1 TITLE 13. CALIFORNIA AIR RESOURCES BOARD

NOTICE OF PUBLIC HEARING TO CONSIDER ADOPTION OF NE W EMISSION STANDARDS, FLEET REQUIREMENTS, AND TEST PROCEDURES FOR

FORKLIFTS AND OTHER INDUSTRIAL EQUIPMENT

The Air Resources Board (the Board or ARB) will con duct a public hearing at the time and place noted below to consider the adoption of n ew emission standards and test procedures for forklifts and other industrial equip ment with 2007 and later model-year off-road large spark-ignition (LSI) engines, requir ements for fleet users of such equipment, and verification procedures for retrofit control systems.

DATE: April 20, 2006

TIME: 9:00 a.m.

PLACE: Long Beach Convention & Entertainment Cen ter

300 E. Ocean Boulevard Long Beach, CA 90802

This item will be considered at a two-day meeting o f the Board, which will commence at 9:00 a.m. on April 20, 2006, and may continue at 8: 30 a.m. on April 21, 2006. This item may not be considered until April 21, 2006. Please consult the agenda for the meeting, which will be available at least 10 days before Apr il 20, 2006, to determine the day on

which this item will be considered.

If you have a disability-related accommodation need , please go to http://www.arb.ca.gov/html/ada/ada.htm for assistance or contact the ADA Coordinator at (916) 323-4916. If you are a person who needs assi stance in a language other than English, please contact the Bilingual Coordinator a t (916) 324-5049. TTY/TDD/Speech-to-Speech users may dial 7-1-1 for t he California Relay Service.

INFORMATIVE DIGEST OF PROPOSED ACTION AND POLICY ST ATEMENT

OVERVIEW

Sections Affected : Proposed amendments and adoptions to title 13, Ca lifornia Code of Regulations, and the documents incorporated by refe rence therein: Amend sections 2430, 2433, and 2434. Amend the title of incorpora ted “California Exhaust Emission

Standards and Test Procedures for New 2001 and Late r Off-Road Large Spark-Ignition Engines,” adopted September 1, 1999; adopt incorpor ated “California Exhaust Emission Standards and Test Procedures for New 2007 through 2009 Model-Year Off-Road Large Spark-Ignition Engines,” adopt incorporated “ California Exhaust Emission

Standards and Test Procedures for New 2007 and Late r Model-Year Off-Road Large Spark-Ignition Engines,” and adopt incorporated “Ca lifornia Exhaust and Emission

Standards and Test Procedures for New 2010 and Late r Model-Year Off-Road Large2

Spark-Ignition Engines.” Adopt sections 2775, 2775 .1, 2775.2, 2780, 2781, 2782, 2783 2784, 2785, 2786, 2787, 2788, and 2789.

Background : Over 90 percent of Californians breathe unhealthf ul air at times. To improve air quality and human health, ARB establish es requirements to reduce

emissions from new and in-use motor vehicles and en gines, as well as other sources. To reduce emissions from off-road vehicles, ARB ado pted regulations in late 1998 requiring that new forklift and other off-road larg e spark-ignition (LSI) engines comply with a standard of 3.0 grams per brake horsepower p er hour (g/bhp-hr) HC+NOx starting in 2001. The regulation phased-in the sta ndard such that by 2004, all new engines met this requirement. The United States En vironmental Protection Agency (U.S. EPA) later adopted its own LSI regulation. T he U.S. EPA regulation required all new LSI engines nationwide to meet the same 3.0 g/b hp-hr standard as of January 2004 and a 2.0 g/bhp-hr standard beginning in 2007.

As a result of these regulations, new LSI engines a re now 75 percent cleaner than previously uncontrolled engines, and engines meetin g the 2007 standard will be approximately 85 percent cleaner. Opportunities ex ist, however, to further reduce emissions from LSI equipment. The 2003 State Imple mentation Plan for the South

Coast Air Basin included two measures to further re duce emissions from LSI engines. The first measure proposed that the California prog ram harmonize with the U.S. EPA regulations by adopting the 2.0 g/bhp-hr emission s tandard for 2007 and beyond. The second measure proposed that existing uncontrolled LSI engine emissions be reduced by 80 percent, or to a 3.0 g/bhp-hr verification le vel. The latter measure also proposes

that zero and near-zero emission standards be devel oped for new LSI engines. The proposed regulation described below meets the objec tives of the two SIP measures.

