## Appendix N

Analysis of Regulatory AlternativesN-1



### Analysis of Regulatory Alternatives

Throughout the regulatory development process, staf f considered many different regulatory structures and elements. Some of these alternatives were developed internally to assess the benefits of regulatory opt ions, and some were developed by stakeholder groups as counter-proposals. This docu ment compares each alternative regulatory approach against the proposed regulation

.

A. ARB January 2008 Regulatory Proposal

In January 2008, ARB staff proposed a regulatory st ructure that would have required truck and bus operators to replace pre-2007 trucks with 2007 engine model year equivalent vehicles between 2010 and 2013, and pre- 2010 trucks and buses with 2010 engine model year equivalent vehicles between 2017 and 2021. The January 2008 proposal was designed on the modernization program envisioned in the 2007 Statewide Implementation Plan, and would have required all tr ucks and buses operating in California to meet 2010 emission standards by 2023.

Figures 1 and 2 compare emissions benefits that wou ld have been generated by the January 2008

proposal, and compared those to emissions benefits that would have been generated by the proposed regulatory proposal. In this case we did not model the phase-in of the January proposal , and instead modeled a simple case that assumed compliance by 2014 and 2020. Figure 1 shows in 201 4 and 2020 the January proposal would have generated more NOx reductions than the p roposed rule. Figure 2 shows

that the January proposal would have achieved essentially the same PM 2.5 emissions reductions as the proposed regulation.N-2

Figure 1: NOx Emissions: January 2008 Proposal vs. Current ARB Proposal

0 100 200 300 400 500 600 700 800

2010 2012 2014 2016 2018 2020 2022 2024NOx Tons per Day

Baseline ARB Proposal MY 07 by 2014, MY14 by 2020 for pre-2010

Figure 2: PM2.5 Emissions: January 2008 Proposal v s. Current ARB Proposal

0 5 10 15 20 25 30

2010 2012 2014 2016 2018 2020 2022 2024PM2.5Tons per Day

Baseline ARB Proposal MY 07 by 2014, MY14 by 2020 for pre-2010N-3

B. Agricultural Stakeholders’ Proposal

A group of more than 70 agricultural stakeholder gr oups submitted several alternative regulatory proposals to ARB. The most recent versi on was submitted to ARB staff on July 15, 2008. The alternative proposal contained several different regulatory structures and elements including elevated mileage exemption t hresholds, exemptions for trucks used in field operations and to the point of first processing, a slower phase-in for BACT compliance than the ARB Rule, and truck trade down concepts.

To assess the impact of the agricultural stakeholde rs’ proposal if applied to all trucks operating in California, we focused on the two most important elements of the proposal. The first element we focused on, as shown in Table 1, is the mileage exemption thresholds. Under this concept trucks and buses dr iving fewer than the mileage threshold would be exempt from retrofit or replacem ent requirements. The second element we focused on was the delayed BACT schedule , as shown in Table 2.

Table 1: Mileage exemption proposed by agricultural stakeholders

Model Year-Engine Mileage Exemption Threshold* Pre-1996 15,000
1996 – 2005 20,000 2005 and newer 25,000

* Note - Based upon three year average

Table 2: Compliance schedule proposed by agricultur al stakeholders

Emissions calculations were developed in July and a s a result are based on the June 2008 draft Statewide inventory, which is slightly h igher than the final inventory developed to analyze the proposed regulation. Figu re 3 and Figure 4 compare NOx

and PM 2.5 emissions respectively for the June 2008 baseline, the current proposed regulation, and the agricultural stakeholders’ prop osed approach. Results show that due to enhanced mileage exemptions and delayed BACT implementation the stakeholders’ proposal would achieve much fewer ben efits than the ARB proposal. In particular, the stakeholders’ proposed approach wou ld reduce NOx emissions benefits in 2014 and 2017 by more than 75% relative to the p roposed regulation, and would not meet SIP targets.

Engine Model-Years Compliance Deadline,

as of December 31

Pre-1990 2012

1991-1994 2013

1995-1998 2015

1999-2004 2017

2005-2007 2019

2008 2021

2009 2022N-4

Figure 3: Statewide NOx Emissions: Agricultural St akeholders’ Proposal vs.

