## Report on Re ductions Achieved from I nc entive-Based

Emission Re duction Meas ures in the San Joaquin Valley

AP PE NDIX A .2 : 2005 Carl Moyer Me mo rial Air Quality

Standards Attai nm ent Pr ogram Guidelines Part II

Release D ate: Se pt em ber 22, 20 14

He ari ng Dat e: Octo ber 2 3

, 2 014



# Calif or ni a E nvironme nt a l Protection Agen cy



# Air Resources Board

# THE CARL MOYER PROGRAM GUIDELINES

PART II of IV



# PROJECT CRITERIA

Approved Revision 2005 November 17, 2005TABLE OF CONTENTS

Chapter One –Heavy-Duty On-Road Vehicles ........... ..................................................I -1

Chapter Two –Heavy-Duty On-Road Fleet Modernization ..........................................II-1

Chapter Three – Reducing Idling Emissions from Heav y-Duty Vehicles....................III-1

Chapter Four – Transport Refrigeration Units .......

................................................... . IV-1

Chapter Five – Compression-Ignition Off-Road Equipm ent ....................................... V-1

Chapter Six – Large Spark-Ignition Off-Road Equipme nt.......................................... VI-1

Chapter Seven – Airport Ground Support Equipment ... ........................................... VII-1

Chapter Eight – Locomotives ........................

................................................... ....... VIII-1

Chapter Nine – Marine Vessels......................

................................................... ........ IX-1

Chapter Ten – Agricultural Sources .................

................................................... ....... X-1

Chapter Eleven – Light-Duty Vehicles...............

................................................... ..... XI-1

Chapter Twelve – Zero-Emission Technologies........ ............................................... XII- 1I-1 ON-ROAD HEAVY-DUTY VEHICLES Chapter One

ON-ROAD HEAVY-DUTY VEHICLES

This chapter addresses the project criteria for on- road heavy-duty vehicles (HDVs). It

also contains a brief overview of the HDV emission inventory, current engine emission standards and regulations impacting HDVs available control technologies, potential projects eligible for funding, and cost-effectivene ss calculations. Since the 2003 Guidelines, the Air Resources Board (ARB or Board) has adopted many regulations that affect existing heavy-duty vehicles. The project c riteria in this chapter have been updated to reflect these new regulatory requirement s. The Carl Moyer Program provides financial incentives to pay for the increm ental cost of cleaner-than-required HDV purchase of new vehicles, repowers, and retrofi ts.

I. Introduction

On-road HDVs encompass a large variety of vehicles such as buses, solid waste collection vehicles (SWCV), street sweepers, delive ry trucks and more. These vehicles are typically categorized by weight. Vehicles grea ter than 8,501 pounds (lbs) gross vehicle weight rating (GVWR) are considered to be H DVs which can also be subcategorized as light heavy-duty (LHD), medium he avy-duty (MHD) and heavy heavy-duty (HHD) vehicles (see Table 1-1).

Table 1-1 Heavy-Duty Vehicle Classifications

Vehicle Classification GVWR Light Heavy-duty (LHD) 8,501 < 14,000 lbs Medium Heavy-Duty (MHD) 14,001 < 33,000 lbs Heavy Heavy-Duty (HHD) 33,001 or more lbs

HDVs can also be further categorized by use and fue l type. Regulations traditionally refer to the vehicle usage type such as SWCVs, urba n buses, and public fleets. Section III of this chapter provides information on regulations that currently impact these

vehicles.

Fuel types for HDVs include diesel, alternative die sel fuels, compressed natural gas (CNG), liquefied natural gas (LNG), liquefied propa ne gas (LPG), gasoline and electricity. The majority of HDVs are powered by c ompression-ignition engines typically fueled with diesel fuel. This preference for diese l engines presents an air quality challenge since diesel emissions of oxides of nitro gen (NOx) and particulate matter (PM) have not been controlled to the extent that ga soline-fueled vehicle emissions have, particularly for light and medium-duty vehicl es. Furthermore, HDVs involved in the transport of goods typically accrue higher annu al mileage than other vehicles.I-2 ON-ROAD HEAVY-DUTY VEHICLES

Consequently, the share of total emissions from HDV s is disproportionately higher than their population would suggest.

II. Emissions

Even though the population of all HDVs, including u rban buses, account for approximately one percent of all on-road vehicles, they emit about 55 percent of the on-road statewide NOx emissions, 14 percent of the statewide reactive organic gases (ROG) emissions and 35 percent of the statewide PM1 0 emissions. As shown in Table 1-2, the NOx, ROG and PM10 annual emissions f rom HDVs will decrease through 2010. However, it is important to note tha t emissions from other on-road motor vehicle categories will also decrease, and by 2010, HDVs will contribute an even larger

share of the emissions from motor vehicles. In add ition, daily vehicle miles traveled (VMT) by HDVs are projected to increase by about 11 percent from 2005 to 2010. Clearly, emissions from heavy-duty vehicles have to be reduced further if California is to achieve its air quality goals.

Table 1-2 Heavy-Duty Vehicle Annual Emissions* Vehicles Greater than 8,500 Pounds

VMT NOx

tpd ROG

tpd PM10

tpd

2005 61,446,000 839 107 18

2010 69,112,000 654 84 15

* 2005 Almanac

III. Regulatory Requirements

All HDVs sold in California have engines that have been certified to specific standards. Those standards are, in general, consistent nationw ide and are discussed below. Urban transit buses are an exception, having more s tringent requirements than other HDVs until the two standards align in 2007. All pu rchases of new vehicles funded by the Carl Moyer Program must be surplus to these min imum requirements.

In addition, the ARB has developed, or is in the pr ocess of developing, additional regulations which will overlay these new engine sta ndards for specific categories. These categories, discussed below, include transit vehicles, SWCVs, school buses, public fleets and private fleets. Any Carl Moyer P rogram project must be surplus to these regulations.

A. Emission Standards

Engine emission standards have progressively and su bstantially reduced NOx and PM emissions from HDVs. Table 1-3 lists the existing and future NOx and PM emission standards for heavy-duty engines as found in Title 13, California Code of RegulationsI-3 ON-ROAD HEAVY-DUTY VEHICLES Table 1-3 Emission Standards for Heavy-Duty Diesel Engines (grams per brake horsepower-hour (g/bhp-hr))

(1) NOx plus NMHC (2) NOx plus NMHC with 0.5 g/bhp-hr NMHC cap (3) Between 2007-2009, 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, a nd it is expected that most engines will conform to the fleet NOx average of approximately 1.2 g-bhp/hr. (4) Optional Standard sunsets on December 31, 2006

(CCR), section 1956.8 [ARB, 2002a]. Urban buses ha ve a separate set of standards and are shown in Table 1-4 as found in Title 13, CC R, section 1956.1 [ARB, 2002b].

Table 1-4

Emission Standards for Urban Buses

(g/bhp-hr)

(1) Standard applies to urban bus equipped with die sel-fuel, dual fuel, or bi-fuel engines. (2) NOx plus NMHC (3) NOx plus NMHC with 0.5 g/bhp-hr NMHC cap (4) Between 2007-2009, 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 i t is expected that most engines will conform to the fleet NOx average of approximately 1.2 g-bhp/hr. (5) Standard sunsets on December 31, 2006

B. Fleet Regulation for Transit Agencies

1. Transit Fleet Vehicles

The fleet regulation for transit agencies was amend ed by the Board on February 24, 2005 [ARB, 2005]. This regulation imp acts vehicles owned or operated by a transit agency. The specific transit fleet vehic les impacted are on-road vehicles 8,501 pounds GVWR or greater powered by a heavy-dut y engine fueled by diesel or

Diesel Urban Bus Alt Fuel Urban Bus Alt Fuel Urban Bus Optional Standard (5)

Model Year NOx PM NOx PM NOx + NMHC PM

2004 - 2006 0.5 (1) 0.01 2.4 (2) or 2.5 (3) 0.01 1.8 - 0.3 0.03 - 0.01

2007 1.2 (4) 0.01 1.2 (4) 0.01


## - -

2010 0.2 0.01 0.2 0.01


## - -

Heavy-Duty Vehicles Heavy-Duty Optional Standard (4 )

Model Year NOx PM NOx + NMHC PM

2004 - 2006 2.4 (1) or 2.5 (2) 0.1 1.8 - 0.3 0.03 - 0.01

2007 1.2 (3) 0.01


## - -

2010 0.2 0.01


## - -I-4 ON-ROAD HEAVY-DUTY VEHICLES

alternative fuel that are not urban buses. Transit agencies operating only gasoline-powered vehicles are not subject to this r egulation.

The regulation establishes a fleet average NOx stan dard and PM emission reduction requirement for transit fleet vehicles phased-in be tween 2007 and 2010. Transit fleet vehicles are subject to the heavy-duty diesel engin e emission standards and not the urban bus engine exhaust emission standards.

A transit agency must meet NOx emission averages of 3.2 g/bhp-hr by December 31, 2007, and 2.4 g/bhp-hr by December 31, 2010, from its transit fleet vehicles. A transit agency must also reduce diesel PM emissions of its transit fleet vehicles by 40 percent as of December 31, 2007, and 80 percent as of December 31, 2010, compared to the agency’s baselin e emissions as of January 1, 2005.

2. Urban Bus

An urban transit bus is a passenger-carrying vehicl e powered by a heavy heavy-duty diesel engine with a load capacity of fifteen or mo re passengers and intended primarily for short rides and frequent stops. Urban transit buses statewide are subject to ARB’s Public Transit Agency Vehicle regulation amended in 2005. The regulation required transit agencies that own, operate or lease urban b uses to choose a diesel fuel or alternative fuel path and follow the requirements a s described for each fuel path.

Agencies on the alternative fuel path are required to:

• Purchase or lease alternative fuel buses that meet the current standards for 85 percent of the annual purchases made by the agen cy, through 2015.

• Only purchase new buses with an engine certified t o an optional PM standard of 0.03 g/bhp-hr or lower.

• Agencies established before January 1, 2005 that a re on the alternative-fuel path shall not operate an active fleet of urban buses wi th:

- Average NOx emissions in excess of 4.8 g/bhp-hr, ba sed on the engine certification standards of the engines in the activ e fleet.

- Diesel PM emission totals exceeding: (1) 40 percent of the agency’s January 1, 2002 dies el PM average beginning January 1, 2007. (2) 15 percent of the agency’s January 1, 2002 dies el PM average beginning January 1, 2009.

Agencies on the diesel fuel path are required to:

• Purchase a diesel-fueled, dual-fueled or bi-fueled bus with 2004-2006 MY engines certified to 0.5 g/bhp-hr of NOx and 0.01 g/bhp-hr of PM or an alternative fuel bus with an engine certified to an optional PM standard of 0.03 g/bhp-hr or lower.

• Agencies established before January 1, 2005 that a re on the diesel fuel path shall not operate an active fleet of urban buses with:I-5 ON-ROAD HEAVY-DUTY VEHICLES

- Average NOx emissions in excess of 4.8 g/bhp-hr, b ased on the engine certification standards of the engines in the activ e fleet.

- Diesel PM emission totals exceeding: (1) 40 percent of the agency’s January 1, 2002 dies el PM average beginning January 1, 2005. (2) 15 percent of the agency’s January 1, 2002 dies el PM average or equal to 0.01 g/bhp-hr times the total number of current die sel-fueled active fleet buses whichever is greater beginning January 1, 200 7.

Agencies established after January 1, 2005, regardl ess of which path they choose, shall not operate an active fleet of urban buses with:

• Average NOx emissions in excess of 4.0 g/bhp-hr, o r the NOx average of the active fleet of the transit agency from which it was forme d whichever is lower, or in the case of a merger of two or more transit agencies or parts of two or more transit agencies, the average of the NOx fleet averages, wh ichever is lower.

• Diesel PM exhaust emissions exceeding the followin g values: (1) Through December 31, 2009, 0.05 g/bhp-hr times the total number of

diesel-fueled buses in the active fleet. (2) As of January 1, 2010, 0.01 g/bhp-hr times the total number of diesel-fueled

buses in the active fleet.

C. Solid Waste Collection Vehicles

SWCVs are on-road heavy-duty vehicles with a GVWR o f 14,000 pounds or more and are used for the purpose of collecting residential and commercial solid waste. SWCVs are subject to a statewide diesel PM control measur e adopted by the Board on September 23, 2003 [ARB, 2004]. The regulation req uires each owner to use one of the best available control technologies (BACT) as d escribed in the regulation on each engine or collection vehicle in the fleet.

BACT, as defined by the regulation, can be summariz ed as an engine or power system certified to the optional 0.01 g/bhp-hr PM standard ; an engine or power system certified to the 0.1 g/bhp-hr PM emission standard, used in c onjunction with the highest level diesel emission control system (DECS); an alternati ve fuel or heavy-duty pilot ignition engine, model year 2004 – 2006 certified to the opt ional standard; or the highest level diesel emission control strategy that is verified.

BACT compliance deadlines are phased in, and are ba sed on a group of engine model years as listed in Table 1-5. It is important to n ote that Group 2 requirements apply to specific model years (MY) based on the fleet size. Compliance deadlines begin in 2004 and continue through 2010.I-6 ON-ROAD HEAVY-DUTY VEHICLES Table 1-5 Implementation Schedule for Solid Waste Collection Vehicles,

Model Years 1960 to 2006

Group Engine Model Years Percentage of Group to Use Best

Available Control Technology Compliance

Deadline

1 1988 – 2002 10

25

50

100 December 31, 2004

December 31, 2005 December 31, 2006 December 31, 2007

2a 1960 – 1987

(Total fleet ≥ 15 collection vehicles) 15

40

60

80

100 December 31, 2005

December 31, 2006 December 31, 2007 December 31, 2008 December 31, 2009

2b 1960 – 1987

(Total fleet < 15 collection vehicles) 25

50

75

100 December 31, 2007

December 31, 2008 December 31, 2009 December 31, 2010

3 2003 – 2006 (Includes dual-fuel and bi-fuel engines) 50

100 December 31, 2009

December 31, 2010

D. Upcoming Regulations

Municipal or utility-owned on-road heavy-duty diese l-fueled vehicles, such as dump trucks, street sweepers, and aerial lift trucks are not currently regulated by a fleet rule. The Board will consider a proposed in-use diesel pa rticulate control measure for public and utility fleets in December 2005 which may impac t the project criteria for these projects. Due to low mileage, these projects are g enerally only eligible for small grant

amounts.

Private on-road heavy-duty diesel-fueled vehicle fl eets such as in-use heavy-duty trucks are not currently regulated. The Board is tentativ ely scheduled to hear a proposed diesel particulate control measure for private flee ts in 2006 which may impact the project criteria for these projects.

IV. Potential Project Types

The Carl Moyer Program can achieve emission reducti ons from heavy-duty vehicles operating in California. The project criteria are designed to ensure that the emission reductions expected through the deployment of low-e mission engines or retrofit technologies under this program are surplus, real, quantifiable, and enforceable.I-7 ON-ROAD HEAVY-DUTY VEHICLES

There are four main types of HDV projects: purchas e of new vehicle, repower, retrofit,

and alternative fuels. Each of these are discussed below.

Commercially available low-emission HDVs are consid ered suitable Carl Moyer Program projects, either as new engine/v ehicle purchases or new engine purchases for vehicle repowers. Recent statutory c hanges now allow for the potential to fund LHD projects. Due to the uncertainty of futur e requests, LHD projects will be considered initially on a case-by-case basis. If a n appreciable number of applications are received for LHD projects, ARB will develop spe cific guidance.

Diesel engines, due to their high efficiency and lo ng life, dominate the HDV markets. However, their typical lean-burn, high-compression, high-temperature operation has resulted in technical limitations for achieving sig nificant NOx emission reductions. Alternative fuel engines, especially those fueled b y CNG and LNG, have been able to

achieve NOx emissions of about half of a convention al diesel engine. Alternative fuel engines, including LPG engines, are available for M HD truck applications and HHD engines used in trash truck applications.

In 2010, both the alternative-fuel and diesel fuel standards will align at 0.2 g/bhp-hr NOx. As a result, engine manufacturer s have invested significant resources for the development of reduced-emission d iesel engines and progress has been made, especially with the integration of advan ced electronics, the use of exhaust gas recirculation, and after treatment devices. To day's generation of HD diesel engines are nearly as clean as some of the alternative-fuel engines produced prior to 2003. Nevertheless, it is likely that only alternative-fu el engines will meet the lower NOx emission standard requirements for Carl Moyer Progr am funding for the purchases of

new vehicles at this time.

The variety of alternative fuel engines available a nd the number sold in California has increased significantly. However, due to increasin gly stringent emission standards, the number of available alternative fuel engines being certified each year has decreased. As engine technology matures, the number and variet y of engines certified to the emission standards will expand. Alternative fuel v ehicles have had the most success in the urban bus market. Presently, approximately 50 percent of all bus sales in California are alternative fuel vehicles and a significant num ber of transit agencies have focused exclusively on alternative fuel buses for new bus p urchases.

A. Purchase of New Vehicle

New vehicle purchases of LNG and CNG HDVs are expec ted to continue to be the most common type of project for on-road heavy-duty vehic les under the Carl Moyer Program, although LPG vehicles continue to be an option. Th e ARB certifies engines destined for sale in California and provides the engine manufact urers with an Executive Order (EO) for each certified engine family which is used to d etermine eligibility for new vehicle purchases and engine repowers. To be eligible, the new vehicle/engine must be certified to one of the ARB’s current optional emis sion standards ofI-8 ON-ROAD HEAVY-DUTY VEHICLES

1.8 g/bhp-hr NOx + NMHC or lower through 2006, rega rdless of fuel type or engine design. Beginning in January 2007, the optional st andards will sunset, and projects for the purchase of a new vehicle must have an engine c ertified to 0.2 g/bhp-hr of NOx.

The Heavy-Duty Diesel-Engine and Vehicle Standard w ill continue to be used as the baseline for determining eligibility for on-road pu rchases of new vehicles except urban buses. Engines and vehicles certified to the Heavy -Duty Otto-Cycle Engine Standard may also be eligible for funding if certified to a level equivalent to the current optional diesel standard or 30 percent less than the current diesel standard. Since new engines are certified throughout the year, districts are en couraged to contact ARB for the most current list of eligible engines.

Purchases of new vehicles must also be beyond the r equirements of ARB’s regulations. Thus, applicants must submit evidence of compliance with the regulations or documentation to support that Carl Moyer Program fu nds will not be used to meet regulatory requirements.

Heavy-duty hybrid electric vehicle purchases are an other new vehicle purchase project type eligible for Carl Moyer Program funding. Heav y-duty hybrid-electric propulsion systems combine two motive power sources: an energ y storage system such as batteries or ultra-capacitors, and an internal comb ustion engine, turbine, or fuel cell functioning as an auxiliary power unit. An electri c motor provides partial or complete power to the wheels. In addition, energy otherwise lost as heat during braking is captured through regenerative braking to charge the energy storage system.

In order to qualify for the Carl Moyer Program, the hybrid-electric drive system must be certified using the "California Interim Certificati on Procedures for 2004 and Subsequent Model Hybrid-Electric Vehicles, in the Urban Bus an d Heavy-Duty Vehicle Classes." These test procedures provide a method to quantify the emission benefits of a hybridelectric drive system which is not possible through engine certification methods. At this time, one gasoline hybrid-electric drive system for use in urban buses is certified to the optional NOx standards at 0.6 g/bhp-hr and is class ified as an alternative fuel bus.

Average Banking and Trading (ABT) engines (i.e., al l Family Emission Limit (FEL)-certified engines) are not eligible to partic ipate in the Carl Moyer Program for new vehicle purchase projects since emission benefits f rom an engine certified to an FEL level are not surplus emissions.

B. Repower

Vehicle repower refers to the replacement of an exi sting engine with a newer engine

certified to lower emission standards. For the Car l Moyer Program, existing HDV engines, regardless of model year, must be repowere d with an ARB certified engine, Model Year 1991 or newer. Engine repowers are allo wed only when the highest available ARB verified retrofit is installed as par t of the repower project. All other eligibility criteria must also be met. Under the C arl Moyer Program, funding is notI-9 ON-ROAD HEAVY-DUTY VEHICLES

available for projects in which spark-ignition engi nes (i.e., natural gas or gasoline, etc.) are replaced with new diesel engines.

Replacement of an old mechanical engine with a newe r mechanical engine that is certified to a lower NOx emission standard may be c ost-effective. (Mechanical engines are those having mechanically-controlled injection timing. These engines are common in pre-1991 models). Some air districts have also expressed interest in mechanical-to-electronic engine repowers for on-roa d heavy-duty engines. Although substantial NOx emission reductions may occur in th ese types of projects, installation of an electronically controlled engine into a mechanic al engine platform is difficult due to the significant differences in fuel and electrical systems. Thus, mechanical-to-electronic engine repower projects will be considered on a cas e-by-case basis.

Another possible repower option is the use of an en gine that was certified to a FEL level as the replacement engine. FEL engines can be fund ed for vehicle repower projects only if they are certified to a level that is below the required emission standard. Due to the possibility of emission credits being generated from FEL engine averaging, specific guidelines must be followed when calculating emissi on reductions. These guidelines are explained in the repower portion of the Project Criteria section below.

C. Retrofit

Retrofit involves modifications to an engine and/or fuel system such that the retrofitted engine does not have the same specifications as the original engine. Retrofit projects are allowed for all engine model years, regardless of mechanical or electronic control. The most straightforward retrofit projects are add- on after treatments. ARB has approved formal verification procedures for several retrofit kits and diesel emission control strategies. The verification process is on going, and districts are encouraged to contact ARB to obtain the most current list of elig ible retrofits. Retrofits may also include engine and/or fuel system component upgrade s that could be done at the time of an engine rebuild, resulting in a lower emission configuration. See Appendix F for more detailed information regarding retrofits.

D. Alternative Fuel

Districts have the option to fund the cost differen ce between conventional diesel fuel

and an alternative fuel such as alternative-diesel fuel, CNG, LNG, and LPG with matching funds. The fuel purchase must be an integ ral part of an engine purchase, repower, or retrofit.

V. Project Criteria

Reduced-emission on-road heavy-duty vehicle project s which include the purchase of a new vehicle, vehicle engine replacement (repower), and engine retrofit, can be considered for incentive funding. The project crit eria listed below for on-road heavy-duty vehicles provide districts, fleet operat ors, transit agencies, and applicantsI-10 ON-ROAD HEAVY-DUTY VEHICLES

with the minimum qualifications for the Carl Moyer Program. The primary criteria for selection are: emission reductions, cost-effective ness, and ability for the project to be completed within the timeframe of the program. Sam ple calculations that illustrate the methodology for determining emission reductions and cost-effectiveness are included in Appendices C and D.

Participating districts retain the authority to imp ose additional requirements in order to

address local concerns.

A. General

• Emission reductions obtained through Carl Moyer Pr ogram projects must not be required by any federal, state or local regulation, memorandum of agreement/understanding with a regulatory agency, s ettlement agreement, mitigation requirement, or other legal mandate.

• Projects must meet a cost-effectiveness of $14,300 per weighed ton of NOx + ROG

+ PM10 reduced calculated in accordance with the co st-effectiveness methodology discussed in this chapter.

• No emission reductions generated by the Carl Moyer Program shall be used as marketable emission reduction credits, or to offset any emission reduction obligation of any person or entity.

• No project funded by the Carl Moyer Program shall be used for credit under any federal or state emission averaging banking and tra ding program.

• Projects must have a minimum project life of three years. ARB may approve a shorter project life on a case-by-case basis. Proj ects with shorter lives may be subject to additional funding restrictions, such as a lower cost-effectiveness limit or a project cost cap.

• The contract term must extend to the end of the pr oject life.

• Funded projects must have at least 75 percent of t he vehicle’s annual miles traveled

in California.

• Potential projects that fall outside of these crit eria may be considered on a case-by-case basis if evidence provided to the air district suggests potential surplus, real, quantifiable and enforceable emission reducti on benefits.

• Vehicles operating under a compliance extension gr anted by the ARB, a local district, or the U.S. EPA are not eligible for fund ing.I-11 ON-ROAD HEAVY-DUTY VEHICLES

• Default project life for on-road projects are as f ollows:

School buses > 33,000 GVWR - New 20 years

Buses > 33,000 GVWR - New 12 years Other On-road - New 10 years Repowers + Retrofits 5 years Retrofits 5 years Applicants must provide documentation to justify a longer project life. The default project life does not consider upcoming regulatory requirements. Project life may be shorter due to regulatory requirements.

• On-road heavy-duty diesel vehicles with a gross ve hicle weight rating between 8,501 and 14,000 pounds may be considered for Carl Moyer Program funding for new, repower and retrofit projects on a case-by-cas e basis.

• All engines in new vehicle purchases and repower p rojects must be certified by the ARB for sale in California and must comply with dur ability and warranty requirements.

• All aftermarket emission controls (retrofits) must be verified by ARB.

• Air districts must consult with ARB staff to deter mine eligibility of all projects considered for funding on case-by-case basis. All projects considered on a case-by-case basis must receive ARB approval prior to receiving program funding.

B. Compliance Check

After the district receives an application for any on-road repower or retrofit project but before the district APCO signs an agreement for fun ding a project, the district must submit information regarding the project to ARB to check for outstanding violations. The process for completing the compliance check is as f ollows:

• The district shall email its ARB district liaison the registered owner’s name, vehicle identification number, California Highway Patrol nu mber, Department of Transportation number or Interstate Commerce Commis sion number for each engine to be repowered or retrofitted in the projec t. Due to the large number of vehicles that could require compliance checks, dist ricts are encouraged to submit this data as soon as possible after receipt of the application.

• The liaison will forward that information electron ically to the responsible parties at

ARB. The liaison will email the district the resul ts of the compliance check within seven working days.

• If the compliance check indicates there is an outs tanding violation the district shall inform the engine owner in writing that no disburse ment may be made until the owner provides proof that the violation has been co rrected and the fines have been paid.I-12 ON-ROAD HEAVY-DUTY VEHICLES

• If the outstanding violation is based on problems with the baseline engine (e.g., gross polluter) the new engine must be installed (i nstead of fixing the old engine), the vehicle must be operational, the engine owner m ust pay the violation and submit documentation of the violation being corrected with , or before submitting, the

invoice.

• During inspections, districts must also check for a sticker verifying engines subject to the software upgrades for diesel trucks (i.e., chip reflash) have completed the upgrade before receiving funding.

C. Purchase of New Vehicle

The following criteria apply to all on-road new veh icle purchases

• Engines must be certified to an optional, low-emis sion standard of at least 1.8 g/bhp-hr NOx + NMHC or provide at least a 30 pe rcent reduction of NOx compared to the baseline NOx emission factors for t he specific vehicle type to claim NOx reductions from the project.

• Fleets/agencies affected by upcoming fleet regulat ions may use Carl Moyer Program funding to purchase a new vehicle if the project li fe expires prior to the final compliance date for the reductions in the regulatio n. For example, if a project with a 3-year project life is funded in December 2006, the emission reductions must be surplus to any emission reductions that are require d by any regulations that apply through December 2009.

• Fleets/agencies purchasing vehicles that will be a ffected by upcoming emission standards may use Carl Moyer Program funding to pur chase a new vehicle up to the compliance date of the new standard.

• The Heavy-Duty Diesel-Engine and Vehicle Standard will be used as the baseline for determining eligibility for the purchase of a n ew on-road vehicle. Engines and vehicles certified to the Heavy-Duty Otto-Cycle Eng ine Standard may be eligible if certified to a level equivalent to the current opti onal diesel standard or 30 percent

less than the current diesel standard.

• Through 2006, the purchase of a new vehicles is el igible for the Carl Moyer Program if the engine is certified to an optional, low-emis sion standard of 1.8 g/bhp-hr NOx + NMHC or less.

• From 2007 to 2009, the purchase of a new vehicle i s eligible for the Carl Moyer Program if the engine is certified to a 0.2 g/bhp-hr NOx emission limit.

• Engines used in any ABT program are not eligible f or funding.I-13 ON-ROAD HEAVY-DUTY VEHICLES

D. Repower

The following criteria apply to all on-road repower (engine replacement) projects.

• Repower replacement engines must be an ARB certifi ed engine with a Model Year

of 1991 or newer.

• On-road engine repowers are allowed only when the highest available ARB retrofit is installed as part of the repower project.

• If a repower project does not meet the weighted co st-effective limit due to a retrofit, then the project is only eligible for the cost up t o the weighted cost-effective limit.

• The full cost of a retrofit kit included in a repo wer project may be funded subject to the $14,300 weighted cost-effectiveness limit.

• If no retrofit is shown to be technically feasible to the district and ARB, the retrofit is not required.

• Repower projects that reduce NOx emissions must be certified by ARB to a NOx reduction level of at least 15 percent from the baseline engine to claim NOx reductions from the project.

• Fleets/agencies affected by upcoming fleet regulat ions may use Carl Moyer Program funding for repower projects if the project life ex pires prior to the final compliance date for the reductions in the regulation. For exa mple, if a project with a 3-year project life is funded in December 2006, the emissi on reductions must be surplus to any emission reductions that are required by any re gulations that apply through

December 2009.

• Funding requests for other related repowering equi pment, such as the vehicle transmission, will be considered on a case-by-case basis, based upon whether it is a necessary expense, and is at the discretion of the district.

• The replacement engine used in vehicle repower pro jects may be a new, rebuilt, or remanufactured engine. Eligible rebuilt or remanuf actured engines are those offered by the original engine manufacturer (OEM) or by a n on-OEM rebuilder who demonstrates to the ARB that the rebuilt engine and parts are functionally equivalent from an emissions and durability standpoint to the OEM engine and components being replaced. Rebuild and remanufactured engines that are not re-certified to new emission standards, shall use the emission standard s associated with the original engine block.

• For repowers, replacement engines manufactured aft er September 30, 2002, that are not certified to at least the 2.4 g/bhp-hr NOx + NMHC, orI-14 ON-ROAD HEAVY-DUTY VEHICLES

2.5 g/bhp-hr NOx + NMHC with a 0.5 g/bhp-hr NMHC ca p, are ineligible to participate in the Carl Moyer Program.

• Engines that are certified to a FEL NOx or NOx + N MHC level that is lower than the required emission standard are eligible for use in vehicle repower projects. However, the emission level that can be used in cos t-effectiveness calculations for these engines would be the applicable emission stan dards and not the FEL levels.

• Replacement engines subject to the software upgrad es for diesel trucks (i.e., chip reflash) must complete the software upgrade process before being installed in a vehicle. The cost of the software upgrade, if any, is not an eligible Carl Moyer Program expense.

• Mechanical-to-electronic engine repower projects w ill be considered on a case-by-case basis.

• Funding is not available for projects to replace s park-ignition engines (i.e., natural gas or gasoline, etc.) with diesel engines.

E. Retrofit

The following criteria apply to all on-road retrofi t projects:

• Only ARB-verified retrofits are eligible for fundi ng.

• Retrofit projects that reduce NOx emissions must b e verified by ARB to a NOx reduction level of at least 15 percent from the baseline engine to claim NOx reductions from the project.

• Retrofit projects that control PM must use the hig hest level cost-effective technology available for the equipment being retrofitted. The following are the diesel PM reductions for each ARB verified level: Level 1 (2 5 percent reduction), Level 2 (50 percent reduction), or Level 3 (85 perc ent reduction).

• Fleets/agencies affected by upcoming fleet regulat ions may use Carl Moyer Program funding for retrofit projects if the project life e xpires prior to the final compliance date for the reductions in the regulation. For example, if a project with a 3-year project life is funded in December 2006, the emission reduc tions must be surplus to any emission reductions that are required by any regula tions that apply through

December 2009.

• If the retrofit device reduces both NOx and PM emi ssions and is being installed to comply with a PM requirement, only the cost of the NOx reductions is eligible for Carl Moyer Program funding.I-15 ON-ROAD HEAVY-DUTY VEHICLES

• From 2007 to 2009, retrofits of urban buses and tr ansit vehicles will be considered on a case-by-case basis. Applicants must provide d ocumentation that the retrofit will not be used to off-set a new diesel urban bus purch ase.

• The cost of the retrofit, all filters and maintena nce needed during the project life, may be paid for with Carl Moyer Program funding pro vided it meets the weighted

cost-effectiveness limit.

F. Scrap

• Scrap requirements are described in the 2005 Carl Moyer Program Guidelines, Part I, Chapter 2: Administration of the Carl Moye r Program.

G. Fuel

• Carl Moyer Program funds can not be used for fuel projects, however funds under a district's budgetary authority or fiduciary control (i.e. match funds) may be used to pay for the incremental cost of liquid or gaseous f uel, other than standard gasoline or diesel, which is integral to a covered emission reducing technology that is part of a project receiving grant funding under the Program . If all Carl Moyer Program criteria are met and the project is not a “fuel-onl y” project, the incremental cost of alternative fuel can be considered a qualified matc hing contribution from a district.

H. Glider Kits

• An engine repower for a glider kit (replacement ca b and chassis) is eligible for funding. The replacement engine must be newer than the glider kit and meet the general program criteria above.

• Glider kits are not an eligible expense under the Carl Moyer Program.

I. Heavy-Duty Trucks

Currently, most in-use heavy-duty trucks, or heavy- duty vehicles designed to carry an entire load such as long-haul, short-haul, delivery , and construction trucks, are not subject to any fleet rules. The ARB is developing a fleet rule for private heavy-duty vehicles that is tentatively scheduled to be presen ted to the Board in 2006. If approved, it may affect the project criteria for these projec ts. Eligible heavy-duty truck projects including new vehicle purchases, repowers, and retr ofits are subject to the general

criteria cited above.

• Heavy-duty trucks are eligible for funding if they meet the general program criteria

above.

• New hybrid electric vehicle (HEV) purchases will b e considered on a case-by-case

basis if the HEV is certified to the current NOx an d PM standards.I-16 ON-ROAD HEAVY-DUTY VEHICLES

J. Private Fleets

Private on-road heavy-duty diesel vehicle fleets ar e not currently regulated by a fleet regulation. The Board is tentatively scheduled to consider a proposed diesel particulate control measure for these fleets in 2006 which may affect the project criteria for these projects.

• Private fleet vehicles are eligible for funding if they meet the general program criteria

above.

K. Public and Utility Fleets

Municipal and utility-owned on-road heavy-duty dies el-fueled vehicles are not currently regulated by a fleet regulation. The ARB will cons ider a proposed diesel particulate

control measure for these fleets in December 2005 w hich may affect the project criteria for these projects. Due to low mileage, these proj ects are generally only eligible for small grant amounts.

• Public and utility fleet vehicles are eligible for funding if they meet the general program criteria listed above.

L. School Buses

School buses are vehicles used for the express purp ose of transporting students through grade 12 from home to school, school to hom e and to any school sponsored

activities.

• School buses are eligible for Carl Moyer Program f unding if they meet the general program criteria above; however, their relatively l ow annual miles traveled usually allows for minimum grant amounts.

M. Solid Waste Collection Vehicles

SWCVs are on-road heavy-duty vehicles with a GVWR o f 14,000 pounds or more that are used for the purpose of collecting residential and commercial solid waste. SWCVs are subject to a statewide in-use diesel particulat e matter airborne toxic control measure (ATCM). Projects that meet the following criteria provide emission reductions that are surplus to the regulatory requirements and may be f unded:

• Projects are subject to the general program criter ia listed above.

• Projects will be considered on a case-by-case basi s. All SWCV projects must submit compliance records as described in the SWCV rule to show that the funds will not be used to meet the rule’s requirements. The SWCV regulation requires owners to maintain compliance records including the following beginning December 31, 2004: the name of the company, address , and fleet terminal(s) namesI-17 ON-ROAD HEAVY-DUTY VEHICLES

and locations; statement of compliance; a list by v ehicle identification number of collection vehicles identifying each vehicle type, engine manufacturer, model year, family, and series; status as active fleet or back- up vehicle, and correlated to each collection vehicle; the installed diesel emission c ontrol strategy, fuel or fuel additives used as a diesel emission control strategy; and bac kup vehicle mileage. The companies must also identify out of which terminal the vehicles potentially receiving Carl Moyer Program funds operate. This information must be submitted with the application and will be forwarded to ARB by the dis tricts. ARB and/or the district will notify applicants if any additional documentation i s required.

• During 2007-2009, new SWCV purchases must meet the new vehicle purchase requirements above and must be certified to 0.2 g/b hp-hr for NOx.

• Surplus NOx reductions from retrofit projects are eligible for funding as described in

the retrofit criteria above.



### • Purchase of new vehicles, repower, and retrofit pro jects for SWCVs in group 2a (MY 1960-1987 with a total fleet of > 15 collection vehicles) of the ATCM are eligible for funding through December 31, 2006 if the follow ing are met:

− 100 percent of the vehicles in group 2a must be in compliance with the SWCV ATCM and in operation by December 31, 2006.

− 20 percent of the vehicles in group 2a would be el igible for the incremental cost of the new vehicle purchase, repower or retrofit pr oject up to the weighted

cost-effectiveness limit.

− The maximum project life for these projects is thr ee years.

• Purchase of new vehicles, repower, and retrofit pr ojects for SWCVs in group 2b (MY 1960-1987 with a total fleet of < 15 collection vehicles) of the ATCM are eligible for funding through December 31, 2007 if one of the following options are met:

− If 100 percent of the vehicles in group 2b are in compliance with the SWCV ATCM and in operation by December 31, 2006, 50 perc ent of the vehicles in group 2b would be eligible for the incremental cost of the new vehicle purchase, repower or retrofit project up to the weighted cost -effectiveness limit. The project life for 50 percent of the vehicles is three years and the remaining 50 percent is four years.

− If 100 percent of the vehicles in group 2b are in compliance with the SWCV ATCM and in operation by December 31, 2007, 25 perc ent of the vehicles in group 2b would be eligible for the incremental cost of the new vehicle purchase, repower or retrofit project up to the weighted cost -effectiveness limit. The project life for these vehicles is three years.I-18 ON-ROAD HEAVY-DUTY VEHICLES

• Purchase of new vehicles, repower, and retrofit pr ojects for SWCVs in group 3 (MY 2003-2006) of the ATCM are eligible for funding through December 31, 2007 if one of the following options are met:

− If the project is in operation by December 31, 200 6, the remaining group 3 vehicles in the fleet do not have to show complianc e with the ATCM. The project life for 50 percent of the vehicles is four years a nd the remaining 50 percent is four years.

− After December 31, 2006, 100 percent of the group 3 vehicles of the fleet must show compliance with the SWCV ATCM and be in operat ion by December 31, 2007 in order to receive funds. Fifty percent of these vehicles would be eligible for the incremental cost of the p roject up to the weighted costeffectiveness limit. The project life for these ve hicles is three years.

N. Street Sweepers and Other Stop-and-Go Vehicles

Stop-and-go vehicles, such as street sweepers, may be included in the public fleet rule scheduled to be considered by the Board in December 2005. This may affect the project criteria for these projects.

• Street sweeper projects that are surplus to regula tions are eligible for funding for the purchase of a new vehicle, repower, and retrofit pr ojects. See the general program

criteria listed above.

O. Transit Fleet Vehicles (Non-Urban Buses and Tran sit Vehicles)

Transit fleets include commuter service buses and o r transit fleet vehicles that are not urban buses. These fleets are subject to a statewi de in-use fleet rule that impacts vehicles with a GVWR of 8,501 pounds or greater and are powered by a heavy-duty engine fueled by diesel or alternative fuel that ar e owned or operated by a transit

agency.

• Projects are subject to the general program criter ia listed above.

• Projects will be considered on a case-by-case basi s. Beginning in January 2006, transit agencies are required to submit annual docu mentation of compliance with the

transit fleet rule to ARB for all transit vehicles that are not urban buses. Districts will work with ARB to determine if applicants are in com pliance with the regulatory requirements and to ensure that Carl Moyer Program funds will not be used to meet these requirements. Transit agencies are not requi red to submit any additional regulatory compliance information with the Carl Moy er Program application and will be notified if districts and/or ARB require additio nal documentation.

• Through 2006, purchases of new vehicles by transit agencies are eligible for Carl Moyer Program funding if the engine is certifi ed to the optional standard of 1.8 g/bhp-hr NOx + NMHC.I-19 ON-ROAD HEAVY-DUTY VEHICLES

• From 2007 to 2009 purchases of new vehicles are el igible for funding if the engine is certified to 0.2 g/bhp-hr NOx.

• Transit agency fleets established before January 1 , 2007 are eligible for Carl Moyer Program funds for new, repower and retro fit projects through December 31, 2007 if documentation is provided that shows: 1. The whole fleet has met the 3.2 g/bhp-hr NOx fle et average, and 2. Diesel PM reductions of 40 percent compared to J anuary 1, 2005 PM levels. These projects shall have a four year project life if installed and in operation by December 31, 2006 and a three year project life if installed and in operation by December 31, 2007.

• Transit agency fleets established before January 1 , 2007 are eligible for Carl Moyer Program funds for purchases of new vehic les, repower and retrofit projects if documentation is provided that shows: 1. The whole fleet has met the 2.4 g/bhp-hr NOx fle et average, and 2. Diesel PM reductions of 80 percent compared to J anuary 1, 2005 PM levels or equal to 0.01 g/bhp-hr times the total number of tr ansit fleet vehicles in the current fleet, whichever is greater. These projects may have the default project life.

• Transit agency fleets established after January 1, 2007 are eligible for Carl Moyer Program funds for purchases of new vehic les, repower and retrofit projects through December 31, 2007 if documentation is provided that shows: 1. The whole fleet has met the 2.4 g/bhp-hr NOx fle et average, and 2. Diesel PM reductions of 50 percent compared to t he fleet’s baseline when

established. These projects shall have a five year project life if installed and in operation by December 31, 2007, four year project life if instal led and in operation by December 31, 2008 and a three year project life if installed and in operation by December 31, 2009.

• Transit agency fleets established after January 1, 2007 are eligible for Carl Moyer Program funds for purchases of new vehic les, repower and retrofit projects beginning January 1, 2008 if documentation is provided that shows: 1. The whole fleet has met the 2.4 g/bhp-hr NOx fle et average, and 2. Diesel PM reductions of 80 percent compared to t he fleet’s baseline when

established. These projects may have the default project life.

P. Urban Transit Buses

An urban transit bus is a passenger-carrying vehicl e powered by a heavy heavy-duty diesel engine with a load capacity of fifteen or mo re passengers and intended primarily for intra-city operation, short rides and frequent stops. Urban transit buses statewideI-20 ON-ROAD HEAVY-DUTY VEHICLES

are subject to an in-use and new vehicle purchase r egulation that requires transit agencies that own, operate or lease urban buses to choose a diesel-fuel or alternative fuel path and follow the requirements a s described for each fuel path.

• Projects are subject to the general program criter ia listed above.

