## S TAFF 

## R EPORT 

## : I NITIAL 

## S TATEMENT OF 

## R EASONS FOR


## P ROPOSED 

## R ULEMAKING



## R EGULATION FOR 

## M OBILE 

## C ARGO 

## H ANDLING 

## E QUIPMENT AT



## P ORTS AND 

## I NTERMODAL 

## R AIL 

## Y ARDS

Stationary Source Division

Emissions Assessment Branch

October 2005i State of California

AIR RESOURCES BOARD

STAFF REPORT: INITIAL STATEMENT OF REASONS

FOR PROPOSED RULEMAKING

Public Hearing to Consider

ADOPTION OF THE PROPOSED REGULATION FOR MOBILE

CARGO HANDLING EQUIPMENT AT PORTS AND INTERMODAL RA IL YARDS

To be considered by the Air Resources Board on Dece mber 8-9, 2005, at:

California Environmental Protection Agency

Headquarters Building

1001 “I” Street Byron Sher Auditorium Sacramento, California

Stationary Source Division: Robert D. Fletcher, Chief Daniel E. Donohoue, Chief,

Emissions Assessment Branch Peggy Taricco, Manager, Technical Analysis Section

This report has been prepared by the staff of the A ir Resources Board. Publication does not signify that the contents reflect the view s and policies of the Air Resources Board, nor does mention of trade names or commercia l products constitute

endorsement or recommendation for use.ii State of California

AIR RESOURCES BOARD

PROPOSED REGULATION FOR MOBILE CARGO HANDLING EQUIP MENT

AT PORTS AND INTERMODAL RAIL YARDS

Contributing Authors

Lisa Williams Pingkuan Di

John Lee

Kirk Rosenkranz

Bonnie Soriano Todd Sterling

Legal Counsel

Michael Terris, Office of Legal Affairs

Supporting Divisions PTSD, RD, MSCD

Acknowledgements

This report was prepared with the assistance and su pport from the other divisions and offices of the Air Resources Board. In addition, w e would like to acknowledge the assistance and cooperation that we have received fr om many individuals and organizations.iii 

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Executive Summary ..................................

................................................... ............. ES-1

I. Introduction..................................

................................................... .................... I-1

A. Overview.......................................

................................................... ........ I-1 B. Purpose .........................................

................................................... ....... I-1 C. Regulatory Authority ............................

................................................... . I-2

D. Need for Control of Diesel Particulate Matter... ........................................ I-3 E. Physical and Chemical Characteristics of Diesel PM............................... I-3 F. Health Impacts of Exposure to Diesel PM, Ambient Particulate Matter,

and Ozone .........................................

................................................... ... I-4 G. Health and Environmental Benefits from the Propo sed Regulation ......... I-6

H. Public Outreach and Environmental Justice ....... ..................................... I-8

II. Mobile Cargo Handling Equipment at Ports and I ntermodal Rail Yards ........... II-1

A. Definitions and Uses...........................

................................................... . II-1

B. Ports and Intermodal Rail Yards ................. ............................................ II-7 C. Regulatory Status ...............................

................................................... . II-8

III. Emissions, Potential Exposures, and Risk ...... ................................................. II I-1 A. Estimated Emissions from Cargo Handling Equipmen t ......................... III-1 B. Potential Exposures and Risk from Diesel PM Emis sions from Cargo Handling Equipment Engines.................. .................................... III-5

C. Non-Cancer PM Health Effects.................... .......................................... III-9

IV. The Proposed Regulation and Alternatives ...... ................................................IV- 1 A. Summary of the Proposed Regulation .............. .....................................IV-1 B. Discussion of the Proposed Regulation ........... ......................................IV-3

C. Alternatives Considered......................... ..............................................IV-18

V. Technological Feasibility of the Proposed Regu lation .......................................V-1 A. New Engine Standards ............................ ...............................................V-1

B. Diesel Exhaust Aftertreatment Emission Controls . .................................V-4 C. Cleaner Diesel Fuels, Alternative Diesel Fuels, and Alternative Fuels ...V-7

D. Verification of Diesel Emission Control Devices . ....................................V-9iv 

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VI. Environmental Impacts ..........................

................................................... ........VI-1 A. Legal Requirements.............................. .................................................VI -1 B. Effects on Air Quality ..........................

................................................... VI-2 C. Health Benefits Analysis ........................ ................................................VI- 4 D. Reasonably Foreseeable Environmental Impacts as a Result of Potential Compliance Methods ...................... ........................................VI-7 E. Reasonably Foreseeable Mitigation Measures ...... ..............................VI-11 F. Reasonably Foreseeable Alternative Means of Comp liance with the Proposed Regulation ............................... ............................................VI-11

VII. Economic Impacts ..............................

................................................... ..........VII-1 A. Summary of the Economic Impacts ................. .....................................VII-1 B. Legal Requirements.............................. ................................................VII -2 C. Methodology for Estimating Costs Associated with Implementation .....VII-3

D. Estimated Costs to Businesses ................... .......................................VII-12 E. Potential Costs to Local, State, and Federal Age ncies .......................VII-17

F. Cost-Effectiveness.............................. ................................................VII -17 G. Analysis of Alternatives........................ ...............................................VII- 23

APPENDICES

Appendix A: Proposed Regulation for Mobile Cargo Ha ndling Equipment at Ports and

Intermodal Rail Yards Appendix B: Emissions Inventory Methodology Appendix C: Ports of Los Angeles and Long Beach Hea lth Risk Assessment Appendix D: Cost Analysis - Basis for Calculations Appendix E: Cargo Handling Equipment Yard Truck Off -Road Emissions Testing Appendix F: Evaluation of the Use of Alternative Fu els in Cargo Handling Equipment Appendix G: Verified Diesel Emission Control Strate gies for Off-Road Applications Appendix H: Demonstration Program for High-Efficien cy Emission Controls for

Rubber-Tired Gantry Cranes, Top Picks, and Side Pic ks Appendix I: NOx to PM Conversion Factor Methodology Appendix J: Data Inputs for Health Impacts Analysis Appendix K: List of Acronyms and Abbreviationsv 

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TABLES AND FIGURES

Contents Page

Tables

Table ES-1: Estimated Statewide 2004 Cargo Handling Equipment Population and Associated Emissions ............... .................................. ES-4

Table I-1: State and National PM Standards.........

................................................... I-7

Table I-2: State and National Ozone Standards ...... ................................................ I-7 Table I-3: Workshop/Workgroup and Public Outreach M eetings ............................. I-9 Table II-1: Average New Equipment Costs............ .................................................. I I-6 Table II-2: Off-Road Compression-Ignition (Diesel) Engine Standards.................... II-9 Table II-3: 2004 and Subsequent On-Road Heavy-Duty Diesel Engine

Standards .........................................

................................................... . II-10 Table III-1: Estimated Statewide 2004 Cargo Handlin g Equipment Emissions........ III-2 Table III-2: Estimated 2004 Cargo Handling Equipmen t Emissions by

District..........................................

................................................... ....... III-3 Table III-3: Cargo Handling Equipment Engines Proje cted Year 2010

and 2020 Emission Estimates....................... ......................................... III-4 Table III-4: Summary of Area Impacted and Populatio n Affected by Risk Levels from Cargo Handling Equipment..................... ....................................... III-8 Table IV-1: Compliance Schedule for In-Use Yard Tru ck Fleets of

Three or Less.....................................

................................................... .IV-8 Table IV-2: Compliance Schedule for In-Use Yard Tru ck Fleets of

Four or More......................................

................................................... .IV-9 Table IV-3: Compliance Schedule for In-Use Non-Yard Truck Mobile Cargo Handling Equipment.......................... ........................................IV-14

Table V-1: Exhaust Emission Standards for 2007 and Later Model Year On-Road Heavy-Duty Diesel Engines/Vehicles ........ ..............................V-3

Table V-2: Verification Classifications for Diesel Emission Control Strategies .......V-10 Table VI-1: Projected Annual Emissions for Cargo Ha ndling Equipment Used in Ports and Intermodal Rail Yard Applications with I mplementation of the Proposed Regulation ........................... ............................................VI-2 Table VI-2: Emission Benefits from Implementation o f the Proposed Cargo Handling Equipment Regulation ..................... .......................................VI-3 Table VII-1: Capital Costs Assumptions for VDECS... ..............................................VII-4 Table VII-2: Estimated Value of New and Used Equipm ent .....................................VII-5 Table VII-3: Compliance Assumptions for New Equipme nt......................................VII-7 Table VII-4: Compliance Assumptions for In-Use Equi pment...................................VII-8 Table VII-5: Population of Yard Trucks Having Compl iance Costs Associated with the Proposed Regulation ........................... ...........................................VII-9vi 

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Tables (cont.)

Table VII-6: Population of Non-Yard Truck Equipment Having Compliance Costs Associated with the Proposed Regulation ..... ...........................VII-10

Table VII-7: Estimated Statewide Annual Costs for B usinesses ............................VII-11 Table VII-8: Estimated Statewide Average Costs per Equipment Types................VII-13 Table VII-9: Estimated Costs for Typical Businesses .............................................VII-14 Table VII-10: Representative Affected Businesses ... ...............................................VII- 18

Table VII-11: Estimated Statewide Diesel PM Annual Emission Reductions ...........VII-18 Table VII-12: Estimated Statewide Cargo Handling Eq uipment NOx Annual

Emission Reductions ............................... ...........................................VII-19 Table VII-13: Summary of Annual Diesel PM Cost-Effe ctiveness for the Cargo Handling Equipment Regulation ..................... ....................................VII-21 Table VII-14: Summary of Average Cost-Effectiveness for the Period 2007-2020...VII-22

Table VII-15: Diesel PM Cost-Effectiveness of the P roposal and Other Regulations/Measures .............................. ..........................................VII-23

Figures

Figure ES-1: Projected Diesel PM Emissions with and without the Regulation ........ ES-7 Figure ES-2: Projected NOx Emissions with and witho ut the Regulation.................. ES-7 Figure II-1: Engine Manufacturers and Equipment Typ es......................................... II-5 Figure II-2: 2004 Statewide Population Distribution of Cargo Handling Equipment at Ports and Intermodal Rail Yards...... ................................. II-6 Figure II-3: California’s Ports....................

................................................... .............. II-7 Figure II-4: California’s Intermodal Rail Yards....

................................................... .... II-8 Figure III-1: 2004 NOx and Diesel PM Emission Distr ibutions at California

Ports and Intermodal Rail Yards ................... ......................................... III-2 Figure III-2: Baseline vs. Voluntary Programs Diese l PM Cargo Handling Equipment Emissions ............................... ............................................. III-5 Figure III-3: Estimated Diesel PM Cancer Risk from Cargo Handling Equipment Activity at the POLA and POLB ..................... ........................................ III-9 Figure IV-1: Diesel PM Emission Rates for Yard Truc ks with Off-Road and On-Road Engines with and without VDECS ............ ..............................IV-6 Figure IV-2: NOx Emission Rates for Yard Trucks wit h Off-Road and On-Road Engines ................................... ...............................................IV-7 Figure IV-3: Basic Container Handling Equipment Com pliance Options .................IV-11 Figure IV-4: Bulk Cargo Handling Equipment Complian ce Options.........................IV-12 Figure IV-5: RTG Crane Compliance Options .......... ...............................................IV-1 3vii 

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Figures (cont.)

Figure VI-1: Projected Diesel PM Emissions with and without the Regulation ..........VI-3 Figure VI-2: Projected NOx Emissions with and witho ut the Regulation....................VI-4 Figure VI-3: Residential Areas Impacted by the Prop osed Regulation for Baseline Year (2002) and Predicted 2010 and 2020 at the POL A and POLB......VI-5 Figure VI-4: Population Affected by the Proposed Re gulation for Baseline Year (2002) and Predicted 2010 and 2020 at the POLA and POLB...............VI-6ES - 1

EXECUTIVE SUMMARY

This executive summary presents the Air Resources B oard (ARB or Board) staff’s Proposed Regulation for Mobile Cargo Handling Equip ment at Ports and Intermodal Rail

Yards . The proposed regulation is designed to reduce di esel particulate matter (PM) and oxides of nitrogen (NOx) emissions from mobile cargo handling equipment that operate at ports and intermodal rail yards in Calif ornia.

Because of its geographical location and major port s and railways, California is a global gateway for goods movement. Some of the largest po rts in the world are located in California, and with increases in trade and general goods movement, both the ports and intermodal rail yards stand to experience major gro wth over the next two decades. Cargo handling equipment at ports and intermodal ra il yards is a significant source of emissions of diesel PM, as well as NOx, in Californ ia. In addition, these facilities are often located in or near densely populated areas an d neighborhoods, exposing residents to unhealthy levels of pollutants.

In 1998, following the ARB’s identification of dies el PM as a toxic air contaminant (TAC), California embarked on an ambitious strategy to red uce emissions from diesel-fueled engines. The Risk Reduction Plan to Reduce Particu late Matter Emissions from DieselFueled Engines and Vehicles (Diesel Risk Reduction Plan), adopted by the Board in October 2000, outlined steps to reduce diesel emiss ions and associated potential cancer risks by 75 percent in 2010 and by 85 percen t by 2020. Because of the potency and the large amount of emissions to California’s a ir, diesel PM is the primary contributor to adverse health impacts, including an estimated 70 percent of all cancer risks, from TACs. Diesel exhaust is a major source of fine particulate pollution as well, and numerous studies have linked elevated particle levels in the air to increased hospital admissions, emergency room visit, asthma a ttacks and premature deaths. (ARB, 2000)

As part of the effort to reduce diesel PM, ARB staf f is proposing this regulation, which

would result in diesel PM and NOx emission reductio ns beginning in 2007. Additional reductions are phased in over the next eight years. Staff estimates that in 2015, diesel PM emissions from cargo handling equipment at ports and intermodal rail yards would be reduced by approximately 66 percent and NOx emis sions by approximately 47 percent relative to the projected baseline, which i ncludes the benefits of the new engine standards adopted by the U.S. EPA and ARB. These r eductions are significant considering the growth in trade that is expected to occur over the same timeframe.

In recent years, the Board has adopted many regulat ions to reduce diesel PM

emissions from other sources. These include statio nary engines, portable equipment, transport refrigeration units, and solid waste coll ection vehicles. Additional regulations are being developed to address oceangoing ship auxi liary engines, commercial harbor craft, and general off-road equipment.ES - 2

Presented below is an overview which briefly discus ses the emissions from new and existing mobile cargo handling equipment, the propo sed regulation, and the potential impacts from implementation as well as what our pla ns are for future activities. For simplicity, the discussion is presented in question -and-answer format using commonly asked questions about the regulation. It should be noted that this summary provides only brief discussion on these topics. The reader is directed to subsequent chapters in the main body of the report for more detailed infor mation.

1. What is ARB staff proposing?

ARB staff is proposing a regulation that would redu ce emissions of diesel PM and NOx from new and existing (in-use) mobile cargo handlin g equipment at ports and intermodal rail yards. Unlike mobile diesel-fueled compressio n ignition (CI) engines used in onroad applications, diesel-fueled engines used in of f-road mobile cargo handling applications are currently required to meet much le ss stringent engine certification standards. The Federal Clean Air Act, Section 209( e), allows California to request and receive authority from the U.S. EPA to establish re quirements for off-road mobile engines. (EPA, 1990)

The proposed regulation would establish requirement s that affect the sellers, renters, lessors, owners, and operators of mobile cargo hand ling equipment that are used at California’s ports or intermodal rail yards. Staff ’s approach in developing the performance standards was to establish requirements that are based on the application of the best available control technology (BACT).

For newly purchased, leased, or rented equipment, c ertified on-road engines would be required if available for the specific equipment ty pe and application. Otherwise, the highest level certified off-road engine would be re quired, along with installation of the highest level verified diesel emission control stra tegy (VDECS) within one year of purchase, lease, or rent, or within six months of b ecoming available if after a year.

The proposed regulation would require in-use yard t rucks to meet BACT performance standards primarily through accelerated turnover of older yard trucks to those equipped with cleaner, on-road engines (2007 model year or l ater). Owners or operators who have installed VDECS prior to the end of 2006, or w ho are already using certified onroad engines, are given additional time to comply. In addition, compliance is phased in for owners or operators who have more than three ya rd trucks in their fleet.

Non-yard truck equipment would also be required to meet BACT, which, for them, is a menu of options that includes replacement to cleane r on-road or off-road engines and/or the use of retrofits. For owners or operators that elect to use retrofits, a second compliance step, which would require replacement to Tier 4 off-road engines or installation of a Level 3 (85 percent diesel PM red uction) VDECS, may be required, depending on the equipment category and level of VD ECS applied.ES - 3

Owners and operators would also be required to meet recordkeeping and reporting requirements. A discussion of the proposed regulat ion and its requirements are in Chapter IV of this Staff Report.

2. What is mobile cargo handling equipment?

Mobile cargo handling equipment is any motorized ve hicle used to handle cargo, or in some cases, may be used for other activities, such as maintenance. The type of equipment used usually depends on the type of cargo handled or the type of activity. Equipment that handles cargo containers includes, b ut is not limited to, yard trucks, top handlers, side handlers, reach stackers, forklifts, and rubber-tired gantry cranes. Equipment that is used to handle bulk cargo include s, but is not limited to, dozers, excavators, loaders, mobile cranes, railcar movers, and sweepers. While forklifts can be used in either container or bulk cargo operation s, for the purposes of this regulation, they are considered to be container handling equipm ent. Forklifts, aerial lifts, mobile cranes, and sweepers may also be used in maintenanc e operations at ports and intermodal rail yards. There are approximately 3,7 00 cargo handling equipment vehicles at California’s ports and intermodal rail yards.

3. Where is mobile cargo handling equipment used?

Mobile cargo handling equipment is used throughout California in almost all industries involved with the movement of goods. The most comm on use of cargo handling equipment occurs at intermodal facilities, includin g ports and rail yards, and distribution centers and warehouses. This proposed regulation w ill address mobile cargo handling equipment only at ports and intermodal rail yards. The ARB is in the process of developing another regulation to address other dies el-fueled off-road equipment, including those used at other intermodal facilities . More information on this effort is

available at http://www.arb.ca.gov/msprog/ordiesel/ordiesel.htm

.

There are several ports in California that would be affected by the proposal, including Antioch, Benicia, Crockett, Humboldt Bay, Hueneme, Long Beach, Los Angeles, Oakland, Pittsburg, Port Chicago, Redwood City, Ric hmond, Sacramento, San Diego, San Francisco, and Stockton. Most of the ports are controlled by port authorities, but several are independently operated. Two major rail road companies, BNSF Railway and Union Pacific Railroad, operate several intermodal rail yards in the state, located in cities such as Barstow, City of Industry, Commerce, Fresno, Lathrop, Long Beach, Los Angeles, Oakland, Richmond, San Bernardino, and Sto ckton. It is expected that, as the growth in trade continues, additional intermodal ra il yards may be developed.

4. What are the emissions, exposures, and health ri sks from mobile cargo handling equipment?

ARB staff estimates mobile cargo handling equipment at ports and intermodal rail yards emit approximately 0.65 tons per day (237 tons per year) of diesel PM and 19.04 tons per day (6,950 tons per year) of NOx in 2004. Base d on an average statewide NOx toES - 4

PM conversion factor, we estimate the secondary for mation of PM 10 nitrate from NOx emissions from mobile cargo handling equipment engi nes to be about 6 to 10 tons per day. Table ES-1 shows the distribution of cargo ha ndling equipment by equipment type

and the estimated emissions in 2004.

Table ES-1: Estimated Statewide 2004 Cargo Handling Equipment Population and

Associated Emissions

2004 Pollutant Emissions (tons per day)

Equipment Types Numbers of Equipment NOx HC CO PM

Cranes 321 1.93 0.15 0.58 0.07

Excavators 28 0.24 0.02 0.06 0.01

Forklifts 464 0.54 0.06 0.20 0.03
Container Handling Equipment 487 3.25 0.22 0.84 0.1 1
Other Equipment 40 0.08 0.01 0.02 0.00
Sweepers/Scrubbers 28 0.04 0.00 0.02 0.00

Tractors/Loaders/Backhoes 93 0.18 0.02 0.05 0.01

Yard Trucks 2277 12.78 1.14 8.98 0.42

Totals 3738 19.04 1.61 10.76 0.65

Yard trucks account for the majority of the diesel PM and NOx emissions, about 66 percent and 67 percent, respectively, from cargo handling equipment at ports and intermodal rail yards. Because ambient air monitor ing techniques for diesel PM are still under development, it is difficult to measure the a ctual exposures to persons from the emissions of cargo handling equipment. However, be cause the equipment is distributed throughout the ports and intermodal rail yards in C alifornia, and because most of the

facilities are located in urban centers near reside ntial communities, we believe that several million Californians are impacted by diesel PM emissions from the operation of cargo handling equipment.

