### CALIFORNIA ENVIRO NMENTAL PROTECTION AGENCY

AIR RESOURCES BOARD

STAFF REPORT: INITIAL STATEMENT OF REASONS

PROPOSED DIESEL PARTICULATE MATTER CONTRO L MEASURE FOR
ON-ROAD HEAVY-DUTY DIESEL-F UELED VEHICLES OWNED OR
OPERATED BY PUBLIC AG ENCIES AND UTILITIES

Date of Release: October 21, 2005
Scheduled for Considerati on: December 8-9, 2005

This report has been reviewed by the staff of the California Air Resources Board and approved for publication. Approval does not signify that the contents necessarily reflect the views and policies of the Air Resources Bo ard, nor does mention of trade names or commercial products constitute endorse ment or recommendation for use.State of California California Environmental Protection Agency
AIR RESOURCES BOARD

PROPOSED DIESEL PARTICULATE MATT ER CONTROL MEASURE FOR ON-ROAD
HEAVY-DUTY DIESEL-FUELED VEHICLES OWNED OR OPERATED BY PUBLIC
AGENCIES AND UTILITIES

Staff Report

October 2005i TABLE OF CONTENTS

EXECUTIVE SU MMARY .........................................................................................................1

I. INTRODUC TION...........................................................................................................2

A. Heavy-Duty Diesel Vehicles Operated by Public Agencies and Utili ties........................2

B. Regulatory Au thority......................................................................................................5

II. PUBLIC OU TREACH....................................................................................................8

A. Environmental Justice ...................................................................................................9

B. Outreach E fforts ............................................................................................................9

III. NEED FOR REDUCTION OF EMISSION RE DUCTIONS...........................................11

A. Particulate Matter ........................................................................................................11

B. Ozone.......................................................................................................................... 11

IV. ENGINE AND EMISS ION INVEN TORY......................................................................12

A. Engine Inv entory ..........................................................................................................12

B. Emission Inv entory ......................................................................................................13

V. SUMMARY OF PROPOSED CONTROL ME ASURE .................................................14

A. Scope and Applic ability ...............................................................................................14

B. Best Available Contro l Technology (BACT) .................................................................15
C. Implementation Schedul e ............................................................................................17

D. Calculating Fleet Size for Implement ation ...................................................................22

E. Compliance Ex tensions ...............................................................................................23

F. Diesel Emission Control Strat egy Special Cir cumstanc es...........................................26
G. Record Keeping Requirem ent .....................................................................................28

H. Contractor Compli ance Require ment ..........................................................................29

I. Non-Compliance and Enforcem ent..............................................................................30

VI. TECHNOLOGICAL FEASIBILITY OF CONTROL MEASURE...................................30

A. Availability of Ultra-low Sulfur Die sel F uel ...................................................................30

B. Verification of Diesel Emi ssion Control St rategi es.......................................................31
C. Diesel Emission Control Strategies for In-u se Public and Utility Fleet Vehicles ..........33

D. Engine Technology for Public and Utility Flee t Vehicl es..............................................39

E. ARB Exhaust Tem perature Study................................................................................42

F. Implementation Assistanc e..........................................................................................42

VII. REGULATORY A LTERNATIV ES...............................................................................42

A. Do Not Adopt This Regulat ion .....................................................................................43

B. Rely on Voluntar y Program s........................................................................................43
C. Require Repowered Engines or New Vehicle Purchas es............................................43

D. Require Alter native F uel ..............................................................................................44

VIII. ECONOMIC IMPACT ..................................................................................................44

A. Legal Requir ement ......................................................................................................45

B. Affected Manuf acturers ...............................................................................................45
C. Estimated Costs to Investo r-Owned Private Utilitie s....................................................45

D. Potential Impact on Utilitie s .........................................................................................49

E. Potential Impact on Busine sses...................................................................................51

F. Potential Impact on Busi ness Competit iveness...........................................................51
G. Potential Impact on Employ ment.................................................................................51

H. Potential Impact on Business Creation, Elimination or Expansion...............................51ii I. Potential Costs to Local Agenc ies ...............................................................................52
J. Potential Costs to State Agenc ies ...............................................................................53

K. Cost to Federal Agenci es ............................................................................................54

L. Cost to Municipalities and Utilities Located in Low Popu lation Coun ties .....................54

M. Cost to the Average Hous ehold for Ut ilities .................................................................54

IX. ENVIRONMENTAL IMPACT A ND COST-EFFECT IVENESS ....................................55

A. Statewide Emissi on Benefit s .......................................................................................55

B. Impacts on the State Im plementation Plan for PM 10 ....................................................57
C. Health Benefits of Reductions of Diesel PM Emissi ons...............................................58

D. Cost-Effectiveness of Proposed Regu lation ................................................................60

E. Potential Negat ive Impac ts..........................................................................................60

X. ISSUES .......................................................................................................................62

A. Low Population Definiti on ............................................................................................62

B. Biodiesel...................................................................................................................... 63
C. Alternative Compliance Plan or Alte rnative Early Co mpliance Plan ............................64

D. Cost to Local Gove rnment A gencies ...........................................................................64

E. Applicability of Proposed Rule to Federal Agencie s ....................................................64

XI. SUMMARY AND STAFF RECOMMENDAT ION.........................................................65

XII. REFERENC ES............................................................................................................66iii TABLE OF TABLES

Table 1. Public Agency Fleet Distribut ion.....................................................................3
Table 2. Public Agencies' Diesel-Fueled Heavy- Duty Trucks By Application............3
Table 3. Private Utilities' Top Ten Vehi cles by Applic ation Type................................4
Table 4. Public and Utility Heavy-Duty Vehicl es by Model Year Group in 2004........4

Table 5. Public Agencies' Engi ne Manufact urers.........................................................5
Table 6. Workshop Locations and Ti mes....................................................................10
Table 7. Baseline Public Agency and Private Ut ility Inventory (Tons Per Year)......14
Table 8. Potential Reductions from the Use of DECS s. .............................................16
Table 9. Implementation Schedule for 1960 to 2006 MY Engines .............................17
Table 10. Low Population Counties: Popul ations Under 125,000...............................19
Table 11. Optional Impementat ion Sche dule................................................................21
Table 12. Verified Level 3 DECS.....................................................................................31
Table 13. Verified Level 2 DECS.....................................................................................32
Table 14. Verified Level 1 DECS.....................................................................................32
Table 15. Emission Standards for New Heavy-Duty Engines......................................39
Table 16. Diesel PM Reductions by Alternati ve Compared to the Proposal. .............44
Table 17. Most-Likely Verification Retrofit S cenario....................................................47
Table 18. Average Capital Costs for Diesel Emission Contro l Strategies..................48
Table 19. Incremental Annual Operation and Maintenan ce Costs..............................48
Table 20. Average Total Stat ewide Co sts .....................................................................49
Table 21. Initial and Annual Costs Average Sm all Utility with 5 Vehicles..................50
Table 22. Average Local Gover nment Co sts ................................................................53
Table 23. Average Costs to the State ............................................................................53
Table 24. Statewide Diesel PM Emissi on Reduction Be nefits.....................................55
Table 25. Other Pollutan t Reducti ons ...........................................................................56
Table 26. Statewide Diesel CO Emissi on Reduction Benefits.....................................56
Table 27. Statewide Diesel HC Emissi on Reduction Benefits.....................................56
Table 28. Statewide Diesel NOx Emi ssion Reduction Benefits...................................57
Table 29. Counties with Populations Be tween 125,000 to 300,000.............................63iv APPENDICES

APPENDIX A: PROPOSED DIESEL PART ICULATE MATTER CONTROL MEASURE
FOR ON-ROAD HEAVY DUTY DI ESEL-FUELED VEHICLES OWNED
OR OPERATED BY PUBLIC AGENCIES AND UTILITIES

APPENDIX B: PUBLIC AND UTILITY VEHICLE EMISSIONS INVENTORY

APPENDIX C: COST EFFECTIVENESS METHODOLOGY

APPENDIX D: ARB’S TEM PERATURE EXHAUST STUDY

APPENDIX E: TOTAL FLEET CALCULATION EXAMPLESv LIST OF ACRONYMS

$/lb Dollars per pound AB Assembly bill ARB, or the Board Air Resources Board
ATCM Air toxic control measure BACT Best available control technology CCR California Code of Regulations
CO Carbon monoxide DECS Diesel Emission Control System or Strategy DOC Diesel Oxidation Catalyst DRRP, or Diesel Risk
Reduction Plan Risk Reduction Plan to Reduce Particulate Matter Emissions from Diesel-Fueled Engines and Vehi cles Risk Reduction Plan DTSC Department of Toxic Substances Control g/bhp-hr Grams per brake horsepower-hour GVWR Gross vehicle weight rating HC Hydrocarbon H&SC Health and Safety Code

μ g/m 3 Microgram per cubic meter MY Model year Moyer Program Carl Moyer Memorial Ai r Quality Standards Attainment Program NO Nitrogen oxide
NO 2 Nitrogen dioxide
NO
x Oxides of nitrogen
NOV Notice of violation
OEHHA Office of Environmental Health Hazard Assessment O & M Operation and maintenance

PM Particulate matter Ppmw Parts per million by weight SCAQMD South Coast Air Quality Management District SJVAPCD San Joaquin Valley Air Pollution Control District
TAC Toxic air contaminant Tpd Tons per day
Ultra low sulfur diesel
fuel Diesel fuel with less than 15 ppmw sulfur content

U. S. EPA United States Envi ronmental Protection Agency
VIN Vehicle identification number VOC Volatile organic compound1 EXECUTIVE SUMMARY

The Air Resources Board’s (ARB or Board) mission is to provide healthful air to all Californians. In 1998, the Board identified di esel particulate matter (PM) as a toxic air contaminant and established a goal of reducing emissions of diesel PM to the lowest practicable levels. Diesel PM is by far the largest contributor to adverse health impacts
from all toxic air contaminants identifi ed, comprising 70% of statewide risk.

In 2000, the Board adopted a comprehensive plan to reduce PM emissions from dieselfueled engines and vehicles (ARB 2000b) . The ARB has already adopted several control measures recommended in that plan, including rules for transit buses, solid waste collection vehicles, st ationary engines, diesel port able equipment, transportation refrigeration units, idling controls, new cl eaner exhaust standards for heavy-duty trucks and off-road equipment, and ultra-low su lfur diesel fuel in mid-2006.

The Diesel Risk Reduction Plan included control measures for on-road public fleets and other public and private fleets. This proposed regulation will meet that commitment. It will reduce ambient PM levels and exposure to primary and secon dary diesel PM, in turn, reducing the prevalence of the diseases attributed to PM and diesel PM including hospitalizations for cardio-respiratory di sease, and premature deaths. ARB staff estimates that approximately 37 deaths would be avoided by the year 2020 as a result
of cumulative emission reductions obtained through this regulation.

The ARB staff recommends that the Board adopt new sections 2022 and 2022.1 in Title 13, California Code of Regulations (CCR), as set forth in the proposed Regulation Order in Appendix A.2 I. INTRODUCTION

The Air Resources Board’s (ARB or Board) mission is to provide clean healthful air to all Californians. In 1998, the Board identified di esel particulate matter (PM) as a toxic air contaminant and established a goal of reducing emissions of diesel PM to the lowest practicable levels. Diesel PM is the larges t contributor to adverse health impacts from
all toxic air contaminants identified thus far, comprising 70% of statewide risk.

In 2000, the Board adopted the “Risk Reduct ion Plan to Reduce Particulate Matter Emissions from Diesel-Fueled Engines and Vehi cles” (Diesel Risk Reduction Plan) at a public meeting. Among other obj ectives, the Plan directs staf f to develop “new retrofit requirements for existing on-road, off-road, and stationary diesel -fueled engines and

vehicles where determined technicall y feasible and cost-effective.”

The ARB has already adopted several of the recommended control measures, including rules for transit buses, solid waste collect ion vehicles, stationary engines, diesel portable equipment, transportation refrigerati on units, idling controls, 2007 model year (MY) emission standards for heavy-duty tr ucks and off-road equipment, and ultra-low
sulfur diesel fuel in mid-2006.

The Diesel Risk Reduction Plan included a sp ecific commitment to develop control measures for on-road public fleets and other public and priv ate fleets. The proposed regulations are part of ARB’ s continuing efforts to impl ement the Plan and reduce the public’s exposure to harmful diesel PM exhaust.

A. Heavy-Duty Diesel Vehi cles Operated by Public Agencies and Utilities

California municipal or public fleets in clude all federal, stat e, county and city government fleets plus universities and specia l districts such as water, utility and irrigation districts. Airports, school distri cts and ports also are considered to be public fleets. In 2002, ARB contracted for a surv ey of public agencies to be used to develop an inventory of heavy-duty public fleet vehicl es (TIAX LLC 2003). ARB staff followed up on the contractor's work and surveyed additional fleets not captured by the contractor. These include vehicles owned or operated by shareholder-owned utilit ies that provide natural gas, water or electricity services.

Most public agencies have fleets of fewer t han 15 vehicles (80.7%); 16.7 percent have 15 to 99 vehicles, and 2.6 percent have 100 or more vehicles (Table 1). Although the majority of fleets have fewer than five vehicl es, they account for less than 7% of the 23,227 1 diesel fueled vehicles with over 14, 000 gross vehicle weight rating (GVWR) owned by state and local agencies. On the other hand, only 2. 6% of the fleets surveyed owned over 100 vehicles, but these fleets a ccount for 46% of the vehicles owned by state and local agencies (Table 1).

1 Vehicle Numbers estimated by 2003 Department of Motor Vehicles (DMV) registered exempt license plates.3 Table 1. Public Agency Fleet Distribution

Fleet Size Number of Fleets Percent (%) of

Fleets Total # of Vehicles (%)

0-4 324 56.5 6.9
5-14 139 24.2 12.7
15-49 81 14.1 23.6
50-99 15 2.6 10.7
100-999 15 2.6 46.0

Total 574 100 100

The picture for private utilit ies includes many small investor-owned water companies with one or two heavy-duty diesel-fueled vehicles each (90% of the utilities), about 15 to
20 medium-sized utilities with 40 to 50 vehicles each (8% of the ut ilities) and a small number of large private utilities with 500 to 1,500 vehicles each (2% of the utilities).

The TIAX report provided additio nal details on the types of vehicle types used by public agencies. Staff analyzed only the diesel-fue led trucks over 14,000 lbs gross vehicle weight rating (GVWR) report ed by public agencies in the TIAX report. Based on this, there are ten vehicle types that comprise 71 percent of the total number of diesel trucks over 14,000 GVWR (Table 2).

Table 2. Public Agencies' Diesel-Fuele d Heavy-Duty Trucks By Application

Application Percent of Fleet

Dump Truck 22 Plow & Spreader Truck 15 Sweeper 7 Cargo Truck 7

Tractor Truck 5
Sewer Truck 4
Service Truck 3
Flatbed Truck 3
Aerial Lift Truck 3
Crane Truck 2

Total: 71

Private utilities have more highly spec ialized vehicles when compared to public agencies. The three most common applications are specifically designed for working on and stringing power lines (Table 3) and comp rise nearly half the total number of vehicles. For utilities, the top ten vehicle types account for 81 percent of the dieselfueled vehicle types.4 Table 3. Private Utilities' Diesel-Fueled Heavy-Duty Trucks Top Ten Vehicles by Application Type

Application Percent of Fleet

Aerial Lift Truck 23
Bucket Truck 14
Line Truck 11 Material Handling Truck 9 Dump Truck 6
Flatbed Truck 5
Mechanic Truck 5 Pickup Truck 3 Welding Truck 3
Flatbed with Crane 2

Total: 81

Engine model year is particularly import ant for developing the emission inventory and analyzing the applicability of different technologi es for reducing emissions. Staff also analyzed the diesel-fueled vehicles by engine type and model year. For the combined public agency and private utility fleet, half of the engines, as of 2004, were in the 1994 to 2006 MY engine group (Table 4). These engi nes were certified at 0.1 gram per brakehorsepower-hour (g/bhp-hr ) PM. Staff estimates t hat an additional 4% of new

vehicles will be added when t he regulation begins.

Table 4. Public and Utility Heavy-Duty Diesel-Fueled Vehicles by Model Year Group in 2004

Engine Model
Year PM Certification (g/bhp-hr) No. of Vehicles Percent

1960-1987

-- 6,165 21 1988-1990 0.60 3,225 11 1991-1993 0.25 3,988 13 1994-2006 0.10 16,491 55 Total 29,869 100

The predominant engines by manufacturer ar e International, Cummins, and Caterpillar for these medium and heavy heavy-duty diesel vehicles (Table 5).5 Table 5. Public Agencies' Engine Manufacturers

Engine Manufacturer Distribution
International 36.8%
Cummins 16.9% Caterpillar 16.5%
Not Listed 10.9%
Ford 5.9%
Detroit Diesel 5.5%
GMC 3.8%
Navistar 1.7%
Other 2.0%

Total 99.9%

B. Regulatory Authority

The Federal Clean Air Act (CCA) grants Calif ornia the authority to control emissions
from mobile sources. T he California Clean Air Act (Health & Safety Code (H&SC) sections 39002, 43013, and 43018) establishes the ARB as the state agency that sets standards for mobile sources. Most impor tant to this regulat ion, the California Legislature also granted ARB the authority to identify toxic air contaminants and

establish airborne toxic contro l measures to reduce risk.

1. Control of Toxic Air Contaminants

In 1983, the California Legislature adopted Asse mbly Bill (AB) 1807 to enact a program to identify the health effects of toxic ai r contaminants and reduce exposure to these contaminants in order to protect public health (H&SC sections 39650 - 39674). The Legislature established a two- step process to address the potential health effects once

a toxic air contaminant is ident ified: the first step is the ri sk assessment or identification phase while the second is the risk m anagement or emission reduction phase.

The Board is directed to address specific issues pursuant to the need for regulation (H&SC section 39665). These requirements we re addressed in detail in the Diesel Risk Reduction Plan (DRRP), incl uding the extent of pres ent and anticipated future emissions, the estimated levels of human exposure, and the risks associated with those levels. The DRRP (ARB 2000b) describes the physical and chemical characteristics of diesel PM and the contribution to emissions by present sources, as well as the costs, availability, technological feasibility of control measures, and t he potential adverse health or environmental impacts. Each of these issues is considered in the development of diesel PM regulations and will be discussed in this report specifically as

each relates to this control measure.6 2. Other Authority that Provides for Exemptions

Although they are owned and operated by pub lic agencies, emergency vehicles and military tactical support vehicles are exempt from this rulemaking under other statutes

and rules.