• Projects will be considered on a case-by-case basi s. In January of each year, transit agencies are required to submit annual documentatio n of compliance with the transit

fleet rule to ARB for all urban buses. Districts w ill work with ARB to determine if applicants are in compliance with the regulatory re quirements and to ensure that Carl Moyer Program funds will not be used to meet t hese requirements. Transit agencies are not required to submit any additional regulatory compliance information with the Carl Moyer Program application and will be notified if districts and/or ARB require additional documentation.

• For urban bus new vehicle projects, only the porti on not funded by the Federal Transit Administration (FTA) is eligible for Carl M oyer Program funding. Proper documentation must be provided. The full increment al cost for an urban transit bus that is not funded by FTA may be granted under the Carl Moyer Program. Operation and maintenance costs are not eligible for Carl Moy er Program funding.

• Through 2006, alternative fuel new bus purchases a re eligible for Carl Moyer Program funds if the engine is certified to at least the optional standard of 1.8 g/bhp-hr for NOx + NMHC.

• Through 2006, diesel fuel new bus purchases are el igible for Carl Moyer Program funds if the engine is certified to 0.2 g/bhp-hr fo r NOx.

• From 2007 to 2009 new bus purchases are eligible f or funding if the engine is certified to 0.2 g/bhp-hr NOx.

• All urban bus fleets established before January 1, 2005 are eligible for Carl Moyer Program funds for the purchase of a new bus, repower and retrofit projects if documentation is provided that shows: 1. The whole fleet has met the 4.8 g/bhp-hr NOx ave rage, and 2. PM reductions of 85 percent compared to January 1, 2002 PM levels or equal to 0.01 g/bhp-hr times the total number of current die sel-fueled active fleet buses, whichever is greater. These projects may have the default project life.

• All urban bus fleets established after January 1, 2005 are eligible for Carl Moyer Program funds for the purchase of a new bus, repower and retrofit projects through December 31, 2006 if documentation is provided that shows: 1. The whole fleet has met the 4.0 g/bhp-hr NOx ave rage, and 2. May not have a diesel PM emission total exceedin g 0.05 g/bhp-hr (exhaust emission value) times the total number of diesel-fu eled buses in the active fleet.I-21 ON-ROAD HEAVY-DUTY VEHICLES

These projects shall have a three year project life if installed and in operation by December 31, 2006.

• Urban bus fleets established after January 1, 2005 are eligible for Carl Moyer Program funds for the purchase of a new bus, repower and retrofit projects if documentation is provided that shows: 1. The whole fleet has met the 4.0 g/bhp-hr NOx ave rage, and 2. May not have a diesel PM emission total exceedin g 0.01 g/bhp-hr (exhaust emission value) times the total number of diesel-fu eled buses in the active fleet. These projects may have the default project life.

• New hybrid electric bus (HEB) purchases will be co nsidered on a case-by-case basis, if the HEB is certified to the current NOx a nd PM standards.

VI. Cost-Effectiveness Calculations

To receive Carl Moyer Program funding, each project must meet the maximum cost effective threshold of $14,300 per weighted to n of covered pollutants reduced. Only funds provided by the Carl Moyer Program and l ocal district matching funds are to be used in determining cost-effectiveness.

The emission factors in the tables of Appendix B re flect preliminary data developed by ARB staff as part of a comprehensive effort to upda te the emissions models used for

on-road motor vehicles and off-road mobile sources. These draft data were made available on ARB's website in early 2005, but are s ubject to change as staff completes its analyses and the associated model development. Appropriate emission factors as a function of vehicle type and model year are illustr ated in Appendix B. ARB staff will issue Carl Moyer Program Advisories to update the t ables as necessary.

The converted emission standards used in the calcul ations are the standards described in the emission standard section of this chapter th at have been adjusted using the fuel correction factors and NOx fraction factors in Appe ndix B. It is important to note that

urban buses have different standards than other hea vy-duty vehicles.

Examples

On-road project calculations are generally mileage based. However, some projects such as stop-and-go vehicles can use fuel-based cal culations.

For a purchase of a new vehicle, the baseline will be an engine certified to the current standard. The reduced technology will be an engine certified to the current optional standard or 30 percent less than the current standa rd. For repower projects, the baseline will be the model year of the existing eng ine that would have been rebuilt. The reduced technology will be the engine certified to at least 5.0 g/bhp-hr of NOx that will be installed instead of the rebuilt engine. The ba seline for a retrofit project is theI-22 ON-ROAD HEAVY-DUTY VEHICLES

existing engine. The reduced technology is the ver ified level of emission reductions for

the retrofit.

A detailed description of how to calculate cost-eff ectiveness can be found in Appendices C and D.

VII. Minimum Project Application Requirements

A. Application

The applicant must provide the minimum information listed in Table 1-6.

A disclosure must also be included stating that the proposed project has not been funded and is not being considered for funding by a nother air district, ARB, or any other public agency. Any applicant who is found to have submitted multiple applications for the same project may be banned from submitting futu re applications to any and all Carl Moyer Program solicitations and may be subject to criminal sanctions. A project funded cooperatively by multiple air districts is e ligible for funding if the project parameters are coordinated amongst the participatin g districts and the project meets all applicable Carl Moyer Program criteria. Applicants are allowed to re-apply for project funding if a previous application has been rejected and is no longer being considered for funding.

Third party applications are not allowed. The owne r of the engine must sign and agree to the application. However, a third party (e.g. e ngine dealer or distributor) may complete an application or part of an application o n an owner’s behalf. Applications must include a signature section for third parties. The third party signature section must include signature and date lines, and blanks for th e third party to list how much they are being paid, if anything, to complete the applicatio n and what source of funds are being used to pay them. To make the Carl Moyer Program a ccessible to all potential applicants, including applicants that cannot afford to hire third party assistance, districts are encouraged to provide technical assistance to a pplicants in completing the application.I-23 ON-ROAD HEAVY-DUTY VEHICLES Table 1-6 Minimum Application Requirements for On-Road Heavy- Duty Vehicle Projects

Applicant Information Organization, Company or Individual Name

Street Address City, County, State, Zip Code Primary Contact Name Primary Contract Phone Number Person with Contract Signing Authority Person who Filled out Funding Application Project Address (if different from above)

Vehicle Information Vehicle Type (Solid Waste Collection Vehicle, Street Sweeper, School Bus, Urban Bus, Other Transit Vehicle, Other Heavy-Heavy Duty Vehicle, Other Medium-Heavy Duty Vehicle, or Other Light-Heavy Duty Vehicle) Vehicle Identification Number (VIN)

Vehicle Make

Vehicle Model

Model Year

Vehicle GVWR

Vehicle License Plate Number Department of Transportation Number (if interstate) California Highway Patrol CA Number Projected Year of Purchase of New Vehicle

Baseline Vehicle Fuel New Vehicle Vendor (optional)

Activity Information Percent Operation in California Percent Operation in District Project Life

Annual Miles Traveled or Gallons Fuel Used

Electronic Monitoring Unit (EMU) Will a new eligible EMU be installed as part of this project? (yes/no)

EMU Make

EMU Model

EMU Model Year

EMU ID Number EMU Cost (optional)

ADDITIONAL INFORMATIONNEW PURCHASE PROJECTS ONLY Engine Make Engine Model Engine Year Engine Serial Number NEW PURCHASE (cont.) ARB Certification Executive Order (if Engine Certified to Alt. NOx Standard) Fuel Type Baseline Fuel Type for Main and (if applicable) Auxiliary Engine Auxiliary Engine Make, Model, Year, Serial Number, Horsepower, Tier, Fuel, and Family (if applicable)

Baseline Cost

New Vehicle Cost

ADDITIONAL INFORMATIONREPOWER PROJECTS ONLY

Baseline Main Engine Family Engine Make Engine Model Engine Year Engine Serial Number Fuel Type

Reduced Emission Main Engine Family Engine Make Engine Model Engine Year Engine Serial Number Fuel Type

ARB Executive Order Number (If Engine Certified to Alt NOx Standard) Baseline and Reduced Auxiliary Engine Make, Model, Year, Serial Number, Horsepower, Tier, and Engine Family (if applicable) Engine Remanufacture Cost Newer Engine Cost Newer Engine Installation Cost

ADDITIONAL INFORMATIONRETROFIT ONLY Engine Family, Make, Model, Year, and (if applicable) Tier Engine Serial Number Fuel Type

Retrofit Device Make and Serial Number

ARB-Verified Retrofit Device
Retrofit Device ARB Executive Order

Retrofit Device Serial Number Verification Level (Level 1, 2 or 3) ARB-Verified NOx Reduction (%) ARB-Verified PM Reduction (%) ARB-Verified ROG Reduction (%)

Retrofit Device Cost Cost of Retrofit Installation (optional) Cost of Retrofit Maintenance for Project Life (optional)I-24 ON-ROAD HEAVY-DUTY VEHICLES

B. Reporting and Monitoring

Reporting and monitoring requirements for districts are described in the Administrative Chapter of these Guidelines.

Fleet operators and transit agencies participating in the Carl Moyer Program are required to keep appropriate records during the lif e of the funded project as determined by the district and ARB. Records must contain, at a minimum, total miles traveled in and outside of California, fuel usage, and maintena nce and repair information. Records must be retained and updated throughout the project life and made available at the request of the district or ARB.

VIII. References

ARB, 2002a. Air Resources Board. December 12, 200 2. California Exhaust Emission Standards and Test Procedures for 1985 through 2003 Model Heavy-Duty Diesel Engines and Vehicles. http://www.arb.ca.gov /msprog/onroadhd/85- 03hddtps_levhdg02_clean_11-14.doc

ARB, 2002b. Air Resources Board. December 12, 200 2. California Exhaust Emission Standards and Test Procedures for 2004 and Subseque nt Model Heavy-Duty Diesel Engines and Vehicles. http://www.arb.ca.gov/msprog/onroadhd/2004hddtps_le vhdg02_clean_11-13.doc

ARB, 2004. Air Resources Board. June 4, 2004. Di esel Particulate Matter Control Measure for On-road Heavy-duty Diesel-fueled Reside ntial and Commercial Sold Waste Collection Vehicles. http://www.arb.ca.gov/regact/ dieselswcv/fro2.doc

ARB, 2005. Air Resources Board. January 7, 2005. Staff Report: Proposed Modifications to the Fleet Rule for the Transit Age ncies and New Requirements for Transit Fleet Vehicles. http://www.arb.ca.gov/regac t/bus04/isor.pdfII-1 FLEET MODERNIZATION Chapter Two

HEAVY-DUTY ON-ROAD FLEET MODERNIZATION

This chapter adds a fleet modernization source cate gory to the Carl Moyer Program. Fleet modernization provides incentives to replace old high-polluting heavy-duty vehicles with newer, lower emission replacement veh icles. The fleet modernization source category provides real emission benefits by retiring the high polluting vehicle earlier than would have been expected through norma l attrition. Carl Moyer Program funds for fleet modernization projects are used to offset part of the cost of the replacement vehicle. Project funds also pay for a diesel particulate emission reduction

device to further reduce emissions and an electroni c monitoring unit to verify miles

traveled in California and the district. An additi onal vehicle replacement strategy

included in fleet modernization is the tiered trans action. A tiered transaction project combines the purchase of a new vehicle certified to the optional NOx standard by one owner with the replacement of an old vehicle by a s econd owner.

I. Introduction

Heavy-duty diesel trucks are durable and stay in op eration for an average of 18.5 years. Old trucks contribute disproportionately to the sta te’s NOx, ROG, and PM10 emissions. Pre-1990 heavy-duty trucks emit one and a half time s as much NOx and two and a half

times as much PM10 as a truck that meets current st andards. These old trucks tend to be driven by relatively low-income operators and ar e concentrated in specific industrial sectors. Generally, the income generated from the old trucks operating in low paid vocations does not justify the purchase of a newer truck, even with the improved fuel economy, reduced maintenance costs, and fewer downt ime expenses of a newer truck. These old trucks continue operating until they dete riorate to a point that it does not make economic sense to repair them.

The Carl Moyer Program for on-road vehicles was des igned to pay for the incremental purchase cost of a new vehicle that is cleaner than the required emission standards. However, the owners of the oldest trucks cannot aff ord to buy a new vehicle that qualifies for incentive funds. It is unlikely that the old truck owners would be willing to

invest in a newer truck since the old truck is stil l operating. In addition, operators of old

trucks do not have an incentive to sell their truck s since the market price for the old trucks is undervalued relative to its utility to th e truck owner. Traditional scrap programs, which provide incentives to scrap a vehic le, may not lower emissions from the old, heavy-duty sector because the old, scrappe d truck is likely to be replaced with

another affordable old truck.

Recognizing that resources were not available to ge t old, high polluting vehicles off the road, AB 1394 was passed in 2004 directing ARB to c onsider fleet modernization as a potential project under the Carl Moyer Program. As such, the Air Resources Board (ARB or Board) has created a source category that p rovides incentive funds to replace old vehicles that were unlikely to be removed from operation with newer, cleaner vehicles. The incentives provided by the Carl Moye r Program change the economics ofII-2 FLEET MODERNIZATION

vehicle replacement, making it economically feasibl e for owners who could not previously justify the expense.

II. Emissions

According to ARB’s motor vehicle inventory, 1990 an d older vehicles account for 33 percent of California’s heavy-duty fleet. This equates to about 58,800 pre-1991 and older heavy-duty vehicles traveling over four milli on miles per day statewide. In 2005,

these vehicles will emit about 107 tons of NOx and three tons of PM10 per day, as

reflected in Table 2-1. The number of these old tr ucks will decrease to slightly over 32,000 by 2010, but this gradual decline is not suf ficient if California is to achieve its air quality goals. This is of particular concern becau se emissions from older trucks often occur in environmental justice areas, such as ports , which are heavily impacted by high

volumes of truck traffic.

Table 2-1

Statewide Calendar Year 2005 Contribution of Pollutants by On-Road Heavy-Duty Ve hicles

1990 Model Year and Older*

Population NOx ROG PM10

2005 58,775 107 6 3

2010 32,155 43 3 1

*EMFAC2002 v2.2 (April 03)

Using data from the United States Census Bureau 200 2 Economic Census - Vehicles and Use Survey [U.S. Census Use Survey], ARB staff determined that in California there are specific industrial sectors that have the highest concentration of old vehicles. Most significant to the fleet modernization categor y are the vocations with the highest numbers of 1990 and older trucks in service. Appro ximately 60 percent of the mining fleet is 1990 and older; 55 percent of the trucks e ngaged in agriculture and forestry are 1990 and older; and, 43 percent of the construction fleet is 1990 and older. In addition to these fleets, it is widely recognized that haule rs moving goods from California’s ports and rail yards utilize the oldest trucks in the fle et.

The concentration of old trucks in specific vocatio ns generally occurs through a series of

sales of the individual trucks. Trends in the indu stry show that fleets which normally

utilize new trucks turn over their trucks in three to five years. The vehicles are then sold to operators that drive high mileage in a well-paid vocation. After several years of use, the vehicle is sold again, moved into a low-paid, l ow-mileage sector and driven until it deteriorates to the point where it does not make ec onomic sense to repair it. The owners of the oldest vehicles tend to buy another o ld vehicle to replace the truck that has deteriorated, and do not normally purchase a ne w or newer vehicle. Data from the U.S. Census Use Survey supports this claim: four o ut of five newer trucks (<5 years old) are purchased as new vehicles, while four out of five old trucks (>15 years old) are purchased as used vehicles.II-3 FLEET MODERNIZATION

III. Regulatory Requirements

To help meet California’s air quality goals, the AR B has adopted engine emission standards and several mobile source fleet regulatio ns that apply to on-road trucks. In addition, ARB is currently drafting regulations tha t will be considered by the Board in late 2005 and 2006. Recently adopted regulations demonstrate the Board’s increased

commitment to reduce emissions from the in-use flee t. The standards and regulations, which may impact eligibility for all heavy-duty, on -road projects, including fleet modernization, are included in Chapter One. All Ca rl Moyer Program project emission reductions must be surplus to regulatory requiremen ts. Applicants from fleet categories must be especially cognizant of the impact of recen tly adopted and upcoming requirements, such as solid waste collection vehicl es and public and utility fleets.

Public and private, on-road, heavy-duty, diesel-fue led vehicle fleets, such as in-use heavy-duty trucks, are not currently regulated. Th e Board will hear a proposed diesel particulate control measure for private fleets in 2 006, which may further impact the project criteria for these projects.

Fleet modernization incentives may be used for the purchase of a new vehicle. For standard fleet modernization projects that replace an old vehicle with a new vehicle, the new vehicle must be certified to more stringent emi ssion standards than the vehicle being replaced. With tiered transaction projects, the new vehicle must be certified to ARB’s current optional NOx emission standards of 1. 8 grams per brake horsepower-hour (g/bhp-hr) of NOx through 200 6, regardless of fuel type or engine design. Beginning in 2007, the optional sta ndards will sunset and projects for new vehicle/engine must be certified to 0.2 g/bhp-h r of NOx. Since new engines are certified throughout the year, districts are encour aged to contact ARB for the most current list of eligible engines.

IV. Development of the Fleet Modernization Source C ategory

The ARB has long recognized the need to reduce emis sions from the oldest trucks in the heavy-duty diesel truck sector. In 1994, the A RB proposed a concept for retiring heavy-duty vehicles in its State Implementation Pla n for Ozone as Measure M-7. The measure envisioned the program could be self-sustai ning through the sale of the old trucks for export to overseas markets. However, th e M-7 measure was eventually withdrawn because of concern regarding the lack of funding and analyses showing that the old, high emitting trucks removed from the flee t were likely to be replaced with similar aged trucks from outside the area.

In 2001, the Sacramento Metropolitan Air Quality Ma nagement District (SMAQMD) received ARB’s approval to establish a fleet modern ization pilot program, which was funded by the Sacramento Emergency Clean Air Transp ortation program in partnership with the Sacramento Area Council of Governments (SA COG). The Sacramento program was designed to replace the oldest trucks i n a fleet by scrapping the trucks and providing a monetary incentive to purchase newer tr ucks with fewer emissions. The SMAQMD developed the concept as an alternative to o n-road repower projects. Also inII-4 FLEET MODERNIZATION

2001, the Gateway Cities Coalition of Governments, located in the area surrounding the Port of Long Beach, initiated a fleet modernization program that mirrored the Sacramento program. To ensure that incentives were changing the normal purchase practices of operators with the oldest trucks, both pilot programs required the

destruction of the old truck and a commitment to ke ep the replacement vehicle in the same location doing the same type of work. These r equirements aimed to resolve the concerns raised in response to the original M-7 mea sure.

A. Sacramento Metropolitan Air Quality Management D istrict Program

The SMAQMD in partnership with SACOG administers a fleet modernization program for the Sacramento and surrounding air districts. This region includes El Dorado, Placer, Sacramento, Solano and Yolo counties. The SMAQMD pilot program was implemented in 2002 with the expectation that data would be gathered on the replacement vehicles for five years. To date, the SMAQMD program has appropriated approximately $10 million to replace 300 trucks. T he average incentive award for the program is $35,000 with a cost-effectiveness of $8, 000/ton of NOx reduced. It is estimated that the SMAQMD program has reduced 200 t ons of NOx and 30 tons of PM10 per year. The replaced vehicles come primaril y from construction and heavy-hauling vocations.

B. Gateway Cities Council of Governments Program

The Gateway Cities Council of Governments (COG) adm inisters a program in the region surrounding the Port of Long Beach and the Port of Los Angeles. The COG is a joint powers authority whose members are the 27 cities in southeast Los Angeles County and the Port of Long Beach. The COG program has ex pended approximately $7.6 million on the replacement of 350 trucks. The average incentive award for the program is $25,000 with a cost-effectiveness of $8, 400/ton of NOx reduced. It is estimated that the COG program has reduced 193 tons of NOx and 42 tons of PM10 per year. The replacement vehicles are owned prima rily by independent operators working in port related vocations. The Gateway veh icles tend to be older and have lower mileage than the Sacramento program. Approxi mately 85 percent of the program participants are non-English speaking. The Gateway Cities program has received funding from multiple sources including the ARB, th e United States Environmental Protection Agency (U.S. EPA), the Mobile Source Air Pollution Reduction Review Committee, and the Port of Los Angeles.

C. Lessons Learned

In developing the criteria for the heavy-duty fleet modernization source category, ARB staff, in collaboration with a multi-agency workgro up, established parameters based on the legislative guidance and mandates, data from ex isting federal and state emission inventories, and data and expertise gathered from t he pilot programs. This information has been instrumental in the development of project criteria for a robust, statewide program. To insure real emission reductions, the c riteria includes requirements that assure the newly-funded truck will have the same co nfiguration as the old truck, that itII-5 FLEET MODERNIZATION

will stay in the same vocation and not move to a ne w location, and that the greatest emission reductions are realized through the use of diesel emission reduction devices. Rigorous qualifying criteria has been developed to assure that the replaced vehicle would have been operating for the project life and that the heavy-duty fleet modernization participants would have been unlikely to have replaced their old truck

with a newer truck without incentive funds. The fu lfillment of contract obligations is addressed through the use of electronic monitoring devices and monitoring and reporting requirements.

V. Key Components of the Fleet Modernization Source Ca tegory

Ensuring that the emission reductions from an incen tive program are real, quantifiable, enforceable, and surplus, is critical to the succes s of the Carl Moyer Program. Given the new niche that fleet modernization must serve, new and rigorous criteria have been developed to protect the integrity of the program. The major criteria include: eligibility of the old vehicle, vocations, model years, project li fe, weight class, salvage requirements, electronic monitoring units, funding caps, subtract ing the cost of repairs, tiered transactions, and administrative tools.

A. Eligibility of the Old Vehicle and Replacement V ehicle

To receive funding for fleet modernization projects , participants must show that the old vehicle meets the following requirements: it must be a model year 1990 or older; it must have California registration for the last three yea rs; the participant must show proof of ownership, vocation, operation, and documentation t o verify actual mileage; and the old vehicle must be turned over to an approved salvage yard for destruction, this includes requiring the engine be destroyed and the frame rai ls cut. The replacement vehicle must be model year 1999 or newer and it must be ide ntical to the old vehicle including axle configuration and body type to prevent a chang e in vocation during the life of the project. New vehicles participating in tiered tran saction projects are required to meet the optional NOx standard.

B. Vocations

One of the goals of the fleet modernization is to e nsure that participants continue to do the same type of work and do not drift to other voc ations once they have acquired a newer vehicle that is capable of traveling long dis tances with greater reliability. This restriction is necessary because the movement of a fleet modernization truck to a new

vocation would result in another old truck backfill ing the original vocation. The program requires participants to show proof of vocation for the previous three years and maintain that vocation for the life of the project.

Vocation is further emphasized by providing greater incentives to vehicles operating in vocations known to have the highest number of old t rucks in service. Targeted vocations include vehicles operating in agricultura l, construction, mining, forestry vocations, vehicles that move goods in and out of p orts and rail yards, and public fleet vehicles in low-population areas as defined in the public fleet regulations adopted by theII-6 FLEET MODERNIZATION

ARB in December 2005. Participants from the target ed vocation are eligible for a five year project life, rather than the standard three y ear project life available for other types

of vocations.

C. Model Years

To be eligible for the fleet modernization source c ategory, the old vehicle must be a model year 1990 or older. This model year was sele cted for several reasons. The

emission factors for the 1990 and older vehicle mak e it a high emitting vehicle at 21.2 grams of NOx/mile and 1.32 grams of PM/mile. The EMFAC 2002 inventory shows that there are approximately 58,000 of these old vehicles on the road today. Reducing the number of these high emitting vehicles will improve air quality. The SMAQMD pilot program originally allowed only 1983 a nd older vehicles to participate in its program. The district then modified its pilot program to allow 1986 and older vehicles. Recently, the district moved the eligibl e model year to 1990 and older vehicles because it has exhausted the number of available ap plicants with 1986 and older

vehicles. Districts should consider a similar stra tegy when establishing a fleet modernization category- initially targeting the ver y oldest trucks and then moving up the allowable age as the program progresses.

Under fleet modernization, the replacement vehicle must be model year 1999 or newer. A 1999 model year was selected due to reduced emiss ion factors, concern with consent decree engines, and affordability to participants. Dual-calibration engines manufactured from 1993-1998 are bound by ARB and U.S. EPA consen t degrees and are not eligible for Carl Moyer Program funding. Districts will nee d to verify the engine model year for 1999 model year vehicles because 1998 model year en gines may have been installed and are not eligible for funding. Experience with the Gateway COG pilot program shows that a majority of their fleet modernization participants purchased 1999 model year replacement trucks. 1999 is a popular choice because it is generally the least expensive model qualified for fleet modernization f unding. Selecting a newer, more expensive model year would make the fleet moderniza tion inaccessible to program participants that are from low-paid vocations.

D. Project Life

The project life for fleet modernization projects, with the exception of target vocations, is three-years. A three-year project life was selecte d because inventory data show the life expectancy of a 1990 on-road, heavy-duty vehicle th at is still on the road is an additional 5.5 years. This means that 50 percent o f the heavy-duty fleet 15 years and older would remain on the road for another 5.5 year s on average, while the other 50 percent would retire through attrition. It is e xpected that the old trucks volunteered for a fleet modernization project will be those wit h less remaining life. To be protective of air quality and ensure that real emission reduct ions are achieved, three years has been selected as an acceptable project life. This approach follows what has already been established in the existing regulations for th e Voluntary Accelerated Light-Duty Vehicle Retirement Program. The light-duty program is designed to retire very oldII-7 FLEET MODERNIZATION

light duty vehicles. In that program the life expe ctancy was reduced by 50 percent to

determine the credit value.

Targeted vocations are allowed a five-year project life because they are known to keep the oldest vehicles in service for more years and w ould be less likely to replace their trucks with a newer truck than the average old truc k owner. Data indicate that in these very limited target vocations, the normal practice for purchasing vehicles is to purchase vehicles of the same age or older. For these vocat ions, the data justifies allowing a five year project life.

E. Weight Class

The focus of the fleet modernization pilot programs has been the replacement of heavy heavy-duty trucks with all analysis conducted on th e heaviest class of vehicles. Fleet modernization projects will continue to focus on ve hicles having a gross vehicle weight rating of 33,000 pounds and greater. However, some districts have expressed an interest in including vehicles in the medium heavy- duty class. Districts may request inclusion of medium heavy-duty vehicles with a weig ht class rating of 19,501-33,000 pounds on a case-by-case basis.

F

. Salvage Requirements

Fleet modernization requires that the old truck be scrapped. To ensure that the vehicle will not be used again, the criteria specify that a qualified salvage yard destroy the engine as specified in the Administration Chapter o f these Guidelines and cut the frame rails of the old vehicle. This requirement has bee n established to ensure that emission reductions are real. It prevents the old trucks fr om being moved into another locale to continue emitting high levels of pollutants.

G. Electronic Monitoring Units

All fleet modernization replacement vehicles must b e equipped with an electronic monitoring unit (EMU). The EMU electronically repo rts vehicle miles traveled and the number of miles a vehicle has operated within Calif ornia and district boundaries. This requirement has been established to verify that the replacement vehicle continues to operate in the same location as the old, scrapped v ehicle.

H. Funding Caps

The fleet modernization criteria sets a maximum fun ding amount of 72 percent of the value of a used, replacement vehicle and 80 percent of the invoice price of a new vehicle. These caps are based on the maximum loan value available through lending

institutions.II-8 FLEET MODERNIZATION

I. Subtracting the Cost of Repairs

Fleet modernization projects are required to subtra ct the cost of repairs needed for the

old vehicle from the incremental cost of the new ve hicles. The cost of repairs is subtracted because it is assumed that repair costs are a normal business expense that would have been incurred by the participant had the vehicle stayed in service. The repair costs are identified during the inspection v erifying the operating condition of the

old vehicle.

J. Tiered Transactions

Tiered transactions are an additional vehicle repla cement strategy available through

fleet modernization. A tiered transaction combines the emission reductions achieved from the purchase of a new vehicle meeting the opti onal NOx standard with a basic fleet modernization project. Combining both transactions provides additional incentives to offset the cost of purchasing the vehicle meeting t he optional standard. However, linking the purchase of the new vehicle by one owne r, with the retirement of an old truck and purchase of a replacement truck by a second par ticipant, presents complexities that

are not found in the basic fleet modernization tran saction. Tiered transactions are a new concept enacted by legislation and have not bee n included in the pilot programs. Local air districts may develop and implement tiere d transactions as part of their fleet modernization component. ARB must approve a distri ct’s proposed tiered transaction component prior to implementation.

K. Administrative Tools

The ARB must review and approve local air district fleet modernization guidelines prior to the district funding fleet modernization project s. This requirement has been established because both pilot programs show there are many administrative tools needed to implement fleet modernization. These inc lude: contracts with the applicant, dealers and scrap yards; performance requirements; reimbursement procedures; pre- and post-inspections; and, monitoring and enfo rcement considerations. This requirement will help achieve ARB’s goal of establi shing a robust, verifiable, enforceable fleet modernization component that reac hes previously non-eligible sectors. As with all Carl Moyer Program components, district s are provided with outreach funds, which are approximately two percent of the Carl Moy er Program grant. In addition, there are a number of funding sources districts may use to cover in-kind costs. When using these other funding sources, districts must f ollow the guidelines for expending

those other funds.

VI. Potential Projects

As discussed, there are two types of potential proj ects available under the fleet modernization category. The first is the replaceme nt of an old vehicle (1990 or older) with the new or newer vehicle (1999 or newer). The second type of project is a tiered transaction, which links the emission reductions ac hieved from the purchase of a newII-9 FLEET MODERNIZATION

vehicle meeting the optional NOx standard with the retirement of an old vehicle (1990 and older). Under the tiered transaction pro ject, two transactions take place:

• A participant proposes the purchase of a new vehic le meeting the optional NOx

standard and estimates the cost of this transaction based on a new, heavy-duty vehicle purchase (as discussed in Chapter One, Sect ion V-C).

• This same owner identifies a standard fleet modern ization project that meets the

fleet modernization criteria and estimates the cost -effectiveness of the project.

• The combined cost-effectiveness of both transactio ns is used to determine

cost-effectiveness.

Tiered transactions could potentially be utilized b y one party that purchases new equipment meeting the optional standard and contrib utes replacement vehicles to a

fleet that has old vehicles.

In addition to replacing an old, high-emitting vehi cle with a newer, cleaner vehicle, fleet modernization requires the use of diesel emission c ontrol strategy (DECS) on all projects. An ARB-verified DECS is required on all fleet modernization vehicles. In selecting the appropriate DECS for the project, pre ference is given to the device providing the highest level of emission reductions. Examples of DECS include diesel particulate filters, diesel oxidation catalysts, an d flow through filters. Incentive funds may be used to cover the cost of DECS maintenance a nd filters needed for the duration of the project life.

The requirement for a DECS may be waived by the ARB . The waiver must be based upon the specifics of individual projects including cost, vehicle duty cycle restrictions, availability, and other factors. Additional detail s regarding the DECS requirement, including funding and data logging options, are inc luded in Section VII-C.

VII. Project Criteria

Fleet modernization projects, which include scrappi ng an old, high-emitting vehicle and replacing it with a newer, cleaner vehicle, are eli gible for incentive funding. The project criteria listed below provide the minimum qualifica tions for the Carl Moyer Program. Sample calculations that illustrate the methodology for determining emission reductions and cost-effectiveness are included in Appendix D.

Participating districts retain the authority to imp ose additional requirements in order to

address local concerns.

A. General Criteria

• Emission reductions obtained through Carl Moyer Pr ogram projects must not be required by any federal, state or local regulation, memorandum ofII-10 FLEET MODERNIZATION

agreement/understanding with a regulatory agency, s ettlement agreement, mitigation requirement, or other legal mandate.

• Projects must meet a cost-effectiveness of $14,300 per weighed ton of NOx +

ROG + combustion PM10 reduced calculated in accorda nce with the cost-effectiveness methodology discussed in this ch apter.

• No emission reductions generated by the Carl Moyer Program shall be used as

marketable emission reduction credits or to offset any emission reduction obligation of any person or entity.

• No project funded by the Carl Moyer Program shall be used for credit under any federal or state emission averaging banking and tra ding program.

• In funding fleet modernization projects, the repla cement vehicle must reduce NOx emissions by at least 15 percent from the old vehic le emissions.

• Carl Moyer Program grants can be no greater than a project’s incremental cost. The incremental cost is the cost of the project minus t he baseline cost. The incremental cost shall be reduced by the value of any current f inancial incentive that reduces the project price, including tax credits or deductions, grants, or other public financial

assistance.

• Fleet modernization projects have a minimum projec t life of three years. Project life is the number of years that a Carl Moyer Program pr oject must operate in California under the conditions specified in the grant funding agreement.

• The default project life does not consider upcomin g regulatory requirements. Project life may be shorter due to regulatory requirements.

• Fleet operators with vehicles in open vocation cat egories are eligible to receive funding for a maximum of five vehicles. There is n o restriction on the number of vehicles per fleet that can be funded in targeted v ocation categories.

• Fleet modernization project life must be equal to the project contract life.

• Vehicles equipped with glider kits are not eligibl e to participate in the fleet modernization category; this includes both old and replacement vehicles. Glider kits are replacement chassis and cab for on-road heavy-d uty vehicles. Glider kits are identified with a vehicle identification number (VI N) starting with the letters “GL”.

• Potential projects that fall outside of these crit eria may be considered on a case-by-case basis if evidence provided to the air district suggests potential surplus, real, quantifiable and enforceable emission reducti on benefits.II-11 FLEET MODERNIZATION

• Air districts must consult with ARB staff to deter mine eligibility of all projects considered for funding on a case-by-case basis. Al l projects considered on a case-by-case basis must receive ARB approval prior to receiving program funding.

B. Participant Requirements

The following categories of vehicles are eligible f or Carl Moyer Program funding:

• Open Category : Vehicles from any vocation or fleet size are eli gible for funding provided the participant submits conclusive documen tation of annual mileage and vehicle usage in California. The maximum project l ife is three years.

• Targeted Vocation Category : Vehicles operating in agricultural, construction

, mining, port hauling, and forestry vocations, or ve hicles that move goods in and out of ports and rail yards may apply as a targeted voc ation. The participant is required to submit conclusive documentation of annual mileag e and vehicle usage in California. The maximum project life is five years

.

• The old vehicle must have both engine and chassis of model year 1990 or older.

• The old vehicle must have been registered in Calif ornia for the previous three years.

• The old vehicle must be in operational condition t o qualify for funding. Operating condition must be determined through a California H ighway Patrol’s Biennial Inspection of Terminals (CHP BIT) or equivalent ins pection. The inspection must identify any needed repairs and the estimated cost of the repairs. The district will also verify the operating condition of the truck by a visual and operational inspection. If the district cannot conduct a pre-inspection, th e ARB may approve one of the following methods on a case-by-case basis:

− The motor carrier company may submit a completed C HP 90-Day Safety Inspection Form documenting the inspection and the estimated cost of any repairs.

− A participating dealership or motor company may co nduct the inspection of the old vehicle and provide pictures verifying the vehi cle condition. The dealer must provide a completed CHP 90-Day Safety Inspection Fo rm and documentation of any necessary repairs. The participant will pay th e cost of the inspection.

− Other methods as approved by ARB.

• The participant must currently own and operate the old vehicle. If it is unclear whether a vehicle is owned or leased by a participa nt, the district will determine whether the vehicle is eligible.II-12 FLEET MODERNIZATION

• Participants must submit documentation of annual m iles traveled for the previous three years to determine cost-effectiveness. Exam ples of documentation include: logbooks, fuel records, and, maintenance records or tax records.

• The participant must maintain replacement value in surance coverage for the project

life.

• The participant must be in compliance with air qua lity laws; all outstanding citations must be paid up.

C. Replacement Vehicle Requirements

All replacement vehicles must meet the following co nditions before funding is awarded to the participant.

• Model Year: The replacement vehicle must have bot h an engine and chassis model year of 1999 and newer.

• The replacement vehicle must operate in the same v ocation for the project life. The participant must stay in the contracted vocation fo r a minimum of 85 percent of the miles, as specified in the application. If a chang e of vocation is required to stay in operation, a written explanation must be provided t o the district and approved by the

ARB.

• The annual mileage of the replacement vehicle must not exceed 150 percent of the baseline project mileage, except as approved by the district and ARB.

• Engine Horsepower Requirements: The horsepower ra ting for the replacement vehicle engine must not be greater than 120 percent of the original manufacturer rated horsepower (baseline horsepower) for the old vehicle engine. This is necessary because engine horsepower is related to t he emissions produced by heavy-duty diesel engines. Auditing of the replace ment vehicle's horsepower may occur throughout the length of the agreement.

− Participants must use the horsepower rating listed on the old engine tag. If the engine tag is not legible, a dynamometer test can b e used to determine the horsepower rating. The results of a dynamometer te st will take into account a 15 percent loss in actual horsepower, based on tran smission loss. The participant must pay the cost of dynamometer testin g.

− In the event the replacement engine horsepower is more than 20 percent greater than the old vehicle, it must be derated (reduced) to not exceed the 20 percent allowable increase. The 20 percent allowable incre ase in horsepower is

calculated as follows:

(Old Engine Horsepower) x (1.20) = Maximum New Engi ne Horsepower

(Example: 300 HP x 1.20 = 360 HP)II-13 FLEET MODERNIZATION

− In limited situations, the district may approve a greater than 20 percent increase in horsepower.

• Weight Class: Eligible vehicles must have a Calif ornia heavy-heavy gross vehicle weight rating of 33,000 pounds. Vehicles having a California medium heavy-duty weight rating of 19,501-33,000 pounds may be eligib le upon the request of the district on a case-by-case basis. The replacement vehicle must be in the same weight rating as the old vehicle.

• Body and Axle Configuration: The replacement vehi cle must have the same axle and body configuration as the old vehicle. The dis trict may allow slight changes based on the latest technology. Changes must be re quested and approved prior to the purchase of the replacement vehicle.

• Warranty Requirements: All participants must purc hase a minimum of a one-year or 100,000-mile major component engine warranty for th e replacement vehicle. The warranty must cover parts and labor. It is recomme nded that the highest grade warranty be purchased in order to avoid expensive r epairs in the future. No Carl Moyer Program funds will be issued for mainten ance or repairs related to the operation of the vehicle. The participant takes so le responsibility for ensuring that the vehicle is in operational condition throughout the agreement period.

• ARB Verified Diesel Emission Control System (DECS) : An ARB-verified DECS is required on all replacement vehicles.

− In selecting the appropriate DECS for the project, preference shall be given to the DECS providing the highest level of NOx and PM1 0reductions.

− The DECS must be installed prior to vehicle delive ry to the participant and must stay in operation on the replacement vehicle for th e project life.

− The cost of the device, and all filters and mainte nance of the filters needed during the project life, may be paid for with incen tive funding provided it meets

the cost-effectiveness limit.

− Upon approval of the ARB, the district may waive t he requirement for installation of the DECS. The waiver must be based upon the spe cifics of individual projects, including cost, vehicle duty cycle restri ctions, availability, and other

factors.

− Data-logging may be conducted on the old vehicle t o determine the proper DECS device needed for the replacement vehicle. Data-lo gging, which is the collection of exhaust temperatures, must be conducted while a vehicle is in service. The information gathered from the old vehicle is applie d to the replacement vehicle. Data-logging may be paid for with incentive funding , if it meets the

cost effectiveness limit.II-14 FLEET MODERNIZATION

− The participant must maintain the DECS as specifie d by the manufacturer’s warranty requirements. The participant must provid e maintenance reports to the district as required.

− If an ARB-approved DECS is not available at the ti me the replacement vehicle is purchased, a DECS will be installed when a DECS com patible with the engine and the vehicle duty cycle has been verified by ARB , unless otherwise stipulated at the time of purchase by the district.

− Vehicles outfitted with dual exhaust will be addre ssed on a case-by-case basis. The district will determine if no DECS is required, or if a DECS shall be installed on both exhaust tailpipes, or if the exhaust shall be converted to a single pipe

with a DECS.

− Additional information on retrofit systems is incl uded in Appendix F - Retrofit Emission Control Systems.

• Electronic Monitoring Unit (EMU): The EMU electro nically reports vehicle miles traveled and the number of miles a vehicle has oper ated within the California and district boundaries. An EMU is required on all rep lacement vehicles.

− Installation and maintenance of the EMU may be inc luded in the cost of the project.

− If an affordable and suitable EMU is not available at the time the replacement vehicle is ready for delivery, the vehicle may be d elivered to the applicant. The owner will be required to return the vehicle to the dealer when an EMU is

available for installation. Verification of the in stallation must be submitted to the district following installation.

− EMU data must be reported to the district for the project life.

− If the EMU is not functioning properly as indicted by the district, the participant will submit mileage reports as specified the distri ct.

− Upon approval of the ARB, the district may waive t he requirement for installation

of an EMU.

• Engine and Emission Control Modifications: Emissi on controls on the replacement vehicle engine cannot be modified in any manner. U nauthorized modification to engine performance (including changes in horsepower ), emission characteristics, engine emission components (not including repairs w ith like-original equipment manufacturers replacement parts), or any other modi fications to the engine’s

emission control function or the EMU are not allowe d.II-15 FLEET MODERNIZATION

D. Tiered Transactions

Districts may establish a tiered transaction compon ent within their fleet modernization source category. Tiered transactions were added to the Carl Moyer Program with the enactment of AB 1394 in January 2005, but were not included in the fleet modernization pilot programs. As a result, there is no experienc e or model to guide districts in implementing a tiered transaction component. ARB m ust approve district plans for implementing a tiered transaction component prior t o funding projects in this unmapped territory.

A tiered transaction combines the emission reductio ns achieved from the purchase of a new vehicle meeting the optional NOx standard with the replacement of a 1990 or older vehicle. In the tiered transaction, the purchaser of a new vehicle meeting the optional

standard identifies a standard fleet modernization project that meets the fleet modernization criteria, including the participation of a 1999 or newer replacement vehicle. A second participant acquires the replace ment vehicle and scraps a 1990 or older vehicle. Tiered transaction programs should include the following elements; however, districts may request that ARB consider al ternative components.

• In determining the grant award for the purchaser o f the new vehicle, the emission benefits and cost-effectiveness of the project must include two transactions:

− Emission reductions from the currently applicable standard to the new vehicle meeting the optional standard.

− Emission reductions from the old vehicle to the re placement vehicle.

• The baseline cost for the new vehicle purchase is the cost of a new vehicle that

meets the current emission standards. The incremen tal cost eligible for funding is the cost of the vehicle meeting the optional standa rd minus cost of the vehicle meeting the existing standards. This is the standa rd method used for new, on-road Moyer projects.

− Emission reductions from the old vehicle are based on the annual mileage traveled by the old vehicle.

− The participant scrapping the old vehicle is subje ct to all fleet modernization project criteria. The participant purchasing the n ew vehicle is subject to all on-road, heavy-duty project criteria.

− The participant purchasing the new vehicle is not eligible for emission reductions from scrapping an old vehicle within his/her own fl eet.

