## Appendix F

Proposed Amendments to the Tractor-Trailer GHG

RegulationF-1

PROPOSED AMENDMENTS TO THE TRACTOR-TRAILER GHG REGU LATION

The proposed amendments to the Tractor-Trailer GHG regulation would provide additional flexibility for fleets to meet the requi rements of the regulation, with minimal impact on the GHG benefits initially approved, cons istent with the requirements of Assembly Bill 32. The text of the proposed amended regulation is contained in Appendix C.

Staff’s main objective is to provide an opportunity for fleets that were not aware of the regulation to register for an optional large fleet compliance schedule, while maintaining a “level playing field” for those large fleets that already registered. Staff also proposes to ease the burden of compliance by incorporating comp liance flexibility provisions within the rule wherever possible.

A. Existing Regulation

The current regulation requires fleets operating in California to utilize tractors and trailers that are either SmartWay certified or retr ofitted with SmartWay verified aerodynamic devices and low rolling resistance tire s that meet specified fuel efficiency improvements. To comply with the existing requirem ents, the regulation provides fleet owners of pre-2011 model year trailers with two dif ferent options for bringing their pre2011 model year trailers into compliance: full comp liance by January 1, 2013, or register for and participate in a multi-year optional phase- in schedule that gives fleets several years to bring their trailers into compliance. The regulation also delays compliance requirements for several years for certain model ye ar refrigerated-van trailers that will be concurrently impacted by other previously-adopte d ARB regulations. Since the technologies required by the regulation are most ef fective at highway speeds, the regulation also includes provisions to exempt local -haul trailers, local-haul tractors, and short-haul tractors and the trailers they pull from some or all of the requirements due to their limited operation at highway speeds and/or th eir limited overall annual mileage.

Since the initial adoption of this regulation, feed back from stakeholders during the implementation phase revealed that several issues a ffecting fleets needed to be addressed. Some of the issues, among other things, include the incompatibility of certain trailer configurations with existing verifi ed aerodynamic devices, the unavailability of SmartWay verified retread tires, the need to move certain trailers from one location to another without having to meet the aerodynamic device and/or tire requirements, and issues related to reporting requi rements. Thus staff is proposing amendments that would provide flexibility in report ing, as well as, provide temporary, short-term exemptions for specific circumstances in volving storage trailers, transfer of ownership, and moving local-haul trailers.F-2

B. Proposed Amendments

1. Optional Second Compliance Schedule for Large Fl eets

The existing regulation requires large trailer flee ts (defined as 21 or more affected trailers) to either have all 2010 or older model ye ar box-type trailers in compliance by January 1, 2013 or register for and participate in an optional compliance phase-in schedule that allows such fleets to phase in compli ance between 2010 and 2015, as shown in Option 1 of Table F-1 below. Large fleet owners that have elected to utilize the optional compliance phase-in schedule were requ ired to register with ARB by July 1, 2010. Ninety-five fleets with approximately 180,00 0 trailers registered by this deadline. However, because the total number of trailers impac ted by the current regulation in 2010 is estimated to be approximately 645,000, it i s likely that many trailer fleet owners were not aware of the regulation and may have misse d the opportunity to participate in the compliance phase-in option, resulting in them h aving to fully comply with the retrofit requirements by January 1, 2013.

To address this issue, staff proposes to modify sec tion 95307, Optional Trailer Fleet Compliance Schedules to provide large fleet owners another optional com pliance phase-in schedule, as shown in Option 2 of Table F- 1 below. Large fleet owners that opt to use Option 2 would be subject to a reporting deadline of July 1, 2011 and, as shown in Table F-1, a phase-in beginning with 20 pe rcent of their fleets by the end of 2011, and 100 percent by the end of 2015.

Table F-1: Optional Trailer Fleet Compliance Schedu le

Required Cumulative Percent Compliance Compliance Deadline, as of January 1 Option 1 (Current) Option 2 (Proposed)

2011 5% --- 2012 15% 20%

2013 30% 40%

2014 50% 60%

2015 75% 80%

2016 100% 100%

2. Additional Reporting Flexibility

The current regulation requires owners of trailer f leets that elect to utilize either the large fleet or small fleet optional compliance phase-in s chedule to submit a one-time, multiyear compliance plan at the time they register for those compliance schedules. The compliance plan must outline which specific, pre-20 11 model year trailers will be brought into compliance during each year of the opt ional compliance phase-in schedule. Representatives of large trailer fleets have indica ted to staff that developing an accurate multi-year compliance plan is impractical because t hey cannot accurately predict which specific trailers in their fleets they will bring i nto compliance each year.F-3

Staff agrees that this requirement may be problemat ic for some fleets and therefore proposes to add new subsection 95307(f), Reporting Requirements , which would allow trailer fleet owners to report which trailers in th eir fleets were brought into compliance at the end of each year, as opposed to identifying the ir entire phase-in schedule in a onetime multi-year plan. It should also be noted, how ever, that trailer fleet owners would still be allowed to submit a one-time, multi-year c ompliance plan for their fleet should they so choose.

