Proposed Amendments to Regulations toReduce Emissions from On-Road andOff-Road Diesel Vehicles and Off-RoadLarge Spark Ignition EnginesCalifornia Environmental Protection AgencyAir Resources BoardDecember 17, 201012Today’s Presentation• Introduction• Truck rule amendments• Off-road rule amendments• Environmental impacts• Recap and closing3Reasons for Changes• Emissions lower than anticipated• Reduced ability to make investments• Board directed revisions405101520252011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Statewide PM2.5 Tons per DaySIP Targets MetBusiness as UsualBenefits with ARB ProposalDiesel Risk Reduction Program GoalRules Meet Public Health and Air Quality Goals3900 PrematureDeaths Avoided5Reduced Emissions Confirmed• 50 percent decrease in black carbon observed• Long term study• Attributed to the decrease in diesel emissions“Impact of California’s Air Pollution Laws on BlackCarbon andtheir Implications for Direct Radiative Forcing” by Bahadur, et. al.6Latest Information Used• Met with stakeholders• Evaluated effects of recession on businesses• Reaffirmed PM mortality study• Updated emissions inventories7Reduced Emissions Provide Margin forEconomic Relief• Inventory update presented in November• Emissions lower than anticipated in the SIP• Establishes 2014 margin for economic relief• Determines future emissions estimates8Revised 5 Rules to Provide Economic Relief• Provide more time and improve complianceflexibility• Address special situations• Compliance costs reduced more than 60 percent• Continue to protect public healthProposed Amendments forTrucks and Buses10Greatest Economic Relief for Lighter Trucks*• 4 year delay• 150,000 trucks cleaned-up by replacement• All 2010 model year engines by 2023* Gross vehicle weight rating (GVWR) of 26,000 pounds or less.Truck and Bus Rule11Economic Life of Heavier* Trucks Extended• PM filters delayed 1 year• Replacements delayed 2 years• Extend use of newer trucks with retrofits• Replace older trucks• All 2010 model year engines by 2023* GVWR more than 26,000 poundsTruck and Bus Rule12Other Amendments Provide AdditionalEconomic Relief• Phase-in option to spread out compliance• Greater credits for truck retirement• Greater credits for early retrofits and cleanervehicles• Small fleet provisions expanded• Second opportunity to apply for ag exemptions• New phase-in option for log trucksTruck and Bus Rule13Amendments Change What Fleets Have to Do20 years12 yearsAge of truck replaced prior to 202020152013Initial truck replacements100,000175,000Number of businesses subject to PM filters150,00010,000Trucks subject to replace only20122011Initial PM filter requirementsProposedAmendmentsExistingRegulationIssueTruck and Bus Rule14Amendments to Provide Significant CostSavings to Fleets• Lower costs for all fleets• First 5 year costs down by 60%• Total 15 year costs down 60%• Cost reduced $3.3 billion from current regulation01,0002,0003,0004,0005,0006,000

Millions ($)First 5 years Total RegulationCurrentProposedTruck and Bus Rule15012345678910111213142011 - 2023

Number of Early Replacements or PM RetrofitsMoving CompanyExistingRuleAmendedRuleTruck and Bus Rule16Concrete CompanyTruck and Bus Rule012345678910111213142011 - 2023