In June 2005, ARB presented an initial proposal to reduce LSI emissions to the Board. At that time, questions arose about the economic im pact of the proposal on forklift dealers and agricultural-related businesses that co uld not be fully answered. As a result, the Board deferred action to a later date a nd directed staff to investigate these issues further. Subsequently, ARB staff conducted a series of meetings and additional analysis to better understand the potential economi c impacts on stakeholder groups. A revised proposal has been developed in light of thi s new information. It is similar in structure to the previous proposal, but contains tw o key revisions designed to significantly reduce the economic impacts on these stakeholders.

Proposed Provisions Applicable to Engine Manufactur ers

The proposal has three components that affect manuf acturers of LSI engines. The first component harmonizes the ARB standard with the more stringent U.S. EPA emission standards and test procedures that become effective in 2007. Under this requirement, manufacturers of 2007 and later model year engines must meet a 2.0 g/bhp-hr HC+NOx and 3.3 g/bhp-hr carbon monoxide (CO) emission stan dards.

The second component would require that new 2010 an d subsequent model year engines meet a 0.6 g/bhp-hr HC + NOx with a corresp onding CO emission standard of3

15.4 g/bhp-hr. By allowing CO emissions to increas e, lower ozone-forming emissions

can be achieved.

The third component establishes optional low-emissi on standards below the 2007 and 2010 mandatory standards. Under this component, en gines could be certified to optional low-emission engine standards of 0.1, 0.2, 0.4, 0.6, 1.0 and 1.5 g/bhp-hr HC+NOx through the 2009 model year, and 0.1, 0.2 an d 0.4 g/bhp-hr HC+NOx in 2010 and beyond. Demand for these low-emission engines is created by the other part of the staff’s proposal that requires fleet operators to r educe emissions.

The proposal would also incorporate by reference th e current certification and test procedures adopted by the U.S. EPA for the 2007-200 9 model years. Starting in 2010, the proposal includes modifications to such areas a s production line testing and in-use compliance, which are consistent with other ARB off -road regulations.

Proposed Provisions Applicable to Fleet Operators

To address emissions from high-polluting, uncontrol led in-use engines and to encourage the use of zero-emission and lower-emissi on equipment, the ARB staff is proposing fleet-average emission requirements for l arge and mid-size fleets of equipment powered by LSI engines, including forklif ts, industrial tow tractors, sweepers/scrubbers, and airport ground support equi pment. Fleet size is determined by aggregating each operator’s equipment in California . Large LSI fleets are defined as those with more than 25 pieces of equipment while m id-size fleets are defined as those with 4 to 25 pieces of equipment.

Large fleets would have to meet more stringent flee t averages than mid-size fleets because they have greater flexibility when incorpor ating combinations of emission-reduction strategies to achieve a prescrib ed level. Additionally, the fleet average would be more stringent for the forklift po rtion of the fleet than for the non-forklift portion of the fleet.

The fleet average would be determined using the cer tification levels of 2001 and newer LSI engines and the retrofit verification levels of engines with retrofit kits. These values are clearly indicated on the engine label. To make the proposal less complex and less intrusive for operators while maintaining cost effe ctive emission benefits, the fleet average would not incorporate load factor, horsepow er, or hours of use.

Small fleets, those with one to three pieces of equ ipment, would be exempt from the fleet average requirement. Exempting small fleets greatly reduces the number of businesses impacted and significantly reduces the i mpact on equipment dealers, but

also results in reduced emission benefits.

The proposal provides operators of LSI fleets with the flexibility to incorporate any combination of retrofits, low-emission purchases, a nd zero-emission electric purchases to meet the fleet-average emission level. The foll owing table summarizes the proposed fleet-average emission levels for forklift and non- forklift LSI fleets.4 In-use Fleet Average Emission Requirement (g/bhp-hr )

LSI Fleet Type Number of

units Jan. 2009 Jan. 2011 Jan. 2013

Large forklift
component 26 + 2.4 1.7 1.1

Mid-size forklift
component 4-25 2.6 2.0 1.4

Mid-size or Large

Non-forklift N/A 3.0 2.7 2.5

Small fleet 1-3 Exempt

Airline Ground Service Equipment in the South Coast Air Basin

In addition to meeting the fleet-average emission l imits, airlines operating ground support equipment (GSE) at airports in the South Co ast Air Basin are required to include a specified percentage of zero-emission GSE in their fleets, consistent with a previous memorandum of understanding with the ARB.

Alternative Compliance Option for Agricultural-Rela ted Fleets

ARB staff is proposing an alternative compliance op tion for agricultural-related fleets that reflects the longer retention period character istic of agricultural operations. Under this option, agricultural fleet operators would be required to control (to a 3.0 g/bhp-hr level) their uncontrolled forklifts for which there are commercially available retrofit control systems have been verified. The proposed c ompliance timeframes provide an opportunity for these fleets to receive Carl Moyer Program incentives for up to 80 percent of the equipment affected.

