbe r of fleets present in the state was estimated using 2006 DMV and CA IRP data with the n umber of registered vehicles grouped by fleet size bins. The number of fleets w as calculated using Equation XIII-3

.

Equation XIII-3: Fleets in State = Σ [Registered Vehicles / Fleet Size]

Using 2006 DMV data for in-state heavy heavy-duty, medium heavy-duty and CA IRP vehicle populations, staff estimates there are appr oximately 171,500 fleets in California subject to the proposed regulation. Approximately 156,000 of these fleets are small fleets (having three or fewer vehicles) and approxi mately 15,500 are larger fleets. To estimate the reporting costs, staff used Equation XIII-4.

Equation XIII-4: Fleet initial reporting costs = # of fleets x 75% x average initial

reporting costs

In $2008 dollars, the anticipated statewide cost fo r fleets to comply with initial reporting requirements in 2010 is shown below in Table XIII-8

.

Table XIII-8: Initial Reporting Costs (2010)

Fleet Type Cost ($2008) (millions) Small fleet $11 Larger fleet $ 5 Total cost for initial reporting $16

Staff estimated the on-going annual reporting costs for small fleets to be approximately $50 per fleet per year, assuming an average of one hour is needed to update the fleet information in the ARB reporting system. For a lar ger fleet, this cost is estimated to be $200 per fleet per year, assuming that, on average, 4 hours is needed to update the fleet information in the ARB reporting system. The 4 hours for larger fleets is based on a weighted average using 1.5 hours for fleets with 4 to 5 vehicles, 2 hours for fleets with 6 to 10 vehicles, 4 hours for fleets with 11 to 20 vehicles and 20 hours for fleets with

over 20 vehicles. The total annual cost for small fleet reporting will be 75 percent of the estimated number of fleets multiplied by $50, or $5 million per year. For larger fleets, the cost per year will be 75 percent of the number of fleets multiplied by $200, or $2 million per year.-190-

The reporting costs over the life of the regulation were calculated using Equation XIII-5

, assuming that for all fleets reporting ends in 2022

.

Equation XIII-5: Total annual reporting cost = Σ (Annual reporting cost for every year of reporting)

The total annual reporting cost over the life of th e regulation is shown in Table XIII-9.

Table XIII-9: Total Annual Reporting Costs

Fleet Type Cost ($2008) (millions) Small fleet $42 Larger fleet $19 Total cost for annual reporting $61

The total reporting costs for the proposed regulati on are the sum of initial and annual reporting costs (in 2008 dollars). This is shown b elow in Table XIII-10.

Table XIII-10: Total Reporting Costs

Fleet Type Cost ($2008) (millions) Small fleet $53 Larger fleet $24 Total cost for reporting $77

D. Total Statewide Costs

The total increased cost due to the proposed regula tion (in 2008 dollars) for fleets operating in California is estimated to be $5.5 bil lion, as shown in Table XIII-11. About $4.5 billion of the cost would be incurred by fleet s with vehicles based in California and $1.0 billion would be incurred by out-of-state flee ts. A detailed explanation of the methodology and input costs used to make the estima tes are discussed in Appendix J.-191-

Table XIII-11: Summary of Average Increased by Stat ewide Fleet Groups

Fleet/Population Type Capital

Cost (millions) Annual

Costs (millions) Total Cost

(millions) #

Vehicles

In-state MHD* $1,194 $450 $1,643 219,392 In-state HHD $1,559 $302 $1,861 147,074

Interstate CA IRP $498 $118 $616 57,399

InterstateNeighboring/NonNeighboring $858 $81 $939 490,359

Motorcoach &

School Buses $348 $54 $402 26,443

Totals $4,457 $1,005 $5,461 940,667

*Includes about 9,000 CA IRP and out-of-state vehic les.

E. Cost Effectiveness of the Proposed Regulation

Cost-effectiveness is expressed as control costs in dollars per unit of pollutant emissions reduced in pounds ($/lb). The cost-effec tiveness for the proposed regulation is determined by dividing the total capital costs p lus the annual costs by the total pounds of diesel PM and NOx reduced during the year s 2010 to 2030. The expected cost effectiveness of this regulation is $1.76/lb f or NOx and $46/lb for PM. All costs are in $2008.

In considering the cost effectiveness of the regula tion relative to premature mortality avoided, a PM cost effectiveness of $46/lb of PM is about 5.5 times lower than the U.S. EPA’s benchmark for value of avoided death (which e quates to about $248/lb). Therefore, proposed regulation is a cost-effective mechanism to reduce premature deaths that would otherwise be caused by diesel PM emissions without this regulation

relative to that benchmark.

Table XIII-12 below compares the estimated cost-eff ectiveness of the proposed regulation to the estimated cost-effectiveness of o ther recently adopted diesel regulations. For comparison purposes, all cost-eff ectiveness estimates shown in Table XIII-12 attribute part of the total regulation cost to PM reductions and part to NOx reductions. Regulations are ranked from lowest $/l b PM cost to highest.-192-

Table XIII-12: Comparison of the Average Cost-Effec tiveness of the Proposed Regulation to Average Cost Effectiveness o f Recently Adopted Air

Toxic Control Measures

Regulation $2008 /lb NOx

Cost-effectiveness $2008 /lb PM Costeffectiveness Source of

Estimate Stationary Compression Ignition Engine ATCM 0.92/lb HC+NOx $7.70/lb PM (ARB, 2003b)

Portable Engine ATCM <$2/lb NOx $8-10/lb PM (ARB, 2004) Cargo Handling ATCM $1/lb NOx $21/lb diesel PM (ARB, 2005a)

Solid Waste Collection

Vehicle ATCM 1.79/lb HC+NOx $32/lb PM (ARB, 2003a)

In-Use Off-Road

Diesel Vehicle Rule $2.1 - 2.5/lb NOx $37 - 43/lb PM (ARB, 2007)

Proposed Regulation $1.4 – 1.9/lb NOx $42 – 48/lb P M See Chapter XIII Public Fleets Rule $10.9/lb HC+NOx $160/lb PM (ARB, 2005b)

F. Cost Model Methodology for Industry Sectors

1. Overview

Staff used fleet vehicle data reported in the fleet survey to proportion the in-state vehicle population by weight class and fleet age group for a number of industry sectors. These included transportation, construction, agriculture, retail and wholesale, and other

services. U.S. Census Bureau 2002 Vehicle Inventor y and Use Survey (National 2002 VIUS) truck data was used to allocate the total num ber of in-state vehicles to each industry group by weight class, as discussed below. Proportions of vehicles by weight class and fleet age groups in the National 2002 VIU S truck data were reviewed for context; however the cost model relied on the propo rtions derived from the more current California fleet survey to be consistent with the m ethod used for the statewide fleet groupings.

The increased costs per vehicle by weight class wer e based on prior analyses for statewide fleet groupings. The percentage of vehic les in each fleet age group was multiplied by the allocated number of in-state vehi cles to get the estimated number of vehicles for each age group by industry sector. Th ese counts by age group were then multiplied by the increased cost per vehicle and su mmed across all age groups to estimate the statewide capital costs for each indus try sector.

The costs for motor coach bus lines, school distric ts, and utilities were calculated separately using emissions inventory vehicle count data and modeling the specific rule provisions. ARB staff computed the increased capit al costs over the period from 2010- 2030 and also calculated the maximum year costs for each industry.

More detail on the analysis of the economic impacts on business sectors can be found in Appendix J.-193-

2. Vehicles by Business Type

The impact of the proposed regulation on each busin ess sector will depend on the number and types of vehicles that are impacted and the fleet ages for each business sector. Figure XIII-9 summarizes the National 2002 VIUS data by the percent of the vehicle population to business type for heavy heavy -duty and medium heavy-duty diesel

vehicles.

Figure XIII-9: Percentage of Vehicle Population by Business Sector from

National 2002 VIUS Data

Heavy Duty Vehicles Medium-Duty Vehicles

Vehicle
Leasing or

Rental

5%

Manufacturing
& Mining

8% Agriculture,
Forestry,
Fishing, or
Hunting

16%

Other

Services

12%

Construction

22% Retail &

Wholesale

Trade

10%

For-Hire
Transportation

or Warehousing

27% Vehicle
Leasing or

Rental

9%

For-Hire
Transportation

or Warehousing

19% Retail &

Wholesale

Trade

19% Construction

18%

Other Services

19% Agriculture,
Forestry,
Fishing, or
Hunting

10%

Manufacturing
& Mining

6%

The total in-state heavy heavy-duty and medium heav y-duty inventory vehicle population’s were multiplied by the appropriate Nat ional 2002 VIUS vehicle percentages for each industry sector type to get the total numb er of vehicles allocated to each industry by weight class. The in-state annual oper ating and reporting costs were apportioned to each industry sector based on the an nual miles travelled for each industry sector, as per the 2002 VIUS national data . The increased costs by sector are

summarized below in Table XIII-13.-194- Table XIII-13: Increased Costs by Business Sector

Business Sector Increased Capital Costs (in millions of $2008) Annual Costs

(in millions of $2008) Total Increased

Costs (in

millions of $2008)

Accommodation or Food Services $ 83.5 $ 14.7 $ 98.2 Agriculture, Forestry, Fishing, or Hunting $ 197.7 $ 68.0 $ 265.7
Arts, Entertainment or Recreation

Services $ 14.0 $ 0.9 $ 14.9

Construction $ 960.1 $ 100.4 $1,060.5
For-Hire Transportation or Warehousing $1,359.0 $ 4 86.2 $1,845.2
Manufacturing $ 124.9 $ 43.3 $ 168.2

Mining $ 117.1 $ 20.1 $ 137.2

Other Services $ 84.6 $ 48.5 $ 133.1

Retail & Wholesale Trade $ 401.3 $ 105.5 $ 506.8

Utilities $ 3.9 $ 10.2 $ 14.1
Vehicle Leasing or Rental $ 207.9 $ 71.1 $ 279. 0

TOTALS $3,554.0 $ 968.9 $4,522.9

This industry sector cost analysis computes the inc reased capital costs for vehicles registered in-state and does not include costs to o ut-of-state operators. However, staff expects the majority of costs to out-of-state fleet s to be borne by the transportation and warehousing sector.

G. Sensitivities in Estimating Statewide Costs

The total economic costs imposed by this regulation on the statewide fleet would depend on the compliance path chosen by each busine ss and the compliance options

available to them.

1. Retrofit

a) Retrofit SCR

Staff examined the possibility of requiring verifie d NOx DECS in addition to verified PM DECS, however high level verified NOx DECS are not yet commercially available and are expected to have substantial cost. As such, wh ile the proposed regulation maintains flexibility to meet emission targets with verified NOx DECS should they become available, it does not require them.

To evaluate how the use of verified NOx DECS could impact staff’s cost estimate, the cost model was run with 119 sample fleets containin g 1,440 vehicles, to examine the difference of Level 3 DECS versus installing SCRs. The vehicles modeled use model year 1994 and newer, and SCR retrofit was estimated to cost $25,000 and provides a 70 percent NOx reduction. As summarized in Table X III-14, the overall average cost was reduced by almost 17 percent across all of the sample fleets. The additional NOx emission reductions realized through the use of the SCR retrofit decreased the number-195-

of replacements needed. Fleets with newer vehicles would have no cost differences because they already would be replacing vehicles fa ster than the regulation would require and would not need to install SCR systems. Fleets with the oldest vehicles would not see any reduction in costs because they w ould likely travel fewer miles and would have several vehicles exempt from the NOx cri teria or because staff modeled that older fleets would purchase older used vehicles and the SCR system may not cost less than replacing the vehicle and selling the retired vehicle.

Table XIII-14: Cost Sensitivity Analysis for Use of NOx Retrofits

Average Age of Sample Fleet Change in Costs Less than 8 years No Change 8 to 18 years Decreased More than 18 years No Change

All Fleets 17% Decrease

b) Increased PM Retrofit Costs

The cost model assigned passive exhaust retrofit co sts of $11,000 for medium heavyduty and $12,000 for heavy heavy-duty vehicles, and a cost of $15,000 for all active retrofits. Staff examined the impact an increased retrofit cost of $5,000 for all size vehicles would have by modeling 119 sample fleets w ith 1,440 vehicles. As summarized in Table XIII-15, the overall average in creased cost was 20 percent across all of the sample fleets. Newer fleets would have no significant costs because they would have a higher proportion of vehicles with OEM equipped DPFs and would not need to install many aftermarket PM retrofits. In contrast, fleets with an older average age would have more vehicles without OEM equipped f ilters and would need to install a higher number of PM retrofits; therefore, the costs would increase for these fleets.

Table XIII-15: Cost Sensitivity Analysis for Increa sed Retrofit Costs

Fleet Average Age Change in Costs

>9 Years Increased <10 Years No Change

All Fleets 20% Increase

2. Optimization Strategies

Individual fleets will be able to assess the option s that are available to them in meeting the proposed regulation and can examine strategies for optimized results. For example, mixed medium and heavy heavy-duty vehicle fleets co uld sequence their replacements such that the medium heavy-duty vehicles with lower costs would be replaced first and delay heavy heavy-duty vehicle replacements so they would occur closer to the normal replacement cycle. Fleets with older vehicles that would require installation of higher cost active filters might find the costs to purchas e used vehicles with pre-installed filters to be less costly than to install the active filter s. In addition, these used vehicles can-196-

remain in the fleet much longer than the older vehi cles with the post-installed filters and the replacement costs for a model year 2010 vehicle could be delayed. Overall, staff believes that as fleets optimize their compliance a ctivities, the overall estimated costs of the proposed regulation are likely conservative.

H. References

ARB, 2003a. California Air Resources Board. Staff Report: Initial Statement of Reasons, Supplemental Report, for Proposed Diesel P articulate Matter Control Measure for On-Road Heavy-Duty Residential and Comm ercial Solid Waste Collection Vehicles. August 8, 2003. http://www.arb.ca.gov/regact/dieselswcv/isor3.pdf

ARB, 2003b. Air Resources Board. Staff Report: I nitial statement of Reasons for Proposed Rulemaking Airborne Toxic Control Measure for Stationary Compression Ignition Engines. September 2003 http://www.arb.ca.gov/regact/statde/isor.pdf

ARB, 2004. Air Resources Board. Staff Report: I nitial Statement of Reasons for Proposed Rulemaking Airborne Toxic Control Measure for Diesel-Fueled Portable Engine. January 2004 http://www.arb.ca.gov/regact/porteng/isor.pdf

ARB, 2005a. California Air Resources Board. Staff Report: Initial Statement of Reasons for Proposed Rulemaking, Adoption of the Pr oposed Regulation for Mobile Cargo Handling Equipment at Ports and Intermodal Ra il Yards. October 2005. http://www.arb.ca.gov/regact/cargo2005/isor.pdf

ARB, 2005b California Air Resources Board: Staff Report: Initial Statement of Reasons for Proposed Diesel Particulate Matter Cont rol Measure for On-Road HeavyDuty Diesel-Fueled Vehicles Owned or Operated by Pu blic Agencies and Utilities.

October 2005 http://www.arb.ca.gov/regact/dpmcm05/isor.pdf

ARB, 2007. California Air Resources Board. Techni cal Support Document: Proposed Regulation for In-Use Off-Road Diesel Vehicles. Ap ril 2007 http://www.arb.ca.gov/regact/2007/ordiesl07/TSD.pdf

National 2002 VIUS. U.S. Census Bureau 2002 Econom ic Census: Vehicle Inventory and Use Survey. EC2TV-US. Issued December 2004-197-

XIV. E CONOMIC I MPACTS

As presented in the Chapter XIII, the total statewi de costs of the proposed regulation are estimated to be about $5.5 billion. About $4.5 billion is attributable to in-state vehicles and about $1 billion is attributable to ou t-of-state vehicles. In this chapter, a discussion of the economic impacts of these costs o n the economy of the state, and on affected business sectors, is discussed.

A. Background

1. Estimating Economic Impacts

Developing control cost estimates provides a means to estimate the direct expenditures that would be incurred by California businesses, go vernments, and individuals to meet the requirements in the proposed regulation. Depen ding on the significance of these costs, they could in turn bring about additional (i ndirect) changes in the California economy. Increased control costs for all on-road ve hicles, for example, may result in higher prices to perform certain services. Califor nia firms may respond by cutting back production and decreasing employment. On other han d, the requirements in the proposed regulation may also increase demand for re trofitting, repowering, and new vehicles, thus inducing firms supplying those produ cts and services to expand their production and increase their hiring of workers.

This change in economics could in turn affect other industries both negatively and positively. The net effect on the California econo my of these activities hinges on the extent to which products and services are obtained locally. Using a new version of the E-DRAM model (a macroeconomic model of the Californ ia economy), staff estimated

the net effects of these activities on affected ind ustries and the overall economy. The California industries affected most are those engag ed in the use of heavy-duty vehicles, such as the transportation and warehousing industry . Also affected are industries that are engaged in installing retrofits, maintaining ve hicles, or selling them.

The economic model used for this analysis does not account for the significant health

benefits to California businesses and citizens that this regulation would bring. Actions to improve air quality reduce illness and premature death, and increase natural resources and work force productivity thereby provi ding significant societal cost savings. This regulation is also likely to induce significan t advancement of clean diesel engine technologies by California based companies. ARB st aff estimates that the benefits to California of currently adopted air pollution contr ol measures exceed their costs by about 10 to 1. That is, each dollar spent on clean air generates on average ten dollars in social benefits that improve the quality of life

.

2. Environmental-Dynamic Revenue Analysis Model (E- DRAM)

The overall impact of all direct and indirect econo mic effects associated with the proposed regulation is estimated using a computable general equilibrium (CGE) model of the California economy. A CGE model simulates v arious economic relationships in a market economy where prices and production adjust i n response to changes in behavior-198-

resulting from regulatory changes. More specifical ly, it describes the relationships among producers, consumers, government, and the res t of the world. The CGE model used for this analysis is the latest updated versio n of the E-DRAM. E-DRAM was first developed as DRAM for the California Department of Finance 22 . The model can be used to measure the total impact of a change caused by a regulation in one industry on

all other industries within California. The econom ic impact results are measured in terms of changes in the State output, personal inco me, and employment.

The new model is based on a revised database called a social accounting matrix (SAM). The revisions to SAM include a calibration of the base year in the model to calendar year 2003 from fiscal year 1998-1999, an u pdating of energy data, and a more detailed sectoring of the California economy. The new E-DRAM divides the California economy into 174 distinct sectors, consisting of 10 8 industrial sectors, 2 factor sectors (labor and capital), 8 household sectors (classifie d by income level), 9 composite goods sectors, 1 investment sector, and 45 government sec tors (7 federal, 27 State, and 11 local), and 1 sector that represents the rest of th e world.

Data for the industrial sectors originated with the Bureau of Economic Analysis of the U.S. Department of Commerce, based on the Census of Business – a detailed survey of companies conducted in the U.S. every five years. The conversion of national data to updated California data is accomplished by Impact A nalysis for Planning (IMPLAN), a program that primarily utilizes state-level employm ent data to scale national-level

industrial data down to the size of a state.

In much the same way as firms, households are also aggregated. California households were divided into categories based upon their taxable income. There are seven such categories in the model, each one corres ponding to a California personal income tax marginal tax rate (0, 1, 2, 4, 6, 8, and 9.3 percent). Thus, the income for the “one-percent” household is calculated by adding up the income from all households in the one-percent bracket.

Similarly, the expenditure of the one-percent house hold on agricultural goods is calculated by adding up all expenditure on agricult ural goods for these households. The total expenditure on agricultural goods is found by adding the expenditure of all households together.

B. Economic Impacts on the California Economy

1. Direct Costs

The proposed regulation imposes capital costs on a number of industries; the most costly year of the regulation was used for this ana lysis ($566 million in 2013). Estimates

of the maximum annual costs for each affected indus try are provided in Table XIV-1. As shown in the table, the transportation and warehous ing sector has the highest increased

22 For a complete description of DRAM, see Berck, Pete r, E. Golan and B. Smith, “Dynamic Revenue Analysis for California, California Department of F inance, Summer 1996.-199-

capital cost in 2013 at 51 percent of the total. T he construction industry has the second highest increased capital cost in 2013 at almost 21 percent of the total.

Table XIV-1: Estimates of Total Capital Costs of Pr oposed Regulation by Affected

Industries in 2013 (Millions of 2008 Dollars)

Industry Capital

Costs Percentage

Accommodation and Food Services $15.1 2.7 Agriculture, Forestry, Fishing $41.4 7.3
Arts, Entertainment or Recreation Services $2.0 0.3 Construction $117.1 20.7 Transportation and Warehousing $288.5 51.0 Manufacturing $18.9 3.3 Mining $17.7 3.1 Other Services $9.4 1.7 Wholesale and Retail Trade $55.7 9.8

Total $565.8 100

2. Overall Statewide Economic Impact

Increased capital costs of the proposed regulation would affect the California economy through many complex interactions. E-DRAM was deve loped to simulate many of these complex interactions. Using the model, staff in co nsultation with U.C. Berkeley

researchers conducted an assessment of the economic impacts of the proposed regulation on the California economy.

Table XIV-2 summarizes the impact of the proposed r egulation on the California economy in the year 2013, when the annual capital c osts to the affected industries were the highest. Staff projects the capital costs of t he proposed regulation would reduce California economic output by roughly $1.3 billion (0.04 percent) and California employment by approximately 4,600 to 13,600 jobs (l ess than 0.08 percent) in 2013. Personal income projections would also decline by r oughly $500 to $600 million (-0.02 percent) in 2013.-200-

Table XIV-2: Impact on the California Economy of Pr oposed Regulation in the Year 2013 (Billions of 2006 Dollars)

California Economy Without Regulation With

Regulation Difference

(Impact) Difference

(Percent) Output 3,104 3,103 -1.3 -0.04
Personal Income 1,800 1,799 -0.6 -0.02 to 0.02 Employment (thousands) 17,630 17,620 to 17,630 0 to 10 -0.03 to -0.08

3. Conclusion

Total annual fleet capital costs associated with th e proposed regulation are estimated to be approximately $566 million in 2013. Accounting for indirect costs, the proposed regulation is expected to reduce California economi c output by about $1.3 billion, personal income by about $0.5 to $0.6 billion, and employment by as many as 13,600 from their projected levels in 2013. In the contex t of the State’s economy ($3.1 trillions), the economic impact of the proposed regulation is m inor and is not expected to impose a noticeable impact. Additional details on staff’s analysis can be found in Appendix J.

