## S TAFF 

## R EPORT 

## :

I NITIAL 

## S TATEMENT OF 

## R EASONS FOR


## P ROPOSED 

## R ULEMAKING



## P UBLIC 

## H EARING TO 

## C ONSIDER 

## A DOPTION OF THE


## R EGULATION TO 

## R EDUCE 

## G REENHOUSE 

## G AS 

## E MISSIONS



## F ROM 

## H EAVY 

## -D UTY 

## V EHICLES



## Mobile Source Control Division

Emission Research and Regulatory Development Branch

October 2008State of California

AIR RESOURCES BOARD

Initial Statement of Reasons: Proposed Regulation to Reduce Greenhouse Gas Emissi ons from Heavy-Duty Vehicles

Public Hearing to Consider

ADOPTION OF PROPOSED REGULATION TO REDUCE GREENHOUS E GAS

EMISSIONS FROM HEAVY-DUTY VEHICLES

To be considered by the Air Resources Board on Dece mber 11, 2008, at:

California Environmental Protection Agency

Air Resources Board Byron Sher Auditorium, Second Floor

1001 I Street Sacramento, California 95814

Mobile Source Control Division

Robert Cross, Chief Steven Albu, Assistant Chief

Emission Research and Regulatory Development Branch

Michael Carter, Chief

On-Road Heavy Duty Diesel Section Stephan Lemieux, 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 TO REDUCDE GREENHOUSE GAS EMISS IONS FROM

HEAVY-DUTY VEHICLES

Primary Authors

Stephan Lemieux

Daniel Hawelti

David Chen

Susan O’Connor

Dassi Pintar

Alex Santos

Contributing Authors

Keith Macias

Lei Zhou Andrew Spencer Ryman Simangan Krista Fregoso

Legal Counsel

Stephen Adams, Office of Legal Affairs

Supporting Divisions

Planning and Technical Support Division

Enforcement 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 - 

## T ABLE OF 

## C ONTENTS

EXECUTIVE SUMMARY ..................................

................................................... ...... ES1

I. Introduction and Overview ..........................

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

A. I NTRODUCTION

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

B. O VERVIEW

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

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

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

A. S UMMARY OF R EGULATORY A UTHORITY

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

III. Public Outreach and Environmental Justice.......... .......................................... 3

A. P UBLIC O UTREACH E FFORTS

................................................... ................................ 3

B. E NVIRONMENTAL J USTICE

................................................... ..................................... 8

IV. Need for Greenhouse Gas Emission Reductions........ .................................... 8

V. On-road Vehicle Descriptions .......................

................................................... . 8

A. O VERVIEW

................................................... ................................................... ........ 8

B. H EAVY

- DUTY T RACTORS

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

C. B OX

- TYPE T RAILERS

................................................... .......................................... 10

VI. Population and GHG Contribution from Heavy-Duty Veh icles..................... 11

A. P OPULATION

................................................... ................................................... ... 11

B. GHG C ONTRIBUTION

................................................... ......................................... 15

VII. U.S. EPA SmartWay Transport Partnership ............ ....................................... 17

A. D ESCRIPTION OF P ROGRAM

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

B. S MART W AY T RACTORS

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

C. S MART W AY T RAILERS

................................................... ........................................ 20

VIII. Proposed Regulation ................................

................................................... .... 20

A. P ROPOSED R EGULATION O VERVIEW

................................................... .................... 20

B. P URPOSE

................................................... ................................................... ....... 21

C. A PPLICABILITY

................................................... ................................................... 21

D. D EFINITIONS

................................................... ................................................... ... 21

E. R EQUIREMENTS AND C OMPLIANCE D EADLINES

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

F. M AINTENANCE R EQUIREMENTS

................................................... ........................... 27- ii -

G. E XEMPTIONS

................................................... ................................................... .. 27

H. R EPORTING R EQUIREMENTS

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

I. E NFORCEMENT AND F INES

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

IX. Technological Feasibility of Control Measure ....... ........................................ 29

A. S MART W AY C ERTIFIED T RACTORS

................................................... ...................... 29

B. T RAILER A ERODYNAMIC T ECHNOLOGIES

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

C. T RACTOR AND T RAILER L OW

- ROLLING R ESISTANCE T IRES ....................................... 42

X. Alternatives Considered ............................

................................................... ... 46

A. N O A CTION

................................................... ................................................... ..... 48

B. E XPAND A PPLICABILITY

................................................... ...................................... 50

XI. Environmental Impact ...............................

................................................... .... 51

A. L EGAL R EQUIREMENTS

................................................... ....................................... 51

B. R EASONABLY F ORESEEABLE E NVIRONMENTAL I MPACTS .......................................... 52

C. R EASONABLY F ORESEEABLE M ITIGATION M EASURES .............................................. 57

D. A LTERNATIVE M EANS OF C OMPLIANCE WITH THE P ROPOSED R EGULATION ................ 57

XII. Cost and Economic Impact...........................

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

A. S UMMARY

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

B. L EGAL R EQUIREMENTS

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

C. M ETHODOLOGY FOR E STIMATING C OST AND E CONOMIC I MPACT ............................... 59

D. E STIMATED C OSTS OF THE P ROPOSED R EGULATION ............................................... 59

E. P OTENTIAL I MPACT ON A S MALL B USINESS

................................................... ........... 63

F. P OTENTIAL I MPACT ON E MPLOYMENT

, B USINESS C REATION

, E LIMINATION

, OR
E XPANSION

................................................... ................................................... .... 64

G. E STIMATED C OSTS TO L OCAL

, S TATE

, AND F EDERAL A GENCIES ............................... 65

H. C OST -E FFECTIVENESS OF THE P ROPOSED R EGULATION .......................................... 66

I. S UMMARY OF C URRENT F INANCIAL A SSISTANCE AND G RANT P ROGRAMS .................. 67

XIII. Requirements of AB 32 ..............................

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

XIV. Issues .............................................

................................................... ................ 75

A. M EXICAN B ORDER I SSUES

................................................... .................................. 75

B. O THER R ULEMAKINGS

................................................... ........................................ 76- iii -

XV. Recommendation .....................................

................................................... ..... 79

XVI. References .........................................

................................................... ............ 80

Appendix A: Proposed Regulation to Reduce Greenhou se Gas Emissions from HeavyDuty Vehicles

Appendix B: Workshop Notice Flyers

Appendix C: Emission Inventory Analysis and Result s

Appendix D: U.S. EPA SmartWay Documents

Appendix E: Fleet Summaries

Appendix F: Optional Trailer Fleet Compliance Sche dules

Appendix G: Implementation and Enforcement- iv - 

## Table of Contents (cont.)

List of Tables Page

Table III-1: Public Workshop Dates, Locations and Times............................................. 3

Table III-2: Presentations ........................

................................................... .................... 5

Table III-3: Associations, Companies and Other Org anizations Contacted.................... 5

Table VI-1: 2010 and 2020 Tractor Population and A nnual VMT in California ............. 12

Table VI-2: Percentage of Tractors with Primary Ra nge of Operation Greater than 100

Miles..............................................

................................................... .. 12

Table VI-3: Percentage of 53-Foot Box Type Trailer s .................................................. 13

Table VI-4: 2010 and 2020 Impacted Tractor Populat ion and the Corresponding Annual

VMT................................................

................................................... . 14

Table VI-5: 2010 and 2020 Impacted 53-Foot Box-Typ e Trailers................................. 15

Table VI-6: 1990, 2002-2004 Average, and 2020 Proj ected Transportation Sector GHG

Emissions (MMT CO 2 e) (ARB, 2008b) .................................... ........... 16

Table VIII-1: Proposed Tractor Requirements.......

................................................... .... 23

Table VIII-2: Proposed 2011 and Later Model Year T railer Compliance Options,

Beginning January 1, 2010.......................... ....................................... 24

Table VIII-3: Proposed Optional Large Fleet (21+) Compliance Schedule for 2010 and

Earlier Model Year 53-foot or Longer Box-Type Trail ers, Except Refrigerated-Van Trailers with Transport Refrigerat ion Units using 2003 to 2009 Model Year Engines .................... ................................. 25

Table VIII-4: Proposed Optional Compliance Schedul e for Small Trailer Fleets of 2010

and Earlier Model Year 53-foot or Longer Box-Type T railers ............. 25

Table VIII-5: Refrigerated Fleet Compliance Deadli nes ............................................... 2 6

Table IX-1: U.S. EPA Certified SmartWay Tractors...

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

Table IX-2: Fuel Savings Ranges for Trailer Aerody namic Devices (Freight Wing,

2007; Laydon, 2007; Surcel, 2007a; Surcel, 2007b) .. ........................ 38

Table IX-3: Comparison of Tire Rolling Resistance Coefficients.................................. 43

Table X-1: Alternative Regulatory Structures Consid ered............................................. 47

Table XI-1: Fuel Efficiency Improvements – Based o n Proposed Requirements ......... 54

Table XI-2: 2010, 2015, and 2020 GHG Emission Bene fits - Statewide and Nationwide

(MMT CO 2 e) ................................................. ...................................... 55

Table XII-1: Tractor and Trailer Costs .............

................................................... ........... 60

Table XII-2: Annual Maintenance Costs/Fees........

................................................... ... 61- v -

Table XII-3: Annual Operating Cost Savings........

................................................... ..... 62

Table XII-4: Owner-Operator Compliance Costs......

................................................... . 64

Table XII-5: Fiscal Year Costs for State Agencies .

................................................... ... 65

Table XII-6: Average Annualized Cost Savings......

................................................... ... 66- vi - 

## Table of Contents (cont.)

List of Figures Page

Figure V-1: Box-Type Trailers .....................

................................................... .............. 10

Figure VI-1: California GHG Emissions by Sector – 2 002-2004 Average (ARB, 2008b)16

Figure VI-2: Transportation Sector GHG Emissions – 2002-2004 Average

(179 MMTCO 2 e) (ARB, 2008b).................................... ....................... 17

Figure IX-1: SmartWay Tractors....................

................................................... ............ 31

Figure IX-2: Trailer Side Skirts ..................

................................................... ................ 35

Figure IX-3: Adamworks Aeromax Retractable Fairing ................................................ 36

Figure IX-4: Front Trailer Gap Fairings...........

................................................... ........... 37

Figure IX-5: Rear Trailer Fairings................

................................................... .............. 38

Figure IX-6: Contributors to Rolling Resistance (M ichelin, 2002)................................. 44

Figure XI-1: Statewide GHG Emissions With and With out the Regulation ................... 55ES1

EXECUTIVE SUMMARY

The State of California has traditionally been a pi oneer in efforts to reduce air pollution, dating back to 1963 when the California New Motor Vehicle Pollution Control Board adopted the nation’s first motor vehi cle emission standards. In 2004, ARB continued its tradition of leadership with the adoption of the first greenhouse gas (GHG) emission reduction measure in the nation, app licable to light-duty vehicles. The staff proposal presented in this Initial Statement of Reasons reduces GHG emissions from another category of motor vehicles that substa ntially contributes to human GHG emissions: heavy-duty vehicles (HDVs).

Climate Change Overview

While the Earth’s natural climate is dynamic and co nstantly changing, the climate change observed over the last one-and-one-half cent uries seems to differ in both its rate and its magnitude. Many sources of data indic ate that the Earth is warming faster than at any time in the last millennium. For examp le, 11 of the last 12 years from 1995 to 2006 rank among the 12 warmest years in instrume ntal record of global surface temperatures (IPCC, 2007). As the global mean surf ace temperature increases, significant adverse effects may be observed: decre ased water supply, higher sea levels, changed agricultural patterns, altered ecos ystems, and worse air quality.

Global temperatures have been linked to the GHG eff ect, where certain gases in the lower atmosphere absorb radiation released by the E arth’s surface that was heated by solar radiation. While the GHG effect is important in maintaining the temperature of the Earth’s lower atmosphere, the addition of more GHG emissions into the atmosphere due to human activities may be causing the increase in the average global ambient temperature. Burning of fossil fuels, agriculture, use of refrigeration systems, and other

human activities release GHG emissions.

The transportation sector is the largest contributo r of human GHG emissions in California: 38 percent of total carbon dioxide equ ivalent (CO 2 e) emissions in 2004. Of this sector, the largest contributing category was that of passenger vehicles at 74 percent of the total transportation CO 2 e emissions. The second largest contributing category was that of HDVs, responsible for 20 perce nt of the total transportation

emissions.

Regulatory Authority

The California Global Warming Solutions Act of 2006 (AB 32) established requirements for a comprehensive program of regulatory and marke t mechanisms to achieve real, quantifiable, and cost-effective reductions of GHG emissions. AB 32 gave ARB responsibility for monitoring and reducing GHG emis sions. It requires ARB and other state agencies to adopt regulations and other requi rements that would reduce, by 2020, statewide GHG emission levels to the equivalent of 1990 levels. This represents aES2

reduction of about 25 percent. Further, by Executi ve Order the Governor has directed that GHG emission levels be reduced to 80 percent b elow 1990 levels by 2050. The 2020 goal establishes an aggressive, but achievable , mid-term target, and the 2050 goal represents the level scientists believe is nec essary to reach in order to stabilize the

climate.

To swiftly address GHG reductions in the near-term, AB 32 also directs ARB to identify a list of early action measures to be adopted by th e Board and made enforceable by January 1, 2010. In 2007, the Board identified 44 early action measures, consisting of potential regulations affecting motor vehicles, fue ls, refrigerant in cars, and many other sources. Included were nine discrete early action measures for which the Board would adopt regulations by the end of 2009. The proposed Heavy-Duty Vehicle Greenhouse Gas Emission Reduction Regulation is one of the nin e discrete early action measures.

Federal SmartWay Partnership Program

The proposed regulation references a federal volunt ary program called the United States Environmental Protection Agency (U.S. EPA) S martWay Partnership Program. The U.S. EPA SmartWay Partnership Program aims to i mprove energy efficiency, reduce GHG and air pollutant emissions, and improve energy security of the ground freight movement system. Under the SmartWay progra m, U.S. EPA certifies tractors

and trailers that have been demonstrated to be more fuel efficient than their traditional counterparts. At this time, there are SmartWay spe cifications for tractors with sleeper cabs and for 53-foot or longer dry-van trailers, an d therefore, only these products can be certified by original equipment manufacturers un der the SmartWay program. The SmartWay program also approves individual aerodynam ic equipment for trailers and efficient (low-rolling resistance) tires for tracto rs and trailers.

Regulatory Proposal

The proposed regulation reduces GHG emissions by im proving long-haul HDV fuel efficiency. A more efficient HDV uses less fuel, a nd as a result, emits less GHG emissions. A HDV consists of a heavy-duty tractor (tractor), and a trailer. The proposed regulation requires new and existing long- haul on-road tractors pulling 53-foot or longer box-type trailers and 53-foot and longer box-type trailers pulled by tractors, which operate on California highways, to be equippe d with SmartWay approved aerodynamic technologies and low-rolling resistance tires. For purposes of the proposed regulation, a box-type trailer is a dry-va n trailer or a refrigerated-van trailer. The proposed regulation does not apply to tractors pulling other types of trailers, e.g., box-type trailers of lengths shorter than 53 feet, or to tractors pulling flatbeds, or logging trailers, drop-frame trailers, curtain-side trailer s, or chassis trailers hauling shipping containers. Also exempt from the requirements of t he regulation are authorized emergency vehicles and military tactical support ve hicles, as well as short-haul and drayage tractors, as defined in the proposal.

Proposed Requirements for TractorsES3

Beginning January 1, 2010, a 2011 and subsequent mo del year tractor with a sleeper berth that pulls a 53-foot or longer box-type trail er on a California highway would be required to be a U.S. EPA certified SmartWay tracto r. As noted previously, SmartWay does not currently certify a tractor without a slee per berth, i.e., day cab, and thus, these tractors would not be required to be SmartWay certi fied. In addition, low-rolling resistance tires that meet U.S. EPA SmartWay specif ications would be required beginning January 1, 2010, for a 2011 and subsequen t model year tractor regardless of whether it has a sleeper berth or not.

Beginning January 1, 2012, a 2010 and earlier model year tractor with or without a sleeper berth that pulls a 53-foot or longer box-ty pe trailer on a California highway would be required to be equipped with low-rolling r esistance tires. This would be the only retrofit requirement for these tractors, and a llows most 2010 or earlier model year tractors to use their existing tires for the remain der of their useful life before replacing them with low-rolling resistance tires.

Proposed Requirements for Trailers

Beginning on January 1, 2010, a 2011 and newer 53-f oot or longer box-type trailer pulled by a tractor on a California highway would b e required to be either (1) a U.S. EPA certified SmartWay trailer or (2) retrofitted with SmartWay approved technologies. The first option, to use a U.S. EPA certified SmartWay trailer, is currently only available for dry-van trailer applications. U.S. EPA has defined specifications for this type of trailer, and several manufacturers have already certified mo dels. For refrigerated-van trailers, the second option, to retrofit with SmartWay approv ed technologies, would be the available compliance approach. In the future, the SmartWay program may expand to cover refrigerated trailers, as well as other types of trailers, potentially making the first option (above) available for refrigerated trailers.

2010 and earlier model year 53-foot or longer box-t ype trailers that will be pulled by tractors on California highways would be required t o be retrofitted with SmartWay approved technologies by January 1, 2013. The retr ofit requirements would be identical to the second option for 2011 and subsequent model year trailers, described above. In lieu of meeting the January 1, 2013 compliance date , the trailer owner could choose to comply with an optional trailer fleet compliance sc hedule only if it meets the following conditions: (1) submits a compliance plan by the d ue date, (2) meets its annual commitments for retrofitting trailers, and (3) allo ws ARB to audit records periodically.

There are two proposed optional trailer fleet compl iance schedules that would be based on trailer fleet size: the large fleet compliance s chedule and the small fleet compliance schedule. The large fleet compliance schedule woul d apply to fleets with 21 and greater trailers. A six year phase-in is proposed for large fleets, with the first compliance year starting in 2010 and the last compl iance year ending in 2015. For added flexibility, a trailer owner could participat e in an early compliance option, in which credit is given for 2010 and earlier model year box -type trailer that are compliant by December 31, 2009. The early compliance credit cou ld be used to delay the retrofit of

some affected trailers until 2016.ES4

The small fleet compliance schedule would apply to trailer fleets with 1 to 20 trailers. Compliance would be delayed, beginning in 2013 and completed in 2016.

Also proposed is a delayed compliance provision for refrigerated-van fleets. This provision would apply to 2003 to 2008 model year re frigerated-van trailers equipped with diesel-fueled transport refrigeration units (T RUs). The flexibility proposed for TRUs is because owners of these vehicles will be subject ed to another ARB regulation, called

the Airborne Toxic Control Measure for In-Use Diese l-Fueled Transport Refrigeration Units and TRU Generator Sets, and Facilities Where TRUs Operate (TRU Rule), which will require replacement or retrofit of the TRU con current with the proposed optional compliance schedules. A three year compliance sche dule is proposed for these trailers with the first compliance year starting in 2017 and the last compliance year ending in

2019.

Requirements for the Owners, Drivers, Motor Carrier s, California-based Brokers, and California-based Shippers

The proposed regulation would establish the followi ng requirements for each of the parties listed below. A notice of violation would be issued to each of the parties listed below if a tractor or trailer subject to the propos ed regulation is found to be noncompliant.

• Owners of tractors pulling 53-foot or longer box-t ype trailers on California highways: Tractor owners would be responsible to ensure that the tractors subject to the proposed regulation comply with the proposed requir ements within the proposed compliance schedule. Owners would also need to ens ure that aerodynamic devices, if applicable, and low-rolling resistance tires are used and maintained in good operating condition. This would ensure that the Sm artWay components are operating as designed.

• Owners of 53-foot or longer box-type trailers pull ed by tractors on California highways: Like owners of tractors subject to the p roposed regulation, trailer owners would be responsible for ensuring that the applicab le trailers comply with the proposed requirements within the proposed complianc e schedule, as well as ensuring that the equipment is maintained in good o perating condition. Owners of affected trailers would also be required to submit information to ARB if they choose to participate in an optional compliance schedule.

• Drivers of tractors pulling 53-foot or longer box- type trailers on California highways: Drivers would be responsible for ensuring that trac tors and trailers to be driven are in compliance with the proposed regulation and meet th e proposed good operating

condition criteria.

• Motor carriers and California-based brokers that d ispatch tractors pulling 53-foot or longer box-type trailers on California highways: M otor carriers and California-based brokers would be responsible for ensuring that the tractors and trailers they dispatch to pick up freight comply with the proposed regulat ory requirements.ES5

• California-based shippers that ship freight in 53- foot or longer box-type trailers pulled by tractors on California highways: Shippers would be responsible for ensuring that any freight being picked up at their facility is do ne so only by compliant tractors and

trailers.

Enforcement

ARB enforcement staff would enforce the requirement s of the proposed regulation as

follows:

• Drivers, owners of tractors and trailers, and moto r carriers could receive penalties upon issuance of a notice of violation (NOV) as det ermined at roadside inspection locations, facility inspections, and audits.

• California-based brokers and California-based ship pers would be notified of motor carriers and tractor trailer owners that they have contracted with, that have failed to settle previously issued NOVs. The purpose of this notification would be to give them the opportunity to take the necessary actions to pr event future violations. If, however, ARB enforcement staff finds that the Calif ornia-based broker or shipper continues to use delinquent motor carriers, tractor owners, or trailer owners, the California-based broker or shipper could be subject to penalties.

Environmental Impact

The statewide GHG emission benefits of the proposed regulation are projected to be 1.0 million metric tons (MMT) of CO 2 -equivalent (CO 2 e) emissions in 2020. Reductions of GHG emissions would extend beyond the California st ate borders as California

interstate trucks that travel outside California an d out-of-state trucks that travel onto California highways are subjected to the proposed r egulation. Nationwide benefits of the proposed regulation are projected to be 6.7 MMT of CO 2 e emissions in 2020. From 2010 to 2020, the cumulative GHG emission benefits are estimated to be approximately

7.8 MMT CO 2 e statewide and 52.1 MMT CO 2 e nationwide.

In addition to GHG benefits, reducing aerodynamic d rag and rolling resistance will also

reduce NOx emissions. Statewide NOx emission reduc tions are projected to be 4.3 and 1.4 tons per day in 2014 and 2020, respectively.

Economic Impact

The proposed regulation would impact trucking busin esses that own tractors and 53- foot or longer box-type trailers subject to the pro posed regulation. While compliance with the proposed regulation would require an initi al capital cost, it is expected that a cost savings would ultimately result due to the inc rease in HDV fuel efficiency and the resultant usage of less fuel. The average estimate d cost increase for the purchase of a SmartWay certified tractor equipped with aerodynami c devices and low-rolling resistance tires is $2,100 per tractor. The estima ted average cost of trailer complianceES6

for the initial purchase and installation of aerody namic technologies and low-rolling resistance tires is approximately $2,900 per traile r. In addition, annual maintenance costs for inspection and repair of installed aerody namic technologies, and replacement and retread costs for low-rolling resistance tires, is estimated to be about $143 for the tractor and $120 for the trailer. Therefore, the i nitial capital cost for a tractor-trailer combination would average about $5,000, with an ann ual increased maintenance cost of $263. However, the industry average trailer-to- tractor ratio is estimated to be 2.5-to-1 per owner. This translates into an average cost of $9,200 per owner.

Operating cost savings resulting from the fuel effi ciency improvement of compliant tractors and trailers are anticipated to be substan tial. A tractor-trailer combination that complies with the proposed regulation is expected t o realize a 7 to 10 percent fuel economy gain, depending on the types of tractor and trailer improvements. Assuming this range, the fuel savings would be approximately $4,000 to $5,700 per year for a

tractor-trailer combination. 1 The fuel savings due to the proposed requirements would allow the owner to recover the initial capital and maintenance costs for both the tractor and trailer in less than 1.5 years. If an owner ha d more trailers than tractors, i.e., a trailer-to-tractor ratio of more than one, it would require additional time for the payback of the initial capital costs. Businesses that are required to equip trailers with aerodynamic technologies and low-rolling resistance tires but do not own or operate tractors (including owners of trailer fleets and ce rtain shippers) may not directly recoup initial costs if they do not directly pay for fuel. However, staff anticipates that at least some of the fuel savings from trailers equipped wit h SmartWay devices and tires will be indirectly shared by trailer owners through price s tructures that reflect fuel savings

associated with these trailers.