Number of Early Replacements or PM RetrofitsExistingRuleAmendedRule17School Buses Receive ReliefSimilar to Trucks• Exclude GVWR less than 26,001 lbs.• Delay start of PM filter phase-in 1 year• Remove reporting• 15 day change – Flexibility to retrofit MY 88-93Truck and Bus Rule18Seven Retrofits or One ReplacementTruck and Bus Rule19$300 Million Provided to Clean upPublic School BusesTruck and Bus RuleCost to retrofitremaining busesRemaining noncompliant busesLocalFederalStateActual useof FundingFunding used for PMFiltersNumber of BusesSource of Funds13000000090005002003300$60 Million20Truck and Bus 15-day Changes• New credit for early truck replacements• New credit for PM filters on all vehicles early• Ensure 2000 MY trucks still eligible for funding• Expand NOx exempt attainment area provisions• Two year deferral for lower-use construction trucks• Early PM filters for1996-1997 MY enginesTruck and Bus Rule21Economic Relief for Drayage Truckers,Less Diesel PM in Communities• Ensures public health protection in impactedcommunities• Stops circumvention of rule• Modernization delayed from 2014 to 2020• Requires 2010 engines by 2023Drayage Truck Rule22Proposed Amendments to theTractor-Trailer GHG Regulation• Additional phase-in option for large fleets• Extended deadline for tire compliance• Delayed compliance for certain trailers• Additional flexibility provisions23Proposed Amendments forOff-Road and LSI Vehicles24Delay Regulation Start by 4 Yearsfor All FleetsOff-Road RuleJanuary 1, 2019March 1, 2015SmallJanuary 1, 2017March 1, 2013MediumJanuary 1, 2014March 1, 2010LargeProposed StartCurrent StartFleet Size25Simplify and Reduce AnnualRequirements• Combine PM and NOx requirements– No mandatory retrofits• Reduce BACT requirements• Raise low-use threshold– from 100 to 200 hrs/yrOff-Road Rule26Simpler Option for Smallest Fleets• Optional new path for fleets under 500 hp• Phase out Tier 0 and Tier 1 vehicles• Clear and simple pathOff-Road Rule7520261002029502022252019Percent of fleet with cleaner enginesCompliance date27Expand Credit for Early Actions• Early double retrofit credits extended for allfleets• Expand credits for fleets downsizing from 2010to 2011• New credit for fleets that complied withrequirements in 2010Off-Road Rule28~5%~85%Percent of the fleet to be controlled by 2014~55%~50%Percent of the cleanest engines in the fleetby 2023100%~30%Percent of fleets that can comply with 8 to10% turnover annually with no other actions0>100,000Number of mandatory retrofits20142010Initial large fleet requirementsProposedAmendmentsExistingRegulationFleet RequirementsOff-Road RuleAmendments Change What Fleets Have to Do29Amendments Provide Significant CostSavings to Fleets• 2010 to 2014 costs down by 97%• Peak year costs delayed to 2019– Lowered over 70%• Cost reduced $1.5 billion from current regulation05001,0001,5002,0002,500

Millions ($)First 5 years Total RegulationCurrentProposedOff-Road Rule30Off-Road 15-day Changes• Move both engines of two-engine vehicles intooff-road regulation• “Bubble” Concept - Allow additional retrofits inon-road or off-road to count towards either ruleOff-Road Rule31LSI Amendments Provide Relief andConsistency Between Regulations• Re-instate limited hours ofuse exclusion at 200 hrs/yr• Broaden complianceextension for nonretrofittable specialtyequipment• Add and modify definitionsLarge Spark Ignition RuleCombined On-Road and Off-RoadEnvironmental Impacts33Amended Rules Protect Public Health• 3900 premature deaths avoided• Substantial reductions in localized risk• Reductions toward Diesel Risk Reduction Plan• School buses controlled – pupil exposuresminimized34051015202530 2010 2011 2 0 12 2 0 13 2 0 1 4 2 0 1 5 20 1 6 20 1 7 2018 2019 2020 2 0 21 2 0 22 2 0 2 3

PM Emissions (tons/day)Adopted Without RecessionWith Proposed Amendments and RecessionCombined PM Benefits Preserved2011 to 2025Effect of RecessionAdded Flexibility$3.3 Billion Savings35Amended Rules Meet SIP Targets• 2007 SIP State Strategy committed Board tomeet defined emission levels in 2014• Amended rules provide 5 ton margin in SouthCoast• Amended rules meet these levels in the SanJoaquin Valley36We Remain on Track to Clean UpDiesel EnginesIn progressIncentivize clean upIn progressFleet rulesIn progressEnforcementNew diesel engine standards√Reformulated diesel fuel√37More Opportunities for Fundingup to $250M$35MLoans Guaranteed*$85M$105MSchool Busup to $138M$60MCarl Moyer*up to $230M$120MLocal & Federal Funds *$43M$34MAB 118~$400M$230M1B Goods MovementAdditional AnticipatedFunding Through 2012Funding SinceDecember 2008Funding Program* Total on-road and off-road projects38Localized Benefits Confirmed• July 2007 and July 2010 comparative study*– Focused on L.A./Long Beach port truck clean up– Exposures reduced by a factor of 2• November 2009 to June 2010 Oakland study**– 40 to 50 percent emission reduction– Rapid rate of port truck clean-up observed– Similar reductions at Caldecott tunnel took 9 years* Air Resources Board, Research Division** Timothy Dalton and Robert Harley (UCB) and Thomas Kirchstetter (LBNL)Conclusion40Conclusions• Long term emissions same as expected• Similar health benefits as expected• Significant economic relief• Recommend Board approve proposedamendments