C. Economic Impact on Individual Business Sectors

Although there are considerable differences in type s of vehicles and how they are used among various industry sectors, there are some comm onalities. Heavy-duty engines are designed to operate up to 1,000,000 miles. In general, few companies will operate vehicles significantly beyond this point because th e cost of repairs will often exceed the value of keeping the vehicle, and in most operation s reduced vehicle reliability presents

additional business risks and costs. As a vehicle ages it is more likely to be placed in local service or in an application where high relia bility is less critical. As the vehicle nears the end of its useful life, it is often place d in a back-up service or in low use application.

In this section, staff provides information on the economic impacts of a number of business sectors impacted by the proposed regulatio n. These include the:

• Transportation sector, including various subsector s;

• Agricultural sector;

• Construction sector;

• Manufacturing sector;

• Retail and wholesale trade sector;

• Schools, and;

• Federal fleets.

Within the discussion of each business sector, staf f provides an overview, including a description of the typical make-up of fleets and th eir vehicle replacement practices. Staff also provides an assessment of the economic i mpact of the proposed regulation-201-

on the sector, the cumulative costs of the proposed regulation and other ARB regulations, and the ability of fleets to pass thro ugh their compliance costs. As part of staff’s analysis a number of industry case studies were performed. A number of these are provided in this chapter, and the remainder are in Appendix J.

1. Transportation Sector

The Transportation and Warehousing sector includes air, pipeline, rail, water, truck, transit and ground passenger transportation. Truck transportation is the largest subgroup in this sector, including busses and motor coaches used in local transportation and tourism. The gross domestic pro duct for this sector from the 2006 California Statistical Abstract for 2004 was $35 bi llion. Within the sector, truck transportation, passenger transportation and other support activities represent about $24 billion of the total.

For comparative purpose, staff also evaluated Calif ornia specific transportation sector data from FleetSeek. FleetSeek is part of Fleet Ow ner Magazine, and provides data on the trucking industry for fleet operators. This da ta contained information for 21,487 individual companies with a total of 259,000 vehicl es in various sections and allocates number of vehicles and revenues by Standard Industr ial Classification (SIC) code for hire carriers, private carriers and other companies with trucks. The data also identifies characteristics about the vehicle weight class and vehicle configuration important for understanding the cost impacts of the proposed regu lation. For the trucking sector FleetSeek reports about $19 billion in gross revenu e for 2006. However, because it is not a complete data set for all companies in Califo rnia, the total figures should be considered a lower bound estimate. As such, staff believes the data from the 2006 California statistical abstract for 2004 provides a more appropriate measure of the economic output of this sector.

a) Industry characteristics of the Transportation I ndustry

(1) Trucking Companies

Trucking companies primarily utilizing heavy-duty, truck-tractor trailer combinations, that travel relatively high miles compared to other sect ors, generally have newer vehicles. Within trucking there are a number of categories th at characterize different vehicle usage patterns and business models. Interstate veh icles tend to travel the highest annual miles, and in-state truck-tractors tend to b e purchased used and travel fewer

miles.

Many trucking companies specialize in certain freig ht types and compete with other companies having similar equipment. For example, c ompanies may specialize in refrigerated freight, bulk materials, liquids, haza rdous waste, dry goods or other items. Most of these transportation businesses will have s everal tractor-trailer combinations with similar design or function, maximizing their f lexibility in moving various goods locally, throughout the state, and across the count ry.-202-

Few trucking companies will operate Class 8 trucks significantly beyond 1,000,000 miles. Long haul trucks that operate 100,000 to 200 ,000 miles per year are commonly purchased new and sold within 3 to 7 years. This m aximizes the fleet reliability while the resale value of the vehicle remains relatively high. In the secondary market, these used vehicles are often purchased by fleets that ma y operate their vehicles regionally or locally and do fewer annual miles. After another 5 to 10 years the vehicle is often sold to a fleet that operates the vehicle for the remain der of its useful life. Fleets that operate their vehicles fewer miles per year generally do no t need high reliability, and because they are operated fewer miles, any repair costs are more spread out over time.

(2) Motorcoach and Bus Industry

There are generally three types of motorcoach servi ces: point to point service, fixed route and fixed schedule service, and intercity or special event service. Shuttle buses are typically used in point to point service, such as transporting passengers to, from, or between airports or other points of destination. S huttle buses are typically light- to medium heavy-duty buses and can be powered by gasol ine or diesel. Motorcoaches are heavy heavy-duty buses designed for long distan ce travel. They are frequently used as charter buses for intercity travel or speci al event services and do not operate on fixed routes or schedules. As these vehicles ag e, their use tends to change such that they are used for shorter trips.

b) Out-of-state Trucks and Buses

Staff estimates there are about 490,000 different v ehicles operating in California over the course of a year. Fleets that come in from out -of-state will vary in age, but have the newest vehicles of any other category of vehicles. Most vehicles coming in from outside California travel well over 100,000 miles per year. Most of these vehicles would reach 1,000,000 miles in seven to ten years. Those from neighboring states will also travel relatively high miles, but are not as new. Staff d id not include the costs attributable to out-of-state vehicles in the E-DRAM model analysis because the model does not address the impacts of costs occurring outside Cali fornia.-203- Figure XIV-1: Vehicles from Non-Neighboring States

0 10000 20000 30000 40000 50000 60000 70000 80000 90000 100000024681012141618202224262830

Vehicle AgeNumber of Vehicles

As Figure XIV-1 shows, the vehicles registered in n on-neighboring states have mostly newer vehicles. About 80 percent are less than 7 y ears old and would normally have 2007 and newer engines by January 1, 2014, thus mee ting the proposed PM and BACT requirements until 2021. The remaining 20 percent would need to have a verified DECS installed or would potentially be replaced ear lier than normal. Small fleets from non-neighboring states are estimated to represent o nly about 2 percent of the nonneighboring truck population but typically have the same age distribution as larger fleets because of the high number of miles travelled. By 2021, more than 94 percent of these vehicles would normally have 2010 emissions engines or newer. Consequently, the cost impact of the proposed regulation would be the lowest compared to vehicles in other truck categories.

Staff analyzed IRP registration data from various n on-neighboring states in the midwest and eastern United States. Staff’s analysis of fle ets that reported traveling in California

showed that about half of the vehicles were in flee ts that operated less than 1,000 miles per truck in California. Under the proposed regula tion, those that operate less than 1,000 miles per year in California would be exempt from any of the proposed performance requirements and would subsequently hav e no costs. For the remaining,

vehicles staff estimated that the total increased c ost for non-neighboring vehicles would be about $471 million. Staff believes this estimat e is conservative because larger outof-state fleets have the ability to direct their cl eaner vehicles (about 83 percent of the vehicles) to California, resulting in no increased cost of operation.

There are an estimated 40,000 trucks operating in C alifornia from neighboring states (Arizona, Nevada, Idaho and Oregon. Trucks from ne ighboring states have nearly identical vehicle age distributions to California r egistered interstate trucks. About 58 percent of the vehicles are less than 7 years old. Staff estimates that, through normal attrition, these vehicles would typically have 2007 and newer engines by January 1, 2014, thus meeting the proposed PM and BACT require ments until 2021. However, to-204-

meet the proposed NOx and PM performance standards, the remaining 42 percent

would need to have a verified DECS installed and/or would potentially be replaced earlier than normal. But by 2021, staff estimates that more than 90 percent of these truck tractors would normally have 2010 emissions e ngines or newer. Again, in many cases like non-neighboring state operators, neighbo ring out-of-state fleets can direct

their cleaner vehicles to California to minimize th eir costs.

c) California Based Interstate Trucks and Buses

As Figure XIV-2 shows, the California tractors that are registered in the IRP tend to be relatively new. About 58 percent of the vehicles a re less than 7 years old. Staff estimates that, through normal attrition, these veh icles would typically have 2007 and newer engines by January 1, 2014, thus meeting the proposed PM and BACT requirements until 2021. However, to meet the prop osed NOx and PM performance standards, the remaining 42 percent would need to h ave a verified DECS installed and/or would potentially be replaced earlier than n ormal. By 2021, staff estimates that more than 90 percent of these truck-tractors would normally have 2010 emissions engines or newer. Consequently, the average cost pe r truck in this timeframe would be lower compared to other truck categories.

Figure XIV-2: California IRP

0 1000 2000 3000 4000 5000 6000 7000024681012141618202224262830

Vehicle AgeNumber of Vehicles

d) In-state Registered Tractors

In-state registered tractors operate regionally or locally. There is significant variety in the type of vehicles used, including smaller bevera ge delivery tractors, two axle tractors pulling double trailers, or larger three axle tract ors. Newer tractors registered to operate in-state average about 75,000 miles per year, while 20 year old tractors average about 30,000 miles per year. Because in-state tractors o perate fewer miles than interstate registered tractors, it takes longer for them to re ach 1,000,000 miles (the estimated end of their useful lives).-205-

As Figure XIV-3 shows, in-state registered tractors have a broad age distribution. About 35 percent of the vehicles are less than 7 years ol d. Staff estimates that, through normal attrition, these vehicles would typically ha ve 2007 and newer engines by January 1, 2014, thus, meeting the proposed PM and BACT requirements until 2021. However, to meet the proposed NOx and PM performanc e standards, the remaining 65 percent would need to have a verified DECS installe d and/or would need be replaced earlier than normal. But by 2021, staff estimates that more than 60 percent of these truck-tractors would normally have 2010 emissions e ngines or newer.

Figure XIV-3: California In-state Registered Tracto rs

0 1000 2000 3000 4000 5000 6000024681012141618202224262830

Vehicle AgeNumber of Vehicles

e) Small Fleets

Based on 2006 DMV data, fleets with three or fewer vehicles represent almost 90 percent of the fleets and approximately 48 percent of the trucks registered in California. Of these same vehicles, single owner operator fleet s represent almost 75 percent of the fleets and approximately 32 percent of all trucks r egistered in California. However, it is unclear from the DMV data what proportion of the sm all fleets are in the transportation

sector or in other sectors. FleetSeek data identif ies owner operators as having about 14 percent of the revenues and number of trucks wit hin the trucking sector.

While smaller in-state fleets, in general, tend to have older vehicles compared to larger fleets, overall they have similar age characteristi cs depending on annual miles travelled. Similar to larger interstate fleets, California IRP registered owner operators travelling higher annual miles have newer vehicles than large fleets operating in state.

As shown in Figure XIV-4, California IRP registered trucks operated by owner operators tend to be fairly new. About 50 percent are less t han 7 years old and would normally have 2007 and newer engines by January 1, 2014. Th ese vehicles would already meet the proposed PM and NOx BACT requirements until 202 1. By 2021, about 90 percent would have 2010 emissions engines or newer. The ag e distribution for these fleets-206-

suggests that it is fairly common to purchase 2 to 4 year old vehicles and to operate them until they are about 10 years old.

Figure XIV-4: California Interstate Registered Owne r Operators

0 200 400 600 800 1000 1200 1400 1600 1800 2000024681012141618202224262830

Vehicle AgeNumber of Vehicles

Similar information from the Owner-Operator Indepen dent Drivers Association (OOIDA), which primarily represents owner operators and smal l long-haul trucking companies that travel across the country, support these findings. Results of the 2008 Land Line Reader Survey, published by OOIDA, show that more than one third of the respondents bought their truck new, 65 percent have not owned their tr uck longer than 6 years and over 80 percent have not owned their trucks more than 10 ye ars. These results appear

consistent with the characteristics of the Californ ia registered interstate operators. In terms of the revenue generated by interstate owner- operators, national surveys of interstate independent owner operators who primaril y operate in long-haul trucking indicate that most independent owner operators gene rally gross more than $1.50 per mile. This is consistent with the reported per mil e revenue generated by larger fleets. The results are show in the Land Line Reader Survey response shown in Table XIV-3.

Table XIV-3: 2008 Land Line Reader Survey Results o n Gross Income per Mile

Gross Income per Mile % of Respondents Less than $0.90 5.8 $0.91 to $0.99 7.0 $1.00 to $1.24 19.6 $1.25 to $1.49 29.0 More than $1.50 33.3

Blank 5.2-207-

Figure XIV-5: In-state Registered Owner Operator Tr actors (Excluding Low Mileage Vehicles)

0 200 400 600 800 1000 1200 1400 1600 1800 2000024681012141618202224262830

Vehicle AgeNumber of Vehicles

While interstate owner-operators tend to have newer vehicles in-state registered tractors owned by owner operators are older, with a median age of about 10 years. The age distribution for these fleets is shown in Figur e XIV-5 and suggests that it is fairly common to purchase 5 to 8 year old vehicles and to operate them until they are about 16 years old. About 28 percent of the vehicles wou ld normally have 2004 to 2006 model year engines by January 1, 2013, and would be required to install a verified DECS under the proposed regulation. An additional 21 percent would be expected to have 2007 or newer engines that would already meet the PM and BACT requirements until 2021. The remaining 51 percent would need to replace their engines or vehicles with one having a 2004-2006 engine and install the highest level verified DECS, or to replace it with one having an engine meeting the 20 07 engine emissions or newer. By 2021, staff estimates that about 65 percent of the vehicles would normally have 2010 emissions engines or newer.

f) Economic Impact on Transportation Sector

As was shown in Table XIII-13, the Transportation i ndustry has the highest proportion of costs of all the impacted business sectors represen ting over 50 percent of the estimated regulatory costs. Staff estimates the transportati on industry would have increased regulatory costs of approximately $1.8 billion.

In evaluating the impacts of these costs, the resul ts of the E-DRAM analysis indicated the economic output for the transportation and ware housing sector would be reduced by about 0.2 to 0.4 percent in 2013, the highest capit al cost year. To put this cost in context, the historic California gross domestic pro duct for truck transportation, passenger transportation and other support activiti es is shown in Figure XIV-6. Relative to the economic output of this sector, the increase d regulatory costs of the proposed regulation represents less than 0.1 percent of the cumulative projected gross domestic product over the years 2010-2025.-208-

Figure XIV-6: California Gross Domestic Product: T ruck Transportation

As shown in Figure XIV-7, California employment in transportation and warehousing grew significantly over the last decade, from about 380,000 jobs in 1994 to over 430,000 jobs in 2005. More detailed data on jobs w ithin segments of the transportation and warehousing sector are not available. The E-DR AM analysis indicates that the proposed regulation could reduce California employm ent in this sector by as many as 12,000 jobs, or -2.5 percent in 2013, the highest c apital cost year. This represents the majority of the potential job impacts from the prop osed regulation. However, employment trends in this industry sector have cont inued to increase, and staff believe such growth can be expected to continue as populati on in the state continues to grow. Therefore, the projected impact on employment would result in slower growth, and would not necessarily result in a loss in jobs.

0 5 10 15 20 25 3019971998199920002001200220032004Economic Output ($Billion)-209-

Figure XIV-7: California Employment: Transportatio n and Warehousing

g) Cumulative Costs and Ability to Pass on Costs

To evaluate potential cumulative costs, as part of the ARB Heavy Duty Vehicle survey, staff requested information about off-road diesel v ehicles, portable engines, and

information about the truck and trailer. The truck and trailer information allowed staff to determine whether a fleet owner would have equipmen t that may be subject to an existing regulation.

Out of a total of 682 transportation companies that responded to the ARB Survey, there were 105 transportation companies that indicated th ey were subject to the In-Use OffRoad Vehicle Regulation, the Portable Equipment Reg ulation or PERP. These companies reported the ranges of equipment horsepow er that would be subject to the

other rules as shown in Table XIV-4.

Of the 105 fleets shown in Table XIV-4 that are sub ject to multiple regulations, almost all of them had less than 2,500 horsepower (hp) of off-road equipment. Under the offroad regulation, such fleets are considered small f leets, meaning they are not subject to the replacement requirements, and do not need to me et the PM retrofit requirements until 2015. Also, few fleets overall reported havi ng equipment subject to the Portable Equipment Regulation. For those that are subject t o that regulation, they would have to replace their unregulated Tier 0 portable engines b y January 1, 2010, which is before most fleets subject to the proposed regulation woul d have to take significant action. Since the regulatory compliance timelines do not ov erlap between these two regulations and the proposed regulation, and since few fleets a re impacted by these multiple regulations, staff does not believe that, overall, many fleets in the transportation sector

will have to address the issue of cumulative costs with these regulations.

380 390 400 410 420 430 440 450 460 4701996199719981999200020012002200320042005Employment (1,000 People)-210-

Table XIV-4: Percentage of Transportation Fleets Re porting Equipment HP Subject to Other Rules

Off-Road Engine Horsepower Off-Road

Vehicles Portable

Engines <2,500 hp 12% 8% 2,500 to <5,000 hp 0% 0% >=5,000 hp 1% 0%

The trucking sector is a competitive industry local , regional and interstate markets. Within these markets, trucking companies tend to sp ecialize with certain equipment and product transportation for a variety of reasons. T hese include filling niche demands, improved efficiency, customer satisfaction, reliabi lity and expertise required to transport various products. In many cases, larger companies depend on owner operators to support seasonal needs, variations in work load and a variety of other reasons. However, the requirements to install verified DECS or to operate newer trucks will have an impact on companies who travel fewer miles and k eep their trucks longer. Staff believes that, in general, companies will be able t o pass through their costs, as the incremental increase in revenue per mile is small r elative to existing gross revenue

levels. This is shown below in several actual flee t case studies. Additional case studies for other fleets are provided in Appendix J.

In addition, to the extent fleets subject to the pr oposed regulation would qualify for incentive funding (as discussed in Chapter XV), the anticipated compliance costs would be even lower, further reducing the need to pass on costs.

(i) Refrigerated Transport Case Study

As a case study, staff analyzed the economic impact of the proposed regulations and the existing transportation refrigeration unit regu lation for a refrigerated transport company that owns 228 tractors and 270 refrigerated trailers used in long haul operations. The average tractor age was 7 years an d the average trailer age was about 6 years old. This particular company normally purc hases refrigerated trailers new and maintains a mix of new to three year old trucks.

For this company, staff estimates the increased co sts to comply with the proposed regulation would be about $1.5 million in 2008 equi valent dollars over the calendar years of 2010-2025. This compares to about $16.8 m illion that would normally be spent for capital upgrades of trucks over this time perio d. Annual revenues for this company are approximately $47.8 million, which are cumulati vely projected to be $583 million in 2008 equivalent dollars over the same time period. To offset the increased capital costs of the regulation, this fleet would need to increas e revenue by about 0.25 percent, or $0.0031 per mile, during 2010 to 2030.

This company would also be subject to the transport refrigeration unit (TRU) regulation. Staff estimate increased TRU costs of $2.1 million in 2008 equivalent dollars would be incurred over 2008-2018 to meet the TRU requirement s. Thus, the increased costs of-211-

both rules would be approximately $3.6 million in 2 008 equivalent dollars over the calendar years of 2010-2025. To offset the increase d capital costs of these combined regulations, this fleet would need to increase reve nue by about 0.61 percent, or $0.0074 per mile, during 2010 to 2030.

(ii) Motorcoach Case Study

A California bus company comprised of 138 diesel bu ses with an average fleet age of 6.4 years had a 2007 net income of approximately $8 00,000 out of about $9.8 million in gross receipts. This company operates a range of bu s types including small shuttle buses and motorcoaches. The shuttle buses are prim arily operated locally and the motorcoaches are used for both local trips and long er trips. On average, this company would spend about $1.7 million annually for normal replacements of 11 to 12 vehicles.

For this company, staff estimates the increased cos ts to comply with the proposed regulation would be about $900,000 in 2008 equivale nt dollars over the calendar years of 2010-2025. This compares to about $20.1 million that would normally be spent for capital upgrades over this time period. Annual reve nue for this company is approximately $9.8 million, which is cumulatively p rojected to be $120 million in 2008 equivalent dollars over the same time period. To o ffset the increased capital costs of these regulations, this fleet would need to increas e revenue by about 0.8 percent from

2010 to 2025.

2. Agricultural Sector

The Agricultural sector includes farms and ranches, forestry, farm service providers and agricultural processing centers. The gross domesti c product data for the agricultural

sector from the 2006 California Statistical Abstrac t for 2004 was $26 billion per year. In its applicability, the proposed regulation would in clude agriculture transport vehicles, and specific certain others that are owned by chemi cal supply companies. Agricultural services are estimated to add about $1 billion to t he gross domestic product of this

sector.

As reported August 28, 2008, by the USDA’s National Agricultural Statistics Service and Economic Research Service, California agriculture s aw a 15 percent increase in the sales value of its products in 2007. The state’s 7 5,000 farms and ranches received $36.6 billion for their output in 2007, a 15 percen t increase from 2006.

a) Fleet Characteristics

ARB staff worked with agricultural stakeholder grou ps and farmers to develop an agricultural fleet specific survey based on the bro ader statewide survey. Based on the results of the agricultural fleet survey, staff est imates that there are about 22,000 vehicles engaged in agricultural operation in Calif ornia. However, most farms do not own vehicles within the scope of the proposed regul ation. Vehicles in this industry sector are typically older and drive fewer miles th an most other sectors.-212-

While many farms and ranches do not own vehicles th at would be subject to the proposed regulation because they contract much of t heir needed transportation services, they still own vehicles to support their farm activities and/or to deliver products to market. In either case, vehicles used on farms and ranches range from single unit vehicles with bodies designed for uses specific to farming operations, to tractor trailer combinations for transporting harvested commodities for processing.