The total estimated lifetime equipment cost of comp lying with the proposed regulation is about $10.4 billion. However, over the same period of time, the total estimated cost (fuel) savings are about $14.7 billion. Therefore, a net savings of approximately $4.3 billion in 2008 dollar values is expected. The tot al estimated statewide lifetime cost of complying for California based tractors and trailer s is about $0.5 billion and the cost savings over the same period of time are $1.1 billi on. This yields a net statewide cost savings of almost $0.6 billion. This net cost savi ngs would be realized by fleet operators and owner-operators of compliant tractors and trailers and are directly attributed to operating cost savings associated wit h improved fuel economy.

Some financial assistance and grant programs are av ailable to aid tractor and trailer owners in complying with the proposed requirements. These programs are available through the federal, state, and local governments; they provide technical assistance, loans for the purchase of fuel savings and emission s reducing vehicles and technologies, and grants to assist eligible partner s to adopt diesel emissions reduction

1 The assumptions for this calculation are as follow s: a baseline fuel economy of 5.8 miles per gallon, an average long-haul mileage accrual rate o f 125,000 miles per year, 84 percent of the vehicle miles traveled at highway speed benefit fully from the aerodynamic devices, and a projected diesel fuel cost of $3.14 per gallon. If the cost per gallon in diesel fuel is higher than $3.14, the fuel savings due to the proposed re gulation would be proportionately greater.ES7

strategies. In particular, in California, $48 mill ion has been appropriated to fund a heavy-duty vehicle air quality loan guarantee progr am (anticipated loan values of $300 million) to encourage early compliance by on-road f leets affected by this proposed regulation and the proposed In-Use Truck and Bus Re gulation (particulate matter and NOx reduction). In developing this air quality loa n program, ARB staff is currently coordinating with the State Treasurer’s Office and private sector banks to tailor a program to meet the specific needs of the heavy-dut y vehicle sector.

Staff Recommendation

ARB staff recommends that the Board adopt the regul ation as proposed in the Initial Statement of Reasons. The proposed regulation is i ntended to achieve feasible and

cost-effective GHG emissions from HDVs.1

I. I NTRODUCTION AND O VERVIEW

A. Introduction

The mission of the California Air Resources Board ( ARB or Board) is to protect public health, welfare, and ecological resources through t he effective and efficient reduction of air pollutants, while recognizing and considering t he effects on the economy of the State (ARB, 2002). ARB’s vision is that all individuals in California, especially children and the elderly, can live in a healthful environment – free from harmful exposure and the effects of air pollution. To this end, staff is pr oposing a regulation to reduce greenhouse gas (GHG) emissions from long-haul heavy-duty vehic les (HDVs). These HDVs are commonly used for freight transport and consist of a heavy-duty tractor (tractor), and a trailer. The proposed regulation affects 53-foot o r longer box-type trailers and the tractors that pull them, when operating on Californ ia highways.

B. Overview

The proposed regulation would reduce GHG emissions by requiring new and existing on-road tractors and trailers to be equipped with t echnologies that improve fuel efficiency and reduce GHG and oxides of nitrogen (N Ox) emissions, when operating on California highways. The proposed regulation refer ences a federal voluntary program,

called the United States Environmental Protection A gency (U.S. EPA) SmartWay Transport Partnership, which is designed to improve the environmental performance associated with the overall ground freight delivery system in the United States. In particular, the program “certifies” or approves tec hnologies, such as aerodynamic equipment and low-rolling resistance tires that red uce GHG emissions and improve fuel efficiency of HDVs. Currently, the federal program is limited to HDVs equipped with sleeping berths pulling 53-foot and longer box-type trailers.

The proposal would require the use of aerodynamic e quipment and low-rolling resistance tires beginning January 1, 2010. Certai n types of HDVs will be exempted from the proposed regulatory requirements, includin g short-haul trucks and drayage

trucks.

Compliance with these requirements would be mandato ry for those parties that use the applicable tractor and trailer to transport freight , including the owner, driver, motor carrier, California-based broker, and California-ba sed shipper. These requirements would pertain to all applicable tractors and traile rs that operate on California highways regardless of where the vehicles are domiciled.

The statewide GHG emission benefits of the proposed regulation are projected to be 1.0 million metric tons of carbon dioxide equivalent (M MT CO 2 e) 2 emissions in 2020. In

2 Carbon dioxide equivalent (CO 2 e) is a metric measure used to compare the emission s from various GHGs based upon their global warming potent ial. Global warming potential (GWP)

is the index used to translate the level of emissio ns of various gases into a common measure in order to compare the relative radiative forcing of different gases without directly calculating the changes in atmospheric concentrations. GWPs ar e calculated as the ratio of the radiative forcing that would result from the emissi ons of one kilogram of a GHG to that from2

addition to GHG benefits, reducing aerodynamic drag and rolling resistance will also

reduce NOx emissions. Statewide NOx emission reduc tions are projected to be 4.3 and 1.4 tons per day in 2014 and 2020, respectively.

The proposed regulation would impact trucking busin esses that own tractors and 53- foot or longer box-type trailers subject to the pro posed regulation. While compliance with the proposed regulation would require an initi al up-front capital cost, fuel savings

will more than offset the initial cost. The initia l capital cost for a tractor-trailer combination would average about $5,000 with an annu al increased maintenance cost of $263.

Operating cost savings resulting from the fuel effi ciency improvement of compliant tractors and trailers is anticipated to be substant ial. Fuel savings for a compliant tractortrailer combination are expected to be 7 to 10 perc ent. Thus, fuel savings would be approximately $4,000 to $5,700 per year. 3 The fuel savings due to the proposed requirements would allow the owner to recover the i nitial capital and maintenance costs for both the tractor and trailer in less than 1.5 y ears. If an owner had more trailers than tractors, i.e., a trailer to tractor ratio of more than one, it would require additional time for the payback of the initial capital costs. Owners o f only trailers would not benefit directly from fuel savings.

The total estimated statewide lifetime cost of comp lying with the proposed regulation is about $10.4 billion. However, over the same period of time, the total estimated fuel cost savings is about $14.7 billion. Therefore, a net s avings of approximately $4.3 billion in 2008 dollar values is expected.

II. R EGULATORY A UTHORITY

A. Summary of Regulatory Authority

California first addressed climate change in 1988 w ith the passage of AB 4420 directing the California Energy Commission, in consultation w ith ARB and other agencies, to study global warming impacts to the state and devel op an inventory of GHG emission sources. Since then, many other pieces of legislat ion have been passed to continue to research global warming impacts, to establish and u pdate GHG emission inventories, and to develop mitigation efforts. In particular, AB 1493, signed on July 22, 2002, required ARB to develop and adopt regulations that achieve the maximum feasible and cost-effective reduction of GHGs from light-duty ve hicles. This resulted in the first

emission of one kilogram of CO 2 over a period of time (usually 100 years). For ex ample, the

GWP of CO 2 , methane, and nitrous oxide is 1, 21, and 310, res pectively. CO 2 equivalents are commonly expressed as "million metric tons of c arbon dioxide equivalents (MMT CO 2 e)".

3 The assumptions for this calculation are as follow s: a baseline fuel economy of 5.8 miles per gallon, an average long-haul mileage accrual rate o f 125,000 miles per year, 84 percent of the vehicle miles traveled at highway speed benefit fully from the aerodynamic devices, and a projected diesel fuel cost of $3.14 per gallon. If the cost per gallon of diesel fuel is higher than $3.14, the fuel savings due to the proposed re gulation would be proportionately greater.3

regulation in the nation, adopted by ARB in Septemb er 2004, to control GHG emissions

from motor vehicles.

In 2006, the California Global Warming Solutions Ac t of 2006 (AB 32) was signed into law, creating a comprehensive, multi-year program t o reduce GHG emissions in California (Nunez, 2002). It calls for the reducti on of GHG emissions to 1990 levels by the year 2020, a reduction of about 25 percent. In addition, the Governor issued an Executive Order directing state agencies to reduce GHG emissions to 80 percent below 1990 levels by 2050. The 2020 goal establishes an aggressive, but achievable, midterm target, while the 2050 goal represents the lev el scientists believe must be reached

in order to stabilize the climate.

To swiftly address GHG reductions in the near-term, one requirement of AB 32 directed ARB to identify a list of early action measures tha t could be adopted by the Board by January 1, 2011. In 2007, the Board identified 44 such early action measures including potential regulations affecting motor vehicles, fue ls, refrigerant in cars, and many other sources, including nine “discrete” early action mea sures, which would be adopted and enforceable by January 1, 2010 (ARB, 2007). The pr oposed Heavy-Duty Vehicle

Greenhouse Gas Emission Reduction Measure is one of these discrete early action

measures.

III. P UBLIC O UTREACH AND E NVIRONMENTAL J USTICE

A. Public Outreach Efforts

During the development of the regulatory proposal, ARB staff conducted numerous outreach efforts to inform affected parties of the proposal and to obtain stakeholder comments. Outreach efforts included public worksho ps, individual meetings, and email and telephone contacts.

1. Public Workshops

Three separate series of workshops were conducted j ointly with another regulatory proposal, the In-use On-road Heavy-duty Diesel-fuel ed Vehicle Regulation (Truck and Bus Rule). The first series, held in January and F ebruary 2008, consisted of ten workshops in eight locations throughout California. The second series, held in May and June 2008, included twelve workshops in eight Calif ornia locations. The third series, held in July and August 2008, included eleven works hops in eight locations throughout California. In addition, staff conducted two serie s of independent workshops focused exclusively on the proposed regulation, one in June 2008 and the other in July and August 2008. Table III-1 provides a listing of the dates, times and locations of the workshops.

Table III-1: Public Workshop Dates, Locations and Times

Date Location Time

January 28, 2008 Sacramento Day4

January 30, 2008 Fresno Day January 31, 2008 El Monte Day January 31, 2008 Riverside Evening February 4, 2008 San Diego Day February 4, 2008 El Centro Evening February 6, 2008 Redding Day February 6, 2008 Redding Evening February 11, 2008 Berkeley Day February 11, 2008 Berkeley Evening May 21, 2008 El Monte Day May 27, 2008 San Diego Day May 27, 2008 El Centro Evening May 29, 2008 Riverside Evening May 30, 2008 San Jose Day May 30, 2008 San Jose Evening June 2, 2008 Redding Day June 2, 2008 Redding Evening June 4, 2008 Sacramento Day June 4, 2008 Sacramento Evening June 10, 2008 Fresno Day June 10, 2008 Fresno Evening July 22, 2008 San Diego Day July 22, 2008 El Centro Evening July 24, 2008 El Monte Day July 28, 2008 Redding Day July 28, 2008 Redding Evening July 30, 2008 San Jose Day July 30, 2008 San Jose Evening July 31, 2008 Sacramento Day August 4, 2008 Riverside Evening August 5, 2008 Fresno Day August 5, 2008 Arvin Evening June 6, 2008 Sacramento Day June 12, 2008 El Monte Day June 13, 2008 San Diego Day July 28, 2008 Sacramento Day July 29, 2008 San Diego/Otay Mesa Day August 5, 2008 El Monte Day

In order to ensure that Spanish-speaking stakeholde rs, particularly those involved in commerce at the U.S.-Mexican border, were able to u nderstand the proposal and provide their comments, the draft regulation and pr esentation documents were translated into Spanish. In addition, the public w orkshop held in San Diego/Otay Mesa on July 29, 2008, was conducted with Spanish interp reters. Efforts to reach the5

attendees to inform them about the upcoming worksho p included distributing flyers translated into Spanish at a California Highway Pat rol border-crossing facility and through the Otay Mesa Chamber of Commerce (See Appe ndix B).

2. Individual Meetings

ARB staff conducted several presentations and off-s ite meetings targeted at specific stakeholder groups to inform them about the propose d regulation and obtain their participation and feedback in the process. These p resentations were given at the following locations or events:

Table III-2: Presentations

Date Organization/Event

June 9, 2008 Greening the Supply Chain Conference July 17, 2008 Distribution Management Association - Inland Empire Chapter August 6, 2008 International Warehouse Logistics

Association July 30, 2008 Otay Mesa Chamber of Commerce September 12, 2008 Ralphs Grocery Distribution Cent er September 18, 2008 Los Angeles area logistics facil ities tour

3. Other Outreach

Staff contacted more than 60 industry associations, representing the trucking, logistics, manufacturing, wholesale, and retail industries, as well as individual industry members, to inform them of the proposal and invite them to p rovide comments. Staff also met with various stakeholders individually to gather informa tion, to discuss the proposed requirements, and to discuss issues of concern. Th ese stakeholders included motor carriers, the trucking industry, warehouse and logi stics companies, and equipment

manufacturers. Staff met with manufacturers of tra iler aerodynamic technologies and manufacturers of low-rolling resistance tires to un derstand their product offerings, as well as with managers of fleets in the U.S. and Can ada that currently use the types of aerodynamic devices required by this regulation, to gain first-hand knowledge of their experiences with the equipment. Summaries of fleet meetings can be found in Appendix E. Table III-3 provides a list of the vari ous associations, companies, and other organizations contacted.

Table III-3: Associations, Companies and Other Org anizations Contacted

ACT Research AdamWorks Inc. ADS Logistics LLC Advance Auto Parts Advanced Logistics & Distribution Systems Affiliated Warehouse Companies

American Chain of Warehouses Inc American Home Furn ishings Alliance American Logistics Association American Supply Asso ciation6

American Trucking Association (ATA) American Wholes ale Marketers

Association Appliance Parts Distributors Association

(APDA) Association of Home Appliance

Manufacturers AT Dynamics B& B Trucking Bakersfield Quality Distribution Center Business En vironmental Resource Center (BERC) Best Buy Co. Inc. Best Logistics Inc Brent Redmond Transportation Brockway Smith Brookvale International Corp Budway Trucking & Ware house Bureau of Home Furnishings CA Manufacturers Technol ogy Association

CA Retailers Association CA Wholesale Marketers Ass oc Cal Chamber of Commerce California Distribution Cen ters

California Furniture Manufacturers

Association California Grocers Association

California Trucking Association (CTA) California Wa rehouse Association

Carry Transit Cascade Drayage & Warehouse Cascades Coalition for Responsible Transportation

Containerization & Intermodal Institute

(CII) Cooperative Grocers' Information Network (CGIN) Costco Wholesale Council of Supply Chain Management

Professionals CVS Caremark Daimler/Freightliner Dependable Logistics Services Distribution & LTL Ca rriers Association Distribution Management Association Environment Can ada, Environmental Stewardship Branch Falcon Transport Food Industry Association Executiv es (FIAE) Food Ingredient Distributors Association

(FIDA) Freight Wing

Global Cold Chain Alliance/International Assoc. of Refrigerated Warehouses Great Dane

Hiner Transport Home Depot Hy-Vee foods IKEA North America Inland Cold Storage Inland Empire Economic Partners hip

Intermodal Association of North America Internation al

International Foodservice Distributors

Association International Society of Logistics

International Warehouse Logistics Association (IWLA) JBHunt

J-Line Transport Kenworth Laydon Composites Longs Drug Los Angeles Cold Storage Co Lowes

Mexican American Grocers Association National Assoc iation of WholesalerDistributors7

National Association of Chain Drug Stores National Association of Manufacturers

National Electronic Distributors

Association National Grocers Association

National Home Furnishings Association

(NHFA) National Motor Freight Traffic Association

National Private Truck Council National Retail Fede ration National Transportation & Logistics

Association New Century

Normandin Transport North American Transportation C ouncil Nose Cone OOIDA (Owner Operator Independent Drivers Assoc) Otay Mesa Chamber of Commerce PAFCO (Pacific Americ an Fish Co, Inc)

Performance Warehouse Association

(PWA) Peterbilt/Paccar

Private Label Manufacturers Association Quest Globa l Ralphs/Food 4 Less (Kroger) Retail Industry Leaders Association (RILA)

Rite Aid RL Jones Customhouse Brokers Safeway Inc Sandag Schneider National, Inc Sears Holdings Secretaria del Medio Ambiente y Recursos

Naturales (SEMARNAT) Sherwin Williams

Silver Eagle Manufacturing Co. Stater Bros Holdings Inc Stockton Chamber of Commerce Supervalu Inc (Alberts ons) Supply Chain & Logistics Association of

Canada Swift

Target Corp Textile Rental Services Association

The National Customs Brokers &

Forwarders Association of America The National Industrial Transportation League Toy Industry Association (TIA) Toys R Us

Trailmobile Trailwood Transport

Trans Am Transload Distribution Association Transportation Intermediaries Association Transtex Composite Truckload Carriers Association Twin City Unicold Corporation US Customs border inspection fa cility Otay

Mesa US Growers Cold Storage Inc US WTO, National Instit ute of Standards & Technology (NIST) Utility Trailer Van Eerden Trucking Ventura Transfer Company Volvo Walgreens Walmart Warehouse Specialists Inc Warehousing Education & R esearch

Council West Coast Warehousing Western Home Furnishings Ass ociation, Whole Foods Market Inc. World Food Logistics Organi zation Yandell Truckaway, Inc Hendrickson Trucking8

Tire Retread Information Bureau Marangoni Retreadin g Systems Bridgestone Bandag Tire Solutions

B. 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 (Policies), which formally established a framework for incorporating environmental justice into the ARB’s programs, cons istent with the directives of state law. Environmental justice is defined as the fair treatment of people of all races, cultures, and incomes with respect to the developme nt, adoption, implementation, and enforcement of environmental laws, regulations, and policies (ARB, 2001). ARB recognizes its obligation to work closely with all stakeholders – communities, environmental and public health organizations, indu stry, business owners, other agencies and all other interested parties – to succ essfully implement these Policies. These Policies apply to all communities in Californ ia, but recognize that environmental justice issues have been raised more in the context of low-income and minority

communities.

The proposed regulation would benefit the people of California by reducing fuel consumption of tractors pulling 53-foot or longer b ox-type trailers throughout the state, and reducing emissions of GHGs and criteria polluta nts in all communities throughout California, including those with environmental just ice concerns.

IV. N EED FOR G REENHOUSE G AS E MISSION R EDUCTIONS

Human, or anthropogenic, activities have altered th e chemical composition of the atmosphere through the buildup of GHG emissions. O ver the past century the Earth’s northern hemisphere has warmed at a faster rate tha n at any other time over the last millennium. The potential impacts of a warming of the planet include: a rise in sea level, spread of certain diseases out of their usual geogr aphic ranges, loss of agricultural production, decreased water supply, altering of eco systems, increased strength and frequency of storms, extreme heat events, air pollu tion episodes, and the consequences of these effects on the economy. As a result, ther e is an urgent need to curtail GHG emissions from all anthropogenic sources where tech nologically feasible and economically practicable. (IPPC, 2007; ARB, 2004)

V. O N

- ROAD V EHICLE D ESCRIPTIONS

A. Overview

This chapter provides general background informatio n on tractors and trailers, and describes the vehicles that will be subjected to th e proposed regulation.9

B. Heavy-duty Tractors

1. Background

An on-road tractor can pull any one of a myriad of trailers to pick up and deliver freight. A long-haul tractor typically has three axles: a fr ont, or steer, axle that uses two wheels, and two rear, or drive, axles that have double whee ls on each side of the axle. Thus, a three-axle tractor may have ten wheels. A tractor may also have only two axles (a steer axle and drive axle), which is easier to maneuver i n tight areas, but has less loadcarrying capacity. Although dual wheels for the dr ive axles are the most common configuration, there is also limited use of single wide-base tires (also known as “super singles”) on each end of an axle, due to their fuel economy benefits. A tractor is also equipped with a coupling known as a fifth wheel, wh ich is used to join it with the trailer. Some tractors have a moveable fifth wheel, also cal led a slider, which can move

forward or backward on the tractor frame. The slid er helps distribute the weight of a loaded trailer more evenly between the tractor and trailer axles, in order to stay within federal axle weight limits and bridge laws.

Typically, a tractor that pulls a trailer for a lon g haul has a cab that is designed for driver comfort and will contain a roomy sleeping berth, or sleeper. A long-haul tractor that is pulling trailers will typically operate at highway speeds during the majority of its trip. Another type of tractor may be used for in-city del iveries and day trips where it may return daily to the location where it is garaged. These tractors are termed local or short haul. A short-haul tractor typically operates at c ity speeds, with some highway driving.

While HDV exhaust emissions have been regulated sin ce 1973 in the United States, GHG emissions from HDVs are currently unregulated. However, recent voluntary efforts to increase fuel efficiency have reduced GH G emissions. For example, tractors have recently been designed with more aerodynamic f eatures such as rounded rather than flat edges on the cab in order to reduce wind resistance. Some tractors have aerodynamic designs on the fuel tank, exhaust stack , and other protruding parts. These designs reduce aerodynamic drag, which, in turn, re duces needed engine power to propel the vehicle forward. Since there are, as ye t, no regulatory requirements established to mandate aerodynamic features on trac tors, the degree of aerodynamic improvement varies from manufacturer to manufacture r and within a manufacturer’s

own line of trucks.

2. Tractor Manufacturers

There are many manufacturers of tractors subject to the proposed regulation. They include Freightliner, Navistar International, Kenwo rth, Mack, Peterbilt, and Volvo Trucks. Some tractor manufacturers also manufacture engines for their tractors, but most manufacturers design vehicles to accept engines man ufactured by other companies.

3. Commercial Truck Classifications

Commercial truck classifications are based on the v ehicle’s gross vehicle weight rating. The gross vehicle weight rating is the value specif ied by the manufacturer as the maximum design loaded weight of a single vehicle, w hich means the total weight of the10

tractor and the trailer with freight. The proposed regulation applies only to Class 7 and 8 tractors. A Class 7 tractor has a gross vehicle weight rating of 26,001 to 33,000 pounds, and a Class 8 tractor is over 33,000 pounds gross vehicle weight rating. Most

of the affected vehicles are Class 8 tractors.

C. Box-type Trailers

1. Background

There are many different types of trailers used on the road to carry freight. Most trailers have two axles, with dual wheels on each side of th e axle, and thus have eight wheels. A trailer may be equipped with a moveable tandem ax le, also called a slider, which

mates with the fifth wheel of the tractor. Like th e tractor’s fifth wheel, the tandem axle can be moved forward or backward to more evenly dis tribute the weight of the loaded

trailer between the tractor and trailer’s axles and to meet bridge laws.

The most common type of trailer on the road is the box-type trailer, also called a van trailer. Types of box-type trailers include dry-va n trailers and refrigerated-van trailers, also called reefers (see Figure V-1). A dry-van tr ailer, which hauls dry freight such as appliances, clothing, and furniture, does not requi re a temperature-controlled environment. A refrigerated-van trailer has a refr igeration or heating unit built into the trailer to maintain precise temperatures and is use d to haul frozen food, fresh produce, hot or warm food, and other perishable items.

Figure V-1: Box-Type Trailers

Other common types of trailer designs include the c urtain-side trailer, chassis trailer, drop-frame trailer, tanker, and flatbed trailer. T he proposed regulation does not apply to these types of trailers. As with tractors, current trailer designs incorporate some aerodynamic features, such as rounded or tapered fr ont corners and smooth, rather than ribbed sides, but the use of these features is inconsistent from manufacturer to

manufacturer and from model to model.11

2. Trailer Manufacturers

Manufacturers of 53-foot box-type trailers will be affected by the proposed regulation. These manufacturers include Utility Trailer Manufac turing Company, Wabash National Corporation, Great Dane Trailers, Trailmobile Corpo ration, Hyundai Translead, and other box-type trailer manufacturers.