The smoke inspection program which operat es pursuant to H&SC section 43701 does not make a specific reference to “motor vehi cle pollution control devices.” That section authorizes the adoption of standar ds, but does not mandate that those standards must be achieved by use of a “device.” Thus emergency vehicles are subject to the requirements designed to reduce visible smoke emissions.

With regards to military tactical support equipment, the federal ex emption for military
tactical vehicles is stated in 40 Code of Federal Regulations (CFR) part 85, section 1703, which refines the definiti on of “motor vehicle” stated in section 216(2) (42 USCA 7550(2))of the CAA. California recognizes the federal military tactical vehicle exemption
in section 1905 of title 13 CCR.

3. Related California Statewide Regulations

California has adopted regulations to ensure compliance with smoke emissions standards. California’s Heavy Duty Vehicl e Inspection and Periodic Smoke Inspection Programs require that owners eliminate excessive smoke emissions and prohibit exhaust system tampering on diesel-fueled vehicles over 6,000 lbs GVWR; the rules apply to all trucks traveling within California. These r egulations impose limits on the opacity of smoke from diesel engines w hen measured in accordance with a snapacceleration test procedure and have been in effect since 1991, with amendments adopted in 1997.

In February 2000, the Board ado pted a new fleet rule for transit agencies and more stringent emission standards for new urban bus engines and vehicles (ARB 1999, ARB 2000c). The transit bus rule was design ed to reduce NOx and PM by setting fleet emission reduction requirem ents, requirements for zero-emission bus (ZEB) demonstrations and acquisition and new mo re stringent mid- and long-term new bus purchasing standards.

In September 2003, the Boar d adopted regulations for in-u se solid waste collection vehicles. This rule requires best availabl e control technology (BACT) on all diesel collection vehicles over 14,000 lbs GVWR . From 2004 through 2020, staff estimates

that this rule will result in the elimination of over 2.26 million lbs of diesel PM from the air. Similar rules have been adopted for stat ionary engines, transportation refrigeration units, and portable equipment.

The Board has also adopted lim its on idling of diesel engines. In general, buses and commercial vehicles may idle no longer than 5 minutes. More stringent restrictions apply to vehicles idling near a school.7 4. Related Local Regulations

The South Coast Air Quality Management Dis trict (SCAQMD) has adopted several fleet rules that apply to diesel vehicles. These rules generally require the affected public or private operator of fleets with more than fifteen vehicles to procure only alternative-fuel engines when purchasing new vehicles. In the case of school buses, the requirement is

tied to the avail ability of grants.

• Rule 1186.1 – Less Po llution Street Sweepers

• Rule 1192 – Clean On-Road Transit Buses

• Rule 1193 – Clean On-Road Residential and Commercial Refuse Collection

Vehicles

• Rule 1195 – Clean On-road School Buses

• Rule 1196 – Clean On-Road Heavy-Duty Public Fleet Vehicles

Some local air districts have enacted or dinances to encourage use of low-emission vehicles and retrofitting of existing vehi cles. The Sacramento AQMD established the “Model Green Contracting Ordinance” and t he “Model Low-Emission Vehicle and Fleet Ordinance” in October 2002, aimed at reduc ing ozone precursors in the Sacramento region. These ordinances encourage contra ctors to operate low-em ission vehicles and amended local codes that regulat e procuring and retrofitting of vehicles for public agency fleets.

The Sacramento Area Council of Government 's (SACOG) Board of Directors approved a strategic plan to implem ent a $70 million incentive pr ogram to help clean up the region's air. This program is known as the Sacramento Emergency Clean Air and Transportation (SECAT). SECAT will provide f unds to vehicle owners to replace old engines with newer engines, use clean diesel formulations such as emulsified diesel,
and retrofit in-use diesel engines with after-treatment.

The San Joaquin Valley Air Pollution Contro l District has established a heavy-duty engine program, which provides incentive funds for the differential cost, associated with reduced emission technology as compared with the cost of conventional technology. Eligible funding categories include various heavy-duty on- and off-road vehicles and engines.

5. California Voluntar y and Incentive Programs

Voluntary efforts play a key role in helping to achieve air quality goals. Incentives or early implementation credits can induce ve hicle owners to reduce vehicle emissions prior to compliance deadlines or in exce ss of regulatory requi rements. Several incentive programs exist in California which ha ve reduced diesel PM emissions over the last several years.

The California Legislature established the Carl Moyer Memorial Air Quality Standards Attainment Program (Moyer Program) in 19 98 to reduce NOx emissions from existing8 vehicles. The Moyer Program funds the in cremental cost of r epower, retrofit, or purchase of new, cleaner engines that meet a specified cost -effectiveness level for NOx reduction. Recently, the Moyer Program has been expanded to include agricultural sources of air pollution as well as cars and lig ht-duty trucks. Program s that may also be funded reduce hydrocarbon (HC) and PM pollution . The total Moyer Program is funded at approximately $140 million per y ear for the next 10 years.

In 2000, the Legislature approved new funds to reduce emissions from school buses. The goal of this incentive program is to reduc e the exposure of school children to both cancer-causing and smog-forming compounds. This program utilizes two strategies to attain these goals: pre-1987 model year school bus replacement and in-use controls for later model year diesel-fueled school buses. Funding for fiscal year 2005 to 2006 is $25

million.

6. Federal Programs

The U.S. EPA established a Voluntary Diese l Retrofit Program in 2000 to address pollution from diesel construction equipment and heavy-duty on-highway vehicles. This program verifies technology that reduces emissions and allows fleet operators to choose appropriate, U.S. EPA-verified technolog ies that will reduce the emissions of the vehicles and engines in their fleets. U. S. EPA has also identified potential funding sources to assist air quality planners and fleet operators as they create and implement retrofit programs. T he program assists air qua lity planners in determi ning the number of State Implementation Plan credits produced by their retrofit projects. The U.S. EPA has also established a program to fund school bu s retrofits and replacements from penalty

revenues.

The Energy Bill authorizes up to $8.5 billi on for federal Congestion Mitigation and Air Quality (CMAQ) programs and ex presses a strong preference fo r funding diesel retrofit projects. In June 2005, the U.S. Senate pass ed an amendment to the Energy Bill called the Diesel Emissions Reduction Act (DERA) of 2005 that provides funding to cut emissions from high-polluting diesel engines. DERA would create a national program to fund the cleanup of all types of diesel-pow ered vehicles, including trucks, buses, tractors, ships, and trains. The legislation authorizes $200 million per year over five years in grants and loans for states and organiza tions to clean up existing diesel fleets.

II. PUBLIC OUTREACH

The ARB is committed to ensuring that all California communities have clean, healthful air by addressing not only the regional smog t hat hangs over our cities but also the nearby toxic pollution that is generated wit hin our communities. The ARB works to
ensure that all individuals in California, especially the child ren and elderly, can live, work and play in a healthful environment that is fr ee from harmful exposure to air pollution.9 A. Environmental Justice

The ARB is committed to integrating environm ental justice in all its activities. On December 13, 2001 (ARB 2001), the Board approved Environmental Justice Policies and Actions, 2 which formally established a framew ork for incorporat ing environmental justice into the ARB's progr ams, consistent with the di rectives of State law. Environmental justice is defined as the fair treatment of people of all races, cultures, and incomes with respect to the devel opment, adoption, implementation, and
enforcement of environmental laws, regulations, and policies. These policies apply to all communities in California, but recognize that environmental justice issues have been raised more in the context of low-income and minority communities.

To achieve this ambitious goal, the ARB ha s established a Community Health Program and placed new emphasis on community health issues in our existing programs. The Neighborhood Assessment Progr am is a key component in the Community Health Program. The Neighborhood As sessment Program Work Plan presents a plan that the ARB staff proposes to use to develop gui delines for evaluating and reducing air pollution impacts at the nei ghborhood-scale (ARB 2000a).

The Environmental Justice Policies intends to promote the fair treatment of all Californians and cover the full spectrum of AR B activities. Underlying these Policies is a recognition that we need to engage community members in a meaningful way as we carry out our activities. People should hav e the best possible information about the air they breathe and what is being done to reduce unhealthful air pollution in their communities. The ARB recognizes its obligat ion to work closely with all stakeholders; communities, environmental and public health organizations, industry, business owners, other agencies, and all other inte rested parties to successfully implement these Policies.

This control measure is in direct response to the environmental justice policy to reduce health risks from toxic air pollutants in a ll communities, especially low-income and minority communities. This control meas ure, when adopted, will provide immediate airquality benefits by reducing diesel PM emissions from public and utility vehicles which operate in neighborhoods. The actions we hav e taken in applying these policies in our rulemaking reflect the Board’ s commitment to the fair treat ment of all people throughout
California.

B. Outreach Efforts

As part of the environmental justice po licy to strengthen our outreach and education efforts in all communities, staff held seven public workshops, and many focused meetings in the development of this rule from April 2003 to August 2005. The workshops were held at times and locati ons that encouraged public participation. Attendees included representatives from lo cal, state, and federal public agencies, utilities, environmental organizations, engine manufacturers, diesel emission control

2 Complete information for these programs c an be found at http://www.arb.ca.gov/ch/ej.htm.10 manufacturers, and other interested parties. These individuals participated both by providing data, reviewing draft regulations and by participating in open forum workshops, in which staff directly addressed their concerns. In addition to this, ARB staff participated in a Diesel Emission Reduc tion for Public Agency and Utility Fleets Technical Conference sponsor ed by the California Air Pollution Control Officers Association (CAPCOA) in Sacramento on A ugust 15-16, 2005. This conference was attended by over 500 individuals represent ing municipal and utility fleet managers, aftreatment device manufacturers, installers , engine manufacturers, fuel producers and environmental groups.

Staff met with a number of stakeholders’ gr oups throughout the rulemaking process. Representatives from various public agenc ies and private utilities assisted ARB in gathering data about their fleets and provided i nput in developing our data survey forms. Alternatives were suggested to the proposed regulation and explored by staff. Staff met several times with representat ives of the Regional Counc il of Rural Counties (RCRC) and presented at a RCRC board meeting on A ugust 11, 2004, to specifically discuss compliance issues unique to small population counties and what special provisions could be provided in the rule.

Workshops were in held in Sacramento and El Monte. The Sacramento workshops were broadcast over the internet (webcas t), to provide opportunity for stakeholders throughout California to participate (Table 6) . Over 3,000 individuals and companies were notified through a series of mailings. In addition, notices were posted to the web
site and e-mailed to subscribers of ARB’s electronic list server.

Table 6. Workshop Locations and Times

Date Location Time April 3, 2003 El M onte 2:30 – 4:30 PM

December 2, 2003 El Monte 10:00 – 12:00 PM

December 3, 2003* Sacr amento 10:00 – 12:00 PM
May 17, 2004* Sacramento 10:00 – 12:00 PM
May 18, 2004 El Monte 10:00 – 12:00 PM

October 7, 2004 El M onte 10:00 – 12:00 PM

October 8, 2004* Sacram ento 10:00 – 12:00 PM

*Webcasted workshops

To generate additional public par ticipation and to enhance the information flow between ARB and interested persons, staff made all documents, including workshop presentations, available via the ARB’s web site. 3 The web site provides background information on diesel PM, including fact sh eets, workshop dates and locations, and
other diesel related information and serves as a portal to other web sites with related
information.

3 Located at http://www.arb.ca.gov /msprog/publicfleets/publicfleets.htm

.11 III. NEED FOR REDUCTION OF EMISSION REDUCTIONS

A. Particulate Matter

PM emissions result primarily from incomple te combustion of fuel in the cylinder and

lubrication oil that has enter ed the cylinder incidentally. Secondarily produced diesel PM is formed as a result of atmospheric reactions with diesel NOx emissions. The majority of diesel PM, approximately 98 percent, is smaller than ten microns in
diameter. Diesel PM is a mixture of materials cont aining over 450 different components, including vapors and fine particles coated with organic substances. More
than 40 chemicals in diesel exhaust are cons idered TACs by the St ate of California.

Diesel PM has been linked to a wide range of se rious health problems. Particles that are deposited deep in the lungs can result in lung cancer, increased hospital admissions; increased respiratory symptom s and disease; decreased lung function, particularly in children and individuals wit h asthma; alterations in lung tissue and respiratory tract defense me chanisms; and premature deat h. Increased PM exposure causes increased cardiopulmonary mortalit y risk as demonstrated in a validity and causality analysis of 57 epidemio logical studies. (Dab, et al . 2001). Significant positive associations exist between lung cancer inci dence and the number of days per year that respirable particulates (PM 10 ) exceeded several thresholds (B eeson, et al. 1998). Longterm ambient concentrations of PM 10 are associated with increased risks of all naturalcause mortality in males, mortality with any mention of nonmalignant respiratory causes in both sexes, and lung cancer mortality in males (Abbey, et al., 1999; McDonnell, et al

. , 2000).

B. Ozone

Ground-level ozone is created by the photochemical reaction between NOx and reactive organic gases (ROG). Breathing ozone can trigger a variety of health problems including chest pain, coughing, throat irritati on, shortness of breath, and congestion. It can worsen bronchitis, emphysema, and asthma . Ozone can also reduce lung function and inflame the linings of the lungs. R epeated exposure may permanently scar lung tissue. The elderly, children, and people with compromised respiratory systems are among those persons who may be most affected by exposu re to ozone.

Ground-level ozone also damages vegetation and ecosystems. It leads to reduced agricultural crop and commercial forest yields, reduced growth and survivability of tree seedlings, and increased susceptibility to di seases, pests, and other stresses such as
harsh weather. Ground-level oz one also damages the foliage of trees and other plants, affecting the landscape of cities, parks and forests, and recreational areas.

NOx is considered an important outdoor pollutant not only because it is an essential precursor in the formation of ground-level oz one, but also because it contributes to the formation of atmospheric acids and secondary par ticles. In addition, nitrogen dioxide is12 a reactive gas capable of damaging the cells lin ing the respiratory tr act. The ARB staff is currently reviewing the NO 2 standard for possible revision.

IV. ENGINE AND EMISSION INVENTORY

An improved engine and emission inventor y was developed for this rule’s proposal, including a survey of vehicles used in California’s public fleets. The ARB contracted with TIAX LLC (formerly Arthur D. Little) to survey California pu blic fleets to allow staff to develop a comprehensive understanding of vehicles and equipment used by various public agencies (TIAX LLC 2003). The surv ey started in February 2002 and was completed in February 2003. The final database contain ed data for 178 fleets representing 57 percent of the DMV estimated heavy-duty vehicles over 8,500 GVWR and equipment owned and operated by public agencie s. The report also conveyed data on engine make, model, model year, vehicle types , as well as activity characteristics of vehicles (i.e., mileage and fuel consumption) used in public fleets in California.

Federal agencies, some large public ag encies and all private, shareholder-owned utilities were not included in the TIAX study, so staff continued the survey in 2004. In addition to the public agencies, staff contac ted the three largest investor-owned private
utilities 4 to request vehicle information. All responded with some information about their fleets. Two of the utilities pr ovided detailed information on t heir vehicles such as engine make, model, model year, vehicle type and current odometer. In addition, staff surveyed smaller utilities and contacted them by telephone for information on their

vehicles.

A. Engine Inventory

Staff estimates the population of diesel vehi cles over 14,000 GVWR owned by state and local agencies is 23,227 based on analysis of the 2003 Department of Motor Vehicles (DMV) database for exempt vehicle license plates 5 . We gathered engine and fleet data for approximately 57 percent of the vehicles used by these public fleets and 79 percent of the vehicles used by utilities. Staff extr apolated these data to obtain a picture of the
entire fleet of Calif ornia’s public and utility owned on-road diesel vehicles. The population is expected to remain relative ly stable or increase slowly during the implementation of this regul ation because of budgetary constr aints. Public agencies tend to keep a vehicle in service for over ten years on average and thus fleet turnover (the time a vehicle is retired from service) is expected to remain relatively slow.

Staff estimates there are 3, 979 heavy-duty vehicles (as of 2004) owned or operated by private utilities subject to this rule. Appr oximately 3,130 of thes e are owned or operated by the three largest investor-owned utilit ies: Southern California Edison, PG&E, and Sempra Energy (Southern California Gas Com pany and San Diego Gas & Electric). In

4 Pacific Gas and Electric, Sempra Energy (Souther n California Gas, San Diego Gas and Electric),
Southern California Edison

5 This number excludes emergency vehicles, school bu ses, solid waste collection vehicles and transit
buses.13 addition, staff identified about twenty additio nal utilities with 664 heavy-duty vehicles
that are listed in the ARB’s Periodic Smok e Inspection Program (P SIP) database. Staff identified about 185 small water companies from the California Public Utilities Commission (CPUC) lists. Telephone c ontact with these small water companies determined that, on average, each has abou t one vehicle per company that may be impacted by this regulation. For federal fleets, the United States Postal Service (USPS), several military bases, and the federal General Service Administration (GSA) also submitted survey information on their heavy duty diesel vehicles accounting for approximately 2,663 vehicles subj ect to the rule.

Combining these data, staff estimated the 2004 population of public agency and private utility vehicles covered by this proposal to be 29,869.

B. Emission Inventory

The California on-road vehicle emission inve ntory data consists of two elements: engine emissions and vehicle activity. The emissions-related data reflect new vehicle testing information and the latest vehicle registration data from the DMV. The activity-related data are updated by the regional transportation agencies that estimate the daily vehicle miles of travel, the distribution of travel by speed, and the number of starts per vehicle per day by year. In addition, staff conduct ed a temperature exhaust study to determine the percentage of vehicles that would be am enable to passive diesel emission control systems. A summary of this study is prov ided in Section VI.E. The on-road emission inventory is then derived using a mathem atical model developed by ARB named EMission FACtor (or EMFAC).

Staff calculated the emission inventory fo r public agency and private utility vehicles using the EMFAC model. Certain parameter s such as vehicle age distribution, population and turn over (useful life) were updated based on the surveys staff did to support this regulatory purpose and incorporat ed into the revised inventory (Appendix B). Gasoline vehicles, alte rnative fueled and vehicles less than 14,001 lbs GVWR were not included in the emissions analysis.

The baseline emissions for pubic agency and priv ate utility vehicles (Table 7) gradually decline over time naturally with the intr oduction of cleaner engines in the 2007 and 2010 model years.14 Table 7. Baseline Public Agency and Pr ivate Utility Inventory (Tons Per Year)

Calendar Year PM NO
x HC CO

2000 165 4061 365 895

2005 140 4148 103 837

2010 93 3680 84 730

2015 63 3093 72 644

2020 45 2676 59 600

V. SUMMARY OF PROPO SED CONTROL MEASURE

Staff recommends that the B oard adopt new sections 2022 and 2022.1, as set forth in Appendix A. The core of th is proposal is a requirem ent that each municipality and private utility apply best available control te chnology (BACT) to its on-road heavy-duty

diesel vehicles to reduce diesel PM emi ssions and associated health impacts according to the rule’s schedule. The proposed rule is based on the proposed control measure listed in the Diesel Risk Reduction Plan (ARB 2000).