Farm operators, especially those that do not own th eir own vehicles, depend on custom service (for hire) providers for supplies, soil pre paration, crop harvesting, and other services. Also, most farm operators contract with custom harvesters, farm labor contractors, co-operatives, trucking companies that transport commodities to processing centers, and often depending on seasonal operators to perform this work.

While many of the truck bodies installed on trucks used in agricultural operations are also available in trailer configurations that can b e pulled behind a farm tractor, trucks are typically used where farm land is not contiguou s and incidental travel on the highway is required. There are a number of truck b ody types that are used in agricultural operations for feeding livestock, land conditioning, crop protection chemical application, fertilizer spreading, dust control, ha rvesting and transporting.

Data for the agricultural industry from the agricul tural fleet survey showed an average vehicle fleet age of about 16 years. Of the vehicl es reported, about 55 percent were heavy heavy-duty vehicles and the remainder were me dium heavy-duty vehicles. Staff compared the results to the 2002 National VIUS surv ey data, and found that mediumduty California agricultural vehicles appear to be older than the national average, while the heavy heavy-duty vehicles are of similar age.

b) Economic Impact on Agricultural Sector

As was shown in Table XIII-13 in Chapter XIII, staf f estimates the Agricultural Sector would have an increased regulatory cost of approxim ately $265 million. In evaluating the impacts of these costs, the results of E-DRAM a nalysis indicate the economic output for the agriculture, forestry, and fishing sector w ould be reduced by about 0.1 percent in 2013, the highest capital cost year. To put this c ost in context, the historic California gross domestic product for the agricultural sector is shown in Figure XIV-8. Relative to the economic output of this sector, the increased r egulatory costs of the proposed regulation represents less than 0.1 percent of the cumulative gross domestic product over the years 2010-2025.-213-

Figure XIV-8: California Gross Domestic Product: A griculture

0 5 10 15 20 25 30200020012002200320042005Economic Output ($Billion)

As shown in Figure XIV-9, employment in agriculture has varied significantly over the last decade, from about 380,000 jobs in 1994 to ove r 400,000 jobs in 1997, and subsequently reduced to less than 380,000 jobs in 2 005. The E-DRAM analysis indicates that the proposed regulation would reduce California employment in this sector by about 0.1 percent, or 430 jobs in the hig hest cost year. With the variable nature of employment in this sector, staff does not believe the proposed regulation will have a noticeable impact on agricultural employment

.

Figure XIV-9: California Employment: Agriculture

340 360 380 400 420199419951996199719981999200020012002200320042005Employment (1,000 People)

c) Cumulative Costs and the Ability to Pass on Cost s

Out of a total of 504 agricultural companies that r esponded to the ARB heavy-duty vehicle survey, most had filled out an abbreviated version of the survey which did not-214-

have detailed vehicle information to determine if t here fleets are subject to multiple ARB regulations for instance, its unclear if some of th e trucks reported had refrigeration units, questions remain as to address whether some farms a lso had portable engines or nonfarm use off-road equipment. Staff has committed t o addressing emissions from in-use off-road agricultural tractors and other equipment in 2010, and plans to evaluate cumulative regulatory cost impacts as part of that rulemaking effort.

Farming is an diverse and complex industry. Various commodities are traded on a world market and prices are establish by supply and consu mer demand. Supply is often affected by weather and other factors. Lower cost commodities produced in other parts

of the U.S. or in other countries limit the commodi ty price and the ability to pass through costs. However, farmers have historically had the ability to switch to other higher value crops as margins and profits for particular commodi ties decline. This practice is expected to continue as market conditions continue to change and the potential need to generate additional revenue arises.

When considering these impacts, it is important to note that California is one of the leading agricultural states in the country for expo rting high value crops such as nuts, flowers and fresh fruit throughout the world. In a ddition, while many crops are grown in other parts of the world, direct competition from t he Southern hemisphere is limited because of the differing seasons. Staff believes t hat for some commodities, and in particular for high value crops, some ability to pa ss through or absorb costs exists, but likely would vary year to year.

In addition, to the extent fleets subject to the pr oposed rule would qualify for incentive funding (as discussed in Chapter XV), the anticipat ed compliance costs would be even lower, further reducing the need to pass on costs.

(i) Almond Farm Case Study

Staff did not receive financial information from an y farms or ranches. Therefore, to evaluate specific costs, staff used an economic stu dy from the University of California (UC), Davis of a typical almond orchard (UC, 2008). The example almond orchard had typical gross returns of $4,200 per acre. The stud y indicates that a single truck-tractor would be needed for an orchard of approximately 125 acres.

Survey data from an Almond Board survey suggests th at a typical farm vehicle would be 16 years old (a 1992 model year) vehicle and would be driven about 13,000 miles (Almond, 2007). If this vehicle would be normally replaced when it was 25 years old it would need to be replaced in 2017. Under the agric ultural provisions of the proposed regulation, this vehicle would be required to be re placed by January 1, 2017. Using the same assumptions from the cost model, it is assumed the farmer would normally buy a ten year old replacement vehicle. Therefore, if th e farmer chose to purchase a vehicle with a 2010 model year engine, the farmer would buy a 7 year old vehicle rather than a 10 year old vehicle. Staff estimates that he would pay about $12,000 more than normal to replace this vehicle after accounting for resale value and a potential loss in value of the older vehicle. For a farm of this size, the to tal amount of almonds harvested from-215-

2010 to 2025 would be about 7,350,000 pounds, value d at $6,400,000 in $2008. The increased capital costs to comply with the proposed regulation represents about 0.025 percent of the gross revenue received. To offset t he increased cost to replace this vehicle, the farmer would need to increase prices b y $0.001 per pound of almonds. Further, if the farmer operated the vehicle less th an 10,000 miles, the vehicle would not be required to be replaced until 2022.

3. Construction Sector

The construction sector in the 2006 California Stat istical Abstract is comprised of businesses engaged in the construction of buildings , highways and utility systems. In addition, many of these businesses are also engaged in the preparation of sites for new construction, subdividing land for sale, and buildi ng sites. The reported gross domestic product for 2004 was $70 billion.

a) Fleet Characteristics

The construction sector is a broad sector that cont ains a wide variety of business types. Staff estimates there are about 76,000 vehicles own ed by construction firms and construction contractors. Construction companies r ange from a special trade contractor with one truck and no off-road equipment, to large road construction and earthmoving companies with hundreds of trucks and pieces of off -road vehicles and equipment. Vehicle types owned by construction companies range from small service trucks and water trucks, to larger tractor trailer combination s to transport aggregate, materials, debris, and equipment. Construction companies may also have more specialized equipment such as sweepers, drill rigs, and cranes. Companies in this sector also include cement truck companies.

While most construction companies and contractors h ave trucks, many have little or no off-road equipment. For those fleets that do have off-road vehicles, in the ARB 2005 off-road equipment survey, it was reported that the majority of fleets are small fleets (i.e., fleets with very few off-road vehicles), and that the majority of off-road vehicles were owned by large fleets (ARB, 2005). Table XIV -5 shows the total off-road vehicle horsepower, number of vehicles, and number of off-r oad fleets by fleet size (small, medium and large off-road fleets), as defined in th e off-road regulation.

As Table XIV-5 shows, while over 70 percent of the fleets reported to have 2,500 or less horsepower (hp), such small fleets have just over f ive percent of the total hp of affected vehicles. Conversely, less than 15 percent of flee ts have total maximum power over 5,000 hp, but these very large fleets have over 80 percent of the total hp of affected

vehicles.-216- Table XIV-5: Total Off-Road Vehicle Fleet Character istics

Reported Survey Results

Size Category Fleet Size (hp)* Percent of Total hp Percentage of

Off-Road

Vehicles Percentage

of Fleets

Large over 5,000 81 72 13
Medium 2,501-5,000 12 16 16 Small under 2,500 6 12 71 * As defined in the in-use off-road vehicles regula tions

Staff used FleetSeek to better understand the impac ts of the proposed regulation, and to determine the percentage of trucks owned by flee ts of different sizes within the construction sector. Table XIV-6 shows that specia l trade contractors have the highest number of trucks, while another third are owned by heavy construction companies, which staff believes are likely to qualify as large off-road fleets under the in-use off-road vehicle regulation. Special trade contractors incl ude roofers, plumbers, drywall installers and electricians that are expected have few or no off-road vehicles.

Table XIV-6: Percent of Vehicles in Construction by Category

Construction Categories Vehicles Special trade contractors 46% Heavy construction, except building 33% Stone, clay, and glass products 13% General building contractors 7%

All Other 1%

Source: FleetSeek

To verify this data, staff also evaluated available data for large companies with known off-road equipment to estimate the number of vehicl es in large fleets. Staff analyzed data from large fleets with 733 vehicles and a tota l of 596,000 total off-road vehicle hp.

Staff estimates there are 27.7 million total off-ro ad vehicle hp in the construction and mining sector, with 81 percent of it in fleets with more than 5,000 hp. Using the ratio of vehicles to total fleet horsepower, staff estimates that there are less than 23,000 vehicles, or about a third, are owned by companies that would be considered to be large fleets in the off-road regulation. The remaining 5 3,000 vehicles would be in fleets that

either would be small fleets or medium fleets in th e off-road regulation or have no offroad equipment. Under the off-road regulation, sma ll fleets only have to meet the PM filters requirements, and not until starting 2015.

b) Economic Impact on Construction

Staff estimates the construction industry would hav e increased regulatory costs of approximately $1 billion in $2008 as a result of th e proposed regulation. In evaluating the impacts of these costs, the results of E-DRAM a nalysis indicate the economic output for the construction sector would be reduced by abo ut 0.15 percent in 2013, the highest-217-

capital cost year. For the California construction sector, staff estimates that the increased regulatory costs of the proposed regulati on represent 0.13 percent of the gross domestic product over the years 2010-2025. Th e historical California cumulative projected gross domestic product for the constructi on sector is shown in Figure XIV-10.

Figure XIV-10: California Gross Domestic Product: Construction

While not reflected in recent data, staff expects t hat some of this growth has been lost in recent years due to poor economic conditions in the industry. While staff expects the market will grow in the long term, with the current economic climate, it is less certain when the construction economy will recover. The re sidential construction sector, in particular, has been significantly impacted with th e recent downturn in the economy. The E-DRAM analysis indicates that the proposed reg ulation would reduce California employment by about 0.15 percent, or 1,300 jobs in 2013, the highest capital cost year. As shown in Figure XIV-11, employment in constructi on grew from about 500,000 jobs in 1994 to over 900,000 in 2005. However, while no t reflected in recent data, staff expects that some of this growth has been lost in r ecent years due to poor economic conditions in the industry. While staff expects th e market will grow in the long term, with the current economic climate, it is less certain wh en the construction economy will recover. The residential construction sector, in p articular, has been significantly impacted with the recent downturn in the economy.

0 10 20 30 40 50 60 70 80 90199719981999200020012002200320042005Economic Output ($Billion)-218- Figure XIV-11: California Employment: Construction

0 100 200 300 400 500 600 700 800 900 1000199419951996199719981999200020012002200320042005Employment (1,000 People)

Staff also evaluated sources of recent construction valuation trends to determine if there are differences in growth patterns within construct ion. Shown in Figure XIV-12 is the construction valuation projection made by the Econo mic Research Unit of the California Department of Finance for residential versus non re sidential construction in a report released on April 2008. While quite variable over time, the residential construction sector overall is currently experiencing a substant ial slowdown. However, the nonresidential sector has not shown a similar decline. For the industry as a whole, the forecast projects a recovery for residential constr uction in 2009 and 2010, and a continued upward trend in the non-residential secto r.-219-

Figure XIV-12: California Construction Total Valuat ion Dollars (in billions)

0 5 10 15 20 25 30 35 40 45 50198319841985198619871988198919901993199419951996199719981999200020012002200320042005200620072008*2009*2010*Economic Valuation (billion Dollars) Residential

Non-Residential

Source: Economic Research Unit of the California D epartment of Finance, April 2008 Data

c) Cumulative Costs and Ability to Pass on Cost

Out of a total of 357 construction companies that r esponded to the ARB on-road survey, 63 companies indicated they had off-road vehicles o r portable engines or both. However, the survey responses did not include many large construction companies, and therefore staff does not believe the data provided are representative of large companies as a whole. Therefore, staff has used alternative means to estimate the anticipated cumulative costs of the proposed regulation and exi sting ARB regulations.

In evaluating the cumulative impacts of the propose d regulation on the construction sector, staff segregated its analysis into large fl eets and small fleets. While the construction industry sector as a whole could have compliance costs associated with a number of in-use regulations, large fleets are expe cted to have the greatest cumulative costs, as they will typically would have the highes t compliance costs associated with the proposed regulation and recently adopted the off-ro ad regulation. In developing its regulatory cost estimates for the in-use off-road v ehicle regulation, it was estimated that $1.7 billion (about 50 percent of the total costs) was attributed to the construction and mining industries.

In proposing the In-Use Off-Road Diesel Regulation, staff concluded that most businesses would be able to pass through or absorb the costs of that regulation. As-220-

discussed above, in evaluating the cumulative costs of this regulation and the in-use offroad vehicle regulation, staff has concluded that o verall, the cumulative impact of the two regulations is small, increasing the anticipate d regulatory costs for affected fleets by no more than about 6 percent. As such, staff does not believe that these additional costs will change the industry’s ability to pass th rough the costs of both regulations in the form of higher bids.

In addition, to the extent fleets subject to both r ules would qualify for incentive funding (as discussed in Chapter XV), the anticipated compl iance costs would be even lower, further reducing cumulative cost impacts and the ne ed to pass on costs.

(i) Large Off-Road Fleets

As noted above, staff did not receive the on-road t ruck and off-road vehicle information from many construction companies necessary to be ab le to perform a detailed analysis on the cumulative industry impacts of multiple regu lations. To address this, staff used 2006 DMV data to find the model year and body type of vehicles owned by individual large off-road vehicle fleets for which staff alrea dy had off-road equipment information. Staff then analyzed the combined compliance costs a ssociated with the off-road regulation and the on-road regulation for 10 large construction companies with more than 5,000 hp of off-road vehicles each.

Because staff did not have information about the an nual miles traveled by the on-road vehicles in these fleets, staff used a conservative estimate by assuming all vehicles did not qualify for any of the low-use flexibility prov isions in the proposed regulation. The companies analyzed had 733 vehicles and a total of 596,000 total hp. Based on this analysis, staff has concluded that the combined cum ulative costs for large off-road fleets to comply with both the proposed regulation and the in-use off-road vehicle regulation is about 6 percent higher than the antic ipated compliance costs of the in-use off-road vehicle regulation alone.

(ii) Small and Medium Off-Road Fleets

Small and medium fleets in the in-use off-road vehi cle regulation are defined as those having less than 5,000 total cumulative off-road ve hicle hp. This means, for example, a company might have a small fleet of backhoes, or wh eel loaders or motor graders. Under the off-road regulation, these fleets are not subject to any clean-up requirements until 2013 for medium fleets, and 2015 for small fl eets. In addition, for small fleets, the clean up requirements are less stringent than for h igher hp medium and large fleets.

As noted above, staff did not receive the on-road t ruck and off-road vehicle information from many construction companies necessary to be ab le to perform a detailed analysis on the cumulative impacts of multiple regulations. Despite this, staff evaluated the potential cumulative costs of the proposed regulati on for small fleets, and does not expect that the proposed regulation will impose any significant over lapping costs on

small fleets. This is because these fleets would n ot incur any capital costs under the off-road regulation prior to 2015, when they would have to begin installing verified-221-

DECS on their off-road vehicles. Because this is l ater than when these small fleets would have to clean up under the proposed regulatio n, staff believes it is unlikely that small fleets would be required to make capital inve stments in the same year to comply with both regulations. In addition, for contractor s not subject to the in-use off-road regulation at all (estimated to be as much as 60 pe rcent of the fleet), there are no

cumulative costs at all.

Like other small fleets, the costs attributable to the proposed regulation depend on when a fleet would normally replace its vehicle. T hose that purchase newer vehicles may experience no cost at all, while those with old er vehicles would be required to either install verified DECS or to replace their en gines or vehicles prior to 2012 or 2013. Also, a fleet that purchases a 2007 to 2009 model y ear engine would not have any additional requirements until January 2021.

4. Manufacturing Sector

The manufacturing sector is engaged in making new p roducts from raw material or assembling parts. This sector includes plants, fac tories, or mills used to make food products, machinery, furniture, equipment and other items. The reported gross domestic product for manufacturing in California wa s $145 billion in 2004.

a) Economic Impact on Manufacturing

Staff estimates the manufacturing sector would have a increased capital costs of approximately $168 million as a result of the propo sed regulation. The results of the EDRAM analysis indicate the output off California ma nufacturing would be reduced by about 0.05 percent in 2013, the highest cost year. The historic California gross domestic product for manufacturing sector is shown in Figure XIV-13. Overall, staff estimates that the increased total costs of the pro posed regulation represent 0.0008 percent of cumulative projected gross domestic prod uct over the years 2010-2025.-222-

Figure XIV-13: California Gross Domestic Product: Manufacturing

As shown in Figure XIV-14 employment in manufacturi ng has declined from about 1.7 million jobs in 1994 to about 1.5 million in 2005. The E-DRAM analysis indicates that the proposed regulation could reduce California emp loyment in the manufacturing sector by about 0.05 percent, or 1,000 jobs in the highest cost year.

Figure XIV-14: California Employment: Manufacturin g

b) Ability to Pass on Costs

The manufacturing sector has local, regional, and i nternational markets. The ability to pass on costs will be determined by a number of fac tors including the market region, uniqueness of a product, supply and consumer demand . Because the use of vehicles subject to this regulation in this sector is genera lly necessary not to generate revenue, but to support other revenue generating activities, staff believes these fleets should be

0.0 0.5 1.0 1.5 2.0 2.5 3.0199419951996199719981999200020012002200320042005Employment (Millions of People) 0 20 40 60 80 100 120 140 160 180 200199719981999200020012002200320042005Economic Output ($Billions)-223-

able to pass on the costs of the proposed regulatio n through higher prices for the products they manufacturer. In addition, to the ex tent fleets subject to the proposed regulation would qualify for incentive funding (as discussed in Chapter XV), the anticipated compliance costs would be even lower, f urther reducing the need to pass on

costs.

5. Retail and Wholesale Trade Sector

The retail and wholesale trade sector primarily sel ls products to individuals or businesses. Retail generally refers to the sale of merchandise in small quantities, such as grocery, department, specialty, and apparel stor es among other venues. Wholesale mainly refers to sales of goods in large quantities to distributors, manufacturers and retailers. The California gross domestic product fo r the retail and wholesale trade sector in California was $194 billion in 2004.

a) Fleet Characteristics

Goods are either transported using the vehicles own ed and operated by the retailer or wholesalers, or through the service of a trucking c ompany. Goods are generally transported to distributors using tractor trailer c ombinations and singe unit box trucks. For perishable goods, tractors with a refrigerated trailer and tractor, or a single unit refrigerated box truck are used. Shipments of raw materials to other manufacturers for refinement are typically transported using tractor trailer combinations, flatbed, box trucks, tank trucks and others. Some retail stores also own vehicles to provide home delivery services.

b) Economic Impact on Retail and Wholesale Trade

Staff estimates the retail and wholesale trade sect or would have an increased regulatory cost of approximately $510 million. In evaluating the impacts of these costs, the results of the E-DRAM analysis indicate the eco nomic output for retail and wholesale trade would be reduced by about 0.01 to 0 .03 percent in 2013, the highest capital cost year. To put this cost in context, th e historic California gross domestic product for the retail and wholesale trade sector i s shown in Figure XIV-15. Relative to the economic output of this sector, the increased r egulatory costs of the proposed regulation represents less than 0.1 percent of the cumulative projected gross domestic product from 2010-2025.-224-

Figure XIV-15: California Gross Domestic Product: Retail and Wholesale

Trade

As shown in Figure XIV-16, employment in retail and wholesale trade grew significantly over the last decade, from about 1.9 million jobs i n 1994 to over 2.3 million jobs in 2005. The E-DRAM analysis indicates that the proposed reg ulation could reduce California employment in this sector by about 0.02 percent, or 500 jobs, in 2013, the highest cost

year.

Figure XIV-16: California Employment: Retail and W holesale Trade

c) Ability to Pass On Costs

Fleets in the retail and wholesale industry sector are not as significantly affected with other ARB regulations as other industries. Because the use of vehicles subject to this

0 500 1000 1500 2000 2500199419951996199719981999200020012002200320042005Thousands of People 0 50 100 150 200 25019971998199920002001200220032004Economic Output ($Billions)-225-

regulation in this sector is generally necessary no t to generate revenue, but to support other revenue generating activities, staff believes these fleets should be able to pass through the costs of the proposed regulation throug h higher prices for the products they

market and sell.

In addition, to the extent fleets subject to the pr oposed regulation would qualify for incentive funding (as discussed in Chapter XV), the anticipated compliance costs would be even lower, further reducing the need to pass on costs.

6. Schools Districts and School Transportation Prov iders

School districts are generally responsible for prov iding school transportation. While many school districts purchase buses and hire their own drivers, many others engage the service of school transportation providers (suc h as Laidlaw) to perform this function. Districts operating their own school bus system may charge fees for school bus ridership. In some urban locations, students may u tilize public transit services.

In the United States, the school bus is a vehicle w hich is built and equipped according to federal and state laws that are required to be p ainted yellow. Most school buses made in recent years have been diesel-powered or hy brid. Full-size school buses can seat 59 to 90 passengers, but in many districts sma ller vehicles are also used. Such smaller vehicles are often used for low-density rou tes associated with private schools and for magnet programs, as well as those for devel opmentally-challenged students.

Today there are about 3,700 verified DECS currently installed on both public and private

school buses in California and an additional number that are equipped with OEM equipped DPFs. However, staff estimates that there are about 3,500 publicly-owned and over 3,900 privately-owned school buses needing to be retrofit to comply with the proposed regulation.