VI. P OPULATION AND GHG C ONTRIBUTION FROM H EAVY -D UTY V EHICLES

A. Population

Assessing the number of tractors and trailers impac ted by the rule was a challenge because the impacted tractors are a subset of the o verall fleet and no complete database exists for trailers. Thus, as an example, for the tractors, staff had to take into account the percentage of total tractors that are l ong-haul, and of those, the number that pull 53-foot or longer box-type trailers. Sta ff’s methodology and the assumptions used to determine the tractor and trailer populatio n impacted by the proposal are discussed below. A variety of data sources were us ed to establish the tractor and trailer population impacted by the proposed rule. These in clude the following: ARB Motor Vehicle Emissions Inventory (ARB Inventory), U.S. B ureau of Census 2002 Vehicle Inventory and Use Survey (VIUS), Americas Commercia l Transportation Research Company (ACT Research), U.S. Bureau of Census Curre nt Industrial Reports (CIR), and Commercial Carrier Journal (CCJ). (See Appendi x C for a more detailed description of these data sources.)

1. Tractors

Tractors impacted by the proposed regulation includ e Class 7 and 8 California-based intrastate and interstate tractors, and out-of-stat e-based tractors that operate in California. Staff used ARB’s updated inventory (AR B, 2008a) as the basis for developing the tractor inventory affected by the pr oposed regulation. For purposes of this analysis, out-of-state-based Class 7 and 8 tru cks operating in California and all

California-based Class 7 and 8 interstate trucks ar e assumed to be tractors, since they are involved in interstate long-haul freight operat ion and as such generally use tractortrailer combination trucks. Table VI-1 shows the p rojected total tractor population, both short-haul and long-haul, operating in California i n 2010 and 2020 and the corresponding annual vehicle miles traveled (VMT).12

Table VI-1: 2010 and 2020 Tractor Population and A nnual VMT in California

Class 7 & 8

Tractors Annual VMT

(10 6 miles) Fleet

2010 2020 2010 2020

CA Intrastate 72,310 96,621 3,360 4,540

CA Interstate 62,292 83,927 2,673 3,611

Neighboring Out-of-State 43,278 58,275 1,274 1,721

Non-neighboring Out-of-State 469,323 626,853 3,935 5,316

Total 647,203 865,677 11,241 15,187

The population numbers shown in Table VI-1 were adj usted to differentiate long-haul from short-haul tractors that pull any size box-typ e trailer. Staff used the 2002 VIUS data to determine the long-haul fraction for Califo rnia intrastate, interstate, and neighboring out-of-state fleets (Census, 2002). Sp ecifically, the VIUS data provided staff with information on (1) the primary range of operation (to determine the percentage of vehicles with a primary range of operation great er than 100 miles), and (2) jurisdiction in which the vehicle was most driven (to determine whether fleets operate interstate or exclusively intrastate). As shown in Table VI-2, t his information was used by staff to conclude that 23 percent of California’s intrastate tractors and 71 percent of California’s interstate tractors operate long-haul. For out-of- state registered tractors, 69 percent of tractors registered in neighboring states are affec ted. For the purpose of this proposal, a range of more than 100 miles from their home base would classify these tractors as long-haul. It is assumed that all tractors from no n-neighboring states travel more than 100 miles, resulting in the long-haul population pe rcentage for this category equal to 100 percent.

Table VI-2: Percentage of Tractors with Primary Ra nge of Operation Greater than

100 Miles

Fleet Percentage of Tractors

with Primary Range of Operation > 100 Miles

CA Intrastate 23%

CA Interstate 71%

Neighboring

Out-of-State 69%

Non-neighboring

Out-of-State 100%13

Table VI-2 gives the fraction of the tractor popula tion with a primary range of operation greater than 100 miles. These percentages include all long-haul tractors that pull all types of trailers. However, because the proposed r egulation applies only to long-haul tractors that pull 53-foot or longer box-type trail ers, the percentages in Table VI-2 were further adjusted, as explained below.

To determine the percentage of box-type trailers th at are 53-foot or longer, it was necessary to first assess what percentage of traile rs sold each year are box-type. Staff analyzed trailer production data from the CIR repor t (Census, 2000), which showed that the percentage of box-type trailers sold each year from 1988 to 2000 varied from 70 to 77 percent with an overall average of 73 percent. As shown in Table VI-3, staff assumed that this average was appropriate for Calif ornia intrastate, interstate, and neighboring out-of-state fleets operating in Califo rnia. It was also assumed that since essentially all non-neighboring out-of-state tracto rs pull loads for greater distances, it would be appropriate to assume that more than 73 pe rcent are box-type. Staff assumed that 90 percent of these tractors pull box- type trailers.

The next step, to determine the percentage of box-t ype trailers that are 53-foot or longer, staff consulted several trailer manufacture rs and ACT Research. 4 Two of the major trailer manufacturers indicated that approxim ately 90 percent or more of box-type trailers produced are 53-foot or longer trailers. Based on correspondence with ACT Research, 85 to 90 percent of refrigerated-van and dry-van trailers are 53-foot or longer (Vieth, 2008). Therefore, as shown in Table VI-3, staff assumes that 85 percent of the box-type trailers pulled by California intrastate, interstate, and neighboring out-of-state tractors, and 90 percent of those pulled by non-nei ghboring out-of-state tractors are 53- foot or longer.

Table VI-3: Percentage of 53-Foot Box Type Trailer s

Fleet Percent Box-Type

Trailers Percent that are 53-foot or Longer

CA Intrastate 73 85

CA Interstate 73 85

Neighboring Out-of-State 73 85

Non-neighboring Out-of-State 90 90

Based on the total tractor population shown in Tabl e VI-1 and the factors shown in Tables VI-2 and VI-3, staff estimated the tractor p opulation impacted by the proposed regulation and the corresponding annual VMT, which is reflected in Table VI-4 for years

2010 and 2020.

4 ACT Research is a subscriber-funded research compa ny that collects and analyzes

commercial vehicle data from manufacturers.14

Table VI-4: 2010 and 2020 Impacted Tractor Populat ion and the Corresponding

Annual VMT

Impacted Tractor Population Annual VMT

(10 6 miles) Fleet

2010 2020 2010 2020

CA Intrastate 9,547 12,910 705 952

CA Interstate 27,462 37,005 1,320 1,783

Neighboring Out-of-State 18,525 24,962 663 896

Non-neighboring Out-of-State 380,152 507,751 3,187 4,306

Total 435,686 582,628 5,875 7,937

2. Trailers

Available data were used to estimate the number of tractors that would be impacted by the proposed rule, as discussed above. For trailer s, no database exists that provides a complete inventory on the total number of box-type trailers that would be impacted by the proposed rule. The ratio of trailers-to-tracto rs in many fleets is often not one-to-one (in which case the same numbers provided in Table V I-4 for tractors could have been used to estimate trailer inventory). The ratio var ies considerably from fleet to fleet. Many fleets typically own more trailers than tracto rs in order to maximize efficiency and reduce downtime for the tractor while waiting for t he trailer to be unloaded and loaded. The ratio varies from zero for some owner-operators that own only tractors and pull trailers owned by other businesses, to “infinity” f or some shippers that own only trailers and use the services of carriers to pull their trai lers. Since data describing the tractortrailer composition of all fleets that operate in C alifornia were not available, staff determined an approximate trailer-to-tractor ratio using data from annual CCJ publications (Vise, 2007; Vise, 2008). The publish ed data included the number of trailers and tractors owned by the top 250 carriers in the country in calendar years 2006 and 2007. Analysis of the two annual datasets prov ided an estimated ratio of 2.5-to-1 trailers to tractors for both years.

The number of box-type trailers impacted by the pro posed rule was then estimated by multiplying the trailer-to-tractor ratio of 2.5 by the number of tractors impacted by the proposed rule shown in Table VI-4. Table VI-5 show s the resulting 53-foot box-type trailer population impacted by staff’s proposal for calendar years 2010 and 2020.15 Table VI-5: 2010 and 2020 Impacted 53-Foot Box-Typ e Trailers

Fleet 2010 2020

CA Intrastate 23,868 32,275

CA Interstate 68,655 92,513

Neighboring Out-of-State 46,313 62,405

Non-neighboring Out-of-State 950,380 1,269,378

Total 1,089,215 1,456,570

B. GHG Contribution

1. Overview, HDV Fleet

Figure VI-1 shows 2002 to 2004 average GHG emission s inventory broken down by sector (ARB, 2008b). As shown in the figure, the t ransportation sector, which includes on-road vehicles, aviation, rail, and ships, is the largest contributor to the total statewide GHG emissions inventory, producing approximately 38 percent of the state’s total GHGs, or 179 MMT CO 2 e. In 2020, GHG emissions from this sector are pro jected to increase by 25 percent (46 MMT CO 2 e) relative to the 2002 to 2004 average and by 50 percent (75 MMT CO 2 e) relative to 1990 levels, as shown in Table VI-6. Thus, emissions from the transportation sector must be si gnificantly reduced in order to achieve the AB 32 requirement that State GHG emissi on levels be reduced to 1990 levels by the year 2020. Furthermore, as shown in Figure VI-2, on-road vehicle emissions account for more than 90 percent of the t ransportation emissions, with 74 percent from light-duty vehicles and 20 percent fro m on-road HDVs. This implies that

most of the needed emission reductions from the tra nsportation sector must come from on-road vehicles. The proposed regulation would th erefore contribute towards achieving AB 32 goals by reducing emissions from on -road HDVs, and specifically from tractors that pull box-type trailers.16 Transportation

38%

Industrial

20%

Electricity

23% Agriculture

6%

Recycling and

Waste

1% High GWP

3%

Commercial and

Residential

9%

Figure VI-1: California GHG Emissions by Sector – 2 002-2004 Average (ARB, 2008b)

Table VI-6: 1990, 2002-2004 Average, and 2020 Proj ected Transportation Sector

GHG Emissions (MMT CO 2 e) (ARB, 2008b)

Fleet Calendar Year

1990 2002-2004 Average Emissions Projected 2020 Emissions (BAU)

Passenger Vehicles 108.9 133.9 160.8

Heavy-duty Trucks 29.0 34.7 48.3
Ships & Commercial

Boats 2.2 3.3 6.3

Aviation (Intrastate) 5.1 3.2 4.9

Rail 2.3 3.0 3.8

Unspecified 3.0 1.2 1.4

Emissions Total 150.7 179.3 225.417 Passenger Vehicles

74% Heavy Duty Trucks

20% Aviation

(Intrastate Only)

2% Ships

2% Rail

2%

Figure VI-2: Transportation Sector GHG Emissions – 2002-2004 Average (179 MMTCO 2 e) (ARB, 2008b)

2. Emissions Contribution of Impacted Tractor-trai lers

Baseline GHG emissions for fleets impacted by the p roposed regulation were estimated using the adjusted VMT shown in Table VI-4, an assu med fleet average fuel economy of 5.8 miles per gallon, and a GHG emission factor of 10.4 kilograms CO 2 e per gallon of diesel fuel (ARB, 2008c). The baseline GHG emissio ns in California from long-haul tractors pulling box-type trailers are 8.5 MMT CO 2 e in 2010 and 11 MMT CO 2 e in 2020.

VII. U.S. EPA S MART W AY T RANSPORT P ARTNERSHIP

A. Description of Program

The SmartWay Transport Partnership (SmartWay) is a voluntary program developed by the United States Environmental Protection Agency ( U.S. EPA) to reduce fuel consumption and emissions (criteria pollutant and G HG) resulting from the transportation of freight. The information present ed in this chapter regarding the SmartWay program was acquired from a collection of references obtained from the U.S. EPA (see Appendix D). Through this program, freigh t industry companies enter into a partnership with U.S. EPA to implement strategies t hat improve their transportation efficiency. In return for their collaboration, U.S . EPA rewards these companies with certain market-based incentives, such as the privil ege to advertise their SmartWay participation, business preference by other SmartWa y partners, and for top-performers, the right to display the official SmartWay logo. U .S. EPA also continually promotes these partnerships in the public forum, which helps partners establish and maintain a18

“green” image. Currently, the SmartWay program has more than 850 partners and aims to reduce oil consumption by as much as 150 million barrels per year, carbon dioxide emissions by as much as 66 million metric tons per year, and oxides of nitrogen emissions by as much as 200,000 tons per year by 20 12. 5

U.S. EPA developed SmartWay primarily for carriers (truck and rail), shippers, and logistics companies because of their influence on f reight movement in the United States. By implementing strategies that improve tr ansportation efficiency, these companies can earn performance points, the accumula tion of which makes up their SmartWay score. This score serves three main purpo ses: it allows companies to monitor their environmental performance; it can be used as a marketing tool; and it can improve business opportunities, since contracting w ith other SmartWay partners increases the SmartWay scores of member businesses.

SmartWay carriers and trailer-operating shippers ma y use the following strategies to earn points:

• Reduce idle time

• Improve vehicle aerodynamics

• Improve freight logistics

• Use automatic tire inflation systems

• Use low-rolling resistance tires

• Implement driver training

• Use low-viscosity lubricants

• Reduce vehicle weight

• Reduce speed

• Use intermodal shipping

• Use hybrid powertrain technology

• Contract with other SmartWay partners

SmartWay shippers may also use the strategies liste d below:

• Use intermodal shipping

• Provide preferential docking for SmartWay carriers

• Provide driver comfort stations

• Use electric forklifts

• Implement anti-idling policies

• Implement pickup/delivery scheduling

• Improve freight management to ensure full truckloa ds

• Improve efficiency of light fleet vehicles

• Improve warehouse efficiency

• Contract with other SmartWay partners

5 http://www.epa.gov/smartway/swplan.htm (July 10, 2008)19

For logistics companies, scores are based solely on the SmartWay participation and scores of the carriers and shippers with whom they contract.

The option to earn points through the use of SmartW ay partners encourages the industry as a whole to improve its environmental pe rformance. Not only does a partner earn points for employing the services of another S martWay partner, but more points are awarded for using partners with higher scores. Therefore, doing more in terms of improving efficiency, even if it requires additiona l investment, can actually serve as a business advantage.

Although some strategies listed in this section req uire upfront capital investment, SmartWay is expected to ultimately reduce the monet ary cost of transportation as well as transportation’s impact on the environment and p ublic health.

B. SmartWay Tractors

Under the SmartWay program, U.S. EPA certifies trac tors that have been demonstrated to use less fuel and produce lower emissions than t heir traditional counterparts. These tractors, which are designed to reduce aerodynamic drag, rolling resistance, and idle times, may be used to improve a partner’s efficienc y and SmartWay score. U.S. EPA developed the SmartWay tractor specifications in co llaboration with the truck manufacturing industry and continues to update thes e specifications as technology advances. Several truck manufacturers currently of fer U.S. EPA certified SmartWay tractors, including Freightliner, International, Ke nworth, Mack, Peterbilt, and Volvo.

1. Technical Specifications and Requirements for Sm artWay Tractors

To certify a tractor under the SmartWay program, a truck manufacturer must demonstrate to U.S. EPA that the tractor is equippe d with the following:

• A 2007 or subsequent model year primary engine

• An integrated cab-high roof fairing

• Tractor-mounted side-fairing gap reducers

• Tractor fuel-tank side fairings

• Aerodynamic bumpers and mirrors

• An option for reducing extended idling

• Low-rolling resistance tires

Since tractors are typically designed from the grou nd up, retrofitting in-use tractors to meet SmartWay specifications is not practical. The refore, in-use tractors are not considered for SmartWay certification. This is not the case for trailers, which will be explained in the following section. At this time, U.S. EPA only certifies tractors equipped with an integrated sleeper berth. However , they are currently developing specifications for day cab tractors as well.20

C. SmartWay Trailers

Under the SmartWay program, carriers and shippers m ay use U.S. EPA certified SmartWay trailers to earn points. SmartWay trailer s incorporate a number of the strategies listed in Section VII.A above, and are d esigned to meet specifications that emphasize improved fuel efficiency and reduced emis sions. These specifications were developed collaboratively by U.S. EPA and the trail er manufacturing industry. At this time, U.S. EPA has only developed specifications fo r dry-van trailers, and therefore, only these trailers can be certified under the Smar tWay program. Several trailer manufacturers currently offer U.S. EPA certified Sm artWay trailers, including Great Dane, Hyundai Translead, Manac, Stoughton, Strick, Utility, and Wabash National.

To designate a trailer as a U.S. EPA certified Smar tWay trailer, the trailer must either be equipped with the necessary SmartWay approved devic es to meet U.S. EPA’s design specifications, or be track tested for fuel consump tion against a base trailer. This can be done by the original equipment manufacturers dur ing manufacture, or it can be done on existing used trailers in the fleet.

The design specifications for a U.S. EPA certified SmartWay trailer currently require the following equipment:

• SmartWay approved side skirt fairings

• Either a SmartWay approved front-mounted trailer g ap fairing or a SmartWay approved rear-mounted trailer fairing

• SmartWay approved low-rolling resistance tires

In order to demonstrate a trailer as a U.S. EPA cer tified SmartWay trailer through track testing, the testing must show that the trailer con sumes at least 6.5% less fuel than a base trailer under similar drive and duty condition s. For this testing, the “SAE J1321, Type II” protocol 6 must be used to measure fuel consumption.

VIII. P ROPOSED R EGULATION

A. Proposed Regulation Overview

The proposed regulation would reduce GHG emissions by requiring new and existing 53-foot or longer box-type trailers, and the tracto rs that pull them, to be equipped with SmartWay technologies when operating on California highways. The proposed regulatory language is contained in the new section s 95300 through 95312 of title 17, California Code of Regulations (see Appendix A of t his report). The proposed requirements for both the tractors and trailers beg in January 1, 2010. These requirements pertain to all applicable tractors and box-type trailers that operate on California highways regardless of where the vehicle s are domiciled.

6 The SAE J1321, Type II test procedure does not spec ify any test parameters, such as environmental cond itions, test design, load requirements, drive cycles, etc. Therefore, U.S. EPA reviews all test parameters be fore each test to ensure that testing is performed in a consistent manner.21

B. Purpose

The purpose of the proposed regulation is to reduce GHG emissions from tractors that pull 53-foot or longer box-type trailers on Califor nia highways. GHG emissions would be reduced from these vehicles through the use of a erodynamic technologies and lowrolling resistance tires, which reduce aerodynamic drag and rolling resistance, respectively. This will result in the tractor requ iring less energy to propel the vehicle forward, resulting in reduced fuel usage and GHG an d NOx emissions.

C. Applicability

The proposed regulation applies to 53-foot or longe r box-type trailers and the tractors that pull them when driven on California highways. The proposed tractor and trailer requirements apply to the owner, driver, motor carr ier, California-based broker, and California-based shipper. The proposed regulation does not apply to tractors pulling other types of trailers, e.g., box-type trailers of lengths shorter than 53 feet, or to tractors pulling flatbeds, or logging trailers, drop-frame t railers, curtain-side trailers, or chassis trailers hauling shipping containers. Also exempt from the requirements of the regulation are authorized emergency vehicles and mi litary tactical support vehicles, as well as short-haul and drayage tractors, as defined in the proposal.

D. Definitions

The proposed regulation contains many definitions t o define and clarify the requirements. Only the key definitions are highlig hted in this section. The full list of definitions can be found in the text of the propose d regulation, provided in Appendix A.

1. Aerodynamic Technologies

Aerodynamic technologies are devices designed to re duce wind resistance on the tractor or trailer that will improve overall vehicl e fuel efficiency and reduce exhaust GHG emissions. Examples of such technologies for the t ractor are fuel tank fairings, integrated cab roof fairings, and side extender fai rings. Examples of trailer technologies are side skirts, front fairings, and rear (or boat tail) fairings.

2. Parties Responsible for Compliance

The parties responsible for compliance with the pro posed regulation include the owner, driver, motor carrier, California-based broker, and California-based shipper. Each of these parties is defined here. The owner of a trac tor or trailer is the person who legally

holds the title of the vehicle or the lessee that h as legal responsibility for registration and

maintenance of the vehicle. The driver of a tracto r is the operator of the tractor on a California highway. The motor carrier and the brok er are the business intermediaries that contract with a person for pick-up and deliver y of commercial freight, and either contract with tractor owners or, if a motor carrier , employs drivers of its own vehicles to pick-up or deliver freight. The shipper is the per son or commercial operation that has possession of freight prior to its transportation, including, but not limited to, the owner of the freight, a distribution center, or a temporary freight storage facility. Only shippers22

that are located in California are subject to the p roposed requirements. When freight is shipped in a 53-foot or longer box-type trailer, ea ch of the aforementioned parties would be responsible to ensure that both the tractor and the trailer are in compliance with the proposed requirements.

3. U.S. EPA SmartWay Partnership Program

The U.S. EPA SmartWay partnership program is a fede ral voluntary program aimed at improving energy efficiency, reducing GHG and air p ollutant emissions, and improving energy security of the ground freight movement syst em. The SmartWay program

certifies tractors and trailers that have the clean est, most fuel-efficient equipment available. U.S. EPA certified SmartWay tractors an d SmartWay trailers may be identified by the special certification mark on the inside of the tractor cab or trailer. U.S. EPA approved SmartWay aerodynamic devices for retro fitting non-SmartWay trailers are also identified through the SmartWay program. These devices meet the SmartWay technical specifications and requirements for impro ved fuel efficiency.

E. Requirements and Compliance Deadlines

1. Heavy-Duty Tractors

Different requirements would apply for tractors wit h sleeper berths and those without sleeper berths that pull 53-foot or longer box-type trailers on California highways (Table VIII-1). Beginning January 1, 2010, a 2011 and sub sequent model year tractor with a sleeper berth would be required to be a U.S. EPA ce rtified SmartWay tractor. A U.S. EPA certified SmartWay tractor typically has a high roof sleeper cab equipped with an integrated sleeper cab roof fairing, aerodynamic mi rrors, an aerodynamic bumper, cab side extenders, fuel tank fairings, and low-rolling resistance tires. A description of tractor aerodynamic devices can be found in chapter IX, section A.2. SmartWay does not currently certify a tractor without a sleeper b erth, i.e., day cab, and thus, these tractors are not included in the proposed regulatio n.

Low-rolling resistance tires that meet U.S. EPA Sma rtWay specifications would be required beginning January 1, 2010, for a 2011 and subsequent model year tractor regardless of whether it has a sleeper berth or not . 2010 and earlier model year tractors with or without sleeper berths would have additiona l time to comply with the low-rolling resistance tire requirements; it is proposed that t hey comply with these tire requirements by January 1, 2012. This flexibility minimizes was te and tire disposal issues by allowing most existing tires on the vehicle to be used for t heir normal useful life, and replaced with low-rolling resistance tires only when new tir es are needed. Thus, by January 1, 2012, all tractors that pull 53-foot or longer trai lers would have low-rolling resistance

tires.23 Table VIII-1: Proposed Tractor Requirements

Requirement Model Year 2011 &

Later Tractors with Sleeper Berths Model Year 2011 &

Later Tractors without Sleeper

Berths All Model Year 2010

and Earlier Tractors

SmartWay Certified

Tractor 1/1/2010 Not Applicable Not Applicable

SmartWay Approved low-rolling

resistance tires 1/1/2010 1/1/2010 1/1/2012

2. Trailers

a) Requirements for 2011 and Subsequent Model Year Trailers

Beginning on January 1, 2010, a 2011 and subsequent model year 53-foot or longer box-type trailer pulled by a tractor on a Californi a highway would be required to be either a U.S. EPA certified SmartWay trailer or ret rofitted with SmartWay approved technologies (See Table VIII-2).

The first option, to use a U.S. EPA certified Smart Way trailer, is currently only available for dry-van trailer applications. The U.S. EPA has defined specifications for this type of trailer, and several manufacturers have already cer tified models. Certified dry-van trailers are equipped with side skirts, front trail er fairings, and low-rolling resistance tires. For refrigerated-van trailers, retrofitting with SmartWay approved technologies would be the only option for compliance. In the fu ture, the SmartWay program may expand to certify refrigerated trailers, as well as other types of trailers, making this

alternative available.