3. Exemption of Storage Trailers

The current regulation requires trailers that are e xclusively or primarily used for storing goods at a single location for extended periods of time to be retrofitted with aerodynamic devices and low rolling resistance tire s when traveling on California highways, despite the fact that they rarely travel on highways. An owner could register a storage trailer as a local-haul trailer, which wo uld alleviate the owner’s requirement to install aerodynamic technologies, but the trailer o wner would still be required to install low rolling resistance tires and would not be able to move such trailer beyond 100 miles of its designated local-haul base. Another option would be to pull the storage trailer with an exempt short-haul tractor from location to locat ion without threat of violation, but this requires the owner of the trailer to own or secure the services of a short-haul tractor.

Staff agrees that the current regulation does not a ddress the unique circumstances involving storage trailers. Staff therefore propos es to modify subsection 95305(e), Exemptions to add an exemption for 53-foot or longer box-type storage trailers that are used exclusively for storage of items at a single l ocation. Specifically, staff proposes exempting storage trailers from the aerodynamic tec hnology and low rolling resistance tire requirements of the regulation provided that s uch storage trailers travel empty of freight while on California highways.

Staff is also proposing that owners be provided the ability to relocate storage trailers as proposed for local-haul trailers described in secti on 7, below.

4. Compliance Delay for Certain Trailers

The current regulation requires affected box-type t railers to utilize SmartWay verified aerodynamic technologies to achieve the specified i mprovement in aerodynamic efficiency. Such technologies presently include fr ont fairings, side skirts, trailer end fairings, and an undercarriage device. Manufacture rs and fleets have indicated that certain configurations of trailers would prohibit t he effective use of these available SmartWay verified technologies, such as those trail ers with rear rollup doors and side doors with hydraulic lifts.

Staff recognizes that there are some limited traile r configurations for which there are currently no SmartWay verified technologies availab le. Therefore, staff is proposing to add new subsection 95305(i), Trailer Aerodynamic Equipment Delay to provide a limited term exemption from the aerodynamic technology requ irements of the regulation for trailers that are configured such that none of the SmartWay verified aerodynamicF-4

technologies can be effectively installed on them. The exemption would require Executive Officer approval, and would have to be re newed annually. Once there are SmartWay verified technologies available for these specific trailer configurations, the trailers would no longer be eligible for the exempt ion.

5. Delayed Compliance Provision for 2009 Model Year Refrigerated Van

Trailers

Since refrigerated van trailers would be concurrent ly impacted by the current regulation and the previously adopted “Airborne Toxic Control Measure for In-Use Diesel-Fueled Transport Refrigeration Units (TRU) and TRU Generat or Sets, and Facilities Where TRUs Operate” (TRU rule), staff developed a special provision that would allow the delay of retrofits of certain in-use refrigerated v an trailers. Specifically, the refrigerated fleet extended compliance provision in the current regulation applies to 2003 through 2008 model year refrigerated van trailers equipped with 2003 and newer model year TRUs. However, staff inadvertently excluded 2009 m odel year refrigerated van trailers (equipped with 2003 model year or newer TRUs) from the delayed compliance provision.

Recognizing this oversight, staff therefore propose s to modify subsection 95303(b), Trailer Requirements, to allow 2009 model year refr igerated van trailers (equipped with 2003 model year or newer TRUs) to comply with the G HG regulatory requirements using the extended compliance provision. These tra ilers would have until the end of 2019 to be brought into compliance with the regulat ion.

6. Aerodynamic Equipment Modifications

The Tractor-Trailer GHG regulation requires affecte d trailers to either be U.S. EPA SmartWay certified trailers or retrofitted with Sma rtWay verified technologies. To date, SmartWay specifications only exist for dry van trai lers in a standard dual axle configuration. However, the Tractor-Trailer GHG re gulation requires fleets to use these technologies on other trailer configurations, such as refrigerated van trailers. Any trailers that are configured differently than typic al dry van trailers may present installation difficulties that will in turn require modifications to SmartWay verified technologies. This is a concern because the curren t regulation does not allow such

modifications.

To address this issue, staff proposes to modify sub sections 95303(b)(1), 95303(b)(2), and 95303(b)(3) to allow modifications to SmartWay verified technologies for “nontypical” trailers, as discussed above. Such modifi cations would be subject to advance approval by the Executive Officer. The Executive O fficer will base his or her determination upon information submitted that demon strates the proposed modifications would not significantly increase the aerodynamic dr ag of the technology.

7. Transporting Local-Haul Trailers

Registered local-haul trailers are presently exempt ed from the aerodynamic equipment requirements of the regulation provided they operat e within a 100-mile radius of theirF-5

local-haul base. Thus if a trailer owner plans to change the base operation location of a

local-haul trailer to a new location that is more t han 100 miles away, the current regulation does not exempt this trailer from meetin g the retrofit requirements.

To require the retrofit of aerodynamic devices and tires on local-haul trailers would be unnecessarily costly and would provide no emissions benefit. Staff therefore proposes to modify section 95305, Exemptions , to exempt local-haul trailers from the retrofit requirements when they travel outside of their base area, as long as these trailers are transported empty of freight.