About $200 million is available in the Lower Emissi on School Bus program for bus replacement and retrofit. The program provides up t o $20,000 for a verified DECS, including 10 years of maintenance cost for 1987 and newer buses. This money is available to both school districts and private scho ol transportation providers. Up to $140,000 is also available for replacement of pre-1 987 buses, but only for the purchase of public school buses. Also, up to 10 percent of the award amount is available for infrastructure improvements for alternative-fueled buses. Local air pollution control districts administer the funds, and the availabilit y of incentive funding is dependent on funding choices made by school districts and progra m administrators.

a) Economic Impact on School Districts

Staff does not expect the proposed provisions for s chool buses to have a significant impact on school districts or school transportation providers. Taking into consideration $200 million that are available through the Lower E mission School Bus program for bus replacement and retrofit, the remaining regulatory costs only total about $27 million over-226-

8 years (2010-2017). Staff believes affected school districts and transportation providers

should be able to absorb these costs into their exi sting budgets.

7. Federal Fleets

The federal government is the largest public truck/ bus fleet operator in California. According to the 2006 Federal Fleet Report, the fed eral government owned and operated over 18,900 heavy-duty vehicles and buses nationwide, excluding military vehicles. About 12 percent of these vehicles are e stimated to operate in California. The U.S. Postal Service (USPS) accounted for over 2 8 percent of these vehicles, and the Department of Interior operated over 23 percent (GSA, 2007). The remaining vehicles were operated by various other agencies. The average ages of the mediumand heavy-duty vehicles are 6 and 9 years respectiv ely (GSA, 2007).

The federal government operates a wide range of veh icle types based on the needs of each individual agency. For example, the USPS oper ates vehicles such as tractor trailers and dry vans for transporting letters and packages between distribution centers, and smaller vans for delivering packages to busines s and residences. The U.S. Forest service, an agency of the Department of the Interio r, operates larger heavy haul vehicles for transporting forestry equipment, and s maller chipper trucks for clearing trees and bushes. In addition, for scenic location s such as in national parks, tour buses may be used for transporting visitors. In support of all of the federal governments’ operations, a wide range of vehicles are used for t ransporting personnel, site maintenance and for general operations.

a) Economic Impact on Federal Fleets

Staff met with representatives of the General Servi ces Administration (GSA) to discuss the proposed regulation and to discuss compliance o ptions. GSA representatives indicated they would likely allocate 2007 and newer vehicles in the federal fleet to California to meet the PM requirements from 2011 to 2014 rather than installing verified DECS. After 2014 they would resume their normal ve hicle replacement cycles and would meet the 2021 PM and NOx requirements without any accelerated replacements. The anticipated costs to the federal government are expected to be negligible.

D. Economic Impact on California Consumers

To estimate the economic impact of the proposed reg ulation on consumers, staff estimated a high and low range cost based on the to tal economic impact in the state. While the actual costs could be higher or lower for a given product, the estimate provides a reasonable indicator of the average cost impacts. For the low end cost range, staff estimated the consumer impact by calcu lating the average increase in cost compared to the total gross domestic product for Ca lifornia from 2010 to 2025. For the high end cost range, staff compared the annual gros s domestic product for the highest cost year.

Overall, in the context of the State’s $3.1 trillio n economy, the economic impact of the proposed regulation is minor and is not expected to impose a noticeable impact on-227-

consumers. However, if all of the regulatory costs were passed through to consumers,

staff estimates this could result in an increase in consumer goods of about 0.04 percent in the highest cost year (2013), and about 0.014 pe rcent on average over the life of the proposed regulation. To put this into context, thi s equates to about a 1 to 2 cent increase for a pair of shoes, less than one one-hun dredth of a cent increase per pound of produce, or an increase of from $3 to $10 for a new car.

E. References

GSA, 2007. GSA Office of Governmentwide Policy. Fe deral Fleet Report, Fiscal Year 2006; January 31, 2007.

2006 California Statistical Abstract, January 2007.

USDA 2008. USDA’s National Agricultural Statistics Service and Economic Research Service, August 28, 2008.

UC, 2008. UC Davis 2008 study #AM-VS-080-1.

Almond, 2007. Almond Board of California. 2007 Al mond Almanac.

ARB, 2005. California Air Resources Board. 2005 AR B Off-road Equipment Survey, Completed February 2006. http://www.arb.ca.gov/msprog/ordiesel/documents/Inv entory_Updates_OffRdEquip_07_ 12.pdf-228--229-

XV. A VAILABILITY OF I NCENTIVE F UNDING

The role of incentive funding will be an important element for many fleets as they consider how to comply with the proposed regulation . While staff recognizes the demand for incentive funding greatly outweighs the availability of funds, several potential state, federal and local funding programs exist that could assist with offsetting the cost of the proposed regulation to affected fle ets that move quickly to take advantage of these funding opportunities.

A. State Sources of Funding

State incentive funding programs have historically played a complementary role to the state’s regulatory emission reduction programs towa rds meeting the state’s SIP requirements and achieving California’s air quality goals. California’s funding programs typically require participation prior to establishe d regulatory deadlines; thus to qualify, fleets affected by the proposed regulation will nee d to act quickly if they are interested in pursuing available state incentive funding.

1. Proposition 1B Funding

In 2006, California voters approved the Highway Saf ety, Traffic Reduction, Air Quality, and Port Security Bond Act of 2006 (Proposition 1B) . This measure authorized the California Legislature to appropriate $1 billion fo r emission reductions in the State’s good movement corridors. Proposition 1B funds are used to pay for projects that are completed in advance of or go beyond what is requir ed by any regulation or law.

a) Overview

The ARB’s Proposition 1B: Goods Movement Emission R eduction Program (Prop. 1B Program) implements Senate Bill 88 (Chapter 181, St atutes of 2007) as amended by Assembly Bill 201 (Chapter 187, Statutes of 2007), which directs ARB to quickly reduce emissions and public health risk associated with fr eight movement along California’s trade corridors – the Bay Area, Central Valley, Los Angeles/Inland Empire, and San Diego/Border area.

In approving the Prop. 1B Program, the Board has ta rgeted $360 million to provide incentives to clean-up heavy-duty vehicles (those n ot routinely serving seaports or intermodal rail yards). Eligible upgrades include retrofits, repowers, and replacements with funding in the form of grants for purchase or lease-to-own programs. The Proposition 1B ballot language directs ARB to fund emission reductions not otherwise required by law or regulation. Once the Board adop ts a regulation, upgrades eligible for funding must result in early reductions in advance of the BACT compliance date or achieve extra reductions beyond what is required in the BACT requirements.

For most fleets, the current Prop. 1B Program requi res engine repowers and vehicle replacements to be completed three years before req uired. However, independent owner/operators and owners of MY 1997 and older veh icles need to complete the project only two years earlier than otherwise requi red. The funding is currently limited to-230-

2003 model year vehicles and older. Each vehicle t hen competes for funding based on

the emission reductions to be achieved and the cost -effectiveness. These factors favor replacement of the oldest vehicles.

The Prop. 1B Program Guidelines for fiscal year (FY ) 2007-08 funds allow up to the following:

• $5,000 to retrofit a truck with a verified Level 3 DECS;

• $20,000 for an engine repower;

• $50,000 to replace a model year 2003 or older vehi cle with one meeting 2007 or better new engine standards.

The current Prop. 1B Program Guidelines require veh icle replacements to be completed at least 3 years prior to a regulatory BACT require ment for that level of emissions control. For independent owner/operators and owner s of MY1997 or older vehicles, replacements must be completed 2 years prior to the BACT requirement. Vehicles receiving Prop. 1B Program funding are prohibited f rom participating in fleet averaging programs during this advance period. The Prop. 1B Program Guidelines also require that the upgraded vehicle be able to legally operat e in California for four years with retrofits to eight years for replacements and repow ers to sustain the benefits of the

investment.

b) Current Funding

Of the $1 billion authorized under Proposition 1B, ARB received the first installment of $250 million in the FY 2007-2008 budget, and the se cond $250 million installment in the FY 2008-2009 budget. The Figure XV-1 below shows t he Board’s allocation of

FY 2007-2008 funds.-231- Figure XV-1: Proposition 1B Fiscal Year 2007/2008 A llocation

Harbor Craft, $4,300,000

Shore Power, $5,400,000

Other Trucks, $103,200,000 Locomotives, $16,500,000 Port/Rail Yard

Trucks, $117,300,000

Local agencies have already awarded most of the $10 3 million in FY 2007-2008 funds allocated for other vehicles to the most competitiv e vehicle projects. The overwhelming majority of the applications has been for vehicle r eplacements, with demand for funds exceeding four times the available funds in the fir st year of the Prop. 1B Program.

Most of the implementing local agencies are develop ing lease-to-own truck programs for expenditure of FY 2007-2008 funds or subsequent cycles. These lease-to-own programs provide a mechanism for independent and sm all fleet owners to obtain a new vehicle for a reasonable monthly payment that cover s the difference between the Program grant and the total vehicle purchase cost. Staff must approve the terms of any proposed lease-to-own programs to ensure that the p ayments are reasonable and appropriate.

c) Program Updates

ARB staff is currently developing updates to the Pr op. 1B Program Guidelines for FY 2008-2009 funds through a public process through out Fall, 2008. The Board is scheduled to consider the proposed guidelines durin g its January, 2009, meeting. After soliciting applications from local agencies and dis cussing funding recommendations in a public process, staff expects the Board to award th e second $250 million in funding in Spring, 2009. Staff will be recommending that most of the funds again be allocated to port trucks and other trucks, in recognition of the need for funds and the expected nearterm regulatory deadlines. Local agency funding fo r individual projects should begin

later in 2009.

Staff is evaluating the updates needed to the Prop. 1B Program Guidelines, including changes to integrate Program funding options with t he proposed regulation. These potential changes that staff is developing for disc ussion in the public process include:-232-

• Expansion of the schedule flexibility currently pr ovided for independent owner/operators to also include small fleets of 3 o r less vehicles (ability to use bond funding 2 years prior to regulatory BACT requiremen t).

• Mechanism to provide an advantage to vehicles owne d by small fleets of one to three trucks in the competitive process for funding

.

• Option to allow some medium heavy-duty vehicles en gaged in goods movement to compete for funding.

• Alternative calculation of emission reductions bas ed on hours of operation (rather than miles traveled) to allow construction industry vehicles to compete for funding.

• Update to the funding amounts to encourage vehicle replacements with models meeting 2010 emission standards and to recognize th e potential availability of more

effective combined PM/NOx retrofit devices.

• Addition of a combined grant/loan guarantee progra m.

The changes identified above would expand the numbe r of vehicles eligible for the Prop. 1B Program and recognize small fleets of one to three trucks as a priority for funding (along with the oldest trucks already targe ted).

Based on these changes and the BACT compliance date s in the proposed regulation, truck owners could compete for bond funding to inst all PM filters on a 1995-2006 engine, or to replace or repower a 2003 or earlier engine. PM filters would need to be installed in the 2009-2012 timeframe, depending on engine model year. Vehicles in fleets of three or less vehicles would generally be eligible for replacement funding through the 2010-2012 timeframe, depending on the a ge of the vehicle. Fleets with more than three vehicles would generally be eligibl e for bond funding through 2012, based on the age of the old vehicle.

2. Lower Emissions School Bus Program

California’s Lower-Emission School Bus Program (LES B Program) is administered by ARB and is implemented by the local air districts. The LESB Program supports the retrofit and replacement of public school buses, an d the retrofit of school buses operated by private companies contracted by public schools to provide home-to-school transportation.

The LESB Program was appropriated $200 million by t he Legislature in 2007, and the LESB Program guidelines were updated in early 2008. Qualifying projects are allowed up to $20,000 for a verified DECS, including 10 yea rs of maintenance costs for 1987 and newer buses. Up to $140,000 is also available for replacement of pre-1987 buses. Up to 10 percent of the award amount is also availa ble for infrastructure improvements for alternative-fueled buses. It is anticipated th at over 1,100 replacements and 3,500 retrofits could be funded through the LESB Program.-233-

3. Carl Moyer Program

a) Overview

Created in 1998, the Carl Moyer Program provides in centive grants to encourage the voluntary purchase of cleaner-than-required engines and equipment that provide early or extra emission reductions. Eligible projects inc lude cleaner on-road, off-road, marine, locomotive and stationary agricultural pump engines . The program achieves near-term reductions in emissions of NOx, PM, and ROG. While regulations continue to be the primary means to reduce emissions, the Carl Moyer P rogram plays a complementary role by funding surplus emission reduction projects

.

Over its first seven years, the Carl Moyer Program provided $170 million to clean up approximately 7,500 engines throughout California. This achieved emission reductions of about 24 tons per day of NOx and one ton per day of toxic diesel PM. Legislation in 2004 provided the Carl Moyer Program with up to $14 0 million per year through 2015. Though significant, this level of funding is far fr om sufficient to pay for all the reductions needed to provide clean air. Reductions required b y regulations, and funded by owners of affected equipment, must continue to provide the majority of emission reductions.

On-road projects in the Carl Moyer Program generall y consist of new alternative-fuel purchases, fleet modernization (replacing an older vehicle with a new or newer vehicle), engine repowers, and retrofits. In recent years, f ewer on-road projects have been funded relative to other categories such as off-roa d. New purchase projects are not common because of a lack of eligible engines that a re cleaner than existing standards. Repower projects are limited due to physical and te chnological constraints with installing a newer engine in an older chassis. Fle et modernization projects have provided significant emission reductions in some ar eas, but are more difficult to administer and may only be considered in air distri cts that have an approved ARB Fleet Modernization Plan. Currently, Fleet Modernization Plans are approved for the South Coast AQMD, Sacramento Metropolitan AQMD and San Lu is Obispo APCD.

State law requires that Carl Moyer Program projects provide emission reductions early or beyond what is required by regulation. Therefor e, on-road projects must be surplus to the proposed regulation, as well as existing reg ulations such as the Fleet Rule for Transit Agencies, the Fleet Rule for Public Agencie s and Utilities, the Solid Waste Collection Vehicle Regulation, and the Port Truck R egulation.

In order for a project to be considered surplus, th e 2005 and 2008 Carl Moyer Program Guidelines require a minimum three year project lif e which means that incentive funds can not be used to pay for equipment that is less t han three years from its compliance deadline. The three year surplus requirement is a fundamental component of the Carl Moyer Program and is necessary to ensure that funds are used for early reductions rather than paying for compliance. It has only bee n shortened by the Board in one other regulatory proposal. However, as discussed below, staff believes it is appropriate to shorten the minimum project life from three years t o two years for one component of this regulation. Also, projects must also be surplus t o the assumptions in the emission-234-

benefit analysis performed to determine creditable emission reductions in the SIP. In other words, projects funded through the Carl Moyer Program can not double count emission reductions claimed by a regulation.

b) Proposed Changes to the Carl Moyer Program Guide lines

Based on the proposed regulation, future opportunit ies for funding on-road projects through the Carl Moyer Program will be limited. Th is section describes those opportunities and proposes several changes to exist ing Carl Moyer Program Guidelines that would maximize funding options while ensuring surplus emission reductions. These changes will be presented to the Board as par t of staff’s presentation of the proposed regulation.

Under the proposed changes, in general, small fleet s of up to three vehicles would be eligible for incentive funding through the end of 2 010 to comply with the December 31, 2012, compliance deadline. The first vehicle in a small fleet would be eligible for incentive funding for a 2010 truck thr ough the end of 2012. Limited use agricultural vehicles would be eligible through 201 3, and low use or specialty agricultural vehicles would be eligible through 201 9. Large fleets with more than three vehicles have few remaining funding opportunities t hat are surplus to the proposed regulation.

In order to effectively integrate Carl Moyer Progra m funding options with the proposed regulation, as well as provide greater consistency with Prop. 1B Program funding, staff proposes several changes to the Carl Moyer Program Guidelines. These changes, shown below in Table XV-1 would primarily help smal l fleets purchase newer vehicles prior to the compliance deadlines while ensuring th at Carl Moyer funded projects result in surplus emission reductions.-235- Table XV-1: Proposed Carl Moyer Program Guidelines Changes

Guideline Provision Existing Criteria Proposed Criteria

On-Road Fleet Modernization

Eligible engine and chassis model year for old vehicle 1990 and older 1993 and older

Maximum eligible funding 80 percent of vehicle cost for fleets of 5 or less; 50 percent for

fleets of 6 or more 80 percent up to $50,000 per vehicle with engine certified to 1.2 g/bhp-hr standard; 80 percent up to $75,000 per vehicle with engine certified to 0.2 g/bhp-hr standard.

Two vehicles to one option not available Replacement of two similar

older vehicles with one newer

vehicle

Minimum Project life 3 years 2 years for small fleets complying with 2012 deadline

On-Road Retrofit

Eligible engine model years no restriction 2004 or later for small fleets; 2005 or later for large fleets (requires highest level retrofit verified for specific engine)

Agricultural Vehicles

Reporting to ARB None Must obtain the agricultural vehicle designation from ARB before applying

All On-Road Carl Moyer Program Funded Projects

Funding contract restriction on proposed regulation compliance options None Applicant must use BACT Compliance Schedule, not BACT Percentage Limits or Fleet Averaging, for compliance during the contract

term

The changes proposed above will expand eligibility for fleet modernization projects by allowing replacement of three additional model year engines, 1991-1993. However, the focus of this funding would still be on replacing t he oldest vehicles. In general, since older vehicles that accumulate the most mileage are the most cost effective to replace, the most competitive on-road projects are expected to be in small fleets with relatively high mileage.

As a direct result of the anticipated oversubscript ion of fleet modernization funds, staff is also proposing to lower the amount of funding per v ehicle to increase the number of applicants receiving funds. Similarly, adding a tw o vehicle to one option under fleet modernization provides greater funding options for applicants.

Changing the minimum project life from three years to two years for small fleets complying with the 2012 compliance deadline extends the window of time to fund surplus projects in fleets with the greatest need. The 2012 compliance deadline for-236-

small fleets is aggressive due to their financial c onditions, but necessary to achieve the needed emission reductions. A three year project l ife would require project completion by the end of 2009, allowing only one funding cycle . A two year project life allows funding during two cycles, and allows districts wit hout a Fleet Modernization Program

the time to initiate one.

Staff also proposes to restrict retrofit funding to 2004 and later engines so that retrofits

are not installed in vehicles destined for short te rm replacement.

c) Funding Opportunities under the Carl Moyer Progr am

As discussed above, there are limited options avail able for on-road Carl Moyer Program funding. However, considering the Carl Moyer Progr am Guideline changes proposed above, Table XV-2 below describes the future fundin g options expected after adoption of the proposed regulation.

Table XV-2: Future Carl Moyer Program On-Road Fundi ng Options

Project Type Funding Availability

Fleet Modernization - Small Fleets Through 2010; limited for first vehicle only throug h

2012 Fleet Modernization - Large Fleets None

Retrofits - Small fleets Limited to 2004-2006 vehic les through 2009 Retrofits - Large fleets Limited to 2005 and 2006 v ehicles through 2009

Agricultural Vehicles – Low Use & Specialty (<10,000 miles per year) Agricultural Vehicles – Limited Use (>10,000 miles/year and <15,000 miles/year Fleet modernization through 2019

Fleet modernization through 2013

Solid Waste Collection Vehicles – New Purchase of 0.84 g/bhp-hr NOx or cleaner Through 2009

Fleet modernization funding would be available for the first, second, and third vehicle in small fleets through 2010, two years in advance of the 2012 compliance deadline. For the first vehicle only, the emission benefit calcul ations assume the purchase of a 2007 truck. Therefore, very limited funding is availabl e for the purchase of a 2010 truck through the 2012 deadline. For large fleets, there are no remaining fleet modernization or repower funding options that would be surplus to the proposed regulation.

On-road retrofit options would remain available thr ough 2009, but would be very limited because there are few currently verified DECS for 2 004 and newer diesel engines. If

future retrofit devices are verified to achieve NOx reductions sufficient to meet the 2004, 2007, or 2010 MY NOx Emissions Equivalent definitio ns in the proposed regulation, then those devices would also be eligible for Carl Moyer Program funding in some applications. For example, funding could be availa ble through 2017 for verified DECS that achieve at least 70 percent NOx reduction on m odel year 2007-2009 vehicles in large fleets.-237-

Designated agricultural vehicles that operate below 10,000 miles annually and specialty agricultural vehicles will have funding opportuniti es through 2019. However, due to lower usage and cost, funding for these vehicles ma y be limited. MY 1993 and older vehicles operating up to 15,000 miles annually will be eligible through 2013.

While not covered under the proposed regulation, fu nding is also available for new purchases of 2007 and newer solid waste collection vehicles, as long as the owner is in compliance with the Solid Waste Collection Vehicle Regulation. New purchases must be at least 30 percent cleaner than the current 1.2 g/bhp-hr NOx standard.

4. Assembly Bill 118 Grants

Assembly Bill (AB) 118 created two new incentive pr ograms with potential funding for on-road heavy-duty vehicles. The first is the Alter native and Renewable Fuels and Advanced Technology Program to be administered by t he California Energy Commission, and the second is the Air Quality Impro vement Program (AQIP) to be administered by ARB. The Energy Commission program will have about $120 million annually beginning in FY 2008-09 and is geared towa rd transforming California’s fuel and vehicle types to help attain California’s clima te change goals. The AQIP has about $50 million annually beginning in FY 2008-2009 to i mprove California’s air quality by funding vehicle and equipment projects, air quality research, and advanced energy technology workforce training.

AB 118 provides the Energy Commission and the AQIP with over seven years of program funding. AB 118 requires that grants recei ved pursuant to these two programs must achieve emission reductions that are early or go beyond what is required by regulation. ARB and the Energy Commission are curr ently developing guidelines and eligible project categories for their respective pr ograms, with initial year project solicitations expected in mid-2009. As discussed i n the next section, the State’s FY 2008-2009 budget designates that the $48 million available in year one be made available for loans to aid heavy-duty vehicle owner s that would be impacted by the proposed regulation.