VllI. Emission Reduction and Cost-Effectiveness Cal culations

To receive weighted Carl Moyer Program funding, eac h fleet modernization project must meet the maximum cost-effectiveness threshold of $1 4,300 per weighted ton of NOx +II-16 FLEET MODERNIZATION

ROG + PM10 reduced. State and local funds used to pay for a fleet modernization project are to be used in determining cost-effectiv eness. Any federal incentives must be discounted from the overall grant award. Appropria te emission factors as a function of vehicle type and model year are illustrated in Tabl es B-5 in Appendix B. Sample calculations for the fleet modernization category a re provided in Appendix D.

IX. Minimum Project Application Requirements

All fleet modernization applicants must provide the minimum information listed in the following table (Table 2-2).

Table 2-2

Minimum Application Requirements for Fleet Moderniz ation

Applicant Information Organization, Company or Individual Name

Street Address City, State, Zip Code Primary Contact Name Primary Contract Phone Number Person with Contract Signing Authority Person who Filled out Funding Application Project Address (if different from above)

Old Vehicle Information Vehicle Type (Solid Waste Collection Vehicle, Stree t Sweeper, School Bus, Urban Bus, Other Transit Vehicle, Other Heavy-Heavy Duty Vehicle, Other Medium-Heavy Duty Vehicle, or Other Light-Heavy Duty Vehicle)

Vehicle Vocation Vehicle Identification Number (VIN)

Vehicle Make

Vehicle Model

Vehicle Model Year

GVWR Horsepower

License Plate Number Registered Truck Owner Department of Transportation Number (if interstate) California Highway Patrol Number

Vehicle Fuel Engine Family Engine Make Engine Model Engine Year Engine Serial Number

ARB Executive Order Number (If Engine Certified to Alt NOx Standard)

New Vehicle Information (Same as Above) Retrofit Information

Retrofit Device Make

ARB-Verified Retrofit Device Name

Retrofit Device Serial Number

Retrofit Device ARB Executive Order Verification Level (Level 1, 2 or 3) ARB-Verified NOx Reduction (%) ARB-Verified PM Reduction (%) ARB-Verified ROG Reduction (%)

Electronic Monitoring Unit (EMU) Will a new eligible EMU be installed as part of this project? (yes/no)

EMU Make

EMU Model

EMU Model Year

EMU ID Number

Activity Information

Vehicle Vocation Percent Operation in California Percent Operation in District Project Life

Annual Miles Traveled or Gallons Fuel Used

Cost Information Adjusted Loan Value of Replacement Vehicle

Retrofit Device Cost Cost of Retrofit Installation (optional) Cost of Retrofit Maintenance for Project Life (optional) Cost of Retrofit Warranty (optional) EMU Cost (optional)II-17 FLEET MODERNIZATION

A disclosure must also be included stating that the proposed project has not been funded and is not being considered for funding by a nother air district, ARB, or any other public agency. Any applicant who is found to have submitted multiple applications for the same project may be banned from submitting futu re applications to any and all Carl Moyer Program solicitations and may be subject to criminal sanctions. A project funded cooperatively by multiple air districts is e ligible for funding if the project parameters are coordinated amongst the participatin g districts and the project meets all applicable Carl Moyer Program criteria. Applicants are allowed to re-apply for project funding if a previous application has been rejected and is no longer being considered for funding.

Third party applications are not allowed. The owne r of the engine must sign and agree to the application. However, a third party (e.g. e ngine dealer or distributor) may complete an application or part of an application o n an owner’s behalf. Applications must include a signature section for third parties. The third party signature section must include signature and date lines, and blanks for th e third party to list how much they are being paid, if anything, to complete the applicatio n and what source of funds are being used to pay them. To make the Carl Moyer Program a ccessible to all potential applicants, including applicants that cannot afford to hire third party assistance, districts are encouraged to provide technical assistance to a pplicants in completing the application.

In addition, the following items must accompany the completed application at the time of

submittal:

• A copy of the old vehicle title.

• Copies of California Motor Carrier Permits and per mit applications for the last three years. If the participant does not have a Motor Ca rrier Permit, submit copies of the Department of Motor Vehicle registration and proof of insurance for the old vehicle for the last three years.

• The participant must provide mileage verification for the previous three years.

• Proof of vehicle vocation for the last three years

.

• The participant may be required to provide either:

− Copies of the participant’s United States Internal Revenue Service Form 2290 (Heavy Highway Vehicle Use Tax Return) for the prev ious three years.

− United States Internal Revenue Service Schedule C.

• If the old vehicle engine tag is missing, the part icipant may be required to provide a dynamometer printout of the engine horsepower from a participating engineII-18 FLEET MODERNIZATION

dealership, or another means of obtaining the requi red information approved by the

ARB.

• The district may request any additional informatio n.

X. Administrative Requirements

Districts must establish fleet modernization polici es and guidelines before they can fund fleet modernization projects. Many administrative tools are needed to manage a reliable fleet modernization source category. This includes agreements with local dealerships and salvage yards, reimbursement proced ures, the development of contracts, etc. The ARB must approve district flee t modernization policies and guidelines prior to district implementation of a fl eet modernization category. The ARB will provide examples for district use. The distri ct’s fleet modernization guidelines must

address all of the above criteria as well as the it ems discussed in the following sections.

A. Determining Awards

Grant award determinations must be made with the fo llowing considerations:

• Funding awards are based on the average miles per year driven during the previous three years. Fleet averages can not be used. Part icipants must submit conclusive documentation of mileage including logbooks, fuel records, and maintenance

records maintained for individual vehicles.

• The incentive amount available for the purchase of the vehicle will be based upon three criteria: cost-effectiveness of the project b ased upon the weighted

NOx + ROG + combustion PM10 emission benefits as ca lculated by the district; the value of the used vehicle based upon the National A utomotive Dealership Association (N.A.D.A.) adjusted loan value or new v ehicle invoice price; and, less any costs associated with repairs noted during the vehicle inspection.

• The maximum reimbursement for all awards will be t he N.A.D.A. adjusted loan value of the replacement truck or the maximum calculated incentive -- whichever is less. The funding amount of a used , replacement vehicle shall not exceed the value of the vehicle given by the N.A.D.A. commercial vehicle gu ide adjusted loan value. The funding amount of a new replacement vehicle shall not exceed 80 percent of the invoice price.

• If suitable equipment is available and deemed cost -effective by the district, supplemental incentive funding will be provided to cover installation of a DECS

and/or an EMU.

• Incentive funding can only be used to pay for item s essential to the operation of the vehicle. Optional items, such as cigar lighters an d custom mud flaps, must be paid for at the owner’s expense.II-19 FLEET MODERNIZATION

• The participant may obtain financing to assist in the purchase of a replacement

vehicle.

B. Dealer Requirements

Districts are encouraged to establish contracts wit h dealers that are selling replacement vehicles to fleet modernization participants. Expe rience with the pilot programs has shown that dealers have provided participants with needed assistance in the application process. Vehicle dealers are encouraged to help in the application process as much as possible. If districts use vehicle dealers in impl ementing the fleet modernization category, reimbursement cannot be issued until all forms are submitted and approved by the district.

Participants may purchase the replacement vehicles from a private party, provided all required documentation is submitted. This includes warranty requirements and all other fleet modernization requirements.

Vehicle dealers are expected to do the following:

• Provide basic information about the fleet moderniz ation category. Districts will provide liaison training to dealership staff.

• Inform participants of rights and responsibilities as outlined in the district and ARB guidelines.

• Help the participants complete the application. T he vehicle dealers will ensure that the participant correctly completes the application . It is important to make sure that all information is filled out correctly and that th e participant understands the meaning of the program and the contract. The district will provide all forms and certificates as appendices to the application. Once complete, the dealer will submit the application package to the district.

To ensure that an application package is complete, the dealer will make sure that all the following items are complete and included in the pa rticipant’s submission to the district. The following must be completed before reimbursemen t can be made:

• Submit a signed and complete application.

• Provide documentation showing that the old vehicle is roadworthy. This includes documentation showing that the old vehicle has pass ed a CHP BIT inspection old vehicle in the past 90 days or conduct an equivalen t vehicle inspection and sign as appropriate. The district reserves the right to au dit the dealer’s record of inspection.

• Provide invoices of all work performed on the repl acement vehicle. The invoices must include all engine, transmission, body and oth er work performed on the replacement vehicle. Invoices must include the ins tallation of all equipment required by this program: EMU (at the discretion of the dis trict), diesel emission controlII-20 FLEET MODERNIZATION

system (at the discretion of the district), and eng ine horsepower derated, if

necessary.

• Submit digital photographs of the old vehicle and the replacement vehicle to the district. The district will specify the required d igital format. Reimbursement will not be processed until all photographs are received and verified by the district. Before submitting photographs to the district, dealers mus t verify that photographs are clear. All VIN and engine serial numbers must be l egible.

Photographs of the old vehicle must include the fo llowing views:

− Right Side - hood down.

− Front - hood down.

− Left Side - hood down.

− VIN Tag - inside vehicle or on frame rail.

− Engine - left side.

− Engine - right side.

− Engine Serial Number - either tag or stamp on bloc k.

− License plate.

− Rear.

Photographs of the replacement vehicle must include the following views:

− Right Side - hood down.

− Front - hood down.

− Left Side - hood down.

− VIN Tag - inside vehicle.

− VIN Tag - on frame rail.

− Engine - left side.

− Engine - right side.

− Engine Serial Number and Engine Information – tag.

− License plate.

− Rear.

− Electronic Monitoring Unit (in working condition).

− Diesel Emission Control Device (if available).

− Odometer Reading.

− Additional modifications (if applicable).

• Provide certification that the old vehicle will be delivered to a qualified salvage yard.

The certification must state that the vehicle will be picked up by the salvage yard within 30 days of receipt of the old truck. The co ntract must include the make, model, year, VIN, engine make, engine serial number , and the date the vehicle is expected to be delivered. It is the dealer’s respo nsibility to ensure that the salvage actually occurs, to obtain the completed Certificat e of Vehicle Destruction, and to

ensure that the Certificate of Vehicle Destruction has been filed with the district. The district will not cover the salvage costs.II-21 FLEET MODERNIZATION

• Provide documentation of replacement vehicle warra nty and registration.

• Provide proof of replacement vehicle financing. T he financing package will enable

the district to determine the reimbursement costs t hat may be accrued in case the participant defaults on the contracted performance requirements.

Prior to releasing the replacement vehicle to the p articipant, the dealer must have documentation of a district pre-inspection of the o ld vehicle and a post-inspection of the replacement vehicle. Upon request of the district, ARB may waive inspection requirements.

After the application and all required documentatio n have been approved by the district, the dealer must provide the district with proof of sale of the replacement vehicle.

C. Salvage Requirements

Destruction of the old vehicle chassis and engine p ermanently removes the old, high emitting vehicles from service. The old vehicle mu st be driven to a qualified vehicle salvage yard for destruction. Vehicle salvage yard s are required to enter into an agreement with the district to qualify for particip ation. Qualified vehicle salvage yards are required to be licensed by the Department of Mo tor Vehicles (DMV) as an auto-dismantler; have a current, valid California E nvironmental Protection Agency (Cal/EPA) Hazardous Materials Generators Permit; an d be in compliance with all local, state and federal laws and regulations.

Funding is not available for the salvage of any old vehicle. The vehicle salvage value will be negotiated between the participant, the dea lership and the salvage yard. The salvage yard operator must do the following:

• Dismantle the old vehicle within 60 days of receip t. The destruction must be done in accordance with program guidelines.

• The old vehicle’s engine must be destroyed and ren dered useless as specified in the Administration Chapter of these Guidelines

• Cut the frame rails of the old vehicle to ensure t hat the vehicle will not be used again.

• Take photographs of the destroyed engine as specif ied in the Administration Chapter of these Guidelines and the cut frame rails . Photographs of the destroyed engine block and cut frame rails must be provided t o the district within ten business days of salvaging the vehicle. The following pictu re views must be taken:

− Front of vehicle with hood down.

− Right side of vehicle with hood down.

− Left side of vehicle with hood down.II-22 FLEET MODERNIZATION

− Serial number printed either on the tag inside in the cab or on the frame rail.

− Engine side view.

− Engine serial number either stamped on the block o r on the tag.

− Destroyed engine block either in-frame or out of f rame as specified in the Administration Chapter of these Guidelines.

− Cut frame rails.

• File a “Non-Repairable Vehicle Certificate” with t he DMV using an “Application for Salvage Certification or Non-Repairable Vehicle Cer tification”.

• Upon request of the district, ARB may approve an a lternative disposition for the old

vehicle.

• Upon request of the district, ARB may approve an e xtension to the required

timeframe for vehicle destruction.

D. Pre- and Post-Inspections

To protect the integrity of the fleet modernization source category, districts must conduct a pre-inspection of the old vehicle and a p ost-inspection of the replacement vehicle. Districts are encouraged to design rigoro us pre- and post-inspection procedures. At a minimum, the inspection of the ol d vehicle must be conducted to establish that it has been in service, that it meet s the described weight class and configuration, and that costs associated with neede d repairs have been identified and deducted from the incentive award. The cost of rep airs needed for the old vehicle will be subtracted from the incremental cost of the gran t award.

Post-inspection of the replacement vehicle must be conducted to verify that the vehicle meets the contract description, including class and configuration descriptions, DECS and EMU installation, and any other items deemed ne cessary to confirm the authenticity project. Upon the request of the district, the ARB may approve an alternative method of ascertaining the authenticity of the old and replac ement vehicle.

E. Minimum Reporting Requirements

Fleet modernization reporting requirements have bee n established to verify that project participants meet contract requirements and to quan tify the emission reductions achieved through the Carl Moyer Program. Fleet mod ernization projects are subject to the following minimum reporting requirements:

• If the participant has a California Motor Carrier Permit, a current copy must be submitted to the district annually. If the partici pant does not have a California Motor Carrier Permit, the participant must provide regist ration and proof of insurance to the district annually.

• The participant must provide annual reports for th e life of the project. The report on the replacement truck will include information such as the number of hours ofII-23 FLEET MODERNIZATION

operation, miles driven in the district and Califor nia, the amount of fuel consumed in the twelve months preceding the report date, detail s regarding maintenance and servicing, and any other items specified by the dis trict.

• Participants from targeted vocation categories mus t provide documentation of

vocation on an annual basis.

• If the replacement vehicle is involved in an accid ent, the participant must report the accident to district staff within 14 days. The par ticipant will be required to provide a police report of the accident, a letter from the in surance company regarding the accident and any additional information requested b y the district. The participant is required to repair the vehicle and return it to ope ration, if possible. Down time due to an accident will be credited toward the performa nce requirements as along as the information is reported as requested and the repair s are made as soon as possible. If the vehicle is totaled, the participant and the district staff must come to an agreement regarding any requirements that still nee d to be met.

F. Compliance Checks

After the district qualifies fleet modernization pr ojects for funding, but before the district APCO signs an agreement for funding a project, the district must submit the project to ARB to check for outstanding violations. The proce ss for completing the compliance

check is as follows:

• The district shall email its ARB district liaison the contact name, address, organization or business name, DOT number, CHP numb er, and VIN for the project.

• The liaison shall then forward that information el ectronically to the responsible parties at ARB. The liaison will email the distric t the results of the compliance check within 14 working days.

• If the compliance check indicates there is an outs tanding violation the district shall inform the applicant in writing that no disbursemen t may be made until the owner provides proof that the fines have been paid.

• Clearance of the citation requires proof of repair or a “Statement of Facts” documenting that the old truck will be scrapped. T he “Statement of Facts” can be written by the dealer or the participant explaining the old truck will be scrapped as required by the Carl Moyer fleet modernization prog ram. The statement and a copy of the fleet modernization contract should be provi ded along with the penalty payment. Include the citation number on all docume nts.

G. Recovery of Incentive Funds

The district must establish a mechanism to assure t he participant fulfills all contractual obligations. This includes owning and operating th e replacement vehicle for the project life, and staying in the agreed upon vocation for t he duration of the contract.II-24 FLEET MODERNIZATION

Participants must meet an 80 percent minimum baseli ne mileage requirement for the life of the project and agree to repay a pro-rated porti on of the incentive funding for failure to fulfill the minimum performance requirements. Upon request of the district, ARB may approve an alternate minimum baseline requirement. The district will determine the method of notice and achieving fund recovery. Opti ons may include:

• List the district as co-lien holder on the title o f the replacement vehicle for the term of the agreement. The participant must submit a compl eted Uniform Commercial Code-1 Financing Statement Form to the California S ecretary of State, with a copy sent to the district, within 30 days of the purchas e of the replacement vehicle. The financing statement must have the district as the s ecured party and the vehicle

should be listed as collateral.

• The participant must be the registered owner of th e replacement vehicle for the project life. If the replacement vehicle is sold w ithin the project life, the new owner must assume the obligations under the participant’s contract with the district and comply with the terms and conditions of the contrac t. The district must approve the change in ownership prior to the sale.

XI. References

ARB 2002. California Emissions Inventory Model, EM FAC2002, v2.2 (Apr03).

ARB 2005. California Emissions Inventory Model, EM FAC2005.

Gateway Cities Council of Governments. November 200 4, Gateway Cities Clean Air Pilot Program: Truck Fleet Modernization Program G uidelines.

Sacramento Metropolitan Air Quality Management Dist rict. May 2005. Fleet Modernization Impacts on Normal Vehicle Turnover - Issue Paper.

Sacramento Metropolitan Air Quality Management Dist rict. Fall 2004, Version 3.0. The Sacramento Emergency Clean Air Transportation ( SECAT) Program, Policies

and Guidelines.

United States Department of Commerce Economics and Statistics Administration,

United States Census Bureau. 2002 Economic Census Vehicle Inventory and Use Survey, Geographic Area Series.III-1 REDUCING HDV IDLING EMISSIONS Chapter Three

REDUCING IDLING EMISSIONS FROM HEAVY-DUTY VEHICLES

This chapter addresses the project criteria for idl ing reduction technologies that may be installed on on-road heavy-duty vehicles. Projects that meet the criteria may be considered for Carl Moyer Program funding. This ch apter contains a brief overview of the engine idling practices of truck operators, emi ssion inventories, available control technology, emission reductions and cost effectiven ess calculations. This chapter expands eligible idling reduction techniques to ele ctrification projects. Information specific to electric auxiliary power units (APU) an d other zero-emission technologies is provided in Chapter 12: Zero-Emission Technologies

.

I. Introduction

Heavy-duty vehicles are employed in line-haul servi ce carrying goods across the state and throughout the nation. The majority of heavy-d uty vehicles are powered by diesel engines. Heavy-duty vehicles employed in line-haul service are typically greater than 33,000 pounds gross vehicle weight rating (GVWR), a re grouped under a Class 8 truck classification, and often accrue very high annual m ileage. It is not uncommon for a line-haul truck to accrue 100,000 miles or more ann ually. These heavy-duty vehicles (HDV) idle at low engine speeds for a significant a mount of time for various operational reasons. The low engine efficiency at these idle s peeds results in significant increases in fuel consumption and emissions.

Truck idling practices vary among different fleets, operators, and geographical locations. Two main purposes of idling are to keep the engine and fuel warm, especially in cold weather, and to heat or cool the truck’s cab/sleepe r compartment. Although technologies for reducing idling emissions from hea vy-duty trucks are commercially available, relatively high initial costs have preve nted these idling reduction strategies from being more widely utilized.

The average power demand for an APU operating under extreme climate conditions is estimated to be approximately 2.3 kilowatts (kW) f or winter conditions and 3.1 kW for summer conditions [Wallace, 2003; Lutsey, 2003]. S taff assumed that the diesel-fueled APU would provide an average of 2.7 kW power to pro vide sleeper berth comfort and electrical power for accessories.

The Carl Moyer Program can provide incentives to re duce emissions from truck idling by encouraging the purchase and installation of alt ernative idling reduction technologies. These technologies not only reduce i dling emissions from heavy-duty trucks, but can also result in fuel savings and red uced maintenance costs to truck
operators.III-2 REDUCING HDV IDLING EMISSIONS

II. Emissions

According to the Air Resources Board’s (ARB or “Boa rd”) emission inventory, idling emissions from heavy heavy-duty diesel (HHD) trucks account for approximately 29 tons per day (tpd) of nitrogen oxides (NOx), 1.6 tpd of reactive organic gases (ROG) and 0.7 tpd of particulate matter (PM10). This rep resents about 7 percent of the total NOx, ROG and PM10 emissions from this sector of veh icles in California. Idling emissions from individual trucks are significant an d the idling emission rate for HHD diesel trucks is large. For example, a single HHD truck that idles an average of 1,500 hours per year emits approximately: 564 pound s/year of NOx, 114 pounds/year of ROG and 7.6 pounds/year of PM10 from idling.

III. Regulatory Requirements

A. School Bus Idling

An airborne toxic control measure (ATCM) became eff ective on July 16, 2003, that restricts idling by school buses and other special classes of vehicles at schools. The regulation also limited the idling of these buses a nd vehicles to no more than five minutes when within 100 feet of a school. [ARB, 200 3]

B. Heavy-Duty Vehicle Idling

On February 1, 2005, an ATCM became effective that extended idling limitations beyond school buses to include diesel APUs, and hea vy-duty diesel trucks over 10,000 GVWR. The ATCM specifically limits idling o f the main engine or the operation of diesel-fueled APU systems when health, safety or operational concerns are not an issue. This regulation limits the idling of HDVs t o no more than five minutes if the truck is within 100 feet of a school or home. These requ irements apply to both California and

non-California trucks.

In addition to statewide restrictions on idling, so me local government and municipalities have ordinances restricting idling time for some ty pes of vehicles. Carl Moyer Program funding for projects must be surplus to the require ments of both the ATCM and local

ordinances.

C. Idling Restrictions

In October 2005, the Board approved a proposal that removes the exemption for idling of heavy duty trucks equipped with sleeper berths. This proposal prohibits heavy duty trucks with sleeper berths from idling more than fi ve minutes unless certain conditions are met. Beginning in 2008, model year 2006 and old er trucks may operate APUs powered by a certified diesel engine. Model year 2 007 and newer trucks may only operate an APU for longer than 5 minutes if the exh aust of the APU powered by a certified diesel engine is equipped with a level 3 PM retrofit device or is routed through the main engine exhaust with a level 3 PM retrofit device; however, the truck must not

be within 100 feet of a restricted area such as a s chool or residential area. In addition,III-3 REDUCING HDV IDLING EMISSIONS

2008 and subsequent model year heavy duty trucks ma y idle longer than longer than

five minutes in a non-restricted area if the main e ngine meets a low NOx standard of 30 g/hr.

The Board approval of the regulation means that beg inning with the 2008 calendar year the baseline for calculating the benefits of truck idle reduction projects will be the 15.1 g/hr NMHC+NOx and .087 g/hr of PM emission rat e for APUs assumed in the idling regulation. Zero-emission or near-zero emis sion technologies would be eligible for funding using the lower emission baseline.

IV. Potential Projects

A. Auxiliary Power Units

APUs are usually installed on the truck chassis out side the truck cab to provide power for the truck’s accessory loads and to keep the eng ine warm when the truck is parked. This allows the operator to refrain from idling the truck’s main engine. The extent of

labor involved in the installation of an APU on the truck depends on the configuration of the truck engine and chassis and the plumbing of it s heating/cooling system. Heating and cooling of the cab compartment are accomplished through either dedicated equipment supplied with the APU or through the truc k's existing heating and cooling system. APUs are commercially available and meet m ost of the power needs of truck operators. Some APUs are available with an electri c option for a few hundred dollars

more.

B. Truck Stop Electrification

Another strategy for reducing truck idling is the r etrofit of trucks with components such as engine block heaters, fuel heaters, electric hea ters and air conditioning for cab/sleeper areas. This strategy requires the inst allation of charging infrastructure at truck stops and rest areas. Specific information a nd project criteria pertaining to truck stop electrification is provided in Chapter 12: Ze ro-Emission Technologies.

C. Advanced Travel Center Electrification

An alternative to truck stop electrification that d oes not require truck modification has been introduced by IdleAire Technologies. Specific information and project criteria are provided in Chapter 12: Zero-Emission Technologies

.

D. Direct-Fired Heaters and Thermal Storage

Direct-fired heaters for truck heating applications are devices that use the combustion heat of a small internal combustion engine to provi de heat directly to the truck's cab/sleeper area through the use of a small heat ex changer. Because it is designed to provide heat directly from a combustion flame, the heating efficiency of these units is higher than that obtained through the truck's engin e due to reduced mechanical losses and fuel consumption. Two primary limitations of d irect-fired heaters for this applicationIII-4 REDUCING HDV IDLING EMISSIONS

are that they cannot provide cooling and that they draw on the truck's battery power during operation. Direct-fired heater technologies continue to evolve, but they have not gained widespread commercial acceptance.

Thermal storage systems provide both heating and co oling for the cab/sleeper area. This technology uses the heat of transformation ass ociated with material phase change to provide heating and cooling to the cab/sleeper a rea. However, the technology cannot provide cooling at night unless the truck's air con ditioner was used in the daytime.

V. Project Criteria

The project criteria for eligible idling reduction strategies for heavy-duty vehicles provide districts and fleet operators with the minimum requ irements for participation in the Carl Moyer Program. The criteria have been develop ed specifically for idling reduction technologies that will be installed on a heavy-duty truck to reduce the truck's idling emissions. The ARB may develop additional project criteria for idling reduction strategies if additional technologies enter the mar ket.

Idling reduction technologies provide a cost-effect ive means to reduce idling emissions from heavy-duty diesel trucks. Carl Moyer Program funds can be used to pay for a portion of the capital cost of idling reduction equ ipment as well as the installation costs.

A. General Criteria

• Emission reductions obtained through Carl Moyer Pr ogram projects must not be required by any federal, state or local regulation, memorandum of agreement/understanding, settlement agreement, miti gation requirement, or other legally binding document.

• Projects must meet a cost-effectiveness of $14,300 per weighed ton of NOx + ROG + combustion PM10, reduced calculated in accordance with the cost-effectiveness methodology discussed in this section.

• No emission reductions generated with funding from the Carl Moyer Program shall be used as marketable emission reduction credits, o r to satisfy any emission reduction obligation of any person or entity.

• No emission reductions from a project funded by th e Carl Moyer Program shall be used for credit under any federal or state emission averaging, banking and trading

program

• Carl Moyer Program grants shall be no greater than a project’s incremental cost. The incremental cost is the cost of the project min us the baseline cost. The incremental cost shall be reduced by the value of a ny current financial incentive that reduces the project price, including but not limite d to tax credits or deductions, grants, or other public financial assistance.III-5 REDUCING HDV IDLING EMISSIONS

• Projects must have a minimum project life of three years. The ARB may approve shorter project life in writing for good cause on a case-by-case basis. Projects with shorter lives may be subject to additional funding restrictions, such as a lower cost-effectiveness limit or a project cost cap.

• The contract term must extend to the end of the pr oject life.

• The default project life does not consider upcomin g regulatory requirements. Project life may be shorter due to regulatory requirements.

• Air districts must consult with ARB staff to deter mine eligibility of all projects considered for funding on case-by-case basis. All projects considered on a case-by-case basis must receive ARB approval prior to receiving program funding.

• Repower projects must provide at least a 15 percen t NOx emission benefit compared to baseline idling NOx emissions.

• 75 percent of the APU usage must be in California. The ARB may approve exceptions on a case by case basis.

• Air districts are encouraged to co-fund projects t hat will produce emission reductions

in more than one air district.

• Potential projects that fall outside of these crit eria may be considered on a case-by-case basis is evidence provided to the air district suggests potential surplus, real, quantifiable and enforceable emission reducti on benefits.

• Air districts must consult with ARB staff to deter mine eligibility of all projects considered for funding on a case-by-case basis. Al l projects considered on a case-by-case basis must receive ARB approval prior to receiving program funding.

B. APUs and Alternative Technologies

• The engine used in an APU must meet current emissi on standards, be certified by the ARB for sale in California, and comply with all applicable durability and warranty requirements.

• If an internal combustion engine APU is available with an electric plug-in option, the incremental cost of the plug-in option is eligible for Carl Moyer Program funding.

• An hour-meter or other means to measure usage must be installed with an APU to track operation. The participant shall provide thi s information to ARB or the district upon request during the life of the project.III-6 REDUCING HDV IDLING EMISSIONS

• The default load factor for the engine used in an APU shall be the maximum power rating of the engine, unless another load factor is proposed by the participant and supported by proper documentation as determined by the ARB.

• Emission benefits must be based on the vehicle's i dling time that occurs in California. At least 75 percent of the idling time must be in California. ARB may approve exceptions on a case-by-case basis.

• The actual capital cost, up to $5,500, of an APU m ay be eligible for funding.

• The installation cost of an APU, including install ation of an hour-meter, up to a maximum of $1,700 per diesel APU and a maximum of $ 3,400 per alternative fuel, electric motor, or fuel cell APU, may be funded.

• The full cost of a PM retrofit device may be funde d provided that the cost-effectiveness for the overall project does not exceed $14,300.

C. Scrap

• Scrap requirements are described in the 2005 Carl Moyer Program Guidelines, Part I, Chapter 2: Administration of the Carl Moye r Program.

VI. Minimum Project Requirements

A. Application

In order to qualify for incentive funds, districts make applications available and solicit proposals for reduced-emission projects from HDV op erators. The applicant must provide at least the following information listed i n Table 3-2.

A disclosure must also be included stating that the proposed project has not been funded and is not being considered for funding by a nother air district, ARB, or any other public agency. Any applicant who is found to have submitted multiple applications for the same project may be banned from submitting futu re applications to any and all Carl Moyer Program solicitations and may be subject to criminal sanctions. A project funded cooperatively by multiple air districts is e ligible for funding if the project parameters are coordinated amongst the participatin g districts and the project meets all applicable Carl Moyer Program criteria. Applicants are allowed to re-apply for project funding if a previous application has been rejected and is no longer being considered for funding.III-7 REDUCING HDV IDLING EMISSIONS

Table 3-2 Minimum Application Information Auxiliary Power Unit Projects

Applicant Information Organization, Company or Individual Name

Street Address City, County, State, Zip Code Primary Contact Name Primary Contract Phone Number Person with Contract Signing Authority Person who Filled out Funding Application Project Address (if different from above)

Vehicle Information Vehicle Type (Solid Waste Collection Vehicle, Street Sweeper, School Bus, Urban Bus, Other Transit Vehicle, Other Heavy-Heavy Duty Vehicle,Other Medium-Heavy Duty Vehicle, or Other LightHeavy Duty Vehicle) Vehicle Identification Number (VIN)

Vehicle Make

Vehicle Model

Model Year

Vehicle GVWR

Vehicle License Plate Number Department of Transportation Number (if interstate) California Highway Patrol CA Number Engine Make Engine Model Engine Year Engine Serial Number ARB Certification Executive Order (if Engine Certified to Alt. NOx Standard) Fuel Type Auxiliary Engine Make, Model, Year, Serial Number, Horsepower, Tier, and Family (if applicable) APU Engine Information Engine Make Engine Model Engine Year Fuel Type Engine Tier Certified APU or Alternative Technology Cost APU or Alternative Technology Installation Cost

Activity Information Percent Operation in California Percent Operation in District Project Life

Annual Gallons Fuel Used

Annual Hours Idled

Electronic Monitoring Unit (EMU) Will a new eligible EMU be installed as part of this project? (yes/no)

EMU Make

EMU Model

EMU Model Year

EMU ID Number EMU Cost (optional)

Third party applications are not allowed. The owne r of the engine must sign and agree to the application. However, a third party (e.g. e ngine dealer or distributor) may complete an application or part of an application o n an owner’s behalf. Applications must include a signature section for third parties. The third party signature section must include signature and date lines, and blanks for th e third party to list how much they are being paid, if anything, to complete the applicatio n and what source of funds are being used to pay them. To make the Carl Moyer Program a ccessible to all potential applicants, including applicants that cannot afford to hire third party assistance, districts are encouraged to provide technical assistance to a pplicants in completing the application.III-8 REDUCING HDV IDLING EMISSIONS

B. Reporting and Monitoring

The district has the authority to conduct periodic checks or solicit operating records from the applicant that has received Carl Moyer Program funds for emission reduction projects. This is to ensure that the APU is operat ed as stated in the program application. Fleet operators participating in the Carl Moyer Program are required to keep appropriate records during the life of the pro ject. Records must contain, at a minimum, total California hours idled. Records mus t be retained and updated throughout the project life and made available at t he request of the district.

VII. References

ARB, 2003. Final Regulation Order: Airborne Toxic Control Measure to Limit School Bus Idling And Idling At Schools. July 16, 2003.

ARB, 2004. Staff Report: Initial Statement of Reas ons for Proposed Rulemaking, Airborne Toxic Control Measure for Idling Reduction . September 1, 2005.

Lutsey, Nicholas. Fuel Cells For Auxiliary Power i n Trucks: Requirements, Benefits, and Marketability. Institute of Transportation Stu dies, University of California, Davis. UCD-ITS-RR-03-04. July 2003.

Wallace, John Paul. Modeling of Line-Haul Truck Au xiliary Power Units in ADVISOR 2002. Institute of Transportation Studies, Univers ity of California, Davis. UCD-ITS-RR03-07. August 2003IV-1 TRANSPORT

REFRIGERATION UNITS Chapter Four

TRANSPORT REFRIGERATION UNITS

This chapter is a new source category and presents the project criteria for transport refrigeration units (TRU) and transport refrigerati on generator sets. This chapter also contains a brief overview of the engine operating c haracteristics of transport refrigeration units, emission inventory, available control technology, potential projects eligible for funding, and emission reduction and co st-effectiveness calculation methodologies. Information is also provided for po tential consideration of other alternative technologies or strategies that may off er real emission reduction of transport refrigeration unit operations from transport refrig eration unit diesel engines. For more information about zero-emission technology, consult Chapter 12: Zero-Emission Technologies.

I. Introduction

TRUs are employed in service carrying perishable go ods throughout the world. TRUs use an internal combustion engine to run the compre ssor of the refrigeration system. TRUs and TRU generator sets operating in the United States are generally powered by diesel engines, typically between 9 and 36 horsepow er. TRUs may be installed on trucks, trailers, shipping containers, and railcars to refrigerate perishable contents. When a refrigerated trailer becomes disconnected fr om the tractor, the trailer TRU will continue to maintain temperature. When the tractor is parked at a rest stop or shut down, the TRU engine continues to cycle. TRU gener ator sets are also attached to ocean-going shipping containers when they are on la nd, to provide electric power to the shipping container's refrigeration system between t he port and cold storage warehouse

or distribution center.

II. Emissions

There are currently about 31,000 TRUs and TRU gener ator sets based in California, and another 7,500 out-of-state refrigerated trailer s and 1,700 railcar TRUs operating in California at any given time. The Air Resources Board (ARB or “Board”) estimates that emissions of diesel particulate emissions from TRUs and TRU generator sets were almost two tons per day or 2.6 percent of the total statewide diesel particulate matter

emissions in 2000. Estimated NOx emissions in 2000 were about 20 tons per day. Based on emission projections, the diesel PM10 emis sions from TRUs will decrease to about 1.6 tons per day in 2010 and decrease again t o about 0.3 tons per day in 2020,

because of the cumulative effects of new emission s tandards and ARB's in-use TRU Airborne Toxic Control Measure (ATCM).IV-2 TRANSPORT

REFRIGERATION UNITS III. Regulatory Requirements

In February 2004, the Board approved an ATCM for TR Us that set in-use performance standards for PM10 emissions beginning in 2008. Co mpliance is phased in over the next 12 years.

The TRU ATCM In-Use Performance Standards and compl iance dates must be considered when determining whether emission reduct ions are surplus. Table 4-1 gives

the TRU and TRU Generator Set In-Use Performance St andards and Table 4-2 provides a graphical representation of the implemen tation schedule. The region in Table 4-2 labeled Potential Surplus Reductions show s a window of opportunity where projects can achieve emissions reductions prior to the compliance date of the TRU ATCM [ARB, 2003].

Table 4-1

TRU and TRU Generator Set In-Use Performance Standa rds

Horsepower Category Engine Certification Value

PM10 Emissions Standard (grams/horsepower-hour) Options for Meeting

Performance Standard

Low Emission Performance Standards

less than 25 0.30 g/hp-hr  Use an engine that meets the Engine Certification Value

 Retrofit with at least Level 2 DECS* (> 50% PM10 reduction)

 Use an Alternative Technology

25 or greater 0.22 g/hp-hr  Use an engine that meets the Engine Certification Value

 Retrofit with at least Level 2 DECS

 Use an Alternative Technology

Ultra-Low Emission Performance Standard

less than 25 N/A  Retrofit with Level 3 DECS (> 85% PM10 reduction)

 Use an Alternative Technology

25 or greater 0.02 g/hp-hr  Use an engine that meets the Engine Certification Value

 Retrofit with Level 3 DECS

 Use an Alternative Technology * Diesel Emission Control SystemIV-3 TRANSPORT

REFRIGERATION UNITS • Table 4-2

≥ 25 hp TRU and TRU Generator Set Engines In-Use Com pliance Dates

(Compliance date is December 31 of applicable year)

In-Use Compliance Year

MY ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 ‘17 ‘18 ‘19 ‘20

‘01 & Older L L L L L L L U U U U U U

‘02 L L L L L L L U U U U U

‘03 U U U U U U U U U U U

‘04 U U U U U U U U U U

‘05 U U U U U U U U U

‘06 U U U U U U U U

‘07 U U U U U U U

‘08 U U U U U U

‘09 U U U U U

‘10 U U U U

‘11 U U U

‘12 U U

‘13

< 25 Hp 2013 and subsequent MY must meet ULETRU 7 y ears after MY L = Low-Emission TRU, U = Ultra Low-Emission TRU

IV. Potential Projects

TRU owners can apply for Carl Moyer Program grant f unds for projects that achieve surplus emission reductions by repowering with clea ner certified engines, installing verified retrofit diesel emission control strategie s, or using alternative technologies to reduce or eliminate NOx, ROG, and PM10 emissions. Many of the technologies discussed below have not yet been verified. Howeve r, they are included in this discussion since they could provide real emission r eductions and could potentially be verified during the time frame covered by the Guide lines.

A. New Purchase

Purchase of a new TRU is eligible for Carl Moyer Pr ogram funding if the new TRU is cleaner than what would have normally been purchase d – a diesel engine. Thus the incremental cost of the new purchase of alternative technologies may be eligible for Carl Moyer Program grants.

B. Repower

Repowering TRUs with cleaner certified diesel engin es is one type of potential project. However, there may be some compatibility issues wit h some engines due to spatial and electronic control differences (e.g., the new engin e is too big to fit in the available space or the electronic controls are incompatible). Thos e compatibility issues must be resolved prior to submitting a grant application.

Potential Surplus

EmissionsIV-4 TRANSPORT

REFRIGERATION UNITS C. Retrofit with a Diesel Emission Control Strategy

Retrofit with a diesel emission control strategy is another potential project if the retrofit is not required by the TRU ATCM or any other regulatio n. Diesel retrofit systems must be verified by ARB in order to qualify for Carl Moyer Program funding. Potential retrofits include diesel oxidation catalysts, diesel particul ate filters, flow though filters and fuel

additives.

D. Alternative Technologies to Reduce or Eliminate NOx, ROG, and PM

Emissions

Alternative technologies are defined under the TRU ATCM as electric standby, cryogenic temperature control systems, alternative fuels, alternative diesel fuels, fuel cells, and other systems that reduce or eliminate d iesel engine operation. Brief descriptions of each of these potential project typ es follow.

1. Electric Standby

Electric standby equipped TRUs allow the TRU engine to be shut off when a compatible electric power supply is available at a facility so TRU diesel engine emissions are eliminated while the TRU is plugged in at the facil ity. See Chapter 12: Zero-Emission Technologies for more information.

2. Hybrid Electric TRU

Hybrid electric TRUs have been available in Europe for several years. The diesel engine drives a generator that, in turn, powers an electric semi-hermetic refrigeration compressor and electrically driven fans, all contro lled by an advanced microprocessor. This hybrid electric TRU is easily adaptable to run on electric grid power when at a facility, so that diesel engine operation is elimin ated. The cost is higher than a traditional TRU, but costs less than it would to re trofit a traditional TRU with an electric standby system. One big advantage is that the hybr id design provides full refrigeration capacity for the initial chill-down. The hybrid de sign is also very likely to be adaptable for future use with fuel cell technology

3. Cryogenic Temperature Control Systems

Cryogenic temperature control systems heat and cool using a cryogen, such as liquid carbon dioxide or liquid nitrogen that is routed th rough an evaporator coil that cools air blown over the coil. Since there is no diesel engi ne, diesel PM10 emissions are eliminated. Capital costs for these types of syste ms are ten percent higher than a diesel TRU, but the facility infrastructure costs f or cryogenic "fuel" storage and dispensing add to the capital cost.IV-5 TRANSPORT

REFRIGERATION UNITS 4. Alternative Fuels

Conventional diesel engines are internal combustion , compression-ignition engines. In contrast, engines that operate on an alternative fu el, such as compressed natural gas (CNG), liquefied natural gas (LNG), and liquid prop ane gas (LPG), are usually spark-ignited. Engines certified to operate on alt ernative fuels produce substantially lower PM10 and NOx emissions than diesel-fueled eng ines that are not equipped with

exhaust after-treatment.

5. Alternative Diesel Fuels

Before any alternative diesel fuel can be used to c omply with a diesel PM10 control measure or used in a Carl Moyer Program project, it must be verified through ARB’s Verification Procedure, which includes a special se ction that deals specifically with

alternative diesel fuels.

The Carl Moyer Program does not fund fuel-only proj ects however, districts may use matching funds to pay for the incremental cost of a lternative diesel fuels if they are part of a Carl Moyer Program project. Recordkeeping and reporting must provide assurance that the emission reductions are real, quantifiable , surplus and enforceable.

6. Fuel Cells

Compared to a conventional diesel-powered TRU, fuel cell TRUs would offer zero or near-zero emissions of criteria pollutants and lowe r greenhouse gas emissions. At this time, there are no fuel cells appropriately sized f or use on a TRU, but electrically-driven TRUs could be powered by fuel cells on or off the r oad (e.g., at a facility).

V. Project Criteria

Participating districts retain the authority to imp ose additional more stringent requirements in order to address local issues.

A. General Criteria

• Emission reductions obtained through Carl Moyer Pr ogram projects must not be required by any federal, state or local regulation, memorandum of agreement/understanding, settlement agreement, miti gation requirement, or other legally binding document.

• Projects must meet a cost-effectiveness of $14,300 per weighed ton of NOx + ROG

+ combustion PM10 reduced calculated in accordance with the cost-effectiveness methodology discussed in this chapter.IV-6 TRANSPORT

REFRIGERATION UNITS • No emission reductions generated by the Carl Moyer Program shall be used as marketable emission reduction credits, or to satisf y any emission reduction obligation of any person or entity.

• No project funded by the Carl Moyer Program shall be used for credit under any federal or state emission averaging, banking, and t rading program.