Verification Procedure

ARB staff is also proposing a verification procedur e for retrofit control systems that may be used to meet the proposed fleet average emission requirements. Such procedures will ensure that the retrofit systems deliver real and quantifiable emission reductions.

COMPARABLE FEDERAL REGULATIONS

In 1998 California adopted emission standards for n ew LSI engines. Following California’s lead, in 2002 U.S. EPA did the same (V olume 67, Federal Register, page 68242, November 8, 2002; title 40, Code of Fed eral Regulations, part 1048). As the preamble to the federal regulations notes, the federal regulations extend California’s standards for new LSI engines to the rest of the Un ited States in 2004 through 2006 and adopt more stringent standards for new LSI engines beginning in 2007.

In the staff’s proposal, California would harmonize with the federal standards for new LSI engines in 2007 through 2009 and would adopt mo re stringent California standards5

for 2010 and later. Staff’s proposal also incorpor ates and revises federal test procedures for the respective model-years.

To further reduce emissions from LSI engines, the p roposal requires California LSI equipment operators to meet fleet-average standards . The federal regulations do not impose requirements on fleet operators or on in-use engines.

AVAILABILITY OF DOCUMENTS AND AGENCY CONTACT PERSON S

The Board staff has prepared a Staff Report: Initia l Statement of Reasons (ISOR) for the Proposed Regulatory Action, which includes a su mmary of the economic and environmental impacts of the proposal. The report entitled: Staff Report: New Emissions Standards, Fleet Requirements, and Test P rocedures for Forklifts and Other Industrial Equipment.

Copies of the ISOR and the full text of the propose d regulatory language, in underline and strikeout format to allow for comparison with t he existing regulations, may be accessed on the ARB’s web site listed below, or may be obtained from the Public Information Office, Air Resources Board, 1001 I Str eet, Visitors and Environmental Services Center, 1 st Floor, Sacramento, CA 95814, (916) 322-2990 at lea st 45 days prior to the scheduled hearing on April 20, 2006.

Upon its completion, the Final Statement of Reasons (FSOR) will be available and copies may be requested from the agency contact per sons in this notice, or may be

accessed on the ARB’s web site listed below.

Inquiries concerning the substance of the proposed regulation may be directed to Mr. Mark Williams by phone at (916) 327-5610 or by email at mwilliam@arb.ca.gov, or to Mr. Tom Evashenk by phone at (916) 445-8811 or b y email at tevashen@arb.ca.gov.

Further, the agency representative and designated b ack-up contact persons to whom nonsubstantive inquiries concerning the proposed ad ministrative action may be directed are Artavia Edwards, Manager, Board Administration & Regulatory Coordination Unit, (916) 322-6070, or Alexa Malik, Regulations Coordin ator, (916) 322-4011. The Board has compiled a record for this rulemaking action, w hich includes all the information upon which the proposal is based. This material is avai lable for inspection upon request to the contact persons.

This notice and the ISOR are available on the ARB I nternet site for this rulemaking: http://www.arb.ca.gov/regact/lore2006/lore2006.htm . All subsequent regulatory documents, including the FSOR, will be available fr om the same Internet site when completed.6

COSTS TO PUBLIC AGENCIES AND TO BUSINESSES AND PERS ONS AFFECTED

The determination of the Board’s Executive Officer concerning the costs or savings necessarily incurred by the public agencies and pri vate persons and businesses in reasonable compliance with the proposed regulations are presented below.

Pursuant to Government Code sections 11346.5(a)(5) and 11346.5(a)(6), the Executive Officer has determined that the proposed regulatory action will not create costs or savings to any State agency or in federal funding t o the state, costs or mandate to any local agency or school district whether or not reim bursable by the state pursuant to part 7 (commencing with section 17500), division 4, title 2 of the Government Code, or other nondiscretionary savings to State or local ag encies.

In general, local and State agencies will need to c omply with the regulatory standards by purchasing new low emission equipment or by retr ofitting existing equipment. However, the staff analysis concludes that over the life of the equipment, a reduction in operating costs through improved fuel use and reduc ed maintenance can offset a significant portion of the increased initial cost.

In developing this regulatory proposal, the ARB sta ff evaluated the potential economic impacts on representative private persons or busine sses. ARB is not aware of any cost impacts on representative private persons. Busines ses will incur cost impacts as described in the ISOR for this rulemaking.

The regulations may impact small businesses; howev er because of the exemption for small fleets (defined in the regulations as operato rs of one to three pieces of equipment)

the Executive Officer believes that the number of s mall businesses affected, if any, will

be minimal.