5. Concepts for Financing Incentives

In developing the proposed regulation, staff recogn izes that the proposal must be balanced in such a way that the needed emission red uctions and health benefits are achieved, while the State’s economy, and the busine sses that support it, can continue to grow. As such, it is important that the State t ake a leading role in ensuring that

economic assistance is available for fleets affecte d by the proposed regulation.

To carry out that role, ARB is developing a heavy–d uty vehicle air quality loan program with funding provided from two separate but complem entary legislatively-established sources: Prop. 1B and AB 118. The FY 2008-2009 st ate budget contains an approximate $48 million appropriation to fund a hea vy-duty vehicle air quality loan program. Funding for loans from the Prop. 1B progr am is still to be determined.-238-

Together, these funding sources will be leveraged t o provide critical financial assistance options, including finance packages that combine gr ant and loan funds, to a broad range of qualifying fleets operating throughout Cal ifornia.

a) Applicant Profile

Just as the existing grant programs described above have their respective eligibility criteria, ARB’s proposed loan program also targets a specific subset of the trucking industry. The fleets targeted by the loan program are based on the statutes that authorize the funding sources, and primarily consis t of heavy-duty vehicle owners for which it is difficult to qualify for conventional f inancing through traditional banking avenues. That is, ARB’s proposed loan program is n ot intended to provide lending to those that already have established a strong credit history and that could easily qualify for a conventional loan, nor is it intended to prov ide loans to those that have extremely poor credit with an assumed high risk of default. The program is intended for the “near bankable” -- those that have marginal credit (See T able XV-3).

It should be noted that the current economic climat e has expanded the window of credit risk to now include what may have previously been c onsidered “Good”. Also, the table below is intended simply to illustrate the portion of the credit risk spectrum on which the loan program intends to focus. The actual loan eva luation process will be dependent on the respective financial institutions.

Table XV-3: Credit Risk

Additional criteria also include, but are not limit ed to, fleet size (focusing on the smallest fleets), corridors and regions of operation, financ ial hardship, and cost effectiveness.

b) ARB’s Proposed Loan Program

Staff is proposing that loan funds be made availabl e for: 1) used and new vehicle purchases; 2) ARB-verified DECS; and 3) SmartWay-ap proved energy efficiency retrofits. The following list provides examples of possible equipment packages, and the corresponding estimated total costs of those packag es, that may qualify for loans through the proposed ARB loan program:

 SmartWay packages (includes used/new trailer trans actions)

• Tractor low-rolling resistance tires (LRRT): $4,75 0

• Compliant trailer retrofit (LRRT and aero kits): $ 6,000

• New SmartWay-compliant trailer: $28,000 Credit Risks FICO Bankruptcy

or Collection Delinquent

by 30 days Delinquent

by more

than 60 days Number

of Years

in

Business Loan-tovalue of

collateral (%) Debt-toincome ratio (%) Debttoworth

ratio

GOOD >700 N N N >5 <70 <30 1:1

MARGINAL 620-

680 N Y N <3 71-80 31-60 3:1

POOR <600 Y Y Y <3 >80 >60 >3:1-239-  DPFs ~ $10,000 - $25,000

 Used/New Vehicles

• Used MY 2004 tractor: $45,000

• Used MY 2007 tractor: $80,000

• New SmartWay-certified MY 2010 sleeper-cab tractor : $125,000 (price estimated in 2010)

• New Day cab tractor – MY 2010 tractor: $115,000 ( price estimated in 2010)

 Any combination of the above

ARB is proposing to utilize the California Pollutio n Control Financing Authority’s (CPCFA) California Capital Access Program (CalCAP) to leverage Proposition 1B and AB 118 funds to support affordable financing to veh icle owners to achieve early compliance with regulatory requirements. The conce pt is geared to the typical CalCAP borrower (near bankable) and is not intended to pro vide funding to high risk borrowers.

c) Potential Applicant Process

(i) Grant Funding Process

Because Carl Moyer Program grants are administered by California’s local air districts, and Prop. 1B Program grants are awarded by local ai r districts and other local agencies (such as Port Authorities), the grant application p rocess and requirements may vary from agency to agency. Though different local air districts and local agency application processes may vary, grants are generally awarded th rough the Carl Moyer Program and the Prop. 1B Program on a competitive basis. After the district or agency receives funding from ARB, the district or agency announces to the public that program funds are available and issues a request for proposals. Appli cants then complete and submit their applications and supplemental documentation before the close of the application period. The district or agency reviews the applications rec eived, and scores the projects according to their established ranking criteria. T ypical ranking criteria include cost effectiveness and benefits to impacted communities. The district or agency enters into contracts with the applicants whose projects were h ighest-ranked. The grantees agree to comply with the contract for the term of the pro ject.

(ii) Loan Funding Process

The California Pollution Control Financing Authorit y administers the CalCAP, which encourages banks and other financial institutions t o make loans to small businesses. CalCAP is a form of “loan portfolio insurance” that provides up to 100 percent coverage

on certain loan defaults. The borrower and lender each contribute a small percentage of the principle amount of the loan, which CalCAP m atches and places in a “loan loss

reserve account” at the lender bank. As the lender enrolls more loans, the loan loss reserve account grows. The participating financial institutions are entirely liable for loan-240-

losses, which can be reimbursed through each lender ’s CalCAP loan loss reserve account. From the beginning of the program in 1994 through the end of 2007, CalCAP has enrolled over 6,800 loans, with a default rate of less than 4 percent.

A small fleet owner or owner/operator may or may no t receive a grant award through the competitive processes explained above. Regardle ss of whether they are a grant recipient, an owner/operator can apply for financin g under the CalCAP program. To do so, the potential borrower would speak with a loan officer at a bank or financial institution that participates in CalCAP. Approxima tely 60 financial institutions, with locations across the state, currently participate i n CalCAP. The most current list of

lenders and their contact information is available at: http://www.treasurer.ca.gov/cpcfa/calcap/institutio ns.pdf.

The loan officer would assist the borrower in compl eting the lender’s standard loan application. If the lending institution cannot off er the borrower a loan because the borrower falls just outside their traditional under writing standards, the loan officer could then evaluate the borrower for eligibility under Ca lCAP by completing CalCAP’s loan enrollment application and ARB’s borrower eligibili ty criteria and certification form. If the borrower meets the CalCAP eligibility criteria, and the lender determines that the borrower qualifies for a loan with CalCAP’s backing , the borrower and lender complete the lender’s traditional loan issuance process and maintain the lender/borrower relationship throughout the term of the loan.

Except for the small amount of extra information fo r the borrower eligibility and criteria certification form, ARB staff expects very little a dditional effort on the borrower to participate in the CalCAP program, compared to trad itional loan financing.

B. How an Integrated Grant and Loan Program Could A ssist Fleets

Constraints on the availability of grant funds from ARB’s traditional incentive programs due to regulatory requirements, coupled with the hi gh demand for grant funds in general, call for the ARB to evaluate new approache s to providing financial assistance to regulated fleets. One concept for a flexible fi nancing option within the ARB’s loan program is a combined grant and loan. In this conc eptual grant/loan program component, the applicant would apply for an incenti ve grant for a vehicle purchase through its local air district’s or local agency’s solicitation process. Upon receiving the grant award, the applicant would then apply for a l oan through a participating lender in CalCAP. Staff will continue to pursue a mechanism to combine these programs in the

future.

a) Summary of How State Financial Assistance Can He lp

This section describes how available state financia l assistance can be combined and integrated to assist fleet operators in meeting the requirements of the proposed regulation. The examples used below assume a new d ay cab, heavy-duty 3-axle truck that costs about $115,000.-241-

Absent any State funding through a grant program to provide down payment assistance, a vehicle owner may see interest rates on qualifyin g bank loans in the range of 12 percent to 15 percent, on average, with terms that may run between 5 and 7 years. These monthly payments would average about $2,300 p er month, ranging from $2,000 to over $2,700 per month. Under the current econom ic climate, many qualifying owner/operators may not have the same access to fin ancing as they did in a more favorable economy. Similar lending trends are occu rring in other financing establishments (e.g., OEM financing sectors, dealer ship financing, etc.) as well.

Grants from either Prop. 1B Program or the Carl Moy er Program as the sole financial assistance source will provide significant relief t o the vehicle owner. As an example, an award of $50,000 from the Proposition 1B program fo r a new 2010 model year truck would provide a down payment that may qualify the v ehicle owner for a bank loan with

interest rates and terms similar to those reference d above. However, the loan balance would be less due to the grant as down payment assi stance. The resulting schedule of payments may equate to approximately $1,300 per mon th, ranging from about $1,150 to $1,550 per month.

Qualifying owners may also receive grants through t he Carl Moyer Program’s Fleet Modernization Program. Depending on local requirem ents, grant awards may be as high as $75,000 for a new 2010 model year truck, wi th payments of less than $800 per

month.

Additional financial assistance through State loan guarantee programs provides added “bankability” for the profiled owner/operator. By reducing the risk of default by covering a percentage of the principle of the loan and other fees, banks may provide more competitive loans at rates that may range from 8 pe rcent to 10 percent. Terms of the loan may also be extended from the traditional 5-7 year schedule to a 10 year schedule. Such terms are directly tied to the vehicle owner’s economic profile. Combining a grant from one of the State’s existing programs, combined with the ARB’s loan program, will not only enhance the profiled vehicle owner’s “bank ability,” but may also significantly provide a more favorable financing schedule.

C. Federal Funding Sources

1. U.S. EPA: EPA's National Clean Diesel Campaign

Under the Energy Policy Act of 2005, the Diesel Emi ssions Reduction Act (DERA) authorized $200 million per year for 5 years for im plementation of diesel emissions reduction projects across the US. U.S. EPA’s Nation al Clean Diesel Campaign Program (NCDC) consists of the NCDC Grants and Funding Prog ram and the State Clean Diesel Grant Program with the first appropriation of $49.2 million authorized by Congress in 2007. The programs provide technical assistance an d grants to assist eligible partners to adopt diesel emissions reduction strategies. Gr ant opportunities are announced at the national level or via regional agreements such as Region 9 and 10 via the West

Coast Collaborative.-242-

2. Congestion Mitigation and Air Quality Improvemen t Program

The Congestion Mitigation and Air Quality Improveme nt (CMAQ) program, jointly administered by the Federal Highway Administration and the Federal Transit Administration, was reauthorized in 2005 under the Safe, Accountable, Flexible, and Efficient Transportation Equity Act: A Legacy for U sers (SAFETEA-LU). The SAFETEALU CMAQ is designed to bolster efforts to reach Nat ional Ambient Air Quality Standards This program strengthens the transportation plannin g and air quality connection and is administered via local and state government. Prefe rence is given to cost-effective emissions reductions measures, such as diesel engin e retrofits, as well as other costeffective emission reduction strategies and congest ion reducing projects.

D. Local Agency Programs

Most federal and state programs are administered by local air districts. These incentive programs include the Carl Moyer Program and state f unds appropriated by legislation for CMAQ and others. Local agency programs usually focus on projects operating within the local air district boundaries. Most pr ograms allow districts to determine the types of projects they may fund. Funding may be al located for stationary, marine, offroad or on-road projects.

In addition, certain vehicle types and uses of vehi cles may have their own specially funded programs. The Ports of Long Beach and the Ci ty of Los Angeles fund the Gateway Cities Clean Air Action Program fleet moder nization plan via a combination of use fees (concession and container), Proposition 1B , and other matching sources. This program, operates in conjunction with the San Pedro Bay Ports Clean Air Action Plan and Local Area Council of Governments, and anticipa tes replacing 16,000 trucks to newer used trucks over the next five years. Other agencies and jurisdictions may also have settlement and mitigation funds available for air quality improvement programs.

1. AB 923 Funds

In 2004, state law was enacted that allows local ai r districts to collect an additional $2 motor vehicle registration surcharge ($2 MV Fee), t o be used to fund projects under four different clean air programs which include the vehi cles and equipment under the Carl Moyer Program and school bus replacements under the LESB Program. Not all air

districts are allowed to collect the initial DMV re gistration fee, while some air districts choose not to access the fee. Currently about $50 million per year through 2015 is available to pay for projects that are in advance o f, or go beyond regulatory requirements.

As described above, funding opportunities for proje cts under the Carl Moyer Program would be limited. However, under the LESB Program, local air districts that chose to use AB 923 funds to pay for projects may pay for th e replacement of any pre-1987 model year school bus or 1987 and newer model year bus powered by two-stroke engines.-243-

2. AB 2766 Funds

In 1990 and 1991, the California Legislature enacte d legislation – AB 2766 (Sher, 1990) and AB 434 (Sher, 1991) – to ensure that California ’s air districts and other local government agencies have the funding needed to carr y out their responsibilities for implementing the California Clean Air Act (CAA). T he legislation allowed air districts to adopt a surcharge of up to $4 on motor vehicle regi stration fees to be used “solely to reduce air pollution from motor vehicles and for re lated planning, monitoring, enforcement, and technical studies necessary for th e implementation of the California

CAA of 1988.” Most air districts in California hav e adopted a motor vehicle surcharge that generates roughly $110 million per year statew ide. In accordance with ARB guidance, most air districts use at least 50 percen t of these funds for emission reduction projects such as transportation control measures an d clean vehicle projects. Unlike some of the other available funding sources mention ed above, AB 2766 and AB 434 motor vehicle fees are not required to fund project s which are surplus to regulatory requirements.

3. AB 2522

Assembly Bill 2522, signed into State law on Septem ber 30, 2008, authorizes the San Joaquin Valley Air Pollution Control District to in crease motor vehicle fees - now at $6 per vehicle - to as much as $30 per vehicle. The a dditional fees would to be used to fund incentive-based programs to achieve surplus em ission reductions to remediate

emissions from mobile sources that the District det ermines are needed to help achieve and maintain ambient air quality standards. If the District opts to collect the full $30 fee, it could generate about $75 million in new revenue per year. Of those funds, at least $10 million are to be used to mitigate air pollutio n in disproportionately-impacted environmental justice communities. Assembly Bill 2 522 authorizes the fees to be collected until 2013. Fee authority is extended to 2024 if the U. S. Environmental Protection Agency approves the reclassification of the District’s ozone nonattainment

status to “extreme.”-244--245-

XVI. R ATIONALE FOR R EGULATORY P ROVISIONS AND C HANGES TO O THER R EGULATIONS

This chapter describes staff’s rationale for some o f the proposed provisions of the proposed regulation, as well as the proposed change s to the other existing regulations.

A. Low Use Exemption

A vehicle that is operated less than 1,000 miles an d less than 100 hours per year in California would be exempt from any performance req uirements. This allows fleet owners to operate some older vehicles if necessary as back up, while not having a significant impact on emissions. This provision als o provides flexibility for fleets operating near the borders of California so that ou t-of-state fleets would have the ability to bring vehicle into California for very brief vis its (while not accruing many miles) and be exempt from the performance requirements of the regulation.

In addition, because out-of-state fleets may not be able to predict which vehicles will need to come to California incidentally, staff has also proposed to allow an out-of-state fleet the option, available only to be used once ea ch year, to operate a single vehicle in California for a 3 day period regardless of miles t ravelled. The fleet owner would be required to report the vehicle information immediat ely before the trip, but would not have any additional record keeping requirements to meet. With this, an out-of-state fleet would not need to anticipate which vehicles would c ome to California at the beginning of each year. However, as previously stated, a fleet could only use this option once per year, and only for one vehicle.

During the regulatory process, it was suggested tha t this threshold be raised to allow for the accrual of additional miles while avoiding the performance requirements. Staff evaluated the emission impacts of raising the 1,000 mile threshold to a higher level, and concluded that raising the mileage threshold would result in the current proposal not meeting the SIP commitments.

B. Fleet Average and BACT Percent Limits

The fleet averaging option provides the most flexib ility for fleets to determine the most cost effective action to take. The fleet average op tion allows fleets to select which vehicles to upgrade or retire rather than having to follow a prescribed schedule. It provides more flexibility to buy used vehicles to c omply with the proposed regulation, lowering compliance costs. It also provides a mech anism for fleets to take advantage of NOx control technologies that, while not achieving the maximum NOx emissions reductions, would nonetheless lower fleet emissions and delay vehicle replacements. The fleet average also provides a mechanism to prov ide credit for the use of alternative fueled vehicles or hybrids.

The BACT percent limits is best suited for fleets t hat prefer to buy engines with 2010 emissions technology. It allows fleets to replace a vehicle a single time during the compliance period. It is fairly straightforward to understand and to plan for future replacements. It also is the best option for fleet s to use if they need to keep some older equipment. For example a fleet that has a speciali zed 1991 model year crane and 9-246-

vehicles may use this option by installing a verifi ed DECS on the crane and keeping it through 2022 provided that the other vehicles are b eing replaced to meet the fleet percentage requirements.

C. Delays to the NOx Performance Requirements

1. Vehicles below Specific Mileage Thresholds

Staff has proposed to delay compliance with the NOx performance requirements, while maintaining the PM performance requirements, for ve hicles operated below specific mileage thresholds. The proposed mileage threshold s are 7,500 miles per year for tractors and vehicles with a GVWR greater than 33,0 00 pounds, and 5,000 miles per year for all other vehicles with a GVWR less than 3 3,000 pounds. These thresholds were proposed based on staff’s cost effectiveness e valuation for achieving PM and NOx reductions on individual vehicles, and on the numbe r of vehicles that would potentially qualify for the delay.

First, staff concluded that it was appropriate to e stablish different thresholds (based on vehicle weight) for medium heavy -duty vehicles and heavy heavy-duty vehicles and tractors. This is because, on average, tractors an d vehicles greater than 33,000 pounds are more expensive to replace than smaller vehicles . In addition, larger vehicles tend to drive more miles each year than smaller vehicles. Also, the proposed thresholds generally coincide with thresholds established by t he United States Internal Revenue Service regarding tax suspensions, for which fleets with such vehicles may file. This tax suspension applies to highway motor vehicles having taxable gross weights of 55,000 pounds or more that are operated on public highways annually for 7,500 miles or less for agricultural vehicles, or 5,000 miles or less f or other businesses.

As part of the analysis, staff evaluated the emissi ons impacts associated with this proposed provision. Using the statewide vehicle po pulation in the emission inventory, vehicles operated below these mileage thresholds re present about 15 percent of the total vehicle population of in-state vehicles, and about one percent of the total vehicle miles traveled. This represents about a two percen t loss in potential total NOx and PM

emission benefits.

The following example compares the PM and NOx emiss ions in 2014 of a vehicle qualifying for this provision relative to a vehicle in a fleet that is meeting NOx and PM performance requirements. In its analysis, staff u sed a vehicle with a 1990 model year engine traveling 5,000 miles per year and compared it to an average vehicle in a fleet that met the 2014 fleet average and traveled 30,000 miles annually. The results of this comparison are shown below in Table XVI-1.-247-

Table XVI-1: Emissions Comparison of Low Mileage Ve hicle and Typical Fleet

in 2014

Fleet Comparison Annual Miles

Traveled NOx (lbs) PM (lbs) Typical Vehicle in a Fleet Meeting 2014 Fleet Average 30,000 650 7 1990 Model Year Engine with verified DECS 5,000 240 6

As can be seen, the heavy-duty vehicle with a 1990 model year engine and a DPF that travelled 5,000 miles per year would emit about 240 pounds of NOx per year, and about 6 pounds of PM. A heavy-duty vehicle travelling 30 ,000 miles in a fleet complying with the proposed regulation in 2014 would emit about 65 0 pounds NOx and about 7 pounds of PM. Without a verified DECS, the 1990 model yea r vehicle would emit about 37 pounds of PM annually. Based on this analysis, staf f believes that providing a delay in the NOx performance requirements for vehicles that travel below the specific mileage thresholds described above would provide fleets wit h additional flexibility and reduced costs without sacrificing significant emission bene fits.

It was suggested by some stakeholders that fleets w ould simply increase the number of vehicles that they have so that they may stay below these mileage thresholds. Staff has considered this, but does not believe that such a s ituation is likely to occur. Because fleets utilizing these provisions still must still install a verified DECS on their vehicle, and

because the cost of such a retrofit relative to the value of the vehicle on which it would be installed is often greater, staff does not belie ve it makes economic sense for fleets to pursue such actions. In fact, staff expects that m any fleets will retire some of their older, less critical, lower use vehicles to avoid t he cost of verified DECS, and instead better utilize the remaining vehicles that they hav e, or will rely on subcontractors or rentals where possible.

Staff also evaluated alternative thresholds and req uirements and concluded that the current proposal provides sufficient reductions to California’s SIP commitments and an incremental increase would result in not meeting th e SIP commitment. As shown in Table XVI-2 a change to the current proposal would increase emissions in key years. The left column shows the emissions increase from p ermanently exempting all vehicles below the current mileage thresholds from the PM an d NOx performance requirements. The middle column represents raising the mileage th resholds to 10,000 miles for all vehicles until 2021; they would still be required t o install verified DECS. Finally, the right column shows the impact of permanently exempt ing all vehicles operating below 10,000 miles from the NOx and PM performance requir ements.-248-

Table XVI-2: Alternatives Emission Loss Compared to Staff Proposal (tpd)

Permanently Exempt from PM

and NOx at Current Mileage

Threshold NOx Exempt

up to 10,000

Miles until

2021 Permanently

Exempt Up to 10,000 Miles Calendar

Year

NOx PM NOx PM NOx PM

2014 0.0 0.3 5.2 0.0 5.2 0.7

2017 0.0 0.3 3.6 0.0 3.6 0.6

2020 0.0 0.2 3.0 0.0 3.0 0.4

2023 3.2 0.2 0.0 0.0 5.9 0.3

2. NOx Exempt Areas

Staff recognizes that air quality problems are less severe in some parts of California. For that reason, staff proposed a special provision for vehicles operating exclusively in

counties that are in attainment of the federal ozon e and PM ambient air quality standards, and do not contribute to downwind exceed ances of the state or federal ozone and PM standards. The provision would allow vehicles that operate exclusively in “NOx exempt areas” to be delay compliance with t he NOx performance requirements until January 1, 2021. However, these vehicles wou ld still remain subject to PM performance requirements. This is because diesel P M emission reductions are still necessary to reduce the localized risk of PM exposu re, and such an approach is consistent with similar provisions provided in the In-Use Off-Road Diesel Vehicle Regulation.