A. Scope and Applicability

The proposed rule applies to municipalities and private utilities that own or operate one
or more diesel-fueled on-road vehicles with a GVWR greater than 14,000 lbs, powered by a heavy-heavy or medium-heavy duty 1960 to 2006 MY engines. Medium and heavy heavy-duty diesel trucks have the highest diesel PM emissions when compared to all medium duty/light heavy-duty trucks and thus focusing on these vehicles is a costeffective mechanism for diesel PM reduction, as will be discussed later. The regulation does not apply to emergency vehicles descri bed in the California Vehicle Code 27156.2 or military tactical vehicles which in general are exempt from certain air pollution control requirements. It also does not include so lid waste collection vehicles, school buses,
transit buses or off-road vehicles which ar e subject to separate state regulations or programs. Gasoline vehicles are excluded if they do not m eet the standards specified in these regulations.

A municipality is defined in se ction 2020, title 13 of the Cali fornia Code of Regulations (CCR) as a city, county, city and county, spec ial district, or a public agency of the United
States of America or the State of California, and any department, division, public corporation, or public agency of this State or of the United Stat es, or two or more entities acting jointly, or the duly constitut ed body of an Indian reservation or rancheria. A utility is a new definition proposed by the regulation and is defined as a privatelyowned company that provides the same or sim ilar services for water, natural gas, and electricity as a utility operated by a municipality.15 B. Best Available Cont rol Technology (BACT)

The proposed rule requires that a municipalit y or utility reduce diesel PM emissions through application of BACT by the app licable implementation dates.

BACT is defined in this section as one of four compliance options:

(1) Use of a engine or power system certified to the 0.01 g/bhp-hr particulate emission standard; or

(2) Use of an engine or power system certifi ed to the 0.1 g/bhp-hr particulate emission standard, in conjunction with the highest level verified diesel emission control strategy (DECS); or

(3) Use of an alternative-fuel, heavy-duty pilot-ignition, or gasoline engine; or

(4) Use of an existing engine used in conjuncti on with the highest level verified DECS.

A public agency or utility that chooses to re power a vehicle with an engine certified to the 0.01 g/bhp-hr PM st andard (option 1), would use an engine certified to either the optional 0.01 g/bhp-hr particula te emission standard as specified in title 13, CCR, section 1956.8(a)(2), or the 0.01 g/bhp-hr particulate emissi on standard as specified in title 13, CCR, section 1956.8(a) , when it becomes effective in 2007. This option has a greater cost, as it entails either purchasi ng a replacement vehicle or engine (also called engine repowering), but may be preferred by a public agency or utility when the vehicle being replaced is nearing the end of its useful life. Engines certified to 0.01 g/bhp-hr PM, however, will not be generally available for vehicles until the 2007 MY.

A public agency or utility that chooses to re power a vehicle with an engine certified to a 0.1 g/bhp-hr particulate emi ssion standard (option 2) as s pecified in title 13, CCR section 1956.8, must also install the highest level DECS that is verified in accordance with 13 CCR section 2702(f). The DECS must be the highest level that the retrofit manufacturer or authorized dealer agrees that can be used on that engine.

No additional controls are required to reduc e diesel PM emissions from alternativefueled or gasoline vehicles (opt ion 3) because, by definition, alternative-fuel or gasoline
vehicles do not emit diesel PM. Staff w anted to ensure that only the cleanest alternative fueled or gasoline engines would be c onsidered BACT, therefore for MY 2004-2006 alternative fueled engines must be certified to the optional reduced emission standards specified in title 13 CCR section 1956.8(a)(2)( A). Similarly, in order for gasoline engines to be considered BACT, they must be certified to the 2005 model year and later emission standards for heavy-duty Otto cycle engi nes specified in title 13 CCR section 1956.8(c)(1)(B) and 1976(b)(1)(F). Beginning in 2007, both alternative fuel and gasoline engines will be required to meet the stringent standards set for diesel fueled engines. A certified dual-fuel engine, however , uses both diesel fuel and an alternativefuel, and is not considered to meet BACT bec ause of the relatively high proportion of16 diesel fuel used. Thus an owner with a dual-f uel vehicle must still comply with the rule, for example by installation of a verified dies el particulate filter. A heavy-duty pilotignition engine is treated like an alternative- fuel engine in this rule because of its relatively low proportion of diesel fuel compar ed to alternative-fuel usage. This engine would use diesel fuel in less than ten per cent of its duty cycle for engine ignition and cannot operate or idle solely on diesel fuel at any time. It should be noted at this time no such engine is currently certified in California.

The last option (4 above) is to install a verified DECS to meet the BACT requirement. This is the least expensive option. If a muni cipality or utility plans to comply using this option, the technology must be verified by ARB. Several DECSs have received approval under the Verification Procedure for In-Use Strategies to Control Emissions from Diesel Engines (title 13, CCR, sections 2700-2710).

Under this procedure, diesel PM control devic es can be verified to one of three levels: Level 1, greater than 25 diesel PM reducti on; Level 2, greater than 50 percent; and Level 3, 85 percent and greater diesel PM reduction. BACT is determined by Level, not by percent emission reduction. Thus a te chnology that reduces diesel PM by, for example, 45 percent is equivalent, under this ru le, to one that reduces diesel PM by 25 percent. Both get the same credit in this ru le as Level 1 DECS. Table 8 shows the PM

emission levels which result when the thr ee levels of verified devices are applied to various engine model years. A DECS can also be optional ly verified to reduce NOx emissions by a minimum of 15 percent reduc tion. ARB has verified a few DECS that
are verified to reduced PM and NOx emissions.

Table 8. Potential Reduction s from the Use of DECSs.

PM Emissions (g/bhp-hr)

Engine MYs New Engine
Particulate

Standard (g/bhp-hr) Level 3 Level 2 Level 1

1960 – 1987 None 85%

reduction 50%

reduction 25%

reduction
1988 – 1990 0.6 0.09 0.30 0.45
1991 – 1993 0.25 0.04 0.13 0.19
1994 – 2006 0.1 0.02 0.05 0.08
2007+ 0.01 NA NA NA

In this rule, BACT is evaluated on a vehicl e-by-vehicle basis. A municipality or utility must evaluate the highest level DECS that can be installed and operated successfully for each combination of an engine and vehicle. If a Level 3 DECS is available for the engine, this option must be applied to the en gine provided the DECS manufacturer or authorized dealer agrees that the DECS will work in that vehi cle. A municipality or utility is required to investigate the highest level DE CS appropriateness to a particular vehicle, prior to installation of a lower level DECS. If a Level 3 is not available or feasible, then a17 Level 2 option must be explored. A device verified to this level, for example, might be employed for those vehicles that do not have the appropriate PM to NOx ratio or exhaust temperature for a Level 3 DECS such as a passive diesel particulate filter.

A Level 1 DECS is acceptable only if it is the only option available for the engine or application. It should be noted that the r egulation does not allow 1960 to 1987 MY engines (Group 1) to use Level 1 technology, unl ess the municipality or utility is located in a county meeting the “low-popul ation” definition. If no DE CS is verified and feasible, the municipality or utility may apply for an im plementation delay, as discussed later, but will eventually have to repower or otherwis e replace the engine with one meeting the 0.01 g/bhp-hr PM standard, an alternative fuel engine, a hea vy-duty pilot ignition, or gasoline engine. Technologies to meet the BACT option are discussed in more detail in
Section VI.

The general approach of applying BACT is consistent with t he solid waste collection vehicle rule previously adopted by the Board.

C. Implementation Schedule

Staff proposes two different implementation sc hedules. The first is for all municipalities or utilities (Table 9). The second is an opti onal schedule that a m unicipality or utility, located in a specified low population county may elect to follow (Table 11). The purpose of the optional schedule is to reduc e costs by lengthening the compliance period.

1. General Schedule

Table 9. Implementation Schedule for 1960 to 2006 MY Engines

Group Engine MY Percentage of Group to

Use Best Available Control Technology Compliance

Deadline

1 a 1960 – 1987 20
60
100 December 31, 2007 December 31, 2009 December 31, 2011

2 1988 – 2002 20
60
100 December 31, 2006 December 31, 2008 December 31, 2010

3 2003 – 2006 50
100 December 31, 2009 December 31, 2010

a Group 1: A municipality or utility not use Level 1 technology as BACT

Currently, the higher emitting, mechanica lly controlled, MY 1960 to 1987 engines (Group 1), are more difficult to retrofit. The best option to reduce PM emissions from these vehicles may be to purchase a new vehicle with a 2007 MY engine. Although replacement with a new 2007 MY vehicle is not required by this rule, staff has adjusted18 the starting implementation date for this gr oup to December 31, 2007, to allow owners to take advantage of these engines. This compliance mechanism would produce the largest overall reductions in diesel PM emissions.

A municipality or utility c ould also replace a 1960 to 1987 MY engine with a newer mechanically controlled engine (i.e., MY 1991- 1993), and then retrofit this engine with the highest level verified DECS. This would result in the engine moving from the Group 1 to the Group 2 in the compliance schedule.

Group 2, or 1988 through 2002 MY engines, begin implementation in December 31, 2006, one year earlier than the Group 1 engines. ARB has verified Level 3, Level 2 and Level 1 DECS for all MY engines in this gr oup, thus an earlier compliance deadline is justified.

Vehicles with 2003 to 2006 MY engines (Group 3) are to be brought into compliance by the end of 2010. This group currently comprise s the smallest portion of the fleet (four percent) and exhaust gas recirculation (EGR) is widely used on these engines to control NOx emissions. Currently there is one Level 3 passive DPF verified for use with an engine that employs exhaust gas recirculation (EGR). However, there are several level 1 and one level 2 currently verified DECS for this MY group.

2. Municipality or Utility Locat ed in a Low Population County

Staff recognizes that a municipality loca ted in a low population county may have less
access to revenue sources such as vehicle li cense fees, road tax, property taxes, sales taxes, etc. than those located in other areas in the state and utilities have fewer customers. Therefore, staff proposes a special, optional implementation schedule for public agencies and utilities located in c ounties with populations below 125,000 as of July 1, 2005, based upon 2001 popul ation projections by the California Department of
Finance. These counties are considered “low population” and are lis ted in Table 10. Figure 1 shows a map where these countie s are located with the overlay of the
California air districts in bold.19 Table 10. Low Population Counti es: Populations Under 125,000

COUNTY Projected Population as of July 2005 ALPINE 1,300 SIERRA 3,700 MODOC 10,100 TRINITY 13,800

MONO 14,200

INYO 18,800 MARIPOSA 19,600

PLUMAS 21,900 COLUSA 24,200 DEL NORTE 31,500 GLENN 31,800 AMADOR 37,600 LASSEN 39,800 SISKIYOU 47,200 CALAVERAS 47,800 TUOLUMNE 62,200

TEHAMA 63,400 SAN BENITO 63,600 YUBA 66,000 LAKE 69,200 SUTTER 90,400 MEDOCINO 95,500

NEVADA 106,300

1 Reference: State of California, Department of Finance, Interim County Population Projections. Sacramento, California, June 200120 Figure 1. Map Showing Locati ons of Low Population Counties21 These municipalities or utilities may follow the alternate compliance schedule provided below (Table 11):

Table 11. Implementation Schedule for a M unicipality or Utility Located in a LowPopulation County

Group Engine Model Years Percentage of Group to Use Best
Available Control Technology Compliance Deadline,
as of
December 31 st

1 1960 – 1987 20
40
60
80
100 2009
2011
2013
2015
2017

2 1988 – 2002 20
40
60
80
100 2008
2010
2012
2014
2016

3 2003 – 2006 (Includes dual-fuel and bi-fuel engines) 20
40
60
80
100 2011
2012
2013
2014
2015

At the request of Regional Council of Rural Counties 6 , staff also included a special provision that allows the use of Level 1 DECS on 1960 to 1987 (Group 1) engines for municipalities or utilities locat ed in low population counties.

3. Municipalities or Utilities Located in a Low Population County Accelerated Turnover Option

Many municipalities located in low population counties stated they still would be unable to comply with the rule even with the ext ended implementation sc hedule. Therefore, based on this input from low population co unties, Regional Council of Rural Counties
and several Air Pollution Control Districts , staff developed the accelerated turnover option.

This option requires that a municipality or utility located in a low population county commit to retiring all their 1993 and older eng ines by December 31, 2020. An owner could elect to retire the vehicle or repower the vehicle with a 1994 or newer engine to comply. This option also requires that t he owner apply BACT to their total fleet by December 31, 2025. The munici pality or utility must notify t he ARB by July 31, 2008, if

6 Regional Council of Rural Counties letter to ARB dated November 9, 2004, September 9, 2004, and September 7, 2005.22 this compliance option is selected. The mu nicipality or utility w ould still be required to comply with all other require ments of the rule such as record keeping.

D. Calculating Fleet Si ze for Implementation

The total number of vehicles comprising a fleet may vary from year to year because of new purchases and retirement of older vehicles , thus complicating the calculation of the
number of vehicles that mu st be in compliance each year. Staff has therefore developed formulas to specify how an owner mu st calculate the number of vehicles to be brought into compliance each year.

To determine compliance during the phase-in , the municipality or utility needs to calculate its fleet size January 1 st of each year where a compliance deadline is applicable. For example, t he first compliance date is January 1, 2006. The following equations are used to calculate fleet size for any given year.

Total number (by group) of municipality or utility’ s fleet vehicles (#MUV by group ) is equal to the total number of engines subject to the rule (#Engines by group ) including gasoline or alternative fueled engines t hat meets the definition of BACT, plus the number of

vehicles retired in the previous year (TotRetire by group ), beginning with J anuary 1st of the initial applicable compliance deadline. For ex ample, for Group 2 vehicles, only vehicles retired in the 2006 calendar year or later woul d be counted as retired. Note also that, under this proposed rule, "retirement" means t hat the engine is scrapped, sold out of state, or converted for use in a "low usage vehicle." If an engine (or vehicle) has BACT applied prior to sale, it may be counted as a retired vehicle; however an engine (or vehicle) that is simply sold within the state is not included in the calculation as a retired vehicle, but disappears from the fleet in t he annual count of engines. This is shown in equation (1) below:

(1) #MUV by group = #Engines by group + TotRetire by group

The total number of vehicles that must be phased in during a given year by group (TotVeh by group ) is calculated by taking the percentage of vehicles that must meet BACT for that particular year (Group%BACT) multip lied by the municipality’s or utility’s total fleet number as of January 1 st of that compliance year (#MUFV by group ) from equation (1). This is shown by equation (2).

(2) TotVeh by group = Group%BACT * (#MUV by group )

After the first year of compliance, to calcul ate how many additional vehicles are required to meet BACT by the next compliance deadline (TotAddComp by group ), then the total vehicles are calculated as shown in equation (1) and (2), then the num ber of vehicles in already in compliance (TotBACT by group ) and the number of vehicles which have been removed the model year group by reti rement in prior years (TotRetire by group ) are subtracted. Again, only engines that hav e been retired through scrapping, sale out of state or has had BACT applied if sold within t he state can be counted as retired. All23 engines retired since the initial compliance year (for example, 2006 for Group 2) may be

included in ToTRetire. This is shown in equation (3).

(3) TotAddComp by group = TotVeh by group – TotBACT by group - TotRetire by group

In the final compliance year for each group, all remaining vehicles must be brought into compliance. If the number of vehicles to be brought into compliance is not equal to a whole number (TotAddComp), the municipality or utility is expected to round to the nearest whole vehicle. A municipality s hould round up when the fractional part of
number of additional vehicles to be brought into complianc e (TotAddComp) is greater than or equal to one-half of a vehicle, and round down to the nearest vehicle when the fractional part of TotAddComp is less than one- half of a vehicle. It should be noted, gasoline vehicles that do not meet t he emission standards specified for BACT are excluded from the initial total fleet number (#MUV by group ); while gasoline engines meeting the requirements for BACT are c ounted in the total fleet number and are counted as a compliant vehicle for determining TotBACT by group in Equation 3.

Five sample fleet size calculations are giv en in Appendix E to illustrate various cases a municipality or utility mi ght experience.

E. Compliance Extensions

Under a variety of conditions, owners may be justified in requesting and receiving compliance extensions. During the public wor kshop process, staff i dentified six different circumstances that would potentially justify a request for a compliance extension: early implementation, no verified DECS, fleets locat ed in a low population county, dual-fuel or bi-fuel vehicle, engines near retirement, and participation in an experimental DECS project.

1. Early Implementation

Many public agencies and utilities have proacti vely taken steps to reduce emissions from their vehicles through ear ly application of BACT. Staff proposes to give some
allowance to these fleets in t he following two situations.

If a municipality or utility has applied BACT to 50 percent of its vehicles in Group 1 (MY 1960 – 1987) before December 31, 2007, the owner may delay 100 percent compliance of the Group 1 vehicles to December 31, 2012. Likewise, if a m unicipality or utility applied BACT to 50 percent of its vehi cles in Group 2 (MY 1988 – 2002) before December 31, 2006, the owner may delay 100 percent compliance of the Group 2 vehicles to December 31, 2012. A municipality or utility ma y count each vehicle that meets BACT, as defined in se ction 2022.1(b) as of Janu ary 1, 2005 as a compliant vehicle. This allows a municipality or utilit y that has previously converted a vehicle to alternative fuel, for example, to subtract this vehicle out of the calculation for additional vehicles required to be brought into comp liance for a given calendar year.24 A municipality or utility that implements early will not be requi red to install a higher level DECS if one becomes available between the time the DECS is installed early and the mandated compliance date. A compliance ext ension for early implementation allows municipalities and utilities to stretch out im plementation beyond required dates while at the same time implementing early in at l east half of the vehicles. In addition, municipalities and utilities may qualify for incentive funding based on early implementation because it is voluntary and occurs prior to the mandated implementation
dates.

2. No Verified Diesel Em ission Control Strategy

Staff proposes to allow a municipality or utility a delay in implementing BACT if no verified DECS exists for an engine and applicati on. This delay recognizes the higher cost of an engine repower or replacement and provides the owner additional time to plan for this cost. In addition, during the ti me allowed for a delay, effective DECS may become verified. This extension applies only after the owner has applied DECS to every applicable engine.