Exposure to these emissions results in increased ca ncer risk and other serious noncancer health impacts, including premature death, i rritation to the eyes and lungs, allergic reactions in the lungs, asthma exacerbatio n, blood toxicity, immune system dysfunction, and developmental disorders. Estimate s of the level of cancer risk can be made using emission estimates and modeling techniqu es to predict ambient

concentrations of diesel PM.

A health risk assessment was conducted for cargo ha ndling equipment operated at the Ports of Long Beach and Los Angeles, which showed s ignificant near-source risks. For example, nearby residents living within a 4,100-acr e perimeter of the ports are estimated to have a potential cancer risk of over 1 00 in a million due to emissions from cargo handling equipment. Nearly 75 percent of the two million people living in the area around the ports have an estimated predicted risk o f greater than 10 in a million. These risk values assume exposure duration of 70 years fo r a nearby individual.ES - 5

ARB staff also estimated the potential non-cancer i mpacts associated with exposure to diesel PM from cargo handling equipment. The non-c ancer health effects evaluated include premature death, asthma attacks, work loss days, and minor restricted activity days. Based on the analysis, staff estimates that the average number of cases statewide per year that would be expected from expo sure to the 2004 cargo handling equipment diesel PM emission levels are as follows:

• 9 premature deaths (4 to 13, 95% confidence interv al (CI))

• 219 asthma attacks (53 to 383, 95% CI)

• 1,907 work loss days (1,614 to 2,200, 95% CI)

• 10,127 minor restricted activity days (8,254 to 12 ,000, 95% CI)

5. Are the requirements proposed for cargo handling equipment technologically feasible?

Yes. Based upon extensive analysis and discussions with numerous stakeholders, staff has determined that the proposed requirements and p erformance standards are technologically feasible.

The proposal requires owners and operators of in-us e yard trucks to accelerate the turnover to cleaner on-road or off-road engines. Y ard trucks with on-road engines meeting the 2007 certified standards will be commer cially available throughout the country beginning in 2007 when the proposed regulat ion takes effect. As the on-road engine standards become more stringent in 2010, yar d truck manufacturers will continue to offer their equipment with certified on -road engines that meet the new standards. (ARB, 2005c) The option to select a co mparable off-road engine is expected to be available beginning in 2011.

The in-use performance standards for non-yard truck equipment can be met through the application of retrofits, or verified diesel emissi on control strategies (VDECS), and/or replacement to cleaner on-road or off-road engines. The ARB has currently verified several VDECS that range from Level 1 to Level 3 fo r applicable cargo handling equipment, and more are expected in the future. Ma ny of these technologies have been successfully used in mobile cargo handling equ ipment, particularly at California ports, and include diesel oxidation catalysts (DOCs ), emulsified diesel fuel, and diesel particulate filters (DPFs). In addition, flow-thro ugh filters, sometimes referred to as enhanced DOCs, are relatively new to the market but also show promise in reducing diesel PM from these engines.

While several VDECS are currently available for non -yard truck cargo handling equipment, the verification extends only to select model years and engine families. As a result, the proposed regulation has several provi sions to provide flexibility and to encourage the development of other emission control strategies. The proposal would allow owners and operators to apply for a complianc e extension for the use of experimental diesel emission control technologies, which in turn, is expected to result in additional verifications. The proposal also includ es an alternative compliance planES - 6

(ACP) option for owners or operators of non-yard tr uck equipment. In order to receive approval for the ACP, owners or operators would be required to demonstrate that equivalent emission reductions can be achieved thro ugh the use of alternative strategies, which can include early engine or equip ment replacement, alternative fuels or fuel additives, exhaust treatment controls, or e quipment engine modifications.

As part of the implementation efforts for the propo sed regulation, staff plan to create a technology workgroup, whose goal will be to monitor the available control strategies, address concerns regarding the use of the technolog ies in non-yard truck cargo handling equipment, and encourage manufacturers to apply for ARB verification.

6. What businesses will be affected by the proposed regulation?

The proposed regulation will affect any businesses operating mobile cargo handling equipment at ports and intermodal rail yards in Cal ifornia. Examples of businesses that potentially will be affected include terminal opera tors and owners at ports, railroad companies that operate intermodal rail yards, and r enting or leasing companies that provide cargo handling equipment to these facilitie s. In general, public agencies will not be affected by this regulation. However, military installations that have cargo handling activities at military ports may be affected.

7. How will the regulation be enforced?

The proposal requires that owners or operators of c argo handling equipment at ports and intermodal rail yards provide access to the equ ipment to ARB employees or agents for the purposes of inspection. This includes acce ss to records necessary to establish compliance with the requirements of the proposal.

8. What are the environmental impacts of the propos ed regulation?

The proposed regulation will significantly reduce d iesel PM emissions and the resulting exposures from mobile cargo handling equipment at p orts and intermodal rail yards in California. ARB staff estimates that, with impleme ntation of the regulation, diesel PM emissions will be reduced by approximately 40 perce nt or 75 tons per year in 2010 and 66 percent or 86 tons per year in 2015 relative to the projected 2010 and 2015 emissions, which includes an annual growth rate of six percent and estimated reductions from normal equipment turnover and volun tary programs. Figure ES-1 shows the projected diesel PM emissions with and wi thout the regulation.ES - 7

Figure ES-1: Projected Diesel PM Emissions with an d without the Regulation

Note: Baseline includes estimated reductions from v oluntary programs and the benefits from the new engine standards adopted by the U.S. EPA and ARB.

California’s air quality will also benefit from red uced NOx emissions. As a result of the regulation, ARB staff estimates that NOx emissions will be reduced by 24 percent or 1,425 tons per year in 2010 and 47 percent or 1,991 tons per year in 2015, relative to the projected 2010 and 2015 emissions, which includ es a growth rate of six percent each year and estimated reductions from voluntary p rograms. Figure ES-2 shows the projected NOx emissions with and without the regula tion.

Figure ES-2: Projected NOx Emissions with and with out the Regulation

Note: Baseline includes estimated reductions from v oluntary programs and benefits from new engine standards adopted by the U.S. EPA and ARB.

We anticipate significant health benefits due to re duced mortality, incidences of cancer, PM related cardiovascular effects, chronic bronchit is, asthma, and hospital admissions for pneumonia and asthma-related conditions. These directly emitted diesel PM reductions are expected to reduce the number of pre mature deaths and other

0 50 100 150 200 250 30020042007201020152020

YearTPY PM Baseline

PM Reg Influence

0 1000 2000 3000 4000 5000 6000 7000 800020042007201020152020

YearTPY

NOx Baseline

NOx Reg InfluenceES - 8

noncancer health effects from air pollution in Cali fornia. Staff estimates that the implementation of this regulation will avoid betwee n 2007 and 2020 approximately:

• 32 premature deaths (16 to 48, 95% CI);

• 820 asthma attacks (200 to 1,400, 95% CI);

• 7,100 work loss days (6,020 to 8,200, 95% CI); and

• 38,000 minor restricted activity days (31,000 to 4 5,000, 95% CI).

With respect to potential cancer risk, ARB staff be lieves there will be significant reductions in exposures and potential cancer risks to residents that live near ports and intermodal rail yards in California. For example, based on an analysis of the predicted

2010 and 2020 ambient diesel PM levels near the POL A and POLB, we estimate that in 2010 there will be a 56 percent reduction in the po pulation-weighted average risk relative to the risk levels in 2002 from cargo hand ling equipment emissions and a 82 percent reduction in 2020.

9. What are the economic impacts of the proposed re gulation?

ARB staff estimates the cost for compliance with the re gulation to be approximately 71 million dollars for the total capital and recurr ing costs. This corresponds to about 5.1 million dollars annually on average for the yea rs 2007 through 2020. This cost, which is based on 2004 dollars, represents the capi tal cost of equipment, maintenance and replacement, and reporting costs from 2007 thro ugh to 2020.

The cost for a business to comply with this regulat ion will vary depending on the number and type of cargo handling equipment and whether th e equipment is equipped with a verified diesel exhaust control system (VDECS) and/ or later replaced with a new Tier 4 engine in 2015. For example, the costs for a typic al crane engine (rated at 210 hp operated 1370 hours per year) with a diesel particu late filter (DPF) is about $17,500 for equipment and installation. The estimated annual o ngoing costs are based on a reporting cost of about $500 per terminal with the cost spread over many pieces of equipment. To determine the cost a typical busines s may incur, we used the ARB Survey data on the average number and type of equip ment operated by a port container terminal, a port bulk handling terminal, and an int ermodal rail yard and applied the annual average costs for the various equipment type s. Based on our analysis, we estimate that the total 2007 to 2020 costs to a typ ical business will be in the range of $343,000 to $1,373,000.

Staff does not have access to financial records for most of the companies that responded to the survey. However, approximately 10 percent of the respondents identified themselves as small businesses (annual g ross receipts of $1,500,000 or less for transportation and warehousing per California G overnment Code Section 11342.610).

Cost-effectiveness is expressed in terms of control costs (dollars) per unit of air emissions reduced (pounds). The cost-effectiveness for the proposed regulation isES - 9

determined by dividing the total capital costs plus the annual operation and maintenance and reporting costs by the total pounds of diesel PM reduced during the years 2007 to 2020. All costs are in 2004 equivale nt expenditure dollars. With a total cost of 71 million dollars reducing approximately 1 .73 million pounds of diesel PM, staff estimates the overall cost-effectiveness of the pro posed regulation to be about 41 dollars per pound of diesel PM reduced, consider ing only the benefits of reducing diesel PM. Because the proposed regulation will al so reduce NOx emissions, we could allocate half of the costs of compliance against th ese benefits, resulting in costeffectiveness values of approximately 21 dollars pe r pound of diesel PM and 1 dollar per pound of NOx reduced.

10. Will Carl Moyer Program funds be available for cargo handling equipment if the regulation is adopted?

Yes. Although the bulk of the emission reductions from cargo handling equipment would be obtained through the regulatory requiremen ts, Carl Moyer Program funds may be available for owners or operators that can compl y early. The incremental cost of new purchase, repower, and retrofit projects would be eligible for funding. In order to qualify for Carl Moyer Program funding, the project would have to start at least three years before the required implementation date in th e regulation, all of the owner or operator’s cargo handling equipment for the specifi c model year or model year group would have to be brought into early compliance at t he same time, and the project would have to meet a cost-effectiveness cap. The percent of the owner or operator’s fleet eligible for Carl Moyer Program funding would be ba sed on how early the fleet is brought into compliance.

11. How does the proposed regulation fulfill the go als of the Diesel Risk Reduction Plan and the State Implementation Plan as they pertain to these engines?

The proposed regulation is consistent with the goal s of the Diesel Risk Reduction Plan. The requirements and standards in the regulation ar e based on the application of BACT for diesel PM. ARB staff estimates that with imple mentation of the regulation, diesel PM emissions will be reduced by approximately 53 perce nt in 2010 and 81 percent in 2020 relative to the 2004 baseline, with a cumulative re duction of 1.73 million pounds by

2020.

The proposed regulation is also consistent with the goals of the State Implementation Plan (SIP) as it relates to the in-use fleet of off -road heavy-duty compression ignition engines and equipment. The requirements and standa rds in the regulation utilize the strategies suggested in the SIP by reducing emissio ns through the application of verified diesel emission control strategies and rep lacing older, dirtier engines with new,

lower-emission models. In addition to the reductio ns in diesel PM stated above, NOx emissions will also be reduced by approximately 35 percent in 2010 and 77 percent in 2020 relative to the 2004 baseline, with a cumulati ve reduction of 37.3 million pounds by

2020.ES - 10

12. How does the proposed regulation relate to ARB’ s goals for Environmental

Justice?

Environmental Justice is defined as the fair treatm ent of people of all races, cultures, and incomes with respect to the development, adopti on, implementation, and enforcement of environmental laws, regulations, and policies. ARB’s Environmental Justice Policies are intended to promote the fair t reatment of all Californians and cover the full spectrum of the ARB's activities.

The proposed regulation is consistent with the envi ronmental justice policy to reduce

health risks from toxic air contaminants in all com munities, including those with lowincome and minority populations, regardless of loca tion. The regulation will reduce diesel PM emissions from mobile cargo handling equi pment at ports and intermodal rail yards by requiring the use of the best available co ntrol technologies. The proposed regulation will provide air quality benefits for al l Californians, particularly those residing

in communities located near these facilities.

13. What future activities are planned?

After Board consideration and approval of the propo sed regulation, ARB staff will work on a number of projects related to implementation, the collection and processing of engine-related data, and the improvement of the car go handling equipment category of the off-road engine emission inventory. Specifical ly, resources will be devoted to the following:

• Seeking a Title I section 209(e) waiver from U.S. EPA

Upon Office of Administrative Law approval of the p roposed regulation, staff will submit a Title I section 209(e) waiver request to the U.S. EPA. Staff expect the U.S. EPA will act expeditiously to appro ve the waiver prior to the implementation dates of the regulation.

• Implementing the requirements of the regulation

ARB staff will develop implementation guidance as a ppropriate and will work with industry groups and affected businesses to ens ure owners and operators are aware of the regulatory requirements and compli ance options. Staff will prepare fact sheets, a question and answer document regarding implementation, and work to provide electronic form s.

• Technology review

A technology working group will be formed to monito r the feasibility of retrofit emission controls, encourage manufacturers to apply for ARB verification, and address concerns regarding the use of VDECS in non-yard truck cargoES - 11 handling equipment. In addition, the workgroup wil l share information on successful applications of experimental emission co ntrol strategies.

• Monitoring implementation

ARB staff will monitor implementation of the propos ed regulation. This will include monitoring advancements in emission control technologies and evaluating BACT. In the event implementation revea ls amendments to the regulation are warranted or that BACT has changed, ARB staff will propose

amendments for the Board’s consideration.

• Updating inventory with the reporting data

A key requirement of the regulation is the initial reporting of information on the number of engines and their operating characteristi cs and compliance reporting. This information will be used to update the ARB’s emission inventory for off-road equipment.

14. What is staff’s recommendation?

We recommend the Board approve the proposed regulat ion presented in this report (Appendix A). The regulation will reduce diesel PM and NOx emissions from mobile cargo handling equipment at ports and intermodal ra il yards by requiring the use of the best available control technologies, including acce lerated turnover and/or retrofits. The proposed regulation will provide air quality benefi ts for all Californians, particularly those living in communities near ports and intermodal rai l yards. ARB staff believes the proposed regulation is technologically feasible and necessary to carry out the Board’s responsibilities under State law.ES - 12

REFERENCES:

(ARB, 2000) California Air Resources Board . Risk Reduction Plan to Reduce Particulate Matter Emissions from Diesel-Fueled Eng ines and Vehicles ; October 2000.

(EPA, 1990) United States Environmental Protection Agency. Federal Clean Air Act, Title II, Part A, Sec. 209(e) ; 1990.

(ARB, 2005c) California Air Resources Board. Phon e call with Mr. Don Lawrence, Ottawa (Kalmar Industries); September 22, 2005.I - 1

I. INTRODUCTION

A. Overview

The California Air Resources Board's (ARB or Board) mission is to protect public health, welfare, and ecological resources through the effec tive and efficient reduction of air pollutants, while recognizing and considering the e ffects on the economy of the State. ARB’s vision is that all individuals in California, especially children and the elderly, can live, work, and play in a healthful environment – f ree from harmful exposure to air pollution. Diesel engine exhaust is a source of un healthful air pollutants including gaseous- and particulate-phase toxic air contaminan ts (TAC), particulate matter, carbon monoxide, hydrocarbons, and oxides of nitrogen. Em issions from diesel-fueled mobile cargo handling equipment (cargo handling equipment) are a significant concern in communities near ports and intermodal rail yards. ARB staff are proposing a control measure to reduce emissions from cargo handling equ ipment used at ports and intermodal rail yards. These emissions contribute to ambient levels of particulate matter, result in community exposures to diesel PM, and contribute to oxides of nitrogen (NOx) levels and reactive organic compounds (ROG) l evels, which are precursors to the

formation of ozone.

This Staff Report for the proposed regulation inclu des:

• background regulatory information, discussion of t he need for control of diesel particulate matter, and a summary of public outreac h (Chapter I);

• discussion of cargo handling equipment at ports an d intermodal rail yards (Chapter II);

• potential emissions, exposure, and risk from cargo handling equipment (Chapter III);

• summary and discussion of the proposed regulation, including alternative requirements considered (Chapter IV);

• availability and technological feasibility of pote ntial control measures (Chapter V);

• environmental impact of the proposed control measu re (Chapter VI);

• economic impacts of the proposed control measure ( Chapter VII); and

• proposed text of the measure and other supplementa ry information (Appendices).

B. Purpose

The proposed regulation is designed to reduce level s of ambient particulate matter, the general public's exposure to diesel PM, and ozone p recursor emissions from cargo handling equipment at ports and intermodal rail yar ds. The proposed regulation establishes best available control technology (BACT ) for cargo handling equipment. The proposed regulation requires yard trucks that o perate at a port or intermodal rail yard in California to meet in-use performance stand ards through accelerated turnover of older yard trucks to ones equipped with cleaner, on -road engines. Non-yard truck equipment would also be required to meet BACT, whic h, for them, could include retrofits and/or replacement to cleaner on-road or off-road e ngines. Owners or operators would be required to maintain records of their equipment, compliance method, and complianceI - 2

dates, as well as report to the ARB compliance plan s and a demonstration of compliance. Chapter IV of this Staff Report contai ns a discussion of the proposed regulation. Appendix A contains the full text of t he proposed regulation.

C. Regulatory Authority

Under federal Clean Air Act (CAA) section 209(e)(2) , California may adopt emission

standards for off-road 1 engines that are not otherwise expressly preempted under section 209(e)(1). Section 209(e)(1) provides that no state, including California, or any political subdivision thereof may adopt or enforce emission standards or other requirements relating to the control of emissions f or nonroad engines under 175 horsepower that are used in farm or constructio n equipment or used in locomotives or locomotive engines. CAA section 209(e)(2) provi des California with sole authority among the states to adopt emission standards and re quirements related to emission control for new and in-use nonroad engines that ar e not specifically preempted under section 209(e)(1). Section 209(e)(2) requires that California must obtain authorization

from the Administrator of the United States Environ mental Protection Agency (U.S. EPA) prior to the regulation becoming effecti ve. As part of the authorization process, ARB must establish that the adopted regula tions “will be, in the aggregate, at least as protective of public health and welfare as the applicable Federal standards.” U.S. EPA is authorized by CAA section 213 to adopt emission standards and other regulations for only new non-road engines. In Engine Manufacturers Association v.

U.S. EPA (D.C. Cir.1996) 88 F.3d 1075, the Court concluded t hat California is the only government body with authority to adopt emission st andards and other regulations for in-use engines. ( Id. , at 1089-1091.)

ARB has been granted both general and specific auth ority under the Health and Safety Code (HSC) to adopt the proposed regulation. HSC s ections 39600 (General Powers) and 39601 (Standards, Definitions, Rules, and Measu res) confer to the ARB, the general authority and obligation to adopt rules and measures necessary to execute the Board's powers and duties imposed by State law. HS C sections 43013(b) and 43018(a) provide broad authority to achieve the maximum feas ible and cost effective emission

reductions from all mobile source categories, including off-road diese l engines and equipment.

With respect to toxic air contaminants (TAC), Calif ornia's Air Toxics Program, established under California law by AB 1807 (Stats. 1983, Ch. 1047) and set forth in HSC sections 39650 through 39675, mandates that ARB identify and control air toxics emissions in California. The identification phase of the Air Toxics Program requires the ARB, with participation of other state agencies, su ch as the Office of Environmental Health Hazard Assessment (OEHHA), to evaluate the h ealth impacts of, and exposure to, substances and to identify those substances tha t pose the greatest health threat as

TACs. ARB's evaluation is then made available to t he public and is formally reviewed by the Scientific Review Panel (SRP) established un der HSC section 39670. Following

1 The CAA refers to “nonroad engines” and California has historically referred to these same engines as “off-road engines.” For purposes of this regulatio n the two terms are interchangeable.I - 3

the ARB's evaluation and the SRP's review, the Boar d may formally identify a TAC at a public hearing. Following the identification of a substance as a TAC, HSC sections 39658, 39665, 39666, and 39667 require ARB, with th e participation of the air pollution control and air quality management districts (distr icts), and in consultation with affected sources and interested parties, to prepare a report on the need and appropriate degree of regulation for that substance. The mobile cargo handling equipment subject to this regulation are vehicular sources. As such, the pro posed regulation would be adopted under the authority provided in HSC section 39667. The ARB is responsible for implementation and enforcement of the proposed regu lation. Districts are not authorized to adopt requirements for equipment subj ect to the proposed regulation.

