Board HearingOctober 26, 2007California Environmental Protection AgencyAir Resources BoardRegulation forCommercial Harbor Craft2Overview♦Background♦Proposed Regulation♦Emissions and Risk Reductions♦Costs and Cost Effectiveness♦Summary and Recommendation3Background4What are Commercial Harbor Craft?♦Ferries and excursion vessels♦Tugboats and towboats♦Crew and supply vessels♦Commercial and charter fishing boats♦Pilot boats♦Work boats♦Other vessels5Vessel and Engine Population♦4,200 vessels♦8,300 diesel engines♦75% of vessels are commercial andcharter fishing boats♦Largest engines in ferries, excursionvessels, tugboats, and towboatsLocation of Ferry, ExcursionVessels, Tugboats, and Towboats♦38% in Bay Area♦30% in South Coast Area♦17% in San Diego♦15% in the rest of the StateU.S. EPA Engine Standards♦Engines meeting Tier 1 standards becameavailable in 2000♦Tier 2 standards became effective 2004 to2007♦Tier 3 and Tier 4 standards proposed byU.S. EPA in April 2007, not yet adopted♦Tier 3 standards effective 2013 to 2014 andTier 4 in 2016 to 201778Emissions from Harbor Craft♦Large emission source– 3.3 tpd diesel PM– 73 tpd NOx♦80% of in-use harbor craft engines areunregulated♦Vessel engines have long life9Over 75% of Vessels areCommercial and Charter FishingBoatsOtherWork BoatsPilot BoatsTow BoatsCrew andSupplyVesselsFerries andExcursionVesselsCharterFishingBoatsCommercialFishingBoatsTug BoatsVessel Population: ~4,2002004 Inventory10Ferries, Excursions, Tugs, and TowsGenerate ~50% of Total Emissions~3.3 tpd PMTotal Other NonFish6%Ferries andExcursionVessels28%Tugboats19%Towboats3%Charter Fishing19%CommercialFishing25%2004 Inventory11Ferries, Excursion Vessels, Tugboats, andTowboats Generate Largest Share of In-HarborPM Emissions00.10.20.30.40.50.60.7 Ferry/Excu r s i on Tug Tow Pilot Wo r k C r ew and Su p p l y C har te r Fishin g Co m mer ci al Fishi n gVessel Type

Tons per DayHarbor (0-3 nm)3-24 nm>24 nm12Health Impacts♦Elevated cancer risk near ports♦Non-Cancer annual impacts:–90 Premature deaths–20 Hospital admissions (respiratory)–40 Hospital admissions (cardiovascular)–2,400 Cases of asthma-related and lowerrespiratory symptoms–200 Cases of acute bronchitis–16,000 Work loss days–90,000 Minor restricted activity days13Proposed CommercialHarbor Craft Regulation14Key Elements of Proposal♦Existing ferries, excursion vessels,tugboats, and towboats required to replaceolder engines with new certified engines♦New vessels and replacement enginesmust install new certified engines♦Monitoring, recordkeeping, and reportingrequirements15Requirements for Ferries,Excursion Vessels, Tugboats,and TowboatsRequired Replacement ofUnregulated (Tier 0) and Tier 1Engines♦Replace existing engines with newcertified engines♦Replacement schedule based on enginemodel year and hours of operation♦Accelerated replacement schedule forSouth Coast16Engine Replacement Delivers60% to 80%Emission Reductions Per Engine1770 to 80% PM40 to 50% NOxTier 1 to Tier 380% PM70% NOxTier 0 to Tier 360 to 65% NOx and PMTier 0 to Tier 2Emission Reductions perEngineTiers18Replacement ComplianceSchedule♦Statewide– Begin replacing engines by 2009– Replace all Tier 0 engines 2009-2016– Replace all Tier 1 engines 2017-2022♦Accelerated schedule for South Coast– Tier 0 replacements 3 years earlier– Tier 1 replacements 2 years earlier19Alternative Methods to DetermineCompliance Model Year♦Pre-2004 engine rebuilt to Tier 1 prior to1/1/08– Rebuild date can be used as compliance modelyear♦Emission control strategy applied– Decrease PM and/or NOx by >25%– Extends compliance date by 1 to 5 years20Alternative Compliance Options♦Demonstrate in-use engine meets thecurrent U.S. EPA marine engine standard♦Demonstrate in-use engine is operatingless than 300 annual hours21Compliance Date Extensions♦No suitable engine replacement♦Manufacturer delay or installationdifficulties♦Engines on multiple vessels within fleetrequiring compliance in one year♦Change in annual engine hours ofoperation22Alternative Control of Emissions♦Operators may comply using alternativeemission control strategies♦Must achieve equivalent or greaterreductions♦Application process includes publicreview process23Requirementsfor All CommercialHarbor Craft24New Harbor Craft Vessels♦Effective January 1, 2009♦All new harbor craft must install enginesmeet current U.S. EPA emissionstandards– Engine standard in effect when vessel ispurchased, Tier 2, 3, or 4♦New ferries– Apply best available control technology(BACT) to propulsion engine or Tier 425Replacement Engines forIn-Use Harbor Craft Vessels♦Install engines meetingU.S. EPA marine newengine emissionstandards at time ofengine acquisition♦Tier 4 engine requiredif engine beingreplaced was a Tier 426Monitoring, Recordkeeping, andReporting Requirements♦Monitoring– non-resettable hourmeters on all engines♦Recordkeeping♦Reporting– Initial– Compliance27Requirements Apply to VesselsWithin Regulated California Waters♦All internal waters♦All estuarial waters♦All ports and terminalfacilities♦All waters within 24nautical miles ofCalifornia baseline28ExemptionsfromEntire Regulation♦Vessels traversing within 24 nautical miles of theCalifornia Coast without stopping♦Temporary emergency rescue/recovery vessels♦Recreational vessels♦Ocean-going vessels (except ocean-going tugs)♦Vessel engines registered with the Portable EngineRegistration Program prior to January 1, 2009♦U.S. Coast Guard vessels♦Military tactical support vessels29ExemptionsfromEngine Replacement Requirements♦Temporary replacement vessels♦Registered historic vessels♦Engines rated at less than 50 horsepower♦Engines operated less than 300 hours peryear♦Near-retirement vessels30ProjectedEmissionReductionsRegulation Benefits♦South Coast reductions in 2013– 0.2 tpd PM– 3.6 tpd NOx♦Statewide reductions in 2020– 0.7 tpd PM– 10 tpd NOx♦Achieves 2015 and 2020 GoodsMovement Goals for harbor craft3132Projected StatewidePM Emission ReductionsCommercial Harbor Craft Statewide PM Emissions00.511.522.533.52004 2007 2010 2013 2016 2019 2022 2025Calendar Year