Two methods of granting delays are proposed. Either the Executive Officer would grant a blanket one-year compliance extension or, if the municipality or utility may apply for a compliance extension. Staff proposes the Executive Office r grant a one-year implementation delay wit hout requiring documentation as to the unavailability of verified technology in the event no DECS has been veri fied for a specific eng ine or application, or one is not commercially available, by t en months prior the im plementation date for that group.

In the second case, a DECS could be verified for an engine, but not able to be used in a specific application. In this case, staf f proposes an owner may apply no later than July
31 st of the year for which he or she is request ing an extension. The owner must provide
documentation that all verified DECSs hav e been investigated and shown not to work on a particular engine or set of engines, or fo r that vehicle’s particular application. Evidence convincing to ARB would include, for example, a letter from a DECS manufacturer showing evidence of data collect ed that demonstrates the DECS will not function on that particular vehicle because of it s duty cycle. Other ex amples of justified reasons for an owner applying for an implement ation delay would be if the engine is under an original engine warrant y and application of a DECS wo uld void that warranty, or if a DECS is not commercially available. In these cases, the documentation should be provided to validate the need for a delay.

ARB has an existing procedure for responding to requests for extension as codified in title 17, CCR, section 60030. Within 90 days afte r the application is accepted for filing,
the Executive Officer will i ssue his/her approval or disapproval of the compliance extension request.

Staff proposes, however, that an owner not be granted extens ions indefinitely because there are other BACT options. Staff proposes t hat if no DECS for a specific engine or25 application is available through 2012 for MY 1960 to 1987 (Group 1) engines, the owner would be required to use one of the following BACT: an engine that achieves the 0.01 g/bhp-hr PM standard, a newer 1988 to 2002 (Group 2) engine that can use a verified DECS or an alternative-fueled, heavy-duty pilot ignition or gasoline engine, by December 31, 2011. Similarly, for MY 1988 to 2002 engines, compliance extensions are not given for longer than to December 31, 2011. The municipalit y or utility would, therefore, be required to em ploy another BACT by December 31, 2012. No compliance extensions are proposed for MY 2003 to 2006 (Group 3) engines.

3. Dual Fuel or Bi-Fuel Engine

Staff proposes that a dual-fuel and bi-fuel engine of any model year implement BACT according to the 2003 to 2006 MY engine comp liance schedule in recognition of its relatively lower certified NOx emissions and because many public agencies purchased these vehicles as part of programs to reduce NOx emissions. A delayed implementation schedule for these vehicles allows public agencies to plan for the additional cost of a retrofit. A public or utility fleet vehicle with a dual-fuel engine retrofitted with a verified level 3 diesel parti culate filter is in compliance with the BACT requirement.

4. Engine Near Retirement

Staff proposes to allow a compliance ex tension for engines within one year of retirement. Retirement, as di scussed earlier, refers in this regulation to sale outside of the State of California, scr appage of the engine, or conversion to use only in a lowusage vehicle 7 . If the engine is within one year of retirement as of the applicable compliance date, then staff propos es that the owner could ta ke advantage of a one year delay for compliance. Similarly, if an inst alled DECS fails and it cannot be repaired, and the vehicle is within one year of retirement, the DECS would not be required to be replaced or upgraded. In the case of this co mpliance extension, staff envisions that the only case in which this would be used is in t he final compliance year. In previous years, the owner needs to apply a DECS to all applicable engines.

5. Use of Experimental Diesel Emission Control Strategy

Many municipalities and utilit ies have participated in demons trations of experimental technology designed to reduce diesel PM. Th is regulation requires the use of verified DECS, and by its nature an experimental technol ogy will not have received verification. Staff, therefore, proposes a municipality or utility be allo wed to install experimental technology on no more than twenty vehicles or ten percent of the fleet (whichever is less) for testing and evaluatio n. Each vehicle being used for the demonstration would be deemed to be in compliance with this ru le for the duration of the experiment, provided the experimental technology reduc es diesel PM and a valid experimental permit has been obtained from ARB. At t he termination of t he experiment, the

7 A low usage vehicle is defined in the proposed regul ation as a vehicle that is operated for fewer than 1000 miles or 50 hours per year, based on a five-year rolling average.26 experimental technology w ould be removed, unless it has received appropriate verification from ARB, and replaced with t he verified DECS as required, within six
months of termination of t he experiment. No experimen tal DECS may be used after December 31, 2012, to meet the BACT requirement.

These provisions provided in sections V. E.1-5 are consistent with the previously adopted rule for the Solid Waste Collection Vehicles.

6. Accelerated Turnover Option

Staff has included an Accelerated Turnover Op tion for municipalities or utilities located in low population counties. To participate in this option, these municipalities or utilities must notify ARB in writing by July 31, 2008. This date is si x months prior to the first implementation deadline for munici palities or utilities located in low population counties.

If a fleet elects to participate in this opt ion, they would send a letter to the ARB indicating that they would be participating in this option. The fleet would then be required to label all their trucks by De cember 31, 2006, as participating in the “accelerated turnover option”. The fleet w ould not be required to do anything to their vehicles until 2020, when they would be required to retire all their vehicles with engines 1993 and older, and replace these with vehicl es with engines newer than 1994. The fleet could also repower all their v ehicles with 1993 engines with 1994 and newer engines to comply with this option. Then the fleet would not do anything until 2025, when they would be required to apply BACT all their vehicles.

F. Diesel Emission Control St rategy Special Circumstances

Staff has included in the proposed rule provis ion to address special circumstances that may arise during its implementation.

1. Fuel Strategy DECS

A municipality or utility must apply the highes t level DECS available for a particular engine. There could be a situation where a fuel based strategy may be the highest level
DECS for a small number of vehicles in a muni cipality or utility’s fleet. Some fuel based DECS strategies require t he fuel be stored in a dedicat ed tank, and for a small number
of vehicles the infrastructure cost could be unreasonable. Therefor e, staff has included a provision where a fleet coul d request the use of a lower le vel non fuel-based DECS on these vehicles where the highest level DECS would only be a fuel based strategy. For example, say a fleet has 100 vehicles and 90 could use a level 3 passive diesel particulate filter and 10 meet t he criteria to use a level 2 di esel emulsified fuel. Use of this fuel would require installa tion of a dedicated fuel tank. In this case, the fleet could request to use a level 1 diesel emission contro l strategy for these 10 vehicles provided they are not in the oldest group of vehicles (1960 to 1987 engine MY).27 Another situation could exist where a fleet decides to use a fuel based DECS across its entire fleet. However, the hi ghest level DECS for certain vehicles within the fleet may be a Level 3 hardware device. In this case, the fleet could request to use a lower DECS
on the few vehicles that are amenable to a Level 3 DECS, in order to accommodate a
minimum Level 2 fuel based DECS across the entire fleet.

2. Failure or Damage of a DECS

For various reasons, a DECS might fail or be damaged during the lifetime of an engine. The intent of this regulation is to reduce dies el PM emissions for th e life of an engine. Staff proposes if a DECS fails or is damaged while it is within its warranty period, the municipality or utility be allowed to repair or replace the DECS with the same or comparable DECS, as provided under the DECS manufacturer’s warranty. If, however, the DECS fails or is damaged outside of it s manufacturer-provided warranty, staff proposes the municipality or utility would then be required to install the highest verified level DECS available. For example, if a v ehicle initially is retr ofitted with a Level 1 DECS or another BACT, and a Level 2 or Lev el 3 DECS becomes available after the Level 1 DECS warranty expires and the DECS fails, then the municipality or utility would be required to upgrade the DECS to the higher level DECS.

3. Discontinuation of Fuel as a DECS

If a municipality or utility chooses to discont inue use of fuel verified as a DECS under section 2022.1(b) of the propos ed regulation, it would be required to use another BACT. In the event another BACT is not commercially available within 30 days from the date of
discontinuation of a fuel verified as a DE CS, a compliance plan must be submitted to the Executive Officer no later than 30 days afte r discontinuation of the use of the fuel verified as a DECS. This plan must demonstrat e how the municipality or utility will bring its vehicles into compliance within six months.

4. Limited Use of a Level 1 DECS

While use of a Level 1 DECS is allowed in most cases when no level 2 or 3 DECS is available, the relatively low level of PM reduction (25 percent) is a concern. Widespread use of Level 1 DECSs would not achieve the goals of 75 percent diesel PM reduction by 2010 and 85 percent diesel PM reduction by 2020. Therefore, staff proposes to allow a municipality or utility to use a Level 1 DECS for a limited time period
as a BACT. The time limit for Gro up 2 (MY 1988 – 2002) is ten years.

A municipality or utility is not allowed to use a Level 1 DECS on MY 1960-1987 (Group 1) engines due to their extremely high PM emi ssion rates. An owner would be required to apply at least a Level 2, Level 3 or anot her BACT to these engines. If no DECS is verified or available for Group 1 vehicles, then the owner would be eligible to apply for a compliance extension, after which the owner would have to repower or replace the engine as per sections 2022.1 (b)(1), or (b)(2) . Alternatively, a municipality or utility could repower a vehicle with a newer engine such that it would be amenable to a28 verified DECS. It should be noted that the regulation does allow Level 1 DECS to be used on 1960-1987 (Group 1) engines located in low population counties to meet BACT. However, the use of a Level 1 DECS even on these engines would be limited to ten years. This provision was provided at the request of the Regional Council of Rural Counties and several air pollution control distri cts. This would prov ide a certain level of
PM reduction for the oldest trucks and allo w additional time for agencies or utilities located in low population counties to procure newer vehicles that could be amenable to higher level DECS.

Staff proposes that the time limit for use of a Level 1 DECS on Group 3 (MY 2003-2006) vehicles be five years since it is antici pated there will be level 3 or 2 technologies available for most engines during the rule’s im plementation timeframe. Therefore, it is proposed that a fleet owner be required to upgrade a level 1 DECS after five years,
since these vehicles will be in the fleet for a very long time.

G. Record Keeping Requirement

Municipalities and utilities must keep records as required by the regulation, and make those records available for inspection durin g enforcement audits by ARB personnel. Certain records as described by section 2022. 1(f) must be kept at the terminal where the vehicle normally resides and others must be k ept in the vehicle. If a municipality or utility is found to be out of compliance with this record keeping requirement, enforcement actions may be initiated.

1. Records Accessible at Terminal

Records to be kept at the facility where the vehicle normally resides (or other centralized location) include a lis t of the vehicles covered by the proposed regulation that identifies each vehicle by type, engi ne manufacturer, engine model, engine model year, series, engine family, and status as a low usage vehicle (if applicable). That information must be tied to specific DECS that are installed in each vehicle.

DECS information required includes the type of DECS, its serial number, manufacturer, model, level, and date of installa tion, or first date of use if a fuel DECS. The reason for choosing a Level 1 or Level 2 verified DECS must also be maintained. If a Level 3 verified DECS is available, then the DECS manufacturer or authorized dealer must provide reasoning for not using that DECS . DECS maintenance records would also
need to be available. In the case of fuel or fuel additives used as a DECS, purchase records would need to be kept for the most current two years worth of purchases.

If a municipality is following the implementation schedule in for a low population county, then it must maintain documentation affirming that the vehicles ar e not at any time operated in a metropolitan statis tical area as defined by the U.S. Census Bureau.29 2. Records Kept in Vehicle

Staff also proposes that a municipality or utility be required to keep certain information in the vehicle, which can be accessed during roadside inspections. In order to have vehicle records easily accessible, ARB prop oses a label with the required information be affixed to the driver’s side door jam, or another location known by the driver and readily visible to an inspector.

For a vehicle with an installed DECS, the in formation required is the same as that required under the Verification Procedure in section 2706 (g). This includes the manufacturer’s name, address, and phone num ber; the DECS family name; product serial number, month and year of manufacture plus the date of installation of the DECS,
or date of first use if the DECS is a fuel.

Staff believes this information is needed to enforce the rule. Without this information, an inspector might have to dismantle a muffler housing, for example, to determine that a diesel particulate filter was installed. In addition, other regulat ions require certain records be kept in vehicles, such as mani fests, therefore staff believes it is not unreasonable to require these records be kept in vehicles.

3. Requirement for Transfer of Records

The regulation requires that once a vehicle is in compliance it must remain in compliance with this regulation. Therefore, if ownership of a vehicle is transferred, the seller shall give these records to the buyer, or a third party sales representative.

H. Contractor Compliance Requirement

Staff has proposed that municipalities and util ities include compliance contract language when hiring a private company for services that a municipality or utility would normally provide. For instance, because many munici palities do street sweeping, a contract to provide this service would be subject to this condition. The compliance contract language is in section 2202.1(g) and proposes that municipalitie s and utilities add a statement in all contracts that a company is in compliance with all applicable air pollution control laws in order to be consi dered for bid. A simila r provision was adopted
in the solid waste collecti on vehicle rule where it was discovered many existing contracts already have boiler plate language si milar to this one proposed. This simply provides another level of back-up that both municipalitie s and contractors are required to comply with all existing air pollution cont rol regulations, local ordinances, and any future retrofit rules for private companies.30 I. Non-Compliance and Enforcement

To ensure compliance with this rule, ARB staff will inspect the records and verify installation of DECS during inspections under the Periodic Smoke Inspection Program 8

. If a fleet is in non-compliance with the regulat ion a penalty of up to $1,000 per vehicle per day can be imposed. If fu rther investigation determines the municipality or utility neglected or intentionally viol ated the regulation, penaltie s of up to $10,000 per vehicle per day may be imposed.

VI. TECHNOLOGICAL FEASIBILITY OF CONTROL MEASURE

Reducing emissions from diesel engines is an area of active research and development. Engine manufacturers are close to deployin g engines that meet the California and federal 2007 engine standards fo r demonstration in fleets, and they are developing technologies to further reduc e NOx emissions for the 2010 standards. The field of exhaust aftertreatment, or retr ofitting engines, is growing r apidly, spurred both by the research and development ongoing to new engine s and by California’s diesel emission reduction regulations. Based on its evaluation of the technol ogy available today and an assessment of technology likely to be available in the near future, staf f is confident that the proposed control measure is technologica lly feasible. The following sections describe the availability and f easibility of various exhaust emission control technologies.

A. Availability of Ultra-low Sulfur Diesel Fuel

Many diesel emission control technologies are adversely affected by sulfur in the fuel. Ultra-low sulfur (15 ppmw or less sulfur content) diesel f uel is therefore required for effective functioning of m any, although not all, diesel emission control strategies (DECS). New, 2007 MY engines will require ultr a-low sulfur diesel fuel to enable proper functioning of the catalyzed diesel particulate filter that manufacturers will use to reduce diesel PM emissions to 0.01 g/bhp-hr.

The U.S. EPA and California adopted regulations that mandate the sale of ultra-low sulfur diesel fuel beginning July 1, 2006. One refiner, BP, has been making and selling
ultra-low sulfur fuel in California since 2002. California transit agencies subject to the Fleet Rule for Transit Agencies have been requi red to use the fuel since July 1, 2002. Some cities have also been using ultra-low su lfur diesel fuel since it became widely
available in 2002 when BP certified fuel rese llers to handle the low sulfur diesel fuel, thus making the product available by truck. BP is also selling low sulfur diesel fuel through its ARCO stations that carry diesel fuel. By July 2006, ultra-low sulfur diesel
fuel will be available statewide th rough the pipeline di stribution system.

8 Details of ARB’s Period Smoke Inspection Program can be found at http://www.arb.ca.gov/msprog/hdvip/hdvip.htm31 B. Verification of Diesel Emission Control Strategies

The Board adopted a procedure to verify diesel emission control strategies in 2002, codified in title 13, California Code of Regulations, Section 2700 et seq. Verification is a stamp of approval from ARB, which tells en d users that the verified device achieves

advertised emission reductions and is durable. The manufacturer is required to provide a warranty that includes co verage of engine damage caused by the DECS. To protect the end user, only ARB-verified DECS can be used in all of ARB’s mandated programs and most of its voluntary programs.

ARB has received over one hundred applications for verification, but not all of those applications are active. The procedure requi res considerable data to prove emission reductions and durability. Any DECS that us es a fuel additive must also demonstrate that it is non-toxic in all media by goi ng through a multimedia assessment. As of September 2, 2005, ARB has verified the DECS shown in the tables below. Not all of these DECS are applicable to public or utility fleet vehicles.

Table 12. Verified Level 3 DECS

Product Name Technology Type PM
Reduction NOx

Reduction Applicability

Cleaire Flash and
Catch CRT DPF 85% 25% 1994+ on-road (limited - Cummins defeat device); 15 ppm sulfur diesel.

Cleaire Flash and
Catch DPX DPF 85% 25% 1994+ on-road (limited - Cummins defeat device); 15 ppm sulfur diesel.

Cleaire Longview Lean NOx Catalyst
and DPF 85% 25% 1993-2003 model year on-road; 15 ppm
sulfur diesel.

CleanAIR Systems PERMIT DPF 85% N/A Stationary emergency generators; 15 ppm sulfur diesel. Donaldson DPF 85% N/A 1994-2002 on-road; 15 ppm sulfur diesel.

International Truck and Engine Corporation DPX DPF 85% N/A 1994-2003 on-road Navistar (International); 15 ppm sulfur diesel.

Johnson Matthey

CRT DPF 85% N/A 1994-2004 on-road; 2002-2006 Cummins ISM and ISB with EGR;15 ppm
sulfur diesel or B20.

Johnson Matthey

CCRT DPF 85% N/A 1994-2004 on-road; 2002-2006 Cummins ISM and ISB with EGR;15 ppm
sulfur diesel.

Johnson Matthey
EGRT EGR/DPF 85% 40% 2000 International DT-466, 2000 Cummins ISM 2001 Cummins ISB, 2001 Cummins ISC, 2001 Cummins ISL, 2001MY DDC - 50, and 2001 DDC - 60. onroad; 15 ppm sulfur diesel.

Lubrizol ECS
Purifilter DPF 85% N/A 1994-2003 on-road; 15 ppm sulfur diesel.

Lubrizol ECS
Unikat Combifilter DPF 85% 1996-2004 off-road; 15 ppm sulfur diesel

or carb diesel.32 Table 13. Verified Level 2 DECS

Product Name Technology Type PM
Reduction NOx

Reduction Applicability

Environmental
Solutions

Worldwide
Particulate
Reactor Flow Through

Filter 50% N/A 1991-1993 on-road, CARB diesel.

Lubrizol PuriNOx Alternative
Fuel 50% 15% 1988-2003 on-road.