ARB Proposed Approach (June 2008 Draft Inventory)

0 100 200 300 400 500 600 700 800 900

2010 2012 2014 2016 2018 2020 2022 2024NOx Tons per Day

Baseline ARB Proposal Agricultural proposal to all fleets

Figure 4: Statewide PM2.5 Emissions: Agricultural Stakeholders’ Proposal vs.

ARB Proposed Approach (June 2008 Draft Inventory)

0 5 10 15 20 25 30 35

2010 2012 2014 2016 2018 2020 2022 2024PM2.5Tons per Day

Baseline ARB Proposal Agricultural proposal applies to all fleetsN-5

C. Alternatives proposed by DTCC

Driving Toward A Cleaner California (DTCC) is a coa lition representing the California Chamber of Commerce, the California Trucking Associ ation, the Western States Petroleum Association, the Construction Industry Ai r Quality Coalition, and a number of other business and community organizations. In a l etter dated August 21, 2008, DTCC proposed an alternative to the ARB proposed rule. The DTCC alternative contained many different regulatory elements and approaches, which differed significantly from the ARB proposed regulation. These elements included m ileage thresholds, delayed BACT implementation relative to the ARB proposal, more l enient fleet average and percent limit targets, special provisions for small fleets using a trade down approach, certifications for compliance, special provisions f or single-unit trucks, and other approaches.

To assess the impact of the DTCC proposal we modele d the four most important elements of the proposal: mileage exemptions, dedi cated use and single-unit truck provisions, small fleet provisions, and revised BAC T/fleet average/percent limit targets. These four elements were chosen for analysis becaus e they would most significantly reduce the benefits of the proposed regulation. Ea ch of these four elements is described specifically below:

1. Mileage Exemption Provisions

For most fleets, the ARB proposed regulation provid es mileage exemptions for a variety of low-use vehicles but does not provide any exempt ions for trucks driving more than 7,500 miles per year. Under the DTCC proposal, tru cks driving less than 30,000 miles per year would be separated into three groups:

a) 15,000 – 30,000 miles per year

By the end of 2010, all trucks and buses driving be tween 15,000 and 30,000 miles per year would need to emit at less than or equal to a 2004 engine emission rate either through vehicle retrofit or replacement. By the en d of 2020, these same vehicles would need to upgrade to meet 2010 engine emission rates.

b) 7,500 – 15,000 miles per year

By the end of 2010, all trucks and buses would be r equired to meet a minimum standard of a 1994 engine equivalent NOx emission rate and b e equipped with a level 3 PM control device or better. By the end of 2020, thes e vehicles would be required to emit at less than or equal to a 2007 engine emission rate.

c) Under 7,500 miles per year

By the end of 2010 all trucks and buses would be eq uipped with a level 3 PM control device, and by the end of 2020 these vehicles would be required to meet a minimum standard of a 2004 engine equivalent emission rate.N-6

2. Dedicated Use and/or Single-Unit Vehicle Require ments

Under the DTCC proposal, all single-unit trucks and dedicated use tractors would be required by the end of 2012 to at a minimum meet a 1994 engine emission rate with a
level 3 PM control device and a 25% NOx control dev ice. By the end of 2020 these vehicles would be required to at a minimum meet 200 7 engine emission rates.

3. Small Fleet Provisions (Fleets of 3 or Fewer Tru cks)

Under the DTCC proposal small fleets would have add itional time to meet a more lenient emission standard than proposed by ARB staf f. Owner operators, and first trucks in two or three truck fleets would be requir ed to meet at a minimum 2004 engine emission rates by the end of 2012. Second trucks i n a two or three truck fleet would be required to meet the minimum 2004 engine emission r ate requirements by the end of

2015. Third trucks in three truck fleets would be required to meet the minimum 2004 engine equivalent emission rate by the end of 2016. All of these trucks would be required to meet 2010 engine emission rates by the end of 2020.

4. Fleet Average / Percent Limit / BACT Provisions

Under both the ARB and DTCC proposals, large fleets would be given the option of complying with fleet average, turnover percentage l imitations, or BACT provisions. Under the DTCC proposal, compliance would be delaye d by several years, a comparison to the ARB Proposal is shown in Table 3, Table 4, and Table 5 (Reprinted from DTCC Letter Dated 8/21/08).