The second option, compliance by retrofitting with SmartWay approved aerodynamic and low-rolling resistance tire technologies, is av ailable to both dry-van and refrigeratedvan trailers. The proposed regulation would requir e dry-van trailers to use low-rolling resistance tires and either be retrofitted with (1) aerodynamic equipment that collectively meets or exceeds a 5 percent fuel savings in accord ance with test requirements defined by the U.S. EPA SmartWay Partnership Program, or (2 ) side skirts plus a front fairing or rear trailer fairing that are SmartWay approved. T his latter combination of aerodynamic devices has been certified by SmartWay to meet the five percent fuel savings criteria. Refrigerated-van trailers would be required to be r etrofitted with low-rolling resistance tires and either (1) any combination of aerodynamic equipment that collectively meets or exceeds 4 percent fuel savings in accordance with t est requirements defined by the SmartWay program, or (2) side skirts that are Smart Way approved. The lower percent fuel savings criteria for refrigerated-van trailers reflects the lack of a requirement for a front or rear fairing on these types of trailers. A front trailer fairing is not feasible on a refrigerated-van trailer because the transport refr igeration unit (TRU) is typically installed where the front trailer fairing would be mounted. Requiring a rear-fairing on all refrigerated-van trailers is too restrictive, since current SmartWay approved rear fairing technologies are not compatible with roll-up door t railers.24

Table VIII-2: Proposed 2011 and Later Model Year T railer Compliance Options, Beginning January 1, 2010

Option 2: Retrofit Existing Trailer

Trailer Type Option 1:

Purchase Certified SmartWay Trailer Retrofitted with SmartWay

approved low rolling

resistance tires and SmartWay approved aerodynamic devices Retrofitted with SmartWay approved low rolling

resistance tires and aerodynamic devices

demonstrated to meet min. fuel savings per SmartWay Program

Dry-Van Available Aero=side skirts + rear or front fairing Aero must meet 5% fuel savings

RefrigeratedVan Not Available* Aero= side skirts Aero must meet 4% fuel savings

* At time of publishing, U.S. EPA had not yet establi shed SmartWay certification specifications for refr igerated-van

trailers

b) Requirements for 2010 and Earlier Model Year Tra ilers

The 2010 and earlier model year 53-foot or longer b ox-type trailers that are pulled by tractors on California highways would be required t o be retrofitted with SmartWay approved technologies by January 1, 2013. The retr ofit requirements would be identical to the second option for 2011 and subsequent model year trailers described above. In lieu of meeting the January 1, 2013, compliance dat e, the trailer owner could choose to comply with an optional trailer fleet compliance sc hedule.

There are two proposed optional trailer fleet compl iance schedules that would be based on trailer fleet size: the large fleet compliance s chedule and the small fleet compliance schedule. A large fleet is defined as a fleet of 21 or more trailers. A small fleet is

defined as a fleet of 20 or less trailers. In orde r to participate, a trailer owner that owns the requisite number of trailers would be required to meet the following criteria: (1) submit a compliance plan by July 1, 2010 for the la rge fleet optional compliance schedule or by July 1, 2012 for the small fleet com pliance schedule, (2) meet the annual commitments for retrofitting trailers, and (3) allo w ARB to audit records periodically. The compliance plan would include a statement of in tent, information on each trailer,

and details as to which affected trailers would be retrofitted to comply with each year of the optional phase-in schedule requirements. If th e owner fails to comply with any of the three conditions for optional compliance partic ipation, it may result in termination of the optional compliance schedule(s). If the fleet’ s participation in the optional compliance schedule is terminated, all trailers in the fleet have to be in compliance within 90 days or by December 31, 2012, whichever i s later.

The large fleet compliance schedule is shown in Tab le VIII-3. A six year phase-in is proposed for large fleets beginning in 2010 and end ing in 2015. For added flexibility, a25

trailer owner could participate in an early complia nce option. For every 2010 and earlier model year box-type trailer that is compliant with the proposed regulation by December 31, 2009, the owner could delay the retrofit of 1.5 noncompliant trailers until 2016. If a trailer owner participates in the early compliance option, the submitted compliance plan

would need to contain information on the list of tr ailers that are brought into compliance by December 31, 2009, and the list of trailers that are delayed for compliance until 2016. The early compliance option is discussed in more detail in Appendix F, Optional Trailer Fleet Compliance Schedules.

Table VIII-3: Proposed Optional Large Fleet (21+) Compliance Schedule for 2010 and Earlier Model Year 53-foot or Longer Box-Type T railers, Except RefrigeratedVan Trailers with Transport Refrigeration Units usi ng 2003 to 2009 Model Year Engines

12/31/10 12/31/11 12/31/12 12/31/13 12/31/14 12/31 /15 Required

Percent Compliance 5% 15% 30% 50% 75% 100%

The small fleet compliance schedule is shown in Tab le VIII-4. The phase-in for small fleets begins in 2013 and ends in 2016.

Table VIII-4: Proposed Optional Compliance Schedul e for Small Trailer Fleets of 2010 and Earlier Model Year 53-foot or Longer Box-T ype Trailers

12/31/13 12/31/14 12/31/15 12/31/16 Required

Percent Compliance 25% 50% 75% 100%

3. Refrigerated Fleet Compliance Provision

Since refrigerated trailers would be concurrently i mpacted by the proposed regulation and the previously adopted Airborne Toxic Control Measure for In-Use Diesel-Fu eled Transport Refrigeration Units (TRU) and TRU Generat or Sets, and Facilities Where TRUs Operate (TRU Rule), staff developed a special provision that would allow the delay of retrofits and retirements of certain in-us e refrigerated trailers. Specifically, the refrigerated fleet compliance provision would apply to 2003 through 2008 model year refrigerated-van trailers equipped with 2003 and su bsequent model year TRUs.

Because allowing the delay of all refrigerated trai lers would significantly reduce the cumulative GHG benefits expected from the proposed regulation, the refrigerated fleet compliance provision would not apply to the followi ng trailers:

• 2009 and 2010 model year trailers: The greatest GH G and fuel economy benefits would likely be achieved by bringing these trailers into compliance first. This is26

because these trailers would be newer, so they woul d see more road miles and

have more time to realize returns on investment.

• 2002 and previous model year trailers: These trai lers would likely reach the natural end of their long-haul service before the p hase-in of the refrigerated fleet compliance provision would begin.

In addition, because the provision would only apply to in-use trailers, 2011 and subsequent model year trailers would not be eligibl e.

A trailer owner participating under this provision would be required to bring trailers of the model years listed in Table VIII-5 into compliance by December 31 of the applicable

year.

Table VIII-5: Refrigerated Fleet Compliance Deadli nes

Year 2017 2018 2019

Trailer Model

Year 2003-2004 2005-2006 2007-2008

4. Requirements for the Owner, Driver, Motor Carrie r, Broker and Shipper

As mentioned previously, the responsibility for com pliance rests primarily with the owner of the tractor and trailer, but the driver, motor c arrier, California-based broker, and California-based shipper also share responsibilitie s. Noncompliance with the proposed tractor or trailer requirements may result in a not ice of violation to each aforementioned party. The responsibility of the owner would be to ensure the applicable tractors and trailers comply with the proposed requirements with in the proposed compliance

schedule. The owner of affected trailers would als o be required to report information to ARB on its trailers and its compliance plan, if app licable.

The driver would be responsible to ensure that the tractor-trailer to be driven is in compliance with this proposed regulation, i.e., Sma rtWay certified, and meets the good operating condition criteria. If the tractor-trail er is not in compliance, the driver should refuse to operate the tractor-trailer. Failure to do so may result in a notice of violation. The driver should also ensure that the following in formation is available to be presented to authorized enforcement personnel: driver’s lice nse, tractor registration, origin of freight being transported, destination of freight b eing transported, and motor carrier information, if applicable.

Motor carriers would be responsible to ensure that a tractor-trailer they dispatch to pick up and deliver freight complies with the proposed r egulatory requirements. To facilitate compliance, motor carriers would be required to pro vide the following information to the dispatched driver: the motor carrier business name , street address, contact person, and contact person’s business phone number.

The requirements for California-based brokers are s imilar to those discussed in the previous paragraph for motor carriers. In addition , ARB would also have the authority to27

restrict California-based brokers from using the se rvices and vehicles of particular motor carriers, tractor owners and trailer owners that ha ve failed to settle a previously issued notice of violation. This approach to enforcement is discussed in detail in Appendix G, Implementation and Enforcement.

The California-based shipper would be responsible t o ensure that the tractors and boxtype trailers used to transport freight from its fa cility are in compliance with the proposed regulation. ARB would have the authority to restri ct California-based shippers from using the services and equipment of particular moto r carriers, California-based brokers,

tractor owners and trailer owners that have failed to settle a previously issued notice of violation. This approach to enforcement is discuss ed in detail in Appendix G, Implementation and Enforcement.

Motor carriers, California-based brokers, and Calif ornia-based shippers may choose to discharge the obligation to pay fines through contr actual language. For example, once a fine has been assessed to a shipper, the shipper could have a contract with the noncomplying motor carrier that requires the motor carrier to pay all fines associated with the use of noncompliant tractor-trailers. Sim ilarly, a motor carrier could also have a contract with a tractor or trailer owner requiring the tractor or trailer owner to pay all fines associated with the use of a noncompliant tra ctor or trailer, respectively.

F. Maintenance Requirements

Owners and drivers of the applicable tractors and t railers would be responsible to ensure that the applicable tractor and trailer are equipped with appropriate equipment and that the equipment is in good operating conditi on. The aerodynamic technology would need to be installed according to manufacture r’s specifications, be securely fastened to the tractor or trailer, not be missing any panels or sections, and not be damaged to the extent that its aerodynamic effectiv eness is compromised. In addition, a rear trailer fairing must be designed such that, when not in-use, it can be folded back against the trailer or otherwise be readily compact ed to allow normal functioning of the

doors.

G. Exemptions

The proposed regulation would exempt certain types of tractors and trailers, as discussed previously in Section C of this chapter. For a short-haul tractor exemption, the trailer would need to be registered with ARB an d approved as short-haul, requiring

annual renewal. A short-haul trailer is defined as only operating within a 100 mile radius from the registered location where the trailer is g araged and maintained. A drayage truck would also be exempted from the proposed requ irements. A drayage truck is defined as a truck that only operates within 100 mi les of a port or intermodal rail yard property of origin or destination.28

H. Reporting Requirements

For tractors, reporting would not be required for t he owner of Class 7 or Class 8 tractors used exclusively for long-haul purposes. In order for a tractor or trailer to be classified as short-haul, and thus exempted from the proposed regulation, it would need to be registered with ARB. The owner would need to submi t an application with specific information on the vehicle, vehicle owner, and vehi cle’s local haul base. For tractors, the owner would designate, in the application, whet her the exemption will be based on a limit of 50,000 miles annually or a limit of operat ion within a 100-mile radius from its local base. Once approved, the tractor or trailer would be considered short-haul and not subjected to the requirements of the proposed regul ation. The short-haul exemption would be effective for one year and would require r enewal on an annual basis.

A trailer owner who does not choose to participate in any of the optional compliance schedules would not be required to provide reportin g of trailers. However, if the owner chooses to participate in the optional compliance s chedules, a compliance plan would be required to be submitted by July 1, 2010. The c ompliance plan would include a statement of intent, information on each affected t railer, and details as to which affected trailers would be retrofitted to comply with each y ear of the optional phase-in schedule requirements.

There are no recordkeeping requirements for shipper s specified in the proposed regulation. However, ARB staff reserves the right to audit existing shipping records, if the shipper or broker continues to use noncompliant tractor-trailer owners and motor carriers after being notified of their noncomplianc e.

I. Enforcement and Fines

Enforcement of the proposed requirements may be car ried out by authorized representatives of ARB, peace officers, and authori zed representatives of an air pollution control district. A violation of the pro posed requirements may result in civil or criminal penalties. A violation may be issued for failure to comply with the proposed tractor and or trailer requirements, failure to sub mit the appropriate information, or providing false information. The extent of the pen alty would depend on the willfulness of the violation, the length of time of the noncomp liance, the magnitude of the noncompliance, and other pertinent factors. Author ized enforcement personnel may stop trucks on the highway or at alternative locati ons, such as on the roadside, at weigh stations, or at loading docks, to ensure that the a ppropriate aerodynamic equipment and low-rolling resistance tires are properly installed and in good operating condition.

If the tractor or trailer does not have the appropr iate aerodynamic equipment or lowrolling resistance tires, or if such equipment is d amaged or not properly functioning, the enforcement personnel would write a notice of viola tion to the parties involved in the movement of freight in the noncompliant vehicle. T hese may include the owner, driver, motor carrier, California-based broker, and Califor nia-based shipper of the transported freight. While the owner of the tractor and traile r is solely responsible for purchasing SmartWay certified tractors and trailers, or retrof itting tractors and trailers with approved SmartWay devices, it would also be the responsibili ty of brokers and California-based29

shippers to ensure that only compliant tractors and trailers are used to transport freight on California highways.

If the tractor and/or trailer has been approved for short-haul exemption, the enforcement personnel would crosscheck its exemption status wit h the ARB database and confirm that the short-haul tractor and/or trailer is opera ting within the 100 mile radius from its local base or is within its annual miles limit, whi chever is applicable. Similarly, an enforcement officer may check a drayage truck to en sure that it is operating within 100 miles of the port or intermodal rail yard property. See Appendix F for a further discussion of implementation and enforcement issues

.

IX. T ECHNOLOGICAL F EASIBILITY OF C ONTROL M EASURE

The proposed regulation would require heavy-duty tr actors and box-type trailers to be SmartWay certified or use SmartWay approved equipme nt and tires. The vehicles and equipment necessary to comply with the proposed reg ulation are already commercially available and in use today. In addition, new techn ologies continue to emerge. Therefore, staff firmly believes that the technolog ical feasibility of the proposed regulation is sound.

The following sections describe the availability of SmartWay certified tractors, SmartWay certified trailers, retrofit equipment for in-use trailers, and low-rolling resistance tires. In addition, because there have been concerns expressed about the reliability and safety of trailer side skirts, flee t experience with these technologies is

discussed.

A. SmartWay Certified Tractors

The proposed regulation would require all 2011 and subsequent model year long-haul tractors that pull 53-foot or longer box-type trail ers to be SmartWay certified. Most major truck manufacturers currently offer SmartWay tractors and have indicated that they are in a position to manufacture more if deman d increases.

Since tractor models are designed as a single unit, retrofitting a tractor with SmartWay aerodynamic equipment after its initial build would not be practical. Therefore, for inuse tractors, the proposed regulation would only re quire the use of low-rolling resistance tires, and not aerodynamic technologies.

1. Base Tractor

For every SmartWay tractor, a manufacturer must fir st identify a “base tractor,” upon which SmartWay features can be incorporated. To qu alify as a base tractor, a tractor must have an overall aerodynamic profile and a high roof sleeper cab. 7 Most major

tractor manufacturers offer at least one base tract or that is eligible for the SmartWay program. Some examples are:

7 As defined by SmartWay Logo Use Guidelines – Langu age – Tractor Requirements

27Mar07.doc30

• Freightliner Columbia, Century Class S/T, and Casc adia

• International Prostar and Lonestar

• Mack Pinnacle

• Kenworth T2000 and T660

• Peterbilt 387 and 386

• Volvo VN Series

Examples of SmartWay tractors are shown in Figure I X-1..

2. Aerodynamic Features

A base tractor must be equipped with all of the fol lowing aerodynamic features to be considered for SmartWay certification. 8 These features have been defined for the purposes of this regulation as follows:

• Integrated sleeper cab roof fairing – a fairing lo cated on the roof of a sleepercab-equipped tractor that extends from the front wi ndshield of the tractor cab to the rear edge of the sleeper cab, with enclosed sides that line up with the sides of the sleeper cab.

• Aerodynamic mirrors – side mirrors designed to min imize air resistance

• Aerodynamic bumper – a front bumper designed to mi nimize air resistance

• Cab side extenders – vertical additions to the rea r side of the tractor that fan out slightly and reduce the space between the tract or and trailer.

• Fuel tank fairings or chassis skirt – the fairing located at the base of the cab

between the front wheel of the tractor and the forw ard-most rear wheel, covering the open space and streamlining the fuel t ank.

8 As defined in SmartWay Logo Use Guidelines – Langu age – Tractor Requirements

27Mar07.doc31 Figure IX-1: SmartWay Tractors

3. Experience with SmartWay Certified Tractors

Based on meetings with various fleets, experiences with SmartWay tractors have been favorable. The only concerns raised, that fuel tan k fairings can get easily damaged, appear to be highly driver-specific. Therefore, st aff anticipates that the damage can be minimized by providing additional guidance to drive rs on how to prevent or minimize damage to the fairings.

4. Incremental Cost of SmartWay Certified Tractors

The aerodynamic tractor package cost, which include s low-rolling resistance tires, was determined from current available retail prices, fl eet price quotes, and manufacturer price estimates for new SmartWay approved tractors. The average incremental cost of the equipment is about $2,100, based on the purchas e price of tractors equipped with the aerodynamic package. Specifically, this increm ental cost assumes that the tractor is32

equipped with an aerodynamic equipment package feat uring fuel tank fairings or chassis skirts, cab side extenders, an integrated s leeper cab roof fairing, aerodynamic bumpers and mirrors, and low-rolling resistance tir es.

5. Lifetime Costs of SmartWay Certified Tractors to Owners

The measure is expected to provide cost savings to tractor owners over the useful life of the tractor by reducing operational costs (i.e., fu el consumption). A SmartWay certified tractor is expected to reduce fuel consumption by a bout 3.5 percent compared to a regular tractor, resulting in an annual fuel saving s of approximately $1,800. Looking at the equipment operating costs only, about $22,000 s avings is expected over a typical equipment life of 11 years. Equipment life was est imated from discussions with fleets which stated that a tractor will be typically used in the long-haul application for about 11 years. Accounting for capital cost, maintenance co st, and fuel savings to the tractor owner, the proposed requirement is expected to have a net cost savings of about $6,000 (in 2008 dollars). Staff believes this is a conservative estimate of the savings since current California retail prices for diesel f uel are higher than the projected fuel cost used in this analysis. The cost of the SmartWay pa ckage for a tractor can, therefore, be recovered from fuel savings in 1 to 1.5 years. For further details on staff’s cost analysis, see Chapter XII.

6. Production Availability

The proposed regulation would require that, beginni ng January 1, 2010, all applicable tractors be SmartWay certified. This section discu sses two important issues associated with this requirement: 1) the anticipated demand fo r these types of tractors; and 2) the procedure that a tractor manufacturer would need to undergo to certify a SmartWay

tractor model.

For model years 2011, 2015, and 2020, ARB staff est imates that 107,000, 129,000, and 143,000 new Class 8 SmartWay tractors, respectively , will be sold to comply with the proposed rule. These numbers represent about 70 pe rcent of the total number of new Class 8 tractors sold nationwide in each of those y ears that will, at some point in their useful life, travel in California. Staff believes that tractor manufacturers will be able to meet the increased demand for SmartWay tractors res ulting from this proposal.

Currently, there are six tractor manufacturers that sell a SmartWay base model tractor.

Table IX-1 lists the manufacturers and the base tra ctor models that, when properly outfitted with aerodynamic equipment and low-rollin g resistance tires, currently meet the SmartWay specifications. The decision-making proce ss to develop a SmartWay tractor is normally preceded by a series of discussions bet ween the U.S. EPA and the manufacturer to ensure mutual understanding of the technical specifications and requirements of the SmartWay program. Each manufac turer that is approved by the U.S. EPA to sell a SmartWay tractor must abide by a licensing agreement, included in Appendix D.33 Table IX-1: U.S. EPA Certified SmartWay Tractors

Manufacturer Base Tractor Model

Navistar International Prostar

9200i*

Mack Pinnacle

Daimler (Freightliner) Cascadia Century Class

Columbia

Kenworth T660

T2000

Volvo VN 780

VN 730

Peterbilt 387

386

* will be replaced with the LoneStar model

B. Trailer Aerodynamic Technologies

1. Aerodynamic Technologies

Aerodynamic technologies are defined in the regulat ion as components that are designed to reduce wind resistance on the tractor o r trailer, resulting in improved overall tractor fuel economy and reduced carbon dioxide emi ssions. These technologies are currently available commercially through several U. S. and Canadian companies; additional companies are in the process of developi ng new or improved aerodynamic products. The types of equipment they currently of fer include: trailer side skirts (sometimes called belly fairings), front fairings, rear fairings, strakes, traps, and others. These aerodynamic products and the companies that m anufacture them are briefly described below. Some of the identified technologi es are SmartWay approved at the present time, while others are not. It should be n oted that this summary does not imply an endorsement of any of the companies or products identified below, nor does it claim to reflect a comprehensive list of all aerodynamic technologies currently available or under development for box-type trailers.

a) Trailer Side Skirts

Trailer side skirts are fairings that extend down f rom the bottom of the trailer to cover part of the open space between the tractor and the rear trailer wheels. They can be used on dry-vans as well as on refrigerated-vans. The range of fuel savings demonstrated by side skirt manufacturers is between 4 percent and 7 percent. Currently available side skirts are made of aluminu m, thermoplastics, or composite materials. Some are constructed of individual pane ls that can be replaced separately in the event they are damaged, while others are constr ucted as a single unit extending the length of the skirt. One design consists of dual, parallel side panels. A set of side skirts, on average, may weigh between 150 and 350 p ounds, depending on the material, length, and configuration of the skirt. The amount of ground clearance34

provided by the various side skirts varies somewhat across the different models; generally they average between 10 and 20 inches fro m the ground in order to strike a balance between maximizing fuel savings and avoidin g potential damage due to road hazards or steeply sloping ramps. According to the manufacturers, installation times per trailer range between three and six hours, alth ough some anticipate shorter times when installed by fully trained installers.

The retail costs to purchase a single set of traile r side skirts range between $1000 and $2600, excluding installation. Fleet volume pricin g would be lower. It is anticipated that as demand for these technologies increases, costs w ill likely drop. The cost to replace a panel varies considerably depending on the design of the skirts, from $80 to $500.

Five different companies manufacture trailer side s kirts; four of them offer skirts that are commercially available at the time of this writing, while the fifth company is still in the prototype phase.

Currently Available Trailer Side Skirts :

Figure IX-2 contains photographs of side skirts off ered by the four companies discussed

below.

• Freight Wing Incorporated offers a selection of si de skirts, which they market as Belly Fairings, adapted for different types of trai lers. Three of these configurations are currently SmartWay approved, including the Stan dard Belly Fairing shown in Figure IX-2. Earlier models of the Belly Fairings were constructed of aluminum, while their newest version is made from high densit y polyethylene.

• Laydon Composites Ltd. offers the TrailerSkirt, a full-length injection molded side skirt. It is made of ABS plastic with a rubber str ip along the bottom. This product is constructed of separate panels; the number of panel s used will depend upon the length of the trailer (typically between 6 and 8 pe r side). The Laydon TrailerSkirt is SmartWay approved.

• Silver Eagle Manufacturing offers Mini-Skirts (see two photographs in Figure IX-2). The Mini-Skirts are made of aluminum and designed w ith dual parallel side panels

that are constructed in four-foot modules. As of t his writing they are not yet SmartWay approved.

• Transtex Composite manufactures the MFS Skirt out of a fiberglass/thermoplastic composite material. It is constructed of a single panel on each side. The MFS Skirt is SmartWay approved.35 Figure IX-2: Trailer Side Skirts

Still In Development :

• Adamworks has developed the AeroMax Retractable Fa iring System, which is currently in the prototype phase. It is designed t o be pneumatically controlled and speed sensitive; it deploys at 35 miles per hour (a nd retracts when speeds fall below 35 miles per hour). When deployed, it reaches with in a few inches of the ground, and when retracted, it stays at about 20 inches abo ve ground (see Figure IX-3). The potential advantages of this type of design are tha t it reduces the chance of damage at low speeds or at loading docks (when retracted), and yet offers potential additional efficiency improvements when deployed cl oser to the ground, thereby reducing air flow under the trailer. As of this wr iting, this device is not yet SmartWay approved.36 Figure IX-3: Adamworks Aeromax Retractable Fairing

b) Front Trailer Fairings

Front trailer fairings are defined in the regulatio n as curved structures that attach to the front facing surface of a trailer that covers all o r part of the trailer’s front facing surface.