Lubrizol AZ
Purimuffler/Purifier DOC + Alt

Fuel 50% 20% 1996-2002 off-road; PuriNOx

Table 14. Verified Level 1 DECS

Product Name Technology Type PM Reduction NOx

Reduction Applicability

Cleaire Flash

and Match DOC 25% 25% 1993+ on-road (limited – Cummins defeat device); 15 ppm sulfur diesel or
CARB diesel.

Donaldson DOC 25% N/A 1988-1990 on-road; 15 ppm sulfur
diesel or CARB diesel.

Donaldson DOC +

crankcase
filter 25% N/A 1988-1990 on-road; 15 ppm sulfur
diesel or CARB diesel.

Donaldson DOC +

crankcase
filter 25% n.a 1991+ on-road/1996 + off-road port equipment; CARB diesel. Donaldson DOC 25% n.a 1991+ on-road; 15 ppm sulfur diesel.

Donaldson DOC +

crankcase
filter 25% n.a 1994+ on-road/1996 + off-road port equipment; 15 ppm sulfur diesel.

Extengine DOC +
SCR 25% 80% 1991-1995 Cummins 5.9 liter off-road; 15 ppm sulfur diesel or CARB diesel.

Lubrizol ECS AZ
Purifier &
Purifmuffler DOC 25% N/A 1991-2003 Cummins and Navistar onroad; 15 ppm sulfur diesel. 1973-1993 DDC 2 stroke; CARB diesel.

Lubrizol ECS AZ
Purifier &
Purifmuffler DOC 25% N/A 1996-2002 off-road; 15 ppm sulfur

diesel.

In order to determine if a particular DECS will work with a specific engine and vehicle combination, the conditions contained in the Executive Order or Ve rification Letter must
be followed. The EO or Verification Letter lis ts the engines by engine family and other conditions of verification, su ch as minimum engine exhaus t temperature. Additional evaluations may then be needed, such as us e of a datalogger that records engine exhaust temperatures over a typical duty cycle.33 This list is subject to changes as additional systems are verified. The most current list of verified DECS, applicable engine families, as well as the EO and verification letters may be found on our web site at:

http://www.arb.ca.gov/diesel/verdev/verdev.htm

C. Diesel Emission Control Strategies for In -use Public and Utility Fleet Vehicles

A variety of retrofit strategies can be used for controlling emissions from in-use diesel engines. The main types of technolog ies discussed here are hardware, add-on technologies such as diesel particulate f ilters (DPF), flow th rough filters (FTF), or oxidation catalysts (DOC), and fuels or fuel additives.

1. Hardware Diesel Emi ssion Control Strategies

Currently, hardware DECS consist of the DPF, including both passive and active regenerated versions, and the DOC. Each of these technology types has been used in both on- and off-road vehicles and equipment fo r many years. More recently, another device, a catalyzed wire mesh filter, also known as a flow-through-filter (FTF), was developed and verified.

a. Diesel Particulate Filter

A passive DPF reduces PM, and catalyz ed DPFs will also reduce CO and HC emissions through catalytic oxidation and filtrati on. Most DPFs sold in the United States use substrates consisting either of a cera mic wall-flow monolith or a silicon carbide

substrate. These substrates are either coated with a cata lyst material, typically a platinum group metal, or a separat e catalyst is installed upstream of the particulate filter. The filter is positioned in the ex haust stream to trap or collect a significant fraction of the particulate emissions while allowing the exhaust gases to pass through the system.

Effective operation of a DPF requires a balance between PM collection and PM oxidation, or regeneration. The volume of PM generated by a diesel engine will fill up and plug a DPF over time; thus the tr apped PM must be burned off or "regenerated" periodically. Regeneration is accomplishe d by either raising the exhaust gas temperature or by lowering the PM ignition temperature through the use of a catalyst. The type of filter technology that uses a cata lyst to lower the PM ignition temperature is termed a passive DPF, because no outside source of energy is required for regeneration.

Verified passive DPFs have demonstrated reduc tions in excess of 90 percent for PM, although the ARB verification Level 3 lists 85 percent PM reduction as its minimum level. A passive catalyzed DPF also r educes CO and HC by approximately the same amount as the PM reduction. A passive cata lyzed DPF is a very attractive means of reducing diesel PM emissions because of the combination of high reductions in PM emissions and minimal operation and maintenance requirements.34 Several passive DPF systems have been verified in California for use on a variety of diesel applications including the most popular engine series of the major engine manufacturers for model-year engines 1993 to 2004. The Executive Orders or EOs
include restrictions for these verifications and a list of applications and engine families for which the device has been approved. These EOs are available at http://www.arb.ca.gov/diesel/verdev/verdev.htm

An active DPF system uses an external sour ce of heat to oxidize the PM. The most common methods of generating additional he at for oxidation involve electrical regeneration by passing a cu rrent through the filter m edium, injecting and burning additional fuel to provide additional heat for particle oxidation, or adding a fuel-borne catalyst or other reagent to initiate regeneration. Some active DPFs induce regeneration automatically on-board the vehicle or equipment when a specified backpressure is reached. Others use an indicato r, such as a warni ng light, to alert the operator that regeneration is needed, and require the oper ator to initiate the regeneration process. Some active systems collect and st ore diesel PM over the course of a full shift and are regenerated at the end of the shift with the vehicle or equipment shut off. A number of the filters are removed and regenerated externally at a regeneration station.

For applications in which the engine-out PM is relatively high, and/or the exhaust temperature is relatively cool, actively r egenerating systems may be more effective than a passive DPF. Because active DPFs are not dependent on the heat carried in the exhaust for regeneration, t hey potentially have a broader range of application than passive DPFs. ARB has verified Lubrizol EC S Unikat Combifilter for certain off-road applications (Executive Order DE-04-012, dat ed December 13, 2004). This filter is an actively regenerated non-catalyzed diesl particu late filter that is regenerated via an electrically-heated regeneration system. Currently, no active DPF systems are verified for on-road applications, although retrofit m anufacturers are currently conducting field studies to verify such systems.

b. Catalyzed Wire Mesh Flow Through Filter

Flow-through filters (FTF) empl oy a catalyzed wire mesh substrate that has an intermix of flow channels creating turbulent flow conditi ons. Unlike a DPF, in which only gases can pass through the substrat e, the FTF does not physically trap and accumulate PM. Instead, it acts list a DOC but achieves a greater PM r eduction due to enhanced contact of PM with catalytic surfaces and longer resi dence times. Any particles that are not
oxidized within the FTF flow out with the re st of the exhaust and do not accumulate. Consequently, the filtra tion efficiency of an FTF is lower than that of a DPF, but the FTF is much less susceptible to plugging because of high PM emissions and low exhaust temperatures. Therefore, this type of f ilter may be suitable for specific duty cycles where a typical DPF would not be applicable.

The ARB has verified the Environmental Solutions Worldwide (ESW) Particulate ReactorTM system for specific 1991 through 1993 model year diesel engines used in on-35 road applications operating on standard CARB di esel fuel. The Particulate ReactorTM system employs a catalyzed wire mesh subs trate to achieve at least a 50 percent reduction in particulate matter emissions, qualifyi ng it for a Level 2 verification. Specific engine families and conditions for which t he Particulate ReactorTM has been approved may be found in the Executive Order DE-04-011 (September 13, 2004) and its

attachment.

c. Diesel Oxidation Catalyst

A DOC reduces emissions of CO, HC, and t he soluble organic fraction of diesel PM through catalytic oxidation alone. Exhaust gases are not filtered in DOCs. In the presence of catalytic materi al and oxygen, CO, HC, and t he soluble organic fraction of the PM undergo a chemical reaction and are conv erted into carbon dioxide and water. Some manufacturers integrate HC traps (zeo lites) and sulfate suppressants into their oxidation catalysts. HC traps enhance HC reduction efficiency at lower exhaust temperatures and sulfate suppressants minimi ze the generation of sulfates at higher exhaust temperatures. A DO C may reduce total PM emissions by up to 30 percent.

On November 7, 2002, the ARB verified thr ee Donaldson Company DECSs (Verification Letter November 7, 2002). The first syst em consists of t he Donaldson DCM DOC muffler with 6000 Series catalyst formula tion plus closed loop crankcase with Donaldson SpiracleTM. The second system consists of t he same Donaldson DOC but with the 6100 Series catalyst formulation. The third system resembles the second system but is applicable to differe nt model year vehicles.

In September 2004, ARB extended the verifi cation of the DCM DOC muffler with 6000 Series catalyst formulation alone and t he DCM DOC muffler with the Donaldson SpiracleTM closed crankcase filt ration system used with California diesel fuel or fuel with a lower sulfur content for model year s 1988-1990 (DE-04-009 September 8, 2004).

2. Fuel-based Diesel Emi ssion Control Strategies

Fuel-based DECS utilize the fueling system and fuel for emission reductions. All fuelbased DECS must undergo an assessment of multimedia toxicity effects by the California Environmental Policy Council as r equired by Health and Safety Code 43830.8 prior to ARB verification.

a. Fuel-Water Emulsion

A demonstrated alternative to diesel fuel that reduces both PM and NO
x emissions is an emulsion of diesel fuel and water. The proc ess blends water into diesel fuel along with an additive to keep the mixtur e from separating. The water is suspended in droplets within the fuel, creating a cooling e ffect on the fuel that decreases NO
x emissions. A
fuel-water emulsion creates a leaner fuel environment in the engine, thus lowering PM emissions also (U.S. EPA 2002).36 Lubrizol's PuriNOx TM is verified by the ARB for 1988 through 2003 MY diesel engines used in on-road applications (Executive Or der, DE-04-008, dated August 5, 2004).
PuriNOxTM is an emulsified diesel fuel that achieves at least 50 percent reduction in PM and 15 percent reduction of NOx and is cat egorized as a Level 2 system. PuriNOx TM is
verified as an emulsified mix of water and CARB diesel fuel. It is verified for use with Luribrizol ECS DOC (Executive Order, DE- 04-007, dated October 29, 2004) for certain off-road engines; however it is not verifi ed for use with any on-road hardware DECS. Lubrizol requires that fleets that use PuriNOxTM must install a recirculation pump in the products’ storage tank and vehicles fueled with product must be used on a daily basis.

b. Fuel Additives

A fuel additive is a substance designed to be added to fuel or fuel system so that it is present in-cylinder during combustion and it s addition causes a reduction in exhaust
emissions. Additives can reduce the total mass of PM, with variable effects on PM, CO, oxides of nitrogen (NO
x ) and gaseous HC production. The range of PM reductions that have been published in studies of fuel additives is from 15 to 50 percent reduction in mass. Most additives are fairly insensitive to fuel sulfur cont ent and will work with a range of sulfur concentrations as well as different fuels and ot her fuel additives (DieselNet 2002).

A fuel-borne catalyst (FBC) is a substance that is added to diesel fuel in order to aid in soot oxidation in DPFs by dec reasing the ignition temperatur e of solid carbon. An FBC can be used in conjunction with both passive and active filter systems to aid system performance, and decrease mass PM emissions . FBC/DPF systems are in wide spread use in Europe in both on-road and off-road, mobile and stati onary applications and typically achieve a minimum of 85 per cent reduction in PM emissions.

No fuel additive is currently verified by AR B, although some retrofit manufacturers are actively pursing verification. Fuel additive s must be used with a Level 3 filter unless proven safe when used without one.

c. Biodiesel

Biodiesel is a mono-alkyl ester-based oxyge nated fuel made from vegetable oils, such as oilseed plants or used veget able oil, or animal fats. It has similar properties to petroleum-based diesel fuel, and can be blended into petroleum-based diesel fuel at any ratio. B20 is a biodiesel blend into petro leum-based diesel fuel at 20 percent. Pure biodiesel is called B100. B20, which is a common concentration used in California, would not reduce PM emissions enough to reach the Level 1 threshold of a minimum of 25 percent PM reduction. In order for a hardware DECS to be used with a biodiesel blended fuel, the DECS manufacturer must spec ifically request verification on this fuel. ARB has verified Johnson-Matthey, Inc. CRT Particulate Filter for use with B20 (Executive Order DE-04-06-05, dated A ugust 15, 2005.) ARB is encouraging other hardware DECS manufacturers to similarly appl y for verification of their hardward DECS

on biodiesel blends.37 Using publicly available dat a, the U.S. EPA analyzed the impacts of biodiesel on exhaust emissions from heavy-duty on-road engines (U.S. EPA 2002). While biodiesel

and biodiesel blends decrease PM, HC, and CO emissions, NO
x emissions, increase proportionally with the increase of biodi esel fraction. For B20, the NO
x increase is reported to be two percent, with reductions of ten percent PM, 21 percent HC, and 11 percent CO. In addition, the U.S. EPA states a B20 blend is predicted to reduce fuel economy by one to two percent. The data we re qualified with conclusions that the impact of biodiesel on emissions varied dep ending on the type of biodiesel (soybean, rapeseed, or animal fats) and the quality of t he diesel fuel used in biodiesel blends.

Although B20 meets the definitio n of California diesel fuel, no biodiesel blend or B100
has been verified to reduce emissions under Ca lifornia’s program. In order to be verified as a DECS, biodiesel fuel, like ot her alternative diesel fuel, must undergo a

multimedia assessment.

3. Combination Systems

Systems combining a hardware and fuel strategy are under development and in-use. In order to receive ARB verification, the hardware and fuel strategy must be approved together as a system. As previously di scussed, ARB has verified Lubrizol ECS’s
PuriNox and DOC t ogether as a combination system (Executive Order DE-04-007).

The U.S. EPA has verified two combination s ystems under its vol untary program (U.S. EPA 2004b). Clean Diesel Technologies, In c manufactures the two products U.S. EPA
has verified. One is the Plat inum Plus Purifier System, wh ich is a fuel borne catalyst plus DOC verified for on-road, medium- heavy and heavy-heavy duty, 4 cycle, 1988 – 2003 MY, turbocharged or naturally aspirated engines. The other is the Platinum Plus Fuel Borne Catalyst/Catalyzed Wire Mesh Filt er (FBC/CWMF) System, which is verified for on-road, medium-heavy duty, 4 cycle, 1991 to 2003 MY, non-EGR, turbocharged or naturally aspirated engines. The U.S. EPA does not assign a level for PM reduction as California does, but describes the fuel-borne catalyst plus DOC as achieving 25 to 50 percent PM reduction and the fuel-borne catalyst plus wire mesh filter as achieving 55 to 76 percent PM reduction. ARB is currently evaluati ng these systems under California's program. Because these system s use a fuel additive, they must to undergo a multimedia assessment prior to receiving verification.

4. In-Use Experience

Around the world, counties and cities have lo ng required the reduction of in-use and new diesel engine emissions, with a focus on reducing diesel PM. Retrofitting offroad diesel engines with DOCs has been taking place for over 20 years; particulate filters have been in use for over ten years. In Europe and Asia, mandates have been in place and are working to clean up the air.38 a. Diesel Oxidation Catalysts

In the past 20 years, over 250,000 DOCs hav e been installed primarily on underground mining and materials handling equipment, and over 40,000 DOCs have been installed
on urban buses and on-road trucks in the U.S. and Europe. The U.S. EPA’s urban bus retrofit/rebuild program r equired that urban buses wit h engines older than 1994 MY (1995 MY in California) retrofit with DOCs, resulting in over 15,000 retrofits. In addition, over 3,000 trucks have been retrofitted in Me xico and in Hong Kong about 40,000 urban buses are beginning to be retrofitted (MECA 2002, 2004b).

b. Diesel Particulate Filters

The use of DPFs is not as widespread as DO Cs in part because of the requirement for very low fuel sulfur content for effective operation of a DPF. Nevertheless, MECA estimated that over 130,000 DPFs have been retrofitted on heavy-duty vehicles worldwide (MECA 2000a). One notable pr ogram is Sweden’s Environmental Zone Program, which requires on- and off-road vehicles operating in specified urban areas to
be retrofitted. In the U.S ., California and New York have taken the lead in aggressive programs to reduce diesel PM through the use of DPFs. In addition, the City of Los Angeles adopted a motion in 2000 to require t he retrofit of all city-owned diesel trucks with DPFs by February 2004.

As of September 2005, the Cit y of Los Angeles has outfitted approximately 370 diesel Solid Waste Collection Vehicles (SWCV) , 252 dual fuel (liquefied natural gas and diesel) SWCV, and 487 general service vehicl es (e.g. asphalt haulers, dump trucks, sweepers, and tractors) with DPFs. The Cit y of LA has stated that they have been
satisfied with their retrof it experience, and have had few maintenance or performance problems associated with vehicles inst alled DPFs (Wilson, pers. comm.).

Several other public fleets have retrofitted or are actively investi gating the applicability of passive DPFs in their in-use vehicles with grant money from the Carl Moyer and ERC programs. These inclu de City of Azusa, City of Chino, Los Angeles County, City of Los Angeles Airports, Rancho California Wate r District, City of Cucamonga, Riverside County, City of Riverside, City of Pasadena and City of San Diego.39 D. Engine Technology for Pub lic and Utility Fleet Vehicles

1. Current Engine Availability

Heavy-duty engines sold in California ar e required to meet the engine exhaust
standards shown belo w in Table 15.

Table 15. Emission Standards for New Heavy-Duty Engines

Emissions Standards (g/bhp-hr)

Model Year NOx PM Diesel Derived Engines

1988-1989 6.0 0.60

1990 6.0 0.60

1991-1993 5.0 0.25

1994-1997 5.0 0.10

1998-2003 4.0 0.10

October 2002 2.2 (a) 0.10

2004-2006 2.2 (a) 0.10

2007-2009 1.2 (b) 0.01

2010 and subsequent 0.20 0.01

Otto Cycle Engines

NHMC+NOx PM

2005-2007 1.0 (c) n/a

NOx PM

2008 and subsequent 0.20 0.01

a . Nominal NOx value of 2.2 g/bhp-hr is based on em ission standards of 2.4 g/bhp-hr for NOx plus non-methane hydrocarbons (NMHC) or 2.5 g/bhp-hr NOx plus NMHC with 0.5 g/bhp-hr NMHC cap,
which took effect in October 2002 for those engines subject to U.S. EPA Consent Decrees and the California Settlement Agreements. The Consen t Decree-complying engines had to comply with 2004 standards by October 1, 2002. b. Between 2007 and 2009, U.S. EPA requires 50 percent of heavy-duty diesel engine family
certifications to meet the 0.2 g/bhp-hr NOx standard. Averaging is allowed, and it is expected that most engines will conform to the fleet NOx average of approximately 1.2 g/bhp-hr. c. A manufacturer may request to certify to the Option 1 or Option 2 federal NOx plus NMHC
standards as set forth in 40 CFR §86.005-10(f). For e ngine families certified to the Option 1 or 2 federal standards the Family Emission Li mit must not exceed 1.5 g/bhp-hr.