• Carl Moyer Program grants shall be no greater than a project’s incremental cost. The incremental cost is the cost of the project min us the baseline cost. The incremental cost shall be reduced by the value of a ny current financial incentive that reduces the project price, including but not limite d to tax credits or deductions, grants, or other public financial assistance.

• Projects must have a minimum project life of three years. ARB may approve shorter project life in writing for good cause on a case-by -case basis. Projects with shorter lives may be subject to additional funding restrict ions, such as a lower cost-effectiveness limit or a project cost cap.

• The contract term must extend to the end of the pr oject life.

• The default project life does not consider upcomin g regulatory requirements. Project life may be shorter due to regulatory requirements.

• Air districts must consult with ARB staff to deter mine eligibility of all projects considered for funding on case-by-case basis. All p rojects considered on a case-by-case basis must receive ARB approval prior to receiving program funding.

• Projects with more than a 5 year project life must have a contract term of at least 5 years.

• Emission benefits must be based on the TRU operati ons that occur in California. 75 percent of TRU operations must be in California. The ARB may approve exceptions in writing on a case-by-case basis.

• Air districts are encouraged to co-fund projects t hat will produce emission reductions in more than one air district. (Most TRU projects will provide multi-district emission reductions.)

B. Repowers

• For repower projects, Carl Moyer Program funds sha ll only be used to pay for the incremental costs of an eligible engine and the cos t to install that engine in the TRU equipment.IV-7 TRANSPORT

REFRIGERATION UNITS • The replacement engine for repower projects used i n the TRU must meet current emission standards and be certified by the ARB for sale in California. Compliance with all applicable durability and warranty require ments is required.

• Repower projects must provide at least 15 percent NOx emission benefit compared

to baseline NOx emission level.

• The participant shall install an hour-meter or oth er means to measure usage on the TRU to track operating hours, and shall provide thi s information to ARB or the district
upon request.

• Potential projects that fall outside of these crit eria may be considered on a case-by-case basis is evidence provided to the air district suggests potential surplus, real, quantifiable and enforceable emission reducti on benefits.

• Air districts must consult with ARB staff to deter mine eligibility of all projects considered for funding on a case-by-case basis. Al l projects considered on a case-by-case basis must receive ARB approval prior to receiving program funding.

C. Retrofits

• For retrofit projects, diesel emission control str ategies used on TRUs must be verified by ARB for sale in California. Compliance with all applicable durability and warranty requirements is required.

• Alternative technologies such as electric standby and pure cryogenic systems are not required to be verified, but ARB must review an d approve such systems in writing on a case-by-case basis. The district shall require recordkeeping and reporting to assure that estimated emission reducti ons are achieved.

D. Scrap

• Scrap requirements are described in the 2005 Carl Moyer Program Guidelines, Part I, Chapter 2: Administration of the Carl Moye r Program.

VI. Cost-Effectiveness

To receive Carl Moyer Program funding, each project must meet the maximum cost-effective threshold of $14,300 per weighted to n of covered pollutants reduced. Only funds provided by the Carl Moyer Program and l ocal district matching funds are to be used in determining cost-effectiveness.

In general, the emission reduction benefit represen ts the difference in the emission level of a baseline engine and reduced-emission engine, r etrofit, or use of alternative technology. TRU engine annual emissions are calcul ated by multiplying the emissionIV-8 TRANSPORT

REFRIGERATION UNITS factor in grams per horsepower-hour for each pollut ant by the rated hp, load factor, and activity (annual engine hours of operation).

VII. Minimum Project Requirements

A. Application

In order to qualify for incentive funds, districts make applications available and solicit proposals for reduced-emission projects from distri bution centers and TRU owners. The applicant must provide at least the following i nformation listed in Table 4-4.

A disclosure must also be included stating that the proposed project has not been funded and is not being considered for funding by a nother air district, ARB, or any other public agency. Any applicant who is found to have submitted multiple applications for the same project may be banned from submitting futu re applications to any and all Carl Moyer Program solicitations and may be subject to criminal sanctions. A project funded cooperatively by multiple air districts is e ligible for funding if the project parameters are coordinated amongst the participatin g districts and the project meets all applicable Carl Moyer Program criteria. Applicants are allowed to re-apply for project funding if a previous application has been rejected and is no longer being considered for funding.

Third party applications are not allowed. The owne r of the engine must sign and agree to the application. However, a third party (e.g. e ngine dealer or distributor) may complete an application or part of an application o n an owner’s behalf. Applications must include a signature section for third parties. The third party signature section must include signature and date lines, and blanks for th e third party to list how much they are being paid, if anything, to complete the applicatio n and what source of funds are being used to pay them. To make the Carl Moyer Program a ccessible to all potential applicants, including applicants that cannot afford to hire third party assistance, districts are encouraged to provide technical assistance to a pplicants in completing the application.

B. Reporting and Monitoring

The district has the authority to conduct periodic checks or solicit operating records from the applicant that has received Carl Moyer Program funds for emission reduction projects. This is to ensure that the TRU is operat ed as stated in the program application. Fleet operators participating in the Carl Moyer Program are required to keep appropriate records during the life of the pro ject. Records must contain, at a minimum, total California hours idled. Records mus t be retained and updated throughout the project life and made available at t he request of the district.IV-9 TRANSPORT

REFRIGERATION UNITS Table 4-4 Minimum Application Information Transport Refrigera tion Unit Projects

Applicant Information Organization, Company or Individual Name
Street Address City, County, State, Zip Code Primary Contact Name Primary Contact Phone Number Person with Contract Signing Authority Person who Filled Out Funding Application Project Address (if different from above)

Project Information TRU Application (Truck, Trailer, Shipping Container, or Railcar) Vehicle ID Type (VIN, Railcar Recording Mark, Container Number, or Company ID Number)
Vehicle ID Number
TRU Make
TRU Model
TRU Model Year TRU Serial Number TRU Horsepower Rating TRU Fuel Type TRU Engine Tier TRU Engine Family

Activity Information Will the new engine have a functioning hour meter for the life of the project? Annual Hours of Operation or Annual Gallons of Fuel Consumption Percent Operation in California Percent Operation in District Project Life

Electronic Monitoring Unit (EMU) Will a new eligible EMU be installed as part of this project? (yes/no)
EMU Make
EMU Model
EMU Model Year
EMU ID Number EMU Cost (optional) ADDITIONAL INFORMATION –
NEW PURCHASE ONLY Project Year of Purchase of New Equipment Baseline Cost
New TRU Cost New TRU Vendor (optional)

ADDITIONAL INFORMATION –
REPOWER PROJECTS ONLY
Reduced Emission TRU Make
Reduced Emission TRU Model
Reduced Emission TRU Model Year
Reduced Emission TRU Serial Number Reduced Emission TRU Horsepower Rating Reduced Emission TRU Fuel Type Reduced Emission TRU Engine Tier Reduced Emission TRU Engine Family TRU Remanufacture Cost – Parts
TRU Remanufacture Cost – Labor TRU Repower Cost – Engine TRU Repower Cost – Labor New Engine Vendor (optional) New Engine Installer (optional)

ADDITIONAL INFORMATION –
RETROFIT PROJECTS ONLY
ARB-Verified Retrofit Device
Retrofit Device Make
Retrofit Device Serial Number Verification Level (Level 1, Level 2, Level 3) ARB-Verified NOx Reduction (%) ARB-Verified PM Reduction (%) ARB-Verified ROG Reduction (%)
Retrofit Device ARB Executive Order
Retrofit Device Cost Cost of Retrofit Device Installation Cost (optional ) Cost of Retrofit Maintenance for Life of Project (optional)

VIII. References

ARB, 2003. ARB, Staff Report: Initial Statement of Reasons for Proposed Rulemaking,

Airborne Toxic Control Measure for In-Use Diesel-Fu eled Transport Refrigeration Units (TRU) and TRU Generator Sets, and Facilities Where TRUs Operate, Stationary Source Division, Emissions Assessment Branch, October 28, 2003.V-1 OFF-ROAD CI ENGINES Chapter Five

COMPRESSION-IGNITION OFF-ROAD EQUIPMENT

This chapter presents the project criteria for off- road compression-ignition (CI) equipment projects under the Carl Moyer Program. I t also contains a brief overview of the current regulations, incentive projects eligibl e for funding, project criteria, cost effectiveness calculations, and minimum application requirements for off-road CI equipment. Updates to the project criteria in this chapter since the 2003 Guidelines include: 1) lowering the minimum engine horsepower (hp) to 25 hp, and 2) prioritizing Tier 2 or Tier 3 repowers.

I. Introduction

Off-road CI equipment eligible for Carl Moyer Progr am funding includes equipment 25 hp (19 kilowatt) or greater such as construction and agricultural equipment. This also includes auxiliary engines found on off-road e quipment and on-road vehicles. Excluded from this discussion are engines that prop el or are used on locomotives, marine vessel propulsion and auxiliary, and most fo rklifts (except for class 7 forklifts) which are discussed in other chapters of these Guid elines. Aircraft engines are excluded from the Carl Moyer Program. In addition, the Carl Moyer Program does not apply to off-road engines used for underground mini ng operations, which are regulated by the Mining Safety and Health Administration.

II. Emissions

Off-road CI engines are used in a wide array of app lications including agricultural tractors, backhoes, excavators, trenchers, and moto r graders. Off-road equipment can be categorized broadly into equipment less than 175 hp and equipment equal to or greater than 175 hp.

Table 5-1 displays statewide population and emissio n estimates for off-road CI engines.

Table 5-1 Statewide Emissions from Off-Road Compression-Ignit ion Engines* (tons per day)

Population NOx ROG PM10

2005 350,420 453 54 30
2010 354,175 354 24 39 *Includes agricultural, construction, dredging, dri lling, industrial, and logging equipment.V-2 OFF-ROAD CI ENGINES

III. Regulatory Requirements

A. Off-Road Compression Engine Regulations

The Air Resources Board (ARB or “Board”) is preempt ed from regulating new farm and construction equipment less than 175 hp. The U.S. Environmental Protection Agency (U.S. EPA) has sole authority to regulate this type of equipment. ARB has the authority to regulate new off-road equipment equal to or grea ter than 175 hp and non-preempted off-road equipment less than 175 hp. ARB and U.S. EPA have worked closely to harmonize the off-road CI standards. ARB is not pr eempted from regulating in-use equipment; a discussion of these regulations may be found in Section III. B of this chapter.

Current off-road engine regulations contain exhaust emission standards that engines are not to exceed under steady state and transient conditions [ARB, 2000 and ARB, 2004b]. In addition, the regulations include provi sions that assist engine and equipment manufacturers in complying with emission standards through: 1) flexibility provisions for equipment manufacturers, 2) Averaging, Banking, and Trading (ABT) programs, and 3) the Tier 4 Early Introduction Incentive for engi ne manufacturers. Since the objective of the Carl Moyer Program is the deployment of clea ner-than-required low-emission engines to achieve maximum emission reduction benef its, it is important to understand the regulatory provisions that allow for the sale o f engines not meeting the current applicable emission standards.

1. Emission Standards

Emissions from off-road equipment between 175 and 7 50 horsepower were uncontrolled prior to 1996. Estimates of NOx emiss ion rates from uncontrolled off-road engines range from 8.2 g/bhp-hr to 14 g/bhp-hr. In January 1992, the Board adopted exhaust emission standards for off-road diesel-cycl e engines 175 hp and greater, effective beginning with 1996 model year engines.

In August 1996, the U.S. EPA, ARB, and off-road die sel engine manufacturers signed a Statement of Principles which called for harmonizat ion of ARB and U.S. EPA off-road diesel engine regulations, as appropriate, in excha nge for an accelerated introduction of progressively more stringent standards. The U.S. E PA adopted emission standards in 1998 and again in 2004 that provided for new NOx + non-methane hydrocarbons (NMHC), PM, and carbon monoxide (CO) emission stand ards for engines within different power categories in a tiered approach, co mmonly referred to as “Tier”

standards. These standards are defined in Title 13 , California Code of Regulations (CCR), sections 2423(b)(1). ARB has since amended the California exhaust emission standards for off-road diesel engines to harmonize with the federal requirements. Table 5-2 summarizes the existing and future emissi on standards for these engines.V-3 OFF-ROAD CI ENGINES Table 5-2

ARB and U.S. EPA Exhaust Emission Standards for New Off-Road Diesel Engines ≥ 25 hp

(g/bhp-hr)

Maximum

Rated

Power (hp) Tier Model Year NOx HC NOx+NMHC CO PM

25=<50 Tier 1 2000-2003 — — 7.1 4.1 0.60

Tier 2 2004-2007 — — 5.6 4.1 0.45

Tier 4 Interim 2008-2012 — — 5.6 4.1 0.22

Tier 4 2013 and later — — 3.5 4.1 0.02

Tier 1 2000-2003 (a) 6.9 — — — —

Tier 2 2004-2007 — — 5.6 3.7 0.30 50=<75

Tier 3 (b) 2008-2011 — — 3.5 3.7 0.30

Tier 4 Interim 2008-2012 — — 3.5 3.7 0.22

Tier 4 2013 and later — — 3.5 3.7 0.02

Tier 1 2000-2003 (a) 6.9 — — — —

Tier 2 2004-2007 — — 5.6 3.7 0.30 75=<100

Tier 3 2008-2011 — — 3.5 3.7 0.30

Tier 4 Interim (c) 2012-2014 2.5 0.14 — 3.7 0.015

Tier 4 2015 and later 0.3 0.14 — 3.7 0.015

Tier 1 2000-2002 (a) 6.9 — — — —

Tier 2 2003-2006 — — 4.9 3.7 0.22 100=<175

Tier 3 2007-2011 — — 3.0 2.6 0.22

Tier 4 Interim (c) 2012-2014 2.5 0.14 — 3.7 0.015

Tier 4 2015 and later 0.3 0.14 — 3.7 0.015

Tier 1 1996-2002 6.9 1.0 — 8.5 0.40

Tier 2 2003-2005 — — 4.9 2.6 0.15 175=<300

Tier 3 (d) 2006-2010 — — 3.0 2.6 0.15

Tier 4 Interim (c) 2011-2013 1.5 0.14 — 2.6 0.015

Tier 4 2013 and later 0.3 0.14 — 2.2 0.015

Tier 1 1996-2000 6.9 1.0 — 8.5 0.40

Tier 2 2001-2005 — — 4.8 2.6 0.15 300=<600

Tier 3 (d) 2006-2010 — — 3.0 2.6 0.15

Tier 4 Interim (c) 2011-2013 1.5 0.14 — 2.6 0.015

Tier 4 2013 and later 0.3 0.14 — 2.2 0.015

Tier 1 1996-2001 6.9 1.0 — 8.5 0.40

Tier 2 2002-2005 — — 4.8 2.6 0.15 600=<750

Tier 3 (d) 2006-2010 — — 3.0 2.6 0.15

Tier 4 Interim (c) 2011-2013 1.5 0.14 — 2.6 0.015

Tier 4 2013 and later 0.3 0.14 — 2.2 0.015

≥ 750 Tier 1 2000-2005 6.9 1.0 — 8.5 0.4

Tier 2 2006-2010 — — 4.8 2.6 0.15

Tier 4 Interim 2011-2014 2.6 0.30 — 2.6 0.07

Tier 4 2015 and later 2.6 0.14 — 2.6 0.03

(a) ARB model years, U.S. EPA model years for Tier 1 st art at 1998 for 50=<75 hp and 75=<100 hp, and 1997 for 100=<175 hp.
(b) Engine families in this power category may meet the Tier 3 PM standard instead of the Tier 4 interim P M standard in exchange for introducing the final Tier 4 PM sta ndard in 2012.
(c) The implementation schedule shown is the three-year alternate NOx approach. Other schedules are avail able.
(d) Caterpillar, Cummins, Detroit Diesel Corporation, a nd Volvo Truck Corporation have agreed to comply wi th these standards by 2005.V-4 OFF-ROAD CI ENGINES 2. Flexibility Provisions for Equipment Manufacture rs

Current regulations for off-road heavy-duty CI engi nes contain a flexibility provision that allows original equipment manufacturers (OEMs) to u se engines not meeting current applicable emission standards in their existing pro duct line for new equipment. Thus, engines that are certified under the flexibility pr ovisions do not comply with current applicable emission standards, and are not eligible as replacement engines for the Carl Moyer Program. The flexibility provision took effect with the introduction of Tier 2 engines (Tier 1 for power categories less than 50 h p) and applies separately for each engine power category. Engine families certified u nder the flexibility provision must have previously been certified to a prior engine st andard, for example Tier 1.

There are four main elements to the flexibility pro gram: 1) a percent-of-production allowance, 2) a small-volume allowance, 3) continua nce of the Tier 1 allowance to use up existing inventories of engines, and 4) availabi lity of hardship relief. The adoption of

the Tier 4 emission standards added several additio nal components to the program including technical hardship allowances, retroactiv e use of flexibilities, delayed implementation, an economic hardship allowance, an early introduction incentive, and a labeling requirement. The percent-of-production al lowance is the largest component of the program and allows each equipment manufacturer to use flexibility engines in its new product line over a seven-year period in cumula tive quantities that sum up to 80 percent of a single year’s national production a t the end of the seven years.

Except for engines used in flexibility allowances p rior to January 1, 2007, flexibility engines will be labeled according to the requiremen ts of Title 13, CCR, sections 2423(d) and 2424(c). In addition, the Executive Order (EO) for engines certified under this program state that the engines were certified in co mpliance with Title 13, CCR, section 2423(d).

3. Averaging, Banking, and Trading

Off-road engine manufacturers are allowed the flexi bility to participate in an ABT program in lieu of only producing engines that comp ly with the current emission standards. The emission benefits from an engine ce rtified to a lower Family Emission Limit (FEL) may be used to offset the emissions fro m engines certified to a higher FEL levels within the engine manufacturer’s ABT program . As a result, ABT emission credits are generated from the lower FEL level engine since it is certified lower than the required emission standards. These engines are onl y eligible for Carl Moyer Program funding as part of repower projects. In these case s, the emission factor based on the applicable emission standard, not the certified FEL level, will be used in emission

calculations. The FEL emission level is identified on the EO and is located under the

emission standard.V-5 OFF-ROAD CI ENGINES 4. Tier 4 Early Introduction Incentives for Engine Manufacturers (“Engine Offsets”)

Engine manufacturers may voluntarily certify engine s to the Tier 4 standards prior to 2011 in exchange for making fewer Tier 4 engines af ter 2011. These early introduction Tier 4 engines are not eligible for Carl Moyer Prog ram funding. These engines are first offered to OEMs to use as part of the flexibility p rogram (see Section III. A. 2 above). Should the OEM decline the engine, the engine manuf acturer may use it as part of the “Tier 4 Early Introduction Incentive for Engine Man ufacturers” created by Title 13, CCR, section 2423(b)(6).

Engines used as part of the “Tier 4 Early Introduct ion Incentive for Engine Manufacturers” must be in production by September 1 of the year prior to the first model year when the standards would otherwise be applicab le, where the model year means the manufacturer’s annual production period which i ncludes January 1 of a calendar year or, if the manufacturer has no annual producti on period, the calendar year. Engines sold during the transitional “phase-in” mod el years (years where the Tier 4 interim standards are in effect) are not considered “early” introduction engines.

These engines will meet all federal labeling requir ements but will add the following statement: “This engine meets U.S. EPA emission st andards under 40 CFR 1039.104(a)” and an additional statement of “meetin g ARB requirements under 13 CCR section 2423(b)(6)”. In addition, the EO for engin es certified under this program will reference that the engines were certified in compli ance with 13 CCR section 2423(b)(6).

B. Upcoming Regulations

The Board approved a cargo handling equipment regul ation in December 2005 that applies to diesel-fueled cargo handling equipment a t California's ports and intermodal railyards. Cargo handling equipment is used to tran sfer goods and includes equipment such as yard tractors (hostlers), rubber tire gantr y cranes, top handlers, side handlers, forklifts, loaders, and mobile cranes. Specific Ca rl Moyer Program project criteria are being identified for this equipment and will be ava ilable in early 2006.

The ARB is also developing a control measure to red uce diesel particulate matter emissions from in-use, off-road, diesel-fueled, mob ile equipment greater than or equal to 25 horsepower. This includes, but is not limite d to, construction equipment, mining equipment, airport ground support equipment, and in dustrial equipment such as forklifts. The proposal will not cover equipment used in agric ultural operations, cargo handling at ports and intermodal rail facilities, or equipment already covered by an in-use rule or agreement. This item is scheduled to be heard by t he Board in 2006. If approved, it may affect project criteria for off-road projects.V-6 OFF-ROAD CI ENGINES

IV. Potential Projects

The Carl Moyer Program can achieve significant emis sion reductions from off-road diesel engines operating in California. All eligib le projects must use certified technology or technology that has been verified by the ARB for real and quantifiable emission reductions that go beyond any regulatory requiremen t. The project criteria included in this chapter are designed to ensure that emission r eductions achieved by the deployment of reduced-emission engines or retrofit technologies are surplus, real, quantifiable, and enforceable.

Off-road projects fall into three distinct categori es: 1) new purchase of equipment equipped with an emission certified engine, 2) repo wer with an emission certified engine, and 3) retrofit with a verified diesel emis sion control strategy (DECS). Based on past experience, most projects will likely fall und er the repower category for off-road projects. Emerging reduced-emission technologies, such as engine retrofit or new engine technologies, will become eligible for progr am participation after ARB grants

verification or certification for sale in Californi a. Districts have the option to fund the

cost difference between conventional diesel fuel an d an alternative fuel such as alternative-diesel fuel, CNG, LNG, and LPG with mat ching funds. The fuel purchase must be an integral part of an engine purchase, rep ower, or retrofit project.

Auxiliary engines on mobile equipment are considere d portable engines and are regulated by the ARB’s Portable Equipment Air Toxic s Control Measure (ATCM). Auxiliary engines that are an integral part of the vehicle’s or barge’s main function, and are not covered under any district rule may be elig ible for Carl Moyer Program funding. Because the ATCM requires that all portable engines be certified engines by January 1, 2010, projects must begin by January 1, 2007, to meet the minimum three year project life requirement [ARB, 2004a].

Class 7 diesel forklifts are the only diesel forkli fts eligible for Carl Moyer Program funding and are subject to all off-road project cri teria. The district must obtain and verify

documentation of the classification of the forklift prior to funding. Class 7 forklifts typically have a lift capacity of over 6,000 pounds , pneumatic tires, and internal combustion, compression ignition engines powered al most exclusively by diesel. Many of the characteristics of these forklifts, includin g pneumatic tires for rough terrain, make them exclusively for outdoor use.

A. New Purchase

For most engine categories, the current standard is Tier 2 or Tier 3 with an optional Blue Sky Standard that applies through Tier 3. How ever, at this time, no engines have been certified to the Blue Sky standard. New equip ment having an engine that was certified to any FEL level is not eligible for new purchase in the Carl Moyer Program. This is because the emission level from an eligible FEL engine in the new equipment would be considered to be at the level of the requi red emission standard for that engine,V-7 OFF-ROAD CI ENGINES

through the averaging provision of the ABT program discussed previously. Therefore, the emissions from an FEL engine in the new equipme nt would not be surplus when compared to the emissions from a new engine meeting the required emission

standards.

For some off-road equipment such as yard tractors, it may be possible to purchase new equipment with a new on-road engine certified to AR B’s optional NOx emission credit standard instead of a new off-road engine. Where t his is the case, emission benefits relative to the baseline engine are calculated base d on on-road engine emission factors. If an applicant provides ARB with documentation sho wing that in past practice, the fleet has been powered by off-road engines, then the base line emission may be calculated using the off-road engine emission factors.

B. Repower

Replacement of the in-use engine (i.e., repower) wi th an emission-certified engine instead of rebuilding the existing engine to its or iginal uncontrolled specifications is the most common type of off-road project. Although thi s is commonly a diesel-to-diesel repower, significant NOx and PM benefits are achiev ed due to the high emission levels of the uncontrolled engine being replaced. Eligibl e engines are those that are certified to the current applicable emission standard or to a n optional credit emission standard. For off-road equipment with similar modes of operat ion to on-road vehicles, other possible options include the replacement of an olde r uncontrolled diesel off-road engine with a new or rebuilt on-road engine certified to a n emission standard equal to or lower

than the Tier 2 off-road emission standard or a new er emission-certified alternative fuel engine.

The Carl Moyer Program Guidelines require repower w ith a newer engine meeting current applicable emission standards (i.e., Tier 2 or Tier 3). If this is not a technical or practical option, as determined by the engine manuf acturer, a newer emission-certified engine that meets the Tier 1 standards may be used. Off-road CI engines have undergone major design changes to meet new and more stringent emission regulations. Off-road engine manufacturers have made significant hardware modifications in order to meet the Tier 2 emission standards for engines with horsepower rating of 100 hp and greater. The incorporation of air-to-air aftercool ers and other auxiliary systems have resulted in Tier 2 engines for some applications th at are physically different than the earlier Tier 1 engines. As a result, some existing equipment cannot accept Tier 2 engines without extensive modifications. This may involve cutting the equipment frame to gain adequate space for the Tier 2 engine. In t hese situations, technical, cost, and safety considerations make a new Tier 2 engine repo wer infeasible. Thus, the use of a newer emission-certified engine meeting the earlier Tier 1 emission standard may be justified. Specific information on the eligibility of these projects is further described in the project criteria.

In addition, ARB staff requires that all repower pr ojects funded by the Carl Moyer Program install a retrofit device if one is available. ARB staff requires thatV-8 OFF-ROAD CI ENGINES

the highest level ARB-verified retrofit device be i nstalled for retrofit projects if the project meets the cost effectiveness limit of $14,300 per w eighted ton. If a Level 3 device is not

feasible or does not meet the cost-effectiveness li mit, a Level 2 device must be installed; if no Level 3 or Level 2 devices are fea sible a Level 1 device must be installed. Due to limited current availability of retrofit dev ices for off-road engines it is likely that a

retrofit will not be available in the near term. R epower projects are not disqualified from participation in the Carl Moyer Program if retrofit devices are not available, feasible, or if the cost of the available retrofit places the proje ct over cost-effectiveness limit.

Funding is not available for projects where a spark -ignition engine (i.e., natural gas, gasoline, etc.) is replaced with a diesel engine.

C. Retrofit

Retrofit refers to modifications made to an engine and/or fuel system such that the specifications of the retrofitted engine are not th e same as the original engine, please refer to Appendix F for more detailed information. The most straightforward retrofit projects are add-on after treatments. Other retrof its include upgrades of components that can be accomplished at the time of engine rebu ild and result in a lower emission configuration. To qualify for Carl Moyer Program f unding, the retrofit technology must be verified for sale in California and must comply with established durability and warranty requirements. Retrofits are verified for diesel PM reductions of: Level 1 - 25 percent, Level 2 - 50 percent, and Level 3 - 85 percent. Although retrofit technology options for off-road diesel engines are limited, it is possible that retrofit technologies that

have been used to reduce NOx and PM emissions from on-road heavy-duty diesel engines may be used to control off-road engine emis sions in some applications. More information on DECS, including a list of currently verified DECS, may be found at http://www.arb.ca.gov/diesel/verdev/verdev.htm

.

V. Project Criteria

Participating districts retain the authority to imp ose more stringent additional requirements in order to address local concerns.

A. General

• Emission reductions obtained through Carl Moyer Pr ogram projects must not be required by any federal, state or local regulation, memorandum of agreement/understanding with a regulatory agency, s ettlement agreement, mitigation requirement, or other legal mandate.

• Projects must meet a cost-effectiveness of $14,300 per weighed ton of NOx + ROG + PM10 reduced, calculated in accordance with the c ost-effectiveness methodology discussed in this chapter.V-9 OFF-ROAD CI ENGINES

• No emission reductions generated by the Carl Moyer Program shall be used as marketable emission reduction credits, or to satisf y any emission reduction obligation of any person or entity.

• No project funded by the Carl Moyer Program shall be used for credit under any federal or state emission averaging, banking, and t rading program.

• Carl Moyer Program grants can be no greater than a project’s incremental cost. The incremental cost is the cost of the project minus t he baseline cost. The incremental cost shall be reduced by the value of any current f inancial incentive that reduces the project price, including, but not limited to, tax c redits or deductions, grants, or other public financial assistance.

• Projects must have a minimum project life of three years. ARB may approve a shorter project life in writing for good cause on a case-by-case basis. Projects with shorter lives may be subject to additional funding restrictions, such as a lower cost-effectiveness limit or a project cost cap.

• The contract term must extend to the end of the pr oject life.

• Potential projects that fall outside of these crit eria may be considered on a case-by-case basis if evidence provided to the air district suggests potential surplus, real, quantifiable, and enforceable emission reduct ion benefits.

• Air districts must consult with ARB staff to deter mine eligibility of all projects considered for funding on case-by-case basis. All projects considered on a case-by-case basis must receive ARB approval prior to receiving program funding.

• The certification emission standard and Tier desig nation for the engine must be

determined from the Executive Order issued for that engine, not by the engine model year. Executive Orders for off-road engines may be found at http://www.arb.ca.gov/msprog/offroad/cert/cert,php

• Reduced-emission engines or retrofits must be cert ified/verified for sale in California and must comply with durability and warranty requir ements. These may include new ARB certified engines, ARB certified after-market p art engine/control devices, and verified diesel emission control strategies.

• Engines participating in the ABT program that are certified to FELs higher than the applicable emission standards, as designated on the Executive Order, are ineligible to participate in the Carl Moyer Program.

• Equipment manufactured under the “Flexibility Prov isions for Equipment Manufacturers”, as detailed in Title 13, CCR, secti on 2423(d), are ineligible for Carl Moyer Program funding as a replacement engine.V-10 OFF-ROAD CI ENGINES

• Engines that are participating in the “Tier 4 Earl y Introduction Incentive for Engine Manufacturers” program, as detailed in Title 13, CC R, section 2423(b)(6), are ineligible for Carl Moyer Program funding.

• Auxiliary engines on mobile equipment are eligible for Carl Moyer Program funding through January 1, 2007 if they are an integral par t of the vehicle’s or vessel’s main function and are not covered by any district rule.

• Class 7 diesel forklifts are the only diesel forkl ifts eligible for diesel-to-diesel repower in the Carl Moyer Program and are subject to all of f-road project criteria. The district must obtain and verify documentation of the classif ication of the forklift prior to funding.

• Funded projects must operate at least 75 percent o f total equipment operation hours

in California.

• Default project life

Off-road new purchase 10 years

Off-road repower 7 years

Off-road repower and retrofit 5 years

Retrofit 5 years

Applicants must provide documentation to justify a longer project life.

B. New Purchase

• Engines must be certified to an ARB optional NOx o r NOx+NMHC emission credit standard for off-road diesel engines that is at lea st 30 percent lower than current applicable emission standards or for some equipment , such as yard tractors, an on-road engine certified to ARB’s optional NOx emis sion credit standard

• Engines that are certified to FEL levels are not e ligible for funding in new equipment purchase projects.

C. Repower

• For repower projects that replace uncontrolled eng ines in existing equipment, the replacement engine must be certified to either: 1) the current applicable emission standard except as noted below, 2) to a FEL NOx or NOx+NMHC level that is lower than the required emission standard, or 3) to an op tional credit emission standard as applicable for the horsepower rating.

• For equipment repower projects that replace emissi on-certified engines in existing equipment, the replacement engine must be certified to a NOx emission standardV-11 OFF-ROAD CI ENGINES

that is at least 15 percent lower than the emission standard(s) applicable to the existing engine.

• Engines used in equipment repower projects may be new, emission-certified rebuilt, or emission-certified remanufactured units. Eligib le new engine are those offered by the original equipment manufacturer (OEM) or by a n on-OEM who demonstrates to the ARB that the repower is functionally equivalent with regard to emissions, durability, and safety as described in Appendix G. Eligible rebuilt or remanufactured engines are those offered by the OEM or by a non-OE M rebuilder who demonstrates to the ARB that the rebuilt engine and parts are fu nctionally equivalent from an emissions and durability standpoint to the original engine and components being replaced as described in Appendix G. Rebuilt and r emanufactured engines that are

not re-certified to new emission standards shall us e the emission standards associated with the original engine block.

• ARB strongly recommends that districts give priori ty to Tier 2 or Tier 3 repowers. However, ARB recognizes that in some cases repower with the current applicable standard is not possible. In these cases a Tier 1 repower may be allowed if the conditions below are met and the project meets a pr oject cost-effectiveness cap of $6,000 per weighted ton of emission reductions for the repower portion of the project. Tier 1 repowers of specialty equipment no t meeting the project costeffectiveness cap may be allowed on a case-by-case basis.

• If repower with an engine meeting the current appl icable standard is technically infeasible, unsafe, or cost prohibitive, the replac ement must meet the most current practicable previously applicable emission standard . The district shall determine eligibility of a Tier 1 engine repower project on a case-by-case basis by obtaining a Tier 2/Tier 3 repower exemption using one of the tw o following methods:

1. The Carl Moyer Program application may include a written statement of reason(s) from the engine manufacturer verifying th at a particular piece of equipment cannot accommodate an engine meeting curr ent standards without major modifications, safety risks, or exorbitant co st. The letter must include information on the equipment being repowered, the e ngine being replaced, the reason why an engine meeting the currently applicab le standard cannot be used (including details on required equipment modificati ons with pictures of the equipment, engineering drawings as necessary, and c ost for the Tier 2/Tier 3 engine), and the proposed Tier 1 replacement engine . Districts must submit the written statement of reason(s) to ARB as an attachm ent to the annual report.

2. The engine manufacturer may provide ARB with suf ficient information on engine and/or equipment models for which Tier 2/Tier 3 rep owers are available, and engine and/or equipment models for which Tier 2/Tie r 3 repowers are not feasible. Engine manufacturers who are interested in pursuing this option should

contact ARB. ARB staff will maintain a list of suc h engines and/or equipment

models and make that list available to district sta ff.V-12 OFF-ROAD CI ENGINES

• If an ARB-verified diesel emission control strateg y is available for the replacement engine, ARB requires installation of the retrofit v erified to the highest level, as discussed in the retrofit section of these project criteria, which still meets the cost-effectiveness limit of $14,300.

• For repowers of equipment with baseline engines ma nufactured under the flexibility provision, as detailed in Title 13, CCR, section 24 23(d), baseline emission rates shall be determined by using the latest applicable Tier emission standard for that engine model year and horsepower rating. Alternati ve emission rates will be allowed

with documentation of the actual emission rates fro m the manufacturer based on the engine serial number. Districts must submit all do cumentation to ARB as an attachment to the annual report.

• Replacement of an uncontrolled diesel off-road eng ine with a new or rebuilt on-road engine certified to an emission standard equal to o r lower than the Tier 2 off-road

emission standard or a newer emission-certified alt ernative-fuel engine is eligible for funding in off-road equipment with similar modes of operation to on-road vehicles. Other equipment may be eligible for funding on a ca se-by-case basis. These repowers must meet all other applicable project cri teria.

D. Retrofit

• Only ARB-verified retrofits are eligible for fundi ng. Emerging engine retrofits will become eligible for Program participation once ARB grants verification for sale in California. Non-verified technologies may be consi dered on a case by case basis if: 1) an application for verification of the retrofit or add-on equipment on the proposed engine category is pending, or 2) for highly specia lized equipment where it is unlikely

that a retrofit would be verified.

• Retrofit projects that control PM must use the hig hest level ARB-verified technology available for the equipment being retrofitted. The following are the diesel PM

reductions for each verified level:

– Level 1 - 25 percent;

– Level 2 - 50 percent; and

– Level 3 - 85 percent.

• Retrofit projects that control NOx must reduce NOx emissions from uncontrolled engines to the current applicable emission standard . If this is not feasible, the project must reduce NOx to at least the applicable Tier 1 NOx emission level (6.9 g/bhp-hr or lower). For emission-certified en gines, the retrofit technology must be able to reduce NOx emissions by at least 15 perc ent.

• The cost of the retrofit, filters, and maintenance of the retrofit device needed during the project life may be paid for with incentive fun ding provided it meets the

cost-effectiveness limit.V-13 OFF-ROAD CI ENGINES

E. Scrap

• Scrap requirements are described in the 2005 Carl Moyer Program Guidelines, Part I, Chapter 2: Administration of the Carl Moye r Program.

VI. Cost-Effectiveness

To receive Carl Moyer Program funding, each project must meet the maximum cost-effective threshold of $14,300 per weighted to n of covered pollutants reduced. Only funds provided by the Carl Moyer Program and l ocal district matching funds are to be used in determining cost-effectiveness.

Emission reduction benefits represent the differenc e in the emission levels of the existing baseline technology relative to the newer, reduced-emission technology. Baseline and reduced engine emission factors are li sted in Table B-12 in Appendix B. These factors reflect preliminary emission data bas ed on model input values to the OFFROAD emission inventory model for engines greate r than or equal to 25 hp.

A detailed description of how to calculate cost-eff ectiveness can be found in Appendix C. Off-road emission reduction calculatio ns will use either the fuel or hour based formula as discussed Appendix C. The equipme nt activity level must be based on actual hours reading from an hour-meter or other similarly appropriate documentation provided by the applicant (i.e., fuel receipts). Future annual hours of equipment operation for determining emission reduct ions must be based only on readings from an installed and fully operational ho ur-meter. A properly functioning hour-meter is required to support equipment activit y information included in the application for Carl Moyer Program funding. See th e Administrative Part of the Guidelines for additional information on this topic . In addition, specific cost-effectiveness criteria and sample calculations for off-road projects may be found in Section V of Appendix D.

VII. Minimum Project Requirements

These are minimum project application requirements; the district has full authority to require additional application, reporting, monitori ng, and scrapping requirements.

A. Application

Districts solicit bids for reduced-emission project s from off-road diesel equipment operators. The applicant must provide the minimum information illustrated in Table 5-3

below.V-14 OFF-ROAD CI ENGINES Table 5-3 Minimum Application Information for Off-road CI Pro jects

Applicant Information Organization, Company or Individual Name

Street Address City, County, State, Zip Code Primary Contact Name Primary Contact Phone Number Person with Contract Signing Authority Person who Filled Out Funding Application Project Address (if different from above)

Equipment Information Equipment Type/Function Equipment Make Equipment Model Equipment Model Year Equipment Serial Number Number of Main Engines on this Equipment

Activity Information Will the piece of equipment have a functioning hour meter for the full project life? (yes/no) Equipment Annual Hours of Operation or Gallons Fuel Consumption Percent Operation in California Percent Operation in Air District Project Life

Electronic Monitoring Unit (EMU) Will a new eligible EMU be installed as part of this project? (yes/no)

EMU Make

EMU Model

EMU Model Year

EMU ID Number EMU Cost (optional)

ADDITIONAL INFORMATION --

NEW PURCHASE PROJECTS ONLY Projected Year of Purchase of New Equipment Engine Information (for each project engine) New Engine Family New Engine Make New Engine Model New Engine Serial Number New Engine Horsepower NEW PURCHASE PROJECTS ONLY(cont.) New Engine Tier Fuel Type

Baseline Cost New Equipment Cost

ADDITIONAL INFORMATION --

REPOWER PROJECT ONLY Number of Main Engines to be Repowered Engine Information (for each project engine) Baseline Fuel Type Baseline Engine Make, Model, and Year Baseline Engine Horsepower Baseline Engine Tier Baseline Engine Serial Number Engine Annual Gallons Fuel Consumption or Hours of Operation Reduced Engine Fuel Type Reduced Engine Make, Model, and Year Reduced Engine Horsepower Reduced Engine Tier Reduced Engine Serial Number (if available) Reduced Engine Family Engine Baseline Cost New Engine Cost New Engine Installation Cost (optional)

ADDITIONAL INFORMATION --

RETROFITS ONLY Engine Make, Model, and Year Engine Horsepower Engine Serial Number Engine Tier Fuel Type

ARB-Verified Retrofit Device Name

Retrofit Device Serial Number

Retrofit Device Verification Level ARB-Verified NOx Reduction (%) ARB-Verified PM Reduction (%) ARB-Verified ROG Reduction (%)

Retrofit Device ARB Executive Order Number

Cost of Retrofit Cost of Installation (optional) Cost of Maintenance for Life of Project (optional)

A disclosure must also be included stating that the proposed project has not been funded and is not being considered for funding by a nother air district, ARB, or any other public agency. Any applicant who is found to have submitted multiple applications forV-15 OFF-ROAD CI ENGINES

the same project may be banned from submitting futu re applications to any and all Carl Moyer Program solicitations and may be subject to criminal sanctions. A project funded cooperatively by multiple air districts is e ligible for funding if the project parameters are coordinated amongst the participatin g districts and the project meets all applicable Carl Moyer Program criteria. Applicants are allowed to re-apply for project funding if a previous application has been rejected and is no longer being considered for funding.

Third party applications are not allowed. The owne r of the engine must sign and agree to the application. However, a third party (e.g. e ngine dealer or distributor) may complete an application or part of an application o n an owner’s behalf. Applications must include a signature section for third parties. The third party signature section must include signature and date lines, and blanks for th e third party to list how much they are being paid, if anything, to complete the applicatio n and what source of funds are being used to pay them. To make the Carl Moyer Program a ccessible to all potential applicants, including applicants that cannot afford to hire third party assistance, districts are encouraged to provide technical assistance to a pplicants in completing the application.

B. Reporting and Monitoring

Districts must abide by all reporting and monitorin g requirements described in Part I-Program Administration. Monitoring of proje ct progress ensures that the vehicle or engine is operated as stated in the program appl ication. Fleet operators and transit agencies participating in the Carl Moyer Program ar e required to keep appropriate records during the life of the funded project. Rec ords must be retained and updated for the duration of the project life and made available at the request of the district or ARB.

IV. References

ARB, 2000. Staff Report: Initial Statement of Reas ons. Public Hearing to Consider Amendments to Off-road Compression-ignition Engine Regulations: 2000 and Later Emissions Standards, Compliance Requirements and Te st Procedures. http://www.arb.ca.gov/regact/ciengine/isor.pdf

ARB, 2004a. Staff Report: Initial Statement of Rea sons. Proposed Amendments to the regulation for Statewide Portable Equipment Registr ation Program. http://www.arb.ca.gov/regact/portreg/isor.pdf

ARB, 2004b. Staff Report: Initial Statement of Rea sons. Public Hearing to Consider Amendments to the California Off-road Emissions Reg ulations for Compression-ignition Engines and Equipment. http://www.arb.ca.gov/regact /offrdcie/isor.pdfVI-1 OFF-ROAD LSI ENGINES Chapter Six

LARGE SPARK-IGNITION OFF-ROAD EQUIPMENT

Due to the upcoming regulations for large spark-ign ition (LSI) equipment that include forklifts, this chapter has been added to replace t he Forklift Chapter in the 2003 Guidelines. This revision of the Guidelines expand s funding opportunities from only forklifts to all LSI equipment types. The chapter provides an overview of off-road LSI equipment and discusses the emissions from LSI equi pment, the State and federal emission standards, and potential types of projects eligible for funding.