D. Need for Control of Diesel Particulate Matter

In 1998, the Board identified diesel PM as a TAC. Diesel PM is by far the most important TAC and contributes over 70 percent of th e estimated risk from air toxics today. In September 2000, the ARB approved the “Ri sk Reduction Plan to Reduce Particulate Matter Emissions from Diesel-Fueled Eng ines and Vehicles” (Diesel Risk Reduction Plan). The goal of the Diesel Risk Reduc tion Plan is to reduce diesel PM emissions and the associated cancer risk by 85 perc ent in 2020. (ARB, 2000) In addition, in 2001, OEHHA identified diesel PM as on e of the TACs that may cause children or infants to be more susceptible to illne ss pursuant to the requirements of Senate Bill 25 (Stats. 1999, ch. 731). Senate Bill 25 also requires the ARB to adopt control measures, as appropriate, to reduce the pub lic’s exposure to these special TACs (H&SC section 39669.5). In the following sect ions, we describe the physical and

chemical characteristics of diesel PM and discuss t he adverse health and environmental impacts from the suite of pollutants emitted by die sel-fueled engines.

E. Physical and Chemical Characteristics of Diesel PM

Diesel engines emit a complex mixture of inorganic and organic compounds that exist in gaseous, liquid, and solid phases. The composition of this mixture will vary depending on engine type, engine age and horsepower, operatin g conditions, fuel, lubricating oil, and whether or not an emission control system is pr esent. The primary gas or vapor phase components include typical combustion gases a nd vapors such as carbon monoxide (CO), carbon dioxide (CO 2 ), sulfur dioxide (CO 2 ), oxides of nitrogen (NOx), reactive organic gases (ROG), water vapor, and exce ss air (nitrogen and oxygen).

Many of the diesel particles exist in the atmospher e as a carbon core with a coating of organic carbon compounds, or as sulfuric acid and a sh, sulfuric acid aerosols, or sulfate particles associated with organic carbon. (Beeson, 1998) The organic fraction of the diesel particle contains compounds such as aldehyde s, alkanes and alkenes, and highmolecular weight PAH and PAH-derivatives. Many of these PAHs and PAH-derivatives, especially nitro-PAHs, have been found to be potent mutagens and carcinogens. Nitro-PAH compounds can also be formed during trans port through the atmosphere by reactions of adsorbed PAH with nitric acid and by g as-phase radical-initiated reactions in the presence of oxides of nitrogen. Fine partic les may also be formed secondarilyI - 4

from gaseous precursors such as SO2, NOx, or organi c compounds. Fine particles can remain in the atmosphere for days to weeks and trav el through the atmosphere for hundreds to thousands of kilometers, while coarse p articles deposit to the earth within

minutes to hours and within tens of kilometers from the emission source.

Almost all of the diesel particle mass is in the fi ne particle range of 10 microns or less in diameter (PM 10 ). Approximately 94 percent of the mass of these p articles are less than 2.5 microns (PM 2.5 ) in diameter. Diesel PM can be distinguished from noncombustion

sources of PM 2.5 by the high content of elemental carbon with the a dsorbed organic compounds and the high number of ultrafine particle s (organic carbon and sulfate).

The soluble organic fraction (SOF) consists of unbu rned organic compounds in the small fraction of the fuel and atomized and evapora ted lube oil that escape oxidation. These compounds condense into liquid droplets or ar e adsorbed onto the surfaces of the elemental carbon particles. Several components of the SOF have been identified as

individual TACs.

F. Health Impacts of Exposure to Diesel PM, Ambient Particulate Matter, and

Ozone

The proposed regulation will reduce the public’s ex posure to diesel PM as well as reduce ambient particulate matter. In addition, th e proposed regulation is expected to result in reductions in emissions of NOx and ROG, w hich are precursors to the

formation of PM 2.5 and ozone in the lower atmosphere. The primary he alth impacts of these air pollutants are discussed below.

Diesel Particulate Matter

Diesel PM is of specific concern because it poses a lung cancer hazard for humans as well as a hazard from noncancer respiratory effects such as pulmonary inflammation. (ARB, 1998a) Because of their small size, the part icles are readily respirable and can effectively reach the lowest airways of the lung al ong with the adsorbed compounds, many of which are known or suspected mutagens and c arcinogens. (ARB, 2002) More than 30 human epidemiological studies have investig ated the potential carcinogenicity of diesel PM. On average, these studies found that long-term occupational exposures to diesel exhaust were associated with a 40 percent increase in the relative risk of lung cancer. (ARB, 1998b) However, there is limited sp ecific information that addresses the variable susceptibilities to the carcinogenicity of diesel exhaust within the general human population and vulnerable subgroups, such as infants and children and people with preexisting health conditions. The carcinogen ic potential of diesel exhaust was also demonstrated in numerous genotoxic and mutagen ic studies on some of the organic compounds typically detected in diesel exha ust. (ARB, 1998b)

Diesel PM was listed as a TAC by ARB in 1998 after an extensive review and evaluation of the scientific literature by OEHHA. (ARB 1998c) Using the cancer unit risk factor developed by OEHHA for the TAC program, it was estimated that for the yearI - 5

2000, exposure to statewide, average population-wei ghted, ambient concentrations of diesel (1.8 μ g/m 3 ) could be associated with a health risk of 540 pot ential cancer cases per million people exposed over a 70-year lifetime.

Another highly significant health effect of diesel exhaust exposure is its apparent ability to act as an adjuvant in allergic responses and pos sibly asthma. (Dab, 2000) (Diaz-Sanchez, 1996) (Kittelson, 1999) However, ad ditional research is needed at diesel exhaust concentrations that more closely app roximate current ambient levels before the role of diesel PM exposure in the increa sing allergy and asthma rates is

established.

Ambient Particulate Matter

The key health effects categories associated with a mbient particulate matter, of which diesel PM is an important component, include premat ure mortality; aggravation of respiratory and cardiovascular disease (as indicate d by increased hospital admissions and emergency room visits, school absences, work lo ss days, and restricted activity days); aggravated asthma; acute respiratory symptom s, including aggravated coughing and difficult or painful breathing, chronic bronchi tis, and decreased lung function that can be experienced as shortness of breath. (U.S. E PA 2000, U.S. EPA 2003)

Health impacts from exposure to the fine particulat e matter (PM 2.5 ) component of diesel exhaust have been calculated for California, using concentration-response equations from several epidemiological studies. Both mortali ty and morbidity effects could be associated with exposure to either direct diesel PM 2.5 or indirect diesel PM 2.5 , the latter

of which arises from the conversion of diesel NO

x emissions to PM 2.5 nitrates. It was estimated that 2000 and 900 premature deaths result ed from long-term exposure to

either 1.8 μ g/m 3 of direct PM 2.5 or 0.81 μ g/m 3 of indirect PM 2.5 , respectively, for the year 2000. (Lloyd, 2001) The mortality estimates are l ikely to exclude cancer cases, but may include some premature deaths due to cancer, be cause the epidemiological studies did not identify the cause of death. Expos ure to fine particulate matter, including

diesel PM 2.5 can also be linked to a number of heart and lung d iseases.

Ozone

Diesel exhaust consists of hundreds of gas-phase, p article-phase, and semi-volatile organic compounds, including typical combustion pro ducts, such as CO 2 , hydrogen, oxygen, and water vapor, as well as CO, ROG, carbon yls, alkenes, aromatic hydrocarbons, PAHs, PAH derivatives, and sulfur oxi des (SOx) - compounds resulting from incomplete combustion. Ozone is formed by the reaction of ROG and NOx in the atmosphere in the presence of heat and sunlight. T he highest levels of ozone are produced when both ROG and NOx emissions are presen t in significant quantities on hot, clear summer days. This pollutant is a powerf ul oxidant that can damage the respiratory tract, causing inflammation and irritat ion, which can result in breathing

difficulties.I - 6

Studies have shown that there are impacts on public health and welfare from ozone at moderate levels. Short-term exposure to high ambie nt ozone concentrations have been linked to increased hospital admissions and emergen cy visits for respiratory problems. (Peters, 2001) Repeated exposure to ozone can make people more susceptible to respiratory infection and lung inflammation and can aggravate preexisting respiratory diseases, such as asthma. Prolonged (six to eight hours), repeated exposure to ozone can cause inflammation of the lung, impairment of l ung defense mechanisms, and possibly irreversible changes in lung structure, wh ich over time could lead to premature aging of the lungs and/or chronic respiratory illne sses such as emphysema and chronic

bronchitis.

The subgroups most susceptible to ozone health effe cts include individuals exercising outdoors, children and people with preexisting lung disease such as asthma, and chronic pulmonary lung disease. Children are more at risk from ozone exposure because they typically are active outside, during t he summer when ozone levels are highest. Also, children are more at risk than adul ts from ozone exposure because their respiratory systems are still developing. Adults w ho are outdoors and moderately active during the summer months, such as construction work ers and other outdoor workers, also are among those most at risk. These individua ls, as well as people with respiratory illnesses such as asthma, especially asthmatic chil dren, can experience reduced lung function and increased respiratory symptoms, such a s chest pain and cough, when exposed to relatively low ozone levels during prolo nged periods of moderate exertion.

G. Health and Environmental Benefits from the Propo sed Regulation

Reducing diesel PM emissions from cargo handling eq uipment at ports and intermodal rail yards will have both public health and environ mental benefits. The proposed regulation will reduce localized potential cancer r isks associated with emissions from cargo handling equipment and will contribute to the reduction of the general exposure to diesel PM that occurs on a region-wide basis due to collective emissions from dieselfueled engines. Additional benefits associated wit h the proposed regulation include further progress in meeting the ambient air quality standards for PM 10 , PM 2.5 , and ozone, and enhancing visibility.

Reduced Diesel PM Emissions

The estimated reductions in diesel PM emissions and the associated benefits from reduced exposure and risk are discussed in detail i n Chapter VI.

Reduced Ambient Particulate Matter Levels

Reducing diesel PM will also help efforts to achiev e the ambient air quality standards for particulate matter. Both the State of California a nd the U.S. EPA have established

standards for the amount of PM 10 in the ambient air. These standards define the maximum amount of PM that can be present in outdoor air. California's PM 10 standardsI - 7

were first established in 1982 and updated June 20, 2002. It is more protective of human health than the corresponding national standa rd. Additional California and

federal standards were established for PM 2.5 to further protect public health (Table I-1).

Table I-1: State and National PM Standards

California Standard National Standard

PM 10 Annual Arithmetic Mean 20 μ g/m 3 Annual Arithmetic Mean 50 μ g/m 3

24-Hour Average 50 μ g/m 3 24-Hour Average 150 μ g/m 3

PM 2.5 Annual Arithmetic Mean 12 μ g/m 3 Annual Arithmetic Mean 15 μ g/m 3

24-Hour Average No separate

State standard 24-Hour Average 65 μ g/m 3

Particulate matter levels in most areas of Californ ia exceed one or more of current state PM standards. The majority of California is design ated as non-attainment for the State

PM 10 standard (ARB 2002). Diesel PM emission reduction s from diesel-fueled engines will help protect public health and assist in furth ering progress in meeting the ambient air quality standards for both PM 10 and PM 2.5

.

The emission reductions obtained from the use of lo wer emission diesel engines will result in lower ambient particulate matter levels a nd significant reductions of exposure to primary and secondary diesel PM. Lower ambient particulate matter levels and reduced exposure mean reduction of the prevalence o f the diseases attributed to diesel PM, reduced incidences of hospitalizations and prev ention of premature deaths.

Reduced Ambient Ozone Levels

Emissions of NOx and ROG, precursors to the formati on of ozone in the lower atmosphere, will also be reduced by the proposed re gulation. In California, most major urban areas and many rural areas continue to be non -attainment for the State and federal 1-hour ambient air quality standard for ozo ne. Controlling emissions of ozone precursors would reduce the prevalence of the types of respiratory problems associated with ozone exposure and would reduce hospital admis sions and emergency visits for respiratory problems. Ozone can also have adverse health impacts at concentrations
that do not exceed the 8-hour NAAQS.

Table I-2: State and National Ozone Standards

California Standard National Standard

1 hour 0.09 ppm (180 μ g/m 3 ) -

8 hour 0.070 ppm (137 μ g/m 3 ) 0.08 ppm (157 μ g/m 3 )

Note: The 8 hour California standard is expected to become effective in early 2006.I - 8

Improved Visibility

In addition to the public health effects of fine pa rticulate pollution, inhalable particulates including sulfates, nitrates, organics, soot, and s oil dust contribute to regional haze that impairs visibility.

In 1999, the U.S. EPA promulgated a regional haze r egulation that calls for states to establish goals and emission reduction strategies f or improving visibility in 156 mandatory Class I national parks and wilderness . California has 29 of these national parks and wilderness areas, including Yose mite, Redwood, and Joshua Tree National Parks. Reducing diesel PM from cargo hand ling equipment will help improve visibility in these Class I areas.

H. Public Outreach and Environmental Justice

Environmental Justice

The ARB is committed to integrating environmental j ustice in all of its activities. On December 13, 2001, the Board approved "Policies and Actions for Environmental Justice," which formally established a framework fo r incorporating Environmental Justice into the ARB's programs, consistent with th e directive of California state law. (ARB, 2001) Environmental Justice is defined as t he fair treatment of people of all races, cultures, and incomes with respect to the de velopment, adoption, implementation, and enforcement of environmental la ws, regulations, and policies. These policies apply to all communities in Californ ia, but recognize that environmental justice issues have been raised more in the context of low-income and minority

communities.

The Environmental Justice Policies are intended to promote the fair treatment of all Californians and cover the full spectrum of the ARB 's activities. Underlying these Policies is a recognition that the agency needs to engage community members in a meaningful way as it carries out its activities. P eople should have the best possible information about the air they breathe and what is being done to reduce unhealthful air pollution in their communities. The ARB recognizes its obligation to work closely with all communities, environmental and public health organi zations, industry, business owners, other agencies, and all other interested parties to successfully implement these Policies.

During the development process, the ARB staff provi ded opportunities to present information about the proposed regulation at places and times convenient to stakeholders. For example, the meetings were held at times and locations that encouraged public participation, including evening sessions. Attendees included representatives from environmental community organi zations, terminal operators, port and rail representatives, engine and diesel emissio n control associations, and other parties interested in mobile cargo handling equipme nt

. These individuals participated both by providing data and reviewing draft regulati ons and by participating in open forum workshops, in which staff directly addressed their concerns. Table I-3 belowI - 9

provides meeting dates that were made to apprise th e public about the development of the proposed regulation.

Table I-3: Workshop/Workgroup and Public Outreach Meetings

Date Meeting Location Time

July 7, 2004 Public Workshop Port of Los Angeles 1: 30 p.m.

July 8, 2004 Public Workshop Elihu Harris Building, Oakland 1:30 p.m.

September 9, 2004 San Pedro Conference on Air Quality, International Trade, & Transportation Marina San Pedro Hotel,

San Pedro 10:15 a.m.

September 22, 2004 Public Working Group Cal/EPA Building, Sacramento (teleconference) 1:30 p.m.

October 27, 2004 No Net Increase Air Quality

Task Force Sheraton Los Angeles Harbor Hotel, San Pedro 1:00 p.m.

November 10, 2004 Public Workshop Cal/EPA Building, Sacramento 10:45 a.m.

December 1, 2004 Public Working Group Cal/EPA Building, Sacramento (teleconference) 1:30 p.m.

January 19, 2005 Port Community Advisory Committee: Air Quality

Subcommittee Port of Los Angeles 4:30 p.m.

February 24, 2005 California Air Resources Board: Board Meeting Cal/EPA Building, Sacramento 9:00 a.m.

April 7, 2005 Environmental Law Super Symposium Omni Hotel, Los Angeles 1:00 p.m.

May 18, 2005 Public Workshop Cal/EPA Building, Sacr amento 9:00 a.m.

August 11, 2005 Public Working Group Cal/EPA Building, Sacramento (teleconference) 1:30 p.m.

August 24, 2005 Public Workshop Port of Long Beach 10:00 a.m.

August 24, 2005 Public Workshop Long Beach Senior C enter 6:00 p.m.

October 4, 2005 Public Working Group Cal/EPA Building, Sacramento (teleconference) 1:30 p.m.

The proposed regulation is consistent with the envi ronmental justice policy to reduce health risks from TACs in all communities, includin g those with low-income and minority populations, regardless of location. The regulatio n will reduce diesel PM emissions from mobile cargo handling equipment at ports and i ntermodal rail yards by requiring accelerated turnover to cleaner engines and the use of the best available control technologies. The proposed regulation will provide air quality benefits for all Californians, particularly those living near ports and intermodal rail facilities where cargo handling equipment operate.

Outreach Efforts

Since the identification of diesel PM as a TAC in 1 998, the public has been more aware of the health risks posed by the emissions of this TAC. At many of the ARB's community outreach meetings over the past few years , the public has raised questionsI - 10

regarding our efforts to reduce exposure to diesel PM. At these meetings, ARB staff told the public about the Diesel Risk Reduction Pla n adopted in 2000 and described some of the measures in that plan, including those for off-road diesel-fueled engines such as cargo handling equipment.

The ARB has held six public workshops and four publ ic working group meetings since July 2004 in developing this rule (see Table I-3). Over 700 individuals and/or companies were notified for each workshop/meeting t hrough a series of mailings. Notices were posted to ARB's cargo handling equipme nt and public workshops web sites and e-mailed to subscribers of the cargo hand ling equipment electronic list server. The majority of the workshops were broadcast live v ia the internet, and working group meetings were held via teleconference, making them more easily accessible the public.

In addition to the public workshops and working gro up meetings presented in Table I-3, ARB staff and management participated in numerous i ndustry, government agency, and community meetings over the past three years, prese nting information on the Diesel Risk Reduction Plan and our proposed regulatory app roach for cargo handling equipment at ports and intermodal rail yards. Some of the industry groups and environmental associations participating were railr oad companies, California ports, the American Lung Association, the Wilmington Coalition for a Safe Environment, Citizens for a Better Environment, Coalition for Clean Air, the Manufacturers of Emission Controls Association, National Resources Defense Co unsel, Environmental Defense, the Pacific Merchant Shipping Association, the Paci fic Maritime Association, private businesses, and others. Staff also met periodicall y with a regulatory workgroup, comprised of representatives from local air polluti on control or air quality management

districts and the U.S. EPA.

As a way of inviting public participation and enhan cing the information flow between the ARB and interested parties, staff created a cargo h andling equipment Internet web site ( http://www.arb.ca.gov/cargo ) in March 2004. Since that time, staff has consis tently

made available on the web site all related document s, including meeting presentations and draft versions of the proposed regulatory langu age. The web site has also provided background information on diesel PM, workshop and m eeting notices and materials, and other diesel related information, and has serve d as a portal to other web sites with

related information.

Outreach efforts have also included hundreds of per sonal contacts via telephone, electronic mail, regular mail, surveys, facility vi sits, and individual meetings with interested parties. These contacts have included i nteractions with engine manufacturers and operators, emission control syste m manufacturers, local, national, and international trade association representatives , and environmental, community, and public health organizations.I - 11

REFERENCES:

(ARB, 2001) California Air Resources Board. Policies and Actions for Environmental

Justice ; December 2001.

(ARB, 1998a) California Air Resources Board. Report to the Air Resources Board on the Proposed Identification of Diesel Exhaust as a Toxic Air Contaminant; Part A, Exposure Assessment

; As Approved by the Scientific Review Panel on Apr il 22, 1998.

(ARB, 1998b) California Air Resources Board. Resolution 98–35: Identification of Particulate Emissions from Diesel-Fueled Engines as a Toxic Air Contaminant ; 1998.

(ARB, 2000) California Air Resources Board . Risk Reduction Plan to Reduce Particulate Matter Emissions from Diesel-Fueled Eng ines and Vehicles ; October 2000.

(ARB, 2002) California Air Resources Board. The 2002 California Almanac of Emission and Air Quality

, 2002.

(Beeson, 1998) Beeson, W. L; Abbey, D. E.; Knutsen, S. F. Long-term Concentrations of Ambient Air Pollutants and Incident Lung Cancer in California Adults: Results from the AHSMOG Study; Environmental Health Perspectives ; 1998.

(Dab, 2000) Dab, W. S., et. al. Air Pollution and Health: Correlation or Causality ? The Case of the Relationship Between Exposure to Partic les and Cardiopulmonary Mortality; Journal of the Air and Waste Management Association ; February 2001.