Tons/dayBaselineControlled with Proposed Regulation33Projected StatewideNOx Emission ReductionsCommercial Harbor Craft Statewide NOx Emissions010203040506070802004 2007 2010 2013 2016 2019 2022 2025Calendar Year

Tons/dayBaselineContolled with Proposed Regulation34Accelerated South Coast PMEmission ReductionsSouth Coast Commercial Harbor Craft PM Emissions00.10.20.30.40.50.60.70.80.92004 2007 2010 2013 2016 2019 2022 2025Calendar Year

Tons/dayBaselineControlled with accelerated schedule for SCControlled with statewide scheduleAdditional reduction in 2013due to accelerated schedule35Health Benefits Due to ProposedRegulation♦Significant reduction in near source cancer risk:♦Avoided non-cancer health impacts by 2025:– 310 premature deaths– 70 hospital admissions due to respiratory causes– 120 hospital admissions due to cardiovascular causes– 8,100 cases of asthma-related and other lower respiratorysymptoms– 670 cases of acute bronchitis– 53,000 work loss days– 300,000 minor restricted activity days♦$1.3 to $2 billion estimated non-cancer healthbenefits from proposed regulationOverall Effect onGlobal Warming♦Reduction in greenhouse gas emissions:– Accelerated phase-in of newer engines withless polluting technologies– Reduction in black carbon♦Slight increase in CO2 emissions:– Use of exhaust treatment technologies thatincrease vessel power usage37Estimated Costs♦Total cost of regulatory compliance $140 million♦Industry cost for new equipment of $460 million♦Impact on Return on Owners Equity (ROE)ranges from 0.5 to 3.5% decline38Summary of Cost-Effectiveness(2009-2022)EmissionsTotalCost-EffectivenessAll Costs Assigned to PMPM$29/lbDivide Costs Equally Between PM andNOxPM$14.50/lbNOx$1,800/tonCombine PM and NOx EmissionsPM + NOx$1.70/lb39Diesel PM Cost-EffectivenessCompared to Other RegulationsRegulation orAirborne Toxic Control MeasureDiesel PM Cost-EffectivenessDollars/ Pound PMCommercial Harbor Craft $29Cargo Handling Equipment $41Solid Waste Collection Vehicle Rule $28Stationary Diesel Engine ATCM $4 - $26Transport Refrigeration Unit ATCM $10 - $2040Potential Incentive Funding♦Carl Moyer Funding♦California GoodsMovement Bond Funds♦POLA Mitigation Funding♦Federal Transit AuthorityGrantsFunding Opportunities♦California Goods Movement Bond Funds– Tugboats, Towboats, Crew and Supply Vessels,and Commercial Fishing Vessels– $60 million available– Eligible two years prior to compliance date♦Carl Moyer Funds– All vessel types– Funding totals varies by local Air District– Eligible three years prior to compliance date forregulated vessel types– No eligibility limitations for non-regulated vesseltypesProposed 15 Day Change42♦Regulation Compliance Plan Reporting– Currently required at time of initial reporting15 DAY CHANGE– Report compliance plan by Feb. 28 the yearcompliance is required♦Compliance Model Year Determination– Emission control strategy applied, extendsengine compliance date 1-5 years15 DAY CHANGE– This option would not apply to vessel locatedin the South Coast AQMD43Issues♦Extend accelerated engine replacementschedule to entire State♦Extend engine replacement requirementsto crew and supply boats♦Remove emission control strategy modelyear compliance extension provisionstatewide♦Require Tier 4 replacement whenavailable44Summary andRecommendation♦Meets Goods Movement 2015 and 2020 goals♦Early reductions for South Coast♦Cost effective♦Staff recommendsthe Board adopt theproposed regulation