3. Agricultural Vehicle Provisions

The agricultural vehicle provisions would exempt lo wer use agricultural vehicles from the NOx and PM performance requirements for a speci fied period of time. Agricultural vehicles are those that are used exclusively in fie ld operations, those that transport agricultural products to the first point of process ing after harvest, and certain trucks owned by chemical supply companies that deliver che micals or crop protection products

from a distribution center to a farm. Under these provisions, agricultural vehicles operating above the mileage thresholds (with the ex ception of specialty agricultural vehicles) would be required to comply with the NOx and PM performance requirements just as any other vehicle.

In considering these provisions, staff ensured that two key parameters were met. First, that the provisions would not jeopardize the antici pated emission benefits of the proposed regulation such that the State did not mee ts its SIP commitments, in any year, in the San Joaquin Valley and the South Coast Air B asins; and second, that the provisions did not result in any adverse impacts re lative to localized risk. While the proposed agricultural vehicle provisions meet the f irst parameter, in that the State meets or exceeds its SIP commitments in all years evaluat ed despite a small loss in emission-249-

benefits as a result of the proposed provisions, ad ditional work is needed to more fully understand the scope of any localized risk impacts from the delay in the PM performance standards for these vehicles, and to de velop recommendations to address the impact.

a) Compliance with the State’s SIP Commitments

Staff estimates there are about 22,000 agricultural vehicles within the scope of the proposed regulation operating in California, which service over 72,000 farms and other agricultural operations through out the state. Agr icultural vehicles are most prevalent in the San Joaquin Valley (about half of the statewide population), with the rest operating in other areas of the state (in contrast, there are very few agricultural vehicles operating in the South Coast Air Basin). Information about t he statewide population of agricultural vehicles was obtained from a number of sources, inc luding survey data and vehicle registration data from the DMV. In general, and co nsistent with statewide fleet as a whole, most agricultural vehicle owners have fairly small fleets. Some reported fleets larger than 10 vehicles, and only a few reported ow ning more than 20 vehicles.

Based on the information available, about 70 percen t of the agricultural vehicles in the state are expected to be limited-use agricultural v ehicles (operate less than specific mileage thresholds based on the model year of the e ngine), and 50 percent are expected to be low-use agricultural vehicles (those which operate less than 10,000 miles per year). Using this and other information, staff estimates that a delay in the NOx and PM performance standards for these vehicles will result in a loss of about 1 TPD of SIP NOx reductions in the San Joaquin Valley in 2017. However, despite this, staff estimates that the proposed regulation will s till provide 49 TPD of SIP NOx reductions in 2017 in the San Joaquin Valley, match ing the State’s SIP commitment for this region.

To better ensure that the SIP commitment is met, th e proposed regulation would limit the number of limited use and low-use agricultural vehicles that could take advantage of the proposed delay in the NOx and PM performance st andards. This is achieved by fleets “locking in” the number of limited use and l ow-use agricultural vehicles in 2010, based on their 2009 fleet. Once locked in, the num ber of these vehicles cannot increase over the entire compliance period. In add ition, the limited use agricultural vehicle population reported in 2010 must meet the P M and NOx performance standards by January 1, 2017, and the low-use agricultural ve hicles that operate above 1,000 miles must meet the NOx and PM performance standard s by January 1, 2023. In addition, while the proposed regulation would allow agricultural fleets to replace limited use and low-use vehicles under certain conditions, these vehicles must be replaced with newer vehicles, a natural decrease in emissions fro m these vehicles over time, until they must meet the NOx and PM performance standards

.

b) Definition of Agricultural Vehicle

A number of different types of vehicles are include d in the definition of agricultural vehicle, and typically include one of four types:-250-

• vehicles that are used on a farm;

• vehicles that deliver products from a farm to a po int of first processing;

• specialty agricultural vehicles, and;

• specialized vehicles that deliver specialty chemic als (fertilizers and crop protection products) to a farm.

The first three types of vehicles are used in the a ctive production, cultivation, and harvesting, and transportation of crops, and for ot her agricultural operations. These vehicles are typically owned by a farmer, a farmer cooperative, or a custom harvester or hauler (a for-hire operator to perform such service s for farmers, typically under a contract). As such, staff believes it is appropria te to include such vehicles in the proposed definition.

Staff also proposed to include vehicles that exclus ively deliver fertilizer or crop protection chemicals to a farm. These vehicles are typically specialized, and are required by the United States Department of Transpo rtation to have certain placards. In addition, these vehicles are predominantly owned by farm supply companies, and these companies must have a license through the Californi a Department of Pesticide Regulation and/or the California Department of Food and Agriculture. Staff’s rationale for including such vehicles is that these vehicles typically operate on a regional basis, usually within a 50 mile radius of a chemical distr ibution center. Vehicles in this service are important in the distribution of these chemical products in the agricultural industry, as they are often dispatched on short notice to del iver various chemicals or gases to a

farm while the weather conditions are favorable for their application. It is important to note that vehicles that deliver any other products or equipment to the farm such as feed, seed, fuel, cryogenic liquids, parts or other items , would not be included in the this

definition.

Specialty agricultural vehicles include a subset of agricultural vehicles including:

• nurse rigs;

• cotton module trucks;

• feed trucks used by cattle and calf feed lots, and ;

• water trucks owned and operated by farmers for dus t control and irrigation.

Staff included such vehicles in the definition of a gricultural vehicles for a number of reasons, including the specialized nature of these vehicles and their high replacement costs, the seasonal nature of their use, their rela tively low annual mileage, and their use predominantly on a farm. However, because ther e is no mileage limitation on these vehicles, and to ensure that the State meets its SIP commitments in 2017, especially in the San Joaquin Valley, staff is prop osing to cap the number of these vehicles that may claim the specialty vehicle provi sions in any given year. This cap would be no more than 1,100 vehicles in the San Joa quin Air District, and no more than 2,200 statewide trucks. Table XVI-3 shows the esti mated number of specialty vehicles, by body type, operating in the state.-251- Table XVI-3: Specialty Agricultural Vehicle Populat ion Estimates

Estimated Number of Vehicles

(2008) Body Type San Joaquin Valley Statewide

Cotton module 170 193

Water 622 1,022 Feed Trucks (Cattle and Calf Feed Lots) 10 100 Nurse Rig 94 190

Total 896 1,505

c) Localized Risk Impacts

While staff believes that the proposed amendments w ill meet the state’s PM and NOx emission reduction commitments under the SIP, there is still a need to ensure that any delay in the PM performance standards does not have an adverse impact on the anticipated reduction in exposure risk to diesel PM . To evaluate the potential impacts on risk from staff’s proposed agricultural vehicle provisions, staff performed a health risk assessment of two “generic” agricultural processing facilities that might receive vehicles that do not meet the PM performance standards of th e proposed regulation.

For its analysis, staff modeled two generic facilit ies, one in the Bakersfield area, and one in the city of Commerce. In its analysis, staf f assumed only vehicles that do not meet the PM performance standards (i.e., do not hav e DPFs) visited the facility. As such, to the extent that vehicles that do meet the PM performance standards visit these facilities, the estimated risk impacts are conserva tive. In other words, the potential risk impact of staff’s proposal depends not on the total number of trucks that visit a facility,

but rather on the number of trucks that visit a fac ility and do not have PM controls installed. In addition, actual risk levels will va ry due to site specific parameters, including the number of uncontrolled trucks and ass ociated emission rates, operating schedules, routes traveled to the location, site co nfiguration, site meteorology, and distance to receptors.

To investigate the potential risks associated with low-use and limited use agricultural vehicles used to transport agricultural commodities from the field to a processing facility, ARB staff developed general assumptions bracketing a range of possible operating scenarios and estimated potential cancer risks. Us ing this approach, cancer risk was

estimated as a function of the number of “uncontrol led” truck trips and the distance from the roadway or processing facility. A description of staff’s assessment is provided in Appendix E. Since the activity at any given proces sing facility can vary based on its throughput, staff’s analysis provides an initial as sessment of potential impacts of staff’s proposal. However, unless an actual facility is mo deled, using data specific to that facility, the actual risk from staff’s proposal can not be determined.

Table XVI-4 below provides the results of staff’s a nalysis for Bakersfield and shows the distances from the facility or roadway boundary whe rein the risk is above 10 in a million-252-

for different uncontrolled agricultural vehicle vol umes. For example, a facility that has 28,800 roundtrip truck trips per year, the risk lev el of 10 in a million could extend to a downwind distance of about 1,100 feet from the faci lity or roadway boundary.

Table XVI-4: Distances from the Facility Boundary w herein the Risk is 10 in a

Million for Different Agricultural Vehicle Volumes

Vehicles/Yr Distance (Meters) Distance

(Feet) 5,760 N/A N/A
11,520 50 164
17,280 120 394
23,040 250 820
28,800 350 1,148
43,200 600 1,968
57,600 850 2,789
72,000 1,000 3,281
86,400 1,300 4,265
115,200 1,700 5,577
144,000 1,900 6,234

Because of the uncertainty with staff’s analysis, i t is unclear as to the actual impact of staff’s proposal on sensitive receptors near agricu ltural processing facilities. While many of these facilities are located in rural areas , away from population centers, not all of them are. In addition, even for those that are located in rural areas, it is necessary in some instances for these vehicles to travel through more urban areas. Finally, while staff’s analysis looked at individual facilities, i t was not able to understand the cumulative impact of several facilities located in close proximity to one another. While staff does not believe that these findings are suff icient to delay staff’s proposal for lowuse and limited use agricultural vehicles, staff be lieves it is necessary to better understand this potential impact by evaluating seve ral actual facilities throughout the

state. Staff intends to continue their evaluation of the potential risk impacts of this proposal over the next 12 to 18 months, and, if app ropriate, develop recommendations to ensure that the proposal does not result in an u nacceptable impact on risk to

communities.

4. Unique Vehicles

While the regulation was written to allow the purch ase of used vehicles to lower the overall costs of the proposed regulation, staff rec ognizes that certain types of vehicles that perform special functions are less common and that used a vehicle may not exist. In the event that such a vehicle needed to be repla ced, there may not be a used replacement available, and the fleet owner would be forced to purchase a new replacement vehicle. To alleviate such a situation , staff is proposing to delay the compliance with the NOx performance requirements of such vehicles until January 1, 2021. In receiving such flexibility, th e fleet owner would have to take action

to ensure that all other vehicles in that fleet mee t the NOx and PM performance-253-

standards. In other words, the unique vehicle woul d need to be included in the fleet for determining the fleet average or the BACT percentag es, and all other vehicles would still have to be cleaned up first. However, once a ll other vehicles in the fleet meet the BACT criteria, the remaining unique vehicle would n eed to take actions to meet the specific criteria in the proposed regulation.

D. Cab Over Engine Tractors with 57 foot Trailers

In California, the overall length of a truck and se mi-trailer combination can be no more than 65 feet. However, a semi-trailer as long as 5 7 feet can be pulled provided the truck-tractor is a short cab over-engine type tract or. A 57 foot trailer cannot legally be pulled by a tractor with a conventional configurati on. However, production of new cab over-engine type tractors in North America ceased i n 2007, using 2006 model year engines. As such, no new cab over engine type tra ctors having 2007 model year engines are available, and none are expected to be made in the future.

To address this, staff is proposing a provision to delay the NOx performance requirements for cab over-engine type tractors excl usively pulling 57 foot trailers until January 1, 2018. Businesses that typically use suc h configurations include those that haul products that have a low density such as empty cans, bottles, or pallets.

Unless high efficiency verified NOx and PM DECS bec ome available, the proposed regulation would impose a significant cost for busi nesses using these vehicles and 57 foot trailers because the regulation would effectiv ely require the replacement of both the tractor and the trailer. This is because operators using cab over engine type tractor would have to switch to using conventional cab truc k-tractors pulling 53 foot trailers in order to stay within California’s length laws. The 4 foot difference between the two trailers amounts to about 7 percent less cargo that can be carried. As a result, these companies will experience an annual economic loss b ecause the shorter trailer will carry less cargo. More truck trips would be requir ed to deliver the same amount of product. More trips would result in using more fuel and in higher fuel expense. Similarly, additional trips would result in more op erating expenses such as increase wages paid by the business.

E. Small Fleet Provisions

Staff is proposing to delay the NOx and PM performa nce requirements for fleets of three or fewer vehicles until January 1, 2013. According to 2006 DMV data, as shown in Figure XVI-1, almost 50 percent of fleets have thre e or fewer diesel vehicles subject to the proposed regulation. Also, small fleets tend t o operate older vehicles relative to larger fleets, but would not benefit from the flexi bility provided by the fleet average option or the BACT percent limit option because of the limited number of vehicles.-254-

Figure XVI-1: Number of Vehicles by Fleet Size (Cal ifornia Department of Motor Vehicles, 2006)

1 Truck

32%

2 Trucks

10%

3 Trucks

6% 4 Trucks

4% 21 ~ 50 Trucks

8% 51 ~ 100 Trucks

4% > 100 Trucks

16%

6 ~ 10 Trucks

9% 5 Trucks

3% 1 1 ~ 20 Trucks

8%

Because of the economic challenges facing small fle et operators, staff believes it is appropriate to provide additional time for complian ce, and to establish somewhat lesser regulatory requirements for small fleet operators d uring the first years of the program. However, while additional time is provided, these v ehicles will still ultimately need to meet the same NOx and PM performance standards as a vehicle owned by a larger fleet operator. As such, staff believes that the p roposed small fleet provisions will reduce the initial costs to small fleets to comply with the proposed regulation in the near term, but will still provide substantial emission r eductions from these vehicles in the long

run.

F. Credit for Hybrid and Alternative Fuel Vehicles

Staff is proposing credit for the use of hybrid veh icles to accelerate the introduction of hybrid technology in heavy-duty vehicles. Hybrid t echnology can play an important role in meeting California’s goals of reducing GHG emiss ion under AB32.

While hybrid diesel vehicles production today is lo w, due to increasing fuel prices and the growing maturity of the hybrid technology, the wide spread use and availability of hybrid vehicles in the future is anticipated. At t his point in time, staff believes it is appropriate to establish provisions in the proposed regulation that will encourage the purchase and use of medium heavy-duty and heavy hea vy-duty hybrid vehicles. While the benefit of hybrid technology to reduce GHG emis sions is clear, it also has the potential to provide criteria pollutant emission re ductions as well.

Many truck and system makers are currently developi ng heavy-duty hybrid prototypes or pre-production units, an important point in the evolution of hybrid technology, but these efforts have not yet achieved critical mass. One of the key barriers to the early success of hybrid vehicles is that production volum es are low, so prices remain high.-255-

The hybrid credit staff is proposing to include in the regulation would be provided for a hybrid vehicle as long as the fuel economy of the h ybrid is at least 20 percent better than an equivalent, conventionally fueled vehicle. A number of hybrid platforms have already achieved this level of incremental efficien cy improvement, and staff does not believe that it will present a barrier for receivin g credit. Staff has also proposed that the credit would expire January 1, 2018. By that time staff believes hybrids will be much more common and will likely be more cost-effective to operate than conventional vehicles, eliminating the need top provide further credits.

G. Enforceability Provisions

1. Requirements for Possession of Valid Operating P ermit

Staff is proposing that in order for fleets to take advantage of any of the flexibility provisions or compliance extensions of the proposed regulation, including the fleet average, BACT percent limits, small fleet, etc, tha t the fleet operator possess and provide one of the following valid operating permit s:

• a valid California motor carrier of property numbe r,

• a valid identification number assigned by the Unit ed States Secretary of the Department of Transportation, or

• a valid operating authority number issued by the P ublic Utilities Commission, or

• other applicable valid operating authority number approved by the Executive Officer.

This requirement was included at the suggestion of stakeholders to ensure that fleets that are utilizing the flexibility provided by the regulation are also complying with applicable operating permit requirements to lawfull y travel on California highways. Staff believes that such a requirement will improve the o verall enforceability of the regulation.

2. Requirements for Brokers, Motor Carriers and Oth er Vehicle Dispatchers

In an effort to ensure that all vehicle owners comp ly with the proposed regulation, instate or out-of-state motor carriers, California-ba sed brokers, or California residents that operate or direct the operation of any vehicle subj ect to the proposed regulation would be responsible for hiring fleets with compliant tru cks. Both motor carriers and brokers direct the operation of their drivers, and as such, are in a unique position to verify compliance with the proposed regulation. Such a re quirement is already in place for other aspects of motor vehicle compliance, such as requiring proof of vehicle insurance, proper drivers licensing, and proof of compliance w ith various drug testing, vehicle safety, and worker compensation requirements.

The proposed regulation would require these motor c arriers and brokers to retain records documenting that the drivers they hire or d ispatch are in compliance with the proposed regulation, but would have an affirmative defense for violations by a vehicle operator they dispatched if they can demonstrate th at they verified the compliance status of the operator at the time they were hired or dispatched.-256-

To assist these motor carriers and brokers, the pro posed regulation includes the development of a system to allow them to easily det ermine the compliance status of any business or vehicle operator. Under such a system, vehicle owners would electronically report to ARB the information regarding their vehic les and their compliance mechanism. Upon completion, an Internet based syst em would generate a Certification of Reported Compliance that would be available for printing and would be available online. The system would allow motor carriers and br okers to determine which of their drivers have reported compliance with the proposed regulation to ARB.

H. Exclusion of Personal Use Motor Homes

Staff has proposed to exempt non-commercial motor h omes from the scope of the proposed regulation for a number of reasons. First , owners of these vehicles do not have the ability to offset the compliance costs sin ce personal use motor homes do not generate income nor appreciate in value. In additi on, these vehicles typically operate very few miles in California, and as such, do not c ontribute significantly towards emissions relative to other vehicles covered by the proposed regulation.

According to 2007 California Emission Forecasting S ystem (CEFS) estimation, the annual average PM and NOx emissions from diesel-pow ered motor homes for the years between 2007 and 2020 are less than 0.3 percent and 0.5 percent, respectively, of the overall mobile fleet emission respectively (ARB, 20 07a). The EMFAC2007 estimates that the annual mileage driven per motor home in ca lendar year 2010 is approximately 3,000 miles within the state (ARB, 2007b). Since t he average mileage is low, it would indicate that most private use motor homes are not driven a significant number of miles within the state, are used infrequently, or are par ked for a significant amount of the time.

Considering the potential financial burden on owner s of personal use motor homes, and the fact that most personal use motor homes would q ualify for the proposed delay of the NOx performance requirements based on their mileage , staff believes that excluding personal use motor homes from the proposed truck an d bus regulation is appropriate.

I. Safety Considerations

Through the course of the development of the propos ed regulation, staff considered potential concerns raised by affected stakeholders regarding safety from the operation

of vehicles that had been retrofit with verified DE CS. These issues included: requirements for diesel retrofits on agricultural a nd fuel delivery vehicles could lead to fires, increased engine operating temperatures due to backpressure, and potential visibility restrictions. While many of these conce rns are unfounded, staff believes it is appropriate to include provisions in the proposed r egulation which could address any safety concerns regarding the use of verified DECS under the regulation. Such an approach was also included in the In-Use Off-Road D iesel Vehicle Regulation for the

same purpose.-257-

A safety issue was also raised regarding the use of SCR systems, and the use of ammonia or urea as reducing agents. While ammonia is significantly more hazardous than urea, its use as a reductant in SCR systems fo r diesel vehicles is limited, with no major engine or DECS manufacturers proposing its us e. The preferred reductant is urea, which has limited health effects in that it c an cause skin or eye irritation if these parts of the body are exposed.

It is not the intent of the proposed regulation to require the unsafe installations of any verified DECS. In fact, the proposed regulation on ly requires retrofits if they are verified as proven, effective, durable, safe, and warrantied ; it never requires retrofits if they are not verified, will not work, or are unsafe. To addr ess this, the proposed regulation provides a process under which the Executive Office r could determine that if a verified DECS cannot be installed safely, its use is not req uired. We believe the safety provisions in the verification procedure and the pr oposed regulation are adequate to ensure that the regulation will not require any uns afe installations. The proposed regulation also contains an appeals procedure so th at if a fleet owner disagrees with the Executive Officer’s decision regarding the safety o f a device, the fleet owner has the opportunity to challenge an Executive Officer’s det ermination that a retrofit device does not impair the safe operation of a vehicle.

J. School Buses

Currently there are about 24,000 school buses that transport children to and from school in California each year. School buses tend to accrue fewer miles than many other heavy-duty vehicles operating in California, which leads to vehicles having a long useful life. As such, school bus fleets tend to be comprised of buses that have been or will operate for 30 years or more. Additionally, s chool buses are also predominately operated by local school districts which are depend ent on limited public funds. Since replacing these vehicles is costly, school district s are likely not able to comply with the NOx performance requirement due to limited school d istrict budgets.

However, reducing diesel PM emissions is critical d ue to reducing the health risks associated with exposure to diesel PM, especially f or children. School age children are especially vulnerable to the affects of air polluti on.

As such, staff is proposing that each school bus fl eet or school bus sub-fleet (dieselfueled vehicles that will be incorporated as part o f the school bus fleet) must comply with PM (but not the NOx) performance requirements of the proposed regulation that are specific for school buses. Under this schedule , by January 1, 2014, all diesel fueled school buses must be retrofitted with the highest l evel verified diesel emission control strategy available to be used on any engine used in school buses regardless of the compliance option chosen. However, school bus flee ts or school bus sub-fleets do not need to meet the NOx performance requirements of th e proposed regulation.

In addition, any school bus manufactured before Apr il 1, 1977, must be taken out of service no later than January 1, 2012. This is bec ause these vehicles were-258-

manufactured before minimum federal safety standard s were in place. However, incentive funding through Proposition 1B is availab le to replace these buses.