The Carl Moyer Program funds projects that provide emission reductions that are surplus to any regulation. Because proposed regula tions for LSI equipment are scheduled for consideration by the Board, staff wil l provide specific criteria to districts through a technical advisory approved by the Execut ive Officer once the Board has approved the proposed regulations.

In the interim, districts may continue to use the 2 003 Carl Moyer Program Guidelines to fund projects or request consideration of other pro jects on a case-by-case basis.

I. Introduction

LSI engines are typically derived from automobile e ngines and are most commonly fueled by gasoline or liquefied petroleum gas. A s mall number are fueled by compressed natural gas (CNG), and some have dual fu el capability. Off-road LSI equipment includes the following types of equipment : large turf care equipment, scrubber/sweepers, airport service vehicles, and a variety of other agricultural, construction, and general industrial equipment. Th e largest group of LSI equipment in California is forklifts, representing almost half o f the LSI inventory.

The U.S. Environmental Protection Agency (U.S. EPA) has sole authority to regulate new farm and construction equipment less than 175 h p. However, the Air Resources Board (ARB) has authority to regulate off-road equi pment equal to or greater than 175 hp, and all in-use off-road equipment and non-p reempted off-road equipment less than 175 hp.

II. Emissions

Uncontrolled LSI engines can emit more than 12 gram s per brake horsepower-hour (g/bhp-hr) of oxides of nitrogen plus hydrocarbons (NOx + HC). Statewide, the NOx + HC emissions from LSI equipment are approxima tely 70 tons per day.

The equipment categories shown in Table 6-1 represe nt the largest contribution to the overall off-road LSI inventory and are the focus of the proposed LSI regulation. Although these three categories account for only 60 percent of the off-road LSI equipment population in 2004, they account for more than 80 percent of the NOx + HCVI-2 OFF-ROAD LSI ENGINES Table 6-1 Statewide Emissions from Off-Road LSI Equipment

(tons per day)

2004 2010 2020 Equipment Category NOx ROG NOx ROG NOx ROG

Industrial Forklifts 40.4 11.8 19.9 5.3 15.6 3.4 Airport Ground Support Equipment 3.3 0.6 1.5 0.3 1.0 0.2

Sweeper/Scrubbers 0.8 0.2 0.3 0.1 0.2 0.1

Total 44.5 12.6 21.7 5.7 16.8 3.7

off-road LSI emission inventory. As shown in Table 6-1, most of those emissions are from forklifts, 80 percent of which are in large fl eets.

III. Regulatory Requirements

A. Emission Standards

In 1998, the ARB adopted LSI regulations that addre ssed the State's obligations under the 1994 State Implementation Plan (SIP). The SIP is California’s federally required plan describing how the State will reduce emissions and meet federal clean air

standards.

That regulation required all new LSI engines over 2 5 horsepower sold in California to be certified to a standard of 3.0 g/bhp-hr of NOx + HC . This was to be phased in from 2001 to 2004. In 2002, U.S. EPA adopted a more st ringent standard requiring that new LSI engines meet a 2.0 standard of g/bhp-hr of NOx + HC beginning in 2007.

B. Proposed Regulation

In order to achieve California’s clean air goals, t he 2003 SIP calls for further reductions from new and in-use LSI engines.

1. Emission Standards

The ARB staff has developed a proposal that would p rovide more low emission options for equipment purchases. Staff is proposing to req uire 2007 model year engines to meet a 2.0 g/bhp-hr standard and 2010 and subsequen t model year engines to meet a 0.6 g/bhp-hr standard. ARB staff is also proposing NOx + HC optional stand ards so that new 2007 engines can be certified to 0.1, 0.2, 0.4, 0.6, 1.0, and 1.5 g/bhp-hr. For model years 2010 and beyond, new engines could be certifi ed to 0.1, 0.2, and 0.4 g/bhp-hr.VI-3 OFF-ROAD LSI ENGINES 2. Fleet Rules

As part of the staff proposal, equipment fleets wou ld have to meet average emission requirements. Large and mid-size fleets of forklif ts, airport ground support equipment (GSE), sweeper/scrubbers (with a displacement great er than one liter), and non-GSE industrial tow tractors would have specific emissio n averages to meet.

Table 6-2 lists the proposed standards required of manufacturers as well as proposed compliance dates for fleets. The proposed averages that fleets would be required to meet would be based on the total number of pieces o f equipment in the fleet. Equipment with hour-meters documenting usage of les s than 251 hours per year would be exempt from the fleet average emission level req uirements.

Table 6-2 Current and Proposed Emission Standards and Fleet A verage Requirements (g/bhp-hr of NOx + HC)

LSI Fleet Type 2005 2006 2007 2008 2009 2010 2011 2012 2013 2016

Current Standards (CA and U.S. EPA) 3.0 2.0

Proposed Standards 3.0 2.0 0.6

Proposed Optional Standards 0.1, 0.2, 0.4, 0.6, 1.0, and 1.5 0.1, 0.2, and 0.4

Proposed Fleet Average Large Fleet Forklift 2.4 2.4 1.7 1.7 1.1 1.1

Proposed Fleet Average

Mid-size Fleet Forklift 2.6 2.6 2.0 2.0 1.4 1.4

Proposed Fleet Average

Non-forklift 3.0 3.0 2.7 2.7 2.5 2.5

Proposed Fleet Average

Small Fleet 3.0

Proposed Fleet Average Ground Support Equipment 3.0

Proposed Agricultural Crop Preparation Services Fleets 12 11.1 10.2 9.3 8.4 7.5 6.6 5.7 3

IV. Potential Projects

The ARB encourages replacement of LSI equipment wit h zero-emission equipment

where feasible. Information about zero-emission st rategies is provided in Chapter 12. Below are brief descriptions of potential projects. Off-road projects fall into three categories: 1) new purchase of an emission certifi ed engine, 2) repower with an emission certified engine, and 3) retrofit with ARB -verified technology.VI-4 OFF-ROAD LSI ENGINES

A. New Purchase

New or expanding facilities purchasing LSI equipmen t with engines that are certified to 30 percent below the current standard may qualify f or funding if the emission reductions are shown to exceed any regulatory requirements or LSI regulations adopted by ARB. This could be accomplished by purchasing equipment that is electric or certified to an optional low emission standard.

Since replacing an older electric forklift with a n ewer electric model would not reduce emissions, projects with "electric to electric" rep lacements are excluded. Purchase of new CNG LSI equipment may also be eligible if it is certified to meet optional low

emission standards.

B. Repower

Repower refers to the replacement of an existing en gine with a newer engine certified to

lower emission standards. This is an alternative t o rebuilding an existing engine to the original higher emitting specifications the existin g engine. The replacement engine must include all the emission control components th at an engine certified to the

standard would have as stated in the Executive Orde r. There may be some limits to repowering of LSI equipment because installing a ne wer engine design into existing equipment may not always be feasible. The baseline emissions for these projects would be the emission rate of the existing engine. The baseline cost would be the cost to rebuild. Repower projects may qualify for fundi ng if the emission reductions are shown to exceed any regulatory requirement or LSI r egulations adopted by ARB. Repowers of certified engines must provide at least a 15 percent emission reduction from the baseline engine and repowers of uncontroll ed engines must meet the current

emission standard.

C. Retrofit

Retrofit refers to modifications or additions made to an engine and/or fuel system such that the specifications of the retrofitted engine a re not the same as the original engine. Data has shown that existing LSI engines retrofitte d with closed loop, catalyst-based emission systems could achieve emission reductions similar to those achieved from new engines designed with catalysts. Retrofits for LSI equipment will likely incorporate advanced automotive-inspired emission control techn ologies that dramatically reduce emissions while meeting operational requirements. (See Appendix F for more discussion on retrofits.) This technology has been in use for about 10 years on a variety of LSI equipment. A retrofit would usually be inst alled at the time of engine rebuild or a regularly scheduled maintenance. To qualify for C arl Moyer Program funding, the emission control technology must be verified for sa le in California. The ARB has an interim verification procedure which manufacturers use to verify their emission control systems for LSI equipment.VI-5 OFF-ROAD LSI ENGINES

To be eligible to receive Carl Moyer Program funds, emission reductions must exceed any regulatory requirement or LSI regulations adopted by ARB. Typ ically under the Carl Moyer Program, retrofit projects are allowed i f they provide at least 15 percent reductions in emissions. However, under the propos ed LSI regulations only retrofits that reduce emissions by 25 percent or more will be verified. Hence, only retrofits that reduce emissions on uncontrolled LSI engines by 25 percent would be for Carl Moyer Program funding. Retrofit systems for i nstallation on emission-certified engines must by verified to a 2.0 g/bhp-hr of NOx+H C level or lower.

The eligible cost would be the complete emission co ntrol system and installation costs. It must be installed according to the criteria stat ed in the interim verification letter or Executive Order as applicable.

Since nearly half of the LSI equipment in Californi a is forklifts, some information on forklift classes is presented below. The Industria l Truck Association (ITA) has defined

seven classes of forklifts. These classes are defi ned by the type of engine, work environment (indoors, outdoors, narrow aisle, smoot h or rough surfaces), operator positions (sit down or standing), and equipment cha racteristics (type of tire, maximum grade, etc.). Several classes are further divided by operating characteristics.

Classifications are described in Table 6-3.

Table 6-3

Forklift Classes

Class Lift Code Engine Type Type/Use 1 1 Counterbalanced rider, stand up
1 4 Three-wheel, sit down 1 5 Counterbalanced rider, sit down
1 6 Counterbalanced rider, sit down

2 Narrow aisle truck

3 Electric

Hand or hand/rider truck

4 Rider, sit down, generally suitable for

indoor use on hard surfaces

5 Internal

Combustion Rider, sit down, typically used

outdoors, on rough surfaces or steep

inclines

6 Internal

combustion

and Electric Ride on unit with the ability to tow at

least 1,000 pounds; designed to tow cargo rather than lift it (e.g. an airport

tug)

7 Internal

combustion (primarily diesel) Rough terrain forklift truck for outdoor

use; almost exclusively powered by

diesel enginesVI-6 OFF-ROAD LSI ENGINES

Class 1 forklifts (lift codes 5 and 6) can be used in many of the same work applications as the class 4 or 5 forklifts because they are simi lar in design and specification. Increasing the use of class 1 forklifts relative to class 4 and 5 forklifts would reduce NOx

emissions of the fleets.

Class 6 trucks are ride-on vehicles designed to tow at least 1,000 pounds. Airport tugs are an example of a Class 6 truck. See Chapter 7 f or a description of Ground Support Equipment.

Class 7 consists of rough terrain forklifts for out door use. See Chapter 5 for project funding criteria for Class 7 forklifts which are us ually powered by diesel engines.

V. Proposed Project Criteria

Since all Carl Moyer Program projects must be surpl us to any regulations, specific project criteria that define project eligibility fo r the LSI source category must be based on LSI regulations that are adopted by the Board. After Board approval of the LSI regulation, staff will develop criteria for those p rojects that provide emission reductions beyond the approved regulatory requirements. Staff recommends that the Board grant the Executive Officer the authority to approve LSI project criteria in a technical advisory. In the interim, forklift projects would be allowed as approved under Chapter 12 (Zero-emission Technologies) for electric forklift replacements and the 2003 Carl Moyer Program Guidelines. During this interim period add itional LSI projects may be considered on a case-by-case basis.

On September 6, 2005, Governor Schwarzenegger signe d Senate Bill 467 (Lowenthal) which requires the ARB to revise the Carl Moyer Pro gram Guidelines to include projects in which an applicant turns in off-road equipment p owered by an internal combustion engines and replaces that equipment with new zero-e mission technologies. This legislation will take effect on January 1, 2006. A RB staff will evaluate how to incorporate the requirements of this legislation in to the Carl Moyer Program in 2006.

VI. Minimum Project Requirements

These are minimum project application requirements; the district has full authority to require additional application, reporting, monitori ng, and scrapping requirements.

A. Application

Districts solicit bids for reduced-emission project s from off-road equipment operators. The applicant must provide the minimum information illustrated in Table 6-4 below.VI-7 OFF-ROAD LSI ENGINES Table 6-4 Minimum Application Requirements for LSI Projects

Applicant Information Organization, Company or Individual Name

Street Address City, State, Zip Code Primary Contact Name Primary Contact Phone Number Person with Contract Signing Authority Person who Filled Out Funding Application Project Address (if different from above) Equipment Information Forklift will be for: existing operation or facilit y, facility expansion, or new facility operations (select one) Does the applicant rent/lease forklift to

others? Equipment Make Equipment Model Equipment Model Year Equipment Serial Number Maximum Rated Lift Capacity (pounds)

Forklift Class

Activity Information Will the piece of equipment have a functioning hour meter for the full project life? (yes/no) Annual Hours of Operation or Gallons Fuel Consumption Percent Operation in California Percent Operation in District Project Life

Electronic Monitoring Unit (EMU) Will a new eligible EMU be installed as part of this project? (yes/no)

EMU Make

EMU Model

EMU Model Year

EMU ID Number EMU Cost (optional) ADDITIONAL INFORMATION -

NEW PURCHASE ONLY Engine Family Engine Make Engine Model Engine Year Fuel Type Engine Serial Number Engine Tier Baseline Equipment Cost New Equipment Cost

ADDITIONAL INFORMATION -

REPOWER ONLY Baseline Engine Information Fuel Type Engine Make, Model and Year Engine Serial Number Engine Horsepower Engine Tier Engine Remanufacture Cost Reduced Engine Information Fuel Type Engine Make, Model and Year Engine Serial Number Engine Horsepower Engine Tier Newer Engine Cost Newer Engine Installation Cost

ADDITIONAL INFORMATION -

RETROFIT ONLY
ARB-Verified Retrofit Device Name
Retrofit Device Make
Retrofit Device Serial Number Verification Level (Level 1, Level 2, Level 3) ARB-Verified NOx Reduction (%) ARB-Verified PM Reduction (%) ARB-Verified ROG Reduction (%)
Retrofit Device ARB Executive Order
Retrofit Device Cost

Cost of Retrofit Device Installation Cost (optional) Cost of Retrofit Maintenance for Life of Project (optional)AIRPORT GSE VII -1 Chapter Seven

AIRPORT GROUND SUPPORT EQUIPMENT

This chapter describes the airport ground support e quipment (GSE) category under the Carl Moyer Program. It also gives a brief overview of the requirements for fleets. It discusses different types of equipment, current emi ssion standards, available control technology, and potential incentive projects eligib le for funding.

All Carl Moyer Program projects must be surplus to any regulation. Because regulations for GSE equipment with spark-ignition e ngines are currently scheduled for consideration by the Board in late 2005, this chapt er does not present criteria districts would use in selecting a project to fund. Staff wi ll present specific criteria to districts through a technical advisory approved by the Execut ive Officer once the Board has approved the proposed regulations for large spark-i gnition (LSI) equipment. In the interim, projects would be allowed as approved unde r the 2003 guidelines.

I. Introduction

Airport vehicles and ground support equipment are u sed to transport passengers as well as baggage and freight, to support maintenance and repair functions, and to provide power to various service functions. Airpor t GSE includes aircraft pushback tugs, baggage and cargo tugs, carts, forklifts and lifts, ground power units, air conditioning units, belt loaders, and other equipme nt. Vehicles and equipment at airports fall into two broad categories. Land-side vehicles and equipment are used on the passenger/entry side of the airport. Air-side vehicles are used principally (at least half of the time) on the tarmac. For the purposes of the Carl Moyer Program, this airport GSE chapter is only to be used to evaluate air-side equipment. Land-side vehicles and equipment may be considered under the on-road vehic les (Chapter 1) and off-road vehicles and equipment (Chapters 5 and 6) project c riteria of the Carl Moyer Program.

Airport GSE is typically powered by gasoline, diese l or propane. Airport GSE can also be powered by electric motors having zero exhaust e missions. Electric GSE is commercially available from a number of manufacture rs, and interest in the use of electric equipment is increasing. Currently, there are no federal or California regulations that require the use of electric GSE. There are ai rports throughout the United States, however, with a very high percentage of electric GS E. For example, Denver International Airport was designed for all electric GSE. Also, Logan International Airport in Boston has made considerable progress in switchi ng to electric GSE equipment.

Airport GSE are used from the moment an aircraft la nds until it takes off. GSE perform a variety of functions such as towing, powering, an d servicing aircrafts. There is great diversity in the type of equipment used, as well as in the variety of engines that power GSE. Table 7.1 below lists the commonly used types of GSE. Airport GSE can be owned by airlines, airports, cargo handlers, mail a nd parcel companies or managementAIRPORT GSE VII -2 companies. Most airlines own or maintain the GSE t hey use, or have full service leasing from equipment management companies. Airpo rts usually own the buildings and other stationary infrastructure on site and lea se them to the airlines. The installation and cost of improvements, including el ectric equipment and vehicle infrastructure, are usually subject to the approval of the airport's property management. Costs can either be borne by the airport or passed on to the airlines. There is also a growing trend for airports to own the ground power units and charge the airlines for the time of usage.

Table 7-1 Types of Airport GSE

Baggage Tug

Belt Loader Forklifts, lifts & cargo loaders

Ground Power Unit Aircraft Tug (narrow & wide body)

Airstart Unit

Air Conditioner

Deicer Cart & Lavatory Cart

Fuel Trucks Utility Trucks (lavatory, maintenance,

water & service)

Bobtail

II. Regulatory Requirements

The United States Environmental Protection Agency ( U.S. EPA) and ARB have adopted emission standards that will be phased in for new G SE equipment powered by off-road internal combustion (IC) engines. Internal combust ion engines used in GSE can be powered by either compression-ignition (CI or “dies el”) engines or by spark-ignition (SI) engines using gasoline, compressed natural gas (CNG ), or propane fuel. GSE is regulated under ARB and U.S. EPA's emission standar ds for off-road equipment.

ARB has the authority to regulate new off-road CI e quipment equal to or greater than 175 hp and non-preempted off-road CI less than 175 horsepower. In January 1992, the Board adopted exhaust emission standards for off-ro ad diesel engines 175 hp and greater, effective beginning with 1996 model year e ngines.

In August 1996, the U.S. EPA, ARB, and off-road die sel engine manufacturers signed a Statement of Principles, which established a progre ssive set of emission standards and

called for harmonization of ARB and U.S. EPA off-ro ad diesel engine regulations. The U.S. EPA adopted emission standards in 1998 and aga in in 2004 that provided for new oxides of nitrogen (NOx) + non-methane hydrocarbons (NMHC), PM, and carbon monoxide (CO) emission standards for engines within different power categories to beAIRPORT GSE VII -3 effective in a tiered approach, commonly referred t o as Tier standards. ARB has since

amended the California exhaust emission standards f or off-road diesel engines (originally adopted in 1992) to include non-preempt engines below 175 horsepower and to harmonize with the federal requirements. Please refer to Chapter 5: Compression-Ignition Off-Road Equipment for more di scussion on these requirements.

In 1998, the ARB adopted regulations for off-road L SI engines sold in California. The regulations require new LSI engines 25 horsepower a nd greater to be certified to an emission standard of 3.0 g/bhp-hr of NOx+HC. This standard was phased in between 2001 and 2004. The U.S. EPA followed in 2002, ado pting the same NOx+HC standard beginning in 2004. At the same time, the U.S. EPA also adopted a standard of 2.0 g/bhp-hr NOx+HC, beginning in 2007. ARB is cur rently developing a proposal that includes new emission standards and fleet requireme nts for LSI engines and equipment. This proposal is scheduled for Board co nsideration in late 2005 and would govern the development of project criteria for GSE. Please refer to Chapter 6: Off-Road Large Spark Ignition Equipment for more di scussion on the off-road LSI equipment category and emission requirements.

In 2002, the ARB and several airlines entered into a Memorandum of Understanding (MOU) aimed at introducing cleaner GSE, with an emp hasis on electric GSE, into the South Coast Air Basin. Under the agreement, all ma jor airlines operating at five airports in the South Coast Air Basin (LAX, Ontario, Orange County, Burbank, and Long Beach) would begin to incorporate lower-emission GSE into their fleets. GSE projects that are surplus to the emission reductions required under t he MOU are eligible for funding under the Carl Moyer Program. After the original p ublication of these Guidelines, the airlines exercised their option to terminate the MO U. The South Coast Air Quality Management District should coordinate with ARB staf f prior to funding GSE projects.

III. Potential Projects

A cost-effective strategy to reduce emissions invol ves the purchase of electric GSE,

which has no exhaust emissions. Electric GSE is co mmercially available for a number of equipment types, including belt loaders, baggage tractors, aircraft tugs, lifts, and ground power units. Several airlines and airports have conducted electric GSE demonstration programs and fleet conversion program s. Further discussion of electric GSE experiences can be found in Chapter 12: Zero-E mission Technologies and a report by Arcadis, Geraghty & Miller [ARB, 1999].

Airport GSE emissions can also be decreased by retr ofitting the equipment with a PM filter, diesel oxidation catalyst or a three-way ca talyst. For instance, catalysts have

been added to SI GSE to meet the current LSI emissi on standards. In addition, to reduce emissions GSE can be repowered with a new, c leaner IC engines.

The Carl Moyer Program will fund the purchase of el ectric GSE, as well as GSE repower and retrofit projects if this equipment is not subject to any existing or planned regulations, funded through another incentive progr am, or used to generate credits ofAIRPORT GSE VII -4 any type. In addition, projects that are surplus to the emission reductions required under the South Coast MOU are eligible for funding. The most promising categories are those where electric equipment has been used and demonstr ated and are readily available

from commercial vendors. This includes electric ba ggage tugs, belt loaders, and aircraft tugs. These equipment categories also represent a significant portion of the statewide GSE population and have some of the highest average annual hours of usage. Purchase of electric GSE instead of IC-engine GSE w ould yield significant emission benefits. Therefore, the Carl Moyer Program guidel ines would continue to target these categories. Other promising projects include lifts and cargo loaders. Carts, lavatory carts and air-start units each represent a smaller fraction of the GSE equipment inventory. Fuel, utility, water, and service truck s are not covered under the current airport GSE guidelines, but may be considered under the on-road vehicle category (Chapter 1).

IV. Project Criteria

Since potential GSE projects could involve either C I or SI engines, eligibility criteria for GSE would be dependent on the base engine of the GS E and any regulatory requirements, including fleet requirements, applica ble to the GSE category. For projects involving CI GSE, please refer to Chapter 5. For LSI GSE, specific project criteria will be developed based on the outcome of the proposed regulation for LSI engines and equipment currently scheduled for Board ’s consideration in late 2005. Staff recommends that the Board grant the Executive Officer authority to approve GSE project criteria in a Carl Moyer Program advisory. Until the Board adopts the upcoming LSI regulation, districts may continue to fund GSE projects using the 2003 Carl Moyer Program Guidelines. In addition, airport GSE used at non-commercial airports would be eligible for funding. During this interim period, additional GSE projects may be considered on a case-by-case basis.

Airport GSE projects funded by the Carl Moyer Progr am must meet a cost-effectiveness of $14,300 per weighed ton of NOx + ROG + combustio n PM10 reduced calculated in accordance with the cost-effectiveness methodology discussed in the Guidelines.

On September 6, 2005, Governor Schwarzenegger signe d Senate Bill 467 (Lowenthal) which requires the ARB to revise the Carl Moyer Pro gram Guidelines to include projects in which an applicant turns in off-road equipment p owered by an internal combustion engines and replaces that equipment with new zero-e mission technologies. This legislation will take effect on January 1, 2006. A RB staff will evaluate how to incorporate the requirements of this legislation in to the Carl Moyer Program in 2006.AIRPORT GSE VII -5 Table 7-2 Minimum Application Requirements for Ground Support Equipment

Applicant Information Organization, Company or Individual Name

Street Address City, State, Zip Code Primary Contact Name Primary Contact Phone Number Person with Contract Signing Authority Person who Filled Out Funding Application Project Address (if different from above)

Equipment Information Equipment Type (A/C tugs – narrow body, AC tugs – wide body, belt loader, baggage tug, cargo loaders, ground power units, or lifts) Equipment Operator (airline, airport, equipment management company, or other) Equipment Make, Model and Year Equipment Serial Number Projected Year of Purchase of New GSE

Baseline GSE Fuel

New GSE Vendor (optional)

Activity Information Will the piece of equipment have a functioning hour meter for the full project life? (yes/no) Annual Hours of Operation or Gallons Fuel Consumption Percent Operation in California Percent Operation in District Project Life

Electronic Monitoring Unit (EMU) Will a new eligible EMU be installed as part of this project? (yes/no)

EMU Make

EMU Model

EMU Model Year

EMU ID Number EMU Cost (optional) ADDITIONAL INFORMATION -

NEW PURCHASE ONLY Engine Family Engine Make, Model, Year Fuel Type Engine Serial Number Engine Tier Baseline Equipment Cost New Equipment Cost

ADDITIONAL INFORMATION -

REPOWER ONLY Baseline Engine Information Fuel Type Engine Make, Model and Year Engine Serial Number Engine Horsepower Engine Tier Engine Remanufacture Cost Reduced Engine Information Fuel Type Engine Make, Model and Year Engine Serial Number Engine Horsepower Engine Tier Newer Engine Cost Newer Engine Installation Cost

ADDITIONAL INFORMATION -

RETROFIT ONLY
ARB-Verified Retrofit Device Name
Retrofit Device Make Retrofit Device Serial Number Verification Level (Level 1, Level 2, Level 3) ARB-Verified NOx Reduction (%) ARB-Verified PM Reduction (%) ARB-Verified ROG Reduction (%)
Retrofit Device ARB Executive Order
Retrofit Device Cost
Cost of Retrofit Device Installation Cost Cost of Retrofit Maintenance for Life of Project

V. References

ARB, 1999. Assessment of Airport Ground Support Eq uipment Using Electric Power or Low-Emitting Fuels (Final Report), Final Report to Air Resources Board. Arcadis Geraghty & Miller, July 20, 1999.VIII-1 LOCOMOTIVES Chapter Eight

LOCOMOTIVES

This chapter presents program criteria for locomoti ve projects, and provides an overview of the locomotive industry, locomotive emi ssions, current emission control requirements, and types of incentive projects eligi ble for funding. The chapter also sets requirements for installation of an idle-limiting d evice (ILD) on project locomotives, and defines criteria for hybrid and multiple engine swi tcher projects.

I. Introduction

Locomotives move more than 40 percent of the freigh t in the United States, on a ton-miles basis [Association of American Railroads, 2004]. Most locomotives operating today are diesel-electric, using a diesel engine to drive a generator, which in turn drives the locomotive wheels. Locomotive engines have ver y long useful lives, with the capability of being rebuilt numerous times.

Locomotives provide line-haul, short-haul, switcher , and passenger service. Each of these locomotive types has discrete functions and c haracteristics:

• Line Haul - Line-haul locomotives typically transport goods between major urban centers, sometimes up to 3,000 miles apart. Line-h aul locomotives operate at higher speeds than other locomotives and generally utilize engines with 3,000 or greater horsepower. Because reliability is important for l ine-haul operators, these

locomotives tend to be newer and well-maintained.

• Short-Haul - Short-haul locomotives perform a combination of line-haul and railyard service. Typically, they use 2,000 to 3,800 horsep ower engines, and move freight regionally or locally. For the purposes of the Car l Moyer Program, short-haul

locomotives are treated the same as line-haul locom otives.

• Switcher

- Switch locomotives separate and move railcars fr om track to track or transfer cars to and from regional carriers. Typic ally, they use 1,500 to 2,300 horsepower diesel engines, travel short distances a t low speeds, make numerous stops, and idle frequently for long periods of time . Switcher locomotives are generally remanufactured from aging line-haul locom otives. Switchers are typically the oldest and most poorly maintained locomotives.

• Passenger

- Passenger locomotives haul passengers rather tha n freight, and are typically used in high speed, line-haul type operat ions. The average passenger train is about 10 years old and has a 3,000 to 3,600 hors epower engine.VIII-2 LOCOMOTIVES

II. Emissions

Locomotives are a significant source of oxides of n itrogen (NOx) and particulate matter (PM) emissions. Line haul and short-haul locomotiv es emit over 90 percent of locomotive NOx and PM emissions in California, whil e switchers and passenger locomotives are responsible for about six and two p ercent of locomotive emissions, respectively. Although switch locomotives generate less overall emissions than line-haul locomotives, their emissions tend to be c oncentrated at and around railyards, and can pose greater health concerns for nearby com munities.

About 25 percent of the State’s locomotive NOx and PM emissions occur in the Mojave Desert Air Basin (See Table 8-1, below). The bulk of these emissions are generated by the hauling of freight from the Ports of Los Angele s and Long Beach through Barstow to points east. Barstow is home to the second largest rail yard west of the Mississippi River; the largest is the Roseville Rail Yard in th e Sacramento Valley. Locomotives in the South Coast Air Basin contribute about 20 perce nt of statewide locomotive emissions, while the locomotives in the San Joaquin Valley and Sacramento Valley each account for about 15 percent.

Table 8-1 Locomotive Emission Inventory (Annual average tons per day in 2005)

Region NOx PM
Mojave Desert Air Basin 39 1.3

South Coast Air Basin 33 1.0 San Joaquin Valley 24 0.7 Sacramento Valley 23 0.7 Bay Area 11 0.3

Rest of the State 32 1.1

Total 162 5.1

Based on ARB’s CCOS Emissions Inventory (Version 2. 12)

III. Regulatory Requirements

The U.S. Environmental Protection Agency (U.S. EPA) , with its sole authority to set

emission standards for new and remanufactured locom otives, has adopted phased-in locomotive emission standards [Federal Register, Ap ril 16, 1998]. Federal locomotive emission standards contain two primary provisions: 1) remanufacture emission limits applicable to railroads whenever they remanufacture or rebuild their locomotive engines, and 2) emission standards for new locomoti ves applicable to locomotive

manufacturers.VIII-3 LOCOMOTIVES

A. Locomotive Remanufacture Emission Standards

Regulation of remanufactured locomotives is critica l because locomotives are generally remanufactured five to ten times during their servi ce lives. U.S. EPA’s locomotive remanufacture emission standards therefore provide a mechanism to reduce emissions from the existing fleet. Federal locomotive remanu facture emission standards require locomotives originally manufactured in 1973 or late r to meet the emission limits listed in Table 8-2 whenever they are rebuilt or remanufactur ed. Locomotives originally manufactured before 1973 are exempt from the federa l locomotive remanufacture requirements.

Table 8-2

Federal Exhaust Emission Standards for Locomotives for New Engines and at Time of Remanufacture

(g/bhp-hr)

Duty-cycle Gaseous and Particulate Emissions

HC CO NOx PM Tier 0 (1973 – 2001 model years)

Line-haul/ Passenger 1.00 5.0 9.5 0.60

Switcher 2.10 8.0 14.0 0.72 Tier 1 (2002 – 2004 model years)

Line-haul/ Passenger 0.55 2.2 7.4 0.45

Switcher 1.20 2.5 11.0 0.54 Tier 2 (2005 and later model years)

Line-haul/ Passenger 0.30 1.5 5.5 0.20

Switcher 0.60 2.4 8.1 0.24

U.S. EPA locomotive remanufacture requirements also include an exemption for small railroads -- line-haul railroads with fewer than 1, 500 employees, and switch railroads with fewer than 500 employees. Surface Transportat ion Board (STB) freight railroad classifications, based on annual revenues, provide an equivalent mechanism for distinguishing between large and small railroads in California. STB railroad classifications, and the applicable U.S. EPA remanu facture requirements, are as

follows:

• Class I Railroads - Class I freight railroads are carriers with annu al revenues greater than or equal to $266.7 million. Locomotives owned and operated by Class I

railroads in California must meet the U.S. EPA rema nufacture emission limits in Table 8-2. The Union Pacific Railroad (UP) and the Burlington Northern & Santa Fe Railroad (BNSF) are the only Class I freight railro ad companies operating in

California.VIII-4 LOCOMOTIVES

• Class II Railroads - Class II railroads are carriers with annual reve nues between $21.3 and $266.7 million. Class II railroads are e xempt from federal locomotive remanufacture requirements. Currently, there are n o Class II railroads headquartered in California. For the purposes of the Carl Moyer Program, a Clas s II railroad locomotive must meet the same project crit eria as a Class III railroad

locomotive.

• Class III Railroads - Class III railroads are carriers with annual rev enues less than $21.3 million. Class III railroads in California a re largely exempt from federal locomotive engine remanufacture requirements. As a result, many older, unregulated locomotives continue to operate at Clas s III railroads.

• Military and Industrial Railroads – Over 100 military and industrial locomotives owned by non-railroad companies operate in Californ ia. These locomotives are generally much smaller in size and horsepower than locomotives used by larger rail yards, are confined to small yards or industrial pl ants, and are typically 40 to 60 years old. Military and industrial locomotives are largely exempt from federal locomotive remanufacture requirements. For the pur poses of the Carl Moyer Program, military and industrial locomot ives must meet the same project

criteria as a Class III railroad locomotive.

• Passenger Service Railroads – Amtrak is California’s only passenger locomotive operator not considered a small railroad by federal regulations. Amtrak is therefore the state’s only passenger railroad subject to fede ral locomotive remanufacture requirements. Amtrak locomotives are currently req uired to meet all Tier 1 and Tier 2 emission limits, but are not subject to Tier 0 remanufacture requirements for their 1973 through 2001 model year locomotives unti l 2007.

The practical impact of the federal small railroad exemption from locomotive remanufacture requirements is that UP, BNSF, and Am trak locomotives must meet federal remanufacture emission limits, while other railroads can remanufacture to

uncontrolled emission levels.

B. Emission Standards for New Locomotives

The second component of federal locomotive standard s took effect in 2000, applies to locomotive manufacturers, and requires all new loco motives to meet the tiered emission standards in Table 8-2. Because these standards ap ply to locomotive manufacturers, all railroads, regardless of size, must purchase lo comotives meeting Tier 2 emission limits when purchasing a new locomotive. In practi ce, however, only Class I railroads purchase new locomotives, while Class III railroads typically purchase existing in-use

locomotives.VIII-5 LOCOMOTIVES

C. Upcoming Regulations

In May 2004, U.S. EPA issued an Advanced Notice of Proposed Rulemaking, signaling its intent to pursue more stringent standards for n ew and existing locomotives [U.S. EPA, 2004]. The standards are likely to be m odeled after 2007 and 2010 on-road and off-road diesel engine standards, and to be bas ed on the application of catalytic after-treatment technology. The new locomotive sta ndards could be phased in beginning as early as 2011.

D. South Coast Locomotive Memorandum of Understand ing

The Air Resources Board (ARB or “Board”) and U.S. E PA have an enforceable Memorandum of Understanding (MOU) with UP and BNSF railroads to implement a locomotive fleet average emissions program in the S outh Coast Air Basin (SCAB). The purpose of the South Coast MOU is to expedite the i ntroduction of new, lower-emitting locomotive engines in the SCAB. The agreement comm its UP and BNSF railroads to achieve a 5.5 g/bhp-hr locomotive fleet average NOx emission rate in the SCAB by 2010. The railroads can also get credit towards th eir 2010 fleet average target by exceeding the fleet average emissions targets betwe en 2005 and 2009.

In order to ensure Carl Moyer Program funding achie ves surplus emission reductions, railroads subject to the South Coast MOU must meet the following minimum project

criteria:

• Locomotive projects in the SCAB may not be include d in the MOU fleet average emission rate compliance demonstration.

• The project baseline emission rate for all locomot ives in the SCAB subject to the South Coast MOU shall be equivalent to the Tier 2 e mission rates identified for

line-haul and switch locomotives in Table B-16.

• Class I freight railroad locomotive projects in al l air districts, with the exception of the South Coast, must have a minimum project life of te n years.

This last requirement helps ensure that a cleaner l ocomotive funded in another air district cannot be exchanged for a dirtier locomoti ve in the SCAB at the completion of the project life to demonstrate compliance with the South Coast MOU. Allowing such an exchange, even at the end of the project life, coul d result in higher overall emissions since the locomotive exchanged into the participati ng air district could be dirtier than the original project locomotive.

E. Statewide Locomotive Memorandum of Understandin g

In June 2005, ARB signed a Statewide MOU with UP an d BNSF railroads. The MOU requires UP and BNSF to install an ILD on over 99 p ercent of their intrastate locomotives between June 30, 2006 and June 30, 2008 . The Statewide MOU also requires 80 percent of the diesel fuel dispensed to UP and BNSF locomotives in California to be low-sulfur diesel by the end of 20 06. This agreement complements anVIII-6 LOCOMOTIVES

ARB intrastate locomotive fuels regulation, adopted in November 2004, which requires

all intrastate diesel locomotives to use California reformulated low-sulfur diesel fuel by January 1, 2007. The Statewide MOU also requires t hat railroads conduct health risk assessments at California’s rail yards and consider additional long-term strategies to reduce idling PM emissions and health risks. Becau se the Statewide MOU requires virtually all UP and BNSF locomotives have ILDs, IL D projects for UP and BNSF locomotives are not eligible for Carl Moyer Program funding.

IV. Potential Projects

Projects eligible for Carl Moyer Program incentive funding include repower or retrofit of an existing locomotive engine, purchase of a new re duced-emission engine or locomotive, or installation of an ILD. Hybrid and multiple engine switch locomotive projects have also received Carl Moyer Program fund ing in recent years and are eligible for funding. Other technologies that offer real em ission reductions may also be considered on a case-by-case basis. Funding for pr ojects considered on a case-by-case basis shall be contingent on a clear d emonstration that the project shall achieve surplus, real, quantifiable, and enforceabl e emission reductions.

A. Repower

A locomotive engine repower involves replacing an e xisting locomotive engine with a newer, lower-emitting engine. Locomotive repower p rojects must achieve at least a 15 percent NOx reduction beyond existing emissions lev els. Repower projects for 1973 and later year Class III locomotives must achieve a t least Tier 0-equivalent emission rates if a remanufacture kit certified by U.S. EPA to meet Tier 0 or lower emission levels

is available. Baseline emissions for locomotive re power projects reflect federal emission requirements for engine remanufacture (e.g . Tier 0 through Tier 2 emission rates for Class I locomotives, and uncontrolled emi ssions for pre-1973 locomotives and Class III locomotives). Baseline costs for repower projects reflect the cost to remanufacture the project engine or $50,000, whiche ver is greater. All locomotive repower projects must include installation of an au tomatic engine start-stop (AESS) idle reduction device if the project locomotive is not a lready equipped with such a device and installation is technically feasible.

B. Retrofits

Retrofits involve hardware modifications to the eng ine or exhaust system to reduce emissions. Potential retrofit projects involve the addition of an ARB-verified retrofit device, or installation of a U.S. EPA-certified rem anufacture emission kit. For most Carl Moyer Program categories, a retrofit device mu st be ARB-verified in order to be considered for funding. To date, however, very few retrofit technologies have been

verified to reduce emissions from a locomotive. Re trofit technologies generally develop first for on-road sources, and are later refined fo r use on off-road engines. Because of

the lack of retrofit devices verified for use on a locomotive engine, ARB will consider funding a locomotive after-treatment retrofit devic e which is not yet ARB-verified for useVIII-7 LOCOMOTIVES

on locomotives on a case-by-case basis. Applicants for funding on a case-by-case basis must meet the applicable project criteria ide ntified in Section V of this chapter.

In recent years, engine manufacturers have also dev eloped U.S. EPA-certified engine

remanufacture kits for use on locomotives. To be e ligible for Carl Moyer Program funding, remanufacture kits must be U.S. EPA certif ied to achieve at least Tier 0 locomotive emission standards on the project locomo tive engine. Remanufacture kit projects must also achieve at least 15 percent NOx reductions from the project locomotive if taking credit for NOx emission reduct ions. Kits which utilize fuel injection timing retard must be clearly demonstrated to not i ncrease in-use PM or hydrocarbon emissions to be eligible for funding. Individual e ngine parts or other locomotive components are not eligible for funding except as p art of a complete U.S. EPA-certified engine remanufacture kit.

C. Idle-Limiting Devices

Locomotive operators idle their engines to maintain battery charge, warmth of the engine coolant, fuel, oil, and water, and comfortab le temperatures inside the operator cabs. Locomotives also idle to ensure the engine i s readily available (avoiding unnecessary starting and shutting-down), and becaus e of habitual practice. Installation of an ILD can significantly reduce emissions from l ocomotives, which typically spend 40 to 60 percent of their operating time in the idl e duty cycle.

The ILD technologies on the market today vary in op erational requirements and predictability of idling reductions. The AESS prov ides an automatic, fully integrated mechanism to reduce idling and does not rely upon a locomotive operator or require additional engines or infrastructure. An AESS typi cally uses a central computer to monitor vital engine parameters, such as battery ch arge, water temperature, and brake pressure, and automatically shuts off the engine af ter a set time. This technology is generally applicable to more locomotive types and o perating conditions than other ILD

devices.

Other ILDs include diesel driven heating systems (D DHS), stationary power plug-in units, and locomotive auxiliary power units (APU). These ILD technologies can reduce locomotive idling time under certain conditions. F or example, a DDHS is particularly effective in colder climates, while a stationary po wer plug-in unit is feasible only for site specific locomotives where plug-in technology can be permanently located. Costs for these ILDs range from $4,000 to $12,000 for a s hore power plug-in unit, $8,000 to $15,000 for an AESS, and $25,000 to $35,000 for an DHSS or APU.

Because an AESS unit can provide significant and pr edictable air quality benefits at a relatively low cost, locomotive repower projects wi thout a functioning ILD must include installation of an AESS, if feasible, to receive pr ogram funding. The Carl Moyer Program shall pay actual equipment costs up to a maximum of $8,000 for

the AESS and actual installation costs of the AESS up to $3,400. The award cap reflects the fact that AESS installation significan tly reduces locomotive operating costsVIII-8 LOCOMOTIVES

and has a typical capital payback period of one to three years. Other ILD technologies may be considered for program funding on a case-by- case basis if an AESS device cannot be installed on the project locomotive.

D. Alternative Technology Switch Locomotives

In recent years, several diesel-electric hybrid swi tch locomotives have been funded through the Carl Moyer Program. Hybrid switch loco motives significantly reduce PM and NOx emissions, idling time, and fuel use compar ed to conventional switchers. These locomotives use the same basic concept as a g as-electric hybrid automobile -- a battery pack powers the locomotive, while a small d iesel engine runs as needed to keep the batteries charged. Hybrid locomotives typicall y utilize an aging locomotive frame and replace the existing large diesel engine, gener ator, and analog controls with a small diesel generator, battery pack, and computerized co ntrol module. The batteries can provide up to 90 percent of the locomotive horsepow er at full load, while the remaining power comes from a 300 to 800 horsepower diesel eng ine. In addition to driving the locomotive, the added weight of the battery pack pr ovides additional traction to propel

the locomotive.