These devices serve to reduce the wind resistance c aused by the gap between the tractor and the trailer and allow for smooth, unint errupted air flow, regardless of the angle of approaching wind. They are most effective when installed on tractor-trailers with a gap greater than 36 inches. They are design ed to be used on dry-vans and not on refrigerated-vans. The average fuel savings ass ociated with front trailer fairings is between 1 percent and 2 percent. Currently availab le front trailer fairings are constructed of aluminum, fiberglass or plastic. Th ey typically weigh between 75 and 140 pounds.

The approximate retail costs for current front trai ler fairings range between $800 and $1000.

The following three companies manufacture some type of front trailer fairing, as shown in Figure IX-4:

• Freight Wing Incorporated produces a few different front trailer fairings. One model, the Gap Fairing, is SmartWay approved. It consists of three curved aluminum panels that extend forward and inward from the top and sides of the trailer front.

• Laydon Composites Ltd. produces the Nose Fairing, which is currently made of fiberglass. It is SmartWay approved. It consists of three elongated hemispheric structures that extend along the top and sides of t he trailer front.37

• Nose Cone manufactures the Nose Cone/Gap Reducer. It is a rounded air deflector that is installed on the upper front portion of a t railer. The Nose Cone is most effective on trailers pulled by tractors that do no t have the extended roof fairings. Previously constructed of aluminum, a newer, plasti c version of the Nose Cone has received SmartWay approval, and will soon be commer cially available.

Figure IX-4: Front Trailer Gap Fairings

c) Rear Trailer Fairings

Rear trailer fairings are structures that attach to the outer edges of the trailer’s rearfacing surface to provide a continuous surface for the air passing over the side and top

surfaces of the trailer. Some models also have a b ase plate on the lower surface. These fairings reduce turbulence and resistance by reducing “suction” on the rear of the trailer. They can be used on both dry-vans and ref rigerated-vans. The fuel savings associated with rear trailer fairings ranges betwee n 1 percent and 5.1 percent.

The following three manufacturers offer some type o f rear trailer fairing, as shown in Figure IX-5.

• Advanced Transit Dynamics (ATDynamics) manufacture s a rear trailer fairing called the TrailerTail. The TrailerTail is a rigid struct ure that extends four feet out from the perimeter of the rear of the trailer when deployed. It collapses when the rear doors of the trailer are opened, and it expands into its aerodynamic configuration when the doors are closed. This device is SmartWay approved

.

• Nose Cone manufactures the Tail Cone. This device is installed on trailers that do not open at the rear. As of this writing, this dev ice is not SmartWay approved.

• Transtex Composite manufactures the BoatTail rear air deflector. It automatically folds away when the rear doors are opened, and fold s flat against the sides of the trailer so as not to interfere with loading or unlo ading. As of this writing, this device is not SmartWay approved.38 Figure IX-5: Rear Trailer Fairings

The ranges of fuel savings offered by each of the t hree types of aerodynamic devices discussed previously are shown in Table IX-2 below. In general, staff expects the benefits of using more than one type of device to b e additive, although there may be synergistic effects or interactions that may limit those additive benefits.

Table IX-2: Fuel Savings Ranges for Trailer Aerody namic Devices (Freight Wing,

2007; Laydon, 2007; Surcel, 2007a; Surcel, 2007b)

Trailer Aerodynamic

Devices Fuel Savings Range

Side skirts 4% - 7%

Front gap fairings 1% - 2%

Rear fairings 1% - 5.1%

d) Other Technologies

Several manufacturers have developed additional tec hnologies to improve trailer aerodynamics, including other types of fairings and a variety of flow control devices (vortex strakes, vortex traps, air talons). As of this writing, these devices are not SmartWay approved but, if approved, may potentially play a role in meeting California’s proposed requirements.

2. Experience with Aerodynamic Technologies

ARB staff spoke with representatives of several fle ets that have been using some of the aerodynamic technologies identified above in order to ascertain what their “real world” experiences have been with the technologies. Detai ls of these discussions can be found in Appendix E: Fleet Summaries. For the mos t part, as described below, these companies have used some type of trailer side skirt and, in a few cases, some other type of technology. It should be noted that the ma jority of fleets with whom staff spoke39

were customers of the manufacturers identified in t he previous section of this report. Staff also spoke with representatives of two large nationwide fleets that do not currently use trailer aerodynamic technologies; these fleets had some previous negative experiences with them. Their comments, one of whic h is detailed in Appendix E (the

other fleet refused to allow its inclusion in this report), are also summarized below in the Previous Users of Aerodynamic Technologies section.

a) Current Users of Aerodynamic Technologies

Fleet Descriptions

The companies with whom staff spoke are located in different parts of the United States, including the East, Midwest, South, and West, as we ll as eastern Canada. Fleet sizes ranged from fewer than 50 trailers to over 20,000 t railers. Some operated dry-vans exclusively or refrigerated-vans exclusively, while others operated a variety of different types of trailers. The majority operated mostly 53 -foot trailers, although one used smaller trailers (48-foot) exclusively.

Types of Aerodynamic Technologies

All of the fleets indicated that they have been usi ng at least one type of side skirt over a period of between nine months and more than two yea rs. The numbers of skirts they currently use vary considerably, from 2 to 200 skir ts, depending primarily on the size of their fleet. Some fleets reported that they are pl anning to install skirts on all of their trailers, while others have not yet decided or do n ot have the capital to invest in them at the present time. The majority have continued usin g the same brand of device; only a minority reported trying more than one brand. Also , only a minority have tried devices other than side skirts. Of those fleets, a few hav e tried some type of gap reducing fairing, and fewer have tried a rear trailer fairin g.

Fuel Economy and Other Benefits

In the real world it is difficult to isolate the be nefits achieved using one particular aerodynamic technology from all other fuel-saving s trategies and technologies that may be used. Many of the fleets reported that besides side skirts, they also employ the following fuel-conserving practices or technologies : speed governing, extensive driver education and incentives, low-rolling resistance ti res, more fuel efficient (SmartWay) tractors, auxiliary power units, etc. For that rea son, several fleets were not able to isolate the fuel savings achieved from individual c omponents. For those fleets that could isolate the benefits, they attributed an esti mated three to six percent improvement in fuel economy with the skirts – a significant imp rovement according to these fleet representatives.

In addition to fuel economy, the fleets reported ad ditional benefits when using trailer side skirts, including a smoother and more stable r ide, particularly in a crosswind; less side spray in the rain; and an overall improvement in the ability of the trailer to follow straighter. Most fleets were convinced that traile r skirting improves overall safety.40

Damage and Repair Issues

The vast majority of the fleets reported having ver y few incidents of damage to the side skirts. Of those who reported any damage, all were minor. Many were caused by driver error, while some were caused by unavoidable accide nts. In all cases, none resulted in any serious damage to their equipment or anyone els e’s property. None reported any pieces of the skirts becoming disconnected and flyi ng off the trailers. A few reported that when damage did occur, the driver was able to take action to secure the situation before driving on the road.

When damage occurred to aluminum skirts, fleets rep orted they were often able to repair minor damage themselves, by hammering the sk irt back into shape. When that was not possible, fleets reported that either they had extra replacement panels (where applicable) or that the manufacturers quickly sent them replacement panels so that repairs were made within a few days.

Based on anecdotal information, staff became aware that side skirts might accumulate

excessive amounts of snow and ice in colder climate s. However, several fleets specifically indicated that they do operate in cold er climates and severe weather, and have not experienced any problems with snow or ice build-up. Nevertheless, the skirt manufacturers have become aware of these potential concerns and are taking steps to avoid any future problems.

Although the majority of fleets have not used rear fairings, a few expressed skepticism about the safety and ease of using them. They repo rted concerns that drivers or

individuals who load or unload the trailers but are unfamiliar with the equipment could easily damage the rear fairings. Staff anticipates that as drivers and warehouse personnel become more familiar with the technologie s, these concerns will disappear. In addition, aerodynamic equipment manufacturers ar e taking steps to further develop and improve their products to eliminate these poten tial problems.

Costs and Return on Investment

The majority of fleets reported paying between $100 0 and $2600 for their skirts. Several of those who purchased their skirts about t wo years ago were able to take advantage of a grant that paid for one-half of the cost, up to a certain number of skirts. The return on investment achieved by some of the fl eets (excluding those who received grant funding), averaged about 18 months, and range d from a few months to 3 years (most of the fleets reported a trailer-to-tractor r atio of 2-to-1 or 2.5-to-1).

b) Previous Users of Aerodynamic Technologies

Staff spoke with representatives of two companies w ith large fleets who had used trailer side skirts in the past, but either stopped using t hem or were in the process of phasing out their use. The following paragraphs identify t he main reasons why these companies are not current proponents of side skirt use, and d iscuss how these concerns are being

addressed.41

• Side skirts installed on trailers were damaged by scraping the ground when encountering elevated railroad track crossings and steep loading dock ramps. Side

skirt manufacturers are well aware of this concern and have developed workable solutions that are incorporated in many of the side skirt models available today. These solutions include using more pliable and dura ble materials, adjusting the height of the skirts to provide more clearance wher e necessary to prevent damage, and designing the skirt to retract when traveling a t slow speeds.

• Side skirts were damaged when encountering objects such as snow banks or fire hydrants. As noted in the previous section on Dam age and Repair Issues, fleets that are currently using side skirts have not encou ntered significant damage to their side skirts. When damage did occur, it was usually minor and often caused by driver

error.

• Side skirts were pulled away from their mounting b rackets by the wind force encountered while traveling on the highway. Most f leets contacted did not experience this issue.

• Side skirts and their support structure collect sn ow and ice in inclement weather, adding weight to the trailer and posing a safety ha zard as the ice breaks away when the trailer is traveling on the highway. As discus sed previously, current side skirt users, including those who operate in extreme weath er conditions, have not encountered these problems. Moreover, the manufact urers have indicated that the

materials from which their skirts are constructed t end to repel snow and ice. Staff therefore anticipates that these issues will contin ue to be addressed by skirt

manufacturers.

• Rain flowing off the side skirts caused a “blindin g” spray on vehicles directly behind and near the trailer. Fleets that currently use si de skirts did not raise this comment; in fact, some commented that the skirts provide enh anced visibility for the truck

driver.

• Side skirts caused additional delays when crossing the U.S.-Mexico border. Staff anticipates that as border inspection personnel bec ome more familiar with such aerodynamic devices as side skirts, they will becom e more efficient at inspecting trailers equipped with them, and will no longer del ay those vehicles.

• High trailer-to-tractor ratio makes outfitting an entire large fleet with skirts costprohibitive. Staff recognizes that the return on i nvestment for such fleets will be longer than for the average fleet, but anticipates that these fleets will eventually realize the cost savings during the trailer’s life.

3. Incremental Cost of Aerodynamic Technologies

Staff estimated the cost of aerodynamic devices bas ed on currently available retail prices, fleet price quotes, and equipment manufactu rer prices for new SmartWay trailers. The amount of time to install the aerody namic equipment varied, depending on the experience of the person(s) doing the installat ion. Staff used a typical or average

time for installation of four hours and a labor rat e of $50 per hour. Thus, the average incremental cost of the aerodynamic equipment for t he trailer (which would include side42

skirts and front fairings) would be about $2,900. For further details on staff’s cost analysis, please see Chapter XII.

4. Lifetime Costs of Aerodynamic Technologies to Ow ners

The proposed requirements are expected to provide c ost savings to owners of trucking businesses over the useful life of the trailer by r educing operational costs (i.e., fuel consumption). The cost of the add-on devices for a trailer can be recovered from fuel savings in 18 months. Looking at the equipment ope rating costs only, about $35,000 savings is expected over a typical equipment life o f 11 years. Staff used 11 years to be consistent with the equipment life of a long-haul t railer. However, it is recognized that a trailer may be used for many years in a long-haul a pplication beyond the assumed equipment life of 11 years. Accounting for capital cost, maintenance cost, and fuel savings, the proposed requirements are expected to result in a net cost savings of about $13,000 per trailer (in 2008 dollars). Staff expects that aerodynamic equipment prices may be lower for future purchases because of increased production and additional manufacturers of approved equipment ente ring into the market. Again, for further details on the staff’s cost analysis, pleas e see Chapter XII.

5. Product Availability

Although recent increases in the cost of fuel have made aerodynamic technologies for trailers more attractive, demand for them has been extremely limited up to this point.

Some of the manufacturers identified earlier in thi s chapter have been producing aerodynamic technologies for only a few years. Nev ertheless, some of them have indicated that they will have the capability to mee t upcoming demand for their devices in their existing facilities by increasing the number of shifts they operate or by purchasing additional equipment to increase the number of prod uction lines. Others indicated that they have licensed their technology to other larger and more nationally distributed companies, or that they can subcontract production of their products to other manufacturers. It is anticipated that the phase-in period provided by this proposal will give manufacturers time to expand production volume s and help stabilize the cost of the technologies.

C. Tractor and Trailer Low-rolling Resistance Tires

1. SmartWay Approved Low-rolling Resistance Tires

Under the SmartWay program, the assumption is that for every 5 percent reduction in tire rolling resistance, a 1 percent reduction in f uel savings is attained (U.S. EPA, 2008). The goal of requiring low-rolling resistance tires is to achieve a fuel consumption savings of at least 3 percent. In order for tires to be SmartWay approved, U.S. EPA requires manufacturers to provide test data that de monstrate their tires meet the SmartWay performance requirements, using one of the following test methods:

• Using the SAE J1321 Type II fuel consumption test, demonstrate a 3 percent (or greater) fuel savings with low-rolling resistance t ires. This test must be performed on a test track, rather than “in service”, or43

• Using the SAE J1269 tire rolling resistance test, demonstrate that the tire’s rolling resistance coefficient complies with the SmartWay “ target values.” These values (see Table IX-3) are axle-specific.

Table IX-3: Comparison of Tire Rolling Resistance Coefficients

Tire

Position Standard Tire (kg/metric ton) SmartWay Tire (kg/metric ton)

Steer Axle 6.8 5.8

Drive Axle 8.6 7.3

Trailer Axle 6.1 5.2

After analyzing tire rolling resistance data, U.S. EPA set the SmartWay target values at 15 percent below the midrange coefficient levels of the most commonly used long-haul tires. A 15 percent reduction in tire rolling resi stance results in a 3 percent reduction in fuel consumption. The SmartWay target values for t ire rolling resistance are expressed in kilograms (kg) per metric ton. This measurement takes the amount of resistance forces within a tire and divides it by the load mas s supported by that tire. For example, a tire with a rolling resistance coefficient of “6” (when tested under SAE J1269) has 6 kilograms of resistive tire forces for each metric ton of downward force on that tire. Thus, about 60 newtons of constant force would be r equired to overcome the rolling

resistance of such a tire.

2. Experience with Low-rolling Resistance Tires

As stated in SAE J1269, rolling resistance is defin ed as the scalar sum of all contact forces tangent to the test surface and parallel to the wheel plane of the tire. The rolling resistance coefficient is the ratio of the rolling resistance to the load on the tire (SAE J1269). Simply put, the more rolling resistance a tire has, the more energy is required to move a vehicle. The three main physical causes of rolling resistance are: hysteretic losses, aerodynamic drag, and friction losses (tire /ground and tire/rim).

Hysteresis is the phenomenon whereby the tire mater ial’s internal molecules slip against one another. The energy that should be con verted to do the mechanical work of moving the vehicle forward ends up getting released in the form of heat. Hysteresis occurs as the tires go through their continuous def ormation and recovery cycles (Bajer, 2008); i.e., deforming

when in contact with the road (and bearing the wei ght) and recovering

when not in contact with the road). By using more resilient rubber compounds in the manufacturing process, hysteretic losses can be reduced.

Aerodynamic drag stems from the wind drag caused by a tire’s tread design. Although it can provide additional traction, an aggressive, zigzag tread pattern with deep lugs has significantly more wind drag (especially at high sp eeds) than does a rib tread design tire with straight grooves. By designing tread patterns that are more aerodynamic, wind drag is reduced; resulting in lower rolling resista nce.44 Figure IX-6: Contributors to Rolling Resistance (M ichelin, 2002)

Friction losses between the tire and road and betwe en the tire and rim are particularly prevalent when tires are new. Forces on drive tire s due to acceleration, and upon all wheels due to turning and heavy loads, can cause fl exing and scuffing to the tire tread and sidewalls that result in extra friction. Rough road surfaces further exacerbate this problem. The taller, deeper treads of a new tire a re more susceptible to this condition (lack of lateral stiffness) because there is more t ire material available to flex. As a tire wears down, lateral stiffness increases and rolling resistance decreases; resulting in fuel economy benefits that increase as the tires’ t read depth decreases. Therefore, to provide lower rolling resistance, SmartWay tires ar e designed with tread depths that are slightly shallower than most standard long-haul tir es. Improvements to the tire casings have also been made to reduce sidewall flexing and casing growth (i.e., stretching out of shape), as well as strengthening of tire beads t o better stabilize tire-to-rim contact.

The development of low-rolling resistance tires beg an largely in response to the 1975 Energy Policy Conservation Act, which established C orporate Average Fuel Economy standards for passenger cars and light trucks. Sin ce 1980, the tire and rubber industry has responded by reducing the rolling resistance of tires by more than 50 percent. One of the greatest factors that reduced rolling resist ance was the shift from bias-ply tires to radial tires. Although still manufactured (largely due to lower cost), bias-ply tires produce higher friction and heat than radials, whic h results in higher rolling resistance and fuel consumption.

There are several other factors that affect a tire’ s rolling resistance, including tire mass, rubber formulations, tread design, inflation pressu re, speed, ambient/tire temperature, applied drive torque, surface roughness, and the ve hicle’s wheel alignment (front/steer tires). Improvements to the factors over which tir e manufacturers have control (i.e., tire Tire/Ground

and Tire/Rim Friction Losses (< 5%) Hysteretic Losses

80 to 95 % Aerodynamic Drag

0 to 15%45

mass, rubber formulations, and tread design) are th e focus of the SmartWay performance requirements.

3. Incremental Costs of Low-rolling Resistance Tire s

According to a tire industry trade publication, in 2005 almost 70 percent of original equipment tires and over 60 percent of replacement tires sold for HDV use were radials (MTD, 2006). With the advent of the SmartWay progr am, combined with the recent increase in fuel costs, staff believes these percen tages are considerably higher today. In the staff’s analysis, the cost of SmartWay appro ved tires over standard HDV radial tires ranged from about $0.00 to $50.00 per tire, w ith an incremental cost of $0.00 to $900.00 to replace the tires on a tractor and trail er. The average incremental cost for those upgrading to SmartWay tires from bias-ply tir es would be slightly higher, but their fuel economy benefit will be significantly greater than those who are already using radial tires. The estimated tire prices were determined f rom price quotes obtained from fleets, tire manufacturers, and tire retailers. For this a nalysis, staff assumed that the typical HDV has 18 tires: two steer tires, eight drive tire s, and eight trailer tires. Although SmartWay approved tires typically have slightly sha llower tread depths, improvements to both the tire casing and tread design have shown that some low-rolling resistance tires may last as long as their conventional counte rparts. Moreover, many fleets are already equipping their tractors and trailers with SmartWay approved tires, so their capital expenses for tires have been made already.

4. Lifetime Costs of Low-rolling Resistance Tires

With respect to tires, there are notable difference s between tractor-trailers and passenger cars. Most notably, when the tires wear out on passenger cars, they are discarded for new ones. However, when tractor-trai ler tires wear out, the tire casings are usually retreaded and put back into service aga in. Therefore, it is not uncommon for a tire to start off “new” as a steer tire, get retreaded and used as a drive tire, and

then retreaded once or twice more and used as a tra iler tire before being discarded. Some fleets may retread the trailer tires even more often, if the casing remains serviceable. Taking this practice into account, st aff estimates that tractor-trailers equipped with SmartWay approved tires will realize an annual fuel cost savings ranging from $500 to $1,000 (greater fuel savings for those replacing bias-ply tires with SmartWay tires).

Another benefit from the use of low-rolling resista nce tires is that, because the tires run cooler, the tire casings are subject to less heat a nd fatigue, thereby, improving the likelihood that the casings of SmartWay tires will be candidates for multiple retreadings. Besides the cost savings associated with retreads ( about one-half the cost of new tires), retreads result in a reduction in the demand for pe troleum. Tires are petrochemical products. On average, it takes about 22 gallons of oil to produce a new tire. However, it only takes about 7 gallons to produce a retread (TRIB, 2008). Thus, retreading is not only a cost-effective alternative, but it also redu ces the demand on petroleum

resources.46

5. Product Availability

In discussions with tire manufacturers, the added d emand for SmartWay tires does not pose a product availability problem. In years past , tire longevity and traction were the important considerations when selecting tires. Now , following the recent increase in fuel costs, the demand for fuel-efficient tires has come to the fore. Manufacturers are already working towards making their tires more fue l efficient. Although staff anticipates that additional tire manufacturers will produce low -rolling resistance tires that meet the performance requirements of SmartWay, there are cur rently four manufacturers with SmartWay approved tires: Bridgestone, Continental, Goodyear, and Michelin. According to a recent trade publication (MTD, 2008) , these four companies comprise over 79 percent of the truck tire market share. Mo reover, each one of these manufacturers produces SmartWay approved tires (lis ted below) in both the 22.5-inch and 24.5-inch HDV rim sizes, and in tread designs o ptimized for the steer, drive, and trailer axle positions.

Bridgestone Goodyear Steer R287, R280 Steer G395 LHS Fuel Max Drive M720, Greatec Drive G305 LHD Fuel Max Trailer R195, Greatec Trailer G316 LHT Fuel Max

Continental Michelin Steer HSL Steer XZA3, XZA2 Drive HDL Eco Plus Drive XDA Energy, XDA3, X-One XDA Trailer HTL Trailer XTA Energy, XT1, X-One XTA

Another option for the drive and trailer axle posit ions is the use of SmartWay approved wide base tires, or “super singles.” Unless origin ally equipped, this alternative requires replacing the dual-wheel configuration on the drive and/or trailer axles with a single, wide tire and rim. The super single tires provide excellent low-rolling resistance and fuel economy; and because they weigh less, they allow fo r greater carrying freight capacity.

X. A LTERNATIVES C ONSIDERED

Staff developed the proposed regulation in an open public process, initially presenting draft regulatory concepts that evolved into the pro posed regulation. During the regulatory development process, the scope, structur e, and requirements of the regulation changed based on information staff gaine d through its own research and through information exchanged at public workshops a nd separate meetings with

interested stakeholders. Ideas that were formulate d during the development process and incorporated in the final proposed draft regula tion included: adding California-based shippers to the list of regulated entities; removin g receivers and non-California-based brokers from the list of regulated entities; exempt ing short-haul tractors and trailers,47

defining an optional compliance schedule that exten ds over several years, exempting curtain-side trailers, and providing credit for ear ly actions.

When determining whether a suggested change should be incorporated into the proposed regulation, staff considered the impact th e proposed change would have on reaching the following goals:

• Achieve maximum reductions in GHG emissions as exp editiously as possible by improving the efficiency of long-haul tractors and trailers;

• Base the regulation’s requirements on the U.S. EPA ’s SmartWay technology specifications and requirements for improved tracto r and trailer aerodynamics and reduced rolling resistance;

• Delay the cost to fleet owners that are also retro fitting or replacing equipment to comply with title 13, California Code of Regulation s, section 2477, Airborne Toxic Control Measure for In-Use Diesel-Fueled Transport Refrigeration Units (TRU) and TRU Generator Sets, and Facilities Where TRUs Opera te;

• Ensure that the regulation is enforceable on both California-based and out-of-statebased tractors and trailers;

• Achieve a positive cost-benefit ratio resulting fr om substantial fuel savings;

• Achieve cost-effective emission reductions on a do llar per ton basis; and

• Achieve these goals while keeping in mind the U.S. EPA SmartWay approved technologies available today and likely to become a vailable over the next few years.

The alternative regulatory structures considered an d reasons they were rejected in favor of the proposed regulation are summarized in Table X-1 below.