Beginning with the 2007 model y ear, every heavy-duty engine will have to meet the 0.01 g/bhp-hr PM standard and lowe r NOx emission standards. The following websites provides information on MY 2005 and 2006 California certified engines:

http://www.arb.ca.gov/msprog/ onroad/cert/mdehdehdv/2005/2005.php http://www.arb.ca.gov/msprog/ onroad/cert/mdehdehdv/2006/2006.php40 2. Future Engine Availability (2007 – 2009)

a. Diesel-fueled Engines

All major manufactures have announced that they will be using exhaust gas recirculation (EGR) to m eet the 2007 NOx emission standard and diesel particulate filters to meet the particulate standard. EGR causes a por tion of the exhaust gases to circulate through a heat exchanger to cool the exhaust before reintroducing the gases into the engine intake manifold. EGR has been used in some engines since 2003, but engine manufacturers have further refined the systems to allow lower NOx emissions.

Caterpillar, Cummins, and DDC plan to offe r a full line of medium- and heavy-duty diesel engines; International focuses on t he school bus and collection vehicle engine markets; and Mack/Volvo focuses on engines for collection vehicles.

Dual fuel systems for collect ion vehicles are no longer available in the U.S., as Clean Air Power, the sole manufacturer of these systems, has concentrated its efforts in Europe. Increased interest in its product may, however, prompt Clean Air Power to develop and certify in California a 2007 product for collection vehicles.

The Diesel hybrid-electric is another technol ogy that reduces both emissions and fuel
use and that will be available in 2007. While not classified by ARB as an alternative-fuel technology, diesel hybrid-electric technology achieves lower emissions and better fuel economy than equivalently sized diesel buses or trucks. Emissions testing studies at
ARB and other facilities indicate a fuel c onsumption reduction of 25 percent and NOx emission reduction of about 50 percent for di esel-fueled hybrid-e lectric buses (HEBs) compared to conventional diesel transit buses. This technology is being applied primarily in delivery vehicles and transit buses.

b. Alternative-fuel Engines

Manufacturers of natural gas engines are lik ely to be able to meet the upcoming 2007 standard with three-way catalyst aftertreatment technology si milar to that being used on passenger cars. Cummins, through its jo int partnership with Westport Innovations, Cummins Westport Inc., and John Deere has stated they will offe r alternative fuel products to meet the 2007 emission standards. Although we have only preliminary data, it appears that these m anufacturers of alternativ e-fuel engines or systems will certify to the more stri ngent 2010 0.20 g/bhp-hr NOx and 0.01 g/bhp-hr PM standards.

John Deere currently only certifies ur ban bus and medium heavy-duty natural gas engines, but is developing a heavy heavy-duty engine that could be suitable for use in

waste collection vehicles. John Deere has stated is intends to produce a 250-325 horsepower, 9 liter natural gas engine meet ing the 0.20 g/bhp-hr NOx level by 2007. This engine could be used in transit buses, school buses, and refuse trucks.41 Cummins will be marketing the natural gas engines developed by Cummins Westport Inc. Cummins is currently providing bids on both diesel and natural gas buses for 2007. Cummins Westport Inc. has partnered with U.S. DOE's NREL to develop a lower emission version of the L Gas Plus (8.9 L) engine for use in mediu m-duty trucks, refuse trucks, and urban buses. This engine is scheduled to be commercially available in early-2007. The SCAQMD is also currently sponsoring a project with Cummins to commercialize the C Gas Plus engine (8 .2 L) to 0.2 g/bhp-hr NOx by 2007.

In 2004, Ford and General Motors stated t hat they would no longer be producing their smaller CNG engines used in cutaway vehicles. As a result, BAT Technologies, Clean Energy, and Teleflex/GFI Control Systems have jointly proposed a contract with the
SCAQMD and the state of New York to "dev elop and certify in California a retrofit system that converts 2005 and subsequent m odel year gasoline-powered Ford Crown Victoria and E-450 cutaway vehicles to dedicated CNG operation" (South Coast Air Quality Management District, 2004). It is anticipated that on ce retrofitted, the engines
will meet SULEV emission levels. This technology is scheduled to be certified by mid-year 2005.

ISE Corporation currently offers a California-certified gasoli ne hybrid electric bus and is developing hybrid electric systems with compressed natural gas, diesel, and hydrogen fuels, also for urban buses. While ISE focuses on the urban bus market, it is considering expanding into ot her vocations that use heavy heavy-duty engines, such as
waste collection vehicles.

c. Gasoline Engines

Emission standards for heavy duty Otto-cycle engines used in heavy-duty vehicles over 14,000 GVWR for model year 2007 are 1.0 g/bhp-hr NMHC+NOx with no PM standard. Beginning in model year 2008 the emission st andards are lowered to 0.20 g/bhp-hr for NOx and 0.01 g/bhp-hr for PM. It is expected that only minor modifications to current gasoline engine technology will be r equired to meet these standards.

3. Engine Availabili ty (2010 and beyond)

Engine technology for 2010 will most likely rely upon selective catalytic reduction (SCR), NOx adsorbers, and further improvements in engine technology to reduce NOx

emissions.

Two aftertreatment technologies that will most likely play a large role in meeting the 2010 NOx standard are selective catalyti c reduction (SCR) and the NOx adsorber.

SCR catalysts use ammonia as a NOx r eductant to reduce stationary sources emissions. Urea may also used as the sour ce of ammonia. In recent years,
considerable effort has been invested in developing urea SCR systems that could be applied to heavy-duty diesel vehicles with low sulfur diesel fuel. Urea SCR systems are being used to comply with the EURO IV heavy-duty di esel emission standard s42 (U.S. EPA, 2004b). U.S. manufacturers are working on SCR systems for vehicles that
could be used in 2010.

Unlike catalysts, which continuously convert NOx to N 2 , NOx adsorbers are materials
that store NOx under lean conditions and release and catalytically reduce the stored
NOx under rich conditions. NO and NO 2 are acidic oxides and can be trapped on basic
oxides. Fuel sulfur can be converted to st able sulfates providin g competition with NOx for storage sites, thus poisoning the catalysts, therefore low sulfur fuel is required.

E. ARB Exhaust Temperature Study

From October 2003 to July 2004, ARB con ducted an exhaust temperature study to evaluate the various vehicle types that ar e typically used by municipalities and/or utilities. The study’s goal was to determine what percent of t he vehicles have the operational characteristics to use DECS that rely on exhaust temperature to function properly.

Based upon the study, ARB determined that at least 56% of the vehicles meet the criteria for Level 3 passive DPFs, 67% of the vehicles meet the temperature criteria for the Level 2 Flow Through Filter, and 96% met the temperature criteria for a Level 1 DOCs. Details of the study can be found in Appendix D

. Overall the study shows nearly all vehicles could use a temperat ure dependent DECS; prov ided adequate space
is available for device installation.

F. Implementation Assistance

Staff is committed to provi de the necessary compliance assistance to fleets for successful implementation of the rule. U pon adoption of the rule, staff is prepared to conduct statewide workshops, develop co mpliance guidance documents, sample recordkeeping forms and labels to assist fleets with implementat ion. All these activities
are consistent with ARB’s effo rts with other fleets rules alr eady adopted. In addition, staff is also working on developing an inte ractive web-based “look-up” table to help fleets identify verified DECS that may be applied to a vehicle based upon engine manufacturer and model-year.

VII. REGULATORY ALTERNATIVES

Staff believes the proposed regulation is the most cost efficient method for reducing diesel PM from municipality and utility fleet vehicles. A comparison of emission reductions from each regulator y alternative considered can be found at the end of this section (Table 16).43 A. Do Not Adopt This Regulation

Not adopting this regulation would disregard the adverse health risk posed by diesel
PM. In consideration of the potential health impacts discussed earlier, and ARB’s mandate to protect the public healt h of all Californians, this alternative is not considered a reasonable option. ARB staff does not recommend this alternative because it would result in approximately 80 percent greater PM emissions over the next few decades than the proposed plan, thus adversely im pacting the health of Californians.

With full implementation of th is control measure, the esti mated reduction in diesel PM ranges from 78 percent in 2010, to 84 percent in 2020, when compared to the 2000 PM baseline. The recommended actions in this plan will reduce the localized risks
associated with activities that expose nearby individuals to diesel PM emissions. This
diesel PM control measure will result in additional benefits a ssociated with reducing diesel PM emissions, including reducing NO x emissions by 35% percent from baseline in 2020, reducing ambient fine PM levels, incr easing visibility, reducing material damage due to soiling of surfaces, and reducing incidenc es of non-cancer health effects, such

as bronchitis and asthma.

B. Rely on Voluntary Programs

The federal rules for new diesel engines wi ll not be implemented for several years and do not affect existing vehicles . The U.S. EPA developed the Voluntary Diesel Retrofit Program to reduce diesel PM emissions in the immediate future. The program addresses pollution from diesel construc tion equipment and heavy-duty vehicles on the road today by providing a volunt ary certification program for technology. Participation is voluntary and available incent ive funds are currently limit ed. The U.S. EPA program is not sufficient for meeting ARB’s overall goals.

The Carl Moyer Program is a Californi a program which encourages use of cleaner engines by funding the incremental cost of r epower, retrofit, or purchase of new, cleaner engines. Although the Moyer Program is fun ded at approximately $140 million per year for the next 10 years, participat ion is still voluntary, availa ble incentive funds are limited and it does not require fleets to clean up their existing fleet.

Therefore, given the over 1. 2 million diesel engines in California, reliance on purely voluntary programs is inadequate for meeting Californi a’s risk reduction goals. ARB
staff does not recommend this alternative becaus e it would result in only minor diesel
PM emission reductions.

C. Require Repowered Engin es or New Vehicle Purchases

Another alternative staff considered, which w ould result in similar reductions in diesel PM emissions, is to require all public and ut ility fleet vehicles to repower with diesel engines certified to the 0.01 g/bhp-hr parti culate standard beginning in 2007. This option is significantly more expensive t han the proposed alternative. The estimated44 capital cost of repowering all engines in 2007 is approximately $650 million, which is three times higher than the $213 million cost to implement this proposed regulation, for

a similar reduction in diesel PM. The estima ted cost could be even higher than this as many vehicles cannot be repowered. A repowe r may be incompatible with older engine and drive train technology or the size of t he engine compartment, thus the owner would have to purchase a new vehicle to a ccomplish the lower PM emissions.

Staff predicts a complete turnover of public and utility vehicles by 2020 would reduce diesel PM emissions by up to 90 percent. Th is is an estimated reduction of 0.06 tpd, which is slightly higher t han the recommended alternative in 2020 (Table 16). ARB staff does not recommend mandating this as the so le option, however, because of the high cost of implementation compared to t he amount of PM emissions reduced and significantly poorer cost effectiveness.

D. Require Alternative Fuel

The last alternative staff considered but did not recommend was the requirement to repower all applicable vehicles with alte rnative fueled engines. This would have

resulted in the same PM reductions as the alternative to repower with all 2007 engines; however it may result in a small NOx benef it from 2007 to 2009. ARB staff does not recommend mandating this as the sole option, however, because of the limited alternative fueled engine availability for pub lic and utility fleet vehicles, and the high cost of implementation compared to the amount of PM emissions reduced and significantly poorer cost effectiveness.

Table 16. Diesel PM Reductions by Al ternative Compared to the Proposal.

Regulatory Alternatives Reductions (tons/day)

Year Proposal (tpd) Adopt Nothing Voluntary Repower to 0.01 Engine Alt Fuel Engines

2010 0.15 0 n.q. 0.13 0.13

2020 0.05 0 n.q. 0.06 0.06

n.q. – not quantified

VIII. ECONOMIC IMPACT

The total discounted cost of the rule in 2005 dollars for all municipalities and utilities is $213 million. This cost is to apply BACT to approximately 31,076 vehicles (estimated to be in the fleet in 2006). The cost per vehicl e is estimated at $6,857. This is lower than the estimated cost per truck of $13,000 for implementation of the solid waste collection vehicle rule adopted by the Board in 2003.45 A. Legal Requirement

Sections 11346.3 and 11346.5 of the Government Code require state agencies to assess the potential for adverse economic im pacts on California business enterprises and individuals when proposing to adopt or amend any administrativ e regulation. The
assessment shall include a c onsideration of the impact of the proposed regulation on California jobs, business expansion, elimination, or creation, and the ability of California business to compete.

State agencies are also required to estimate t he cost or savings to any state or local agency and school districts in accordance with instruction adopted by the Department of Finance. This estimate is to include any nondiscretionary costs or savings to local agencies and the costs or savings in federal funding to the state.

B. Affected Manufacturers

No manufacturer will incur any direct costs as a result of this proposed rule because it only applies to government agencie s and utilities that operate fleets, and their choices on purchasing existing engines and em ission control technologies.

C. Estimated Costs to Invest or-Owned Private Utilities

Staff estimates a total of 209 private utilities operating an estimated 3,979 vehicles as of 2004 will be impacted by this regulation. Staff collected data from the four largest investor-owned private utilities that provide natural gas, elec tricity and/or water services in California. These four large utilities account for 3,130 vehicles that are subject to this rule. In addition, st aff identified about twenty additional ut ilities with 664 vehicles from the ARB PSIP database. Lastly, staff ident ified about 185 small water companies from
the California Public Utilities Commission’s (CPUC) lists. Telephone contact with these small water companies shows that on average they have about one vehicle per company that may be impacted by this regulation.

Staff does not have access to financial records for any investor-owned utilities; therefore the number of vehicles owned by a company was used as a surrogate to determine

small business status. The cr iteria staff used for a small business was a company that
owns fewer than 15 vehicles. Based on thes e criteria, staff determined that all small water companies would be considered small busi nesses, which is 88 percent of the total companies potentially directly affected by th is regulation but less than one percent of the total California municipal and utility fleet vehicles.

1. Retrofit Implementation Scenario

Staff assumed utility vehicle owners would choose the least expensive of the best available control technologies to comply with th is regulation. Staff, therefore, assumed a diesel emission control strategy would be employed in lieu of more expensive options of repowering or replacing the vehicle or engine, unless that was the only option46 available to those vehicles or the fleet operator needed to replace the vehicle in the
near future for other reasons. Typically, particulate matte r (PM) emissions and exhaust temperatures dictate the type of diesel emission control st rategy a vehicle can use. Based on available data on DECS currently ava ilable to the vehicle fleet, staff created a “most-likely” retrofit scenar io to determine an average economic impact (Table 17).

This scenario is based on those DECS that are expected to be available during the implementation period (Table 18 ). DECS include Level 3 ve rified diesel particulate filters; Level 2 verified flow through filters and a fuel-wat er emulsified fuel; and Level 1 verified technology of a diesel oxidation ca talysts. Table 18 also includes an active

DPF 9 . The only other technologies available to these vehicles are engine repower or replacement. The scenario assumes more Lev el 1 technologies will be verified, and for current verified Level 1, 2 and 3 technolog ies to have verifications extended to additional MY engines.

9 Active DPFs do not rely on exhaust temperature for regeneration, thereby having a wide range of retrofit applications.47 Table 17. Most-Likely Veri fication Retrofit Scenario g (Applies to Municipal a nd Utility Fleets)

Group MY %BACT Implementation
Date Level 1 a Level 2 d Level 3 Repower

20% 12/31/2007 10% 8%
60% 12/31/2009 28%
100% 12/31/2011 11% 33% 1 1960-
1987 e
Delay 12/31/2012 10%
20% 12/31/2006 5% 5% 8%
60% 12/31/2008 2% 10% 25%
100% 12/31/2010 35% 2a 1988-
1993 Delay 12/31/2011 10%

20% 12/31/2006 5% 5% 8%

60% 12/31/2008 2% 10% 25%
100% 12/31/2010 35% 2b 1994-
2002 d, f

Delay 12/31/2011 10%

50% 12/31/2009 20% 30% 3 2003-
2006 b,c 100% 12/31/2010 20% 30%

Notes:

a Assumes current Level 1 verification will be extended to 1960-1993 model years.

b Assumes current Level 3 verification will be extended to 2003-2006 model years.

c Assumes current Level 1 verification wil l be extended to 2003-2006 model years.

d Assumes current Level 2 verification will be extended to all model years

e Assumes a Level 3 verification will be available for some 1960-1987 model

years.
f Assumes a Level 3 active DPF verifica tion will be available for some 1988-2002 model years.

g Percentage add to 100% for each model year group

2. Implementation Costs

The initial cost per truck will vary dependi ng on the best available control technology
used for the truck. The initial costs list ed in this section are based on capital and operation and maintenance costs applied to the retrofit scenarios discussed in the previous paragraph. Capital costs per vehicle and technology are listed in Table 18. Staff assumed that the only capi tal cost required for the fuel-water emulsion option is for one fuel re-circulation pump per terminal since it is assumed that fleets that use this operation already have an existing fuel tank on-site. No additional cost was added for those DECS that specify use of ultra-low su lfur fuel because the federal and state ultra
low sulfur diesel fuel rule will be effective fo r all on-road diesel vehicles as of July 1, 2006 (six months prior to the first implementation deadline).48 Table 18. Average Capital Costs for Diesel Emission Control Strategies

COST DESCRIPTION

DECS Low High Average Passive Diesel Particulate Filter $6,000 $11,000 $8,500

Diesel Oxidation Cata lyst $1,000 $2,000 $1,500 Flow Though Filter $3,500 $6,500 $5,000 Fuel Recirculation Pump/Terminal $1,000 $10,000 $4,000 10
Lean Nox Catalyst wit h DPF $13,000 $17,000 $15,000 Active DPF $10,000 $12,500 $11,000 EGR+DPF $14,000 $18,000 $16,000

Table 19. Incremental Annual Operation a nd Maintenance Costs for a Retrofitted Municipality or Utility Vehicle

Cost Description Average Cost for

Passive and
Active DPF and
Oxidation

Catalyst Average Cost for

Fuel-Water

Emulsion Average Cost Savings for Engine Repower c

Maintenance $33 a $0 <$176>

Fuel b $0 $355 <$264>

Total: $33 $355 <$440>

Notes:

a Includes increased cleaning and maintenance estimated at 1 hour for diesel particulate filters and oxidation catalyst crankca se filter replacement interval required once per three years based upon low mileage accumulation.

b Incremental fuel cost if a fuel-based DECS is selected.

c Decreased maintenance and fuel costs are as sociated with the use of new engines.