Switch locomotive projects which involve replacing the main engine with multiple heavy-duty truck or off-road engines have also beco me more common. Multi-engine locomotive projects also typically involve signific antly refurbishing an existing locomotive frame with new batteries, electronics, and controls . The replacement engines typically have a much lower horsepower rating and lower emiss ions than the engine they replace. For the purposes of the Carl Moyer Progra m, hybrid and multiple engine switchers, as described above, are defined as alter native technology switchers.

Switch locomotive purchase practices are unique. F ew new locomotives are manufactured and purchased by the railroads for use in switcher service. Instead, as line-haul locomotives get older and less reliable, they are remanufactured for switching service and moved to a rail yard. In many cases, C lass III railroads will purchase older switchers when they are retired by Class I railroad s. Because railroads do not typically purchase newly manufactured switcher locomotives, a n alternative technology switcher is considered a new locomotive purchase for the pur pose of the Carl Moyer Program.

Baseline project emissions and costs for alternativ e technology switchers also reflect differing Class I and Class III regulatory requirem ents and purchase practices. Since Class I railroads are required to meet federal loco motive remanufacture emission standards for 1973 and newer locomotives, a new Cla ss I switcher would typically emit

at Tier 0 emission rates. Class III railroads -- w hich are not subject to federal requirements and typically purchase older, in-use l ocomotives -- typically remanufacture

to uncontrolled emission levels. Baseline emission s for hybrid and multiple engine switcher projects at Class I and Class III railroad s therefore reflect Tier 0 and uncontrolled emission rates, respectively.VIII-9 LOCOMOTIVES

The Carl Moyer Program may fund up to 60 percent an d 80 percent of the total cost of an alternative technology switcher for Class I and Class III railroads, respectively. Project funding caps reflect the differential cost of a typical switcher purchased by Class I and Class III railroads, as described above . Funding caps have also been set in recognition that an alternative technology switcher achieves significant fuel cost savings

over its lifetime relative to a traditional switch locomotive.

U.S. EPA requires new switchers with an aggregate e ngine power rating greater than or equal to 1,006 horsepower to be certified to meet f ederal locomotive emission standards. An alternative technology switcher with federal locomotive certification must be evaluated based upon its certified locomotive em ission rate. If federal locomotive certification is not required or not yet complete, the switcher may be evaluated and considered for Carl Moyer Program funding based upo n the project engine’s on- or off road engine certification. However, alternativ e technology switchers must meet all federal certification requirements before program f unding can be distributed to the project participant. Federal locomotive certificat ion must demonstrate the locomotive emits NOx at a rate at least 30 percent below the T ier 2 locomotive emission standard.

V. Project Criteria

These criteria provide the minimum requirements for all Carl Moyer Program locomotive projects. Participating districts retain the autho rity to impose additional requirements in

order to address local concerns.

A. General

• Emission reductions obtained through Carl Moyer Pr ogram projects must not be required by or used to comply with any federal, sta te or local regulation, memorandum of agreement/understanding with a regula tory agency, settlement agreement, mitigation requirement, or other legally binding document. Inclusion in a rail yard or port emission reduction plan, lease ag reement, or other voluntarily adopted strategy does not exclude a locomotive proj ect from funding eligibility, if such a project is not otherwise required.

• No emission reductions generated by the Carl Moyer Program shall be used as marketable emission reduction credits, or to offset any emission reduction obligation of any person or entity.

• No project funded by the Carl Moyer Program shall be used for credit under any federal or state emission averaging banking and tra ding program.

• Locomotive operators utilizing an alternative emis sion control plan (AECP) to comply

with California’s locomotive low-sulfur diesel fuel requirements shall not be eligible for Carl Moyer Program funds.VIII-10 LOCOMOTIVES

• Beginning January 1, 2007, all diesel locomotive p rojects must use ARB low-sulfur

diesel fuel. Emission reductions and costs associa ted with use of ARB low-sulfur diesel shall not be included in project cost-effect iveness calculations.

• Projects must meet a cost-effectiveness of $14,300 per weighed ton of NOx + ROG

+ combustion PM10 reduced calculated in accordance with the cost-effectiveness methodology discussed in this chapter.

• Carl Moyer Program grants can be no greater than a project’s incremental cost. The incremental cost is the cost of the project minus t he baseline cost. The incremental cost shall be reduced by the value of any current f inancial incentive that reduces the project price, including tax credits or deductions, grants, or other public financial

assistance.

• The contract term for all locomotive projects must be equivalent to the project life. The project life is defined as the number of years used to evaluate project

cost-effectiveness.

• Class I freight locomotive projects in air distric ts other than the South Coast must have a minimum project life of ten years. All othe r locomotive projects have a minimum project life of three years. ARB may appro ve a shorter project life on a case-by-case basis. Projects with shorter lives ma y be subject to additional funding restrictions, such as a lower cost-effectiveness li mit or a project cost cap.

• The maximum project life for a locomotive project is 20 years.

• Because of uncertainty in locomotive load factors, locomotive project activity must be based upon fuel consumption.

• Seventy-five percent of estimated annual miles tra veled and annual fuel consumption must occur in California.

• The energy consumption rate for a locomotive engin e is 20.8 bhp-hr per gallon. The energy consumption factor for an on- or off-road en gine used in a locomotive application is 18.5 bhp-hr per gallon.

• Carl Moyer Program funds cannot be use to pay for labor or parts used during

routine maintenance.

• Class I locomotives subject to the South Coast MOU are eligible for Carl Moyer Program funding only if such locomotives are excluded from the fleet average emission rate calculations which demonstrat e compliance with the MOU provisions. The baseline emission rates used to de termine emission reductions and cost-effectiveness for these locomotive projects re flect the Tier 2 emission rates for

line-haul and switch locomotives identified in Tabl e B-16. Locomotives subject toVIII-11 LOCOMOTIVES

the South Coast MOU which receive Carl Moyer Progra m funding are ineligible to receive fleet average emission credits.

• Military and industrial locomotives and locomotive s owned or operated by Class II railroads use the same Carl Moyer Program criteria as Class III railroad locomotives.

• Locomotive engine emissions, if based on emission testing, must be determined following the most current and approved U.S. EPA em ission testing procedures for

locomotives.

• All locomotive new purchase or repower projects mu st include an electronic monitoring unit (EMU) to track activity and geograp hic location. Eligible EMUs include a geographic positioning system (GPS) unit, transponding device, automated vehicle locator (AVL), or other similar device. Th e EMU must be capable of providing complete digital information regarding to tal activity both within the air district and the State of California; this informat ion shall be reported to air districts annually for the project life. The full purchase, installation and data summarization

or transmittal costs associated with the EMU is eli gible for Carl Moyer Program funding, and may be included when calculating proje ct cost-effectiveness.

• For all liquefied natural gas-diesel or other dual fuel locomotive projects, an EMU must be used to electronically monitor activity and fuel consumption by fuel type.

• Potential projects which fall outside of these cri teria may be considered on a case-by-case basis if evidence provided by the air district suggests potential surplus, real, quantifiable, and enforceable emission reduct ion benefits.

• Air districts must consult with ARB staff to deter mine eligibility of all projects considered for funding on case-by-case basis. All p rojects considered on a case-by-case basis must receive ARB approval prior to receiving program funding.

B. New Purchase

• Purchase of a new locomotive must achieve federal Tier 2 locomotive emission standards for PM and hydrocarbon emissions, and a N Ox emission rate at least 30 percent below Tier 2 locomotive emission standar ds.

• For the purposes of the Carl Moyer Program, an alt ernative technology switcher is defined as a hybrid (e.g., Green Goat) or multiple engine switcher in which an existing locomotive chassis is significantly refurb ished with a new engine, batteries, electronic controls, and/or other equipment. An al ternative technology switcher project is considered a new locomotive purchase and must meet all emission criteria for a new locomotive purchase. Other switch locomo tives may be considered for funding as an alternative technology switcher on a case-by-case basis.VIII-12 LOCOMOTIVES

• Baseline emissions for an alternative technology s witcher project reflect Tier 0

emission rates for Class I locomotives and uncontro lled emission rates for Class III locomotives. The cost of an alternative technology switcher eligible for Carl Moyer Program funding shall not exceed 60 perc ent of the total cost of the new switcher for Class I railroad switchers, and 80 per cent of the total cost of the new

switcher for Class III railroad switchers.

• Baseline emissions and costs for a new locomotive purchase project which is not an alternative technology switcher reflect Tier 2 emis sion rates and the cost of a new Tier 2 locomotive, respectively.

• An alternative technology switcher with federal lo comotive certification must be evaluated based upon its federally certified locomo tive emission rate; alternatively, if federal locomotive certification is not required or not yet complete, the project may be evaluated and considered for funding based upon its on- or off-road engine certification. If not federally certified, locomot ives may on a case-by-case basis

utilize NOx emission rates associated an ARB determ ination of an Ultra-Low

Emission Locomotive under the South Coast MOU. Loc omotives must meet all federal certification requirements before funding c an be distributed to the project participant.

C. Repower

• Locomotive repower projects must achieve at least a 15 percent NOx reduction beyond existing emission levels.

• Baseline emissions for a locomotive engine repower are based upon federal emission requirements for engine remanufacture (see Section III of this chapter) and the corresponding emission rates in Table B-16. Ba seline costs for a locomotive engine repower equal the actual remanufacture cost or $50,000, whichever is
greater.

• 1973 and later model year Class III locomotives mu st achieve at least Tier 0 emission levels, if Tier 0 remanufacture kits are a vailable.

• Alternative-fueled engines must be ARB- or U.S. EP A-certified to achieve a reduced emission level in a locomotive application. Altern ative-fueled engines not certified to achieve a reduced emission limit in a locomotive ap plication may be eligible for funding on a case-by-case basis.

D. Retrofit

• A retrofit device must be ARB-verified to reduce e missions from the project engine in order to be eligible for funding. Non-verified tec hnologies may be considered on a case by case basis if: 1) an application for verif ication of the retrofit or add-on equipment on the proposed engine category is pendin g, 2) the retrofit or add-onVIII-13 LOCOMOTIVES

equipment has been verified or certified by ARB or U.S. EPA for use on a similar engine category, or 3) project emission benefit, du rability, and applicability have been or shall be demonstrated through in-situ testi ng.

• Retrofits considered for funding on a case-by-case basis must be clearly demonstrated to achieve the expected emission reduc tions for the full project life, function properly under the project locomotive engi ne duty cycle, and to not harm the locomotive engine.

• Remanufacture emission kits must achieve at least a 15 percent NOx reduction and

be U.S. EPA certified to achieve at least Tier 0 lo comotive emission standards on the project locomotive engine. Emission kits must be demonstrated not to increase in-use emissions of NOx, ROG, or PM emissions. Ind ividual engine parts or other locomotive components are not eligible for funding except as part of a complete U.S. EPA certified engine retrofit kit.

E. Idle-Limiting Device

• All locomotive purchase and repower projects (exce pt alternative technology switchers) must include purchase and installation o f an AESS ILD to reduce unnecessary engine idling if the locomotive is not already equipped with such a device and AESS installation is technically feasibl e.

• If not already required by a rule, regulation, MOU , or other legal mandate, the purchase and installation cost of an AESS is eligib le for Carl Moyer Program funding, subject to the following limitations:

− The Carl Moyer Program may provide actual equipmen t costs up to a maximum of $8,000 for a locomotive-specific AESS.

− The Carl Moyer Program may provide the lower amoun t of actual installation costs of the AESS, up to a maximum of $3,400.

− AESS emission reductions are calculated by applyin g the ILD factors in Table B-17. Appendix D provides details regarding use of the ILD factors.

− All ILDs must comply with applicable durability an d warranty requirements.

F. Scrap

• Scrap requirements are described in the 2005 Carl Moyer Program Guidelines, Part I, Chapter 2: Administration of the Carl Moye r Program.

VI. Cost-EffectivenessVIII-14 LOCOMOTIVES

To receive Carl Moyer Program funding, each project must meet the maximum cost-effective threshold of $14,300 per weighted to n of covered pollutants reduced. Only funds provided by the Carl Moyer Program and l ocal district matching funds are to be used in determining cost-effectiveness. Emissio n reduction benefits represent the difference in the emission levels of the existing b aseline technology relative to the newer, reduced-emission technology. Baseline and r educed engine emission factors are listed in Table B-16 in Appendix B. These fact ors represent U.S. EPA emission

factors from U.S. EPA Technical Highlights – Emission Factors fo r Locomotives [December 1997], with fuel correction factors appli ed.

As mentioned earlier, an AESS ILD is required for a ll locomotive repower or new purchase projects (other than alternative technolog y switchers) if feasible. An ILD Factor, identified in Table B-17, is used to accoun t for the air quality benefits of reduced idling.

A detailed description and examples of how to calcu late cost-effectiveness can be found in Appendix D. Locomotive emission reduction calcu lations will use the fuel- based formula as discussed in Appendix C.

VII. Minimum Project Application Requirements

The minimum application requirements for locomotive projects are described below. Air districts have full authority to require additional application, reporting, and monitoring requirements.

A. Application

Districts solicit bids for reduced-emission project s for locomotives. The applicant must provide the minimum information listed in Table 8-3 . A disclosure must also be included stating that the proposed project has not been fund ed and is not being considered for funding by another air district, ARB, or any other public agency. Any applicant who is found to have submitted multiple applications for t he same project may be banned from submitting future applications to any and all Carl Moyer Program solicitations and may be subject to criminal sanctions. A project funded cooperatively by multiple air districts is eligible for funding if the project parameters a re coordinated amongst the participating districts and the project meets all applicable Carl Moyer Program criteria. Applicants are allowed to re-apply for project funding if a pr evious application has been rejected and is no longer being considered for funding.VIII-15 LOCOMOTIVES Table 8-3 Minimum Application Requirements for Locomotive Pro jects

Applicant Information Organization, Company or Individual Name

Street Address City, County, State, Zip Code Primary Contact Name Primary Contact Phone Number Person with Contract Signing Authority Person who Filled Out Funding Application Project Address (if different from above)

Locomotive Information Railroad Class (Class 1 or Class 3) Locomotive Type (Line Haul, Traditional Switcher, Alt. Technology Switcher, Passenger)

Locomotive Make

Locomotive Model Locomotive Horsepower

Locomotive Serial Number Fuel Type Engine Make Engine Model Engine Year Engine Serial Number

Activity Information Does the project locomotive already have a functioning automatic engine start-stop (AESS) ILD installed? (yes/no) Annual Gallons Fuel Consumption Percent Operation in California Percent Operation in District Project Life

Electronic Monitoring Unit (EMU) Will a new eligible EMU be installed as part of this project? (yes/no)

EMU Make

EMU Model

EMU Model Year

EMU ID Number EMU Cost (optional)

ADDITIONAL INFORMATION –

NEW PURCHASE PROJECTS ONLY Projected Year of Purchase of New Locomotive

New Locomotive Cost Locomotive Vendor (optional) Alt. Technology Switcher New Purchase Information What type of engine(s) does the new switcher use? (on-road or off-road/stationary) Engine Make, Model, Year, Horsepower, and Serial Number (for each engine) ARB Certification Executive Order, if any (on-road engine(s) only) Engine Family and Tier (off-road/stationary engine(s) only) New Switcher Fuel Consumption (if different from baseline) Has this locomotive been certified by U.S. EPA? If yes:

U.S. EPA certified locomotive NOx emission rate (g/bhp-hr)

U.S. EPA certified locomotive HC emission rate (g/bhp-hr)

U.S. EPA certified locomotive PM emission rate (g/bhp-hr)

ADDITIONAL INFORMATION –

REPOWER PROJECTS ONLY Reduced Emission Engine Make Reduced Emission Engine Model Reduced Emission Engine Serial Number Reduced Emission Engine Horsepower Engine Rebuild Cost New Lower Emission Engine Cost New Lower Emission Engine Installation Cost New Engine Vendor (optional) New Engine Installer (optional)

ADDITIONAL INFORMATION –

LOCOMOTIVE IDLING LIMITING DEVICE OR

ENGINE REMANUFACTURE KIT ONLY For AESS ILD Projects

AESS Make

AESS Model

AESS Year

AESS ID Number AESS Capital Cost

AESS Installation Cost For Engine Remanufacture Kits

Remanufacture Kit Make

Remanufacture Kit Model

U.S. EPA Certified Locomotive Emission Level (Tier 0, Tier 1, or Tier 2)

Remanufacture Kit CostVIII-16 LOCOMOTIVES

Third party applications are not allowed. The owne r of the engine must sign and agree to the application. However, a third party (e.g. e ngine dealer or distributor) may complete an application or part of an application o n an owner’s behalf. Applications must include a signature section for third parties. The third party signature section must include signature and date lines, and blanks for th e third party to list how much they are being paid, if anything, to complete the applicatio n and what source of funds are being used to pay them. To make the Carl Moyer Program a ccessible to all potential applicants, including applicants that cannot afford to hire third party assistance, districts are encouraged to provide technical assistance to a pplicants in completing the application.

B. Reporting and Monitoring

Air districts must abide by all reporting and monit oring requirements described in Chapter 1 – Program Administration. Monitoring of project progress ensures that the vehicle or engine is operated as stated in the prog ram application. Records must be retained and updated for the duration of the projec t life and made available at the request of the air district or ARB.

VIII. References

Association of American Railroads, 2004. Associati on of American Railroads, 2004, Overview of U.S. Freight Railroads.

Federal Register, April 16, 1998. Federal Register , Part II - Environmental Protection Agency, Emission Standards for Locomotives and Loco motive Engines Final Rule; 40 CFR Parts 85, 89 and 92; April 16, 1998.

U.S. EPA, 2004. U.S. EPA Advanced Notice of Propos ed Rulemaking on the Control of Emissions of Air Pollution from New Locomotive Engi nes and New Marine Compression-Ignition Engines Less Than 30 Liters Pe r Cylinder;

Docket OAR-2003-0190.IX-1 MARINE VESSELS Chapter Nine

MARINE VESSELS

This chapter presents program criteria for marine v essel projects, and provides an overview of types of marine vessels, current emissi on control requirements, and available emission reduction technologies. The ch apter also expands eligibility for Carl Moyer Program marine vessel projects to marine vessels with wet exhaust systems, and utilizes a single set of emission fact ors for propulsion and auxiliary engines, consistent with federal emission standards

.

I. Introduction

Marine vessels eligible for Carl Moyer Program fund ing include harbor craft and oceangoing ships, but exclude recreational vessels such as personal watercraft. Historically, harbor craft have received the vast m ajority of Carl Moyer Program funding for marine vessels. However, oceangoing vessels re main eligible for funding if they operate in California Coastal Waters enough to gene rate cost-effective emission reductions and the proposed project meets all appli cable Carl Moyer Program criteria. A map of California Coastal Waters can be found in Figure 9-1.

A. Harbor Craft

Harbor craft include tugboats, fishing vessels, wor k boats, crew boats, ferries, Coast Guard vessels, and some military vessels. Th ese vessels generally stay within

California Coastal Waters and often leave and retur n to the same port. Tugboats generally have the most powerful engines, averaging about 1,300 horsepower. Commercial fishing and work boats, at the other end of the spectrum, average a little over 200 horsepower [ARB, 2003]. Beginning on Janu ary 1, 2007, all fuel sold to harbor craft statewide will be required to meet Air Resources Board (ARB or “Board”) low-sulfur diesel fuel standards. This ARB require ment goes into effect on January 1, 2006 in the South Coast Air Basin.

B. Oceangoing Ships

Oceangoing ships usually travel internationally and include container ships, bulk carriers, general cargo ships, tankers, military sh ips, auto carriers, cruise ships and ocean-going tugboats. Oceangoing ships generally ru n on one or more 750 or greater horsepower engines. Most oceangoing ships run thei r main propulsion engines on a mixture of residual and distillate fuel (heavy fuel oil). Diesel gas turbine propulsion engines and auxiliary engines on ocean-going ships often run on cleaner marine gas oil (MGO).IX-2 MARINE VESSELS

C. Propulsion Engines

Both propulsion and auxiliary marine vessel engines are eligible for Carl Moyer Program funding. For the purpose of the Carl Moyer Program , a propulsion engine is defined as an engine that powers the vessel through the water or directs the movement of the

vessel. About two-thirds of harbor craft in Califo rnia have one propulsion engine, while the remaining vessels have two or more engines [ARB , 2003]. Unlike most recreational vessel engines, harbor craft engines typically push the vessel through the water rather than hydroplaning, endure heavy use, and operate up to 6,000 hours a year. Harbor craft propulsion engines are therefore designed for prolonged operation at high loads.

Ocean-going vessels may be propelled by diesel pist on engines, steam turbines, or diesel-fueled gas turbines. In addition, diesel pi ston or turbine engines on oceangoing vessels may be used to drive generators to create e lectric power for propulsion.

D. Auxiliary Engines

Auxiliary engines are used to power on-board equipm ent such as electrical lights, refrigeration units, and radios. For the purposes of the Carl Moyer Program, an auxiliary engine is defined as a marine vessel engi ne that is not the propulsion engine whose fuel, cooling, or exhaust systems are an inte gral part of the vessel or require special mounting hardware. All other engines are c onsidered portable and may be eligible for funding under the Off-Road Compression Ignition project criteria (See Chapter 5).

About 40 percent of harbor craft in California have auxiliary engines; almost half of these vessels are equipped with more than one engin e [ARB, 2003]. Harbor craft auxiliary engines range from 4 to 400 horsepower, w ith ferries, tug boats, and commercial work boats having the highest horsepower auxiliary engines.

II. Emissions

Marine vessels are a significant source of airborne particulate matter (PM) and oxides of nitrogen (NOx), particularly at and around the Stat e’s major maritime ports. The Ports of Los Angeles and Long Beach are among the busiest in the world, and emissions from marine vessels serving the ports impact air quality in surrounding communities and the South Coast Air Basin. At the Port of Los Angeles, for example, marine vessels are responsible for about two-thirds of port-related NO x emissions and over 80 percent of port-related PM emissions -- locomotives, heavy-dut y trucks, and cargo-handling equipment contribute the bulk of remaining emission s [Port of Los Angeles Air Quality Task Force, 2005]. As trade with the Pacific Rim c ountries continues to grow, marine vessel emissions are projected to increase signific antly.

As shown in Table 9-1, emissions from ocean-going s hips are far greater than emissions from harbor craft. The majority of Calif ornia’s commercial marine vessel NOx and PM emissions (excluding emissions in the outer continental shelf) occur in theIX-3 MARINE VESSELS

South Coast Air Basin. The San Francisco Bay Area, home to the Port of Oakland, is responsible for another 20 percent of the State’s t otal marine vessel emissions.

Table 9-1

Marine Vessel Emissions (Statewide, Annual Average, tpd)

Pollutant by Vessel Type 2005 2010 2015 2020

NOx

Harbor Craft 24 25 25 25 Ocean-going Ships 119 132 156 181

Total 143 157 181 206

PM

Harbor Craft 1.3 1.3 1.3 1.4 Ocean-going Ships 10.3 11.3 13.0 14.9

Total 11.6 12.6 14.4 16.2

ROG

Harbor Craft 3 3 3 3 Ocean-going Ships 6 7 8 10

Total 9 10 11 13

Based on the 2005 ARB Emission Inventory Almanac. N umbers may not total due to rounding.

PM tends to be a localized pollutant, having the gr eatest impact in proximity to where it is emitted. PM emissions from vessels which spend much of their time further off-shore, such as fishing vessels, may therefore have less of a human health impact than emissions from vessels which operate closer to shor e. At this time, however, PM emission standards for marine vessel engines are no t differentiated by vessel type based upon the potential for human exposure. ARB s taff will evaluate whether PM

emissions from certain vessels should be discounted based on exposure potential in future Carl Moyer Program Guideline revisions.IX-4 MARINE VESSELS Figure 9-1

California Coastal Water Boundaries

III. Regulatory Requirements

Most marine vessels in operation today have uncontr olled engines, since marine vessel emission standards have only recently begun being p hased-in. Harbor craft began being subject to U.S. Environmental Protection Agen cy (U.S. EPA) emission standards beginning in 2004, while new oceangoing vessels hav e recently become subject to

federal and international emission standards.

A. Harbor Craft Emission Standards

Unlike other Carl Moyer Program categories, marine vessel propulsion and auxiliary engine emission standards are based upon cylinder d isplacement rather than horsepower. Basing standards on displacement rathe r than horsepower is intended to help ensure that each engine is not subject to mult iple standards, since marine engines can be tuned for different power output.

U.S. EPA harbor craft emission standards, adopted i n 1999, apply to new diesel-powered engines with a displacement of up to 30 liters per cylinder. The standards apply to both propulsion and auxiliary en gines and take effect between 2004 and 2007, depending upon the engine size [Federal R egister, 1999]. Table 9-2 provides more information regarding federal harbor craft engine standards.IX-5 MARINE VESSELS Table 9-2 U.S. EPA Marine Propulsion and Auxiliary Engine Emission Standards

(g/kW-hr)*

Displacement (liter/cyl) Starting

Date NOx+THC** PM

D < 0.9 2005 7.5 0.40

0.9 < D < 1.2 2004 7.2 0.30

1.2 < D < 2.5 2004 7.2 0.20

2.5 < D < 5.0 2007 7.2 0.20

5 < D < 15 2007 5.8 0.20

15 < D < 20 (P < 3300 kW) 2007 7.8 0.27

15 < D < 20 (P > 3300 kW) 2007 8.7 0.50

20 < D < 25 2007 9.8 0.50

25 < D < 30 2007 11.0 0.50

* grams per kilowatt-hour. ** NOx plus total hydrocarbon emissions.

In May 2004, U.S. EPA issued an Advanced Notice of Proposed Rulemaking, signaling its intent to pursue more stringent standards for n ew and existing harbor craft engines [U.S. EPA, 2004]. The standards are likely to be m odeled after 2007 diesel off-road and 2010 heavy-duty diesel on-road engine standards, an d be based on the application of catalytic after-treatment technology. The new stan dards could be phased in as early as 2011 and require a 90 percent reduction from previo us limits.

ARB staff is also developing a rule that may requir e the Best Available Control Technology (BACT), such as after-treatment devices or accelerated turnover, to reduce emissions from existing harbor craft fleets. The r ule is scheduled to be considered for adoption by the Board in mid- to late-2006. If the rule is adopted, ARB shall publish an advisory describing how the rule impacts Carl Moyer Program funding eligibility.

B. Oceangoing Vessel Emission Standards

International oceangoing vessels fall under the reg ulatory jurisdiction of the International Maritime Organization (IMO). In 1997, the IMO esta blished NOx emission standards for diesel-powered propulsion and auxiliary engines ove r 130 kW (174 hp) on new ocean-going ships. The IMO standards have been rat ified by the requisite number of nations and became enforceable in May 2004. Engine manufacturers have generally produced IMO-compliant engines since January 1, 200 1, however, since the standards were retroactive to that date upon ratification.IX-6 MARINE VESSELS Table 9-3 International Maritime Organization NOx Emission St andards

Engine Speed (rpm) NOx (g/kW-hr) NOx (g/bhr-hr)

n < 130 17.0 12.7

130 < n < 2000 45n (-0.2) (convert from g/kW-hr)

n > 2000 9.8 7.3

n = IMO rated engine speed (crankshaft revolutions per minute).

U.S. EPA also adopted NOx emission standards for ne w oceangoing vessel engines in 2003 [U.S. EPA, 2003]. The federal standards are v irtually equivalent to the IMO standards but apply only to vessels flagged or regi stered in the United States beginning in 2004. U.S. EPA has also committed to adopt more stringent standards for oceangoing vessel engines by April 2007. The IMO a nd U.S. EPA standards do not include PM or reactive organic gas (ROG) emission l imits, leaving marine vessels largely unregulated for these pollutants.

An ARB rule requiring oceangoing vessel auxiliary e ngines run on MGO or marine diesel oil (MDO) while at dock or in California Coa stal Waters is also under development. Use of MGO or MDO in place of dirtier heavy fuel oil can achieve up to 80 percent emission reductions from oceangoing vess el auxiliary engines. The draft rule is scheduled to be considered by the Board in December 2005 and could require implementation beginning in mid-2006.

Finally, ARB staff is developing a rule to require ships that visit California frequently to implement emission reduction strategies. The rule will be considered for adoption by the Board sometime in 2006. ARB will publish an ad visory once these rules are adopted describing how each rule impacts Carl Moyer Program funding eligibility.

C. Voluntary Emission Standards—The Blue Sky Serie s Program

In order to provide engine manufacturers with an in centive to produce engines that are cleaner than those required by regulations, the fed eral government developed the Blue Sky Series Program. U.S. EPA’s voluntary Blue Sky Series Program permits manufacturers to certify their engines to more stri ngent emission standards than required. New marine vessel purchase projects must meet the federal Blue Sky Standards to qualify for Carl Moyer Program funding . To date, no marine vessel propulsion engines have been certified to meet the Blue Sky standards, and no marine vessel new purchase projects have been funded throu gh the Carl Moyer Program.IX-7 MARINE VESSELS Table 9-4 “Blue Sky Series” Voluntary Emission Standards

(g/kW-hr)

Cylinder Displacement (D, dm 3 ) NOx+THC PM

Power ≥ 37 kW & D < 0.9 4.0 0.24

0.9 < D < 1.2 4.0 0.18

1.2 < D < 2.5 4.0 0.12

2.5 < D < 5.0 5.0 0.12

5.0 < D <15 5.0 0.16

15 < D < 20 & Power < 3300 kW 5.2 0.30

15 < D < 20 & Power < 3300 kW 5.9 0.30

20 < D < 25 5.9 0.30

25 < D < 30 6.6 0.30

IV. Potential Projects

The vast majority of Carl Moyer Program marine vess el projects thus far involve harbor craft, rather than oceangoing vessels. Harbor craf t projects have been more common

due to several factors – their emissions tend to oc cur solely within California Coastal Waters, vessel activity is more predictable, and en gine replacement is extremely

cost-effective.

Marine vessel projects that could potentially quali fy for incentive funding under the Carl Moyer Program include the purchase of a new re duced emission marine vessel, a marine vessel repower, or a marine vessel retrofit. Shore power projects to reduce marine vessel auxiliary engine emissions may also b e eligible for Carl Moyer Program funding and are discussed in Chapter 12. Projects to replace gasoline-fueled engines with diesel engines are not eligible for funding.

A. New Purchase

New marine vessels with propulsion engines certifie d to U.S. EPA’s Blue Sky Series emission limits are eligible for Carl Moyer Program funding. While no marine vessel propulsion engines currently meet the Blue Sky Stan dards, engines meeting certification emission limits may become commercially available a s engine technologies continue to

advance.

B. Repower

To date, most Carl Moyer Program marine vessel proj ects have involved replacing or “repowering” an old harbor craft engine with a newe r, cleaner engine. Most of these projects have involved replacing an older mechanica l engine with a newer electronically controlled engine. For all Carl Moyer Program engi ne repowers, the replacement engine certified emission rate must provide at leas t a 15 percent NOx reduction relative to the baseline engine. If the replacement engine is significantly modified orIX-8 MARINE VESSELS

re-configured in any way during the project life, e missions testing must be conducted to

determine its new emission rates.

Engine repowers for marine vessels equipped with a wet exhaust system are eligible for Carl Moyer Program funding. Since a wet exhaust sy stem reduces air emissions from both the baseline and the newer, cleaner engine, re power projects on marine vessels with these systems may result in slightly fewer emi ssion reductions compared to repowers of vessels with dry exhaust. An analysis of emissions data from California harbor craft indicates wet exhaust systems reduce P M and NOx emissions from propulsion and auxiliary engines by 1 to 19 percent . In order to ensure emission reductions projects on vessels with wet exhaust sys tems are not overstated, a conservative 20 percent NOx and PM emission reducti on factor must be applied to both the baseline and reduced emission engine (See marin e vessel Example Calculation 3 in Appendix D for more information). The Carl Moyer P rogram does not provide funding to repair or replace any component of the wet exhaust system itself.

C. Retrofits

Potential marine vessel retrofit projects involve t he addition of an ARB-verified diesel particulate filter, diesel oxidation catalyst, or s elective catalytic reduction technology. A retrofit device must typically be verified by ARB i n order to be considered for funding. To date, however, very few retrofit technologies ha ve been verified to reduce emissions from marine vessels. Retrofit technologies general ly develop first for on-road sources, and are refined for use on off-road engines. Becau se of the lack of retrofit devices verified for use on a marine vessel engine, a marin e vessel retrofit device which is not yet verified may be considered for funding on a cas e-by-case basis. Applicants for funding on a case-by-case basis must meet the appli cable project criteria described in Section V of this chapter.

In recent years, engine manufacturers have also dev eloped engine remanufacture retrofit kits certified by the IMO to meet IMO NOx emission standards. To be eligible for Carl Moyer Program funding, a remanufacture retrofi t kit must be certified by the ARB, U.S. EPA, or the IMO to reduce emissions from the p roject vessel engine. NOx emissions must be reduced by at least 15 percent to take credit for NOx emission reductions. Remanufacture kits which employ fuel i njection timing retard are only eligible for funding if it is demonstrated that PM emissions from the project vessel shall

not increase. If the retrofit kit certification do es not specify a specific percent reduction or emission rate for NOx, PM, or ROG, emissions tes ting must be conducted annually for the life of the project to ensure the retrofit does not increase emissions of these individual pollutants. Individual engine parts or other vessel components are not eligible for funding unless as part of a complete certified engine remanufacture kit.

D. On-Board Testing

Because of the high variability in marine engine em ission rates, districts may utilize on-board testing to determine baseline marine vesse l emission rates for the purposes ofIX-9 MARINE VESSELS

Carl Moyer Program cost-effectiveness calculations, if testing follows approved test procedures. Constant speed propulsion engines shoul d be tested on the International Organization for Standardization’s (ISO) 8178- E2 t est cycle and constant speed auxiliary engines on the ISO 8178-D2 test cycle. V ariable speed auxiliary engines and variable speed propulsion engines used with variabl e-pitch propellers (or electrically coupled propellers) should be tested on the ISO 817 8-C1 duty cycle. All other engines, including those used with fixed-pitch propellers, s hould be tested on the ISO 8178-E3 Marine Propeller Law Heavy Duty operating cycle. W hen on-board testing is conducted in accordance with approved procedures, these resul ts must be used when calculating emission reductions. The maximum acceptable values of baseline NOx, ROG, and PM

emission factors derived from in-situ source testin g are 20 g/bhp-hr, 2.0 g/bhp-hr, and 1.0 g/bhp-hr, respectively. If emission testing is not feasible, the applicant can use the default baseline emission factors presented in Appe ndix B.

V. Project Criteria

These criteria provide the minimum requirements for all Carl Moyer Program marine vessel projects. Participating districts retain th e authority to impose additional requirements in order to address local concerns.

A. General

• Emission reductions obtained through Carl Moyer Pr ogram projects must not be required by any federal, state or local regulation, memorandum of agreement/understanding with air quality regulators , settlement agreement, mitigation requirement, or other legal mandate. In clusion in a port emission reduction plan, lease agreement, or other voluntari ly adopted strategy does not exclude a marine vessel project from Carl Moyer Pro gram funding eligibility, if such project is not otherwise required.

• No emission reductions generated by the Carl Moyer Program shall be used as marketable emission reduction credits, or to offset any emission reduction obligation of any person or entity.

• No project funded by the Carl Moyer Program shall be used for credit under any federal or state emission averaging banking and tra ding program.

• Marine vessels and engines utilizing an alternativ e compliance plan to comply with a rule, requirement, or other mandate shall not be el igible for Carl Moyer Program

funds.

• A marine vessel engine receiving any type of emiss ion reduction credit or offset is ineligible for Carl Moyer Program funding.

• Beginning January 1, 2007, all harbor craft with d iesel engines must use ARB low-sulfur diesel fuel to be eligible for Carl Moye r Program funding. EmissionIX-10 MARINE VESSELS

reductions and costs associated with use of ARB die sel shall not be included in project cost-effectiveness calculations.

• Only marine vessel engines with a United States Co ast Guard Documentation Number or IMO/Lloyd’s Number are eligible for Carl Moyer Program funding. This information must be included in the project applica tion.

• Projects must meet a cost-effectiveness of $14,300 per weighed ton of NOx + ROG

+ combustion PM10 reduced calculated in accordance with the cost-effectiveness methodology discussed in this chapter.

• Carl Moyer Program grants can be no greater than a project’s incremental cost. The incremental cost is the cost of the project minus t he baseline cost. The incremental cost shall be reduced by the value of any current f inancial incentive that reduces the project price, including tax credits or deductions, grants, or other public financial

assistance.

• The contract term for all marine vessel projects m ust be equivalent to the project life. The project life is defined as the number of years used to evaluate project

cost-effectiveness.

• Projects must have a minimum project life of three years. ARB may approve shorter project life on a case-by-case basis. Projects wit h shorter lives may be subject to additional funding restrictions, such as a lower co st-effectiveness limit or a project
cost cap.

• The maximum project life for marine vessel project s (equivalent to the average engine life reported by U.S. EPA) is as follows:

Maximum Project Life Engine displacement < 5.0 liter/cyl. 16 years Engine displacement >5.0 liter/cyl. 23 years Auxiliary engines 17 years

• Only marine vessel activity in California waters m ay be used to determine project emission reductions. For the purposes of the Carl Moyer Program, California water boundaries are based upon each air districts' emiss ion inventory boundary. If a local district has not established an emission inventory boundary, the ARB and district staff will determine an appropriate boundary for us e in project evaluation.

• Non-captive California fleets and vessels may be c onsidered for funding on case-by-case basis if their operation in California coastal waters can be properly

documented.IX-11 MARINE VESSELS

• Marine vessels which are not self-propelled (e.g. barges) are not eligible for Carl Moyer Program funding.

• Project marine vessels must be equipped with a fun ctioning tamper proof electronic monitoring unit (EMU) to track activity and geograp hic location. The EMU must be turned on and functional when the project engine is running to record all vessel trips and activity. If the EMU is battery powered, the b attery life must be long enough to ensure the EMU is charged and functional each time the project vessel is operated. Electronic information from the EMU regarding total and percent of activity (fuel use or hours of operation) within the air district coas tal boundary and California Coastal Waters must be reported to air district annually. The cost of a new unit, as well as

installation and data summarization and transmittal costs, may be included in the Carl Moyer Program grant and in the project cost-ef fectiveness calculations if not required by any rule, statute, MOU, or other mandat e.

• Carl Moyer Program funds cannot be expended on cos ts for labor or parts used during routine maintenance.

• Funding is not available for projects where spark- ignition engines (i.e. natural gas or gasoline, etc.) are replaced with diesel engines.

• Engines on marine vessels with wet exhaust systems are eligible for Carl Moyer Program funding if the project vessel me ets all other applicable program requirements. The wet exhaust systems themselves a re not eligible for Carl Moyer Program funding. A wet exhaust factor o f 0.80 must be applied to the baseline and reduced emission propulsion and auxili ary engine emission calculations for all projects on vessels with wet e xhaust systems.

• Potential projects which fall outside of these cri teria may be considered on a case by-case basis if evidence provided by the air district suggests potential surplus, real, quantifiable, and enforceable emission reduct ion benefits.

• Air districts must consult with ARB staff to deter mine eligibility of all projects considered for funding on a case-by-case basis. Al l projects considered for funding on a case-by-case basis must receive ARB approval p rior to receiving program funding.

B. New Purchase

• A new marine vessel must meet the U.S. EPA Blue Sk y Series Standards identified in Table 9-4 to be eligible for funding. All prop ulsion and auxiliary engines on new marine vessel purchase projects must also achieve a t least a 30 percent NOx

emission reduction from baseline levels.IX-12 MARINE VESSELS

C. Repower

• A replacement engine or retrofit must provide a 15 percent minimum NOx emission reduction relative to the baseline engine.

D. Retrofit

• A retrofit device must be ARB-verified to reduce e missions from the project engine in order to be eligible for funding. Non-verified tec hnologies may be considered on a case by case basis if: 1) an application for verif ication of the retrofit or add-on equipment on the proposed engine category is pendin g, 2) the retrofit or add-on equipment has been verified or certified by ARB for use on a similar engine category, or 3) project emission benefit, durabilit y, and applicability have been or shall be demonstrated through in-situ testing.

• Retrofits considered for funding on a case-by-case basis must be clearly demonstrated to achieve the expected emission reduc tions for the full project life, to function properly under the project vessel engine d uty cycle, and to not harm the vessel engine.

• To be eligible for Carl Moyer Program funding, an engine remanufacture retrofit kit must be certified by the ARB, U.S. EPA, or the IMO to reduce emissions from the project vessel engine. NOx emissions must be reduc ed by at least 15 percent to take credit for NOx emission reductions. Engine re manufacture kits must also not increase NOx, PM, or ROG emissions from the project vessel. If the engine certification does not specify a specific percent r eduction or emission rate for NOx, PM, or ROG, emissions testing must be conducted ann ually for the life of the project

to ensure the retrofit does not increase emissions from these individual pollutants. Individual engine parts or other vessel components are not eligible for funding unless as part of a complete certified engine reman ufacture kit.

E. Scrap

• Scrap requirements are described in the 2005 Carl Moyer Program Guidelines, Part I, Chapter 2: Administration of the Carl Moye r Program.

VI Cost-Effectiveness Calculations

To receive Carl Moyer Program funding, each project must meet the maximum cost-effective threshold of $14,300 per weighted to n of covered pollutants reduced. Only funds provided by the Carl Moyer Program and l ocal district matching funds are to be used in determining cost-effectiveness. Emissio n reduction benefits represent the difference in the emission levels of the existing b aseline technology relative to the newer, reduced-emission technology. Baseline and r educed engine emission factors are listed in Table B-18 in Appendix B. Harbor cra ft emission factors represent off-roadIX-13 MARINE VESSELS

engine emission factors for uncontrolled engines, a nd harbor craft emission standards for controlled engines. Fuel correction factors ha ve been applied to all emission factors.

A detailed description of how to calculate cost-eff ectiveness can be found in Appendix C. Marine vessel emission reduction calcu lations will use either the fuel- or hour-based formula as discussed in Appendix C. Exa mples of cost-effectiveness calculations can also be found in Appendix D.

VII. Minimum Project Application Requirements

These are minimum project application requirements. Air districts have full authority to require additional application, reporting, and moni toring requirements.

A. Application

Districts solicit bids for reduced-emission project s for marine vessels. The applicant must provide the minimum information illustrated in Table 9-5.

A disclosure must also be included stating that the proposed project has not been funded and is not being considered for funding by a nother air district, ARB, or any other public agency. Any applicant who is found to have submitted multiple applications for the same project may be banned from submitting futu re applications to any and all Carl Moyer Program solicitations and may be subject to criminal sanctions. A project funded cooperatively by multiple air districts is e ligible for funding if the project parameters are coordinated amongst the participatin g districts and the project meets all applicable Carl Moyer Program criteria. Applicants are allowed to re-apply for project funding if a previous application has been rejected and is no longer being considered for funding.