Appendix I further discusses the regulatory require ments, available incentive funding, and existing technology available for school buses.

1. Safety Issues

During the development of the proposed regulation, several school district stakeholders expressed concerns about the potential safety impac ts of staff’s proposal on school children. This concern was expressed in the contex t that many school districts do not have the funding available to meet the proposed PM performance standards for school buses, and will likely reduce or eliminate school t ransportation services instead of complying with the proposed requirements. This wou ld in turn mean that many children

will be either forced to walk to school or ride in a private vehicle, which many studies have shown is significantly less safe than transpor tation via a school bus.

Staff agrees with these stakeholders on the safety advantage that school buses provide relative to other forms of transportation, and it i s not the intent of the staff to establish requirements that would reduce the health impacts o n school children while simultaneously reducing the safety of school childr en. However, as can be seen in Figure XVI-2, the number of students transported an nually in California has been declining statewide since 2002 as school districts across the state have reduced or eliminated school transportation services. Staff d oes not believe that the proposed regulation will have an effect on this continuing t rend, but will continue to monitor the situation. If transportation services are adversel y impacted by the proposed regulation, staff will consider, as appropriate, alternatives t o ensure the safety of school children is not jeopardized.-259-

Figure XVI-2: California K-12 Students Transported at Public Expense

8.6 8.8 9 9.2 9.4 9.6 9.8 10

01/02 02/03 03/04 04/05 05/06

School Year100,000 Students

Source: Data from School Transportation News Buyer ’s Guide as reported by the California Department of Education.

K. Drayage (Port) Trucks

Drayage trucks are diesel-fueled, heavy-duty trucks that transport containers, bulk, and break-bulk goods to and from ports and intermodal r ail yards to other locations. Staff estimates that about 20,000 drayage trucks regularl y service ports and rail yards in California. ARB adopted a regulation in December 2 007 that requires all vehicles entering ports and intermodal rail yards to have PM controls by December 31, 2009, except for 2004 to 2006 model year engines. Staff a t that time were concerned with creating any incompatibility with the then planned proposed regulation because it was uncertain what the final proposal would be.

To ensure consistency between the requirements in t he drayage truck regulation and the proposed regulation, staff is proposing to requ ire drayage trucks with 2004-2006 model year engines to install the highest level ver ified DECS according to the same schedule as all other trucks subject to the propose d regulation. This requirement would align the drayage truck regulation with the propose d regulation. This would also help meet the State’s PM emission reduction commitments, and would ensure uncontrolled trucks would not cycle into the drayage fleet to av oid the requirements of the proposed regulation.

Staff is also proposing to include drayage trucks i n the scope of the proposed regulation beginning January 1, 2021. This would harmonize th e requirements between the two regulations after that date, and would provide addi tional emission reductions needed to

meet the 2023 ozone SIP commitments.-260-

L. Two-Engine Cranes

Throughout the regulatory development process, staf f has been working to address a number of issues regarding the control of emissions from two-engine cranes by multiple regulations. As discussed in Chapter XI, cranes ar e currently regulated by as many as four different regulations, including the In-Use Of f-Road Diesel Vehicle Regulation, the Portable Engine and Equipment Regulation, the Cargo Handling Equipment Regulation, and the statewide Portable Engine Registration Prog ram. This has created a confusing and conflicting regulatory environment. To address this issue, and to provide a path for crane operators to clean-up these vehicles in a mor e cost-effective manner, staff’s proposal would place the regulation and clean-up of all two-engine cranes in the In-Use Off-Road Diesel Vehicle Regulation. Staff believes that this approach is superior to the current approach. This is especially true when con sidering the unique issues facing cranes, including the safety and feasibility of rep owering and/or retrofitting upper crane engines.

In evaluating two-engine cranes as part of this reg ulatory effort, staff identified the following areas of concern:

• Issues with compliance with more than one regulati on

• Feasibility issues with the replacement and/or ret rofit of auxiliary engines

• Safety compliance issues

• OSHA and Cal-OSHA re-certifications

• Costs

Some of these issues are further discussed below.

1. Feasibility of Repowering and Retrofitting

Modifications to the original crane design cannot b e easily performed. Each modification requires specialized engineering to de sign/specify parts to ensure the safe operation of a modified crane. For example, the re power or retrofit of a secondary engine can create safety and design concerns, as th e secondary engine is part of the counterweight system of the crane. A small weight change can have a significant impact on a crane’s lifting capacity and interfere with the electronic controls programmed into the crane’s positioning system gear (Sierra, 2007).

Repowering or retrofitting secondary crane engines requires crane manufacturers’ approval first, and then requires recertification b y OSHA and Cal-OSHA. Therefore any modification, alteration or change to a crane that affects its original design, and is not authorized and approved by the crane manufacturer, is strictly prohibited and voids any manufacturer warranties (Sierra, 2008 and Sierra 20 07). This includes changes associated with repowering or retrofitting the auxi liary engine. Most two-engine crane manufacturers have submitted to staff that physical changes to the crane are unauthorized. Copies of these letters are provided in Appendix L.-261-

Without staff’s proposed modifications, many two-en gine cranes in California would have to be replaced to meet the existing requiremen ts of existing regulations since these engines cannot be replaced with newer, cleane r engines. Such a requirement would result in significant costs to crane operator s, as new two-engine cranes can cost

as much as several million dollars.

2. Impact on Emissions

Staff evaluated the emission impacts of their propo sal using information provided by crane operators and from DMV data. In their analys is, staff modeled the emission benefits from two-engine cranes under existing regu lations, and then compared this to the anticipated emission benefits of the staff prop osal. The results of this analysis for NOx are shown in Figure XVI-3. As can be seen, the re would be a slight increase in NOx emissions in 2010 through 2013 from staff’s pro posal, but a considerable NOx

benefit after 2013.

Figure XVI-3: NOx Emissions Benefits of Staff Propo sal

0 1 2 3 4 5 6 72010201120122013201420152016201720182019202020212022202320242025NOx (tpd) Baseline with Existing Regulations

Proposed Regulation

As shown in Figure XVI-4, the current proposal woul d result in a small increase in PM emissions in 2010, but would result in substantial PM reductions thereafter.-262- Figure XVI-4: PM Emissions Benefits of Staff Propos al

0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.352010201120122013201420152016201720182019202020212022202320242025PM (tpd) Baseline with Existing Regulations

Proposed Regulation

Because of this analysis, staff believes that this proposal will result in additional emission benefits relative to current regulations, and will achieve these reductions at a substantial cost savings. More details on the esti mates for number of cranes and details of the emissions calculations methodology a re in Appendix L.

3. Effect on SOON

In adding two-engine cranes to the proposed amendme nts to the In-Use Off-Road Diesel Vehicle Regulation, staff is also proposing to exclude the horsepower in twoengine cranes from a fleet’s maximum horsepower in determining eligibility for Surplus Off-Road Opt-in for NOx (SOON). This would be cons istent with the intent of the regulation in that the second engine in two-engine cranes, as well as the propulsion engine in on-road two-engine cranes, which were nev er previously part of the regulation, were not considered in determining flee t size and eligibility for the SOON

program.

M. Privately-Owned Two-Engine Street Sweepers

For many of the same reasons as mentioned for the t wo-engine crane, staff is proposing changes for privately-owned with two-engi ne sweepers. These changes are intended to provide a more straightforward regulato ry approach, while reducing the overall cost of cleaning up these vehicles.

Based on information provided by the sweeper indust ry, in many cases it is infeasible to repower the auxiliary engines in these vehicles wit h new engines (which are subject to the Portable Engine and Equipment Regulation); the only alternative is to replace the entire vehicle with a new vehicle having a certifie d engine. Staff does not believe it is necessary or financially feasible for many fleets t o purchase new vehicles simply to comply with the requirements of the Portable Engine and Equipment Regulation.-263-

Therefore, staff is proposing to regulate both engi nes under the proposed regulation. In this way, private sweeper operators would still be required to install PM controls on both the drive engines and the auxiliary engines in the 2010 to 2013 timeframe under the proposed regulation. The results for NOx are shown in Figure XVI-5. There would be a small increase in NOx emissions prior to 2012 but t here would lower emissions starting

in 2013. For PM there could be a minimal loss in be nefits in 2010 but considerable benefits after 2011. With the current staff propos al, all engines would have verified DECS by January 2014. The Portable Engine and Equi pment Regulation would require a phase-in of verified DECS starting in 2013.

Figure XVI-5: NOx Emissions with Staff Proposal

To further reduce costs to sweeper fleets, while in centivizing the purchase of newer, cleaner private two-engine sweepers, staff is propo sing to modify the Public Agency and Utility Diesel-Fueled Vehicles Regulation such that municipalities may receive retirement credit for the sale of two-engine sweepe rs having certified 2004 through 2006 model year engines within California. Currently, m unicipalities may only receive

retirement credit if such vehicles are sold outside the state; municipal fleets cannot currently receive credit if the vehicle is sold in state, unless BACT is applied. This change would allow private sweeper fleet operators to purchase cleaner used sweepers to comply with the proposed regulation, thereby low ering their cost to clean up their

vehicles.

N. Privately-Owned Utilities Alternative Proposal

Privately-owned utility fleets are currently subjec t to the existing Public Agencies and Utility On-road Heavy-duty Diesel-fueled Vehicles R egulation, and must apply BACT to all of their vehicles, depending on model year, by December 31, 2011. Staff has proposed to include these fleets within the applica bility of the proposed regulation. This has created concern among affected privately-owned utility fleets that are currently

0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.62010201120122013201420152016201720182019202020212022202320242025NOx (tpd) Existing Portable Engine Regulations

Staff Proposal-264-

accelerating the purchase of vehicle with 2007 and newer model year engines to meet the PM requirements.

To address this, a number of the private utilities in California proposed a delay in meeting the Pubic Agency and Utility On-road Heavy- duty Diesel-fueled Vehicles requirements that would allow them to purchase more 2010 and 2007 and later model year engines rather than installing more PM retrofi ts. Information supplied by the utilities show that utility fleet vehicles operate an average of 7,800 miles per year and typically buy new vehicles and use them for 12 to 2 0 years. Staff evaluated the utility proposed option and agreed that it was appropriate to make changes to the existing regulation for Pubic Agency and Utility On-road Hea vy-duty Diesel-fueled Vehicles to provide an option to delay the remaining PM require ments by 2 years while adding requirements that, by 2013, at least 30 percent of the vehicles in the fleet must have 2010 model year engines, and an additional 20 perce nt must have 2007 or newer engines. All other vehicles would need to meet the BACT requirements for PM. In addition, staff is proposing to require these fleet s to meet the PM and NOx performance standards of the proposed In-Use Heavy Duty Vehicle Regulation beginning January 1, 2021.

Overall, staff believes their proposal will provide an overall net air quality benefit. As such, staff believes that it is appropriate to prov ide the proposed option so that private utility fleets may purchase more 2010 and later mod el year engines to meet the BACT provisions of the fleet regulation for Public Agenc ies, which will provide additional long term NOx benefits relative to the current regulator y structure, and because the proposal would provide the same PM benefits in 2014 and beyo nd, consistent with the other vehicles subject to the proposed regulation.

O. Workover Rigs

Currently, the idling regulations restrict idling t o five minutes, with certain exceptions for where idling is required to perform a specific job function. The regulations also require that the engine automatically shut off after five m inutes of idling without interaction from the driver. Typically, in vehicles PTO, the engine shutdown system is normally

overridden when in PTO mode. For most vehicles thi s occurs when a vehicle’s engine is idling and the engine’s power is used to perform certain specialized non mobile functions. However, unlike other vehicles, workove r rigs use PTO to propel the vehicle and do not use PTO to power the specialized work wh ile stationary. To address this, staff is proposing changes to the idling regulation s to exempt workover rigs from the motor vehicle idling limit while they are performin g the work for which the vehicle was specially designed. This proposal would allow a wo rkover rig to carry out its specialized function when the vehicle is stationary and the eng ine is working.

P. Other Changes

1. Public Agency and Utility On-road Heavy-duty Die sel-fueled Vehicles

Staff is proposing other changes to this regulation that would:-265-

• expand the scope and applicability of the regulati on to include light heavy-duty engines that were inadvertently omitted from the or iginal scope of the regulation

• address concerns with the introduction of 2007 mod el year and newer engines certified under the ABT provisions at PM levels gre ater than the 2007 model year standard of 0.01 g/bhp-hr, and;

• provide a means of ensuring that vehicle owners ge t BACT credit for vehicles sold

out of state and that vehicles sold out of state ca nnot be re-sold in California unless they met the BACT requirements

These revisions are consistent with the original in tent of the regulation to require upgrades of all engines that did not meet the PM BA CT standard of 0.01 grams per brake horsepower hour, and will help fleets subject to this regulation ensure that they receive proper compliance credit for their actions.

2. In-Use Off-Road Diesel Vehicle Regulation

Staff is proposing to modify section 2449 (e)(7) to clarify the exemption provision for low-use vehicles. The current regulatory language in the section exempts low-use vehicles from all of the performance requirements i n section 2449(d). In proposing that regulation, it was not the intent of staff to exemp t low use vehicles from those provisions. The proposed modifications would requi re low-use vehicles to comply with the requirements for adding vehicles to a fleet and with the idling requirements, consistent with staff’s original intent, and with h ow other off-road vehicles are covered.

Also, new language is proposed in the In-Use Off-Ro ad Diesel Vehicle Regulation that would clarify the repower requirements for workover rigs (and other on-road vehicles subject to that regulation). This new language wou ld require that any replacement engine must be an on-road engine if the workover ri g is to be registered and driven on public roadways. This is to clarify that, as new, these vehicles should have had on-road engines installed in them.

3. Purpose and Definitions of Diesel Particulate Ma tter Control Measure

Under the current definition of “municipality”, age ncies of the United States of America are subject to the regulation for municipality and utility heavy-duty diesel vehicles. However, it was determined that CAA section 118 did not require federal fleet operators to comply with the municipality and utility fleet r egulation because the regulation did not generally apply to nongovernmental entities.

Staff’s proposal would amend the definition of muni cipality by excluding federal agencies from the municipality and utility fleet re gulation. Consequently, fleets owned by the federal government would then be subject to the proposed regulation. In addition, staff is including tribal reservations an d Rancherias because the sovereign nature of tribes is similar to the federal governme nt.-266-

4. Mobile Cargo Handling Equipment

Staff examined the environmental impacts of removin g both single-engine and two-engine mobile cranes and sweepers from the Carg o Handling Equipment Regulation. This would affect approximately 30 cra nes and 40 sweepers statewide. Staff’s analysis showed that the affected equipment is responsible for only about one percent of the overall statewide cargo handling equipment emissions (or 0.006 tons per day of diesel PM and 0.14 tons per day of NOx i n 2008). Complying with the OffRoad and proposed regulations would, in some cases, delay compliance until after the more stringent 2010 on-road and final Tier 4 off-ro ad engine standards take effect. This would slightly decrease near-term reductions, but e nhance the long term emission reductions are expected to be greater, particularly for cranes, which have long useful

lives.

Q. References

ARB, 2007a, Air Resources Board. CEFS 2007. Avail able at: http://www.arb.ca.gov/ei/emissiondata.htm

ARB, 2007b. California Air Resources Board. EMFAC 2007. Available at: http://www.arb.ca.gov/msei/onroad/latest_version.ht m

ARB, 2008. Air Resources Board. Regulation for In -Use Off-Road Diesel Vehicles. June 15, 2008. http://www.arb.ca.gov/regact/2007/ordiesl07/frooal. pdf

US BLS, 2008, US Bureau of Labor Statistics. Crane Related Occupational Fatalities Fact Sheet July 2008.

MachineryTrader, 2008. Machinery Trader. Construc tion Equipment for Sale: Crane. October 5, 2008. www.machinerytrade.com

Sierra, 2008. Sierra Research. Letter From Gary R ubenstein of Sierra Research to Tony Brasil of ARB with attachments. March 14, 200 8.

Sierra, 2007. Sierra Research. Letter From Allan Daly to Clerk of the Board of ARB of ARB with attachments. March 21, 2007.Cranes-267-

XVII. E NFORCEMENT

As in all its programs, it is the goal of the ARB t o ensure uniform compliance across the industry, so that no one entity obtains an unfair e conomic advantage by not complying with the requirements of the regulation. This chap ter discusses ARB preliminary plans regarding enforcement of the proposed regulation.

A. Overview

Any heavy-duty diesel vehicle traveling in Californ ia, including vehicles registered in other states and foreign countries, is subject to A RB inspection. Enforcement activities will have to increase significantly for staff to ac complish the program’s goal of consistent enforcement of the proposed regulation. Successful enforcement of the proposed regulation will depend on other important elements of the ARB’s enforcement program. These include active outreach to regulated industri es and training and compliance assistance. Given the complexity of the proposed r egulation and the many critical decisions that fleets will have to make, there coul d be a large number of fleets that will

seek staff’s assistance. Staff will be available t o help those fleets that do request such

assistance.

For heavy-duty vehicles, current enforcement activi ties for existing regulations include inspections at border crossings, California Highway Patrol (CHP) weigh stations, fleet facilities, randomly selected roadside locations, a nd audits of records. ARB’s enforcement staff currently uses the inspection and audit methods they have developed during their many years of experience enforcing the Heavy-Duty Vehicle Inspection Program, the Periodic Smoke Inspection Program, and in coordination with CHP staff.

B. Planned Enforcement Activities for Proposed Regu lation

ARB’s enforcement staff will use the inspection and audit methods they have developed during their many years of experience enforcing the Heavy-Duty Vehicle Inspection Program (adopted into law in 1988) and the Periodic Smoke Inspection Program (adopted into law in 1990). Enforcement activities will include inspections at border crossings, CHP weigh stations, fleet facilities, an d randomly selected roadside locations, and audits of records. These activities could result in corrective actions and substantial civil penalties for non-compliance with the regulation.

The critical elements to the successful enforcement of the proposed regulation would be the annual reporting, if using the BACT percentage limits or the fleet averaging option, or vehicle inspections if the BACT option is used. Reporting will allow staff to initially

determine whether fleets have either met the fleet average targets or complied with the BACT percentage limits requirements. Fleets would report each vehicle, its vehicle identification number (VIN), its engine data, its m odel year, as well as any actions taken to comply. For vehicles claiming one of the exempti ons from the NOx or PM requirements, owners will report the appropriate in formation such as miles driven, location where miles occurred, hours of use, and da te of installation of control technology.-268-

Fleets that report noncompliance with any of the pr oposed PM and NOx performance requirements will automatically be subject to enfor cement action, as will fleets choosing to use the fleet averaging option or the BACT perce ntage limits option that do not report at all. Fleets that submit questionable annual rep orts will also be subject to follow-up inspections and possible enforcement action. An an nual report that appears appropriate will not preclude its fleet from an ARB audit.

Each vehicle that installs a verified DECS will nee d to carry in the cab of the vehicle documentation demonstrating proper installation and proof that the device has been verified by ARB. When ARB inspectors conduct a bus iness audit, they will be able to link the VIN or the engine serial number to whateve r action was claimed for that vehicle. They will be able to tell if the vehicle does not h ave the engine claimed, or is not

outfitted with the retrofits claimed or whether the retrofits have been correctly installed. Even though in most cases inspectors may not be abl e to view an owner’s entire fleet because it will be dispersed in various locations, inspectors will be able to verify compliance for whatever vehicles they encounter. If inspectors find vehicles without the retrofits that were reported or with different mode l engines that were reported, fleets would be subject to enforcement action.

If inspectors find vehicles that choose to utilize retrofit technology to comply with the regulation but are not carrying the proper verified DECS documentation, then that will be an immediate indication of noncompliance. Vehicl es driving in from out-of-state will need to carry the same documentation.

ARB inspectors may use a variety of opportunities t o find and inspect vehicles that are subject to the regulation. For example, they may c onduct audits of fleets at facilities including but not limited to truck stops, weigh sta tions, and temporary roadside inspection facilities. They may also inspect truck terminals at business facilities or at ports and rail stations. A search of CHP’s Biennial Inspection of Terminals database may also provide a way to target inspectors toward larger trucking terminals.

They may also inspect vehicles at the border crossi ngs where vehicles are routinely inspected for produce. Finally, inspections may be triggered if ARB receives reports from the public that indicate that certain vehicles has been observed with smoking exhaust or that a fleet is not in compliance with t he rule.

Enforcement of the rule will be conducted similarly to enforcement of ARB’s commercial vehicle and school bus idling rules. Complaints fro m the public via calls to the 1-800- END-SMOG toll-free line or on-line reporting trigge r inspections or further enforcement

action.

Staff would provide public access to the names of t he companies who have reported. While details of each fleet and its compliance stra tegy would not be made public, the public would be able to search the reporting databa se to confirm whether companies they are considering hiring have reported and submi tted the required certifications of compliance. This would allow motor carriers, broker s, and others wishing to hire-269-

compliant trucking firms an avenue to ensure they h ire only fleets that have reported their data to ARB or can demonstrate compliance wit h the regulation. The system would also allow companies to check whether their c ompetitors have complied with regulation. If a motor carrier is considering hiri ng a trucking company or an owneroperator to move goods, it can check the reporting database and at least see if the company reported that it is complying using the fle et averaging or BACT percentage limits if it chose that option to comply. Because the rule would impose significant costs, to ensure a level playing field, it would be import ant to ensure that firms who are competing against one another are all complying. C ertain business and professions codes that protect fair competition may be used aga inst a non-complying firm.

ARB would have the responsibility for enforcing the proposed rule. From time to time, local air district staff may encounter vehicles tha t they believe are not in compliance with the proposed regulation. In addition, district insp ectors may observe or be told by the public of situations where vehicles are smoking exc essively. In these situations, the district staff could notify ARB staff so that ARB s taff can take appropriate enforcement

action.