The average total statewide dollar costs were then derived from the application of the average discounted capital costs plus t he average operation and maintenance costs from FY 2006 to 2022 for the most-likely re trofit implementation scenario, totaling approximately $28,390,000 (Table 20) for the re trofit of the tota l number of utility vehicles expected to be in the fleet in 2006 (approximately 4,140 vehicles).

Staff developed average capital costs for eac h BACT option listed in the most-likely retrofit scenario (Table 17). Staff surveyed va rious retrofit manufacturers and installers to get an average cost for a level 1, 2, and 3 DECS. Staff also surveyed engine dealerships and fleets to get an av erage cost to repower a diesel vehicle. These capital

10 Based upon most common size fuel pump utilized by fleets, Lubrizol 2004.49 costs were discounted over the period of ten years for the DE CS or repower. See small businesses section below for complete de scription of how costs were derived and Appendix C for more detailed retr ofit cost assumptions.

Table 20. Average Total Statewide Cost s of Most-Likely DECS Verification Implementation Scenarios for Utilities

Fiscal
Year Discounted Average Annual Capital Costs (in 2005 dollars) Average Annual O&M Costs (in 2005 dollars) Total Average Annual Cost (in 2005 dollars) 2006 $333,000 $35,000 $368,000 2007 $806,000 $53,000 $859,000 2008 $1,520,000 $43, 000 $1,563,000 2009 $2,188,000 $19, 000 $2,207,000 2010 $2,932,000 -$22, 000 $2,910,000 2011 $3,162,000 -$39, 000 $3,123,000 2012 $3,115,000 -$60, 000 $3,056,000 2013 $2,912,000 -$56, 000 $2,856,000 2014 $2,721,000 -$52, 000 $2,669,000 2015 $2,543,000 -$49, 000 $2,494,000 2016 $2,208,000 -$64, 000 $2,144,000 2017 $1,811,000 -$70, 000 $1,742,000 2018 $1,303,000 -$59, 000 $1,244,000 2019 $828,000 -$47,000 $781,000 2020 $323,000 -$24,000 $299,000 2021 $87,000 -$13,000 $75,000 2022 $0 $0 $0

Total: $28,792,000 -$405,000 $28,390,000

Capital and operation and maintenance co sts will vary depending on the year of implementation, due to the phase-in schedule. Staff expects the costs to be borne by the end user, since this is a regulation requi ring retrofits of in-use vehicles.

D. Potential Impact on Utilities

The average cost per vehicle for small utilities and typical utilities are the same. The average investor-owned private utility company has approximately five vehicles to which this rule applies, while the four largest investor-owned utilities have an average of 783 vehicles each to which this rule applies. St aff chose to calculate the average cost using five vehicles. The average size for a typica l fleet was calculated by taking the total number utility vehicles (4,140) and subtract ing the percentage of vehicles owned by large utilities (79%). This number (869) wa s then divided by 205 which is the number of private utilities if the four lar gest utilities are not included.

Staff assumed 22 percent of the vehicles would fall un der 1960-1987 MY (Group 1) engines, 74 percent of the vehicles woul d fall under 1988-2002 MY (Group 2) engines,50 and 4 percent would fall under the 2003-2006 MY (Group 3) engines for implementation phase-in, based on survey information. The capital costs, and operating and
maintenance costs are listed in Table 21 for the years of implement ation, FYs 2006 to
2011.

Table 21. Initial and Annual Costs Aver age Small Utility with 5 Vehicles

Fiscal
Year Discounted Average Annual Capital Costs (in 2005 dollars) Average Annual O&M Costs (in

2005 dollars) Total Average Annual Cost (in

2005 dollars) 2006 $402 $43 $444 2007 $974 $64 $1,038 2008 $1,836 $51 $1,888 2009 $2,642 $23 $2,665 2010 $3,541 -$26 $3,514 2011 $3,819 -$47 $3,772

In order to arrive at the di scounted capital costs for the small/typical business, staff annualized the capital costs by mu ltiplying the net present val ue of the capital costs by the capital recovery factor. 11 Staff assumed a lifetim e of the DECS based on a minimum lifetime of ten years with an annua l interest rate of seven percent. 12 It is quite likely that a DECS will last much longer in a well-maintained vehicle, as some DECSs have been operating for over ten years on solid waste collection vehicles in Europe. 13

To determine the operation and maintenance cost s in current dollars, staff multiplied the yearly costs by the net present value factor . Also, the operation and maintenance costs are higher than would be expected with just hardware DECS used, because the fuelwater emulsion DECS is included the ov erall operation and maintenance costs at an average of $355 per vehicle annually, and not all utilities will utilize this option.

11 Net Present Value is the cost multiplied by 1/(1+r)^ (n+1), where r = the annual interest rate, and n = the number of years in the future. For example, FY 2004-2005 is considered to be n = 0, and for FY 2005- 2006 n = 1. Capital Recovery Rate Factor is (r*(1+ r)^N)/[(1+r)^N-1], where r = the annual interest rate, and N = lifetime of project (i n years) (Linsley, 1977).

12 For federal decision-making, Office of Managem ent and Budget suggests using this annual interest rate. (OMB Circulate A-94, http://www.whit ehouse.gov/omb/circulars/a094/a094.html)

13 Bauner, David. March 2002. Raw data submitted to ARB for contract to determine European retrofit experience.51 E. Potential Impact on Businesses

The regulation allows munici palities and utilities a variety of options to meet the proposed regulation requirements. The pr oposed regulation may have some cost impact on companies involved in the manufacture and production of engines and vehicles by creating the need for new engines and vehicles.

While this regulation applies to existing bus inesses and uses technology from existing businesses, it may lead to the creation of businesses. Businesses that may be created
include those that manufacture DECS and those that insta ll, repair, or clean DECS.
Staff believes businesses will be alter ed or augmented in lieu of creating new
businesses. Some used trucks businesse s; however, may be adversely affected because these businesses may experience a reduction in demand for their used truck services. Staff believes, how ever, that these businesses are likely to change their
business focus to refurbishment and upgrading of engines for resale.

Specific to the retrofit requirements, Calif ornia businesses capable of performing engine retrofits will be positively a ffected with increased workload. There are seven DECS
manufacturers located in Calif ornia that may be pos itively affected by this regulation.

F. Potential Impact on Business Competitiveness

The proposed regulation is not expected to impac t the ability of California businesses to compete with businesses in ot her states because utilities generally do not compete with each other because each has their own specific service territories. As indicated above, many of the businesses that produce t he products needed to meet the proposal are located in other states. By requiring new, clean technology, this proposal may actually provide new opportunities for California bus inesses engaged in advanced technology. Utilities providing water, natural gas and electric ity services will remain in California to provide effective and efficient serv ices to their customers.

G. Potential Impact on Employment

The proposed regulation will lik ely create a market for m anufacturers of heavy-duty diesel or natural gas engines, vehicles , and emission control systems. For those businesses located in California, the creatio n of new jobs is expected to meet this demand. Services to retrofit existing public and utility vehicles are expected to create new opportunities for existing businesses.

H. Potential Impact on Business Cr eation, Elimination or Expansion

The proposed regulation could impact Californi a companies involved in the manufacture and production of engines, vehicles, and DECS. Currently seven DECS manufacturers and numerous OEM dealerships are located in California. Allowing new, cleaner engine and vehicle purchases as a means to meet t he diesel PM control measure could create52 new business opportunities for manufacturers of heavy-duty diesel, natural gas, or gasoline engines, vehicles, and DECS.

I. Potential Costs to Local Agencies

The proposed regulation is expected to have a significant impact on public agencies statewide that own and operate diesel-fueled vehicles. T he average total statewide dollar costs for local agencies (i.e., city, coun ty and special districts) were derived from the application of the average discounted capi tal costs plus the average operation and
maintenance costs from FYs 2006 to 2022. Implementing the retrofit scenario (Table 17) would cost approximately $156.6 million fo r the retrofit of approximately 22,839 vehicles expected to in the fleet by 2006. Capital costs were discounted over the period of ten years for the DECS.

The average discounted costs for the firs t year of implementation in FY 2006 are $2,030,000 (Table 22). The average annual co sts are based on discounted average capital costs plus average operation and ma intenance costs (Table 18 and 19) for the most-likely DECS verification implementation scenario.

In order to arrive at the discounted capital costs for t he proposed regul ation, staff annualized the capital costs by mu ltiplying the net present val ue of the capital costs by the capital recovery factor. 14 Staff assumed a lifetim e of the DECS based on a minimum lifetime of ten years with an annua l interest rate of seven percent. 15 It is quite likely a DECS will last much longer in a well-maintained vehicle, as some DECS have been operating for over ten years in v ehicles in Europe without replacement. 16

To determine the operation and maintenance co sts in 2005 dollars, st aff multiplied the yearly costs by the net present value fa ctor. The cost analysis assumes a fleet composition of 22 percent of the Group 1 vehicles; 74 percent of the Group 2 vehicles; and 4 percent of the Group 3 vehicles, and a retr ofit scenario shown in Table 17. Staff estimates 22,839 vehicles are owned by lo cal public agencies throughout California, and 3,087 vehicles would be brought into compliance in FY 2006.

14 Net Present Value is the cost multiplied by 1/(1+r)^ (n+1), where r = the annual interest rate, and n = the number of years in the future. For example, FY 2003-2004 is considered to be n = 0, and for FY 2004- 2005 n = 1. Capital Recovery Rate Factor is (r(1+ r)^N)/[(1+r)^N-1], where r = the annual interest rate, and N = lifetime of project (i n years) (Linsley, 1977).

15 For federal decision-making, Office of Managem ent and Budget suggests using this annual interest rate. (OMB Circulate A-94, http://www.whit ehouse.gov/omb/circulars/a094/a094.html)

16 Bauner, David. March 2002. Raw data submitted to ARB for contract to determine European retrofit experience.53 Table 22. Average Local Government Costs to Implement Public and Utility Fleet Vehicle Regulation

Fiscal
Year Number of

Vehicles
Retrofit Discounted Annual Capital Costs (in 2005 dollars) Average
Annual O&M Costs (in 2005 dollars) Total Average
Annual Cost (in 2005 dollars) 2005 0 $0 $0 $0 2006 3,087 $1,835,000 $19 5,000 $2,030,000 2007 3,416 $4,448,000 $29 2,000 $4,740,000

J. Potential Costs to State Agencies

Two separate costs may pertain at the state government level: costs to state agencies that own diesel vehicles to bring the vehicl es into compliance, and costs for the ARB to implement and enforce the regulations. AR B estimates three additional staff will be required to enforce the regulat ion and to provide guidance for implementation. The cost
for three additional ARB staff is approximately $300,000 annually . Staff anticipates the need for added staff beginning FY 2005.

According, to DMV registration data, the St ate of California owns approximately 1,275 diesel-fueled vehicles as of 2004; however this number is expected to grow to approximately 1,327 vehicles by 2006. The tota l cost to the state just to bring these vehicles into compliance is approximately $9.1 million. If we incl ude the cost to the state to implement and enforce the regulation, the initial discounted cost for FY 2006 would be $418,000. Assuming the cost of compliance is discounted over ten years, the estimated cost of compliance for California for current fiscal year and the next two fiscal years are shown below (Table 23):

Table 23. Average Costs to the State to Implement Municipality and Utility Fleet Regulation

Fiscal
Year Number of

Vehicles
Retrofit Discounted
Annual Capital Costs (in 2005 dollars) Average
Annual O&M

Costs 17 (in 2005 dollars) Total Average
Annual Cost (in 2005 dollars) 2005 0 $0 $300,000 $300,000 2006 179 $107,000 $311,000 $418,000 2007 198 $258,000 $317,000 $575,000

Most state agencies will have to absorb the cost of compliance in their general budget since they do not charge specific fees for se rvices provided by their diesel vehicles (e.g., CalTrans freeway sweeping.)

17 O&M costs include vehicle retrofit costs and costs to implement and enforce the regulation.54 K. Cost to Federal Agencies

Staff was unable to determine the exact num ber of vehicles owned by the federal government operating in California, since most are not registered by the DMV. However, the United States Postal Servic e, several military bases, and the federal
General Services Administration submitted su rvey data on their vehicles subject to the rule. Based on these, staff estimated the total federal fleet vehicles subject to the rule is 2,663 as of 2004. This number is expected to grow to approximately 2,771 by 2006. The total cost for federal agencies discount ed to 2005 dollars is estimated at $19

million.

L. Cost to Municipalities and Utilit ies Located in Low Population Counties

Municipalities and utilities located in low population counties typically have older vehicles. Based on an analysis DMV data, approximately 1,070 m unicipal and utility vehicles subject to the rule are registered in low population counties. Forty-six percent (46%) are Group 1 vehicles, 54% are Group 2 vehicles, and less than 1% are Group 3 vehicles. The majority of Group 1 vehicles will likely be r eplaced as shown in the retrofit
scenario in Table 17 since thes e are less amenable to retrofit . The total discounted cost for these fleets is estimated at $9.2 million if they do not select any optional compliance

schedule.

Based on discussion with these fleets and the Regional Council of Rural Counties, staff assumes most fleets will take advantage of the optional implementation schedule in Table 11 or the accelerated turnover option. This would result in a lower discounted total cost since the full implementation per iod is extended out a minimum six years (depending what option is se lected.)

M. Cost to the Averag e Household for Utilities

Utilities have the ability to pass the cost of compliance on to their ratepayers. Some special districts also provide services on a fee basis (i.e., water district) and may be able to pass on the cost of compliance to their ratepayers. A utility ratepayer may eventually pay higher costs for natural gas, electric or water services.

To estimate an order of magnitude for the cost to an individual ratepayer, staff calculated the average increase to an indivi dual ratepayer for the largest utility in California. This utility owns approximately 1, 472 vehicles subjected to the regulation as reported to ARB in 2004 (this number is esti mated to grow to 1,531 vehicles by 2006). The total cost of compliance discounted to 2005 dol lars is $10.5 million. If this cost was equally distributed to the 4,756, 159 utility’s customer accounts 18 , it would result in a one time increase per ratepayer of $2.20.

18 California Public Utility Commiss ion 2001 Utility Electric Sales55 IX. ENVIRONMENTAL IMPACT AND COST-EFFECTIVENESS

The proposed regulation would provide cost-e ffective diesel PM emission reductions throughout California, especially at the nei ghborhood level. The air quality benefits statewide would be not only from reduction of diesel PM emissions, but also from reduction of CO, NO
x , and HC emissions. Staff calculat ed the average cost per diesel PM pound reduced by 2010 is about $159 and t he average cost per NOx pound reduced is $11.47

The cost-effectiveness of this regulation is higher than other similar PM control measures; however the health be nefits of the regulat ions provides a cost savings as
discussed in section IX.C.

A. Statewide Emission Benefits

ARB staff estimates the proposed diesel PM control measure would result in the reduction of between 0.15 tpd of diesel PM emissions in 2010 and 0.05 tpd diesel PM reduced in 2020 (Table 24). The reduction of di esel PM emissions attributed to this regulation peaks around 2010 because the majority of v ehicles are expected to meet
the diesel PM control measur e by 2010 (except for about 1,070 vehicles located in lowpopulation counties, which have a later fi nal implementation dat e). After 2010 the benefits attributed to this regul ation decline to 0.05 tpd in 2020 as vehicles are retired and replaced with new engines t hat meet the federal 2007 0.01 g/bhp-hr PM standard.

Table 24. Statewide Diesel PM Emission Reduction Benefits.

Calendar Year Baseline Inventory (tpd) Diesel PM Retrofit Reduction (tpd) % Reduction from

Baseline

2006 0.36 0.02 6%

2010 0.25 0.15 60%

2015 0.17 0.10 59%

2020 0.12 0.05 42%

Other air quality benefits also exist as a result of the use of the various BACT, including reduced emissions of CO, HC, and NOx. T he reductions in HC are also accounted for in the State Implementation Plan. Bas ed on expected reduction capabilities from the various DECS that might be used (Table 25), reductions of up to 1. 18 tons of CO per day (Table 26), 0.15 tons of HC per day (Table 27), and 0.30 tons of NOx per day (Table 28) will be realized .56 Table 25. Other Pollutant Reductions

Emission Reduction (Percent) Diesel Emission Control Strategy PM a CO HC NO
x Passive Diesel Particulate Filter 85 90 b 95 b 0 c

Fuel-Water Emulsion h 50 35 d 60 d 50 d
Average Diesel Oxidation Catalyst 25 47 e, f 76 e, f 0 c

a Verified Level Reduction Goals for ARB. Strategies will not be verified without meeting this standard at a

minimum.

b Allansson, R, Cooper, BJ, Thoss, JE, Uusimaki, A, Walker, AP, Warren, JP. 2001. European Experience of High Mileage Durability of Cont inuously Regenerating Diesel Part iculate Filter Technology. SAE.
2001-01-0480.

c Majewski, W. Addy. 2001. Diesel Net Tech nology Guide: Diesel Particulate Traps. www.dieselnet.com

. d Diesel Net Technology Guide: Emission Control Technologies, 1998. www.dieselnet.com

. e Diesel Net Technology Guide: Diesel Oxidation Catalyst, 1999. www.dieselnet.com

. f Khair, Magdi; McKinnon, Dale L. Performance Eval uation of Advanced Emission Control Technonlogies for Diesel Heavy-Duty En gines. SAE. 1999-01-3564.

h Fuel-water emulsion increases CO and HC emission s. Although can be verified alone for the purposes of simplifying calculations, assumed it would be used in conjunction with a diesel oxidation catalyst to decrease impact of increase. Choose least decrease to account for offset of increase from fuel-water

emulsion.

Table 26. Statewide Diesel CO Emission Re duction Benefits

Calendar Year Baseline Inventory (tpd) Diesel CO Reduction (tpd)

2006 2.2 0.17

2010 2.0 1.18

2015 1.8 0.85

2020 1.6 0.46

Table 27. Statewide Diesel HC Emission Reduction Benefits

Calendar Year Baseline Inventory (tpd) Diesel HC Reduction (tpd)

2005 0.27 0.02

2010 0.23 0.15

2015 0.20 0.11

2020 0.16 0.0557 Table 28. Statewide Diesel NOx Emission Reduction Benefits

Calendar Year Baseline Inventory (tpd) Diesel NOx Reduction (tpd)

2006 11.2 0.03

2010 10.1 0.30

2015 8.5 0.18

2020 7.3 0.09

B. Impacts on the State Im plementation Plan for PM 10

The draft State Implementation Plan (SIP) for in the San Joaquin Valley projects
attainment for the federal PM10 standard by 2010. As a “serious” nonattainment area, the San Joaquin Valley must use best availa ble control measures for all sources of

PM 10 and must also achieve five percent annual emission reductions in PM 10 and its precursors. The San Joaquin Valley has t en percent of the st atewide municipal and utility vehicles and will see a benefit of 0.02 tpd of PM reduced by 2010. In addition, the NOx and volatile organic carbon (VOC) benefits of the proposed rule are contained in the plan, as they are precurso rs to secondary PM formation.