The Executive Officer has also determined that adop tion of the proposed regulatory action will not have a significant statewide advers e economic impact directly affecting businesses, including the ability of California bus inesses to compete with businesses in other states, or on representative private persons.

In accordance with Government Code section 11346.3, the Executive Officer has determined that the proposed regulatory action will not affect the creation or elimination of jobs within the State of California, the creatio n of new businesses or elimination of existing businesses within the State of California, or the expansion of businesses currently doing business within the State of Califo rnia. An assessment of the economic impacts of the proposed regulatory action can be fo und in the ISOR.

In accordance with Government Code sections 11346.3 (c) and 11346.5(a)(11), the Executive Officer has found that the reporting requ irements of the regulation which apply to businesses are necessary for the health, s afety, and welfare of the people of

the State of California.

Before taking final action on the proposed regulato ry action, the Board must determine that no reasonable alternative considered by the Bo ard or that has otherwise been7

identified and brought to the attention of the Boar d would be more effective in carrying out the purpose for which the action is proposed or would be as effective and less burdensome to affected private persons than the pro posed action.

BENEFITS OF THE PROPOSAL

The staff analysis of the proposal indicates that t he statewide emissions benefit associated with the new engine standards and operat or fleet average emission requirements exceed 5.7 tons per day of HC+NOx in 2 010 and 6.2 tons per day of HC+NOx in 2020. The emission benefits are just bel ow the lower HC+NOx range of 6.2 to 13.1 tons per day in 2010 in the Board’s state i mplementation plan commitment for ozone. The cost-effectiveness of the proposal comp ares favorably with that of other mobile source regulations promulgated by the ARB.

SUBMITTAL OF COMMENTS

The public may present comments relating to this ma tter orally or in writing at the hearing, and in writing or by e-mail before the hea ring. To be considered by the Board, written submissions not physically submitted at the hearing must be received no later than 12:00 noon, April 19, 2006 and addressed to the following:

Postal mail is to be sent to:

Clerk of the Board

Air Resources Board

1001 I Street, 23 rd Floor Sacramento, California 95814

Electronic submittal: http://www.arb.ca.gov/lispub/comm/bclist.php no later than 12:00 noon, April 19, 2006.

Facsimile transmissions are to be transmitted to th e Clerk of the Board at (916) 322-3928 and received at the ARB no later than 12:00 noon, April 19, 2006

.

The Board requests but does not require that 30 cop ies of any written statement be

submitted and that all written statements be filed at least 10 days prior to the hearing so that ARB staff and Board Members have time to fully consider each document. The Board encourages members of the public to bring to the attention of staff in advance of the hearing any suggestions for modification of the proposed regulatory action.

STATUTORY AUTHORITY AND REFERENCES

This regulatory action is proposed under that autho rity granted in Health and Safety Code, sections 39002, 39003, 39500, 39600, 39601, 3 9650-39675, 43000, 43011,
43013, 43017, 43018, 43101, 43102, 43104, 43600, an d 43700. This action is proposed to implement, interpret and make specific Health and Safety Code sections
43000, 43009.5, 43013, 43017, 43018, 43101, 43102, 43104, 43105, 43106, 43107,8

43150, 43151, 43152, 43153, 43154, 43204, 43205, 43 205.5, 43210, 43210.5, 43211,

and 43212.

HEARING PROCEDURES

The public hearing will be conducted in accordance with the California Administrative Procedure Act, title 2, division 3, part 1, chapter 3.5 (commencing with section 11340) of

the Government Code.

Following the public hearing, the Board may adopt t he regulatory language as originally proposed or with nonsubstantial or grammatical modi fications. The Board may also adopt the proposed regulatory language with other m odifications if the text as modified is sufficiently related to the originally proposed text that the public was adequately placed on notice that the regulatory language as mo dified could result from the proposed regulatory action; in such event the full regulatory text, with the modifications clearly indicated, will be made available to the pu blic, for written comment, at least 15 days before it is adopted.

The public may request a copy of the modified regul atory text from the ARB’s Public Information Office, Air Resources Board, 1001 I Str eet, Visitors and Environmental Services Center, 1 st Floor, Sacramento, California 95814, (916) 322-299 0.

CALIFORNIA AIR RESOURCES BOARD

Catherine Witherspoon

Executive Officer

Date: February 21, 2006

The energy challenge facing California is real. Ev ery Californian needs to take immediate action to r educe energy consumption. For a list of simple ways you can reduce demand and cut your energy costs see our Web –site at www.arb.ca.gov

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