(Diaz-Sanchez, 1996) Diaz-Sanchez, D.; Tsien, A.; C asillas, A.; Dotson, A.R.; Saxon, A. Enhanced Nasal Cytokine Production in Human Beings after in vivo Challenge with

Diesel Exhaust Particles ; J. Allergy Clin. Immunol; 1996.

(Kittelson, 1999) Kittelson, D.B., Arnold, M., Watt s, W.F. Review of Diesel Particulate Matter Sampling Methods (University of Minnesota); 1999

(Lloyd, 2001) Lloyd, A.C.; Cackette, T.A. Diesel Engines: Environmental Impact and Control; J Air Waste Management Association; 2001.

(Peters, 2001) Peters, A; Dockery, D. W.; Muller, J . E.; Mittleman, M.A. Increased Particulate Air Polltion and the Triggering of Myoc ardial Infarction Circulation ; 2001.II - 1 Yard Truck

II. MOBILE CARGO HANDLING EQUIPMENT AT PORTS AND IN TERMODAL

RAIL YARDS

A. Definitions and Uses

Mobile cargo handling equipment at ports and interm odal rail yards is as diverse a group of equipment as the cargo that it handles. C argo that arrives and/or departs by ship, truck, or train, can include liquid, bulk (br eak bulk and dry bulk), and containers. Liquid cargo, such as petroleum products and chemic als, are often transported via pipelines, and therefore, do not usually have mobil e cargo handling equipment associated with their operation. Break bulk cargo, such as lumber, steel, machinery, and many types of palletized goods, and dry bulk ca rgo, such as cement, scrap metal, salt, sugar, sulfur, and petroleum coke, usually re quire equipment such as loaders, dozers, cranes, forklifts, and sweepers for their o perations. Container cargo, which is the most common type of cargo at ports and intermod al rail yards, requires equipment such as yard trucks, rubber-tired gantry (RTG) cran es, top picks, side picks, forklifts,
and straddle carriers. There are about 3,700 mobil e cargo handling equipment vehicles at California’s ports and intermodal rail yards. B elow is a description of some of the most common equipment types.

Container Handling Equipment

Yard Truck

The most common type of cargo handling equipment is a yard truck. Yard trucks are also known as yard goa ts, utility tractor rigs (UTRs), hustlers, yard hostlers, and y ard tractors. Yard trucks are very similar to heavy-du ty on-road truck tractors, but the majority are equipped with off-road engines.

Yard trucks are designed for moving cargo container s. They are used at container ports and intermodal rai l yards

as well as distribution centers and other intermoda l facilities. Containers are loaded onto the yard tr ucks by other container handling equipment, such as rubber- tired gantry cranes, top picks, or side picks, and they are unloaded the same way. In addition to loading and unloading operations, yard trucks are used to move containers around a facility (yard) for stacking and storing purposes.

While most yard trucks are diesel-fueled, there is limited availability of those powered by liquefied petroleum gas (LPG), compressed natural g as (CNG), and liquefied natural gas (LNG), and the incremental costs of alternative fuel yard trucks is very high (between 20 and 66 percent). The Port of Los Angel es has approximately 60 LPG fueled yard trucks, and the Port of Long Beach has ordered five natural gas yard trucks

to be delivered in the Fall 2005.II - 2

Yard trucks have a horsepower (hp) range of about 1 50 hp to 250 hp, with most being around 175 hp to 200 hp. There are approximately 2 ,300 yard trucks at California's ports and intermodal rail yards.

Top Handler

Another very common type of container handling equi pment is the top handler. Also known as top picks, top h andlers are large truck-like vehicles with an overhead boom which locks onto the top of containers in a single stack. They are used within a terminal to stack containers for temp orary storage and load containers onto and off of yard tr ucks. Top handlers are capable of lifting loaded cargo co ntainers weighing as much as 45,000 pounds. Top handlers ha ve a horsepower range of about 250 hp to 400 hp, with mo st being between 250 hp and 350 hp.

Side Handler

Like the top handler, side handlers (or side picks) are used to lift and stack cargo containers. They look very si milar to a top pick, but instead of grabbing the containers from t he top, their

boom arm extends the width of a container to lift i t from the front face (or side). Side handlers are most often used to lift empty containers; however, some are manufactured to lift loaded containers. Side handlers have a horsepower range of about 120 hp to 400 hp, with most being between 160 hp and 250 hp.

Reach Stacker

Another member of the cargo container handling fami ly is the reach stacker. Similar to a top pick, the reach st acker has a telescopic boom, usually attached behind the cab, t hat moves upward and outward in order to reach over two or mo re stacks of containers. Reach stackers lock onto the top of the containers in a similar fashion to top handlers. H owever, they are not nearly as common as top handlers and side h andlers because their duties can similarly be performed by rubbertired gantry cranes. They are most often found at port container terminals, but rarely at intermodal rail yards. Reach stackers have a horsepower range of about 250 hp to 400 hp, with most being between 230 hp and 300 hp. Top Handler

Side Handler

Reach StackerII - 3

Rubber-Tired Gantry Crane

Rubber-tired gantry cranes (or RTG cranes) are very large cargo container handlers that have a lifting mechan ism mounted on a cross-beam supported on vertical legs which run on rubber tires. While the propulsion of the c rane is very slow (about three miles per hour), the lifting mechanism can move quickly, and is therefore able t o load and unload containers from yard trucks or from stac ks at a very fast pace.

RTG cranes have a horsepower range of about 200 hp to 1,000 hp, with most being between around 300 hp to 1,000 hp. There are approximately 300 RTG cranes a t California's ports and intermodal rail yards.

Forklift

Used at both container facilities and bulk cargo fa cilities,

forklifts are industrial trucks used to hoist and t ransport materials by means of one or more steel forks inser ted under (or in the case of steel coils, in the middle of) the load. Forklifts are extremely diverse in both thei r size and custom cargo handling abilities. While they ar e designed to move and/or lift empty cargo containers or stacked or palletized cargo, they can also be desig ned to move or rotate (flip) truck chassis.

Forklift engines can be powered by either electric motors or internal combustion engines, such as compression ignition (i.e., diesel or natural gas) or spark ignition (i.e., gasoline or propane) engines. Compression ignition forklifts are usually designed for higher lift capacity than their electric or spark i gnited counterparts, and are therefore more likely to be used in cargo handling operations

.

The cargo handling forklifts used at ports and inte rmodal rail yards have a horsepower range of about 45 hp to 280 hp. There are approxim ately 460 forklifts at California’s ports and intermodal rail yards. RTG Crane

ForkliftII - 4

Bulk Cargo Handling Equipment

Loader

One of the most common dry bulk handling equipment, the loader is any type of off-road tractor, with either tracks or rubber tires, that uses a bucket on the end of mova ble arms to lift and move material. There are many differen t types of loaders, including but not limited to, front end, s kid steer, backhoe, rubber tired, and wheeled. Loaders used in cargo handling operations range from 36 hp (for sma ll, skid steer loaders) to over 1,000 hp (for large, rubber- tired loaders), with most being between 200 hp and 750 hp

.

Dozer

The term dozer refers to an off-road tractor, eithe r tracked or wheeled, equipped with a blade. Dozers at ports and intermodal rail yards are most often used in dry bulk or break bulk cargo handling operations. They range in size from 77 hp to 900 hp, with most being between 300 hp to 400 hp. Both loaders and dozers are among the approximately 250 bulk cargo handling equipment at California’s ports and intermodal rail yards.

In 2004, the Port of Long Beach (POLB) and the Port of Los Angeles (POLA) published emission inventories, which included information on all mobile cargo handling equipment, for their respective ports. (POLB, 2004 ) (POLA, 2004) In addition to the data gathered in the two port inventories, ARB staf f conducted a statewide survey of cargo handling equipment (survey) at ports and inte rmodal rail yards in December 2004. The completed surveys and the POLB and POLA invento ry data gave staff important information regarding the equipment, such as equipm ent and engine make, model, model year, and fuel types. Additionally, the stat ewide survey included estimated useful life, and expected growth for the years 2010 and 20 20. More information is available in the emissions inventory appendix (Appendix B).

Several engine manufacturers were prevalent in the cargo handling equipment that was surveyed and inventoried. The most common manufact urer was Cummins, which comprised about 80 percent of all of the mobile car go handling equipment engines. Within the Cummins engine families, the 5.9 liter a nd the 8.3 liter models were the most common, and yard trucks made up the majority of the Cummins engines. About 10 percent of the engines were Caterpillar and Detr oit Diesel models. Figure II-1 shows the distribution of the most common engine manufact urers and the most common equipment types using them. Loader

DozerII - 5

Figure II-1: Engine Manufacturers and Equipment Typ es 2

In addition to the statewide survey and the POLA an d POLB inventories, ARB staff contacted equipment manufacturers to obtain approxi mate costs for new cargo handling equipment. Table II-1 shows the average reported n ew equipment costs for the most common types of mobile cargo handling equipment.

2 The figure represents only the most common engine manufacturers of mobile cargo handling equipment from ARB’s survey and the Ports of Los Angeles and Long Beach inventories and their corresponding distribution of equipment types. Therefore, not al l manufacturers or equipment types are shown.

2145

165 165 78

0 500 1000 1500 2000 2500

Cummins Caterpillar Detroit Diesel Perkins# of Engines 58% Yard Trucks

13% Forklifts

12% Loaders 76% Yard Trucks 11% Top Handlers

5% Side Handlers

44% RTG Cranes

38% Yard Trucks

11% Forklifts

88% ForkliftsII - 6

Table II-1: Average New Equipment Costs

Equipment Category Equipment Type Average New Cost (in thousands $)

Yard Trucks Yard Truck $60

Top Handler $400 - $460

Side Handler $240 - $460 Basic Container Handling

Forklift $40 - $250

Dozer $25 - $75 (50 – 100hp) up to $1,000 for 900hp

Excavator $200 - $300

Mobile Crane $60 - $400 Bulk Cargo Handling

Loader $15 - $100 (35 – 95hp) $125 - $500 (130 – 675hp)

RTG Cranes RTG Crane $1,000 +

The POLA and POLB data, along with the data collect ed from ARB’s survey, were integral in developing a statewide population and e missions inventory for cargo handling equipment at ports and intermodal rail yards. The developed inventory revealed that container handling equipment, such as yard trucks, top handlers, side handlers, and RTG cranes, makes up the majority of the population (about 74 percent), with yard trucks being the most common equipment type (61 per cent). Figure II-2 below shows the population by equipment type or category.

Figure II-2: 2004 Statewide Population Distribution of Cargo Handling Equipment

at Ports and Intermodal Rail Yards

Cranes

9%

Forklifts

13%

Container Handling

13% Yard Trucks

61% Bulk Cargo
Handling

4%II - 7

Detailed information on the statewide emissions inv entory for cargo handling equipment is available in Appendix B.

B. Ports and Intermodal Rail Yards

California is a global gateway for the United State s by virtue of its strategic location on the Pacific Rim, its border with Mexico, and its ma jor ports and railways. Some of the largest ports in the world are located in Californi a, and with the increases in trade and general goods movement, both the ports and intermod al rail yards stand to experience major growth over the next two decades.

Currently, the State has 16 primary ports that part icipate in waterborne commerce: Antioch, Benicia, Crockett, Humboldt Bay, Hueneme, Long Beach, Los Angeles, Oakland, Pittsburg, Port Chicago, Redwood City, Ric hmond, Sacramento, San Diego, San Francisco, and Stockton. While most of the por ts fall under a port authority, the smaller ports, such as Antioch, Benicia, and Crocke tt, generally have docks or terminals controlled by the terminal owner(s) or operator(s). Additionally, other small, independent ports may exist, or other ports may be developed in the future, to which this regulation would be applicable. Figure II-3 s hows the current primary ports in California and their approximate locations.

Figure II-3: California’s Ports

Two major railroad companies, BNSF Railway (BNSF) a nd Union Pacific Railroad (UP), operate 14 intermodal rail yards in California. Ad ditionally, other smaller railroad companies may own or operate intermodal rail yards in the state and would be subject to compliance with this regulation. The intermodal rail yards generally handle container cargo to and from trains, trucks, and in the case o f the rail yards being located at theII - 8

ports, to and from ships. Figure II-4 shows the in termodal rail yards operated by BNSF and UP in California and their approximate location s.

Figure II-4: California’s Intermodal Rail Yards

C. Regulatory Status

This section provides a regulatory context for the proposed regulation by briefly discussing significant existing federal, state, and local air quality regulations and programs that apply to cargo handling equipment.

Federal and California Emission and Fuel Standards

In all states, off-road engines are required to mee t federal standards. However,

California is authorized under the federal Clean Ai r Act (CAA), Section 209(e)(2)(A), to adopt and enforce emission standards and other requ irements for off-road engines and equipment not subject to federal preemption, provid ed California’s standards are at least as health-protective as the federal standards . In order to receive this authorization, California must apply for and receiv e approval from the U.S. EPA. (EPA, 1990)

Federal nonroad (off-road) compression ignition eng ine emission standards are set forth for new engines in 40 Code of Federal Regulations ( CFR) Part 89. California has harmonized with federal emission standards, as set forth in title 13 California Code of Regulations (CCR), Article 4, sections 2420-2427, u nder “Heavy Duty Off-road Diesel Cycle Engines.” The off-road engine standards (Tie rs) vary depending upon the engine model year and maximum rated power. The U.S. EPA a dopted more stringent Tier 4II - 9

standards for the control of emissions from nonroad compression ignition engines in 2004 and ARB approved equivalent off-road standards in 2005. (ARB, 2005) Table II-2 shows the standards for Tier 1 through Tier 4.

Table II-2: Off-Road Compression-Ignition (Diesel) Engine Standards

[NMHC+NOx/CO/PM in g/bhp-hr (g/kW-hr)]

Federal and California fuel standards specifically apply to manufacturers and

distributors rather than to mobile sources or their operators. Nevertheless, these standards directly affect the fuel used in mobile s ources, including cargo handling equipment. Fuel standards for sulfur content, arom atic content, and other fuel components and parameters play a critical role in m eeting emission standards. Federal

commercial fuel standards are set forth in 40 CFR P art 80 and California fuel standards are set forth in title 13 California Code of Regula tions sections 2281 and 2282 (diesel). In July, 2003, a revision to CCR title 13, section 2281 was adopted by the ARB which allows only very low sulfur diesel (<15 ppm) in die sel fuel starting in June 2006.II - 10

(ARB, 2004) Activities involving California nonveh icular diesel fuel are also subject to this requirement as if it were vehicular fuel. U.S . EPA plans to adopt a similar sulfur restriction that would go into effect in 2006 for o n-road fuel use and in 2010 for nonroad fuel use. Fuel suppliers for California must meet both federal and California fuel

standards.

Some types of cargo handling equipment, particularl y yard trucks, have the option to use certified on-road engines. The on-road diesel engine standards are included below

in Table II-3.

Table II-3: 2004 and Subsequent On-Road Heavy-Duty Diesel Engine Standards

Model Year HC CO NMHC + NOx NOx PM

2004-2006 A - 15.5 2.4 B - 0.10

2007 and subsequent 0.14 C 15.5 - 0.2 D 0.01

A October 1, 2002, for EPA Consent Decree signers

B manufacturers can chose a 2.5 g/bhp-hr NMHC+NOx st andard with a 0.5 g/bhp-hr NMHC cap

C non-methane hydrocarbons (NMHC)

D phase-in schedule: 50 percent from 2007 to 2009, 1 00 percent in 2010

California Statutes and Local Air District Rules

In addition to harmonized state/federal off-road/no nroad diesel engine emission standards, cargo handling equipment are subject to several other air quality-related statutes and regulations in the California Health a nd Safety Code.

HSC section 41700 is an important statutory require ment that applies to any source of air pollution whatsoever (with some very narrow exc eptions), that prohibits any person from discharging such quantities of air contaminant s which cause injury, detriment, nuisance, or annoyance to any considerable number o f persons or the public, or which endanger the comfort, repose, health, or safety of any such persons or the public, or which cause or have the natural tendency to cause i njury or damage to business or property.”

HSC section 41701 also applies similarly to any sou rce whatsoever and prohibits air

contaminant emissions that obscure an observer’s vi ew to no more than Ringelmann 2 or an opacity of 40 percent.

Local air districts all have prohibitory rules that are at least as stringent as HSC sections

41700 and 41701. These two statutes and the local rules provide broad authority to air districts to enforce the statutory prohibition agai nst any source whatsoever causing a nuisance or emitting excessive smoke.II - 11

Voluntary Retrofit Programs

Federal, State, and local programs have been develo ped to encourage less-polluting diesel engines. These programs include:

• ARB’s Carl Moyer Program;

• Retrofit programs at the Ports of Long Beach, Los Angeles, and Oakland; and

• U.S. EPA's Voluntary Diesel Retrofit Program.

ARB’s Carl Moyer Memorial Air Quality Standards Att ainment Program (Moyer Program) provides funds on an incentive-basis for t he incremental cost of cleaner than required engines and equipment. Eligible projects include cleaner on-road, off-road, marine, locomotive and stationary agricultural pump engines, as well as forklifts, airport ground support equipment, auxiliary power units, tr ansport refrigeration units, and cargo handling equipment. The program achieves near-term reductions in emissions of oxides of nitrogen (NOx), which are necessary for C alifornia to meet its clean air commitments under the State Implementation Plan. I n addition, local air districts use

these NOx emission reductions to meet commitments i n their conformity plans, thus preventing the loss of federal funding for local ar eas throughout California. The program also reduces particulate matter (PM), a com ponent of diesel exhaust.

Several large ports in California have developed ai r quality improvement plans to reduce emissions from port-side diesel equipment. The Ports of Los Angeles, Long Beach, and Oakland have offered financial ince ntives to terminal operators to install emission control devices, such as diesel ox idation catalysts (DOCs) on cargo handling equipment, and to use cleaner-burning dies el fuels, such as ultra-low sulfur diesel and emulsified diesel fuel. Yard trucks, wh ich are the largest emission source for this category of off-road equipment, have the abili ty of using certified on-road engines,

which can reduce diesel PM emissions as much as 30 percent and NOx emissions as much as 70 percent. Some of the ports’ incentive p rograms have helped to encourage terminal operators to purchase yard trucks equipped with on-road engines instead of those with off-road engines when adding to their fl eets. As a result of these voluntary programs, more than 1,200 cargo handling equipment vehicles, primarily yard trucks, have been retrofitted with DOCs or replaced with ne w, cleaner engines in the last three

years.

Although U.S. EPA plans to significantly reduce pol lution from new diesel engines through several steps of new diesel engine emission standards, the effects of these rules will take many years to implement due to the long lives of diesel engines. U.S. EPA has developed the Voluntary Diesel Retrofi t Program to help make a difference in the immediate future. The program ad dresses pollution from diesel construction equipment and heavy-duty vehicles that are currently on the road today. The Program is building a market for clean diesel e ngines by working with state, local and industry partners to create demonstration proje cts around the country. The Web site at http://www.epa.gov/otaq/retrofit is designe d to help fleet operators, air qualityII - 12

planners in State/local government, and retrofit ma nufacturers understand this program, and to obtain the information they need to create e ffective retrofit projects.

More recently, on August 8, 2005, President Bush si gned the Energy Policy Act of 2005. Subtitle G, Diesel Emissions Reduction, authorizes $200 million each year for fiscal years 2007 through 2011 to provide grants and low-c ost revolving loans to achieve

reductions in diesel emissions. These monies canno t be used to fund emission reduction measures mandated under Federal, State or local law. It is unknown at this time when the monies will be appropriated and how m uch funding will be made available to California. While the proposed regula tion for cargo handling equipment is clearly a State mandate, the ARB would support the use of these monies by cargo handling equipment operators provided the funds are used to comply early or to achieve greater emissions benefits similar to the manner in which Carl Moyer funds can be used (see Executive Summary item # 10).II - 13

REFERENCES:

(ARB, 2005) California Air Resources Board. Rulemaking on the Proposed Amendments to the California Off-Road Emissions Reg ulation for Compression-Ignition Engines and Equipment (December 9, 2004) ; September 29, 2005.

(ARB, 2004) California Air Resources Board. Amendments to the California Diesel Fuel Regulations ; May 2004.

(EPA, 1990) United States Environmental Protection Agency. Federal Clean Air Act, Title II, Part A, Sec. 209(e) ; 1990.

(POLB, 2004) Port of Long Beach. 2002 Baseline Emissions Inventory ; March 2004.