C. Need for Additional Resources

The proposed regulation would affect over 400,000 i n-state only or over 900,000 both

in-state and out-of-state on road diesel vehicles o perating in California, including vehicles registered in other states and foreign cou ntries. To ensure uniform compliance across the industry, guarantee no one entity obtain s an unfair economic advantage by not complying with the requirements, and to achieve the emission reductions projected for the proposed regulations, enforcement activity will need to increase significantly. Subsequently, existing staffing levels will need to be increased to meet the increased demand for inspections and other enforcement activi ties.

It is also anticipated additional staffing would be required to conduct implementation and outreach activities such as statewide training work shops, seminars, trade show presentations, and booths conferences and expositio ns. Staff further anticipates an increase in requests for information and assistance , the development of compliance guidance documents and other tools to assist potent ial stakeholders with implementation. A web based regulatory tracking sy stem for fleet reporting, enforcement verification purposes, and status repor ts on the rule’s implementation would be required.

In addition, additional contracting with CHP staff will likely be required for enforcement. Based on the cost of CHP participation under the cu rrent scope of ARB’s field enforcement activities, and the projected increases in roadside inspections required for enforcement of the regulation, additional funding w ould also be required.-270--271-

XVIII. A LTERNATIVE C ONSIDERED

Throughout the regulatory development process, staf f considered a number of alternative possible approaches to the rule structu re. The alternatives considered and reasons they were rejected in favor of the chosen p roposed regulation are provided in this chapter.

In developing the regulation, staff considered the following goals:

• Achieve the maximum, fastest possible, reductions in toxic PM emissions;

• Maximize NOx reductions to aid in attainment of fe deral air quality standards in the South Coast and San Joaquin Valley;

• Meet the SIP commitments

• Minimize the costs for fleets and, in particular, minimize the frequency of fleets replacing existing vehicle with new vehicles;

• Achieve cost-effective emission reductions on a do llar per ton basis.

Staff sought to achieve these goals while consideri ng the technology available today, as well as the technology that is likely to become ava ilable in the future.

Overall, the proposed regulation was selected as th e best regulatory structure. It meets the goals of maximizing necessary PM and NOx emissi on reductions by cost-effective emission reductions. The proposed regulation provi des flexibility in that it allows fleets to choose one of three compliance options each year . Small fleets (3 or fewer vehicles) are given additional time for compliance, and the r egulation provides credit for both early actions to reduce PM emissions and the use of hybrid and alternative fuel vehicles. The proposed regulation also has lesser requirements for vehicles with lower usage, for those that drive exclusively in NOx-exem pt areas, and for agricultural

vehicles.

A. Retrofit Only Regulation

Staff considered a traditional BACT PM retrofit onl y regulation. This is similar to previous adopted regulations for solid waste collec tion vehicles, transit and urban bus fleets, and public and utility fleets. Such a regu lation would require fleets to phase-in a certain percent of PM retrofits each year until all vehicles are retrofit in the fleet. Such a regulation would achieve the goal of maximizing the fastest possible reductions in PM emissions. A retrofit-only regulation would also a chieve some NOx emission reductions as a result of replacing vehicles with newer vehicl es in lieu of retrofits. It could also

result in lower costs for fleets and minimize the n eed for fleets to replace existing vehicles with new vehicles since there are many PM- only retrofits available that are not as expensive as retrofits that achieve both PM and NOx reductions, or as expensive as replacing the engine or vehicle.

Although this proposal would maximize the necessary PM emission reductions, it would fall significantly short of achieving the NOx emiss ions needed for attainment of federal air quality standards in the South Coast and San Jo aquin Valley Air Basins. Substantial-272-

NOx emission reductions are needed not only to achi eve federal air quality standards but also to meet progress requirements for the ozon e standard required under California

state law.

B. August 2007 ARB Staff Proposal

Staff’s first draft proposed regulatory language wa s presented at public workshops held in August, 2007. The proposal consisted of requiri ng the application of NOx and PM BACT in two phases, optional fleet averaging provis ions for non-interstate vehicles, or a combination of the two requirements. This two-phas e approach is shown below in

Table XVIII-1.

Table XVIII-1: August 2007 ARB Staff Proposed BACT Schedule

Phase Standard Engine Model Year Compliance Date (December 31)

Pre 1994 2009

1994 – 1997 2010

1998 – 1999 2011

2000 – 2002 2012 Phase 1 2004 and later

MY engine with highest

level DECS

2003 – 2006 2013

Pre 2003 2017

2003 – 2004 2018 Phase 2 2007 and later

MY engine

2005 – 2006 2019

For Phase 1, meeting the BACT requirement included replacing a vehicle with a vehicle equipped with an engine that met the 2004 and later emission standards, and had the highest level verified DECS, or applying a verified DECS that, when applied, provided equivalent NOx and PM emission reductions. In Phas e 2, beginning in 2017, all

vehicles would have had to meet or exceed the emiss ions standards of a 2007 and later model year engine by the end of 2020. Compliance w ith these requirements could have included replacing an older vehicle with a new or u sed cleaner vehicle, installing a cleaner engine, retrofitting an existing vehicle, a nd/or retiring older, dirtier vehicles.

The proposed fleet averaging option applied only to fleets that are registered to exclusively operate in California. To use the flee t average option, each year fleets would have had to demonstrate that, their fleet ave rage emission rate was less than the fleet average emission target rate as shown in Figu re XVIII-1. This compliance option also required that by December 31, 2019, all vehicl es must meet engine model-year 2007 PM and NOx emissions standards. Staff also pr oposed special provisions for low use vehicles (less than 1000 miles and less than 10 0 hours per year), vehicles used for emergency operations, manufacturer delays, and use of experimental diesel control technology. The staff also proposed credit for use of diesel hybrid electric vehicles and

alternative fuel vehicles.-273-

Figure XVIII-1: August 2007 ARB Staff Proposed Flee t Average PM and NOx Emission Targets

While this proposal would have maximized PM emissio ns reductions by 2014 (this proposal would have provided equivalent PM reductio ns to the proposed regulation), it did not provide the NOx emission reductions needed to meet the State’s SIP commitments in the San Joaquin and South Coast Air Basins. As a result, this

alternative was not considered.

In addition, this proposal did not minimize the cos ts to fleets, especially owner-operator type fleets or small fleets with three or fewer veh icles. It also did not minimize the need for engine or vehicle replacement.

C. January 2008 ARB Staff Proposal

Staff again revised its proposed regulatory languag e and presented it at the series of public workshops held in January and February 2008. The proposal was modified to reflect the modernization program envisioned in the 2007 SIP.

The January 2008 proposal consisted of revised NOx and PM BACT requirements, more stringent fleet averaging provisions, and new special provisions for small fleets and specialty vehicles. It also contains special p rovisions for low mileage vehicles and vehicles that travel exclusively in certain less po lluted areas in California. Staff also scaled back the applicability of the proposed regul ation by excluding pickups and other vehicles with GVWR less than 14,000 pounds (except diesel shuttle buses), emergency vehicles, tactical military vehicles, and personal use motor homes. 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.52009201020112012201320142015201620172018

Engine Model YearNOx Target (g/bhp-hr)

0.00 0.02 0.04 0.06 0.08 0.10 0.12PM Target (g/bhp-hr)-274-

Again, staff proposed a two-phase NOx and PM BACT s chedule, but revised the NOx BACT requirement to require compliance in Phase 1 w ith a vehicle equipped with an engine that met the 2007 and later emission standar d by 2014. In the second phase, the NOx BACT requirement was strengthened to requir e a vehicle equipped with an engine that met the 2010 and later emission standar d by 2022. Table XVIII-2 outlines the proposed two-phase BACT schedule in the January , 2008, staff proposal.

Table XVIII-2: January 2008 ARB Staff Proposed BACT Schedule

Phase Standard Engine Model Year Compliance Date (December 31)

Pre 1998 2010

1998 – 2002 2011

2003 – 2004 2012 Phase 1 2007 and later

MY engine

2005 and newer 2013

Pre 2004 2017

2004 – 2006 2018

2007 2019

2008 2020 Phase 2 2010 and later

MY engine

2009 2021

In the January 2008 ARB staff proposal, staff propo sed a fleet averaging compliance option that would have allowed a mix of cleaner and dirtier engines, and would have applied to all vehicles in a fleet, regardless of t he origin of the vehicle’s registration (just as the current fleet average provision in the propo sed regulation does). This compliance option would have required fleets to hav e achieved 2007 model-year equivalent emission reductions from 25 percent of t heir fleet by the end of 2010, 50 percent by the end of 2011, 75 percent by the end o f 2012, and 100 percent by the end of 2013. Similarly, the fleets would have had to a chieve 2010 model-year equivalent emission reductions from their fleet by 2021. Figu re XVIII-2 shows the fleet average emission targets that fleets would have to meet at the end of each compliance year.-275- 0 2 4 6 8 10 12 14 16 18201020112012201320142015201620172018201920202021

End of Calendar YearEmission Targets (g/mile)

PM x10 NOx Figure XVIII-2: January 2008 ARB Staff Proposed Fle et Average Emission Targets

ARB staff also proposed a new, special provision fo r small fleets. Under this provision,

small fleets were defined as a fleet with three or fewer vehicles. A fleet with one vehicle would have been required to upgrade the vehicle to a 2007 emission equivalent engine by the end of 2012. A fleet with two vehicles woul d have been required to upgrade to a 2007 emissions equivalent engine by the end of 2011 for the first vehicle and by the end

of 2013 for the second vehicle. Fleets with three vehicles would have been required to upgrade to a 2007 emissions equivalent engine start ing in 2010. Table XVIII-3 shows the ARB staff’s January 2008 proposed compliance sc hedule for small fleets.

Table XVIII-3: January 2008 ARB Staff Proposed Comp liance Schedule for

Small Fleets

Fleet Size Upgrade to 2007 Equivalent Engine (by December 31)

1 Vehicle 2012

2 Vehicles 2011 and 2013
3 Vehicles 2010, 2012, and 2013

Staff also proposed requiring public utilities (whi ch are subject to the provisions of the Fleet Rule for Public Agencies and Utilities) to up grade to 2010 engine emissions between 2017 to 2021, providing double credit for h ybrid vehicles, and additional credit for existing alternative fueled vehicles. ARB staf f also proposed incorporating twoengine cranes into ARB’s In-Use Off-Road Diesel Veh icle Regulation, and added PM only retrofit requirements for school buses.-276-

Figure XVIII-3 compares the NOx emissions of the AR B January, 2008, proposal to the emissions of the current staff proposal. In this c ase, staff did not model the phase-in of the January proposal, and instead modeled a simple case that assumed compliance by 2014 and 2020. Figure XVIII-3 shows that in 2014 a nd 2020 the ARB January proposal

would have resulted in more NOx reductions than the current staff proposal in 2014 but less reductions in 2017. Figure XVIII-4 shows that the January 2008 proposal would have achieved essentially the same PM2.5 emissions reductions as the current staff proposal.

Figure XVIII-3: ARB January Proposal (NOx Emissions )

0 100 200 300 400 500 600 700 8002010201120122013201420152016201720182019202020212022202320242025NOx (tpd) Baseline Proposed Regulation January 2008 Proposal-277- Figure XVIII-4: ARB January Proposal (PM Emissions)

However, while this approach achieved additional em ission reductions relative to the proposed regulation in 2013, it did not allow most fleets much opportunity to spread out their vehicle replacements past the 2014 period. I t would also have created greater demand for 2007 model year engines, and would have resulted in higher capital investments in the first four years relative to the current proposal. Staff estimates that this approach would have resulted in additional reg ulatory costs of about $1 billion relative to the proposed regulation. Additional in formation about staff’s analysis is provided in Appendix N.

D. Street Sweeper Industry Proposal

Staff also considered a regulatory proposal from th e California Chapter of the North American Power Sweeping Association (NAPSA). The p roposal included a schedule for phasing out older sweeper vehicles through 2022. U nder this proposal, by 2022, sweeper fleets would be required to have 50 percent of their fleet with 2007 or newer model year engines (NAPSA, 2008). The proposal als o included provisions to exempt certain types of sweepers from existing diesel emis sion regulations that apply to the auxiliary engine on two-engine sweepers, and to exe mpt from the proposed regulation sweeper fleet owners with two or fewer sweepers tha t do not sweep for hire or in a commercial capacity.

As shown in Table XVIII-4, the proposed phase-out s chedule began in 2011, with sweeper fleets being required to retire or remove 1 979 and older vehicles, limiting the mileage on 1980 to 1989 model year sweepers, and al lowing 1990 and newer model year sweepers to continue to operate uncontrolled u ntil 2018. Beginning in 2018, sweepers with model year engines 1980 to 1989 would have to be retired, 1990 to 1997 model year sweepers would be permitted to operate w ith limited mileage, and 1998 and newer vehicles would continue to operate uncontroll ed. Finally, in 2022, vehicles with model year engines 1990 to 1997 would have to be re tired, 1998 to 2006 model year

0 5 10 15 20 25 302010201120122013201420152016201720182019202020212022202320242025PM (tpd) Baseline Proposed Regulation January 2008 Proposal-278-

engines would be permitted to operate with limited mileage, and fleets would be required to have 50 percent of their fleet with swe epers with 2007 or newer model year engines, while the remaining 50 percent of their ve hicles could operate uncontrolled.

Table XVIII-4: NAPSA July 2008 Proposal for Street Sweepers

Compliance Year Model Year Requirement

Pre - 1979 Retire 1980 – 1989 Operate less than 15,000 miles per year 2011

1990 and newer Unlimited operation

1980 – 1989 Retire 1990 – 1997 Operate less than 15,000 miles per year 2018

1998 and newer Unlimited operation

1990 – 1997 Retire 1998 – 2006 Operate less than 15,000 miles per year 2022 Fleets required to have 50% of fleets with 2007 or

newer engines

NAPSA also proposed that the Fleet Rule for Public Agencies and Utilities be modified to allow public agencies to receive retirement cred it for in-state sales of used sweepers and provide double credit for public agencies selli ng sweepers to comply with that rule.

ARB staff considered the proposal from NAPSA and me t a number of times with representatives to discuss the proposal and their c oncerns. Staff estimates that there are about 1,250 to 2,000 sweepers operating in Cali fornia that would be subject to the proposed regulation. Although the proposal would s ubstantially reduce the regulatory costs to sweeper fleets, it would also forgo a subs tantial percentage of emission

reductions of both PM and NOx from these vehicles. Since sweepers frequently operate in urban areas, and especially residential neighborhoods, staff was concerned

that the loss in reductions of diesel PM emissions could result in a substantial loss in the anticipated risk reductions provided by the propose d regulation. In addition, the loss of

both PM and NOx reductions from these vehicles woul d reduce the overall emission reductions needed from the proposed regulation to m eet the state’s SIP commitments in the San Joaquin Valley and South Coast air basins. Additional information about staff’s analysis is provided in Appendix M.

However, staff recognized that the street sweeper i ndustry is subject to multiple ARB regulations, including the Portable Equipment ATCM, the Mobile Cargo Handling Equipment at Ports and Intermodal Rail Yards regula tion, and the proposed regulation. Each of these regulations has different compliance requirements on various sweeper engines at different times. In addition, the privat e sweeper industry has historically purchased used sweepers from municipalities. Howev er, under the Fleet Rule for Public Agencies and Utilities, municipalities canno t receive BACT credit unless they sell-279-

a non-compliant sweeper (that is, one that has not had BACT applied to it) out of state. This has essentially stopped the supply of used swe epers for the California private sweeper industry.

In order to streamline complying with these various regulations, and to continue to realize emission reductions from these sweepers, st aff has proposed special provisions for certain two-engine sweepers, while clarifying t he applicability of these other regulations to two-engine sweepers. In addition, t o increase the supply of cleaner, used municipal sweepers, staff is proposing to allow mun icipalities the ability to obtain BACT credit (in the Fleet Rule for Public Agencies and U tilities) for the sale of a two-engine sweeper with a 2004 and later propulsion engine to a private sweeper operator.

E. Driving Toward a Cleaner California Proposal

“Driving Toward A Cleaner California” (DTCC) is a c oalition of business leaders and industry representatives that developed an alternat ive proposal in response to the proposed regulation. The DTCC proposal includes:

• more generous mileage exemptions;

• early incentives;

• specialty vehicles provisions;

• a less aggressive compliance schedule for business es subject to two or more ARB regulations;

• consideration of safety and compatibility issues, and;

• more flexible provisions if diesel emission contro l technology is not available.

The proposal would retain the same three compliance options in the proposed regulation, but would modify the compliance schedul e and requirements. It also would add a fourth compliance option which would apply on ly to single units vehicles.

DTCC also proposed revisions to increase the mileag e exemptions for certain model year engines. As shown below in Table XVIII-5, sta rting December 31, 2010, 2004 or newer model year engines would be exempt from any p erformance requirements if their mileage is less than 30,000 miles per year. After December 31, 2020, these vehicles would be required to be replaced with vehicle havin g 2010 or newer model year engines.

For vehicles driven less than 15,000 miles per year , but more than 7,500 miles per year, 1994 or newer engines with level 3 PM diesel contro l technology installed would be exempt from any further performance requirements un til December 31, 2020. Starting December 31, 2020, these vehicles would have to be replaced with a vehicle having a 2007 or newer model year engine, and the mileage wo uld need to remain below 15,000 miles per year. For vehicles driven less than 7,50 0 miles per year, vehicles with level 3 PM diesel control technology installed would be exe mpt from any performance requirements until December 31, 2020. After Decemb er 31, 2020, vehicles would have-280-

to be replaced with a vehicle having a 2004 model y ear or equivalent engine, and the mileage would need to remain below 7,500 miles per year.

Table XVIII-5: DTCC Proposal for Mileage Exemptions

Annual Mileage Engine Model Year/Technology Exemption End Date (December 31)

2004 or newer 2020 Up to 30,000 2010 or newer N/A

1994 with Level 3 DECS 2020 Up to 15,000 2007 or newer N/A

Level 3 DECS 2020 Up to 7,500 2004 or newer N/A

DTCC also proposed that fleet owners who purchase a nd operate 2007 or newer model year engines or equivalent and are not subject to t he drayage truck regulation before December 31, 2009, would get 2 additional years, st arting December 31, 2020, to comply under the current proposed BACT schedule for 2007 or newer model year engines. In addition, DTCC proposed that by Decemb er 31, 2012 dedicated use or single unit vehicles meet a 1994 or later model yea r engine standard and have a level 3 diesel PM control technology installed. These vehi cles would then have to meet a 2007 engine standard in 2020.

• DTCC also proposed that the staff should be requir ed to address any and all safety concerns and allow for specific exemptions related to emission reduction technology and safe operation, including the transport of haza rdous or flammable materials and other considerations, and that staff should develop a personalized compliance schedule for businesses subject to two or more ARB regulations. The schedule would allow compliance on a schedule which consider s the financial impacts of all regulations rather than the schedule required by ea ch regulation.

DTCC also proposed changes to the BACT implementati on schedule that would delay any of the NOx BACT performance standards until 201 4. DTCC’s proposed changes to

the BACT schedule are shown below in Table XVIII-6.-281- Table XVIII-6: DTCC Proposed BACT Schedule

Compliance Deadline (as of December 31) Engine Model Years BACT Requirements

2010 Pre - 1994 PM BACT

2011 1994 – 1997 PM BACT

2012 1998 – 2003 PM BACT

2013 2004 – 2006 PM BACT

2014 Pre – 1994 NOx and PM BACT

2015 1994 – 1997 NOx and PM BACT

2016 1998 – 2003 NOx and PM BACT

2017 2004 – 2006 NOx and PM BACT

2018 NA NA

2019 NA NA

2020 2007 NOx and PM BACT

2021 2008 NOx and PM BACT

2022 2009 NOx and PM BACT

DTCC also proposed changes to the proposed fleet av eraging provisions. This including counting vehicles retired in a fleet befo re December 31, 2010, as 2010 compliant until December 31, 2017, for purposes of fleet averaging. Under the DTCC proposal, each retired vehicle would count as a 201 0 model year equivalent and would be included in the total fleet average until 2017. The proposal also would, in general, delay the NOx fleet average emission targets. Howe ver, the PM fleet average emission targets would remain the same as in the proposed re gulation.

DTCC also proposed changes to the BACT percent limi t provisions, which would, in general, delay the NOx BACT percent limits. Howeve r, the PM fleet average emission targets would remain the same, for the most part, a s in the proposed regulation. DTCC proposed BACT percent limits are shown in Table XVI II-7. DTCC also proposed that vehicles retired be counted as a BACT compliant veh icle in a fleet before the end of each compliance year.-282- Table XVIII-7: DTCC Proposed BACT Percent Limits

Percentage of Total Fleet Complying with BACT Compliance Deadline (as of December 31) PM BACT NOx BACT

2010 25% NA

2011 25% NA

2012 50% 25%

2013 100% 25%

2014 100% 50%

2015 100% 50%

2016 100% 75%

2017 100% 75%

2018 100% 80%

2019 100% 90%

2020 100% 90%

2021 100% 90%

2022 100% 100%

Staff analyzed the four main provisions of the prop osal together. The results are shown in Figure XVIII-5 for NOx and Figure XVIII-6 for PM . The primary difference between the DTCC proposal and the proposed regulation is th e rate at which emissions benefits are realized. The proposed regulation would achiev e substantially more reductions between 2012 and 2020. Beginning in 2021, the DTCC proposal would achieve similar emissions benefits to the proposed regulation. Ove rall, the DTCC proposal would achieve roughly half of the emissions benefits that would be achieved by the proposed regulation. The DTCC proposal would not meet Calif ornia’s SIP commitments in any year. Additional information about staff’s analysi s is provided in Appendix N.-283- Figure XVIII-5: DTCC Stakeholder Proposal (NOx Emis sions)

0 100 200 300 400 500 600 700 8002010201120122013201420152016201720182019202020212022202320242025NOx (tpd) Baseline Proposed Regulation DTCC Proposal

Figure XVIII-6: DTCC Stakeholder Proposal (PM Emiss ions)

0 5 10 15 20 25 302010201120122013201420152016201720182019202020212022202320242025PM (tpd) Baseline Proposed Regulation DTCC Proposal