Table X-1: Alternative Regulatory Structures Consid ered

Approach Why Rejected

No action – Tractor and trailer owners would install SmartWay technology on a voluntary basis in accordance with the U.S. EPA SmartWay program requirements. SmartWay technologies have been available for several years and most truck

and trailer owners have not installed them despite available fuel savings. Would prevent ARB from meeting GHG emission reduction goals required by AB 32.48

Don’t limit applicability of regulation to heavy-duty tractors pulling 53-foot or longer box-type trailers

• Expand applicability of aerodynamic technology requirements – Require aerodynamic technologies to be installed on box-type trailers of any length and on straight trucks

• Expand applicability of low-rolling resistance tire requirements - Require low-rolling resistance tires on all heavy-duty tractors, trailers, and heavy-duty straight trucks. • Beyond scope of current U.S. EPA SmartWay Program

o No SmartWay approved aerodynamic technologies exist for straight trucks.

o SmartWay approved technologiesonly exist for 53-foot or longer boxtype trailers

o SmartWay certified trailers are all 53- foot or longer.

• Extending regulation to straight trucks results in only modest increase in GHG

reductions.

• Heavy-duty tractors pulling 53-foot or longer box-type trailers comprise the majority of long-range mileage from heavy-duty tractors. Those vehicles will see the greatest fuel economy benefits from the use of aerodynamic technologies and low-rolling resistance

tires.

• Information to quantify the emission benefits of low-rolling resistance tires on other heavy-duty truck applications is lacking. Thus, it is difficult to assess at

this time whether the benefits would outweigh the costs.

The sections below provide further quantification a nd detail on the two alternative regulatory structures identified in Table X-1.

A. No Action

During the course of the regulatory development pro cess, tractor and trailer owners, as well as representatives of trucking industry associ ations, suggested that the best approach is to continue with the voluntary U.S. EPA SmartWay Program. They argued

that at this time there are insufficient data avail able to demonstrate how the various aerodynamic technologies and low-rolling resistance tires perform in real world operations to support a regulation that mandates th eir use.

Staff agrees that the use of aerodynamic technologi es and low-rolling resistance tires by current long-haul transport fleets is not widesprea d. However, staff believes that there are sufficient laboratory test data (generated by U .S. EPA’s SmartWay program, Chapter VII) as well as real-world data (informatio n gathered by staff, Chapter IX) to support requiring their use in accordance with the proposed regulation.49

The reported negative experiences with aerodynamic devices include increased weight with little or no fuel efficiency gain, extent and frequency of fairing damage, and additional weight added due to snow and ice build-u p. The negative experience with low-rolling resistance tires includes little or no fuel economy savings and loss of traction in off-road applications. The negative concerns ab out adding weight without fuel efficiency gains is being addressed in the proposed regulation by limiting the requirement to add aerodynamic devices to only long -haul applications, where most vehicle miles traveled are done at highway speeds. Further, by limiting the low-rolling resistance tire requirement to tractor-trailer rigs comprised of tractors pulling 53-foot or longer box-type trailers on California highways, co ncerns about loss of traction are largely mitigated, since typical off-road applicati ons (e.g., logging, construction equipment transport) are not impacted by the propos ed regulation. Other negative experiences like fairing damage and snow/ice buildu p have largely been addressed by aerodynamic device manufacturers. In summary, staf f believes the negative experiences associated with aerodynamic and low-rol ling resistance tire technologies required by the proposed regulation are being addre ssed by the manufacturers of those products and are further lessened by limiting the a pplicability of the proposed regulation to long-haul tractor-trailer rigs.

Although the SmartWay program has been in place sin ce 2004, a relatively small

number of tractors and trailers have been retrofitt ed with aerodynamic technologies in response to this program. This is especially true for trailers, where staff estimates that less than 0.3 percent of the total 53-foot or longe r box-type trailer inventory incorporates aerodynamic technologies. Part of the reason for t his lack of use of aerodynamic technologies is that SmartWay partners are choosing other options to reduce the GHG footprint of their businesses. Strategies chosen i nclude reduction in idling time, increasing intermodal transport, reducing trailer w eight, and using cleaner diesel engine technologies. But the question still remains, why don’t they choose to retrofit trailers instead of some of these other options when meeting their SmartWay goals? Staff

believes the decision not to retrofit is rooted in the conservative nature of the long-haul transport business and the magnitude of the up-fron t capital costs to retrofit an entire

fleet of trailers.

Staff estimates that the average capital cost to co mply with the proposed regulation is approximately $5,000 per tractor and trailer affect ed. About $2,900 is needed to retrofit a box-type trailer with aerodynamic technologies an d low-rolling resistance tires. However, the operating cost savings resulting from the fuel efficiency improvement associated with compliant tractors and trailers is substantial. Staff estimates a compliant tractor-trailer combination will save bet ween $4,000 and $5,700 in fuel costs every year. To some extent, the transportation ind ustry has recognized the benefits associated with improved aerodynamics. Most long-h aul tractors have some aerodynamic features – roof fairings and fuel tank fairings are two examples. However, trailer aerodynamics has lagged woefully behind. B ox-trailer design has not evolved much over the last 30 years. The trailers are desi gned to carry the largest possible load within federal and state size and weight limits. A s a result, trailers are rectangular in shape, designed to take advantage of every inch all owed by the size limits, with little consideration given to aerodynamics. Staff believ es the incorporation of aerodynamic50

technologies on box-type trailers will not happen i n a timely manner without regulatory impetus. Real and quantifiable near-term GHG reduc tion benefits will be lost if the proposed regulation is not implemented. As a resul t, staff has rejected the “No Action” option.

B. Expand Applicability

The proposed regulation was identified by staff in October 2007 as a discrete early action measure required to be adopted by the Board and made enforceable by January 1, 2010 (ARB, 2007). Key to its inclusion in the l ist of discrete early actions was the existence of the SmartWay program, which establishe s technical specifications and requirements for compliant tractors and trailers. The applicability of the proposed regulation is inline with the applicability of the SmartWay program’s technical specifications and requirements.

Throughout the regulatory development process envir onmental groups have suggested that the applicability of the proposed regulation s hould be expanded beyond the traditional long-haul configuration of tractor and trailer (i.e., a sleeper cab tractor pulling a 53-foot or longer box-type trailer) to include bo x-type trailers of various lengths and types, and straight trucks. Their analysis indica tes that requiring aerodynamic device retrofits and low-rolling resistance tires on all t ractor-trailers pulling box-type trailers and straight trucks could get an additional 46 percent reduction in cumulative GHG emissions by 2020 (Schubert, 2008).

Staff agrees that additional GHG emission reduction s can be gained by expanding the applicability of the proposed regulation beyond the proposed long-haul configuration tractors and trailers. But expanding the applicabi lity of the proposed regulation in these areas would mean that it would be broader in scope than the applicability of the current SmartWay program. Expanding the applicability of t he rule would require staff to develop an ARB tractor and trailer, tire rolling re sistance, and aerodynamic technology approval and certification program. A certificatio n testing protocol and certification procedure would need to be developed. This could n ot be accomplished in the timeframe allotted to develop the proposed regulati on. As a result, staff did not expand the applicability of the proposed regulation. Howe ver, staff is committed to work with U.S. EPA SmartWay program staff and evaluate the fe asibility of expanding the program in the near future

Below are listed some of the specific data needs as sociated with expanding the applicability of the proposed regulation that could not be addressed by staff within the regulatory development timeframe of the proposed re gulation. These issues will be addressed by staff in the development of future reg ulations.

• Obtain additional test data to verify fuel economy improvements from aerodynamic technologies and low-rolling resistance tires on straight trucks, and other box-type trailers. For the proposed regulati on, staff has relied on the U.S. EPA’s published fuel economy benefits based on a Cl ass 8 tractor pulling a 53- foot box-type trailer loaded to 65 percent of its g ross vehicle weight rating51

(52,000 lbs.) operated over three drive cycles repr esentative of line-haul tractortrailer operations (Bachman, 2005.) For different trailer sizes and tractor classes and vocations, the fuel economy benefits may be dif ferent and would need to be verified through testing.

• Obtain additional data on low-rolling resistance t ire availability, off-road capability, and production capacity. Expanding the applicability of the low-rolling resistance tire requirement will increase the deman d for these tires and result in them being used on tractors and trailers that trave l off-road regularly, i.e. log hauling.

• Obtain additional data on the synergistic effects of combining aerodynamic technologies on tractors and trailers. Staff relie d on the fuel economy benefits established by the SmartWay program for combination s of aerodynamic devices. Requiring all available aerodynamic technologies on all trailers goes beyond the requirements of the SmartWay program. Staff needs to verify the fuel economy benefits of such an approach through additional tes ting.

XI. E NVIRONMENTAL I MPACT

The proposed regulation is driven by the need to re duce GHG emissions from the transportation sector and specifically from on-road HDVs. The reductions are expected to be achieved through the accelerated introduction of new aerodynamically styled fuel

efficient tractors and trailers and the retrofit of existing tractors and box-type trailers with fuel efficient aerodynamic and tire technologies.

Staff expects implementation of the regulation to r esult in significant GHG emission reductions and to a lesser extent oxides of nitroge n emission reductions, and does not anticipate any significant adverse public health or environmental impacts associated with the proposed regulation. The following sectio ns discuss the environmental impacts associated with the proposed regulation.

A. Legal Requirements

The California Environmental Quality Act (CEQA) and ARB policy require an analysis to identify the potential environmental impacts of pro posed regulations and to mitigate significant effects whenever it is feasible to do s o. Since ARB’s program involving adoption of regulations has been certified by the S ecretary of Resources as meeting certain environmental standards set forth in CEQA, the CEQA environmental analysis requirements may be included in the Initial Stateme nt of Reasons (ISOR or Staff Report) for this rulemaking in lieu of following th e CEQA format of an Initial Study and Negative Declaration, and Environmental Impact Repo rt (see Public Resources Code, section 21080.5). In addition, ARB staff will resp ond, in the Final Statement of Reasons for the regulation, to all significant environmenta l issues raised by the public during the public review period or at the Board public hearing

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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.

The proposed regulation is designed to reduce GHG e missions from long-haul

combination trucks. The reductions are needed to r educe global warming which poses a threat to the public health, natural resources, e conomic well being, and the environment of California as required by AB 32.

Alternatives to the proposed regulation are discuss ed in Chapter X of this report. ARB

staff has concluded that there are no alternative m eans of compliance that would

achieve similar GHG emission reductions at a lower cost.

B. Reasonably Foreseeable Environmental Impacts

Staff has identified air quality benefits and minim al negative environmental impacts of compliance with the proposed regulation.

1. Estimated GHG Benefits

The GHGs associated with diesel exhaust are CO 2 , methane, and nitrous oxide, with

CO 2 being the major component of the three. Since CO 2 is emitted in direct proportion to the fuel combusted, any reduction in CO 2 emissions requires reduction in the fuel burned to propel the vehicle. The proposed regulat ion would reduce GHG emissions by reducing the fuel consumption of HDVs achieved thro ugh improvements in aerodynamic drag and tire rolling resistance. The GHG reductio ns would contribute towards attaining AB 32 goals for the year 2020.

Equation XI-1 was used to calculate the GHG reducti ons from the proposed regulation.

CO 2 e Reduced = Fuel Savings*EF/1000 (Equation XI-1)

Where: CO 2 e Reduced = average annual reduction in GHGs in met ric tons CO 2 e Fuel Savings = Annual fuel savings in gallons per year EF = GHG emission factor from diesel fuel combusti on (10.4 kilograms CO 2 e

per gallon of diesel fuel (ARB, 2008c)) 1000 = Conversion factor from kilograms (kg) to met ric tons (1000 kg = 1 MT)

Annual Fuel Savings : The annual fuel savings is determined from the p ercent fuel efficiency improvement, annual VMT, and the baselin e fuel economy.

Percent Fuel Efficiency Improvements : The percent fuel efficiency improvements used to quantify the GHG benefits are shown in Tabl e XI-1. These were determined based on the minimum aerodynamic and tire rolling r esistance performance53

requirements specified in the proposed regulation. For example, the proposed regulation would require a minimum fuel efficiency improvement of 3 percent from lowrolling resistance tires on the combined tractor an d the trailer, a minimum of 4 percent from trailer side skirts, and a minimum of 1 percen t from front or rear gap fairings on dry-van trailers. Thus, for this example, an in-us e pre-2011 model year tractor pulling a dry-van trailer would achieve an overall fuel effic iency improvement of 8 percent, as

shown in Table XI-1.

The fuel efficiency improvements of currently certi fied aerodynamic devices are determined from track tests conducted at speeds of 60 to 62 miles per hour according to “SAE J1321 Type II” test procedures. These aerodyn amic devices also reduce drag at lower speeds, though to a lesser extent, since aero dynamic drag varies with the square of the vehicle speed.

Annual VMT

: The annual VMT applicable to tractors pulling 53 -foot or longer box-type trailers was determined using the methodology descr ibed in Chapter VI. However, the resulting total VMT cannot be directly applied to t he fuel efficiency improvements shown in Table XI-1, since the VMT is accrued at various speeds, while the fuel efficiency improvements are determined at speeds of approximat ely 60 miles per hour. Thus, the speed-VMT distribution of the impacted tractors and fuel efficiency improvements at different speeds are needed in order to accurately quantify the GHG emission benefits. However, such data were not available and therefore staff estimated the GHG benefits using only the VMT accrued at highway speeds, witho ut taking into account benefits that occur at lower speeds. Accordingly, for non-n eighboring out-of-state tractors, staff assumed 85 percent of the VMT to be at highway spee ds, since these tractors travel long distances, spending the majority of their VMT at highway speeds. For neighboring out-of-state, California interstate, and California intrastate tractors, staff assumed 75 percent of the VMT to be at highway speeds, benefit ing fully for 75 percent of the VMT from the aerodynamic devices. 9

9 This assumption is consistent with assumptions mad e by other studies. For example, a report by Rocky Mountain Institute indicates 75 percent of the VMT is at highway speeds. (Ogburn, 2007).54

Table XI-1: Fuel Efficiency Improvements – Based o n Proposed Requirements

Tractor Improvements Trailer Improvements 10 Fuel Savings

1 2011+ model year SmartWay certified sleeper cab tractor (3.5%) Dry-van trailer – SmartWay certified or

retrofitted with side skirts and front gap fairings (6.5%) 10.0%

2 2011+ model year SmartWay certified sleeper cab tractor (3.5%) Refrigerated-van trailer – SmartWay certified or

retrofitted with side skirt (5.5%) 9.0%

3 2011+ model year day cab tractors and all pre-2011 model year in-use tractors - Tire Improvements (1.5%) Dry-van trailer – SmartWay certified or

retrofitted with side skirts and front gap fairings (6.5%) 8.0%

4 2011+ model year day cab tractors and all pre-2011 model year in-use tractors - Tire Improvements (1.5%) Refrigerated-van trailer – SmartWay certified or

retrofitted with a side skirt (5.5%) 7.0%

Baseline Fuel Economy : Staff also used model year specific baseline fue l economy values to estimate the fuel savings from the propos ed regulation. The fuel economy values used are developed by ARB staff and are appl icable for on-road HDVs operating in California (See Appendix C for a discussion of t he development of fuel economy values for HDVs).

For the purposes of quantifying the emission reduct ions, staff also assumed that all fleets will adopt the large fleet trailer complianc e plan which provides a compliance option for in-use pre-2011 trailers based on a phas e-in schedule specified in Appendix F of this report. Staff also assumed that in the abs ence of the proposed regulation, 20 percent of the tractors sold each year from 2010 to 2020 would be SmartWay certified and 25 percent of the in-use pre-2011 model year tr actors would use fuel efficient tires.

The GHG emission benefits were calculated for the y ears 2010 to 2020 based on VMT

accrued within California and nationwide. Table XI -2 summarizes the 2010, 2015, and

2020 statewide and nationwide GHG emission benefits of the proposed regulation. Staff estimates that from 2010 to 2020, as new fuel efficient tractors and trailers are

introduced and in-use ones retrofitted with fuel ef ficient technologies, GHG emissions will be reduced by a cumulative total of approximat ely 8 MMT CO 2 e statewide and approximately 52 MMT CO 2 e nationwide. The 2020 benefits are approximately 1 MMT

CO 2 e statewide and 6 MMT CO 2 e nationwide. Figure XI-1 shows the statewide

10 The trailer aerodynamic technologies specified in the table are meant for illustration purposes. Fleets can meet the requirements using o ther aerodynamic technologies that meet or exceed the minimum performance requirements

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baseline and controlled GHG emissions for calendar years 2010 to 2020. As seen in Figure XI-1, GHG emissions from long-haul tractors continue to increase even with implementation of the proposed regulation because t he trucking industry will grow substantially between now and 2020 (ARB, 2008a).

Table XI-2: 2010, 2015, and 2020 GHG Emission Bene fits - Statewide and Nationwide (MMT CO 2 e)

California Nationwide

Calendar Year Baseline Reductions Baseline Reductio ns

2010 8.5 0.2 55.6 0.9

2015 10.1 0.8 65.7 5.5

2020 11.4 1.0 74.6 6.7

7.0 7.5 8.0 8.5 9.0 9.5 10.0 10.5 11.0 11.5 12.0

2009 2011 2013 2015 2017 2019 2021

Calendar YearGHG Tailpipe Emissions(MMTCO2e) Baseline

With Regulation

Figure XI-1: Statewide GHG Emissions With and With out the Regulation56

2. Estimated Oxides of Nitrogen (NOx) Emission Bene fits

In addition to GHG benefits, reducing aerodynamic d rag and rolling resistance also reduces NOx emissions (Bachman, 2005; Bachman, 2006 ). Thus, the proposed regulation is expected to provide NOx emission redu ction benefits that would contribute towards attainment of ambient air quality standards for ozone. Staff used the methodology specified in the U.S. EPA SmartWay Stat e Implementation Plan (SIP) and Transportation Conformity guidance document (U.S. E PA, 2007) to quantify the NOx emission benefits from the proposed regulation.

Because the effects of the SmartWay technologies on NOx emissions of trucks with particulate matter and NOx aftertreatment controls is not yet determined, the U.S. EPA recommends that, for SIP and conformity determinati ons, the NOx reductions not be applied to trucks of model years newer than 2006. Furthermore, the NOx emission reductions associated with SmartWay retrofit applic ations vary by speed, requiring the VMT to be distributed by speed. Since speed distri bution data for the fleet that is impacted by the proposed regulation were not availa ble, staff made the following assumptions on VMT-speed distribution of long-haul tractors. That is, for nonneighboring out-of-state tractors, staff assumed 85 percent of the VMT to be at highway speeds and a corresponding NOx reduction of 9.5 per cent. For the remaining 15 percent of the VMT staff assumed an average speed o f 35 miles per hour and a NOx reduction of 4.6 percent. For California intrastat e, California interstate, and neighboring out-of-state tractors, staff assumed 75 percent of the VMT to be at highway speeds and a corresponding NOx reduction of 9.5 percent. For the remaining 25 percent of the VMT, staff assumed an average speed of 35 miles per hour and a corresponding NOx reduction of 4.6 percent. Based on these assumptio ns and U.S. EPA guidelines, California specific NOx reductions were estimated t o be 4.3 and 1.4 tons per day in 2014 and 2020 respectively. These reductions assum e a “business as usual” scenario, where they do not take into account the impact of o ther proposed regulations that would impact NOx emissions.

3. Potential Negative Impacts

Staff has identified one potential negative impact resulting from the proposed requirement to use fuel efficient tires. Waste tir es may increase during the phase-in periods because fleet owners, in order to comply wi th the proposed requirements, may be forced to replace usable tires before the end of their useful life. If not managed properly, waste tires can cause serious public heal th risks and environmental problems, such as fires, air and groundwater contamination re sulting from burning tires, providing habitats for vector breeding, and reduction of land fill capacity.

Staff believes the proposed requirement would resul t in minimal or no increase in tire waste for the following reasons. The proposed regu lation requires that in-use 2010 and older model year tractors use fuel efficient tires by January 1, 2012, giving fleet owners 2 years to comply with the requirements. It also p rovides in-use 2010 and older model year trailers the option to meet the proposed requi rements during a 6-year phase-in period by January 1, 2016. For long-haul operation s, fleets normally replace old steer tires with new tires once every year. Thus, replac ing steer tires with new fuel efficient57

tires during the two-year phase-in period will not result in increased tire waste since the replacement can be done at the end of the tire’s no rmal life. Drive tires, depending on the fleet’s tire maintenance program, may be replac ed with new tires once every one to two years, or recapped once or twice during their l ifetime and reused as drive or trailer tires. Thus, similar to the steer tires, the drive tires replaced with new fuel efficient tires during the two-year compliance period would not res ult in increased tire waste since replacement can occur at the end of the tire’s norm al life. Retreaded drive tires that would have been reused as drive tires, but because of the proposed requirements are now replaced with new fuel efficient tires, could a lso be used as trailer tires or sold to

out-of-state fleets or for use on tractors and trai lers not affected by the proposed regulation, resulting in no increase or minimal inc rease in tire waste. Trailer tires are normally retreaded and reused multiple times. Howe ver, the proposed regulation provides a phase-in period of six years for fleets to comply with the trailer retrofit requirements, providing enough time to retread and reuse trailer tires before they are forced to replace them with fuel efficient tires. Trailer tires that cannot be reused in California but have remaining life for retread coul d also be sold to out-of-state fleets, thus minimizing tire waste.

C. 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.

D. Alternative Means of Compliance with the Propose d Regulation

Alternatives to the proposed regulation are discuss ed in Chapter IX of this report. ARB staff has concluded that the proposed regulation pr ovides the most effective and least burdensome approach to reducing GHGs from on-road H DVs.

XII. C OST AND E CONOMIC I MPACT

A. Summary

AB 32 requires that climate change regulations must consider the impacts on the economy of the state. The consideration should incl ude, but not be limited to, the impacts of the regulations on jobs and businesses, and California business competitiveness. The regulations must take into ac count the impacts on local communities with minority/low-income populations, a nd affiliated businesses. This section discusses the economic methodology and cost impacts staff anticipates from implementation of the proposed climate change regul ation on the California economy. The results are intended to provide an overall pict ure of the economic impacts on the economy although an individual business or consumer may experience different impacts than anticipated.

The cost analysis was computed based upon an 11-yea r equipment lifespan, from 2010 to 2020. Over that time span, staff expects a net savings of approximately $4.3 billion

to the affected stakeholders in 2008 dollar values. During the first six years of58

implementation from 2010 to 2015, an estimated net savings of $3.5 billion is expected. The net savings will be realized by truck operators because of improved fuel economy. Businesses that own only trailers and no tractors m ay not be able to recover the cost of retrofitting their trailers through fuel savings, a nd therefore, they may need to recover their investment by paying less to haulers or by pa ssing it on to customers by increasing the cost of their merchandise. Ultimately, the sub stantial operating cost savings seen by the truck haulers should result in lower costs t o ship goods and result in lower cost for consumers. Staff calculated the savings based upon the projected retail price per gallon of ultra low sulfur diesel fuel of $3.14 in 2010 to $3.69 in 2020. 11 However, staff believes this may be a conservative estimate of the savings since recently the California average retail price for diesel fuel was about $4.0 0 per gallon. 12 At $4.00 per gallon, the lifetime savings of the regulation (over the 11-yea r lifespan of the equipment) would be about $8.5 billion.

The GHG emission reductions from the proposed rule for all affected vehicles traveling

in and out of California are estimated at 6.7 MMT C O 2 e in 2020. An emission benefit of approximately 1 MMT CO 2 e or 15 percent would occur within California. The proposed rule is also expected to achieve NOx reductions. T he U.S. EPA State Implementation Plan (SIP) guidelines for implementation of aerodyn amic devices on heavy-duty trucks and trailers approved through the SmartWay program estimates NOx reductions ranging from 2 to 10 percent per vehicle, depending on speed. Based on the guidelines, in addition to the GHG benefits, the pr oposed measure would result in a

statewide NOx emission reduction of about 4.3 tons per day (tpd) in 2014 13 and 1.4 tpd

in 2020.