(POLA, 2004) Port of Los Angeles. Baseline Air Emissions Inventory – 2001 ; July 2004.III - 1

III. EMISSIONS, POTENTIAL EXPOSURES, AND RISK

This chapter presents the most recent emissions inv entory for diesel-fueled cargo handling equipment engines operating at ports and i ntermodal rail yards in California as well as a discussion on the potential cancer and no n-cancer health risks that may occur due to exposures to emissions from cargo handling e quipment.

A. Estimated Emissions from Cargo Handling Equipmen t

To develop an emissions estimate of the emissions f rom diesel-fueled cargo handling equipment engines operating at ports and intermodal rail yards, the ARB staff developed a methodology that integrated information from the following sources:

• an ARB survey conducted in 2004 of cargo handling equipment owner/operators at California’s ports and intermodal rail yards;

• emission inventories developed for the ports of Lo s Angeles and Long Beach for 2001 and 2002, respectively; and

• the ARB’s OFFROAD model.

Baseline emission estimates of diesel PM and NOx fo r the year 2004 were developed and emission projections to 2010 and 2020 were also developed using estimates of expected growth, equipment turnover, and equipment age distribution. Details of the methodology are found in Appendix B. Based on the information available to date, we believe the methodology has resulted in a reasonabl e estimate of the emissions from cargo handling equipment. However, there are conti nuing efforts by the ARB and the major California ports to update and improve the ca rgo handling equipment inventories.

As new information becomes available from these eff orts, the cargo handling equipment emission inventory will be updated.

Current 2004 Emission Estimates for Diesel-fueled Cargo Handling Equipment

The ARB staff estimate that diesel-fueled cargo han dling equipment engines operating at ports and intermodal rail yards result in approx imately 0.65 tons per day or 237 tons per year of diesel PM emissions statewide. In addi tion, based on a range of statewide NOx to PM conversion factors of 0.3 – 0.5 g NH 4 NO 3 /g NOx, ARB staff estimate a secondary formation of PM 10 nitrate from NOx emissions from diesel-fueled carg o handling equipment engines ranges from approximatel y 5.7 to 9.5 tons per day. 3

Estimates of statewide 2004 diesel PM and NOx from cargo handling equipment are presented in Table III-1.

3 The conversion factor for the transformation of NO x to NH 4 NO 3 was based on an analysis of annual-average conversion factors for secondary for mation of PM 10 nitrate from NOx emissions at a

number of urban sites in California. A more detail ed description of the methodology used to evaluate the

conversion of NOx to NH 4 NO 3 is found in Appendix I.III - 2

Table III-1: Estimated Statewide 2004 Cargo Handli ng Equipment Emissions

2004 Pollutant Emissions (tons per day)

Equipment Types Numbers of Equipment NOx PM

Cranes 321 1.93 0.07

Excavators 28 0.24 0.01

Forklifts 464 0.54 0.03
Container Handling Equipment 487 3.25 0.11
Other Equipment 40 0.08 0.00
Sweepers/Scrubbers 28 0.04 0.00

Tractors/Loaders/Backhoes 93 0.18 0.01

Yard Trucks 2277 12.78 0.42

Totals 3738 19.04 0.65

As shown in Table III-1, there are over 3,700 piece s of cargo handling equipment operating at ports and intermodal rail yards in Cal ifornia. Of these, the majority, or 61 percent, are yard trucks. As shown in Figure II I-1, yard trucks represent approximately 66 percent of the diesel PM emissions and 67 percent of the NOx emissions for cargo handling equipment.

Figure III-1: 2004 NOx and Diesel PM Emission Distr ibutions at California Ports

and Intermodal Rail Yards

NOx Diesel PM

67% 10% 17% 3% 3%

Yard Trucks Cranes

Container Handling Equipment Forklifts

All Other Equipment 66% 11% 16% 4% 3%III - 3

The ARB staff also estimated district-specific emis sions associated with cargo handling equipment. The allocation of these estimates is ba sed on the location of the port or intermodal rail yard. Table III-2 presents a distr ict-by-district estimate of emissions from cargo handling equipment.

Table III- 2: Estimated 2004 Cargo Handling Equipme nt Emissions by District (tpd) 4

District NOx Diesel PM

Bay Area 3.34 0.11

Mojave 0.08 <0.01

North Coast 0.06 <0.01

San Diego 0.75 0.03

San Joaquin 0.55 0.01

South Coast 13.38 0.45

Ventura 0.66 0.02

Yolo-Solano 0.08 <0.01

Note: The following districts did not have emissio ns allocated to them; Amador, Antelope Valley, Butte, Calaveras, Colusa, El Dorado, Feather River, Glenn, Great Basin Unified, Imperial, Kern, Lake, Lassen, Mariposa, Mendocino, Modoc, Monterey Bay, Unified, Northern Sierra, Northern Sonoma, Placer, Sacramento, San Luis Obispo, Santa Barbara, Shasta, Siskiyou, Tehama, and

Tuolumne

. The numbers may not match the statewide totals in T able III-1 due to rounding.

Projected 2010 and 2020 Emission Estimates for Carg o Handling Equipment

The projected emission estimates for the years 2010 and 2020 are presented in Table III-3. Based on information provided in the ARB Survey, annual growth rates for cargo handling equipment were determined. Addition al details on the methodology and the growth rates for each equipment type are provid ed in Appendix B

.

4 The total emissions may vary slightly from the val ues shown in Table III-1 due to rounding.III - 4

Table III-3: Cargo Handling Equipment Engines Proje cted Year 2010 and 2020

Emission Estimates

2010 Emission, Tons per Day 2020 Emission, Tons per Day Equipment Types Numbers of

Equipment NOx Diesel PM Numbers of Equipment NOx Diesel PM

Cranes 470 1.83 0.06 602 1.33 0.03

Excavators 29 0.18 0.01 32 0.05 <0.01

Forklifts 530 0.39 0.02 607 0.17 0.01

Container Handling Equipment 738 3.43 0.12 1111 1.70 0.05

Other

General

Industrial Equipment 60 0.08 <0.01 93 0.04 <0.01

Sweepers/

Scrubbers 43 0.04 <0.01 64 0.02 <0.01

Tractors/

Loaders/

Backhoes 132 0.17 0.01 200 0.08 <0.01

Yard Trucks 2810 10.20 0.31 3790 3.02 0.09

Total 4811 16.34 0.53 6500 6.41 0.18

These estimates include benefits from new engine st andards and benefits from pre-2005 voluntary efforts undertaken at California ’s ports and intermodal rail yards to reduce emissions from cargo handling equipment, but do not include the projected reductions expected from implementation of the prop osed regulation. As can be seen from Table III-3 and Figure III-2, emissions are ex pected to decline significantly over the next 15 years, despite an increase in the number of equipment and operating hours at the ports and intermodal rail yards. The reduction s of diesel PM can be attributed to fleet turnover to newer, cleaner engines and the vo luntary emission reduction programs implemented prior to 2005 are demonstrated in Figur e III-2.III - 5

Figure III-2: Baseline vs. Voluntary Programs Dies el PM Cargo Handling

Equipment Emissions (tons per year)

Based on the emission projections, the ARB staff es timates that the voluntary efforts undertaken by ports and intermodal rail yards to im plement emission control strategies, such as diesel oxidation catalysts, result in a red uction of approximately 13 percent in

diesel PM emissions between 2004 and 2020.

Because the majority of the voluntary efforts invol ved the installation of diesel oxidation catalysts, the ARB staff estimates there are minima l reductions in NOx attributable to the voluntary installation of exhaust aftertreatmen t control devices on cargo handling equipment. While a small percentage of cargo handl ing equipment engines are using emulsified fuels, which result in some NOx reductio ns (up to 20 percent), the ARB staff is unable to quantify the benefits at this time.

Expected emission reductions and the impact on the cargo handling equipment emission estimates are discussed in Chapter VI, Env ironmental Impacts.

B. Potential Exposures and Risk from Diesel PM Emis sions from Cargo Handling Equipment Engines

This section examines the exposures and potential c ancer health risks associated with particulate matter (PM) emissions from diesel-fuele d cargo handling equipment at ports and intermodal rail yards. A brief qualitative dis cussion is provided on the potential exposures of Californians to the diesel PM emission s from cargo handling equipment. In addition, a summary is presented of a health ris k assessment conducted to determine the 70-year potential cancer risk associated with e xposures to diesel PM emissions from cargo handling equipment operated at the Ports of Los Angeles and Long Beach. ARB staff believes that the results from this analy sis provide quantitative results for exposures around the Ports of Los Angeles and Long Beach and are generally

0 50 100 150 200 250 30020042007201020152020

YearTPY PM Baseline

PM No VoluntaryIII - 6

applicable to other ports and intermodal rail yards in California, providing a qualitative

estimate for those areas.

Exposures to Diesel PM

As discussed previously, cargo handling equipment i s used at ports and intermodal rail yards throughout California. The diesel PM emissio ns from cargo handling equipment

contribute to ambient levels of diesel PM emissions . Based on the most recent emissions inventory, there are about 3,700 pieces o f diesel-fueled cargo handling equipment operating at ports and intermodal rail ya rds in California. The majority of ports and intermodal rail yards are in urban areas and, in most cases, are located near where people live, work, and go to school. This r esults in substantial exposures to diesel PM emissions from the operation of diesel-fu eled cargo handling equipment.

Because analytical tools to distinguish between amb ient diesel PM emissions from cargo handling equipment and that from other source s of diesel PM do not exist, we cannot measure the actual exposures to emissions fr om diesel-fueled cargo handling equipment. However, modeling tools can be used to estimate potential exposures. To investigate the potential risks from exposures to t he emissions from cargo handling equipment, ARB staff used dispersion modeling to es timate the ambient concentration of diesel PM emissions that result from the operati on of cargo handling equipment at the Ports of Los Angeles and Long Beach. The potential cancer risks from exposures to

these estimated ambient concentrations of diesel PM were then determined. The results from this study are presented below, and ad ditional details on the methodology used to estimate the health risks are presented in Appendix C.

Health Risk Assessment

Risk assessment is a complex process that requires the analysis of many variables to

simulate real-world situations. There are three ke y types of variables that can impact the results of a health risk assessment for cargo h andling equipment: the magnitude of diesel PM emissions, local meteorological condition s, and the length of time of exposure. Diesel PM emissions are a function of th e age and horsepower of the engine, the emissions rate of the engine, and the a nnual hours of operation. Older engines tend to have higher pollutant emission rate s than newer engines, and the longer an engine operates, the greater the total po llutant emissions. Meteorological conditions can have a large impact on the resultant ambient concentration of diesel PM, with higher concentrations found along the predomin ant wind direction and under calm wind conditions. How close a person is to the emis sions plume and how long he or she breathes the emissions (exposure duration) are key factors in determining potential risk, with longer exposures times typically resulting in higher risk.

To estimate potential cancer risks from cargo handl ing equipment, ARB staff conducted a risk assessment for cargo handling equipment oper ated at the Ports of Los Angeles and Long Beach. We evaluated the impacts from the 2002 estimated emissions for cargo handling equipment operated at the two ports. Meteorological data fromIII - 7

Wilmington was used for this study. The Wilmington site is about one mile away from the ports, and the measurements were collected in 2 001. The U.S. EPA’s ISCST3 air dispersion model was used to estimate the annual av erage offsite concentration of diesel PM in the area surrounding the two ports. T he modeling domain (study area) spans a 20 x 20 mile area, which includes both the ports, the ocean surrounding the ports, and nearby residential areas in which about 2 million people live. The land-based portion of the modeling domain, excluding the prope rty of the ports, comprises about 65 percent of the modeling domain. A Cartesian gri d receptor network (160 x 160 grids)

with 200 x 200 meter resolution was used in this st udy. While grids within the ports were included in the network, the risks within thes e grids were excluded from the final risk analyses. The elevation of each receptor with in the modeling domain was determined from the United States Geological Servic e topographic data.

The potential cancer risks were estimated using sta ndard risk assessment procedures based on the annual average concentration of diesel PM predicted by the model and a health risk factor (referred to as a cancer potency factor) that correlates cancer risk to the amount of diesel PM inhaled. The methodology u sed to estimate the potential cancer risks is consistent with the Tier-1 analysis presented in the Office of Environmental Health Hazard Assessment (OEHHA) Air Toxics Hot Spots Program Risk Assessment Guidelines. (OEHHA, 2002) (OEHHA, 2003) Following the OEHHA guidelines, we assumed that the most impacted indiv idual would be exposed to modeled diesel PM concentrations for 70 years. Thi s exposure duration represents an “upper-bound” of the possible exposure duration. T he potential cancer risk was estimated by multiplying the inhalation dose by the cancer potency factor (CPF) of diesel PM (1.1 (mg/kg-d) -1 ).

Cancer Risk Characterization

Emissions from cargo handling equipment resulted in significant risk impacts on the nearby residential areas. Figure III-3 shows the r isk isopleths for diesel PM emissions from cargo handling equipment at the Ports of Los A ngeles and Long Beach superimposed on a map that covers the ports and the nearby communities. As shown in Figure III-3, the area in which the risks are pr edicted to exceed 100 in a million has been estimated to be about 4,100 acres with a popul ation of 82,000. For the highest risk level of over 500 in a million, the impacted a reas have been estimated to be about 50 acres and about 3,200 people living around the p orts who are exposed to the risk level. Overall, about 73 percent of the effective modeling domain (excluding the port property and the surrounding ocean area) has an est imated risk level of over 10 in a

million.

Using the U.S. Census Bureau’s year 2000 census dat a, we estimated the population within the isopleth boundaries. The area impacted and the population affected for the risk ranges of 10-100, 100-200, 200-500, and over 5 00 are shown in Table III-4. As shown in the table, nearly three quarters of 2 mill ion people live in the area around the ports that has predicted risks of greater than 10 i n a million due to emissions from cargo handling equipment. Note that the size of the mode ling domain was limited by theIII - 8

technical capabilities of the model. However, it i s clear that a significant number of people outside the modeling domain are exposed to r isks greater than 10 in a million.

Table III-4: Summary of Area Impacted and Populatio n Affected by Risk Levels

from Cargo Handling Equipment

Risk Level Acres Impacted Population Affected
Risk > 500 50 3,200
Risk > 200 410 11,100
Risk > 100 4,100 82,000
Risk > 10 119,000 1,444,000

Note: The effective modeling domain is about 255 s quare miles or 163,435 acres, and the total population within the domain is about 2 million. T he area with predicted risks greater than 10 in a m illion extends beyond the modeling domain. As such, the a ctual acres impacted and population exposed to levels greater than 10 in a million are larger than those presented in Table III-4.III - 9

Figure III-3: Estimated Diesel PM Cancer Risk from Cargo Handling Equipment

Activity at the POLA and POLB (W ilmington Met Data, Urban Dispersion Coefficients, 80 th Percentile Breathing Rate, Emission = 172 TPY, Mode ling Domain = 20 mi x 20 mi, Resolution = 200 m x 200 m)

C. Non-Cancer PM Health Effects

A substantial number of epidemiologic studies have found a strong association between exposure to ambient particulate matter and adverse health effects. (CARB, 2002) As part of this study, ARB staff conducted an analysis of the potential non-cancer health impacts associated with exposures to the model-pred icted ambient levels of directly emitted diesel PM (primary diesel PM) discussed abo ve and extrapolated them to the

rest of the state. The non-cancer health effects e valuated include premature death, asthma attacks, work loss days, and minor restricte d activity days.

380000 385000 390000 395000 400000 405000

Easting (m) 3725000 3730000 3735000 3740000 3745000 3750000Northing(m)

0 1 2

milesIII - 10

Based on our analysis, we estimate that the average number of cases statewide in 2004 that would be expected due to emissions from cargo handling equipment are as follows:

• 9 premature deaths (for ages 30 and older), 4 to 1 3 deaths as 95% confidence interval (CI);

• 219 asthma attacks, 53 to 383 as 95% CI;

• 1,907 days of work loss (for ages 18-65), 1,614 to 2,200 as 95% CI; and

• 10,127 minor restricted activity days (for ages 18 -65), 8,254 to 12,000 as

95% CI.

As stated previously, to estimate these statewide p otential non-cancer health impacts from cargo handling equipment emissions, ARB staff estimated the non-cancer health impacts from cargo handling equipment in the area s urrounding the ports of Los Angles and Long Beach and extrapolated these results to pr edict statewide values based on

the ratio of the mass emissions at the POLB and POL A to those in the rest of the State. A brief discussion on the methodology used to gener ate these estimates is provided below. Additional information on the data inputs f or the non-cancer health impacts analysis are provided in Appendix J.

Non-Cancer Health Effects Methodology

ARB staff assessed the potential non-cancer health impacts associated with exposures to the model-predicted ambient levels of directly e mitted diesel PM (primary diesel PM) within each 200 meter by 200 meter grid cell within the modeling domain used for the POLA-POLB exposure assessment study. Because the s tudy used the 2002 emissions estimates for cargo handling equipment at the ports , the ambient concentrations were adjusted to reflect the updated 2004 emissions inve ntory developed by ARB staff. The populations within each grid cell were determined f rom U.S. Census Bureau year 2000 census data. Using the methodology peer-reviewed a nd published in the Staff Report: Public Hearing to Consider Amendments to the Ambien t Air Quality Standards for Particulate Matter and Sulfates, (PM Staff Report) (CARB, 2002), we calculated the

number of annual cases of death and other health ef fects associated with exposure to

the ambient PM concentrations modeled for each of t he grid cells. For each grid cell,

each health effect was estimated based on concentra tion-response functions derived from published epidemiological studies relating cha nges in ambient concentrations to changes in health endpoints, the population affecte d, and the baseline incidence rates. The total affected population was obtained by summi ng the results from each grid cell.

The selection of the concentration-response functio ns was based on the latest epidemiologic literature, as described in the PM St aff Report (CARB, 2002) and in Lloyd and Cackette (Lloyd, Cackette 2001). Staff estimat ed that the ports of Los Angeles and Long Beach account for approximately 70 percent of total statewide emissions related to cargo handling equipment activities. Hence, the statewide impact of the cargo handling emissions was estimated by dividing the es timated impacts in the modeling domain around the ports of Los Angeles and Long Bea ch by 0.70.III - 11

Several assumptions were used in quantifying the he alth effects of PM exposure. They include the selection and applicability of the conc entration-response functions, exposure estimation, subpopulation estimation, baseline inci dence rates, and the extrapolation from results in the modeling domain to the statewid e results. These are briefly

described below.

• Premature death calculations were based on the con centration-response function of Krewski et al. (Krewski et at, 2000) The ARB sta ff assumed that concentrationresponse function for premature mortality in the mo del domain is comparable to that in the Krewski study. It is known that the co mposition of PM can vary by region, and not all constituents of PM have the sam e health effects. However, numerous studies have shown that the mortality effe cts of PM in California are comparable to those found in other locations in the United States, justifying our use of Krewski et al’s results. Also, the U.S. EPA has been using Krewski’s study for its regulatory impact analyses since 2000 . For other health endpoints, the selection of the concentration-response functio ns was based on the most

recent and relevant scientific literature. Details are ARB’s PM Staff Report (CARB, 2002).

• The ARB staff assumed the model-predicted exposure estimates could be applied to the entire population within each modeli ng grid. That is, the entire population within each modeling grid of 200 meter x 200 meter was assumed to be exposed uniformly to modeled concentration. Thi s assumption is typical of this type of estimation.

• The ARB staff assumed the grid cell population had similar age distributions as the county in which it was located. The subpopulat ion used for each health endpoint was calculated by multiplying the all-age population for each grid cell by the county-specific ratio of the subpopulation used for the endpoint over the allage population. For example, mortality estimates w ere based on subpopulations age 30 or more estimated from ratios of people over 30 over the entire population, specific for each county. For Los Ange les County, this value was 54 percent. These estimates were needed because in formation on the particular subpopulation in each modeling grid was not availab le.

• The ARB staff assumed the baseline incidence rates were uniform across each modeling grid, and, in many cases, across each coun ty. This assumption is consistent with methods used by the U.S. EPA for it s regulatory impact

assessment. The incidence rates match those used b y U.S. EPA.

• Because only impacts from directly emitted diesel PM are estimated and a subset of health outcomes is considered here, the e stimates should be considered an underestimate of the total public hea lth impact. In addition, the model domain for the study was 20 miles by 20 miles and did not capture all of impacts on the surrounding communities from the POL A and POLB emissions.III - 12

• Without readily available modeled concentrations a t other ports in California, staff extrapolated the results based on the modeling doma in around ports of Los Angeles and Long Beach to infer statewide effec ts. In doing so, it was assumed that the population density and the change in concentrations due to the regulation would be similar to those in the ports o f Los Angeles and Long Beach.III - 13

REFERENCES:

(OEHHA, 2002) Office of Environmental Health Hazard Assessment. The Air Toxics Hot Spot Program Risk Assessment Guidelines: Part I I-Technical Support Document for Describing Available Cancer Potency Factors ; 2002.