Third party applications are not allowed. The owne r of the engine must sign and agree to the application. However, a third party (e.g. e ngine dealer or distributor) may complete an application or part of an application o n an owner’s behalf. Applications must include a signature section for third parties. The third party signature section must include signature and date lines, and blanks for th e third party to list how much they are being paid, if anything, to complete the applicatio n and what source of funds are being used to pay them. To make the Carl Moyer Program a ccessible to all potential applicants, including applicants that cannot afford to hire third party assistance, districts are encouraged to provide technical assistance to a pplicants in completing the application.IX-14 MARINE VESSELS Table 9-5 Minimum Application Requirements for Marine Vessel Projects

Applicant Information Organization, Company or Individual Name

Street Address City, County, State, Zip Code Primary Contact Name Primary Contact Phone Number Person with Contract Signing Authority Person who Filled Out Funding Application Project Address (if different from above)

MARINE VESSEL REPOWER Equipment Type (Commercial Fishing, Charter Fishing, Crew and Supply, Ferry Excursion, Pilot, Tow, Tug, Work, or Other) Number of Propulsion Engines to be Repowered Number of Auxiliary Engines to be Repowered

Vessel Name

Vessel Make

Vessel Model

Vessel Year

U.S. Coast Guard Documentation Number (IMO/Lloyd's Number if oceangoing vessel) Does the project vessel utilize a wet exhaust system? (yes/no)

Engine Information – Needed for Each Project Engine (Propulsion and/or Auxiliary) Baseline Engine Make Baseline Engine Model Baseline Engine Year Baseline Engine Serial Number Baseline Engine Horsepower Baseline Engine Displacement (ltr/cyl) Baseline Engine Fuel Will the vessel engine have a functioning hour meter for the full project life? (yes/no) Engine Annual Hours of Operation or Gallons Fuel Consumption Newer Engine Make Newer Engine Model Newer Engine Year Newer Engine Serial Number (if available) Newer Engine Horsepower Newer Engine Displacement (ltr/cyl) Activity Information Vessel Berthing Location (if any) Percent Operation in California Waters Percent Operation in District Waters Vessel Annual Hours of Operation or Gallons Fuel Consumption Does Vessel Remain in Port Only? (yes, no) Project Life

Electronic Monitoring Unit (EMU) Will a new eligible EMU be installed as part of this project? (yes/no)

EMU Make

EMU Model

EMU Model Year

EMU ID Number EMU Cost (optional)

Cost Information– Needed for Each Project Engine (Propulsion and/or Auxiliary) Cost to Rebuild Existing Engine New Engine Purchase Price New Engine Installation Cost New Engine Vendor (optional) New Engine Installer (optional)

B. Reporting and Monitoring

Air districts must abide by all reporting and monit oring requirements described in Chapter 1 – Program Administration. Monitoring of project progress ensures that the vessel or engine is operated as stated in the progr am application. Records must beIX-15 MARINE VESSELS

retained and updated for the duration of the projec t life and made available at the request of the air district or ARB.

VIII. References

ARB, 2003. California Air Resources Board 2003 Har bor Craft Survey.

Federal Register, 1999. Federal Register - Environmental Protection Agency, Control of Emissions of Air Pollution From New Marine Compress ion-Ignition Engines at or Above

37 kW , December 29, 1999 (Volume 64, Number 249).

Port of Los Angeles Air Quality Task Force, 2005. Port of Los Angeles Air Quality Task Force, Port of Los Angeles No Net Increase in Air Emission s Final Report , June 24,

2005.

U.S. EPA, 2003. U.S. EPA, Control of Emissions From New Marine CompressionIgnition Engines at or Above 30 Liters Per Cylinder , Federal Register 9745-9789, 28

Feb 2003.

U.S. EPA, 2004. United States Environmental Protect ion Agency, U.S. EPA Advanced Notice of Proposed Rulemaking on the Control of Emi ssions of Air Pollution from New Locomotive Engines and New Marine Compression-Ignit ion Engines Less Than 30 Liters Per Cylinder

(Docket OAR-2003-0190).AGRICULTURAL SOURCES X-1 Chapter Ten

AGRICULTURAL SOURCES

This chapter presents the project criteria under th e Carl Moyer Program for stationary and portable agricultural engines and for non-engin e agricultural projects (e.g. dairies). Previous versions of the Carl Moyer Program Guideli nes only allowed funding for stationary agricultural irrigation pump engines; el igible projects now include other non-mobile agricultural engines and non-engine sour ces. Information about mobile agricultural use equipment (e.g. tractors) can be f ound in Chapter 5: Compression Ignition Off-Road Equipment. This chapter also con tains an overview of agricultural sources of air pollution, current regulations, pote ntial project types, and application requirements. For information about electric-power ed agricultural equipment, please consult Chapter 12: Zero-Emission Technologies.

I. Introduction

The agricultural industry contributes greatly to th e economy and identity of California. Approximately 78,500 farming operations within Cali fornia produce 13 percent of the nation's gross farming receipts, while representing only 4 percent of the total farms in the nation. Agricultural marketings from Californi a's farmers and ranchers reached $27.8 billion in 2003 [CASS, 2003].

Until the enactment of Senate Bill 700 (SB 700, Flo rez) in 2003, the agricultural industry in California was largely exempt from air pollution regulations. Local air districts are currently adopting regulations to reduce air pollut ion from agricultural engines as well as other agricultural sources.

Since 1998, the Carl Moyer Program has provided sig nificant funding for repowers or retrofits of internal combustion engines powering i rrigation pumps, and for engine replacement of self-propelled farm equipment. Rece nt legislative changes extended the Carl Moyer Program to additional agricultural sourc es of air pollution.

II. Emissions

Emissions attributed to agricultural use of off-roa d vehicles are included in the emissions estimates found in the Chapter 5: Compre ssion Ignition Off-Road Equipment. Currently available estimates for other agricultural sources are discussed

below.

As part of the airborne toxic control measure (ATCM ) for stationary diesel engines, ARB staff worked with the local districts and the agric ultural community to create an estimate of emissions from stationary diesel-fueled engines used in agricultural operations [ARB, 2003]. ARB staff was unable to project the emissio ns for future years with any degreeAGRICULTURAL SOURCES X-2 of certainty because of the limited data available. The emissions estimates for stationary agricultural use of diesel engines are s hown in Table 10-1.

Table 10-1 Statewide Emissions from Agricultural Use of Statio nary Diesel Engines for 2001 (prime engines, tons per day)

Population NOx ROG PM10

5,338 21.1 4.3 1.5

No emissions estimates for stationary spark-ignited (SI) agricultural use engines are available because the population of stationary SI e ngines in agricultural operations is

not known.

Emission estimates for livestock operations were de veloped for the recent regulatory process for creating a definition for large confine d animal facility (CAF) [ARB, 2005b]. The emission estimates (found in Table 10-2) are ba sed on current best available data

as of March 2005. The emission factors used to dev elop livestock emission estimates

will be refined as additional research studies are completed.

Table 10-2

Statewide ROG and PM10 Emissions from Livestock for 2004 (tons per day)

ROG PM10

Dairies 35.7 8.3

Other livestock 10.1 11

III. Statutory and Regulatory Requirements

A. SB 700

In 2003, SB 700 amended and added air pollution con trol requirements in the California Health and Safety Code (sections 39011.5, 39023.3, 40724, 40724.5, 40724.6, 40724.7, 40731, 42301.16, 42301.17, 42301.18, 42310 , and 44559.9) to include requirements for agricultural sources of air pollut ion. Some of the key requirements of this legislation are listed below:

• The legislation defined “agricultural source of ai r pollution” as a source or group of sources used in the production of crops or raising of fowl or animals located on contiguous property and under common ownership or c ontrol. Four categories of emission sources are identified as part of this def inition:

− Large CAFs.

− Internal combustion engines, including portable an d off-road engines, unless used to propel instruments of husbandry.AGRICULTURAL SOURCES X-3 − Sources subject to requirements of Title V, the fe deral operating permitting program for major stationary sources.

− Sources of emissions otherwise subject to district regulation.

• The legislation removed language exempting agricul tural sources from air quality permits in the Health and Safety Code in its entire ty. As a result, agricultural operations may be required to obtain air permits fr om local districts.

• The legislation established specific agricultural source permitting and exemption requirements for local districts.

• The legislation required certain districts to adop t by regulation a set of measures to reduce emissions from agricultural sources in feder al particulate matter

non-attainment areas.

• The legislation required the ARB to establish a de finition for a “large” CAF, and required certain districts to adopt rules requiring large CAFs to obtain permits and implement emission mitigation measures.

B. Stationary Diesel Engines ATCM

In February 2004, the Board adopted an ATCM for sta tionary compression ignition (CI) engines greater than 50 horsepower [ARB, 2003]. Th e Board amended the ATCM in May 2005 [ARB, 2005a]. The control measure require s new CI engines for agricultural operations, including those used to repower agricul tural equipment, to meet ARB and federal new off-road engine PM certification standa rds for engines of the same horsepower and model year. The only exception to t his requirement is for the installation of Tier 2 engines through January 1, 2 008, purchased with Carl Moyer Program funds.

ARB staff is currently working on the development o f in-use stationary diesel agricultural engine requirements to be considered by the Board i n 2006.

C. Portable Diesel Engine ATCM

An ATCM for portable diesel engines was adopted by the Board in February 2004 [ARB, 2004]. The control measure requires all diesel-fue led portable engines 50 horsepower and greater to be certified to Tier 1, 2, or 3 fede ral and state off-road engine emission standards by 2010. The ATCM also requires fleets o f portable engines 50 horsepower and greater to meet weighted particulate matter emi ssion standards that become more stringent in 2013, 2017, and 2020.

D. Large Confined Animal Facility Definition

In response to the requirements of SB 700, the Boar d approved a definition for large CAF on June 23, 2005 [ARB, 2005b]. The definition (shown in Table 10-3) is based onAGRICULTURAL SOURCES X-4 headcount of livestock categories and takes into co nsideration the federal ozone

attainment status of districts as well as livestock population and operational practices of facilities. A recordkeeping component requires the owner or operator of a large CAF to keep a daily record of animals at the facility and to submit the information to the local air district consistent with applicable local rules.

Table 10-3 Large Confined Animal Facility Definition by Livest ock Category (facilities at or exceeding threshold are considere d large)

Livestock Category Non-Attainment Areas* Attainment Areas*
Dairy 1,000 milk producing cows 2,000 milk producin g cows Beef Feedlots 2,500 beef cattle 5,000 beef cattle

Other Cattle Operations 7,500 calves, heifers, or

other cattle 15,000 calves, heifers, or

other cattle Chickens – Broilers 650,000 1,300,000 Chickens – Egg Layers 650,000 1,300,000

Turkeys 100,000 200,000 Swine 3,000 6,000 Sheep and Goats 15,000 30,000
Horses 2,500 5,000
Ducks 650,000 1,300,000
Rabbits, Pheasants, Llamas, Others 30,000 60,000

*Federal 1-hour ozone designation as of January 1, 2004

By July 1, 2006, air districts in federal ozone non -attainment areas must adopt rules requiring large CAFs to submit a mitigation plan to reduce air contaminants to the extent

feasible. Each air district in a federal ozone att ainment area must adopt a similar rule by July 1, 2006, unless its district board makes a finding in a public hearing that large

CAFs will not contribute to violations of state or federal standards. Large CAFs have six months from the date of adoption of the district ru le to submit their mitigation plans to the district; the districts have an additional six months to approve submitted plans. One year after submitting their plans (July 1, 2008), l arge CAFs must comply with the requirements of their mitigation plans.

E. Local Air District Rules

Because most Carl Moyer Program projects affect mob ile sources that are subject to statewide regulation, few district rules affect Car l Moyer Program funding. However, future district rules impacting agricultural source s must be considered when determining whether projects provide reductions surplus to regu latory requirements.

Internal combustion engines: Prior to the adoption of SB 700, most air distric ts specifically exempted agricultural engines from pro hibitory rules for stationary internalAGRICULTURAL SOURCES X-5 combustion engines greater than 50 horsepower. As a result, stationary agricultural engine emissions were largely uncontrolled. These districts have amended (or will amend) their internal combustion engine rules to re move the agricultural operation exemption. In these districts, stationary internal combustion engines used in agricultural operations are now required (or will be required) t o meet the emission standards/limits, permitting conditions, and compliance requirements of the local district.

Large Confined Animal Facilities: As outlined in the previous section, local air di stricts in federal ozone non-attainment areas are required to adopt rules developed to mitigate emissions from large CAFs. Local air districts in federal ozone attainment areas are also required to develop rules to mitigate large CA F emissions unless their district boards make a finding in a public hearing that larg e CAFs will not contribute to

violations of state or federal standards. A number of air districts have or are preparing to adopt regulations to meet these requirements.

Fugitive Dust Control: A number of air districts require agricultural op erations to reduce fugitive dust emissions through local rules. Local rules for particulate matter dust control generally require agricultural operations t o implement a variety of practice-specific options to reduce particulate mat ter. These practices may include methods to reduce the movement of soil during land preparation, cultivation, and harvesting, suppression of dust on unpaved roads, a lternatives to burning, and reduction of agricultural chemical applications.

IV. Potential Projects

Potential Carl Moyer Program projects for agricultu ral sources fall into three broad categories:

• Mobile source projects. Criteria for the projects may be found in Chapter 5: Compression Ignition Off-Road Equipment

.

• Stationary and portable agricultural engines.

• Non-engine agricultural sources.

The Carl Moyer Program seeks cost-effective emissio n reductions from stationary and portable agricultural engines operating in Californ ia. Criteria are designed to ensure that the emission reductions expected through the d eployment of electric motors, reduced-emission engines, or retrofit technologies under this program are real, surplus, enforceable, and quantifiable. In addition, at eac h district’s discretion, eligible projects may be subject to funding or cost-effectiveness cap s.

Portable diesel engine repower projects must begin by January 1, 2007, to meet the three year project life requirement due to the requ irement of the diesel-fueled portable engines ATCM that all diesel-fueled portable engine s be certified engines by January 1, 2010 [ARB, 2004].AGRICULTURAL SOURCES X-6 A. New Purchase

The only Carl Moyer Program eligible project for a new agricultural stationary or portable equipment purchase is a new electric motor . For the purposes of determining emission reductions, the new electric motor will be compared to an off-road diesel engine certified to the current off-road emission s tandards.

B. Repower

1. Repower with Electric Motors

Replacement of uncontrolled or older engines in agr icultural operations with electric motors provides significant emission benefits. Die sel and SI engines may be repowered with electric motors. In addition, selected costs for necessary peripheral equipment associated with the motor (e.g., control panel, mot or leads, service pole with guy wire, connecting electric line) may be included in determ ining the grant amount awarded.

In June 2005, the Public Utilities Commission appro ved a reduced electricity rate and

line extension allowance for Pacific Gas and Electr ic (PG&E) and Southern California Edison (SCE) to be used for conversion of stationar y agricultural internal combustion engines to electric. Individuals enrolling in the PG&E and SCE incentive programs may receive funds through the Carl Moyer Program for an electric motor replacing an internal combustion engine, regardless of whether they are c urrently under Carl Moyer Program

contract. Because of the limited enrollment timefr ame, ARB will allow grantees currently under contract to negotiate new contracts if they choose to participate in the utilities’ incentive programs. Please refer to Cha pter 12: Zero-Emission Technologies for specific information on these projects.

2. Repower with Emission-Certified Engines

Stationary and portable agricultural engines may be repowered with new off-road engines certified to the current applicable off-roa d emission standards. This provision applies to repowers with diesel and SI engines. Di esel engines may be replaced with cleaner diesel or SI engines. SI engines may only be replaced with cleaner SI engines; projects replacing SI engines with diesel engines a re not eligible for Carl Moyer Program funding. Emission reductions mu st be surplus to state or district rules and any permit conditions. Cost-effectivenes s calculations are based on the rebuild cost of the engine being replaced.

3. Repower with SI Engines Exceeding Local Distri ct

Requirements

Very few power systems using SI engines for station ary and portable applications have been certified to meet applicable emission standard s. These power systems are typically assembled by third parties and are not re quired to be certified because they are used in stationary applications. Because under certain conditions SI engines canAGRICULTURAL SOURCES X-7 be significantly cleaner than diesel engines, Carl Moyer Program funds may be used to fund purchases of non-certified SI engines in some cases. This provision is available until January 1, 2008. This will allow ARB and the districts an opportunity to assess the emission performance and durability of non-certifie d SI engines in the field. The emission reductions provided by a non-certified SI engine must be surplus to any local

district rules. Emission reduction calculations wi ll be based on the rebuild cost of the engine being replaced.

Non-certified SI engines purchased through the Carl Moyer Program will be required to have best available emission control components, an d will be subject to source testing and monitoring requirements as described in the Pro ject Criteria or local district requirements, whichever is more stringent. The cos ts associated for testing and monitoring may not be included in the grant award.

C. Retrofit

A retrofit involves modifications to the engine and /or fuel system such that the retrofitted engine does not have the same specifications as the original engine. Retrofit projects that reduce NOx may be applicable to certain diesel or SI engine families. Emission control technologies that have been verified for us e to reduce NOx and PM10 emissions in other applications for on-road or off-road diese l or SI engines may be applicable to stationary and portable agricultural engines. A NO x retrofit for an uncontrolled diesel engine must be verified to reduce emissions to the applicable new engine tier standard or less for a given engine size and not increase pa rticulate matter. An emission-certified stationary or portable engine ma y use a retrofit kit that is verified to reduce NOx or NOx + non-methane hydrocarbon (NMHC) emissions by at least 15 percent from the applicable emission standard. Uncontrolled SI engines may use a

retrofit kit verified to reduce emissions to the cu rrently applicable standard for large SI equipment, or if not feasible, with a retrofit k it verified to reduce emissions to at least 3.0 g/bhp-hr. The emission reductions provided by a retrofit kit must be surplus to the

local district rule. Emission reduction calculatio ns will be based on the emission rates of the existing engine being retrofitted.

Additional information on retrofit emission control strategies is provided in Appendix F.

D. Non-Engine Projects

Recent legislative changes have extended the Carl M oyer Program to non-engine agricultural sources of air pollution. The Board h as directed the Executive Officer to develop and approve project criteria for non-engine agricultural sources where technology is available to ensure the emission redu ctions are real, surplus, quantifiable, and enforceable. No specific project criteria are included at this time due to the limited data available on specific control technologies. A RB staff will continue to work closely

with the districts and interested stakeholders to m onitor technological developments to determine when and if it is it appropriate to devel op project criteria for non-engine

sources.AGRICULTURAL SOURCES X-8 Potential control technologies and regulatory optio ns will be evaluated for suitability under Carl Moyer Program requirements. During thes e evaluations, ARB staff will

consider:

• Whether the technology provides real, quantifiable , and enforceable emission

reductions.

• The availability of standardized testing procedure s that will quantify emission reductions from these technologies.

• Availability of baseline emission factors.

• Potential multi-media issues.

While engines have a statewide certification or ver ification process to prove the emission levels are achieved in practice, there is no comparable statewide process for stationary and area-wide sources. In developing st atewide project criteria for non-engine technology, ARB staff will need to consi der how to ensure that emission

reductions are achieved.

If non-engine agricultural projects include reducti ons of non-combustion PM, the criteria will include a weighting factor for non-combustion PM for use in the cost-effectiveness

formula.

The following sections provide background on some p otential non-engine agricultural projects.

1. Livestock Operations

Air emissions of concern from livestock include amm onia, nitrous oxide, methane, carbon dioxide, volatile organic compounds (VOC), h ydrogen sulfide, and particulate matter. The emissions can come from animal housing , storage areas for manure and wastewater, cropland where manure is applied, and d irectly from the cows. Livestock emissions are most significant in the San Joaquin V alley and the South Coast Air Basin.

The South Coast Air Quality Management District ado pted Rule 1127 - Emission

Reductions from Livestock Waste in 2004. This rule requires dairies to clear manure from corrals more frequently and send the manure to an emissions-controlled compost facility, an anaerobic digester, or to agricultural land where manure is approved for spreading as fertilizer.

The San Joaquin Valley Unified Air Pollution Contro l District recently approved a VOC emission factor to be used for permitting San Joaqu in Valley dairies. The District reviewed important classes of VOC constituents and key dairy processes individuallyAGRICULTURAL SOURCES X-9 before approving a total dairy emission factor of 1 9.3 lbs/year/head. The District will consider regulations to reduce emissions from dairi es in the near future.

With the upcoming SB 700 deadlines for approving la rge CAF mitigation plans, there is a need for a rapid, objective assessment of which t echnologies are most likely to be successful in California’s unique economic, regulat ory, and environmental conditions. The Dairy Manure Technology Feasibility Assessment Panel, created and hosted by the ARB, was convened in February 2005 to carry out thi s work. Members were drawn from government, industry, academia, and environmen tal and conservation groups.

The Panel evaluated technologies for their potentia l to reduce environmental impacts resulting from air emissions and from releases of n utrients, salts, and pathogens to the environment. The Panel is assessing the ability of the technology to prevent releases of contaminants and is considering their efficacy in r educing environmental impacts, energy production (if any), economic performance (i ncluding saleable products produced by the technology), quality of supporting data, and the development status. The Panel’s draft report is scheduled for release i n early 2006.

In general, potential technologies may be classifie d into categories including:

• Thermal conversion (including combustion and gasif ication).

• Solid-liquid separation (including dehydration).

• Composting.

• Anaerobic digestion.

• Aerators/mixers.

• Nitrification/denitrification.

• Covers.

• Microbials, enzymes, and other additives.

• Feed management.

• Trapping nutrients in biomass (e.g. crops, plants in constructed wetlands, algae, fish).

• Combination systems (such as wastewater treatment plants).

It is likely that no single technology will solve a ll of the problems associated with dairy manure and each dairy will likely require its own u nique combination of technologies to address the specific problems of that area. Resear ch still needs to be done on VOC emissions to quantify amounts emitted from each por tion of the dairy, and reactivity of the chemical species to form ozone. Without this i nformation and a lack of standard testing procedures, it is difficult to assess how v arious technologies will reduce these emissions, reduce ozone formation, and improve air quality.

2. Other Projects

Non-combustion particulate matter reductions can be achieved through the use of chemical dust suppressants, road paving, and harves ting equipment with catch-frame technology to eliminate the need for sweeping. For some of these projects, multimedia impacts must also be considered.AGRICULTURAL SOURCES X-10 Another potential project is the evaluation of irri gation pump efficiency. Improvement in pump efficiency through parts replacement and repai r has the potential for emission reductions of NOx, ROG, and PM by reduced work by t he engine or motor for water
output.

V. Project Criteria

The project criteria below have been designed to pr ovide districts and potential applicants with a list of minimum eligibility requi rements for Carl Moyer Program funding. Criteria focus on emission reductions, co st-effectiveness, and the ability for a project to be completed within the timeframe of the program. Additional information about funding electric motors for irrigation pumps is available in Chapter 12: Zero-Emission Technologies.

Participating districts retain the authority to imp ose additional requirements in order to

address local concerns.

A. General

• Projects that replace non-mobile agricultural engi nes with electric motors should be encouraged. After electric motors, priority should be given to engine repowers with certified engines, and then to engine retrofits and non-certified engines, if applicable.

• Emission reductions obtained through Carl Moyer Pr ogram projects must not be required by any federal, state or local regulation, memorandum of agreement/understanding with a regulatory agency, s ettlement agreement, mitigation requirement, or other legal mandate.

• Projects must meet a cost-effectiveness of $14,300 per weighed ton of NOx + ROG

+ combustion PM10 reduced calculated in accordance with the cost-effectiveness methodology discussed in this chapter.

• No emission reductions generated by the Carl Moyer Program shall be used as marketable emission reduction credits, or to offset any emission reduction obligation of any person or entity.

• No project funded by the Carl Moyer Program shall be used for credit under any federal or state emission averaging banking and tra ding program.

• Carl Moyer Program grants can be no greater than a project’s incremental cost. The incremental cost is the cost of the project minus t he baseline cost. The incremental cost shall be reduced by the value of any current f inancial incentive that reduces the project price, including tax credits or deductions, grants, or other public financial

assistance.AGRICULTURAL SOURCES X-11 • Projects must have a minimum project life of three years. ARB may approve shorter project life on a case-by-case basis. Projects wit h shorter lives may be subject to additional funding restrictions, such as a lower co st-effectiveness limit or a project
cost cap.

• The contract term must extend to the end of the pr oject life.

• Potential projects that fall outside of these crit eria may be considered on a case-by-case basis if evidence provided to the air district suggests potential surplus, real, quantifiable, and enforceable emission reduct ion benefits.

• Air districts must consult with ARB staff to deter mine eligibility of all projects considered for funding on a case-by-case basis. Al l projects considered on a case-by-case basis must receive ARB approval prior to receiving program funding.

• An engine must be rated at greater than 25 hp, whi ch is equivalent to an electric motor greater than 19 kW.

• Projects must operate at least 75 percent of total equipment hours in California.

• The default project life when determining project benefits for new purchases or repowers shall be ten years for electric motors. T he default project life for engines without documentation shall be seven years. A long er project life may be used with approval by ARB staff, however, sufficient document ation must be provided to ARB that supports the selected project life based on th e actual remaining useful life. The default project life does not consider upcoming reg ulatory requirements. Project life may be shorter due to regulatory requirements.

B. New Purchase

• Engine purchases for new 2005 or later model year agricultural stationary or portable equipment can only be electric motors.

C. Repower

• A repower of an uncontrolled or emission certified (1996+ model year) diesel engine must be with one of the following:

− A new electric motor.

− A new off-road diesel engine certified to the curr ent applicable emission

standards.

− A new off-road spark-ignited (SI) engine certified to the current applicable

emission standards.

− A new SI engine that exceeds local district emissi on requirements and is subject to and complies with local district permitting, mon itoring, record keeping and reporting requirements. This criterion will sunset on January 1, 2008.AGRICULTURAL SOURCES X-12 • A repower of an uncontrolled SI engine must be wit h one of the following:

− A new electric motor.

− A new off-road SI engine certified to the current applicable emission standards.

− A new SI engine that exceeds local district emissi on requirements and is subject to and complies with local district permitting, mon itoring, record keeping and reporting requirements. This criterion will sunset on January 1, 2008.

• A repower of an emissions-controlled SI engine mus t be with one of the following:

− A new electric motor.

− A new off-road SI engine certified to the current applicable emission standards.

− A new SI engine that meets or exceeds local distri ct emission requirements and is subject to and complies with local district perm itting, monitoring, record keeping and reporting requirements, provided that t he new engine provides a

NOx emission reduction of at least 15% from the bas eline engine NOx emissions. This criterion will sunset on January 1 , 2008.

• Electric motors may replace diesel or SI engines. The applicant must have documentation of payment to the local utility compa ny for power installation. This requirement of documentation also applies to new in stallations.

• Off-road diesel engines must be certified for sale in California and must comply with durability and warranty requirements.

• The use of a non-certified SI engine shall be subj ect to approval by ARB staff. Emissions testing of a non-certified SI engine shal l be conducted using an ARB-approved source testing procedure, such as ARB Test Method 100.

• Non-certified SI engines shall be required to incl ude currently available emission control components such as closed-loop fuel control systems, and three-way catalysts.

• Non-certified SI engines shall be subject to sourc e testing with an ARB-approved testing procedure following local district requirem ents.

• Non-certified SI engines must be emission tested u sing a portable analyzer every 1,000 hours of operation and at least annually, or following local district monitoring requirements, whichever is most stringent. The emi ssion tests shall measure NOx and hydrocarbon emissions. An alternative monitori ng schedule may be used upon approval by ARB staff.

• The costs associated with source testing and monit oring requirements for non-certified SI engines are not eligible for fundi ng.AGRICULTURAL SOURCES X-13 D. Retrofit

• A retrofit of an uncontrolled diesel engine that r educes NOx must be with a retrofit kit

that is verified to reduce NOx or NOx+NMHC emission s to the applicable new engine Tier standard or less for a given engine siz e.

• A retrofit of an uncontrolled SI engine that reduc es NOx must be with a retrofit kit

that is verified to reduce NOx+NMHC emissions to th e currently applicable standard for off-road large spark-ignited equipment. If thi s is not feasible, the project must reduce NOx+NMHC emissions to at least 3.0 g/bhp-hr or less.

• A retrofit of an emission-certified (1996+ model y ear) off-road diesel engine that

reduces NOx must be with a retrofit kit that is ver ified to reduce NOx or NOx+NMHC emissions by at least 15 percent from the applicabl e NOx or NOx+NMHC emission

standard.

• Reduced-emission retrofit kits must be verified fo llowing California test procedures and must comply with durability and warranty requir ements.

E. Scrap

• Scrap requirements are described in the 2005 Carl Moyer Program Guidelines, Part I, Chapter 2: Administration of the Carl Moye r Program.

VI. Cost-Effectiveness

To receive Carl Moyer Program funding, each project must meet the maximum cost-effective threshold of $14,300 per weighted to n of covered pollutants reduced. Only funds provided by the Carl Moyer Program and l ocal district matching funds are to be used in determining cost-effectiveness.

Cost-effectiveness methodology and sample project c alculations are provided in Appendices C and D. Emission reduction benefits ar e calculated by comparing the emission levels and operating parameters of the bas eline engine and the replacement, reduced emission engine or motor. The emission red uctions and cost-effectiveness of an agricultural engine project may be calculated ba sed on annual hours of operation or annual fuel consumption.

VII. Minimum Project Requirements

A. Application

The minimum application information for stationary and portable agricultural engine projects is in Table 10-4. Districts may request a dditional information from the applicant.AGRICULTURAL SOURCES X-14 Table 10-4 Minimum Application Information for Stationary and Portable

Agricultural Engine Projects

Applicant Information Organization, Company or Individual Name

Street Address City, County, State, Zip Code Primary Contact Name Primary Contact Phone Number Person with Contract Signing Authority Person who Filled Out Funding Application Project Address (if different from above)

Equipment Information Equipment Type (portable, stationary, other) Equipment Make Equipment Model Equipment Year Equipment Serial Number Baseline Equipment Fuel New Equipment Vendor (optional)

Activity Information Will the new engine have a functioning hour meter for the life of the project? Annual Hours of Operation or Annual Gallons of Fuel Consumption Percent Operation in California Percent Operation in District Project Life

Electronic Monitoring Unit (EMU) Will a new eligible EMU be installed as part of this project? (yes/no)

EMU Make

EMU Model

EMU Model Year

EMU ID Number EMU Cost (optional) ADDITIONAL INFORMATION –

NEW PURCHASE PROJECTS ONLY

New Electric Motor Make

New Electric Motor Model

New Electric Motor Serial Number New Electric Motor Family

New Electric Motor Year New Electric Horsepower (converted from kilowatts) Projected Year of Purchase of New Equipment

Baseline Cost New Reduced Emission Equipment Cost New Electric Motor Vendor (optional)

ADDITIONAL INFORMATION –

REPOWER PROJECTS ONLY Existing and Newer Engine/Motor Make Existing and Newer Engine/Motor Model Existing and Newer Engine/Motor Year Existing and Newer Engine/Motor Serial Number (if available) Existing and Newer Engine/Motor Fuel Type Existing and Newer Engine/Motor Horsepower Existing and Newer Engine/Motor Tier Existing and Newer Engine/Motor Family Is this project participating in the PG&E AG-ICE or the SCE TOU-PA-ICE Incentive Programs? Is this project engine a currently covered by a Moy er Program contract? Engine Rebuild Cost New Reduced Emission Equipment Cost New Engine Vendor (optional) New Engine Installer (optional)

ADDITIONAL INFORMATION –

RETROFIT PROJECTS ONLY

ARB-Verified Retrofit Device

Retrofit Device Serial Number ARB-Verified NOx Reduction (%) ARB-Verified PM Reduction (%) ARB-Verified ROG Reduction (%)

Retrofit Device Executive Order Verification Level (Level 1,2 or 3)

Retrofit Device Cost Cost of Retrofit Installation (optional) Cost of Retrofit Maintenance for Life of Project (o ptional)AGRICULTURAL SOURCES X-15 A disclosure must also be included stating that the proposed project has not been funded and is not being considered for funding by a nother air district, ARB, or any other public agency. Any applicant who is found to have submitted multiple applications for the same project may be banned from submitting futu re applications to any and all Carl Moyer Program solicitations and may be subject to criminal sanctions. A project funded cooperatively by multiple air districts is e ligible for funding if the project parameters are coordinated amongst the participatin g districts and the project meets all applicable Carl Moyer Program criteria. Applicants are allowed to re-apply for project funding if a previous application has been rejected and is no longer being considered for funding.

Third party applications are not allowed. The owne r of the engine must sign and agree to the application. However, a third party (e.g. e ngine dealer or distributor) may complete an application or part of an application o n an owner’s behalf. Applications must include a signature section for third parties. The third party signature section must include signature and date lines, and blanks for th e third party to list how much they are being paid, if anything, to complete the applicatio n and what source of funds are being used to pay them. To make the Carl Moyer Program a ccessible to all potential applicants, including applicants that cannot afford to hire third party assistance, districts are encouraged to provide technical assistance to a pplicants in completing the application.

B. Reporting and Monitoring

Owners of stationary and portable agricultural engi nes participating in the Carl Moyer Program are required to keep appropriate records during the life of the project. During the project life, the district has the authority to conduct periodic checks or solicit operating records from the recipient of Carl Moyer Program funds. This is to ensure that the engine is being operated as stated in the project application. The recipient must maintain and update operating record s throughout the project life and have them available to the district upon request. Annual records must contain, at a minimum, total actual hours of operations or estima ted amount of fuel used from actual fuel receipts. Actual hours of operations are acce ptable for an engine equipped with a

non-reset hour meter.

Monitoring may be required to comply with district requirements and to ensure the program incentives are being applied toward the pro ject as specified in the application. To ease the tracking of the equipment over the life of the project, a district registration certificate may be issued to the equipment owner.

VIII. References

ARB, 2003. Air Resources Board. Staff Report: In itial Statement of Reasons, Airborne Toxic Control Measure for Stationary Compression Ig nition Engines. http://www.arb.ca.gov/regact/statde/isor.pdfAGRICULTURAL SOURCES X-16 ARB, 2004. Air Resources Board. Staff Report: In itial Statement of Reasons, Airborne

Toxic Control Measure for Diesel-fueled Portable En gines. http://www.arb.ca.gov/regact/porteng/isor.pdf

ARB 2005a. Air Resources Board. Staff Report: In itial Statement of Reasons for Proposed Revisions to the Airborne Toxic Control Me asure for Stationary Compression Ignition Engines. http://www.arb.ca.gov/regact/statde05/isor.pdf

ARB, 2005b. Air Resources Board. Staff Report: I nitial Statement of Reasons, Public Hearing to Consider the Large Confined Animal Facil ity Definition. http://www.arb.ca.gov/regact/lcaf05/isor.pdf

CASS, 2003. California Agricultural Statistics Ser vice. California Agricultural Statistics, 2003. California Agricultural Overview. http://www.nass.usda.gov/ca/bul/agstat/indexcas.htmXI-1 LIGHT-DUTY VEHICLES Chapter Eleven

LIGHT-DUTY VEHICLES

This is a new chapter that addresses the project cr iteria for on-road, light-duty vehicle projects under the Carl Moyer Program. The chapter contains a brief overview of the light-duty vehicle emission inventory, current engi ne emission standards, available control technologies, potential projects eligible f or funding, and emission reduction and cost-effectiveness calculation methodologies.

I. Introduction

Light-duty vehicles include passenger cars and ligh t-duty trucks such as pick-up trucks, sport utility vehicles (SUVs), and vans. In 2005, the estimated number of light-duty

vehicles in California is over 21 million vehicles. This number is expected to increase to over 23 million vehicles by 2010. Light-duty vehic les are major contributors to California’s ozone and particulate matter air pollu tion. Although emissions from light-duty vehicles are decreasing with the impleme ntation of stricter emission control standards, light-duty vehicles contribute about hal f of the ozone producing emissions

from all on-road vehicles.

II. Emissions

The oxides of nitrogen (NOx), reactive organic gas (ROG), and particulate matter (PM10) emissions from the light-duty fleet are show n in Table 11-1. In addition to these pollutants, light-duty vehicles emit toxic air cont aminants and carbon monoxide (CO).

Table 11-1 Statewide Emissions from On-Road Light-Duty Vehicle s

(tons per day)

Population NOx ROG PM10

2005 21,500,000 574 583 29
2010 23,700,000 388 405 32

Older, light-duty vehicles (pre-1990 model years) a ccount for 56 percent of the ROG and 41 percent of the NOx emissions from all light- duty vehicles in 2005 despite accounting for only 19 percent of the vehicle popul ation and less than 13 percent of the vehicle miles traveled (VMT). Generally, these old er vehicles emit more pollutants

because of less restrictive emission standards and increased wear and tear on drive train and emission control components. Additionall y, the subset of older vehicles that are not well maintained has a higher probability of being high emitters. As a result, older vehicles tend to be major contributors to ozo ne and particulate matter air pollution

in California.XI-2 LIGHT-DUTY VEHICLES

III. Regulatory Requirements

California’s emission controls for light-duty vehic les date back to the 1960s. Emission standards have become more restrictive over the yea rs, enabled by new control technologies and cleaner fuels.

Since the 1990s, the Low Emission Vehicle (LEV) reg ulations have been the cornerstone of the ARB’s program to reduce emission s from light-duty vehicles. The LEV program, implemented in 1994, established four tiers of low emission standards and provided manufacturers with the option of certi fying their vehicles to any mix of these standards as long as they complied with an av erage non-methane organic gas annual fleet requirement. The fleet average requir ement gradually decreased each year between 1994 and 2003, resulting in the introductio n of a greater number of cleaner vehicles each proceeding model year. The LEV II re gulation, adopted in 1998, set even more stringent, declining fleet average emission re quirements for 2004 through 2010 as well as lowering the NOx emission standards.

Figure 11-1 shows the progressively more stringent emission standards for new light-duty vehicles from 1970 through 2010. As a r esult of the ARB’s LEV program, a new 2005 model year car is on average 99 percent cl eaner than an uncontrolled car.

California also has requirements to ensure vehicles ’ emission control systems continue to work throughout their lives. Under the Inspecti on and Maintenance Program (Smog Check), vehicles are tested biennially to ens ure that they stay clean as they age. A Smog Check includes a tailpipe emissions test and a visual inspection of the emission control system. For vehicles equipped with on-boar d diagnostic (OBD II) systems

Emission Standards for New Light-Duty Vehicles

1970-2010

0 1 2 3 4 5 6 7 8 9

19 7 0 1972 19 7 4

1 97 6 19 7 8

1 98 0 19 8 2 1984 1986

1 98 8 19 9 0

1 992 19 9 4 19 9 6 1998
2 00 0 20 0 2 2004 2006
2 00 8 20 1 0ROG + NOx Emissions (g/mi) Figure 11-1XI-3 LIGHT-DUTY VEHICLES

(model years 1996 and later), the inspection also i ncludes a check of the malfunction indicator light to ensure that no problems have bee n detected with the vehicle’s emission control system.

IV. Potential Projects

Under the general heading of light-duty vehicle pro jects, the ARB has identified two programs that are eligible for funding under the Ca rl Moyer Program: voluntary accelerated vehicle retirement (VAVR) and voluntary vehicle repair (VVR). Both programs have the potential to decrease excess emis sions from older, high emitting vehicles. These Guidelines will focus on implement ing the VAVR program under the Carl Moyer Program. The ARB staff will continue to assess how to incorporate VVR into the Carl Moyer Program and anticipates providi ng guidance on VVR in 2006. As part of this assessment, the ARB staff will also ev aluate extending the guidance to medium-duty vehicles.

A. VAVR Programs

The goal of VAVR programs is to retire older, more polluting vehicles earlier than their expected lifetime, thereby eliminating air pollutio n emissions associated with their operation. VAVR programs are strictly voluntary pr ograms overseen by the ARB and administered by local air districts. Enterprise op erators are contracted by the district and are responsible for evaluating, approving, and disposing of qualified light-duty

vehicles. Real emission reductions can be achieved as vehicles are still fully operational and have a useful life remaining. Ther efore, to qualify for a VAVR program, a vehicle must meet registration, functionality, an d equipment eligibility criteria. To accommodate car collectors and others with potentia l interest in vehicles offered for retirement, VAVR programs provide the public with a n opportunity to purchase vehicles in whole or in part before the vehicle is entered i nto the VAVR program. Vehicles accepted into the program for emission reductions m ust be retired by crushing the vehicle to such a degree that the vehicle and its p arts are rendered unusable.

B. Legislative and Regulatory History of VAVR

Vehicle scrapping programs were first introduced in California in the early 1990s. In the 1994 State Implementation Plan (SIP), the ARB inclu ded a measure calling for a vehicle scrapping program in the South Coast Air Basin. Se nate Bill 501 (Calderon, 1995) directed the ARB to adopt a regulation governing VA VR which would include market-based, privately-operated VAVR enterprises a nd the generation of emission reduction credits. (See California Health and Safe ty Code sections 44100-44122, in part.) The ARB adopted VAVR regulations in 1998 an d amended these regulations in 2002 [ARB, 1998 and ARB, 2001]. In 1998 and 1999, the ARB conducted a pilot program for retiring light-duty vehicles in the Sou th Coast Air Basin. While the results of the pilot program were encouraging, funding limitat ions did not permit expansion of the program to achieve the emission reductions called f or in the SIP.XI-4 LIGHT-DUTY VEHICLES

The 2003 SIP did not contain an explicit commitment to vehicle retirement because sufficient funding for such programs had not been s ecured. However, the SIP did acknowledge the need to provide incentives for VAVR programs in the long term. Legislative changes to the Carl Moyer Program enact ed with the signing of Assembly Bill 923 (Firebaugh, 2004) added light-dut y vehicle projects to the list of allowable projects and provided additional means of funding VAVR programs to reduce NOx, ROG, and PM10 emissions.

C. District VAVR and the BAR Vehicle Retirement Pro grams

Four districts have recently operated or continue t o operate VAVR programs including the Bay Area Air Quality Management District (AQMD) , San Diego Air Pollution Control District (APCD), Santa Barbara APCD, and South Coas t AQMD. Between 2000 and 2003, these districts scrapped over 21,000 vehicles or over 5,000 vehicles per year.

In addition to district VAVR programs, the Bureau o f Automotive Repair’s (BAR) Smog Check Program includes a voluntary vehicle ret irement element. As part of BAR’s Consumer Assistance Program, owners of qualif ying vehicles that fail the biennial inspection are given the option of volunta rily retiring their vehicle rather than repairing it. BAR offers $1,000 in exchange for th e vehicle.