B. Legal Requirements

The legal requirements for an economic analysis are included in the Government Code

sections 11346.3 and 11346.5 and the Health and Saf ety Code section 57005. These statutes require all State agencies do an assessmen t of the potential adverse economic impacts on California business enterprises and indi viduals when any regulation is proposed, adopted, or amended. The assessment must include at a minimum, consideration of the impact of the proposed regulat ion on California jobs, business expansion, elimination or creation, and the ability of California businesses to compete with businesses in other states. State agencies al so are required to estimate the cost or savings to any State or local agency and school dis trict, in accordance with instructions adopted by the Department of Finance. The estimate shall include any nondiscretionary cost or savings to local agencies and the cost or savings in federal funding to the State. The ARB must also perform an economi c impact analysis of submitted alternatives to a proposed regulation before adopti ng any major regulation. A major

11 Integrated Energy Policy Report, California Energy Commission developed in 2007 and projected to 2020 (CEC, 2007).

12 The United States Energy Information Administratio n tracks California retail diesel fuel price; on September 15, 2008, ultra low sulfur diesel was at $4.05 per gallon (EIA, 2008).

13 2014 is one of the target years for reducing emiss ions in the California SIP.59

regulation is defined as a regulation that will hav e a potential cost to California business enterprises in an amount exceeding ten million doll ars in any single year.

C. Methodology for Estimating Cost and Economic Imp act

The cost-effectiveness analysis is based on estimat es of expected emissions reductions and costs for implementation of the proposed regula tion. The annual discounted capital costs and operating cost savings were calculated to determine the total annual costs or net savings. The incremental cost to purchase Smar tWay certified aerodynamic devices and approved tires begins with the 2011 mod el year (2010 calendar year) and is incurred as a lump sum. Since the equipment may last for many years, the lump sum expenditure can be “spread-out” over the expected l ife of the equipment. Staff used the capital recovery method, also known as the amortiza tion method, to spread the costs of the equipment and tires over their useful life at a specified interest rate.

The following formula (Linsley, 1977) is used to ca lculate the annualized cost of new and in-use equipment replacement:

AC = (ICE)(CRF)

Where: AC = Annualized cost of equipment ICE = Incremental consumer expenditure for equipmen t CRF = Capital recovery factor = [ i (1 + i) ^n ] / [ (1 + i) ^(n – 1) ]

Note that “i” in the CRF formula represents the int erest rate (or “opportunity cost”) for the incremental consumer expenditure, while “n” rep resents the equipment life. By using the capital recovery factor method, the equip ment’s annual depreciation and the opportunity cost is accounted for.

Annual capital cost values of the affected populati on of tractors and trailers were calculated by multiplying the projected population for each year by the incremental cost of the required aerodynamic equipment and tires in that year. The affected population represents the projected number of tractors sold in that year generated from the ARB’s inventory. The trailer population was determined b y using a trailer-to-tractor ratio of 2.5 to 1. Annualized costs are estimated using a real interest rate of 5 percent. All these costs are predictions of future prices, which could vary noticeably depending on demand, competition, and economic conditions, among other factors.

D. Estimated Costs of the Proposed Regulation

Staff estimated aerodynamic device and tire costs f rom currently available retail prices, fleet price quotes, and equipment manufacturer pric es for new and in-use SmartWay trucks and trailers. The low, average and high cos t estimates for the required equipment/tires are shown in Table XII-1. Staff as sumed in absence of the regulation, 20 percent of the new tractors sold would be SmartW ay certified and 25 percent of new day cabs and in-use sleepers would use fuel efficie nt tires. In staff’s analysis, it was assumed that without the regulation, affected trail er owners would not purchase60

SmartWay certified trailers nor retrofit their exis ting trailers. This is based on conversations with manufacturers of SmartWay aerody namic equipment who stated that very few fleets had SmartWay equipped trailers. In addition, fleets that had purchased aerodynamic trailer equipment mostly did so because they were awarded grant funding.

Staff assumed that the tractor would be equipped wi th fuel tank fairings, cab side extenders, an integrated sleeper cab roof fairing, aerodynamic bumpers and mirrors, and low-rolling resistance tires. The lower price estimate for new sleeper cab equipment was based on selecting lower cost SmartWa y aerodynamic component options, some of which now come standard on new sle eper tractors. Also, depending on the manufacturer, the aerodynamic package for ne w sleepers may include components that may not necessarily be needed to me et the minimum requirements for the proposed regulation, thereby providing even mor e benefits than estimated.

The trailer would be equipped with side skirts and front or rear fairings. Both the tractor and trailer are assumed to have SmartWay approved t ires. Staff did not include any incentive or grant funds that may be available to o ffset the purchase of the proposed technologies, although these programs can provide a significant reduction in capital outlay and are discussed in section I.1 of this cha pter – Summary of Current Financial Assistance and Grant Programs.

Table XII-1: Tractor and Trailer Costs

Category Low Average High New Sleeper $1,100 $2,100 $3,000

Trailer $1,900 $2,900 $4,200

Tractor & Trailer $3,000 $5,000 $7,200

The estimated tire cost differentials for a convent ional heavy-duty tire versus a SmartWay approved tire ranged from $0 to $50. For the tire cost analysis, staff assumed that the typical long-haul tractor has two steer tires and eight drive tires. Staff assumed the trailer has eight tires.

As noted in the technology discussion, SmartWay app roved tire technology has made improvements to both the casing and tread design ov er the years, and may now last as long as conventional tires. Based on this, staff a ssumed that the steer tires will last one year, the drive tires will be replaced every two ye ars, and the trailer tires would last four years and then be retreaded. One retread was assum ed for the tractor drive tires and

two retreads for the trailer tires. Some fleets ma y retread the tires as long as the casing lasts. Staff also spoke with retreaders that state d that there was no cost difference between retreads for a low-rolling resistance tire versus a conventional tire. The

retreader also stated that the retread cost was bas ed on the amount of rubber used and that a low-rolling resistance tire could be less ex pensive to retread since this tire typically does not have a tread depth as thick as a conventional tire. Also, some fleets noted that they will continue to use tires with tre ad left and then switch these tires from the steer position to drive position to trailer tir e positions to reduce tire purchasing costs;61

staff did not account for these additional savings in the cost analysis. From meetings with various fleets, it was noted that fleets have a variety of tire replacement practices.

Staff included maintenance costs and administrative fees, as shown in Table XII-2. No

incremental maintenance cost for tires was included since it is assumed that a fuel efficient low-rolling resistance tire would be main tained in the same manner as a

conventional tire.

Many fleets noted that, in general, neither the tra ctor nor trailer aerodynamic devices required any additional annual maintenance. Howeve r, to be conservative, staff included an annual maintenance and inspection cost of $143.00 based on the repair and replacement of a fiberglass panel for one out o f every ten tractors. Most of the

fleets indicated that the maintenance needed for tr actor fairings was minimal. Damage

to trailer side skirts was more common because of l oading, environmental conditions, and driver errors. For trailer maintenance and rep air, staff included a cost of $120.00 per year. This is an average of $170 per year (abo ut 10 percent of the cost of a side skirt) reported by one fleet that used trailer skir ts in a very harsh environment of snow and ice; and $75 per year from a 2.5 year maintenan ce study of 20 trailers (Freight Wing, Inc., 2008).

The proposed regulation specifies reporting require ments for short-haul tractors and trailers, and in-use trailer compliance schedules. Included in the overall cost is an estimated annual $500 per fleet for trailer reporti ng cost during the first five years of the proposed regulation. The fees are meant to account for the record keeping, tracking of California compliant tractors/trailers, updating of contract/legal fees, inspection costs for freight companies and shippers, and administrative costs during implementation.

Table XII-2: Annual Maintenance Costs/Fees

Item Low Average High

Tractor $30 $143 $233

Trailers $75 $120 $166

Contract Administration Fees 0 $3.50/Tractor $5/Trailer $5

Using the above costs, staff estimates that for the industry as a whole, the lifetime capital cost of complying with the proposed regulat ion would be about $10.4 billion and the cost savings over the same period of time would be $14.7 billion. This yields a net cost savings of almost $4.3 billion. On an annuali zed basis, the average cost savings over the lifetime of the proposed regulation would be about $0.4 billion per year from 2010 to 2020 (2008 dollars). However, at a retail diesel fuel price of $4.00 per gallon, net cost savings would increase to about $8.5 billi on or $0.8 billion per year from 2010

to 2020.

Approximately 9 percent of the affected tractor and trailer population are based in

California. The total estimated statewide lifetime cost for California based tractors and trailers to comply is about $0.5 billion, and the c ost savings over the same period of62

time are $1.1 billion. This yields a net statewide cost savings of almost $0.6 billion. This net cost savings would be realized by Californ ia fleet operators and owner operators of compliant tractors and trailers and ar e directly attributed to operating cost savings associated with improved fuel economy.

On a per vehicle/equipment basis, the total operati ng cost savings per year ranges from approximately $5,400 to $3,700 as shown in Table XI I-3. The cost of add-on devices would, on average, be $5,000 (Table XII-1), making the cost recovery period less than 1.5 years.

Table XII-3: Annual Operating Cost Savings

Vehicle/Equipment Fuel Savings (gallons/year) Fuel Cost

Savings 1 ($/year) Maintenance

Cost ($/year) Total

Savings 14 ($/year) Fuel

Savings

New Sleeper Cab &

Trailer Combination -1,819 -$5,704 $263 -$5,441 10.0%

New Sleeper Cab & Refrigerated Trailer

Combination -1,737 -$5,133 $263 -$4,870 9.0%

In-Use Sleeper Cab/New Day Cab &

Trailer Combination -1,455 -$4,563 $263 -$4,300 8.0%

In-Use Sleeper Cab/New Day Cab & Refrigerated Trailer

Combination -1,273 -$3,993 $263 -$3,729 7.0%

1 The estimated fuel cost is $3.14 per gallon in 201 0, sourced from the Integrated Energy Policy Report of the California Energy Commission in 2007 (CEC, 2 007).

Staff expects that the increased production of the aerodynamic equipment needed to meet the proposed regulation would help to lower fu ture purchase costs as economies of scale are realized. Also, staff expects additio nal manufacturers of approved aerodynamic equipment to enter the marketplace, pro viding more competitive pricing. As mentioned previously, businesses that own only t railers and no tractors may not be able to directly recover the cost of retrofitting t heir trailers through fuel savings, and therefore, they may need to recover their investmen t either by paying less to haulers who receive the direct fuel economy benefit or by p assing it on to customers by temporarily increasing the cost of their merchandis e.

14 The assumptions for this calculation are as follow s: a baseline fuel economy of 5.8 miles per gallon, an average long-haul mileage accrual rate o f 125,000 miles per year, 84 percent of the vehicle miles traveled at highway speed that be nefit fully from the aerodynamic devices, and a projected diesel fuel cost of $3.14 per gallo n. If the cost per gallon in diesel fuel is higher that $3.14, the fuel savings due to the prop osed regulation would be proportionately greater.63

For instance, due to high fuel prices, some motor c arriers are charging a fuel surcharge per truckload; however, a company with a dry-van me eting the rule’s requirements should incur a lower fuel surcharge. A retrofitted dry-van will increase the fuel economy of the tractor pulling it on average by 6.5%. Ther efore, it would be reasonable for a company that hires a motor carrier to haul their re trofitted or SmartWay certified trailer to negotiate a proportional reduction in the freigh t rate.

E. Potential Impact on a Small Business

Most businesses that operate long-haul tractors and trailers are not considered small businesses because they generate revenues where the transportation and warehousing annual gross receipts exceed $1.5 million (Governme nt Code 11342.610) particularly when they own multiple tractors and operate multipl e shifts. Similarly, logistics companies are typically not considered small busine sses. These organizations, however, may contract with small fleets and truck o wner-operators that could be

classified as small businesses.

Based upon transportation revenue estimates, staff developed a “small fleet” definition (see Appendix F). A small fleet could own up to 8 tractors and 20 trailers using the “small fleet” definition. The typical fuel savings projected for one year for one tractortrailer combination is $3,700 to $5,400, so the pay back for an expensive option of purchasing a new SmartWay tractor (versus not Smart Way), and retrofitting a trailer is less than 1.5 years.

The notice of public hearing issued in conjunction with this staff report included a statement on page 7 that staff assumed that a small business owner did not own any

trailers. This statement in the notice was in erro r; as noted in this section of the staff report, ARB’s analysis considers that companies own ing as many as 20 trailers may be small businesses, and the regulation specifically p rovides that those owning up to this number of trailers may utilize a “small fleet compl iance schedule.” This misstatement had no effect on staff’s economic analysis or on AR B’s determination as stated in the notice that the proposed regulatory action would af fect small business.

Staff assumed that most owner-operators will fall u nder the small business definition. The Owner Operator Independent Drivers Association (OOIDA) has a California membership of about 5,600 (OOIDA, 2004). According to OOIDA, about 50 percent of their members are involved with long-haul, and of t hese 28 percent operate dry-vans and refrigerated-vans that could be affected by the regulations. According to the OOIDA survey, 15 members own, on average, 1.5 tractors; 82 percent own only one tractor. About 40 percent of owner-operators purch ase their tractors new and 60 percent purchase their tractors used. About 53 per cent own trailers and those that do own trailers have, on average, two trailers. Based on these statistics, the cost of compliance will vary as shown in Table XII-4 below:

15 Not all owner-operator truck drivers are members o f OOIDA. Therefore, the survey results discussed may not apply to all owner-operators.64 Table XII-4: Owner-Operator Compliance Costs

Owner-Operator Equipment Configuration Equipment

Needs Cost per One

Tractor-Trailer

Combination Cost per OwnerOperator with 1.5

Tractors and 2 Trailers

Owns used tractor Upgraded tractor

tires $0 to $500 $0 to $750

Owns used tractor

and trailer Upgraded tractor

tires, retrofit trailer $2,900 to $3,400 $5,800 to $6,500

Purchases new SmartWay tractor,

owns trailer SmartWay tractor,

retrofit trailers $5,000 $9,000

Outside of California, based on the OOIDA market su rvey, there are approximately 160,000 owner-operator businesses (OOIDA, 2004). O f these, staff estimated that there are about 18,000 long-haul owner-operator bus inesses that operate dry-vans and refrigerated-vans that may be subject to the propos ed rule.

F. Potential Impact on Employment, Business Creatio n, Elimination, or Expansion

There are modest up-front costs associated with the proposed regulation before fuel efficiency gains occur. It is possible that some v ery marginal trucking companies would not be able to finance the required upgrades. Fina ncial assistance and grant programs

will be available to assist these businesses. Fuel costs have been shown to have a direct correlation to the survivability of many lon g-haul transport businesses, and this proposed regulation is expected to provide a net fu el savings once the required equipment is installed.

The regulation should result in an increased demand for aerodynamic devices and lowrolling resistance tires. This in turn may result in the creation or expansion of some businesses as a result of manufacturing, distributi ng, and marketing of these devices. The increased demand in approved aerodynamic device s may also result in the creation of some new jobs related to research and developmen t for further improvement of these

devices.65

Most of these types of jobs are expected to be loca ted near chassis or trailer manufacturing facilities located outside of Califor nia, although some will be created in California dealerships and maintenance facilities. New jobs for maintaining/replacing aerodynamic devices may also be created.

The regulation is not expected to affect the abilit y of California businesses to compete with other states by making it more costly to produ ce goods or services because the proposal affects both interstate and intrastate lon g-haul freight distribution. In addition, most of the tractors and trailers affected by the p roposed regulation are owned by

businesses located outside of California.

G. Estimated Costs to Local, State, and Federal Age ncies

The proposed regulation is not expected to have any impact on local public agencies. However, there would be a cost to the State for add itional staff to provide the ongoing regulatory development, implementation, and enforce ment of the regulation. The costs for the additional staff would be approximately $3, 613,223 in fiscal year 2009-2010 (this includes one-time contract and equipment costs). I n fiscal year 2010-2011 and going forward, the cost to the State would be $6,494,463 annually (in 2008 dollars). The total costs for fiscal years 2009-2010 and 2010-2011 are shown in Table XII-5.

Table XII-5: Fiscal Year Costs for State Agencies

Fiscal Year State Cost (2008 $) FY: 2009 – 2010 $3,613,223 FY: 2010 – 2011 $6,494,463

The cost is based on 20 new staff to conduct ongoin g regulatory development and program implementation and 11 staff for enforcement of the regulation. The need for 20 new positions was estimated based on the number of staff it has taken to develop and implement similar rules. 16 It is envisioned that there would be a significan t amount of coordination and program development work with U.S. EPA SmartWay staff. The proposed program would be dynamic in nature, meanin g that regulatory amendments are expected to be routinely brought before the Boa rd for approval as the program is expanded to include new aerodynamic components, tru cks, and trailers. Given that the heavy-duty truck fleet accounts for 20 percent of t he GHG emissions from the transportation sector (or 36 MMT CO 2 e), expansion of the program is not only expected, but vitally needed.

Because ARB’s enforcement staff already has major c ommitments to other diesel regulations, it is expected that existing staffing levels will not be adequate to meet the increased demand for inspections and other enforcem ent activities. Staff anticipates additional inspectors will be required to conduct a n enforcement program involving field

16 Airborne Toxic Control Measure to Limit Diesel-Fue led Commercial Motor Vehicle Idling, Title 13, Section 2485; Regulation for In-Use Off-Road Di esel Vehicles, Title 13, Sections 2449, 2449.1, 2449.2 and 2449.366

inspections, office investigations, and case develo pment for the affected population of over 400,000 tractors and over 1 million trailers. A robust enforcement program is necessary to assure a level playing field for those that comply, and to assure the GHG

emission reductions are achieved.

Staff does not expect any costs to federal agencies as these agencies typically contract out for long-haul freight services.

H. Cost-Effectiveness of the Proposed Regulation

The basic methodology ARB staff uses to determine c ost-effectiveness of a regulation is to determine what costs are involved to comply with the proposed regulation and to compare those costs to the emission reduction benef its to the public. Since the proposed regulation would result in an overall savi ngs to the affected industry, it would

be cost effective.

This regulation would result in an estimated CO 2 benefit of approximately 1 MMT CO 2 e in California and 6.7 MMT CO 2 e nationwide in 2020. In addition, the regulation is estimated to provide NOx emission reductions of abo ut 4.3 tons per day (tpd) in 2014 and 1.4 tpd in 2020. 17

The regulation would provide a cost savings of $4.3 billion. The annualized net savings are the cost savings for the tractors and trailers subject to the regulation from 2010 to 2020, as shown in Table XII-6. On an average annua lized basis, this is equivalent to an operating cost savings of about $0.4 billion per ye ar over the 11 years.

Table XII-6: Average Annualized Cost Savings

Model Year Cumulative Annual

Capital Costs Annual Operating Cost Savings Net Savings Total

2010 $71,994,512 -$586,464,631 -$514,470,120

2011 $233,058,924 -$809,739,777 -$576,680,853

2012 $411,434,088 -$1,176,648,403 -$765,214,315

2013 $613,503,052 -$1,292,353,131 -$678,850,079

2014 $822,210,899 -$1,361,253,981 -$539,043,082

2015 $1,040,505,088 -$1,423,881,061 -$383,375,973

2016 $1,169,863,202 -$1,477,348,117 -$307,484,915

2017 $1,300,497,855 -$1,538,439,022 -$237,941,167

2018 $1,435,448,768 -$1,585,812,457 -$150,363,689

2019 $1,572,800,765 -$1,666,974,913 -$94,174,148

2020 $1,727,329,806 -$1,755,052,155 -$27,722,349

Total Savings $10,398,646,958 -$14,673,967,648 -$4,275,320,691

17 U.S. EPA methodology entitled, “SmartWay SIP and T ransportation Conformity Guidance: Accounting for NOx Reductions from Trailer Aerodyna mic Kits and Low-rolling Resistance

Tires”67

Total Savings over 6 year implementation -$3,457,6 34,422 Total Savings over 11 years to 2020 per AB 32 -$4, 275,320,691

I. Summary of Current Financial Assistance and Gran t Programs

1. Federal grants and state incentive programs

a) 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 implementation of diesel emissions reduction projects. The U.S. EPA National Clean Diesel Campaign Program (NCDC) consists of the NCDC Grants and Fund ing Program and the State Clean Diesel Grant Program, with the first ap propriation of $49.2 million authorized by Congress in 2007. The NCDC includes the SmartWay Clean Diesel Finance Program. The programs provide techn ical assistance and grants to assist eligible partners to adopt diesel emissio ns reduction strategies. Grant opportunities are announced at the national level o r via regional agreements such as Region 9 and 10 via the West Coast Collabor ative (Federal Register & NCDC website).

b) U.S. EPA SmartWay Partnership Financing Program

The U.S. EPA SmartWay Finance Center provides a web site to assist the trucking industry with the purchase of fuel savings and emissions reducing vehicles and technologies. This website works by b ringing interested buyers and lenders together in one place. The interested trac tor or tractor equipment buyer submits an application for an approved vehicle or t echnology, and interested lenders submit loan or lease offers to the applican t. The applicant decides which lenders he/she wants to work with, and both applica nt and lender discuss the specific terms and conditions of each loan or lease

.

In September 2008, U.S. EPA was awarded $3.4 millio n in grants to provide

financial assistance for truckers under the SmartWa y Clean Diesel Finance Program. These loans will help small trucking firm s lower their fuel costs and their carbon footprint by purchasing newer used tru cks and idling and emissions reduction technologies. However, the loans and lea ses on this web site are limited to SmartWay certified vehicles and/or appro ved technologies and not available to the general public.

Information on financial institutions that provide loans for purchase of new or preowned tractors can be found at the following websit e www.SmartwayFinanceCenter.com . The following provides SmartWay Program

details from the U.S. EPA website:

• Interest rates: 5.5 to 8.5 percent, depending on, among other things, each applicant’s business history, available collateral, cash flow, and credit score68

• Loan payback period: 3 to 6 years, depending on, a mong other things, business history, available collateral, and cash fl ow

• Geographic location: Nationwide

• Eligible activities: Purchase used trucks that ar e already upgraded, or upgrade them with SmartWay or CARB verified idle re duction and/or emission reduction technology.

• Program Goal: Establish a revolving loan fund for the purchase of used trucks that have SmartWay upgrades or will receive SmartWay upgrades.

• Service fee: 2 to 3 percent

2. California incentive programs

While ARB’s existing incentive grant programs, such as the Carl Moyer Program, have a proven success record in accelerating fleet turnover to newer, cleaner vehicles, funding opportunities for regulatory comp liance are limited by statutory requirements to achieve surplus emission reductions , i.e., reductions that occur early and/or are in excess to what is required by r egulation. As such, staff is currently developing an air quality loan program co mprised of various financing options to provide an additional, more flexible fin ancial assistance tool to regulated fleets.

The 2008-2009 fiscal year State budget contains a $ 48 million appropriation to fund a heavy-duty vehicle air quality loan program to assist on-road fleets affected by staff’s proposal and the proposed Truck and Bus Rule. In developing this air quality loan program, ARB staff is coordin ating with the State Treasurer’s Office (STO) to tailor a program to meet the specif ic needs of the heavy-duty

vehicle sector.

One option being developed by ARB staff is a progra m with loan guarantees as the core component. Loan guarantees are advantageo us for two primary reasons: 1) by reducing the financial risk to lend ers, they create opportunities for borrowers that fall slightly below normal lending c riteria and may not otherwise qualify for loans to obtain affordable financing pa ckages; and 2) they provide an inherent benefit of fund leveraging to significantl y increase the amount of funds

available for direct loans to fleet owners. For ex ample, the $48 million budget appropriation could result in nearly $340 million i n competitive-rate loans to heavy-duty vehicle fleet owners, based on a seven-t o-one leveraging ratio found in similar financing programs within the STO. In c onjunction with loan guarantees, staff is evaluating other economic assi stance tools to extend repayment periods and further reduce interest rates , as well as evaluating

financial mechanisms that maximize State funds to c reate a large-scale, sustainable air quality loan program.