(OEHHA, 2003) Office of Environmental Health Hazard Assessment. Air Toxics Hot Spots Program Risk Assessment Guidelines: The Air T oxics Hot Spots Program Guidance Manual for Preparation of Health Risk Asse ssments ; 2003.

(CARB, 2002) California Air Resources Board and Off ice of Environmental Health

Hazard Assessment. Staff Report: Public Hearing to Consider Amendment s to the Ambient Air Quality Standards for Particulate Matte r and Sulfates , available at http://www.arb.ca.gov/research/aaqs/std-rs/pm-final /pm-final.htm ; 2002.

(Krewski et al. 2000) Krewski D.; Burnett R.; Goldb erg M.; Hoover K.; Stemiatychi J.; Jerrett M.; Abrahamovicz M.; White W. Reanalysi s of the Harvard Six Cities Study and the American Cancer Society Study of Part iculate Air Pollution and Mortality, Health Effects Institute, Cambridge, Mas sachusetts; 2000. http://es.epa.gov/ncer/science/pm/hei/Rean-ExecSumm .pdf

(Lloyd and Cackette. 2001) Lloyd, A.C.; Cackette, T .A.; Diesel Engines: Environmental Impact and Control; J Air Waste Manag e. Assoc. 2001, 51: 809-

847. http://www.arb.ca.gov/research/seminars/lloyd/AWMA2 001/JAWMADieselCritical Review.pdfIV - 1

IV. THE PROPOSED REGULATION AND ALTERNATIVES

In this chapter, we discuss the key requirements of the proposed regulation for mobile cargo handling equipment at ports and intermodal ra il yards. This chapter begins with a general summary of the regulation, and each major r equirement of the regulation is discussed and explained. This chapter is intended to satisfy the requirements of Government Code section 11343.2, which requires tha t a noncontrolling “plain English” summary of the regulation be made available to the public. Unless otherwise noted herein, all references to mobile cargo handling equ ipment include mobile cargo handling equipment at ports and intermodal rail yards, as de fined in the regulation.

A. Summary of the Proposed Regulation

The proposed regulation for Mobile Cargo Handling E quipment at Ports and Intermodal Rail Yards is included in Appendix A. The regulati on is designed to use the best available control technology (BACT) to reduce the g eneral public’s exposure to diesel particulate matter (PM) and oxides of nitrogen (NOx ) emissions from mobile cargo handling equipment. In addition, the regulation wo uld include recordkeeping and reporting requirements to provide staff up-to-date information on cargo handling equipment and activities.

The requirements for newly purchased, leased, or re nted equipment, as well as in-use equipment would affect owners and operators of mobi le cargo handling equipment that operate at ports and intermodal rail yards in Calif ornia. The requirements would also affect any person who sells, offers for sale, purch ases, leases, or rents mobile cargo handling equipment for use at a port or intermodal rail yard in California. This would include shipping terminals at ports and intermodal rail yard terminals. Mobile cargo handling equipment that does not operate at a port or intermodal rail yard, portable compression-ignition engines, and cargo handling eq uipment used to transport personnel and deliver fuel would not be covered by the rule.

The proposed regulation would require, as of Januar y 1, 2007, newly purchased, leased, or rented (new) equipment to meet performan ce standards, which vary depending on the classification of the new equipmen t (either off-road cargo handling equipment or a registered on-road cargo handling eq uipment vehicle), and the availability of certified on-road engines for the e quipment type and application. For registered on-road vehicles, the new equipment must meet the certified on-road engine standards for the model year in which the engine is newly purchased, leased, or rented. New yard trucks that are not registered motor vehic les must meet either the current model year certified on-road engine standards or th e certified off-road final Tier 4 standards for the rated horsepower. New non-yard t ruck equipment that are not registered motor vehicles must meet either the curr ent model year certified on-road engine standards or the certified off-road Tier 4 s tandards for the rated horsepower and model year in which the equipment and engines were newly purchased, leased, or rented. However, if that is not available for the specific non-yard truck equipment type and application, the highest level certified off-ro ad engine for the model year of the yearIV - 2

purchased, leased, or rented and installation of th e highest available level verified diesel emission control strategy (VDECS) within one year i s required. If no VDECS is available during the initial year of operation, ins tallation would be required within six

months after VDECS becomes available.

The proposed regulation would require in-use yard t rucks to meet performance standards based on BACT by choosing one of three op tions. One option is to meet the 2007 or later model year certified on-road engine s tandards, another option is to meet the certified final Tier 4 off-road standards, and the last option is to apply VDECS that would result in emissions less than or equal to the diesel particulate matter (PM) and oxides of nitrogen (NOx) emission standards of a ce rtified final Tier 4 off-road engine. Compliance dates are soonest for pre-2003 model yea r yard trucks, and owners of more than three yard trucks are given additional ti me to comply. The proposal also provides more time for owners or operators who have installed VDECS prior to December 31, 2006, and for those currently using ce rtified on-road engines, by delaying the compliance date one year.

The proposed regulation would require in-use non-ya rd truck equipment to use BACT to meet a selection of performance standards based on the category of equipment. Three categories exist:

• Basic Container Handling (including, but not limit ed to top handlers, side handlers, and forklifts 5 );

• Bulk Cargo Handling (including, but not limited to dozers, loaders, excavators, aerial lifts, and sweepers); and

• Rubber-Tired Gantry (RTG) Cranes.

Each category has three compliance options, based o n BACT. One option is to use an engine or power system, including a diesel, alterna tive fuel, or heavy-duty pilot ignition engine, certified to the 2007 or current model year on-road engine standards or Tier 4 off-road engine standards. Another option is to us e a pre-2007 model year certified onroad engine or a certified Tier 2 or Tier 3 off-roa d engine and apply the highest level VDECS available. The last option is to use a pre-T ier 1 off-road engine or a certified Tier 1 off-road engine and install the highest leve l VDECS available. If either of the two options requiring VDECS is chosen, an additional co mpliance step may be necessary, depending on the category of equipment and the leve l of VDECS used. For Basic Container Handling and Bulk Cargo Handling Equipmen t, the additional compliance requirement is to replace the engine with a Tier 4 off-road engine or install a Level 3 VDECS by December 31, 2015. For RTG cranes, the ad ditional compliance requirement is the same, but the compliance date is either December 31, 2015, or model year plus 12 years, whichever is later. More detail is provided in the discussion of the requirements.

5 While forklifts are used to handle both containeri zed and bulk cargo, for the purposes of this regula tion, they are considered to be part of the Basic Contain er Handling equipment category.IV - 3

The proposal includes provisions that allow qualifi ed owners or operators to delay compliance with the in-use performance standards if an engine is within one year of retirement, if no VDECS are available, if an experi mental diesel PM emission control strategy is used, if there are equipment manufactur er delivery delays, or for yard trucks that received incentive funding from public agencie s to apply VDECS by the end of 2005 with minimum use requirements. The maximum de lay depends on the compliance extension granted.

The proposal also includes an alternative complianc e plan (ACP) option for owners and operators of non-yard truck cargo handling equipmen t that would allow them to demonstrate that equivalent emission reductions can be achieved through the use of alternative strategies.

Recordkeeping and reporting requirements are also d efined in the proposed regulation. Owners and operators would be required to maintain records for all mobile cargo handling equipment, affix a label to each vehicle ( or use an alternative method approved by the Executive Officer) with the complia nce strategy used or planned compliance date, submit a compliance plan and annua l statement of compliance for their mobile cargo handling equipment, and perform annual reporting by submitting to

the ARB their contact information and location of t heir equipment. These requirements would allow staff to monitor the implementation of the regulation and provide more accurate estimates of pollutant reductions.

B. Discussion of the Proposed Regulation

Purpose

As specified in subsection (a) of the proposed regu lation, the purpose of the regulation is to reduce diesel PM and criteria pollutant emiss ions from CI mobile cargo handling equipment that operate at ports and intermodal rail yards in California.

Applicability

As specified in subsection (b) of the proposed regu lation, the regulation would apply to anyone who sells, offers for sale, leases, rents, p urchases, owns, or operates any CI mobile cargo handling equipment that operates at a port or intermodal rail yard in California. This would include shipping terminal o wners or operators and rail terminal owners or operators who either operate their own eq uipment or contract stevedoring or cargo handling services with a company that supplie s its own cargo handling equipment. In addition, the regulation would apply to contracted companies that supply their equipment to terminal owners or operators.

Exemptions

Clarifications on applicability are included here i n the discussion regarding exemptions. The regulation would not apply to mobile cargo hand ling equipment that is not operatedIV - 4

at a port or intermodal rail yard in California. A port is defined in the regulation as a facility used for water-borne commerce. While ther e are many publicly owned or operated ports in California, there are also severa l that are owned and operated by private parties. A port can simply mean a terminal that has a dock or other means of accepting water-borne cargo or loading cargo onto a vessel that will travel via waterway. An intermodal rail yard is defined as a facility wh ere cargo is transferred to or from a train and any other form of conveyance, such as tra in to ship, ship to train, train to truck, or truck to train. ARB staff are in the process of developing a general off-road engine regulation proposal that will apply to cargo handli ng equipment that operate at facilities other than ports and intermodal rail yards, such as distribution centers and warehouses.

Cargo handling equipment or vehicles that do no han dle cargo at any time but are operated at a port or intermodal rail yard for purp oses of transporting personnel or delivering fuel are exempt from meeting the perform ance requirements of the regulation. However, owners or operators of this equipment are still required to report the equipment to the Air Resources Board. Examples of equipment to which this exemption might apply may include fuel delivery trucks operat ing solely on the terminal to deliver fuel to terminal equipment and vans and buses used to transport personnel.

The requirements of the regulation also do not appl y to portable CI engines. Portable engines are defined as engines that are designed an d capable of being carried or

moved from one location to another. Mobile cranes and sweepers may have auxiliary engines that would be considered portable CI engine s.

Definitions

The proposed regulation provides definitions of all terms that are not self-explanatory. There are 56 definitions to help clarify and enforc e the regulation requirements. Most of the definitions listed in subsection (d) of the pro posed regulation were developed by staff, with input from the public during workshops and workgroup meetings. Staff working on this regulation also coordinated with st aff working on other diesel PM regulations to provide consistency where it was pra ctical. Please refer to Appendix A, subsection (d) for a list of definitions.

Requirements

As specified in subsection (e), the proposed regula tion would require newly purchased, leased, or rented mobile cargo handling equipment t o meet performance standards. Inuse equipment would also be required to meet perfor mance standards, which vary by equipment type. The requirements are briefly discu ssed below.

1. Newly Purchased, Leased, or Rented Equipment

As of January 1, 2007, newly purchased, leased, or rented (new) equipment that has been registered as an on-road vehicle with the Depa rtment of Motor Vehicles (DMV) would be required to meet the certified on-road emi ssion standards, which are specifiedIV - 5

in title 13, California Code of Regulations (CCR), section 1956.8, for the year purchased, leased, or rented. New yard trucks that are not registered motor vehicles must meet either the 2007 or current model year cer tified on-road engine standards or

the certified off-road final Tier 4 standards for t he rated horsepower. New non-yard truck equipment that are not registered motor vehic les must meet either the 2007 or current model year certified on-road engine standar ds or the certified off-road Tier 4 standards for the rated horsepower and model year o f the year purchased, leased, or rented. However, if that is not available for the specific non-yard truck equipment type and application, the highest level certified off-ro ad engine for the rated horsepower and model year of the year purchased, leased, or rented , and installation of the highest available level VDECS within one year is required. If no VDECS is available during the initial year of operation, installation would be re quired within six months after VDECS

becomes available.

2. In-Use Yard Trucks

The proposed regulation would require owners or ope rators of in-use yard trucks to meet one of three performance standards, which are considered to be BACT for this type of mobile cargo handling equipment: 1) use an engine certified to the 2007 or later on-road emission standards for the model year purch ased; 2) use an engine certified to

the final Tier 4 off-road emission standards for th e rated horsepower; or 3) install

VDECS that would result in diesel PM and NOx emissi ons that are equivalent to or

lower than the certified final Tier 4 off-road emis sion standards for an engine with same horsepower rating.

The performance standards are based on the 2007 cer tified on-road engines, with which the Tier 4 certified off-road engines eventua lly harmonize by 2015. Staff considered engine model year and diesel PM and NOx emission rates, with and without VDECS, when determining the performance standards a nd compliance dates for in-use yard trucks 6 . Figure IV-1 shows the diesel PM emission rate di fferences between the model years and configurations.

6 Pre-2003 model year off-road yard trucks are consi dered to be either uncontrolled or Tier 1 engines,

which means their diesel PM emission rates are 0.40 g/bhp-hr or greater. With a Level 1 VDECS (25 percent PM reduction) or Level 2 VDECS (50 perc ent PM reduction), their emission rates are at leas t 0.30 g/bhp-hr and 0.20 g/bhp-hr, respectively. In comparison, 2003-2006 model year off-road yard truc ks (Tier 2 or Tier 3) have a diesel PM emission rate o f 0.15 g/bhp-hr. With a Level 1 or Level 2 VDECS, the rates drop to 0.11 g/bhp-hr and 0.075 g/bhp-hr, res pectively, which is equivalent to a pre-2007 certif ied on-road yard truck with a Level 1 VDECS. In compar ison, a 2007 model year certified on-road yard truc k emits only 0.01 g/bhp-hr PM.IV - 6

0 0.05 0.1 0.15 0.2 0.25 0.3 0.35 0.41996-2002 Off-roadw/Level 1 VDECSw/Level 2 VDECSw/Level 3 VDECS2003-2006 Off-roadw/Level 1 VDECSw/Level 2 VDECSw/Level 3 VDECS2004-2006 On-roadw/Level 1 VDECSw/Level 2 VDECSw/Level 3 VDECS2007-2010 On-roadDiesel PM (g/bhp-hr) Figure IV-1: Diesel PM Emission Rates for Yard Tru cks with Off-Road and OnRoad Engines with and without VDECS

Note: The diesel PM emission standard for Tier 4 of f-road engines is equivalent to the 2007 and later on-road engines. Tier 4 for yard truck engines beg ins in 2011.

In addition to large reductions in diesel PM emissi ons, the 2007 and 2010 on-road engines also have a large NOx benefit. NOx emissio n rates go from 6.9 g/bhp-hr for 1996 through 2002 model year off-road engines to 0. 2 g/bhp-hr for 2010 model year on-road engines. Figure IV-2 shows the emission ra tes for the off-road and on-road engines for each model year group.IV - 7

Figure IV-2: NOx Emission Rates for Yard Trucks wit h Off-Road and On-Road

Engines

Notes: 1. The NOx standard for 2003 through 2005 model yea r off-road yard trucks is 4.6 g/bhp-hr. The NOx standard changes for 175-299 hp off-road engines in 2006 (Tier 3) to 2.7 g/bhp-hr. 2. The NOx standard shown for the 2007 on-road engi nes is a weighted average, since 50 percent of these engines must meet 0.2 g/bhp-hr NOx in 2007. 3. The NOx standard for early (interim) Tier 4 off- road yard truck engines is between 1.5 and 2.5 g/bhp-hr; the final Tier 4 NOx standard for yar d trucks, which begins in 2014, is 0.30 g/bhp-hr.

The compliance dates for in-use yard trucks vary ba sed on the engine certification (offroad or on-road), the model years, whether or not V DECS have been installed, and whether the owners or operators have more than thre e yard trucks in their fleets. Fleets of four or more yard trucks would have a phased-in compliance schedule, which would allow them to spread out the compliance over a peri od of one to three years. Yard trucks that have VDECS or certified on-road engines installed as of December 31, 2006, would be given an additional year to comply with th e in-use performance standards.

The compliance schedules for in-use yard trucks are listed below in Tables IV-1 and IV-2. Fleets of four or more yard trucks have init ial compliance dates that are the same as the compliance dates for fleets of three or less

. 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.5 6 6.5 7

1996-2002 Off-road 2003-2006 Off-road 2004-2006 On-ro ad 2007 On-road 2010 On-roadNOx (g/bhp-hr)IV - 8

Table IV-1: Compliance Schedule for In-Use Yard Tru ck Fleets of Three or Less

Off-road without VDECS Installed by December 31, 2006 Off-road with VDECS Installed by December 31, 2006

Model Year Compliance Deadline Model Year Compliance Deadline

Pre-2003 Dec. 31, 2007 Pre-2003 Dec. 31, 2008

2003 Dec. 31, 2010 2003 Dec. 31, 2011

2004 Dec. 31, 2011 2004 Dec. 31, 2012

2005 Dec. 31, 2012 2005 Dec. 31, 2013

2006 Dec. 31, 2013 2006 Dec. 31, 2014

On-road without VDECS Installed by December 31, 2006 On-road with VDECS Installed by December 31, 2006

Model Year Compliance Deadline Model Year Compliance Deadline

Pre-2000 Dec. 31, 2007 Pre-2000 Dec. 31, 2008

2000 Dec. 31, 2008 2000 Dec. 31, 2009

2001 Dec. 31, 2009 2001 Dec. 31, 2010

2002 Dec. 31, 2010 2002 Dec. 31, 2011

2003 Dec. 31, 2011 2003 Dec. 31, 2012

2004 Dec. 31, 2012 2004 Dec. 31, 2013

2005 Dec. 31, 2013 2005 Dec. 31, 2014

2006 Dec. 31, 2014 2006 Dec. 31, 2015IV - 9

Table VI-2: Compliance Schedule for In-Use Yard Tru ck Fleets of Four or More

Off-road without VDECS Installed by December 31, 2006 Off-road with VDECS Installed by December 31, 2006

Model

Year % of Model Year Compliance

Deadline Model

Year % of Model Year Compliance

Deadline

Greater of 3 or 50% Dec. 31, 2007 Greater of 3 or 50% Dec. 31, 2008 Pre-2003 100% Dec. 31, 2008 Pre-2003 100% Dec. 31, 2009

Greater of 3 or 25% Dec. 31, 2010 Greater of 3 or 25% Dec. 31, 2011

50% Dec. 31, 2011 50% Dec. 31, 2012 2003

100% Dec. 31, 2012 2003

100% Dec. 31, 2013

Greater of 3 or 25% Dec. 31, 2011 Greater of 3 or 25% Dec. 31, 2012

50% Dec. 31, 2012 50% Dec. 31, 2013 2004

100% Dec. 31, 2013 2004

100% Dec. 31, 2014

Greater of 3 or 25% Dec. 31, 2012 Greater of 3 or 25% Dec. 31, 2013

50% Dec. 31, 2013 50% Dec. 31, 2014 2005

100% Dec. 31, 2014 2005

100% Dec. 31, 2015

Greater of 3 or 25% Dec. 31, 2013 Greater of 3 or 25% Dec. 31, 2014

50% Dec. 31, 2014 50% Dec. 31, 2015 2006

100% Dec. 31, 2015 2006

100% Dec. 31, 2016

On-road without VDECS Installed by December 31, 2006 On-road with VDECS Installed by December 31, 2006

Model

Year % of Model Year Compliance

Deadline Model

Year % of Model Year Compliance

Deadline

Greater of 3 or 25% Dec. 31, 2007 Greater of 3 or 25% Dec. 31, 2008

50% Dec. 31, 2008 50% Dec. 31, 2009 Pre-2000

100% Dec. 31, 2009 Pre-2000

100% Dec. 31, 2010

Greater of 3 or 25% Dec. 31, 2008 Greater of 3 or 25% Dec. 31, 2009

50% Dec. 31, 2009 50% Dec. 31, 2010 2000

100% Dec. 31, 2010 2000

100% Dec. 31, 2011

Greater of 3 or 25% Dec. 31, 2009 Greater of 3 or 25% Dec. 31, 2010

50% Dec. 31, 2010 50% Dec. 31, 2011 2001

100% Dec. 31, 2011 2001

100% Dec. 31, 2012

Greater of 3 or 25% Dec. 31, 2010 Greater of 3 or 25% Dec. 31, 2011

50% Dec. 31, 2011 50% Dec. 31, 2012 2002

100% Dec. 31, 2012 2002

100% Dec. 31, 2013

Greater of 3 or 25% Dec. 31, 2011 Greater of 3 or 25% Dec. 31, 2012

50% Dec. 31, 2012 50% Dec. 31, 2013 2003

100% Dec. 31, 2013 2003

100% Dec. 31, 2014

Greater of 3 or 25% Dec. 31, 2012 Greater of 3 or 25% Dec. 31, 2013

50% Dec. 31, 2013 50% Dec. 31, 2014 2004

100% Dec. 31, 2014 2004

100% Dec. 31, 2015

Greater of 3 or 25% Dec. 31, 2013 Greater of 3 or 25% Dec. 31, 2014

50% Dec. 31, 2014 50% Dec. 31, 2015 2005

100% Dec. 31, 2015 2005

100% Dec. 31, 2016

Greater of 3 or 25% Dec. 31, 2014 Greater of 3 or 25% Dec. 31, 2015

50% Dec. 31, 2015 50% Dec. 31, 2016 2006

100% Dec. 31, 2016 2006

100% Dec. 31, 2017IV - 10

For fleets of four or more yard trucks, the percent age of yard trucks (25 percent, 50 percent, or 100 percent) that must meet the perf ormance requirements is determined based on the total population of yard trucks for a specific model year or model year group (i.e., pre-2003) that exist in the owner’s or operator’s yard truck fleet at the time of the first compliance deadline for that model year o r model year group. If the number of yard trucks is not a whole number, conventional rou nding practices apply (i.e., round down if less than 0.5; round up if 0.5 or greater).