Table 3: DTCC BACT Schedule (shaded where different from ARB proposal)

Compliance Deadline,

as of December 31 Engine Model-Years BACT Requirements

2010 Pre-1994 PM BACT

2011 1994 - 1997 PM BACT

2012 1998 - 2003 PM BACT

2013 2004 - 2006 PM BACT

2014 Pre - 1994 NOx and PM BACT

2015 1994 - 1997 NOx and PM BACT

2016 1998 - 2003 NOx and PM BACT

2017 2004 - 2006 NOX and PM BACT

2018 NA NA

2019 NA NA

2020 2007 NOx and PM BACT

2021 2008 NOx and PM BACT

2022 2009 NOx and PM BACTN-7

Table 4: DTCC Percent Limits (shaded where differen t from ARB proposal)

Percentage of Total Fleet Complying with BACT Compliance Deadline,

as of December 31 PM BACT NOx BACT

2010 25% NA

2011 25% NA

2012 50% 25%

2013 100% 25%

2014 100% 50%

2015 100% 50%

2016 100% 75%

2017 100% 75%

2018 100% 80%

2019 100% 90%

2020 100% 90%

2021 100% 90%

2022 100% 100%

Table 5: DTCC Fleet Average Proposal (NOx Targets) (shaded where different from ARB proposal)

Fleet NOx Targets for each compliance deadline Compliance Deadline,

as of December 31 MHD HHD

2012 8.5 14.4

2013 8.5 14.4

2014 5.8 9.8

2015 5.8 9.8

2016 4.6 7.8

2017 4.6 7.8

2018 4.0 6.0

2019 4.0 6.0

2020 3.2 3.0

2021 1.6 3.0

2022 0.8 1.6

5. DTCC Emissions Impacts

To assess emissions impacts of the DTCC proposal, w e first ran the complete scenario covering the four main provisions of the proposal t ogether. Results, as displayed in Figure 5 and Figure 6, show that prior to 2021, the DTCC proposal falls far short of the reductions required by the SIP, providing roughly h alf of the emissions benefits provided by the ARB proposal. The delayed implementation to cleaner technologies that is embodied by the DTCC proposal would, if implemented , result in California not meeting the emissions reductions necessary to meet air qual ity attainment goals in 2014 for the South Coast and 2017 for the San Joaquin Valley.N-8

Figure 5: Statewide NOx Emissions: DTCC vs. ARB Pr oposed Approach

0 100 200 300 400 500 600 700 800

2010 2012 2014 2016 2018 2020 2022 2024NOx Tons per Day

Baseline ARB proposal DTCC proposal

Figure 6: Statewide PM2.5 Emissions: DTCC vs. ARB Proposed Approach

0 5 10 15 20 25 30

2010 2012 2014 2016 2018 2020 2022 2024PM2.5Tons per Day

Baseline ARB proposal DTCC proposal

In addition to running the four primary elements of the DTCC proposal at the same time, we also looked at the impact individual provisions would have on select groups of trucks, and how those provisions would compare to t he ARB proposed regulation.N-9 a) Provisions Applied to Trucks in Large Fleets (Fo ur or More Trucks)

Under the DTCC proposal, large fleets would be subj ect to both mileage limitations and fleet average / BACT / BACT percentage limits requi rements. To assess the impact of these provisions on large fleets, we first applied mileage thresholds to all large fleet trucks, and then layered mileage exemptions and fle et average / BACT / BACT percentage limits to large fleets excluding single unit trucks. In the second analysis, we excluded single unit trucks because they would be c overed under separate provisions of the DTCC proposal.

First, we applied mileage exemption requirements to large fleet trucks only in order to isolate the impact elevated mileage exemptions prop osed by DTCC would have in reducing emissions benefits relative to the propose d regulation. Figure 7 and Figure 8 compare NOx and PM 2.5 respectively to this category. Results show that in general
NOx and PM 2.5 benefits would be reduced by 25%, although this fra ction varies somewhat by calendar year.