Because this loan program specifically supports the ARB’s two proposed regulations for on-road heavy-duty vehicle fleets, ARB staff will update the Board69

on the program at the same time the regulatory prop osals are presented for Board consideration; funds should be available to a ssist fleets in early 2009.

a) Assembly Bill 118

Assembly Bill 118 (Nunez, 2007) created the Alterna tive and Renewable Fuels and Advanced Technology Program to be administered by the California Energy Commission, and the Air Quality Improvement Program to be administered by ARB. The Energy Commission program will have about $120 million annually beginning in fiscal year 2008-2009, and is geared t oward transforming California’s fuel and vehicle types to help attain California’s climate change goals. ARB will receive $50 million annually to su pport clean air programs, and the first year appropriation is the source of the l oan program funds described above. AB 118 provides the Energy Commission with over seven years in program funding. AB 118 requires that grants recei ved pursuant to this program 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 respectiv e programs, with initial year project solicitations expected in mid-2009.

b) Local Agency Programs

Most Federal and State programs are administered by local agencies. In most cases, equipment operators should check with their local air district for funding opportunities, apply to, and be funded through them . Many local programs administered in conjunction with Carl Moyer funds o perate under the title of “Heavy-duty Incentives” or similar. In the same ma nner, federal funding may be distributed through special programs like Sacrament o Air Quality Management District’s Emergency Clean Air and Transportation P rogram, supplemented by CMAQ (Congestion Mitigation and Air Quality) and st ate funds.

In addition, certain vehicle types and uses of truc ks may have their own specially funded programs. The Ports of Long Beach and Los A ngeles fund the Gateway Cities Clean Air Action Program fleet modernization plan via a combination of use fees (concession and container), Goods Movement and other matching sources. This program operates in conjunction with the San Pedro Bay Ports

Clean Air Action Plan and Local Area Council of Gov ernments, and anticipates replacing 16,000 trucks with 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.

XIII. R EQUIREMENTS OF AB 32

AB 32, at Health and Safety Code section 38560.5, r equires that ARB adopt regulations by January 1, 2010 to implement discrete early acti on GHG emission reduction

measures. These measures must “achieve the maximum technologically feasible and cost-effective reductions in greenhouse gas emissio ns” from the sources identified for early action measures. AB 32 contains additional s tandards in Health and Safety Code70

section 38562 that apply to regulations that will b e adopted for general emissions reductions consistent with ARB’s scoping plan. Amo ng other things, this section requires that reductions must be real, permanent, q uantifiable, verifiable, and enforceable. ARB is also required to adopt rules a nd regulations in an open, public process. While section 38562 does not directly app ly to early action items enacted under section 38560.5, ARB is interested in ensurin g that its early action measures for GHG reductions such as those contained in this prop osed regulation meet the broader criteria for the GHG reduction regulations that wil l follow. For that reason, these criteria are summarized here, with staff’s assessment as to why the proposed regulatory action meets them or is not specifically applicable to the m.

The proposed regulation would reduce GHG emissions by improving long-haul heavyduty vehicle fuel efficiency. This improvement in fuel efficiency would be accomplished through the required use of aerodynamic technologie s and low-rolling resistance tires. Below is a discussion of why staff believes the pro posed regulation meets the requirements of State law.

1. The State Board shall adopt rules and regulation s in an open public process to achieve the maximum technologically feas ible and costeffective greenhouse gas emission reduction from so urces or categories

of sources.

The proposed regulation was developed in consultati on with affected parties in an open, public process. ARB staff conducted numerous outre ach efforts to inform affected parties of the proposal and to obtain stakeholder c omments. Outreach efforts included public workshops, individual meetings, and email an d telephone contacts. See Chapter III, Public Outreach and Environmental Justice, for a description of the public process.

2. Design the regulations, including distribution o f emissions allowances where appropriate, in a manner that is equitable, s eeks to minimize costs and maximize the total benefits to California, and encourages early action to reduce greenhouse gas emissions.

The proposed regulation requires the use of U.S. EP A SmartWay approved aerodynamic technologies and low-rolling resistance tires on long-haul heavy-duty vehicles. Long-haul heavy-duty vehicles are the fo cus of the proposed regulation because GHG emission benefits resulting from the us e of aerodynamic improvements are maximized when vehicles travel a majority of th eir miles at highway speeds. Heavyduty vehicles that travel a majority of their miles at slower speeds, e.g., short-haul delivery vehicles, are exempted from the regulatory requirements.

The proposed regulation would apply equally to Cali fornia-registered and out-of-state registered long-haul heavy-duty vehicles. All long -haul vehicles (heavy-duty tractors pulling 53-foot or longer box-type trailers) subjec t to the requirements would need to comply, regardless of state or country of registrat ion. The proposed regulation would also establish requirements for drivers and owners of heavy-duty tractors and 53-foot or longer box-type trailers, motor carriers, Californi a-based brokers, and California-based shippers. Drivers, motor carriers, tractor owners, and trailer owners would be directly71

responsible for ensuring that noncompliant tractors and trailers do not operate on California’s highways. Although California-based s hippers and brokers would not initially be held responsible for noncompliant trac tors and trailers, they could be held responsible, under certain circumstances, if a moto r carrier, tractor owner, or trailer owner with whom they did business failed to settle a previously issued notice of violation. Under this strategy, staff expects that motor carriers, tractor owners, and trailer owners, including those domiciled out of st ate, would have an incentive to settle outstanding violations in order to avoid any potent ial detriment to their relationships with California-based shippers and brokers. Ensuring th at out-of-state fleets are treated the same as California-registered fleets with respect t o enforcement, would provide an equitable playing field for doing business in Calif ornia. See Appendix G, Implementation and Enforcement for further informat ion.

Owners of long-haul vehicles affected by the propos ed regulation may have up-front costs associated with acquisition of aerodynamic te chnologies and low-rolling resistance tires. These initial costs are expected to be recouped through savings from reduced fuel use, and the proposed regulation is ex pected to result in a substantial net savings for the businesses that operate long-haul v ehicles in California. See Chapter XII, Cost and Economic Impacts, for a more detailed discussion.

The proposed regulation would provide an incentive for owners of trailers to retrofit their trailers early. For every 2010 and earlier model y ear 53-foot or longer box-type trailer that is compliant with the proposed regulation by D ecember 31, 2009, the owner could delay the retrofit of 1.5 nonconforming trailers un til 2016. This provision encourages early compliance and is structured such that GHG em issions would not be lost. The early compliance option is discussed in more detail in Appendix F, Optional Trailer Fleet Compliance Schedules.

3. Ensure that activities undertaken to comply with the regulations do not disproportionately impact low-income communities.

Long-haul heavy-duty vehicles operate throughout Ca lifornia; no disproportionate localized impacts are expected. Greater GHG and NO x reductions would occur in populations located near interstate highways, typic ally where low-income communities

are located.

4. Ensure that entities that have voluntarily reduc ed their greenhouse gas emissions prior to the implementation of this secti on receive appropriate credit for early voluntary reductions.

The U.S. EPA SmartWay Partnership program is a volu ntary program that encourages the use of approved aerodynamic technologies and lo w-rolling resistance tires. In response to this program, some long-haul vehicle ow ners have voluntarily installed aerodynamic technologies and low-rolling resistance tires that meet the requirements of the proposed regulation. The proposed regulation w ould allow extra flexibility to fleets that have complied early with the requirements by p roviding additional time to meet the requirements. See Appendix F, Optional Trailer Fle et Compliance Schedules.72

5. Ensure that activities undertaken pursuant to th e regulations complement, and do not interfere with, efforts to a chieve and maintain federal and state ambient air quality standards and to reduce toxic air

contaminant emissions.

The proposed regulation requiring the use of aerody namic technologies and low-rolling resistance tires on long-haul heavy-duty vehicles w ould aid in efforts to achieve federal and state standards by reducing NOx emissions. Lon g-haul heavy-duty vehicles equipped with aerodynamic devices and low-rolling r esistance tires are able to transport freight more efficiently, reducing the required loa d on the engine. Engines operating at lower loads have lower peak combustion temperatures and thus lower NOx emission rates. The magnitude of the reduction in NOx emiss ions resulting from improvement in tractor-trailer efficiency is dependent on the NOx emission rate of the tractor’s engine. Older engines produce more NOx emissions, and thus will realize a greater NOx reduction benefit from efficiency improvements. Se e Chapter XI, Environmental Impacts, for a more detailed description.

6. Consider cost-effectiveness of these regulations

. The proposed regulation is expected to result in a substantial net savings for the businesses that operate long-haul heavy-duty vehicl es in California. See Chapter XII, Cost and Economic Impacts, for a more detailed disc ussion.

7. Consider overall societal benefits, including re ductions in other air pollutants, diversification of energy sources, and other benefits to the economy, environment, and public health.

The proposed requirements for long-haul heavy-duty vehicles are not expected to cause any adverse impacts to society or the environment. California would benefit from the

reduction of GHG emissions. As discussed in the re sponse to criterion five above, the proposal would not cause an increase in volatile or ganic compound or toxic air contaminant emissions, and would result in NOx emis sion reductions. See Chapter XI, Environmental Impacts, for a more detailed descript ion.

8. Minimize the administrative burden of implementi ng and complying with these regulations.

For those long-haul heavy-duty vehicle owners that comply with the requirements by the established compliance dates, the administrative bu rden would be minimal. The proposed regulation requires no recordkeeping or re porting for these parties.

Only those tractor or trailer owners that wish to b e classified as short-haul, and exempted from the requirements of the proposed regu lation, or those that choose to participate in an optional compliance schedule or t he refrigerated fleet compliance provision, would be subject to reporting requiremen ts.

To apply for the short-haul exemption, owners would need to submit an application with specific information on the vehicle, vehicle owner, and vehicle’s local haul base. Once approved, the tractor or trailer would be considere d short-haul and not subject to the73

requirements of the proposed regulation. The short -haul exemption would be effective for one year and would require renewal on an annual basis.

To participate in an optional compliance plan, owne rs would need to submit a compliance plan that would include a statement of i ntent, information on each affected trailer, and details as to which affected trailers would be retrofitted each year to comply with the optional phase-in schedule requirements.

To participate in the refrigerated fleet compliance provision, owners would need to submit information on each affected refrigerated-va n trailer, and details as to which affected trailers would be retrofitted each year to comply with the phase-in schedule requirements.

There would be no recordkeeping requirements for mo tor carriers, California-based shippers, or California-based brokers.

9. Minimize leakage.

Leakage is not expected as a result of the proposed regulation. Leakage occurs when an emission limit or regulatory requirement set by the State causes business activities to be displaced outside of California. If leakage were to occur, emissions, jobs and

other economic benefits to California would be lost . The proposed regulation requires that long-haul vehicles traveling on California hig hways be equipped with aerodynamic devices and low-rolling resistance tires, regardles s of state or country of registration. Therefore, there would not be a situation where a l ong-haul heavy-duty vehicle registered inside the State would be at a competiti ve disadvantage compared to vehicles registered outside of the State. Similarl y, both California and out-of-state motor carriers would be subject to the same requirements; both would be required to dispatch compliant vehicles.

The proposed regulation does, however, establish ad ditional requirements for California-based brokers and California-based shipp ers. These California-based businesses would be required to use compliant long- haul vehicles when dispatching vehicles and loading freight for transport, respect ively. The primary intent of this strategy is to provide an incentive for out-of-stat e motor carriers, tractor owners, and trailer owners to comply with the proposed regulati on. Historically, it has been very time consuming and costly to collect penalties from unre sponsive out-of-state fleets. This is because the State has no authority to hold the regi strations of out-of-state registered vehicles and limited authority to hold the vehicles themselves. Therefore, if an out-of-state registered fleet currently refuses to settle a violation, it is necessary, in many cases, for the State of California to file a l awsuit against that fleet in their state of residence to collect any penalties. However, under the strategy of the proposed regulation, staff expects that most motor carriers, tractor owners, and trailer owners, including those domiciled out-of-state, would choos e to settle their violations in order to avoid any potential detriment to their relationship s with California-based shippers and brokers. Ensuring that out-of-state fleets are tre ated the same as California-registered fleets with respect to enforcement, would provide a n equitable playing field for those doing business in California.74

10. Consider the significance of the contribution o f each source or category of sources to statewide emissions of greenhouse gas es.

The transportation sector, which includes on-road v ehicles, aviation, rail, and ships, is the largest contributor to the total statewide GHG emissions inventory, producing approximately 38 percent of the state’s total GHGs, or 179 MMT CO 2 e. This is projected to increase to 225 MMT CO 2 e by 2020 if no actions are taken to reduce emissions. Thus, emissions from the transportation sector must be significantly reduced in order to achieve the AB 32 requirement that Stat e GHG emission levels be reduced to 1990 levels by the year 2020. See Appendix C, Em ission Inventory Analysis and

Results for more details.

The statewide GHG emission benefits of the proposed regulation are projected to be 1.0

MMT CO 2 e emissions in 2020. From 2010 to 2020, the cumula tive GHG emission benefits are estimated to be approximately 7.8 MMT CO 2 e statewide. While this reduction may appear somewhat modest, when the redu ction is considered in conjunction with anticipated future GHG reductions from current and future reductions from other categories, the total reductions are sig nificant. Key to ARB’s overall strategy to meet AB 32’s aggressive GHG emission reduction g oals is to achieve relatively small reductions from a large number of categories, and t hus achieve a significant overall reduction in GHG emissions by 2020.

11. The greenhouse gas emission reductions achieved are real, permanent, quantifiable, verifiable, and enforceable by the st ate board.

The proposed regulation would require compliant tra ctors and trailers to be either: 1) retrofitted with aerodynamic technologies and low-r olling resistance tires that are U.S. EPA SmartWay approved technologies, or 2) a U.S. EP A certified SmartWay tractor or trailer. The technical requirements and specificat ions that compliant tractors and trailers would be required to meet are defined by the U.S EP A SmartWay Partnership Program. The proposed regulation defines the dates when spec ified requirements would become effective and provides ARB, CHP, and District perso nnel the authority to inspect heavyduty vehicles and audit records for enforcement. T he proposed regulation defines recordkeeping and reporting requirements that would provide enforcement personnel with information necessary to enforce the requireme nts of the proposed regulation in the field. Once the proposed regulation is approved by the Office of Administrative Law, the proposed emission limit would become State law. Ba sed on the above, upon the effective date of the proposed emission limit, the reductions would become real, permanent, quantifiable, verifiable, and enforceabl e.

12. For regulations.... ....the reduction is in additio n to any greenhouse gas emission reduction otherwise required by law or reg ulation, and any other greenhouse gas emission reduction that otherwise wo uld occur.

The proposed regulation is the first GHG emission l imitation affecting the long-haul heavy-duty vehicle industry. No other existing Sta te, federal or other requirements75

would affect emissions of GHGs from long-haul heavy -duty vehicles. The proposed regulation requirements are based on the requiremen ts of the U.S. EPA’s SmartWay Partnership program, which is a voluntary program. Although the SmartWay program has been in place since 2004, a relatively small nu mber of tractors and trailers have been retrofitted with aerodynamic technologies in r esponse to this program. This is especially true for trailers, where staff estimates that less than 0.3 percent of the total 53-foot or longer box-type trailer inventory incorp orates aerodynamic technologies.

13. If applicable, the greenhouse gas emission redu ction occurs over the same time period and is equivalent in amount to any direct emission reduction required pursuant to this division.

This requirement is not applicable to the proposed regulation.

14. The state board shall rely upon the best availa ble economic and scientific information and its assessment of existing and proj ected technological capabilities when adopting the regulations required by the law.

ARB staff used the best available economic and scie ntific information available to develop the proposed regulation. The description i n this section documents that the proposal was developed in accordance with AB 32 req uirements. Chapter XII, Cost and Economic Impacts, contains a detailed description o f the economic impact of the proposed regulation. In addition, a technological assessment of the feasibility of the required aerodynamic technologies and low-rolling r esistance tire technologies required by the proposed regulation is presented in Chapter IX, Technological Feasibility of

Control Measure.

XIV. I SSUES

A. Mexican Border Issues

During the regulatory development process, staff he ard comments from a U.S. motor carrier regarding concerns associated with complyin g with the trailer aerodynamic technology requirements while routinely driving acr oss the U.S.-Mexico border. According to the U.S. motor carrier, the maintenanc e costs associated with repairing or replacing side skirt technology installed on traile rs that traveled throughout Mexico outweighed the cost savings associated with improve d fuel economy. Reportedly, a number of the skirts became damaged when traveling on Mexican roads that were in a state of disrepair. Also, many of the installed sk irts were stolen from trailers that were parked overnight in unsecured parking facilities an d alongside roadways.

Mexican motor carriers also had concerns about comp lying with the rule. At a public workshop, a Mexican-based motor carrier stated that a number of the tractor-trailers that cross the U.S. border on a daily basis travel 20 miles or less to distribution centers in California. They “drop and hook” trailers at th ese facilities and return back to Mexico. “Drop and hook” refers to the activity of dropping- off a trailer at a warehouse or distribution center and hooking up to pull a differ ent trailer to another location. Typically,76

tractors engaged in drop and hook activities make s everal trips into the U.S. every week. The Mexican-based motor carrier, like the U. S. motor carrier, was concerned that the required aerodynamic technologies would be frequently damaged when traveling throughout Mexico. Also, there were conc erns raised about the capital costs associated with these technologies and whether the smaller owner-operators that currently own one or two older tractors and trailer s would be able to absorb these costs and continue doing business.

In response to the above issues, staff believes the provisions in the proposed regulation for exempting short-haul tractors and trailers can be used by many motor carriers that

traverse the U.S-Mexico border. As discussed in Ch apter VIII, Proposed Regulation, owners of tractors and trailers may register them a s short-haul tractors and trailers as long as they only operate within 100 miles of their local base. Tractors have the option of limiting their annual vehicle miles traveled to 50,000 miles per year, rather than limiting their area of operation. Tractors and tra ilers that meet the short-haul criteria and that are registered with the ARB as short-haul trac tors and trailers would be exempted from the proposed requirements. This would address issues associated with equipment damage and capital costs, but it would require the owners of these tractors and trailers to register them with the ARB. Motor carriers that wish to use this option may be required to alter their current method of operation , since the area of operation of these

tractors and trailers would be limited.

B. Other Rulemakings

Staff evaluated the impact of having to concurrentl y comply with the proposed rule and two other rulemakings, the proposed Truck and Bus R ule and the previously-adopted TRU Rule. The details of this evaluation are prese nted below.

1. Impact with Truck and Bus Rule

Staff’s proposal will be considered for adoption to gether with the Truck and Bus Rule, which would also have a regulatory impact on busine sses operating heavy-duty vehicles. From 2010 through 2020, the Truck and Bu s Rule would require the retrofit, repower, or replacement of vehicles equipped with m odel-year 2006 and older heavyduty diesel-fueled engines. These requirements wou ld phase in concurrently with requirements of staff’s proposal.

Although certain fleets could end up having to bear the burden of concurrently complying with both staff’s proposal and the Truck and Bus Rule, staff believes that the number of these fleets would likely be small. This is because staff’s proposal would only apply to long-haul vehicles, which, according to vehicle population data, are typically newer. Therefore, staff does not expect long-haul fleets to have many vehicles within the scope of the Truck and Bus Rule’s requir ements during the period of regulatory overlap.

Nevertheless, staff realizes that certain businesse s could still be significantly impacted by both regulations, and therefore, has included th e impact analysis below.77 a) New Tractor Requirements

Staff’s proposal would require all 2011 and subsequ ent model year tractors with sleeper berths to be SmartWay certified. Staff does not be lieve this requirement would significantly impact businesses, including ones aff ected by the Truck and Bus Rule, because the incremental cost of a SmartWay certifie d tractor is relatively small. For example, staff estimates that a new SmartWay certif ied tractor is $2,100 more than a typical sleeper berth tractor. Assuming that the a verage price of a sleeper berth tractor is $121,000, 18 the incremental cost would be less than 2 percent of the total price of the vehicle. In addition, the regulation does not forc e the turnover of existing vehicles.

b) In-Use Tractor Requirements

Staff’s proposal would require all 2010 and previou s model year tractors to use SmartWay approved low-rolling resistance tires. St aff believes this requirement would place very little burden on businesses, primarily b ecause the price difference between a SmartWay approved tire and a standard tire is littl e to none. Based on staff’s verbal communication with various fleets, the incremental cost of a SmartWay approved tire ranges from $0 to $50. In addition, tires are cons umables that are replaced anyway, and the tire requirement would allow adequate time for vehicles to wear down their existing tires treads before requiring them to chan ge. Moreover, although those affected would not be allowed to recap their noncom pliant casings, they could still sell these casings in the secondary market to short-haul fleets, fleets that do not service California, and rubber recyclers. Therefore, staff does not believe that this requirement would add to the impact of the proposed regulation.

c) New Trailer Requirements

Staff’s proposal would require all 2011 and subsequ ent model year box-type trailers to be SmartWay certified or equipped with a required n umber of SmartWay approved

devices. Because natural turnover rates of trailer s are low, staff does not believe that this requirement by itself would have a significant impact on businesses. However, staff expects that many fleets would choose to purchase n ew SmartWay certified trailers instead of retrofitting older trailers with SmartWa y approved devices to comply with the proposal’s in-use trailer requirements. Therefore, the primary impact of this requirement will be considered as part of the impact of the in- use trailer requirements, discussed

below.

d) In-Use Trailer Requirements

The proposed regulation would require all in-use bo x-type trailers that operate in California to be SmartWay certified or equipped wit h a required number of SmartWay approved devices by December 31, 2012. Staff expec ts the largest impact of this proposal to come from these requirements due to the large number of trailers that operate in California.

18 “Truck Paper,” October 7, 2008, <http://www.truckp aper.com>78

Therefore, to alleviate some of the burden that a b usiness could potentially face when trying to comply with both the current proposal and the Truck and Bus Rule, staff’s regulatory proposal includes the option for a trail er fleet to participate in a compliance schedule that would allow the fleet to delay full c ompliance of in-use trailers beyond the December 31, 2012 compliance deadline. Two complia nce schedules were developed for this purpose--one for large fleets of trailers (21 or more trailers) and one for small fleets of trailers (20 or less trailers). In addit ion, certain refrigerated trailers concurrently affected by the TRU Rule and staff’s proposal could receive an additional delay as

described in section 2 below.

Under the large fleet compliance schedule, trailer fleets would be required to begin bringing trailers into compliance in 2010, but woul d be given until the end of 2015 to complete their fleet transition. Additional flexib ility would be available to fleets that bring trailers into compliance before December 31, 2009. Fleets that do so would be given one additional year to bring their remaining traile rs into compliance. Furthermore, the large fleet compliance schedule also begins with a conservative phase-in, which would only require 15 percent of a fleet’s trailers to co mply by the end of the second compliance year (December 31, 2011). This would pr ovide even more flexibility by giving fleets the opportunity to get ahead of early percentage requirements in order to reduce obligations in later years. Staff believes that the built-in flexibility would allow fleets to better manage their capital expenditures for complying with the current proposal and the Truck and Bus Rule. Moreover, bec ause long-haul fleets typically operate newer vehicles, it would be even less likel y for a long-haul fleet to be significantly impacted by the Truck and Bus Rule af ter December 31, 2011. Based on the reasons above, staff believes this compliance s chedule would provide adequate time for large fleets to comply with the requiremen ts of the current proposal, even if they are also concurrently subject to the Truck and Bus Rule.

To further reduce regulatory impacts on smaller fle ets, they would not be required to begin bringing trailers into compliance until 2013, and would be given until the end of 2016 to complete their fleet transition.

2. Impact with TRU Rule

The TRU Rule requires the retrofit, repower, or rep lacement of trailers equipped with 2009 and older model year diesel-fueled TRUs from 2 010 through 2016. These requirements would phase in concurrently with the l arge fleet and small fleet compliance schedules of staff’s proposal. In addition, since both the TRU Rule and staff’s proposal would affect trailers, trailer owners could face a significant burden should they be subjected to both regulations. Therefore, staff de veloped a special provision that would delay this proposed regulation’s phase-in requireme nts for most 2003 through 2008 model year refrigerated trailers until after 2016. As currently proposed, the refrigerated fleet provision would provide three years (2017-201 9) to phase in affected refrigerated

trailers. Staff feels that this would allow fleets to better distribute the regulatory impact of complying with the two regulations.79

XV. R ECOMMENDATION

Staff recommends the Board adopt new sections 95300 through 95312 entitled “HeavyDuty Vehicle Greenhouse Gas Emission Reduction Meas ure” in its entirety in chapter 16 of the California Code of Regulations, title 17. The regulatory language is set forth in the proposed regulation order in Appendix A.80

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