3. In-Use Non-Yard Truck Equipment

The proposed regulation would require owners and op erators of in-use non-yard truck equipment to meet a selection of performance standa rds (Compliance Options), which are based on BACT, and which vary based on the cate gory of equipment. For the purpose of this regulation, BACT for non-yard truckcargo handling equipment is a menu of compliance options because these equipment types are diverse in their design, engines, operation, retrofit control technologies t hat are available to them, the level of risk posed, capital costs, and cost-effectiveness. As such, BACT can vary greatly even within each category or type of equipment.

In determining the BACT compliance options, staff c onsidered the feasibility of using certified on-road engines, technological feasibilit y of emission controls and availability of VDECS, ability for engine repowering, average usefu l life, associated health risks, and economic feasibility of replacing equipment. Staff has defined three categories of nonyard truck equipment, and for each category, three BACT compliance options are offered. The categories and their corresponding Co mpliance Options are discussed in

the sections that follow.

Basic Container Handling Equipment

Basic Container Handling equipment consist of top h andlers, side handlers, reach stackers, forklifts, straddle carriers, and any oth er equipment type (except RTG cranes) that handles cargo containers. The proposed regula tion requires the owner or operator to select one of three BACT compliance options. On e option is to use an engine or power system, including a diesel, alternative fuel, or heavy-duty pilot ignition engine, certified to the 2007 or later model year on-road e ngine standards or Tier 4 off-road engine standards for the rated horsepower and model year of the year manufactured. Another option is to use a pre-2007 model year cert ified on-road engine or a certified Tier 2 or Tier 3 off-road engine for the rated hors epower and model year of the year manufactured and apply the highest level VDECS avai lable. If the highest level VDECS applied is a Level 1, then by December 31, 2015, th e engine must either be replaced to a Tier 4 certified off-road engine or a Level 3 VDE CS must be installed. Another option is to use a pre-Tier 1 off-road engine or a certifi ed Tier 1 off-road engine for the rated horsepower and model year of the year manufactured and install the highest level VDECS available. If the highest level VDECS is a L evel 1 or 2, then by December 31, 2015, the engine must either be replac ed to a Tier 4 certified off-road engine, or a Level 3 VDECS must be installed. Figu re IV-3 graphically displays theIV - 11

Compliance Options for Basic Container Handling Equ ipment. The compliance dates for all non-yard truck cargo handling equipment are listed in Table IV-3.

Figure IV-3: Basic Container Handling Equipment Com pliance Options

Bulk Cargo Handling Equipment

Bulk Cargo Handling equipment consist of dozers, lo aders, excavators, mobile cranes, sweepers, railcar movers, aerial lifts, and any oth er equipment type (except forklifts) that handles non-containerized or bulk cargo. The propo sed regulation requires the owner or operator to select one of three BACT compliance options. One option is to use an engine or power system, including a diesel, alterna tive fuel, or heavy-duty pilot ignition engine, certified to the 2007 or later model year o n-road engine standards or Tier 4 offroad engine standards for the rated horsepower and model year of the year manufactured. While the 2007 model year certified on-road engine is not available in high horsepower ranges, it may be available for som e of the equipment in this category in the lower horsepower ranges. Another option is to use a pre-2007 model year certified on-road engine or a certified Tier 2 or T ier 3 off-road engine for the rated horsepower and model year of the year manufactured and apply the highest level VDECS available. If the highest level VDECS applie d is a Level 1, then by December 31, 2015, the engine must either be replac ed to a Tier 4 certified off-road engine or a Level 3 VDECS must be installed. Anoth er option is to use a pre-Tier 1 offroad engine or a certified Tier 1 off-road engine f or the rated horsepower and model year of the year manufactured and install the highe st level VDECS available. If the highest level VDECS is a Level 1, then by December 31, 2015, the engine must eitherIV - 12

be replaced to a Tier 4 certified off-road engine, or a Level 3 VDECS must be installed. Figure IV-4 graphically displays the Compliance Opt ions for Bulk Cargo Handling Equipment. The compliance dates for all non-yard t ruck cargo handling equipment are

listed in Table IV-3.

Figure IV-4: Bulk Cargo Handling Equipment Complian ce Options

RTG Cranes

Because of their unique operation, size, costs, eff ective life, and retrofit options, RTG cranes are in a category of their own. While there is a limited selection of VDECS currently available to this category of equipment, the ARB is coordinating a study to identify and demonstrate high efficiency retrofit e mission control systems for RTG cranes, top handlers, and side handlers that will l ead to verification. Additional information on this project is available in Appendi x H.

As with the other two categories of non-yard truck equipment, the proposed regulation requires the owner or operator to select one of thr ee BACT compliance options for RTG cranes. One option is to use an engine or power sy stem, including a diesel, alternative fuel, or heavy-duty pilot ignition engine, certifie d to the 2007 or later model year on-road engine standards or Tier 4 off-road engine standard s for the rated horsepower and model year of the year manufactured. While the 200 7 model year certified on-road engine is not available for most RTG cranes because of their high horsepower ranges, it may be available for some of the smaller horsepower RTG cranes. Another option is to use a pre-2007 model year certified on-road engine or a certified Tier 2 or Tier 3 off-IV - 13

road engine for the rated horsepower and model year of the year manufactured and apply the highest level VDECS available. Another o ption is to use a pre-Tier 1 off-road engine or a certified Tier 1 off-road engine for th e rated horsepower and model year of the year manufactured and install the highest level VDECS available. If the highest level VDECS is a Level 1 or Level 2, then the engin e must either be replaced to a Tier 4 certified off-road engine, or a Level 3 VDECS must be installed, by either December 31, 2015, or model year plus 12 years, whi chever is later. Figure IV-5 graphically displays the Compliance Options for RTG Cranes. The compliance dates for all non-yard truck cargo handling equipment are listed in Table IV-3.

Figure IV-5: RTG Crane Compliance Options

The compliance schedule listed in Table IV-3 is bas ed on engine model year and size of the fleet. The oldest engines would be replaced fi rst, and owners or operators of more than three non-yard truck equipment would have a ph ased-in compliance schedule, allowing more time to achieve compliance for 100 pe rcent of their fleet.IV - 14

Table IV-3: Compliance Schedule for In-Use Non-Yar d Truck Mobile Cargo

Handling Equipment

The percentage of non-yard truck equipment (25 perc ent, 50 percent, or 100 percent) that must meet the performance requirements is dete rmined based on the total population of non-yard truck equipment for a specif ic model year group (i.e., pre-1988) that exist in the owner’s or operator’s non-yard tr uck fleet at the time of the first compliance deadline for that model year group. If the number of non-yard truck equipment is not a whole number, conventional round ing practices apply (i.e., round down if less than 0.5; round up if 0.5 or greater).

Fuel Requirements

The proposed regulation requires the use of specifi ed fuels, including CARB diesel fuel, an alternative fuel, an alternative diesel fuel tha t meets the requirements of the Verification Procedure, CARB diesel fuel used with fuel additives that meets the requirements of the Verification Procedure, or any combination of the above. In addition, owners or operators who choose to use alt ernative diesel fuels in order to meet the performance requirements of the proposed r egulation are required to meet the recordkeeping requirements, use only alternative di esel fuels that are VDECS, identify the fuel on a label near the vehicle’s fill spout, and comply with the performance requirements within 10 days of discontinuing the us e of the alternative diesel fuel.

Owners or operators that retrofit mobile cargo hand ling equipment with a VDECS that requires certain fuel properties to be met in order to achieve the required PM reductions or PM emissions must only use fuel that meets these specifications. The same applies to the use of a VDECS that requires certain fuel pr operties to be met in order to prevent damage to the VDECS or to prevent increases in poll utants.

Compliance Extensions

The proposed regulation includes several possible c ompliance extensions for specific circumstances. Subsection (f) of the proposed regu lation in Appendix A details the

7 Compliance date refers to December 31 st of the year indicated. Compliance Date 7

Non-Yard Truck Fleets of 4 or More

Engine Model

Years Non-Yard Truck

Fleets of 3 or Fewer First 3 or 25% (whichever is greater) 50% 75% 100%

pre-1988 2007 2007 2008 2009 2010

1988-1995 2008 2008 2009 2010 2011

1996-2002 2009 2009 2010 2011 2012

2003-2006 2010 2010 2011 2012 2013IV - 15

requirements for each compliance extension. Unless specifically stated, compliance extensions may not be combined or used consecutivel y.

Engine Near Retirement

Engines that are within one year of retirement are eligible for a one-year compliance extension and, therefore, would not have to meet th e in-use requirements of subsection (e). The owner or operator would have t o demonstrate that their equipment did indeed retire on or before the assigned retirem ent date to avoid penalties for noncompliance.

No Verified Diesel Emission Control Strategy

Non-yard truck mobile cargo handling equipment that do not have the availability of VDECS may be eligible for an annual compliance exte nsion up to two years. Owners or operators would be required to comply with the in-u se requirements of subsection (e) for all other equipment before applying this extension.

Use of Experimental Diesel Particulate Matter Emis sion Control Strategies

Because the availability of VDECS is limited, and b ecause those that are verified may not always be feasible for specific equipment types or applications, staff determined that a compliance extension for the use of non-verified emission control strategies was an appropriate option to maintain flexibility in compl ying with the performance standards, while at the same time, continuing to achieve emiss ion reductions. If no VDECS is available for a non-yard truck mobile cargo handlin g equipment engine or if the available VDECS is not feasible for the specific eq uipment or application, the owner or operator can apply for a compliance extension to us e an experimental diesel PM emission control strategy. Feasibility may be dete rmined based on one or more criteria, which could include technology, economics, operatio ns, safety, contractual agreements, infrastructure, systems compatibility, training, ma intenance, and security issues. The application process includes submitting engine and emission control test data to demonstrate at least a Level 1 (25 percent diesel P M reduction) control. An owner or operator must apply each year if they wish to conti nue receiving the extension, but the experimental controls may not be used past December 31, 2015. At the end of the experiment, the owner or operator would be required to comply with the in-use non-yard truck equipment requirements in subsection (e) of t he proposed regulation within six months of the end of the compliance extension perio d.

Equipment Manufacturer Delays

An owner or operator who has, at least six months p rior to their required compliance date, purchased or entered into contractual agreeme nt to purchase new equipment in order to meet the requirements of the regulation, b ut has not received the equipment by their compliance date due to manufacturer delays, w ould be considered to be inIV - 16

compliance until the equipment is received. This c ompliance extension can be used following any other compliance extension except for an engine near retirement.

Minimum Use Requirements

Yard trucks that were retrofitted with VDECS prior to December 31, 2005, using incentive funding from public agencies (i.e., NOx a nd PM Bank or Carl Moyer Program) may be eligible for a compliance extension if the f unding program stipulated minimum use requirements that would expire after the requir ed compliance date. The maximum compliance extension could not exceed three years f rom the VDECS installation date.

Diesel Emission Control Strategy Special Circumsta nces

For mobile cargo handling equipment that has VDECS installed in order to comply with the in-use requirements, the proposed regulation co ntains provisions in the event of a failure or damage to the VDECS. If the failure or damage occurs within the warranty period and cannot be repaired, the owner or operato r would be required to replace the VDECS with either the same level VDECS, or choose a nother Compliance Option, within 90 days. If the failure or damage occurs ou tside of the warranty period and cannot be repaired, the owner or operator would be required to return to the original Compliance Options and bring the equipment into com pliance within 90 days.

Alternative Compliance Plan for Non-Yard Truck Car go Handling Equipment

As stated previously, the need for flexibility is i mportant when considering options to reduce emissions from non-yard truck mobile cargo h andling equipment. The proposed regulation includes an alternative compliance plan (ACP) option for owners and operators of non-yard truck cargo handling equipmen t that would allow them to demonstrate that equivalent emission reductions can be achieved through the use of alternative strategies. Alternative strategies can include equipment engine modifications, exhaust treatment control, engine re powering, equipment replacement, the use of alternative fuels or fuel additives, and operational controls. Applications for the ACP must be approved by the Executive Officer, and until such approval is granted, the owner or operator would be required to meet the performance requirements in subsection (e)(3).

Recordkeeping and Reporting Requirements

As specified in subsections (i) and (j) of the prop osed regulation, the proposal includes provisions for mobile cargo handling equipment owne r or operator recordkeeping and reporting that would allow staff to obtain more acc urate information on the number of mobile cargo handling equipment in California, to m onitor the implementation of the regulation, to estimate pollutant reductions based on compliance choices the owners or operators make, and to facilitate inspections by AR B’s Enforcement Division. Beginning in 2007, owners or operators would be required to r eport mobile cargo handling equipment inventory information (e.g., make, model, serial number, etc.), where theyIV - 17

operate, and how and when they come into compliance with the in-use requirements of the regulation. Owners or operators would also be required to affix a label to each equipment that will display information such as the engine model year, compliance strategy used or the planned compliance date, engin e certification (e.g., off-road or onroad), or experimental diesel emission control stra tegy test dates. An alternative approach to using labels may be used if approved by the Executive Officer.

Beginning January 31, 2007, owners or operators wou ld be required to submit a compliance plan to the Executive Officer. The plan would identify how the owner or operator plans to meet the in-use requirements of t he regulation. The plan is not binding and can be changed prior to the compliance date(s).

For owners and operators of off-road mobile equipme nt that do not handle cargo at any time but is used to transport personnel or deliver fuel, a one-time reporting of that equipment is required by January 31, 2007. The inf ormation gathered from this reporting will help staff to determine if additiona l regulatory requirements are appropriate for this equipment.

The proposed regulation currently requires submitta ls to the ARB by mail, however, staff plans to develop the potential for electronic repor t submittals in time for owner or operator reporting deadlines. In addition, staff p lans to conduct outreach to owners and operators to explain and clarify these reporting re quirements.

Right of Entry, Prohibitions, and Severability

The proposed regulation includes Right of Entry, Pr ohibitions, and Severability clauses. As specified in subsection (k), the Right of Entry clause allows an ARB agent or employee to enter the premises of a port or intermo dal rail yard where mobile cargo handling equipment operate in order to inspect the equipment that are subject to the regulation.

As specified in subsection (l) of the proposed regu lation, the Prohibitions clause states that people engaged in the State in the business of selling, renting, or leasing new or used mobile cargo handling equipment are prohibited from selling, importing, delivering, purchasing, receiving, or otherwise acquiring a new or used mobile cargo handling equipment for the purpose of selling, renting, or l easing, that does not meet the performance requirements of the regulation.

As specified in subsection (m) of the proposed regu lation, the Severability clause ensures that if any portion of the regulation is de emed invalid or unconstitutional, that portion would be deemed a separate, distinct, and i ndependent provision, and will not affect the validity of the remaining portions of th e regulation.IV - 18

Submittal of Documents

Documents that are required to be submitted to the ARB may be submitted by mail or by an alternative method approved by the Executive Officer, which may allow for

electronic submittals in the future. The address f or mailing documents to the ARB is included in subsection (n) of the proposed regulati on.

C. Alternatives Considered

The Government Code section 11346.2 requires the AR B to consider and evaluate reasonable alternatives to the proposed regulation and provide the reasons for rejecting

those alternatives. ARB staff evaluated three alte rnative strategies to the current proposal. Based on the analysis, none of the alter native control strategies were considered more effective than the proposed regulat ion. Full implementation of the proposed regulation is necessary to achieve ARB’s g oal, as described in the Diesel Risk Reduction Plan, to reduce by 85 percent diesel PM e missions and associated potential cancer risks by 2020. (ARB, 2000) The proposed re gulation provides owners or operators of mobile cargo handling equipment with f lexibility in determining the most cost-effective control strategy that will meet the proposed emission standards and operational requirements for their operation.

This section discusses each of the three alternativ es and provides reasons for rejecting

those alternatives.

Do Not Adopt This Regulation: Rely on New Engine S tandards and Voluntary Programs

One alternative would be to do nothing and rely on existing governmental programs and voluntary programs. Beginning in 1996, manufacture rs and vendors of diesel engines have been subject to U.S. EPA's nonroad (off-road) diesel emission regulations (40 CFR Part 89). The standards are tiered and the date upon which each tier takes effect depends on the engine size. As of January 1 , 2000, all engine sizes were subject to Tier 1 standards. In 2004, the U.S. EPA adopted new engine standards (Tier 4) for off-road diesel engines that will begin in 2008, bu t not be fully implemented until 2015. These stringent standards will significantly reduce emissions of PM and NOx, which contribute to adverse public health impacts. In ad dition, U.S. EPA's rule requires offroad diesel engines to use diesel fuel with a maxim um sulfur content of 500 ppm in 2007 and 15 ppm in 2010. (EPA, 2003) California h as harmonized its new engine standards for off-road diesel engines with the U.S. EPA off-road standards.

However, the U.S. EPA’s Tier 4 new engine standards do not address existing in-use diesel engines, and the new standards would be impl emented on a phased-in schedule based on engine size beginning in 2008 through 2015 . Additionally, the federal

standards offer various alternatives to demonstrate (use of emission reduction credits) or delay compliance to certain phase-in schedules. These critical implementation measures will not produce the greatest potential re ductions in diesel PM emissions inIV - 19

the shortest timeframe. Further, the long useful l ife of diesel engines and the lack of stringent standards for in-use off-road diesel engi nes will significantly limit the potential

reduction in ambient concentrations of diesel PM an d associated cancer and noncancer

health risks. ARB staff does not recommend this al ternative because it would result in

less reduction in diesel PM and NOx emissions and f ewer public health benefits than the proposed regulation.

While federal, State, and local programs have been developed to encourage lesspolluting diesel engines, the effects of these prog rams are expected to be far less significant than the proposed regulation. The U.S. EPA’s Voluntary Diesel Retrofit Program, which addresses pollution from diesel cons truction equipment and heavy-duty on-road vehicles, applies only to a very small frac tion of cargo handling equipment. ARB’s Carl Moyer Incentive Funding Program, which p rovides funds on an incentivebasis for the incremental cost of cleaner than requ ired engines and equipment, has focused primarily on agricultural equipment. And, while the voluntary retrofit programs at the Ports of Long Beach, Los Angeles, and Oaklan d have made great strides in reducing diesel PM emissions from the existing flee ts of cargo handling equipment at their ports, they are local programs whose reductio ns will not be realized elsewhere in the State, and the level of emission reductions fal l short of what is needed to protect public health.

It is estimated that the proposed regulation will a chieve an additional 744 tons reduction in diesel PM and an additional 18,310 tons reductio n in NOx emissions beyond what voluntary measures would achieve. Therefore, ARB s taff does not recommend this

alternative.

Adopt Requirements for Yard Trucks Only

Another option would be to adopt requirements only for yard trucks and not address the non-yard truck equipment. While this option achiev es emission reductions for one equipment type, it does not address the cargo handl ing equipment emissions at bulk cargo facilities or other equipment types at contai ner facilities, both of which pose significant health risks. The full regulation woul d reduce diesel PM emissions by an estimated additional 241 tons and NOx emissions by an estimated additional 1,233 tons. Therefore, ARB staff does not recommend this alternative.IV - 20

REFERENCES:

(ARB, 2000) California Air Resources Board. Risk Reduction Plan to Reduce Particulate Matter Emissions from Diesel-Fueled Eng ines and Vehicles ; October 2000.