Figure 7: Statewide NOx Emissions for Large Truck F leets: DTCC Mileage

Exemptions vs. ARB Proposed Regulation

0 50 100 150 200 250 300 350 400

2010 2012 2014 2016 2018 2020 2022 2024NOx Tons per Day

Baseline ARB proposal DTCC mileage exemptN-10

Figure 8: Statewide PM2.5 Emissions for Large truck Fleets: DTCC Mileage Exemptions vs. ARB Proposed Regulation.

0 2 4 6 8 10 12 14 16

2010 2012 2014 2016 2018 2020 2022 2024PM2.5Tons per Day

Baseline ARB proposal DTCC mileage exempt

Next, we removed single unit trucks from the analys is, and applied fleet average / BACT / BACT percentage limits requirements in the DTCC p roposal, as shown in Figure 9 and Figure 10. Results show that NOx benefits in 2014 would be reduced by 42% due to mileage provisions alone, and by 55% due to mileage provisions and fleet average / BACT / BACT percentage limit requirements. In 2014 PM 2.5 benefits would be reduced by 16% due to mileage exemptions under the DTCC pro posal, and by 21% due to the combination of mileage exemptions and fleet average / BACT / BACT percentage limit requirements in the DTCC proposal.N-11

Figure 9: Statewide NOx Emissions for Large Truck F leets: DTCC Mileage Exemptions and Fleet Average / BACT / BACT Percenta ge Limits vs. ARB Proposed Regulation

0 50 100 150 200 250 300 350 400

2010 2012 2014 2016 2018 2020 2022 2024NOx Tons per Day

Baseline ARB proposal DTCC proposal

Figure 10: Statewide PM2.5 Emissions for Large Tru ck Fleets: DTCC Mileage Exemptions and Fleet Average / BACT / BACT Percenta ge Limits vs. ARB Proposed Regulation

0 2 4 6 8 10 12 14 16

2010 2012 2014 2016 2018 2020 2022 2024PM2.5Tons per Day

Baseline ARB proposal DTCC proposalN-12 b) Single-Unit Truck Requirements

As discussed above, DTCC proposed specific complian ce requirements for dedicated use and single-unit trucks. To evaluate this optio n, we modeled the DTCC proposal as it would have applied to single-unit trucks. This evaluation accounts for the single-unit truck provisions, as well as mileage provisions tha t apply to single-unit trucks, and small fleet provisions that apply to single unit trucks u nder both the DTCC and ARB proposals. Results shown in Figure 11 and Figure 1 2 for NOx and PM2.5 respectively show that the DTCC proposal would achieve less than half of the benefits in this category than would be achieved by the ARB proposal

.

Figure 11: Statewide NOx Emissions for Single-Unit Trucks: DTCC Provisions vs. ARB Proposed Regulation

0 10 20 30 40 50 60

2010 2012 2014 2016 2018 2020 2022 2024NOx Tons per Day

Baseline ARB proposal DTCC proposalN-13

Figure 12: Statewide PM2.5 Emissions for Single-Uni t Trucks: DTCC Provisions vs. ARB Proposed Regulation

0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2

2010 2012 2014 2016 2018 2020 2022 2024PM2.5Tons per Day

Baseline ARB proposal DTCC proposal

c) Provisions Applied to Small Fleets

As described above, under the DTCC proposal, small fleet requirements are less stringent than in the proposed ARB regulation. The net impact of the DTCC small fleet provisions is to reduce emissions benefits until 20 21, when those vehicles would meet the emissions levels envisioned by the proposed ARB regulation. In particular, the loss in PM benefits in this category under the DTCC prop osal would be large; and small fleets account for roughly a third of emissions in the inventory. Results are shown in Figure 13 and Figure 14.N-14

Figure 13: Statewide NOx Emissions for Small Fleet Trucks: DTCC Provisions vs. ARB Proposed Regulation

0 50 100 150 200 250

2010 2012 2014 2016 2018 2020 2022 2024NOx Tons per Day

Baseline ARB proposal DTCC proposal

Figure 14: Statewide PM2.5 Emissions for Small Flee t Trucks: DTCC Provisions vs. ARB Proposed Regulation

0 1 2 3 4 5 6 7 8 9 10

2010 2012 2014 2016 2018 2020 2022 2024PM2.5Tons per Day

Baseline ARB proposal DTCC proposal