The South Coast air basin is also classified as “serious” for PM 10 but its attainment deadline is 2006, before most of the benefits of the propos ed rule will be achieved. Nonetheless, the proposed rule will help t hat District maintain compliance with the
federal PM 10 standard. The rule also serves as a down payment on future plans to
achieve the federal PM 2.5 standards and California’s own, more stringent standards. Thirty-five percent of Californ ia’s public and utility fleet vehi cles are in the South Coast region. By 2010, the proposed rule will reduce emissions from those vehicles by 0.05 tpd.

All other PM 10 nonattainment areas in California wi ll benefit from the proposed rule in a general way. Every district except Lake County is in nonattainment for the California

PM 10 standard. In addition, four other areas in Californi a are nonattainment for the
federal PM 10 standards: Owens Valley, Searles Valle y, Coachella Vall ey, and Imperial Valley.

For ozone SIPs there is a sim ilar situation. The ARB adopt ed the statewide element and approved the comprehensive SIP for the Sout h Coast Air Basin and the PM10 SIP for the Coachella Valley on Oc tober 23, 2003. ARB subm itted the South Coast and
Coachella SIPs to U.S. EPA on January 9, 2004.58 As with PM 10 , all other ozone nonattainment areas in California will benefit from the proposed rule in a general way as it reduces the precursors to ozone formation (see Tables 27 and 28).

C. Health Benefits of Reduc tions of Diesel PM Emissions

This section examines the heal th benefits of reducing diesel PM emission and provides an analysis of the number of pr emature deaths prevented by t he reduction of diesel PM. It also provides the cost savings to soci ety for each prevented premature death. In addition, a brief discussion of heal th benefits of reducing ozone pr ecursors is included.

Staff estimates that approximately 40 premature deaths will be avoided from the implementation of this proposal. The pr oposed regulation is expected to reduce PM 2.5 emissions by a cumulative amount of 538 tons by the end of year 2022, and therefore prevent an estimated 38 premature deaths ( 19 - 57, 95 percent confidence interval (95% CI)) by year 2022. In addition, staf f estimates that the proposed regulation is expected to accrue a cumulative reduction of 1,005 tons of NOx by the end of 2022, therefore avoiding an estimated 2 pr emature deaths (1 – 2, 95% CI).

Lloyd and Cackette estimated that, based on the Krewski et al. study 19 , a statewide population-weighted average diesel PM 2.5 exposure of 1.8 μ g/m 3 resulted in a mean estimate of 1,985 premature deaths per year in California (Lloyd/Cackette, 2001). The diesel PM emissions corresponding to the dire ct diesel ambient po pulation-weighted PM

concentration of 1.8 μ g/m 3 is 28,000 tons per year (ARB, 2000). Based on this information, we estimate that reducing 14.11 tons per year of diesel PM emissions would result in one fewer prematur e death (28,000 tons/1,985 deaths).

Comparing the PM2.5 emissi ons before and after this regulation, the proposed regulation is expected to reduc e PM2.5 emissions by a cumulative amount of 538 tons by the end of year 2022, and t herefore prevent an estimated 38 premature deaths (19 - 57, 95 percent confidence interval (95% CI)) by year 2022.

Lloyd and Cackette also estimated that indirect diesel PM 2.5 exposures at a level of

0.81 μ g/m 3 resulted in a mean estimate of 895 addi tional premature deat hs per year in California, above those caused by directly emitted formed diesel PM. The NOx emission levels corresponding to the indirect diesel ambient PM concentration of

0.81 μ g/m 3 is 1,641 tpd (598,965 tpy). Following the same approach as above, we

19 Although there are two mortality estimates in the re port by Lloyd and Cackette – one based on work by Pope et al. and the other based on Krewski et al. , we selected the estimate based on the Krewski’s work.

For Krewski et al., an independent team of scientific experts co mmissioned by the Health Effects Institute

conducted an extensive reexaminat ion and reanalysis of the health effect data and studies, including Pope et al . The reanalysis resulted in the relative risk being based on changes in mean levels of PM 2.5 , as opposed to the median levels from the original Pope et al. study. The Krewski et al . reanalysis includes broader geographic areas than the original study (63 cities vs. 50 cities). Further, the U.S. EPA has been using Krewski’s study for its regulatory im pact analyses since 2000. (Krewski et al., 2000) (Pope, 1995)59 estimate that reducing 669 tons of NOx emi ssions would result in one fewer premature death (598,965 tons/895 deaths). T herefore, with a NOx reduction of 1,005 tons that is expected to accumulate by the end of 2022, an estimated 2 deaths (1 – 2, 95% CI)

would be avoided.

1. Social Benefit - Cost Analysis

As discussed below, staff calculated the value of avoiding one premature death, as well
as the estimated cost of cont rol to prevent a premature death

The U. S. EPA has establishe d $6.3 million (in 2000 $) for a 1990 income level as the mean value of avoiding one death (U.S. EPA, 2003). As real income increases, people may be willing to pay more to prevent prem ature death. The U.S. EPA further adjusted the $6.3 million value to $8 million (in 2000 $) for a 2020 income level. Assuming that real income grew at a constant rate fr om 1990 and will continue at the same rate until 2020, we adjusted the value of avoiding one death for income growth. We then updated
the value to 2005 dollars and discounted values of avoiding a premature death in the future back to the year 2005. The U. S. EPA’s guidance of social discounting recommends using both three and seven percent discount rates (U.S. EPA, 2000). Based on these rates, and the annual avoide d deaths, the weighted average value of reducing a future premature death, disc ounted back to the year 2005, is around $5 million at seven percent discount rate , and $7 million at three percent.

The ARB calculates the cost of avoiding a premature death, following these steps:

• For each year, note the annualized cost and the annual premat ure deaths avoided.

• Allocate a portion of the costs to PM and the rest to NOx, in proportion to the premature deaths prevented by the regulation. Since 96 % of the estimated deaths prevented by this regulation would be a ttributed to PM emi ssion reduction, we
allocate 96% of these costs to PM 2.5 emission reductions and 4% to NOx reductions.

• Take the time value of money into accoun t, by discounting the cost in each year to 2005, using a 3 percent discount ra te and a 7 percent discount rate.

• Calculate a cost per premat ure death avoided in each year.

• Calculate a weighted average of these valu es, using the weights proportional to the annual premature deaths avoided.

• Results using a 3 percent discount rate. The average cost per premature death avoided is about $4 million. 20

• Results using a 7 percent discount rate. The average cost per premature death avoided is about $3 million.

The results presented here are point estimates. Their values are actually uncertain. For example, we reported t he confidence interval on the number of prem ature deaths

20 The value is the same whether the premature deat hs avoided result from reductions of PM or
reductions of NOx. That is because the costs allo cated to each pollutant are proportional to the number of premature deaths avoided. Thus, the ratio of co st to deaths comes out the same for both pollutants.60 avoided. Not all of the uncertainties ar e quantified, so it would be misleading to calculate and report a conf idence interval for the results of the valuation calculations.

2. Health Benefit From Reduced Ambient Ozone Levels

Emissions of NOx and ROG ar e precursors to the formation of ozone in the lower atmosphere. Exhaust from diesel engines c ontributes a substantial fraction of ozone precursors in any metropolitan area. Therefore, reductions in NOx from diesel engines

in urban areas would make a considerable contribution to reducing exposures to ambient ozone. Controlling emissions of ozone precursors would reduce the prevalence of the types of adverse respir atory effects associated with ozone exposure and would reduce hospital admissions and emergen cy visits for respiratory effects.

D. Cost-Effectiveness of Proposed Regulation

The estimated average cost-effectiveness of this proposed diesel PM emission reduction regulation is approximat ely $159/lb of PM reduced annually from fiscal years

2006 to 2010. The costs and emission reducti ons associated with this regulation and how they were derived are discussed in Appendi x C. Both capital costs, such as the purchase and installation of a DECS, and O & M co sts, such as increm ental fuel cost for fuel DECS, are included in this analysis. This cost-effectiveness does not include a number of benefits and costs, which could not be quantified. These benefits and costs are described in the assumptions se ction in Appendix C as well.

E. Potential Negative Impacts

Certain potential negative impacts could be associated with elements of this proposed regulation. Those potential negat ive impacts are discussed below.

1. Creation Of Nitrogen Di oxide By Passive Catalyzed Diesel Particulate Filters

Nitrogen dioxide (NO 2 ) is a component of NOx and its pr esence in the atmosphere can
be correlated with emissions of NOx. There has been a steady decline in NO 2 values over the years due primarily to the implementa tion of tighter controls on both mobile and stationary sources. However, statewide em ission trends still predict NOx levels of 761 tons/day per year from on-road di esel vehicles by year 2010.

At higher concentrations than are normally found in the atmosphere, NO 2 is an acute
irritant. Health effects from prolonged exposure to NO 2 include upper respiratory problems, bronchitis, and pulmonary edema, and NO 2 has been linked to causes of
severe asthma and bronchial infections in children.
Measurements of NO X emissions (NO and NO 2 ) from heavy-duty diesel vehicles equipped with passive catalyzed filt ers have shown an increase in the NO 2 fraction, though total NO X emissions remain approximately the same. Passive catalyzed filters
oxidize NO to NO 2, which burns soot captured in the filter. More NO 2 is created than is actually used in the regenerati on process and the excess is emitted. In fact, the NO 2 to61 NO X ratios could range from 20 to 70 perc ent, depending on factors such as the diesel particulate filter system, sulfur level in di esel fuel, and the duty cycle. Diesels without passive catalyzed filters typically emit less than 10 percent NO 2 as a fraction of total
NOx.

Based on an ARB study conducted in 2002 (A RB 2002), a cap of 20 percent of NO 2 to
NOx emission ratio was established for all veri fied diesel emission control technologies,
to assume that measured NO 2 emission caused no increase in ambient air pollution. In December 2003, the Board m ade the decision to delay t he effective date of the 20 percent NO 2 limit, which was to go into effect on J anuary 1, 2004, to provide more time
for manufacturers of DECS to reduce the NO 2 fraction. ARB established a working group comprised of scientists, health prof essionals, and manufacturers around the
world to re-evaluate the limit. Staff is now working on the rulemaking effort to refine the
NO 2 specific requirements for verification. ARB staff held a workshop to propose an
alternative limit. Details of the workshop can be found at http://www.arb.ca.gov/diese l/verdev/mailoutmsc0504.pdf

.

2. Diesel Oxidation Catalysts

Two potential adverse environmen tal impacts of the use of diesel oxidation catalysts have been identified. First, as is the case with most processe s that incorporate catalytic oxidation, the formation of sulfates increas es at higher temperatures. Depending on the exhaust temperature and sulfur content of the fuel, the incr ease in sulfate particles may offset the reductions in soluble organic fraction emissions. Using low sulfur diesel fuel
can minimize this effect. Second, a diesel oxidation catalyst could be considered a
“hazardous waste” at the end of its useful life depending on the materials used in the catalytic coating. However, diesel oxid ation catalysts are usually recycled for their precious metal content and thus are not ma naged as hazardous wastes in practice. Recycling also reduces any potentia l impact on landf ill capacity.

3. Ash Management

Diesel particulate filter technology may generate a new hazardous waste stream. The carbonaceous component of the PM captured by the filter is burned off when the filter regenerates. Any inorganic components left behi nd after regeneration as ash in the filter must eventually be clean ed from the filter. Based on preliminary data from two samples, the ash may be classified as hazar dous waste because of its zinc content.

Ash collected from a diesel engine using a ty pical lubrication oil and no fuel additives has been analyzed and is primarily composed of oxides of the following elements: calcium, zinc, phosphorus, silicon, sulfur, and iron. Zinc is the element of primary concern because, if present in high enough concentration, it can make a waste a hazardous waste. Title 22, CCR, section 66261.24 establishes two limits for zinc in a waste: 250 milligrams per liter for the Soluble Threshold Limit Concentration and 5,000 milligrams per kilogram for the Total Thres hold Limit Concentration. The presence of62 zinc at or above these levels would cause a sample of ash to be characterized as a

hazardous waste.

Under California law, it is the generator's responsibility to determi ne whether their waste is hazardous or not. Applic able hazardous waste laws are found in the HS&C, division 20; title 22, CCR, division 4.5; and title 40 of the Code of Federal Regulations. Staff

recommends that owners who install a diesel particulate filter on a vehicle contact both
the manufacturer of the DECS and the Ca lifornia Department of Toxic Substances Control (DTSC) for advice on waste management.

DTSC personnel have advised ARB that it has a lis t of facilities that accept waste from businesses that qualify as a conditionally exempt small quantit y generator. Such a business can dispose of a specific quantif y of hazardous waste at certain Household Hazardous Waste events, usually for a sma ll fee. An owner who does not know whether or not he qualif ies or who needs specific informa tion regarding the identification and acceptable disposal methods for this waste should contact the California DTSC. 21

X. ISSUES

Over the course of development of this proposal, staff has met with various

stakeholders and received written and verbal comments. Although staff has considered each comment, not all issues could be resolv ed while achieving ARB’s goals to reduce diesel PM emissions from public and utility v ehicles. Following is a discussion of major outstanding issues.

A. Low Population Definition

Staff has proposed an extended compliance sc hedule municipalities or utilities located in counties with populations 125, 000 or less. Several fleet s located in counties with populations over 125,000 but less than 300,000 still have the same fiscal limitations
needs as smaller “rural” counties. Count ies with population greater than 125,000 but less than 300,000 are listed below (Table 29):

21 Information can be obtained from local duty officers and from the website: http://www.dtsc.ca.gov.63 Table 29. Counties with Populat ions Between 125,000 to 300,000

County Population

HUMBOLDT 132,500 NAPA 135,700 KINGS 149,600 MADERA 152,600 IMPERIAL 182,500 SHASTA 185,700 EL DORADO 187,000 YOLO 188,600 BUTTE 235,000 MERCED 239,900

MARIN 257,600 SANTA CRUZ 284,500 SAN LUIS OBISPO 287,000

Several of these counties include urban areas. If these counties ar e included in the current definition of low populat ion they would account for 17% of the rule’s benefit.
Staff does not believe these mid size countie s should be treated as rural counties with a delayed implementation schedule. Other provision of the rule , such as low use vehicle exemption, and exclusion of dedicated snow removal equipment, may help reduce the
cost of the rule to these counties.

B. Biodiesel

The biodiesel industry and entities subject to the Federal Energy Policy Act (EPAct) expressed concerns that implem entation of the rule would f unctionally preclude the use of biodiesel. This is a concern for public fl eets such as the military since these agencies are using biodiesel blends in their heavy dut y trucks to accumulate alternative fuel credits for compliance with EPAct. This concern was raised several times during
outreach activities when no DECS was verifi ed for use with biodie sel blends; however since this time, ARB has verified the J ohnson-Matthey CRT with the use of B20 (EO DE-04-006-05). Based on this staff is c onfident that other DECS manufacturers will also apply for extension of existing DECS verifications to be used with biodiesel blends dispelling the concerns raised earlie r in the rulemaking process.

The biodiesel industry has also requested severa l times to allow biodiesel blends to be
considered BACT in the rule. Since ARB is mandating the applic ation of BACT on inuse engines, biodiesel and biodiesel blends c ould only be considered BACT if the fuel goes through ARB’s verification procedure. Th is would ensure the us er that the fuel would carry the same warranty as other DE CS against damage to the engine. Other impediments to the use of biodi esel blends have been the lack of fuel specifications for64 the neat fuel. ARB has formed a Biodiesel Working Group to facilitate the development of possible biodiesel specifications. Th is group consists of a broad range of stakeholders, including biodiesel producer s, distributors, pet roleum refiners, regulatory agencies, and biodiesel end users. Information of this effort can be found at http://www.arb.ca.gov/fuels/di esel/altdiesel/altdiesel.htm

C. Alternative Compliance Plan or Alternative Early Compliance Plan

Several commentors have request ed the inclusion of alter native compliance plans or early compliance plans. The rationale behind th is request is that some municipalities or utilities have proactively purchased alternative fuel engines or retrof itted their vehicles with BACT. Therefore, the early implementation of BACT should generate credits that would allow delaying the pr oposed implementation schedule. Staff evaluated this proposal, but believed that impl ementation of such a provisi on would be too difficult to
enforce. Staff also noted t hat many municipalities and/ or utilities applied BACT to vehicles with the use of grant money. Therefore, no early credit can be given, since most grant money is also tied to emission reduction requirements. Therefore these alternative implementation options were not included in the regulation.

D. Cost to Local Government Agencies

Several government agencies that do not have the ability to collect fe es have stated that the cost of compliance for this rule is too high. Staff believes based on the variety of verified DECS available, and the phased-in implementation ma kes the rule technically feasible and cost effective. The concept of BACT is to give owners several options to
choose from whether it is staggering their new vehicl e purchases with already complying engines, repowering ol der vehicles with cleaner engine s, or retrofit existing engines with verified technology. BACT is a much more attractive opt ion to accelerated fleet turnover because it does give the owner the choice of less costly options. Staff also tried to stagger implement ation schedules that were more in line with fleets’ routine plans for vehicle replacement and engine repowerin g. In addition, staff built in several extensions based on technology unavailabilit y and low population county concerns. Any further relaxing of the proposal would no t deliver the near term needs of reducing the public’s exposure to dies el PM.

E. Applicability of Proposed Rule to Federal Agencies

The United States Postal Service (USPS) has submitted several comment letters presenting a legal argument that while other governmen tal fleets may be regulated, federal fleets like USPS may not be regulat ed until privately-owned fleets are similarly regulated citing section 118(a) of Clean Air Act (CAA). ARB’s legal staff determined that USPS’s reading of this statute is not c onsistent with the statut e itself and is also inconsistent with other provisions of the C AA. In cases regarding the applicability of state and local regulations to federal agencie s, the courts have held that Congress waived its sovereign immunity with respect to independent state or local air pollution65 control laws. Therefore, staff has determi ned that federal fleets including the USPS are subject to the proposed regulation.

XI. SUMMARY AND STAFF RECOMMENDATION

ARB staff recommends the Board adopt new sections 2022, and 2022.1, title 13, chapter 1, article 4, CCR, in its entirety. T he regulation is set forth in the proposed regulation order in Appendix A.66 XII. REFERENCES

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