It has been argued that if an owner plans to reloca te one of these trailers, it would make more “economical sense” if, at the same time, it wa s also loaded with freight. Such a trailer would not be eligible for the exempt status described above, but staff believes such a practice should be allowed on a limited basi s. Staff therefore proposes to add a provision in subsection 95305(f) that would waive t he retrofit requirements for loaded

local-haul trailers that travel outside the 100-mil e area, via the issuance of a relocation pass. Up to four relocation passes per year per tr ailer could be issued, with each pass not to exceed three consecutive days. Similarly, s uch pass would also be available to storage trailers moving from one storage location t o another. Reporting requirements would apply.

8. Three-Day Pass for Non-compliant Tractors

There are some fleets that infrequently travel into California or typically operate with trailers that are exempt. Staff believes a limited exemption is warranted for such fleets that infrequently transport goods in California pro vided that their owners request and obtain advanced Executive Officer approval.

Therefore, staff proposes to add a provision in sub section 95305(h) that would allow tractor owners to request and obtain a temporary ex emption (pass) from the regulation, not to exceed three consecutive days. Only one pas s would be issued to an owner per year. Furthermore, only one tractor per fleet, sha ring a U.S. Department of Transportation, motor carrier, or International Reg istration Plan number, would be granted one pass per year. In other words, if a fl eet is made up of multiple owners, only one pass could be issued to a tractor in that fleet , regardless of the number of owners in that fleet. Staff believes this exemption is only needed for the first several years of the regulation and can be sunsetted once fleets that ar e typically unaffected become aware of this regulation. Thus, staff proposes to sunset this provision on January 1, 2015.

9. Transfer of Ownership Pass for Trailers

The regulation currently does not provide any exemp tions for affected trailers involved in a transfer of ownership. Staff has learned that it is common industry practice, in a transfer of ownership situation, for the seller of a trailer to transport freight in such trailer while delivering it to the buyer’s location. Under the existing regulation, the owner(s) of this trailer would be subject to the retrofit requi rements.F-6

Staff believes that an exemption is warranted for t hose cases where the trailer is merely passing through California to the buyer’s location. Therefore staff proposes to include a provision in subsection 95305(g), to allow sellers and buyers of affected trailers to obtain a temporary exemption for trailers involved in a transfer of ownership while being transported from the seller’s location to the buyer ’s location. This transfer of ownership pass would be valid for up to three consecutive day s, or for an alternate time period as approved by the Executive Officer.

10. Delayed Compliance for Low Rolling Resistance T ire Requirements for

Pre-2011 Model Year Tractors and Trailers

The current regulation requires pre-2011 model year tractors to use SmartWay verified tires by January 1, 2012, and pre-2011 model year t railers to use SmartWay verified tires by either January 1, 2013, or by the deadline s specified in the optional compliance

schedules. Affected stakeholders have indicated th at fleets rely heavily on the ability to use retreaded tires, especially on trailers. Since the U.S. EPA SmartWay Program has not yet completed its efforts to develop standards for SmartWay retreads, a delay in the implementation date is warranted to allow time for fleets to retread and use their existing tires, and then transition to using SmartWay verifi ed retreads once they become available. Also, the delay would allow time for fl eets to accumulate sufficient numbers of SmartWay verified tire casings to use for retrea ds.

Staff therefore proposes to amend subsections 95303 (a)(3) and 95303(b)(3) to allow pre-2011 model year tractors and trailers additiona l time to be equipped with SmartWay verified low rolling resistance tires. Pre-2011 mo del year tractors would have an additional year to comply, and pre-2011 model year trailers would be allowed up to four additional years to comply. Model year 2003 throug h 2009 refrigerated-van trailers equipped with 2003 or subsequent model year transpo rt refrigeration units would still be required to convert their tires to SmartWay verifie d tires beginning January 1, 2018.

11. Exemption for Open Shoulder Drive Tires

The current regulation requires 2011 and subsequent model year tractors to use SmartWay verified tires by January 1, 2010. Staff is aware that some regional-haul fleets must use open shoulder drive tires to negoti ate roads in inclement weather. Currently, staff is aware of only three open should er drive tire models that are U.S. EPA SmartWay verified models. Therefore, staff is prop osing to include a limited term exemption in section 95305(j) for 2011 or subsequen t model year tractors using openshoulder drive tires. This exemption would sunset on January 1, 2013.

12. Disclosure Language and Recordkeeping

The regulation requires any person residing in Cali fornia that sells or leases an affected tractor or trailer to notify the buyer or lessee, i n writing, that the tractor/trailer may be subject to the Tractor-Trailer GHG regulation.

Staff proposes to clarify, in subsection 95303(i), that only California-licensed vehicle dealers selling affected tractors or trailers are r esponsible for providing the specifiedF-7

disclosure language, and in subsections 95302(a)(42 ), that lessors of affected tractors and trailers are responsible for providing specifie d disclosure language. In addition, staff is proposing to add a requirement in new sect ion 95311 that sellers and lessors

must maintain a record of the written disclosure fo r three years after the date of sale or

lease.

13. Other Amendments

Staff is proposing other relatively minor amendment s to clarify certain definitions and to reorganize the regulatory language to include the p roposed amendments.