District VAVR programs work outside of BAR’s Smog C heck Program to ensure that district programs generate emission reductions that are surplus to the those obtained through the Smog Check. BAR’s program covers vehic les that have failed their biennial Smog Check while the district programs cover vehicl es that have passed their biennial Smog Check or are “off cycle” for Smog Check (i.e., not due for their biennial inspection). To ensure that the two programs do no t compete with one another, vehicles that are within 60 days from their next re quired Smog Check must pass the Smog Check inspection under the VAVR regulation. I f the vehicles are between 61 to 90 days of the next Smog Check, the district must v erify that the vehicle has not failed the Smog Check inspection before the vehicle can be accepted. Additionally, the vehicle cannot be operating under either a BAR repa ir cost waiver or economic hardship

extension.

D. Remote Sensing

Studies by the ARB, BAR, the U.S. Environmental Pro tection Agency (U.S. EPA), and the University of Denver, Colorado, among others, h ave shown that remote sensing devices (RSD) can be effective tools in identifying high emitting vehicles [BAR, 2001; U.S. EPA; Stedman, 1994; and Stedman].

Remote sensing typically uses infrared and, at time s, ultraviolet spectroscopy to measure the concentrations of air pollutants in veh icle exhaust while the vehicle is in use on the roadway. Concentrations of ROG, NOx, an d CO in parts per million or percent are recorded along with the vehicle’s speed and rate of acceleration and a photo of the license plate.XI-5 LIGHT-DUTY VEHICLES

The option of using RSD is included to identify hig h emitting vehicles that can then be contacted for participation in voluntary early reti rement programs. Staff is taking a two-step approach to integrate RSD into the Carl Mo yer Program and the VAVR regulation. As a first step, the ARB would authori ze an RSD-based “High-Emitting Vehicle Identification, Repair, and Scrapping Progr am” to be run by the South Coast AQMD starting in Spring 2006. Then, the ARB would use the data from this program to revise the VAVR regulation and provide additional C arl Moyer Program guidance in 2006 to fully incorporate RSD. The revisions would codify the use of RSD; establish protocols for quantifying emission reductions; and determine the appropriate application of Moyer funds to RSD-based VAVR programs. As part of this guidance, the ARB

would evaluate what elements related to the use of RSD would be eligible for funding under the Carl Moyer Program consistent with legisl ative requirements and Board direction. After the ARB revises the regulation an d Carl Moyer Program guidance, any district may develop and implement an RSD-based VAV R program.

The South Coast project will mark the first time an RSD-based VAVR program has been implemented. Because the methodology for calculati ng the emission reductions associated with retiring or repairing high-emitting vehicles has not been established and the level of vehicle owner participation cannot be predicted in advance, the cost-effectiveness of the program cannot be fully e stablished in advance. Carl Moyer Program funds can only be used for proje cts that meet the $14,300 per weighted ton cost-effectiveness limit. By undertak ing this introductory RSD program, the South Coast Air District is taking some risk if the program ultimately exceeds the

cost-effectiveness limit.

V. Project Criteria

Light-duty vehicle projects will initially be limit ed to VAVR programs that meet the ARB’s VAVR regulations. As noted above, the Guidelines a lso provide for an RSD implementation program in the South Coast. The pro ject criteria listed below provide districts with the minimum qualifications for the C arl Moyer Program.

The criteria listed below highlight many, but not a ll, of the requirements of the ARB’s VAVR regulation. VAVR programs must meet all of th e requirements of the regulation. Districts starting VAVR programs using Carl Moyer P rogram funding should reference these Guidelines as well as the regulation. Where the Carl Moyer Program Guidelines go beyond the requirements of the regulation, it is noted below. Participating districts retain the authority to impose additional requireme nts to address local concerns.

A. General Requirements

• Emission reductions obtained through Carl Moyer Pr ogram projects must not be required by any federal, state, or local regulation ; memorandum of agreement/understanding with a regulatory agency; s ettlement agreement; mitigation requirement; or other legal mandate.XI-6 LIGHT-DUTY VEHICLES

• Projects must meet a cost-effectiveness of $14,300 per weighed ton of NOx + ROG

+ combustion PM10 reduced calculated in accordance with the cost-effectiveness methodology discussed in this chapter.

• No emission reductions generated by the Carl Moyer Program shall be used as

marketable emission reduction credits or to offset any emission reduction obligation of any person or entity.

• Projects must have a minimum project life of three years. The ARB may approve shorter project life on a case-by-case basis. Proj ects with shorter lives may be subject to additional funding restrictions, such as a lower cost-effectiveness limit or a project cost cap. The contract term must extend to the end of the project life. The default project life does not consider upcoming reg ulatory requirements.

• Potential projects that fall outside of these crit eria may be considered on a case-by-case basis if evidence provided to the ARB suggests potential surplus, real, quantifiable, and enforceable emission reduction be nefits.

• Air districts must consult with ARB staff to deter mine eligibility of all projects considered for funding on case-by-case basis. All p rojects considered on a case-by-case basis must receive ARB approval prior to receiving program funding.

• Participation in a light-duty VAVR program shall b e entirely voluntary for vehicle

owners.

• VAVR programs shall comply with all provisions of the VAVR regulations found in Title 13 California Code of Regulations, Division 3 , Chapter 13, Article 1, section 2601 et seq.

• VAVR programs seeking funding under the Carl Moyer Program shall comply with all applicable provisions of the Carl Moyer Program Gui delines including “Administration of the Carl Moyer Program.”

• Funding of program administrative costs, including advertising or outreach, shall be

limited to the amount allowable under statute.

B. Vehicle Eligibility Requirements

• The vehicle to be retired must be currently regist ered with the Department of Motor Vehicles (DMV) as an operating vehicle and mu st have been registered for at least 24 consecutive months prior to the final date of the sale to a VAVR enterprise to an address, or addresses, within the district in which the VAVR enterprise is operated. Smog Checks must be performed as require d by the DMV in order for the vehicle to be considered registered.XI-7 LIGHT-DUTY VEHICLES

1. A vehicle may also be eligible if the owner of t he vehicle placed the vehicle in planned non-operational status per Vehicle Code sec tion 4604, et seq., for a total of 2 months during the continuous 24 month registra tion period, occurring at least 3 months prior to the date of sale to the VAVR ente rprise.

2. A vehicle may also be eligible if the registrati on has lapsed for a period not to exceed 180 days during the previous 24 months and a ll appropriate registration fees and late penalties have been paid to the DMV, provided that the vehicle is registered for at 90 days immediately prior to its date of sale to a VAVR enterprise.

NOTE: These eligibility requirements are stricter than the ARB’s current VAVR regulation but are consistent with the requirements of Health and Safety Code

section 44094.

• The vehicle to be retired shall be driven to the V AVR enterprise purchase site under its own power and shall pass a functional and equip ment eligibility inspections as specified in the ARB’s VAVR regulation.

• The vehicle to be retired shall not be operating u nder a Smog Check repair cost

waiver.

• If a vehicle volunteered for retirement is within 60 days of its next required Smog Check inspection, the vehicle shall pass the S mog Check inspection without receiving a repair cost waiver or economic hardship extension prior to acceptance by a VAVR enterprise operator.

• If a vehicle volunteered for retirement is within 61-90 days of its next required Smog Check inspection, the district shall verify th at the vehicle has not failed a Smog Check inspection during this time frame.

C. Calculating Emission Reductions

• Emission reductions from VAVR programs shall be ca lculated in accordance with the methodology specified in the ARB’s VAVR regulations . Emission reductions, by model year of vehicle retired, are shown in Table 1 1-2. (The table is also included in Appendix B, Tables for Emission-Reduction and Cost- Effectiveness Calculations, at Table B-21.)

• The project life for a vehicle retirement project is three years as specified in the ARB’s VAVR regulation.

D. Offering Vehicles/Parts to the Public

• The enterprise operator must inform the district o f the vehicles that are ready for dismantling.XI-8 LIGHT-DUTY VEHICLES

• The district must provide a detailed description o f the vehicle to interested parties including collectors and enthusiasts.

• The enterprise operator must wait a minimum of 10 days before submitting a Notice

to Dismantle to the DMV.

• If an interested person contacts the enterprise op erator, the enterprise operator must hold the vehicle for an additional, minimum of 7 da ys.

• Non-emission-related and non-drive train parts fro m the vehicle may be sold at the sole discretion of the enterprise operator.

• Engine, emission-related parts, transmission, and drive train parts must be removed from the vehicle and destroyed after the 10 day wai ting period but prior to offering the remaining parts for sale. (Emission-related an d drive train parts are defined in the VAVR regulation.)

• If a vehicle or its emission-related or drive trai n parts are sold instead of retired, no emission reductions will be generated, and Carl Moy er Program funds may to be used for retiring the vehicle.

E. Recordkeeping

• For each vehicle retired, the district shall retai n the following information:

1. Vehicle Identification Number (VIN). 2. Vehicle license plate number. 3. Vehicle model year. 4. Vehicle odometer reading.

5. Vehicle make and model. 6. Name, address, and phone number of legal owner s elling vehicle to the enterprise operator. 7. Name and business address of inspector conductin g the vehicle’s eligibility inspection, if the VAVR enterprise operator contrac ts with an ARB-approved inspection entity to perform the vehicle functional and equipment eligibility inspection. 8. Date of purchase of vehicle by enterprise operat or. 9. Date of vehicle retirement.

10. Emission reduction claimed.XI-9 LIGHT-DUTY VEHICLES

• The VAVR enterprise operator shall maintain the fo llowing:

1. Reproduction of California Certificate of Title and registration, as signed-off by the seller at time of final sale to the VAVR enterp rise. 2. Reproduction of the applicable certificate of fu nctional and equipment eligibility; 3. Reproduction of the applicable Notice to Dismant ler (DMV Registration 42 form). 4. Reproduction of written documentation from the D MV verifying that a vehicle meets the vehicle registration requirements of the ARB’s VAVR regulations. 5. If the retired vehicle was within 60 days of its next required Smog Check inspection, a reproduction of documentation that th e vehicle passed its Smog Check inspection.

• Districts and enterprise operators shall retain th ese records for the life of the project plus an additional three years.

NOTE: This requirement is stricter than the ARB’s current VAVR regulation which requires that records be maintained for the life of the project but is consistent with the Carl Moyer Program administrative requirements.

F. Criteria for South Coast AQMD RSD/Scrapping/Repa ir Project

• The South Coast AQMD may operate an RSD-based high -emitting vehicle identification, repair, and scrapping program.

• Prior to project implementation, the district shal l submit a detailed project plan for approval by the ARB’s Executive Officer (EO).

1. The plan shall include a detailed protocol descr ibing the installation, calibration, and operation of RSD that will be used to identify high emitters along with the methodology for processing of the data collected. 2. The plan shall include itemized, estimated proje ct costs including, but not limited to, the funds allocated to vehicle repair and the n umber of vehicles to be repaired; the funds allocated to vehicle retirement and the number of vehicles to be retired; and the costs allocated to RSD data col lection, data analysis, outreach, and solicitation of vehicle owners. 3. The plan shall include a sample of the letter th at the South Coast AQMD intends to send to vehicle owners soliciting their voluntar y participation in the project. 4. The project must follow the plan, and any substa ntive changes must be pre-approved by the EO.

• The South Coast AQMD shall permit the ARB to perfo rm emissions testing on a subset of the retired vehicles selected by the ARB prior to dismantling.

• As part of the Carl Moyer Program reporting requir ements, the South Coast AQMD shall report on each vehicle retired or repaired un der this program.XI-10 LIGHT-DUTY VEHICLES

• The ARB may conduct periodic auditing of the progr am, and the South Coast AQMD shall provide any required information concerning t he program.

• If vehicle records are missing, incomplete, or chr onically late, the ARB may disallow

emission reduction credit for that vehicle.

• The ARB has not yet established the methodology fo r calculating the extra emission benefits from retiring high-emitting vehicles ident ified using RSD. Because of this, the emission reductions achieved under this project shall be calculated in accordance with a new methodology that will be esta blished during the next revision of the VAVR regulation.

• An acceleration simulation mode (ASM) Smog Check t est must be run on all vehicles being retired or repaired during this intr oductory RSD/scrapping/repair project to help establish the emission reduction ca lculation methodology.

VI. Emission Reduction and Cost-Effectiveness Calcu lations

For VAVR projects, the emission reduction benefits represent the difference in the emission levels of the retired vehicle and the repl acement vehicles. The ARB approved the methodology for calculating emission reductions associated with VAVR at its December 1998 Board meeting [ARB, 1998]. Emission reductions, by model year of vehicle retired, calculated in accordance with the approved methodology are listed in

Table 11-2. The table lists the reductions over th e full three year life of a vehicle retirement project. The methodology for retiring h igh-emitting vehicles identified via RSD has not yet been established.

A detailed description of how to calculate cost-eff ectiveness can be found in Appendix C: Cost-Effectiveness Calculation Methodo logy and Appendix D: Example

Calculations.XI-11 LIGHT-DUTY VEHICLES Table 11-2 Voluntary Accelerated Light-Duty Vehicle Retirement Program

Emission Reductions for Calendar Year 2006*

Total Pounds Per Vehicle Over 3 Year Credit Life

Emission Reductions (pounds) – 3 Year Credit Life

Model Year NOx ROG** CO PM10

65 and earlier 151 496 2,757 0.68
66 145 471 2,552 0.67
67 148 477 2,611 0.65
68 156 492 2,731 0.81
69 162 504 2,841 0.56
70 169 438 2,971 0.99
71 172 449 2,990 0.95
72 177 458 3,037 0.83
73 180 469 3,082 0.64
74 159 401 2,859 1.20
75 145 345 2,861 1.17
76 130 222 2,673 1.04
77 108 183 2,546 1.13
78 107 186 2,493 1.10
79 95 168 1,625 0.90
80 85 129 1,373 1.13
81 62 108 1,092 1.22
82 66 101 1,085 1.36

83 73 85 934 1.22

84 73 74 883 1.05

85 69 59 575 0.89

86 71 61 527 0.91

87 67 71 468 0.92

88 67 65 430 0.85

89 50 46 492 0.84

90 38 45 529 0.81

91 38 42 514 0.76

92 40 41 510 0.71

93 35 31 279 0.64

94 19 17 21 0.54

* Table is repeated in Appendix B, Table B-21 ** Includes exhaust and evaporative emissions

Source: EMFAC2002, Version 2.2, statewide, annual average . Assumes average 1965 through 2006 vehicle as replacement vehicle for vehicles retired in calendar year 2006.

This table updates the emission reductions provided in the ARB’s VAVR regulation consistent with the methodology in the staff report, Proposed Regulatio ns for Voluntary Accelerated Light-Duty Vehicle Retirement Enterprises, released October 23, 1998, and approved by the ARB on December 10, 1998.XI-12 LIGHT-DUTY VEHICLES

VII. Minimum Project Application Requirements

Districts must submit a VAVR plan to the ARB, consi stent with the Carl Moyer Program Guidelines. The district must receive written appr oval of the plan from the ARB’s EO prior to implementing the VAVR program under the Ca rl Moyer Program. The district must also follow all other Carl Moyer Program repor ting requirements.

The district plan must at a minimum include:

1. The name, title, and telephone number of the dis trict contact for the VAVR program. 2. An evaluation of environmental justice considera tions including, but not limited to, outreach addressing community needs. 3. An estimate of the number of vehicles that may b e retired and an estimate of the cost-effectiveness of the program along with all as sumptions and calculations that were used to derive the estimate (recognizing that the ultimate cost-effectiveness will depend on the mix of vehicles actually retired ). 4. A sample of the enterprise operation contract. 5. A description of the methods that will be used a nd a timetable for monitoring and auditing enterprise operations. 6. A copy of the statement of certification that an enterprise operator has demonstrated compliance with all applicable provisions of the re gulation. 7. The methodology and sample records for verifying that a vehicle is eligible for inclusion in the VAVR program including confirmatio n of compliance with any Smog Check requirements. 8. The protocol for informing the public of the ava ilability of eligible vehicles for sale. 9. A sample of the records that will be required of the enterprise operator. 10. A description of changes to the VAVR program th at are more stringent than those listed in the statewide regulation (if a district c hooses to adopt requirements beyond those required). 11. Any additional information necessary to explain or clarify how the district plan complies with the VAVR regulation and the Carl Moye r Program.

The annual report shall contain, for each vehicle r etired, at a minimum:

1. Vehicle Identification Number (VIN). 2. Vehicle license plate number. 3. Vehicle model year. 4. Vehicle odometer reading.

5. Vehicle make and model. 6. Name, address, and phone number of legal owner s elling vehicle to the enterprise
operator. 7. Name and business address of inspector conductin g the vehicle’s eligibility inspection, if the VAVR enterprise operator contrac ts with an ARB-approved inspection entity to perform the vehicle functional and equipment eligibility inspection. 8. Date of purchase of vehicle by enterprise operat or. 9. Date of vehicle retirement.XI-13 LIGHT-DUTY VEHICLES

10. Emission reductions claimed.

VIII. References

ARB, 1998. Air Resources Board, Proposed Regulatio ns for Voluntary Accelerated Light-Duty Vehicle Retirement Enterprises, October 23, 1998.

ARB, 2001. Air Resources Board, Proposed Amendment s to Air Resources Board Voluntary Accelerated Vehicle Retirement Regulation s – Minimize the Differences Between ARB and BAR VAVR Regulation and Allow Parts Recycling and Resale of Non-Emission-Related and Non-Drive Train Parts, Nov ember 30, 2001.

BAR, 2001. Bureau of Automotive Repair, Remote Sen sing Device High Emitter Identification with Confirmatory Roadside Inspectio n, Final Report 2001-06, August 30, 2001.

U.S. EPA. Julian W. Jones, C. Ted Ripberger, and N iranjan Vescio, U.S. Environmental Protection Agency, Office of Res earch and Development, FINAL REPORT An Investigation of Remote Sensing Devices f or Chemical Characterization of

Motor Vehicle Exhaust.

Stedman. Donald H. Stedman and Gary A. Bishop, Dep artment of Chemistry and Biochemistry, University of Denver, Colorado, Emiss ions-Based Mobile Source Inventory Methods.

Stedman, 1994. Donald H. Stedman, On-Road Remote S ensing of CO and HC Emissions in California, February 1994, ARB Contrac t No. A032-093.XII-1 ZERO-EMISSION TECHNOLOGIES Chapter Twelve

ZERO-EMISSION TECHNOLOGIES

This is a new chapter that highlights some of the a vailable zero-emission technologies eligible for Carl Moyer Program funding. It provid es more detail on zero-emission technologies and, for some project types, provides additional project criteria. It also

describes emission reduction and cost-effectiveness calculation methodologies. This chapter is a supplement to other chapters in these Guidelines: it does not replace or supersede any other criteria.

I. Introduction

A. Benefits of Zero-Emission Projects

Zero-emission technology is a key element of Califo rnia's long-term plan for attaining health-based air quality standards. Electric motor s are the most commercially viable zero-emission technology available today. In gener al, replacing internal combustion engines with electric motors provides major reducti ons in oxides of nitrogen (NOx) and particulate matter (PM10). Zero-emission technolog ies also have a number of societal benefits that are not quantified in the Carl Moyer Program. These include reductions in toxic air contaminants, greenhouse gases, petroleum consumption and noise pollution. In addition, electricity production does not have a s many “upstream” emission impacts as the production of combustible fuels. Refining, storage and delivery all have associated emissions from routine operations and ac cidents (e.g., fuel spills). Furthermore, unlike other technologies with emissio n control devices that may lose effectiveness over time, with zero-emission equipme nt there is no emission rate deterioration. Electric equipment will remain emis sion-free throughout its useful life.

Although the purchase price of electric equipment c an be higher than comparable internal combustion engine equipment, owners and op erators generally realize significant fuel and maintenance cost savings. The higher purchase price is sometimes recouped through these savings during the life of t he equipment. Higher salvage values and longer lives can provide electric equipment wit h an economic advantage compared to internal combustion engine equipment. In additi on, electric equipment operators sometimes derive indirect benefits from privileges like access to restricted areas, use of carpool lanes and even public relations benefits.

Yet, despite these attributes and the fact that ele ctric technologies may be well-suited for a multitude of applications, there have been re latively few zero-emission projects funded by the Carl Moyer Program. Many prospective buyers still perceive electric equipment to be an unfamiliar, risky technology or are deterred by the higher initial investment. The Carl Moyer Program can address bot h of these issues, first by serving as a source of information regarding electric techn ologies and, second, by providing grants to help offset increased costs. Zero-emission projects should becomeXII-2 ZERO-EMISSION TECHNOLOGIES

increasingly competitive within the Carl Moyer Prog ram. New regulations, tighter emission standards, increasing petroleum prices, an d technology advances are helping to make zero-emission technologies more competitive . As regulatory requirements continue to decrease baseline emission levels, Carl Moyer Program applicants need to find cleaner technologies to qualify for funding.

The Air Resources Board (ARB) requires districts to encourage zero-emission projects. This encouragement can be demonstrated in a number of ways. Districts operating on a “first-come-first-served” basis may rotate zero-e mission projects to the top of the list, regardless of when the applications were submitted. Districts that solicit projects and rank them by cost-effectiveness may choose to fund zero-emission projects first, regardless of their cost-effectiveness (as long as the project does not exceed $14,300 per weighted ton). Alternatively, districts may ea rmark a percentage of their allocation for zero-emission projects or increase outreach eff orts that target zero-emission projects. Any of these strategies are acceptable, as well as other means of encouragement. Districts’ policies and procedures must describe how they plan to encourage zero-emission technologies.

B. Types of Zero-Emission Projects

To date, the Carl Moyer Program has funded approximately 231 electric forklifts, 55 hybrid-electric buses, 7 electric motor driven a gricultural pumps, and 4 electric battery hybrid locomotives. In addition, 30 truck stop spaces are scheduled to be equipped with IdleAire systems to reduce truck idli ng under the Carl Moyer Program. In all of these projects, the NOx-only cost effectiven ess is very favorable. These projects will be even more cost-effective when reactive orga nic gases (ROG) and combustion PM are taken into account with the new weighted cos t-effectiveness formula. Zero-emission projects have an inherent emissions a dvantage because there is no NOx versus PM trade-off (as with some diesel projects) and no additional cost for controlling

PM or ROG.

In addition to agricultural pumps, buses, locomotiv es, and forklifts, there are several other applications where zero-emission technologies are capable of replacing combustion engines. Marine ports, airport ground s upport equipment (GSE), and industrial equipment are all good candidates for ze ro-emission technology. In addition, electric motors can substitute for idling trucks an d engines used for truck refrigeration units. All these applications are eligible for the Carl Moyer Program funding, and zero-emission technologies are the cleanest option.

In the following section, we discuss the availabili ty and provisions for using zero and near-zero emission technologies. For new applicati ons of zero-emission technologies not addressed elsewhere in the Guidelines, such as truck parking space electrification, we outline the parameters for Carl Moyer Program el igibility. Although many of these projects will be assessed on a case-by-case basis a t this time, our intent is to provide a general framework for evaluation. As with all proj ects, emission reductions must beXII-3 ZERO-EMISSION TECHNOLOGIES

surplus, real, quantifiable, and enforceable and th e project must meet the cost-effectiveness threshold of $14,300 per weighte d ton of reduced emissions.

Most Carl Moyer Program projects can simply substit ute an electric motor for an internal combustion engine. In those cases, the same criter ia and methodologies apply as for a typical repower or new purchase, except as noted in the criteria section of this chapter. All relevant regulations and MOUs discussed or refe rred to in the respective chapters also apply to zero-emission projects. The only dif ference is that the new or replacement piece of equipment has no emissions.

II. Regulatory Requirements

Regulatory requirements that apply to the baseline equipment are included in the respective chapters pertaining to the category of e quipment under consideration. Because there are no regulatory requirements for Ca rl Moyer Program categories that mandate zero-emission technologies, emission reduct ions resulting from using such technologies will always be surplus.

III. Potential Zero-Emission Projects

A. Electrically-Driven Agricultural Equipment

Agricultural equipment, such as pumps, provides an ideal application and the potential for wide-scale deployment of a zero-emission techno logy. Statewide, several thousand internal-combustion engines are used for pumping wa ter for agricultural purposes. To date over 2,000 pumps have been replaced using Carl Moyer Program funds, all but a few of those replacements were with diesel engines. Farmers are reluctant to purchase electrically driven pumps for several reasons but t he high cost of installing infrastructure and unpredictable electricity rates have been the p rimary deterrents to purchasing electric motor pumps. In addition, farmers usually have to pay substantial fixed charges for electricity even when the electric pump is not used. Because of these issues, most farmers opt for diesel pumps.

A new utility company incentive program coupled wit h Carl Moyer Program funding provides an opportunity to go electric. Pacific Ga s and Electric (PG&E) and Southern California Edison (SCE) have developed a rate-based incentive program that helps make electric motor irrigation pumps cost-competiti ve with diesel pumps. These new incentive rates, which have been approved by the Pu blic Utility Commission, are structured with the intent to achieve cost parity b etween owning and operating electrically driven agricultural pumps and diesel p umps capable of equal output. The rates were developed with a diesel price assumption of $1.15 per gallon. The rates are guaranteed to remain fixed (with the exception of a one and one half percent annual increase) until the year 2015. With current diesel prices more than double the assumed $1.15 price, electrically driven pumps should prove a viable economic option to diesel-powered pumps. The PG&E and SCE incentive p rograms are first-come-first-served programs that are accepting applications through July 31, 2007.XII-4 ZERO-EMISSION TECHNOLOGIES

Applicants must obtain prior approval from the dist rict before purchasing an electric motor under the PG&E and SCE incentive programs.

The PG&E and SCE incentive programs also provide fu nding to partially or fully offset the cost of extending power lines to the pump sites and eliminate the fixed demand charge, so customers do not have to pay a fee for t he months that the pump is not operated. Carl Moyer Program funding coupled with the PG&E and SCE incentive programs can provide lower electricity rates, price stability, infrastructure subsidies and waived demand charges, making electric motor pumps a very attractive option.

In order to qualify for the PG&E or SCE incentive p rogram, the applicant must replace an internal combustion engine (excluding those fire d with natural gas) used for irrigation pumping which was installed and operational prior t o September 1, 2004. In addition, the replaced engine must be destroyed or, if purcha sed with Carl Moyer Program funds, surrendered, destroyed, relocated or removed as ins tructed by the ARB and the local air district. All Tier 1 engines originally funded by the Carl Moyer Program that are replaced through the PG&E or SCE incentive program must be destroyed as described in the Administration Chapter (Chapter Two, Part I of the Approved Carl Moyer Program Guidelines). If a Tier 2 engine currently under Mo yer contract is relocated to replace a dirtier engine within the air district, then the di rtier engine must be destroyed. Districts should conduct pre-inspections to ensure the dirtie r engine is operational, and post-inspections to ensure that the replacement Tie r 2 engine is properly installed and functioning.

Districts may allow the sale of Tier 2 engines that are replaced through the PG&E or SCE incentive program if documentation is provided to establish the chain-of-custody of the engine, and the sale price. If the district al lows the sale of Tier 2 engines, all proceeds from the sale must be divided between the applicant and the district based upon the ratio of original funding provided for the purchase of the Tier 2 Moyer engine. Funds returned to the district must be spent on Moy er eligible projects (funds may be used to offset the added cost of the pre- and post- inspections). If the Tier 2 engine cannot be relocated or sold within 60 days of the e lectric service being energized, it must be destroyed. If the engine is sold out of Ca lifornia, documentation that the engine

will not be used in or re-sold into California must be provided to the district.

Because the PG&E and SCE incentive programs are a l imited time offer, ARB staff will allow pump engines currently under Carl Moyer Progr am contract to be replaced with electric motors under the incentive programs, with the contract to be revised to reflect the use of an electric motor. The remaining projec t life of the initially funded engine project would be added to the project life for the new electric motor pump project. The increased project life would be used in the cost-ef fectiveness calculation, and the contract duration will be increased accordingly.

For replacement agricultural pump engines not curre ntly funded by the Carl Moyer Program, applicants are allowed to use o ne-half of the normal rebuild cost for the baseline cost. Normally, Carl Moyer Progra m participants apply for grants at theXII-5 ZERO-EMISSION TECHNOLOGIES

time an engine needs to be rebuilt. In these cases , the grower would pay the base rebuild cost, while the Program would fund the incr emental cost of a repowering with a newer, cleaner engine. Because the PG&E and SCE in centive programs are a limited time first-come, first-served offer, some growers m ay choose to replace their engines

with an electric motor before the normal rebuild in terval for their engine. Because it will be difficult to determine where each individual eng ine is in its rebuild cycle, it is assumed that all engines taking advantage of the PG &E and SCE incentive programs are halfway through their rebuild cycle – and that the applicant’s base cost would be half

the rebuild cost.

Carl Moyer Program applicants using the PG&E and SC E incentive programs will also have to make adjustments to the emission reduction calculations. Because to date virtually no electric agricultural pump projects ha ve been funded through Carl Moyer Program grants, the PG&E and SCE incenti ve programs take credit for the emission reduction between a Tier 3 engine and an e lectric motor. As a condition of the PG&E and SCE incentive programs, these emission red uctions must be donated to the Carl Moyer Program for clean air. The emission red uction benefit between the replaced engine and a Tier 3 engine, may be included in the cost-effectiveness calculation to determine the grant amount. An example of this cal culation is provided in Appendix D.

Project Criteria for Electrically Driven Agricultur al Equipment

• Purchases of new 2005 or later model year agricult ural equipment can only be

electric motors.

• Priority must be given to projects that replace st ationary agricultural engines with

electric motors.

• Agricultural equipment that use an electric motor may use a default 10 year project life for calculating cost-effectiveness.

• Costs for necessary peripheral equipment associate d with the motor (e.g. control panel, motor leads, service pole with guy wire, and connecting electric line) may be included in the grant award amount.

• District match funds may be used for infrastructur e purchase and installation.

• District match funds may be used to offset the hig her cost of electricity relative to diesel fuel, if applicable. In this case, the fuel cost difference will be accounted for when calculating the cost-effectiveness of the proj ect.

• All electric-driven equipment must have a function ing kilowatt-hour meter, or other method approved by the local air district, to monit or usage.XII-6 ZERO-EMISSION TECHNOLOGIES

B. Marine Shore-Side Provided Power

In addition to being the largest source of air poll ution in many districts, ports are often situated in environmental justice areas. For these reasons, ports are a primary focus for emission reduction strategies throughout the state. Governor Schwarzenegger has directed state and regional air agencies to work to gether with the U.S. Environmental Protection Agency, industry and community stakehold ers to address port-related sources of air pollution.

The largest emission source at ports is marine vess els. One strategy for reducing marine vessel emissions is “cold ironing” where shi ps plug into shore-side power while docked, rather than continuously running their dies el engines to generate electricity. Cold-ironing requires the proper electrical supply connections from the shore — lines, transformers, switching gear, cables, etc. — and t he necessary hook-ups on the ship.

Cold ironing, long used for naval vessels, has rece ntly been implemented in the non-military sector in Juneau, Alaska and at the Po rt of Los Angeles. Four specially-equipped cruise ships plug into shore-sid e power in Juneau during hotelling operations, while a container vessel plugs in at th e electrified berth in Los Angeles. In addition, the Port of Long Beach has begun work to provide dockside electricity to

accommodate two retrofitted oil tankers and work ha s begun in Seattle to convert a berth for cruise ships. Other ports in the U.S. an d worldwide are also considering cold-ironing. Early results of ARB’s shore-electri fication feasibility study indicate that cold-ironing is a cost-effective measure to reduce pollutants from a variety of ships — namely, cruise ships, container ships, and refriger ated bulk ships — at several California ports.

Most marine projects in the Carl Moyer Program deal with harbor craft. Cold ironing projects go beyond harbor craft and include cruise ships, tankers, and freighters. Because cold ironing is a nascent technology, it is difficult to specifically identify the exact components that will be eligible for Carl Moy er Program funding. Because each cold ironing project will be unique, each must be c onsidered for grant funding on a case-by-case basis. The cost-effectiveness and gra nt amount will depend on a number of issues such as interface compatibility, operatin g voltage, energy needs and electricity availability at the dock. However, evidence must b e submitted to the air district to prove that all emission reductions are surplus, real, qua ntifiable, and enforceable and the

cost-effectiveness limit is not exceeded

. Applications will be evaluated based on factors including, but not limited to, frequency and durati on of port visitations, energy usage at the dock, seasonal operating variances and regulari ty of travel routes.

C. Forklifts and Other Large Spark-Ignition Equipm ent

The Carl Moyer Program has two general emission con trol strategies for forklifts -- (1) purchase of new electric forklifts instead of n ew internal combustion engine (ICE) forklifts; and (2) retrofit or repower of internal combustion forklifts that do not lendXII-7 ZERO-EMISSION TECHNOLOGIES

themselves to electric substitution. Specific proj ect criteria for funding large spark-ignition (LSI) engines are not yet formalized in these Carl Moyer Program Guidelines pending the Board’s action on the staff’ s proposed regulations for LSI engines and equipment. However, staff proposes the following changes regarding electric forklift projects:

• The cost-effectiveness limit for electric forklift s is $7,000 per weighted ton of reduced

emissions.

• Leased forklifts are eligible for funding if the l ease term is three years or more.

Chapter Six provides additional background discussi on on this project category and potential criteria that could be used to establish funding eligibility under the Carl Moyer Program for both strategies. Until the Board adopt s the LSI regulation, districts may continue to fund forklift projects using the 2003 C arl Moyer Program Guidelines. During this interim period, additional zero-emission LSI p rojects may be considered on a case-by-case basis.

D. Airport Ground Support Equipment

Electric GSE have several attributes that make them appeal to users. Participants of demonstration and fleet conversion programs like th e way that electric GSE handle and appreciate the fact that they are more “task specif ic”. Battery weight often provides valuable ballast needed to lift heavy objects or pu sh airplanes; usage is often conducive to charging cycles; there are no odors; and no liqu id fuel required in the aircraft staging area. Most importantly, electric GSE can be cost-e ffective and generally have relatively short payback periods. Electric GSE are commercial ly available and commonly used for a number of equipment types including belt load ers, baggage tractors, aircraft tugs, lifts, ground power units, cargo loaders, lavatory carts and air-start units. However, the higher capital cost of electric equipment is often a deterrent to prospective buyers. Carl Moyer Program funds can be used to offset this initial capital investment.

As discussed in Chapter Seven, there are currently no regulations requiring the use of electric ground support equipment (GSE) at airports but there is a Memorandum of Understanding that involves five airports in southe rn California (Los Angeles, Ontario, Orange County, Burbank, and Long Beach). The Carl Moyer Program will fund the purchase of new electric GSE instead of new GSE pow ered by internal combustion engines if this equipment is surplus to the MOU; is not used to meet the requirements of any regulation, including the upcoming large-spark ignition regulation; is not funded through any other incentive program; and is not use d to generate credits of any type.

E. Idling Reduction Technologies

Truck drivers idle their propulsion engines for a n umber of reasons but the main purpose is for interior climate control -- heating and cooling the cab/sleeper compartment of the truck. A pilot survey on truck idling trends conducted in NorthernXII-8 ZERO-EMISSION TECHNOLOGIES

California indicates that 67 percent of idling is t o provide heating and 83 percent for air conditioning [Brodrick et al., 2001]. Therefore, d evices capable of providing heating and air conditioning without operating the propulsion i nternal combustion engine may substantially reduce emissions associated with truc k idling. Such devices are eligible for funding in the Carl Moyer Program.

Idling emissions, as well as fuel consumption, can be reduced by installing an available zero-emission idling control technology such as an on-board non-internal combustion engine device; by using a site-specific off-vehicle technology such as IdleAire; or by combining on and off-vehicle technologies.

Available zero-emission on-vehicle technologies inc lude generators or upgraded alternators coupled with inverter/chargers and elec tric heating ventilation and air conditioning (HVAC) systems. On-board battery pack s or fuel cells are also an option. Off-vehicle technologies include grid-supplied elec tricity at truck stops and advanced truck stop electrification (e.g., IdleAire). The u se of these devices, in lieu of operating the heavy-duty engine at idle, will result in signi ficant NOx reductions. Reductions in PM and ROG are also expected but to a lesser extent depending on the type of alternative idle reduction device/strategy used.

In October 2005, the Board will consider a proposal that would limit idling of heavy-duty trucks equipped with sleeper berths. This proposal would prohibit heavy duty trucks with sleeper berths from idling more than five minu tes unless certain conditions are met. If the Board approves the staff recommendations, th e baseline for calculating the benefits of truck idle reduction projects would be a certified diesel APU. Zero-emission technologies would be eligible for funding using th e lower emission baseline.

1. Idling Reduction Technology Options

Because the vast majority of truck idling occurs aw ay from truck stops, the most effective idle reduction technologies are those tha t are available to meet operator needs at any location idling occurs. The costs of these technologies vary widely, although the initial capital investment can typically be recover ed within one to three years from reduced fuel and maintenance savings. Still, truck owners and operators have not been receptive to these solutions because of their highe r initial cost.

Another on-board idle reduction system utilizes ele ctric heating, ventilation, and air conditioning (HVACs) instead of internal combustion engine-driven HVACs. These electric HVACs can be powered directly from the gri d, a fuel cell, or from energy stored in battery packs. The battery packs can be charged from the grid, from the truck’s alternator, or from a small on-board gen-set. Fuel cells are an emerging zero-emission technology that may also substitute for idling truc k engines or auxiliary power units in

the future.

Carl Moyer Program funds could be used to help defr ay the initial cost of equipping the truck with the necessary idle-reducing electric equ ipment. The Carl Moyer ProgramXII-9 ZERO-EMISSION TECHNOLOGIES

would pay up to $5,500 toward electric equipment an d up to $3,400 for its installation. In order to be eligible for funding, 75 percent of the applicant’s usage must take place

within California.

2. Truck Stop Electrification

Installation of electric power infrastructure at tr uck stops, or truck stop electrification (TSE), is gaining support as an idling reduction st rategy. Under this option, trucks would be provided with 110 volt alternating current (AC) electrical power at truck stops to run the electric air conditioning, heating and o nboard appliances. The electric supply can also be used to charge on-board batteries for e lectricity use away from the truck stop. Truck stops would need to be equipped with e lectrical outlets throughout the parking spaces and trucks would need to be equipped , at a minimum, with inverter/chargers and electrical power connections. If fitted with batteries, the truck could use electricity away from the truck stop. The inverter/charger is used to charge

the truck batteries and to convert the truck’s 12 v olt direct current (DC) batteries to 120 volt AC power for all onboard appliances. Curr ently, AC power inverters that are built into the truck are offered as a factory optio n by Freightliner, Volvo and International. The cost for inverter/chargers is a pproximately $1,400, a 600-700 Ah lead acid battery pack (good for about 8-15 hours of HVA C and appliance operation) costs approximately $8,000.

As discussed above, the Carl Moyer Program would pa y up to $5,500 toward electric equipment on-board the truck and up to $3,400 for i ts installation. TSE infrastructure installation at truck stops costs approximately $2, 000 per truck parking space. District matching funds may be used to offset this cost.

3. Advanced Truck Stop Electrification

An alternative to the TSE system that does not need truck modifications has been introduced by IdleAire Technologies. This system p rovides heating and air conditioning to the truck, as well as electrical power for on-bo ard appliances. It also provides basic services such as telephone and internet access and cable or satellite television. The unit is connected to the truck through a console mo unted to the truck window using a template insert. The console contains all the nece ssary connections and controls, including a card reader for the billing system. Th e infrastructure cost is approximately $17,000 per parking space but may vary depending on the number of parking spaces

installed.

Several advanced truck stop electrification project s have been installed with state and local funding. Carl Moyer Program funds may be use d for installing advanced truck stop electrification systems (e.g., IdleAire system s). In these cases, a partial payment would be made upfront to help offset the initial ca pital investment. The remainder of the grant amount would be paid out in installments base d on system utilization. The amount of the initial payment and subsequent instal lments will be determined on a case-by-case basis.XII-10 ZERO-EMISSION TECHNOLOGIES

The truck idling reduction projects described are j ust a few of many zero-emission idle reduction strategies. Other technologies and proje cts may also be eligible for Carl Moyer Program funding on a case-by-case basis. As with all projects, emission reductions must be surplus, real, quantifiable, and enforceable and the project must meet the cost-effectiveness threshold of $14,300 pe r weighted ton of emission

reductions.

F. Transportation Refrigeration Units

Electric standby transportation refrigeration units allow the engine to be turned off when a compatible electric power supply is available to operate the transportation refrigeration unit (TRU). Diesel engine emissions are eliminated while the TRU is plugged in at the facility. TRU manufacturers currently offer an ele ctric standby option on most models but very few trucks operating in the United States – less than one percent of trucks with TRUs – opt for these units. Electric standby TRU m odels are common in Europe where approximately 90 percent of all truck TRUs have som e type of electricity plug-in capability. As currently designed, however, the el ectric motors are only sized to hold a temperature set point and may not have sufficient p ower to pre-cool large trailer enclosures. This technology does not reduce emissi ons when the vehicle is away from an electricity source.

Electrically-driven TRUs could, in the long term, b e powered by fuel cells. This would allow the TRU to operate emission-free while enrout e or when stopped at a facility, regardless of the availability of electricity. As previously mentioned, fuel cell technology for this application is not currently market-ready.

Zero-emission TRU projects will be evaluated on a c ase-by-case basis. Criteria for other TRU projects are discussed in Chapter Four: Transport Refrigeration Units.

G. Other Zero-Emission Projects

This chapter addresses some of the most likely zero -emission technology projects. It is by no means a complete list of zero-emission techno logy projects. Other zero-emission technology projects either require no special consi deration (e.g., an internal combustion engine is directly replaced with an electric motor) or are described in the appropriate chapters (e.g., electric TRUs and power plug-in uni ts to reduce locomotive idling). Zero-emission technology projects not specifically addressed in this chapter or elsewhere in the Guidelines may be considered for C arl Moyer Program funding on a case-by-case basis. As with all projects, emission reductions must be surplus, real, quantifiable, and enforceable and the project must meet the cost-effectiveness threshold of $14,300 per weighted ton.

ARB staff will continue to work closely with intere sted stakeholders to monitor technological developments in effort to determine w hen it may be appropriate to develop or modify criteria for zero-emission projec ts. If necessary, ARB will issueXII-11 ZERO-EMISSION TECHNOLOGIES

advisories to inform prospective applicants and dis tricts of any new policy developments regarding Carl Moyer Program projects using zero-em ission technologies.

On September 6, 2005, Governor Schwarzenegger signe d Senate Bill 467 (Lowenthal) which requires the ARB to revise the Carl Moyer Pro gram Guidelines to include projects in which an applicant turns in off-road equipment p owered by internal combustion engines and replaces that equipment with new zero-e mission technologies. This legislation will take effect on January 1, 2006. A RB staff will evaluate how to incorporate the requirements of this legislation in to the Carl Moyer Program in 2006.

IV. References

Brodrick, C .J., N. P. Lutsey, Q. A. Keen, D. I. Ru bins, J. P. Wallace, H. A. Dwyer, and S. W. Gouse III, Truck Idling Trends: Results of a Pilot Survey in Northern California, Society of Automotive Engineers, Technical Paper Se ries 2001-01-2828, Warrendale, PA, 2001.