(EPA, 2003) United States Environmental Protection Agency. Regulatory Announcement, Summary of EPA's Proposed Program for Low Emission Nonroad Diesel Engines and Fuel ; April 2003.V - 1

V. TECHNOLOGICAL FEASIBILITY OF THE PROPOSED REGULA TION

There are a variety of technologies available to re duce diesel PM emissions from cargo handling equipment engines. Since the 1970's, much of the diesel emission control has been achieved through emission-conscious engine des ign. For example, emission improvements have included modifications in combust ion chamber geometry, increased fuel injection pressure, and design for better fuel atomization and mixing with the air. (DieselNet, 1998) In the past 15 years, more devel opment effort has been put into catalytic exhaust emission control devices for dies el engines, especially in the areas of particulate matter control. These developments hav e made the widespread commercial

use of diesel exhaust emission controls feasible. (ARB, 2003a)

In this chapter of the staff report, we provide des criptions of diesel PM emission control strategies currently available and projected to be available in the near future. We focus on those we believe will be employed to comply with the proposed regulation. Additional information on the wide variety of emiss ion reduction options for diesel fueled engines is provided in the Diesel Risk Reduction Pl an. (ARB, 2000) We also list actual in-use experience with diesel PM emission control s trategies and clean fuels that cargo handling equipment engine operators are using curre ntly.

A. New Engine Standards

Due to the efforts of the ARB and U.S. EPA in estab lishing new engine standards that reflect advanced technology options, replacing an o lder engine with a new one will usually result in significant emission reductions. The proposed regulation includes performance standards based on best available contr ol technologies (BACT), which in many cases can include replacing an older engine wi th a cleaner, new engine through either repowering or equipment replacement. In the case of yard trucks in particular, accelerating the turnover to new on-road engines is a very effective means of achieving significant reductions in both diesel PM and NOx wh ile maintaining economic feasibility (cost-effectiveness). Below we briefly discuss the current off-road and on-road new engine emission standards and how they can be part of the strategy for achieving

emission reductions.

Off-Road

Because of advancements that have been made in comb ustion technology and engine design, diesel engines today emit over 80 percent l ess PM and over 60 percent less NOx than they did in 1988. (Diesel, 2003) Beginni ng in 1996, all compression ignition (diesel) engine manufacturers have been subject to U.S. EPA’s nonroad (off-road) diesel emission regulation (40 CFR Part 89), which the ARB has subsequently adopted as well. The off-road engine emission standards ar e tiered (i.e., Tier 1, 2, 3, 4), and the date upon which each tier takes effect depends on t he engine size (horsepower). As of January 1, 2000, all engine sizes were subject to T ier 1 standards. In 2006, all engine sizes will be subject to Tier 2, and in 2008, most engines sizes will be subject to Tier 3 standards (engines less than 75 horsepower or great er than 750 horsepower do notV - 2

have a Tier 3 standard). These standards, which be come increasingly more stringent with each subsequent tier, will result in the devel opment of new, lower-emitting diesel engines in the future years.

Tier 4 standards are divided into two stages: inte rim, which begins between 2008 and 2012 for most engines, and final, which is effectiv e for all off-road engines by 2015. The final Tier 4 standards will result in diesel engine s that will be over 90 percent cleaner than 1988 vintage engines. Tier 4 requires most en gines to meet a 0.01 g/bhp-hr diesel PM emission rate and a 0.3 to 0.5 g/bhp-hr NOx emis sion rate in the 2011-2015 timeframe. ARB staff has worked closely with U.S. EPA to develop a harmonized federal and California program to more effectively control emissions from off-road equipment. ARB’s heavy-duty new engine regulation is found in title 13, California Code of Regulations, section 2423. When it has bee n feasible to do so, the Board has adopted a more stringent program than the federal p rogram and adopted engine test procedures that more accurately measure emissions t hat occur during typical in-use driving conditions.

Repowering, or replacing an existing engine with a new one, can provide the same emissions benefits as replacing the equipment, part icularly when the new engine is a higher tier level (i.e., replacing a pre-Tier 1 eng ine with a Tier 2 or Tier 3 engine). In addition, repowering is often an attractive strateg y for owners or operators of cargo handling equipment whose engines have reached their useful life before the other equipment components are ready for retirement. Rep owering is most often accomplished on non-yard truck equipment (e.g., top handlers, side handlers, railcar movers, and rubber-tired gantry cranes) because the ir equipment replacement costs are much higher than the costs of repowering. While re powering to a Tier 2 or Tier 3 engine does not get the same benefits as a Tier 4 engine, it can make the engine more suitable to aftertreatment emission controls, and is therefo re, one compliance option for nonyard truck cargo handling equipment.

For owners or operators of some non-yard truck carg o handling equipment that choose to use retrofits for their initial compliance, an a dditional compliance step to replace the engines to meet Tier 4 standards at the end of 2015 is required. This strategy achieves both near-term and long-term reductions in diesel P M and NOx emissions.

On-Road

On-road engines are a step ahead of off-road engine s and are an even better emission reduction strategy for cargo handling equipment tha t can utilize them. In January 2001,

U.S. EPA finalized its rule for new emission standa rds for 2007 and later model year onroad heavy-duty diesel engines and vehicles 8 . The 2007 standards break new ground by setting emission standards that require aftertre atment-based technologies for all classes of heavy-duty diesel engines and vehicles. The adopted standards will reduce

8 U.S. EPA’s 2007 Final Rule on the Control of Emiss ions of Air Pollution from 2007 and Later Model Yea r Heavy-Duty Highway Engines and Vehicles; Revision o f Light-Duty On-Board Diagnostics Requirements (66FR 5002, January 18, 2001). Referred to as U.S. EPA’s 2007 Final Rule or 2007 Final Rule.V - 3

exhaust emissions from new diesel-cycle engines mee ting the 2004 standards by 90 percent for NOx, 72 percent for NMHC, and 90 per cent for PM. These emission standards, which are also applicable to both natura l gas-fueled engines and liquefied petroleum gas-fueled engines derived from the diese l cycle engine, are shown below in Table V-1. The U.S. EPA adopted the requirements f or heavy-duty gasoline-fueled engines (with implementation starting in 2008) at t he same time it adopted emission standards for 2007 and later model year heavy-duty diesel engines. ARB adopted regulations to harmonize with the federal standards in 2002.

Table V-1: Exhaust Emission Standards for 2007 and Later Model Year On-Road

Heavy-Duty Diesel Engines/Vehicles

Phase-In by Model Year* Pollutant Standard

(g/bhp-hr) 2007 2008 2009 2010

NOx 0.20 50% 100%

NMHC 0.14 50% 100%

PM10 0.01 100% 100% 100% 100% * represents percent of sales

The Board approved the same phase-in schedules for the NOx, PM, and NMHC emission standards as adopted by U.S. EPA. The pha se-in schedules, shown in Table V-1, represent the percentage of new engines produced for sale in California that are required to meet the more stringent emission st andards beginning in 2007. Full implementation is required starting with the 2009 m odel year.

On-road engines are currently available for some ty pes of cargo handling equipment, particularly yard trucks. In fact, yard truck manu facturers have provided buyers the option to choose the on-road engine for several yea rs with only a minor incremental cost differential. Since the 2007 on-road engines have the emission benefits up to eight years sooner than off-road engines, they are an eff ective strategy for achieving both near-term and long-term emission reductions.

Test methods used to certify on-road engines are di fferent than those for off-road engines. On-road engine methods use a transient du ty cycle while off-road engine methods use a steady state duty cycle. ARB staff c onducted testing, in partnership with the Port of Los Angeles and through the University of Riverside, of yard trucks equipped with both on-road and off-road engines, using an of f-road duty cycle (C1). The emission rates from the off-road duty cycle were compared to the U.S. EPA certified on-highway, transient emission rates for this engine family. T he comparison indicated the on-road engine’s emission rates were similar in both duty c ycles, concluding that the off-road duty cycle did not increase the on-road engine emis sions. Based on these results, staff believes the same will hold true for future model y ear on-road engines. Additional yard truck testing is being conducted which includes alt ernative fuels, data logging to evaluate the duty cycles, and in-use emission testi ng. Information on the test program can be found in Appendix E.V - 4

The proposed regulation provides an option for yard trucks and other applicable mobile cargo handling equipment types to use certified on- road engines. This is clearly technically feasible, as many yard trucks are alrea dy using on-road engines. Based on discussions with manufacturers, this option will co ntinue to be available for future model year yard truck engines as well, even as the certif ied on-road engine standards strengthen in 2007 and again in 2010. (ARB, 2005c) Mobile cargo handling equipment operating with on-road engines are not required by the regulation to use any verified diesel emission control strategy. Chapter IV provi des more information on the requirements of the proposed regulation.

B. Diesel PM Exhaust Aftertreatment Emission Contro ls

There are various advanced exhaust aftertreatment t echnologies commercially available that can provide significant reductions in diesel P M, particularly when combined with

ultra low-sulfur diesel fuel. Several of these tec hnologies have been verified by the ARB to reduce diesel PM emissions and are one optio n that owners and operators of non-yard truck cargo handling equipment can use to meet the performance requirements of the proposed regulation. (The veri fication procedure is discussed later in this chapter). While several VDECS are currentl y available for non-yard truck cargo handling equipment, the verification extends only t o select model years and engine families. Therefore, flexibility in applying these and other emission control strategies is necessary and contributes to the technological feas ibility of the proposed regulation. The proposal would allow owners and operators to ap ply for a compliance extension for the use of experimental diesel emission control tec hnologies, which in turn, is expected

to result in additional verifications.

The principal technologies that have been successfu lly used to reduce diesel PM from diesel-fueled engines are diesel oxidation catalyst s (DOCs), emulsified diesel fuel, and diesel particulate filters (DPFs). Since 2002, mor e than a thousand DOCs have been installed on many types of cargo handling equipment , primarily yard trucks, at the ports of Los Angeles, Long Beach, and Oakland. (ARB, POL A; ARB, POLB; ARB, Port of Oakland) Additionally, several DPFs have been inst alled on top handlers at the Port of Oakland. Flow-through filters, sometimes referred to as enhanced DOCs, are relatively new to the market but also show promise in reducing diesel PM from diesel-fueled engines. These aftertreatment emission control sys tems are briefly described below.

Diesel Oxidation Catalysts

Diesel oxidation catalysts (DOCs) are the most comm on currently used form of diesel aftertreatment technology and have been used for co mpliance with the PM standards for some on-highway engines since the early 1990s. DOCs are generally referred to as “catalytic converters.” DOCs are devices attached to the engine exhaust system. They have chemicals lining them which catalyze the oxida tion of carbonaceous pollutants – some of the soot emissions and a significant portio n of the soluble organic fraction. These carbon-containing pollutants are oxidized to CO 2 and water. The catalysts that are used are known as the platinum group metals (PG Ms). These consist of platinum,V - 5

iridium, osmium, palladium, rhodium, and ruthenium. Platinum is best suited as the catalyst for diesel engine control devices; therefo re, it appears that it will be the main catalyst used in diesel catalytic converters. (Ken dall, 2002/2003)

DOC effectiveness in reducing PM emissions is norma lly limited to about 30 percent of diesel PM. This is because the soluble organic fra ction portion of diesel PM for modern diesel engines is typically less than 30 percent. Additionally, DOCs increase sulfate PM emissions by oxidizing the sulfur in fuel and lubri cating oil, reducing the overall effectiveness of the catalyst. Limiting fuel sulfu r levels to 15 ppm allows DOCs to be designed for maximum effectiveness (nearly 100 perc ent control of soluble organic fraction emissions). DOCs also reduce emissions of HC and CO with reported efficiencies of 76 percent and 47 percent respectiv ely. (Khair, 1999)

DOCs are also very effective at reducing the air to xic emissions from diesel engines. Test data shows that emissions of toxics such as po lycyclic aromatic hydrocarbons (PAHs) can be reduced by more than 80 percent with a DOC. (DieselNet, 2002)

Flow-Through Filters

Flow-through filter (FTF) technology is a relativel y new technology for reducing diesel PM emissions. Unlike a DPF, in which only gasses c an pass through the substrate, the FTF does not physically "trap" and accumulate PM. Instead, exhaust flows through a medium (such as wire mesh) that has a high density of torturous flow channels, thus giving rise to turbulent flow conditions. The medi um is typically treated with an oxidizing catalyst that is able to reduce emissions of PM, HC , and CO, or used in conjunction with a fuel-borne catalyst. Any particles that are not oxidized with the FTF flow out with the

rest of the exhaust and do not accumulate.

The filtration efficiency of an FTF is lower than t hat of a DPF, but the FTF is much less likely to plug under unfavorable conditions, such a s high PM emissions, low exhaust temperatures and older engines. The FTF, therefore , is a candidate for use in applications that are unsuitable for Diesel Particu late Filters (DPF). Currently, there are no verified FTF technologies. If verified, FTF tec hnology could potentially fill an emission reduction role on older RTG cranes, constr uction equipment, and other engines where DPF’s would easily clog.

Diesel Particulate Filters

DPFs have been successfully used in many applicatio ns, including on-road, off-road applications, and prime and emergency engines, use of DPF’s in CHE equipment has been limited. In general, a DPF consists of a poro us substrate that permits gases in the exhaust to pass through but traps the diesel PM. D iesel PM emission reductions in excess of 85 percent are possible, depending on the associated engine's baseline emissions, fuel sulfur content, and emission test m ethod or duty cycle. In addition, up to a 90 percent reduction in CO and a 95 percent reduc tion in HC can also be realized with DPFs. (Allansson, 2000) Most DPFs employ some mea ns to periodically regenerateV - 6

the filter, i.e., burn off the accumulated PM. In California, diesel-fueled school buses, emergency backup generators, solid waste collection vehicles, urban transit buses, medium-duty delivery vehicles, people movers, and f uel tankers trucks have been retrofitted with DPFs through various voluntary and regulatory mandated programs as well as demonstrations programs. Particulate filte rs can be either active or passive
systems.

Active DPFs use a source of energy beyond the heat in the exhaust stream itself to help regeneration. Active DPF systems can be regenerate d electrically, with fuel burners, with microwaves, or with the aid of additional fuel injection to increase exhaust gas temperature. Some active DPFs induce regeneration automatically onboard the vehicle or equipment when a specified back pressure is reac hed. Others simply indicate when to start the regeneration process. Some active sys tems collect and store diesel PM over the course of a full day or shift and are rege nerated at the end of the day of shift with the vehicle or equipment shut off. A number o f the smaller filters are removed and regenerated externally at a "regeneration station." Because they have control over their regeneration and are not dependent on the heat carr ied in the exhaust, active DPFs have a much broader range of application and a much lower probability of getting plugged than passive DPFs.

A passive DPF is one in which a catalytic material, typically a platinum group metal, is applied to the substrate. The catalyst lowers the temperature at which trapped PM will oxidize to temperatures periodically reached in die sel exhaust. No additional source of energy is required for regeneration, hence the term "passive."

Field experience has indicated that the success or failure of a passive DPF is primarily determined by the average exhaust temperature at th e filter's inlet and the rate of PM generated by the engine. These two quantities, how ever, are determined by a host of factors pertaining to both the details of the appli cation and the state and type of engine being employed. As a result, the technical informa tion that is readily accessible can sometimes serve as a guide, but it may be insuffici ent to determine whether a passive DPF will be successful in a given application. (AR B, 2002)

With regard to estimating average exhaust temperatu re in actual use, commonly documented engine characteristics such as the exhau st temperature at peak power and peak torque are insufficient. The exhaust temperat ure at the DPF's inlet is highly application dependent in that the particular duty c ycle experienced plays a prominent role, as do heat losses in the exhaust system. Ver y application-specific characteristics enter the heat loss equation, such as the length of piping the exhaust must travel through before it reaches the DPF. Lower average e xhaust temperatures can also be the result of operating engines that are oversized for the application or run without a load applied. (ARB, 2002)

Staff believes that RTG cranes in particular are go od candidates for DPFs because of their duty cycle and high operating temperatures at load. The ARB is currently participating in a study to identify and demonstrat e high-efficiency retrofit emissionV - 7

control systems for RTG cranes, top handlers, and s ide handlers. The program will continue through Spring 2006 is expected to lead to ARB verification for controls such as DPFs. Appendix H contains more information on t he demonstration program.

Combinations

Combinations of more than one technology are also b eing explored to maximize the amount of diesel PM and reducing other pollutants. For example, fuel-borne catalysts or emulsified fuel can be combined with any of the three main hardware technologies discussed above: DOC, FTF, or DPF’s.

C. Cleaner Diesel Fuels, Alternative Diesel Fuels, and Alternative Fuels

Diesel PM emission reductions can also be realized through the use of cleaner diesel fuels, alternative diesel fuels, or alternative fue ls. Using ultra low-sulfur diesel fuel (15 ppm) results in modest PM reductions and will a lso enable the use of advanced exhaust aftertreatment systems for those engines th at use verified diesel emission control strategies (VDECS) to meet the performance standards in the proposed regulation. Alternative diesel fuels, such as emul sified diesel, can also reduce diesel PM emissions and has been used successfully in carg o handling equipment at the ports of Long Beach and Los Angeles. Using alternative f uels, such as compressed natural gas (CNG), liquefied natural gas (LNG), and liquefi ed petroleum gas (LPG) can often produce significantly fewer emissions than older di esel engines but there are operational and economic constraints associated wit h cargo handling equipment that utilize these fuels. However, while there are limi tations to using alternative diesel-fuels and alternative fuels, particularly with higher pow er demanding engines, we believe they may provide a satisfactory route to compliance for many categories. Below we describe some fuel options for cargo handling equipment engi nes.

Ultra-Low Sulfur Diesel Fuel (CARB Diesel)

Lowering the sulfur content of diesel fuel is impor tant to the performance of aftertreatment technologies, particularly DPFs. Su lfur affects filter performance by inhibiting the performance of catalytic materials u pstream of or on the filter (i.e., catalyst "poisoning"). This phenomenon not only adversely a ffects the ability to reduce emissions, but also adversely impacts the capabilit y of these filters to regenerate - there

is a direct trade-off between sulfur levels in the fuel and the ability to achieve regeneration. Sulfur also competes with the chemic al reactions intended to reduce pollutant emissions and creates particulate matter through catalytic sulfate formation. The availability of ultra low-sulfur fuel will enab le these filters to be designed for improved PM filter regeneration and emission contro l performance, as well as to reduce sulfate emissions. Diesel fuel containing less tha n 15 ppm sulfur is required to ensure maximum emission control performance on the broades t range of off-road diesel engines. (MECA, 2003)V - 8

All diesel-fueled cargo handling equipment will be required to use ultra low-sulfur diesel fuel beginning in mid to late 2006 as a result of r ecently approved amendments to the California diesel fuel regulations. This reduced s ulfur content will provide a small emission benefit because a portion of PM emissions is comprised of sulfates, the

formation of which is a direct function of the leve l of sulfur in the fuel. (Diesel, 2003) Several port terminals (i.e., at the Port of Oaklan d) are already using ultra-low diesel fuel exclusively in their cargo handling equipment. Currently, this lower sulfur diesel fuel costs about 5 to 15 cents more per gallon than CARB off-road diesel fuel.

Alternative Diesel Fuels

Alternative diesel fuel is a fuel that can be used in a diesel engine without requiring engine or fuel system modifications for the engine to operate, although minor modifications (e.g., recalibration of the engine fu el control) may enhance performance. Examples of alternative diesel fuels include biodie sel, emulsified fuels, Fischer-Tropsch fuels, or a combination of these fuels with CARB di esel fuel. The emissions effects of these fuels can vary widely. A detailed discussion of alternative diesel fuels is provided in the Diesel Risk Reduction Plan. (ARB, 2000) Th ese alternatives may result in significant benefits for higher-emitting categories , such as off-road engines. Synthetic or alternative diesel fuels may also prove to be pa rt of the preferred control strategy for diesel-fueled engines that would otherwise result i n relatively high risk, or where control retrofit options are very expensive or difficult to implement.

Several terminals at the ports of Long Beach and Lo s Angeles are currently using emulsified diesel fuel across their fleets of cargo handling equipment, with some of them using it in conjunction with a DOC. Engines that a re using the fuel must be able to tolerate a power loss of up to 20 percent. In ARB’ s yard truck testing program that was mentioned earlier in this chapter, comparison testi ng using CARB diesel and emulsified diesel showed an overall increase in total hydrocar bon emission factors of 10 to 33 percent for the emulsified diesel. The reductio ns in NOx emission factors ranged from 18 to 22 percent for the emulsified diesel. P M emission factor reductions ranged from 17 to 53 percent. Additional information on t he testing program and its results are available in Appendix E.

Alternative Fuels

Using alternative fuels is another option for reduc ing emissions from off-road dieselfueled engines. Engines using alternative fuels ha ve emission levels than are comparable or lower than new diesel engines operati ng on CARB diesel fuel. However, the availability of cargo handling equipment, parti cularly non-yard truck equipment, that use alternative fuels is very limited. In fact, th ere is no known availability of alternativefueled top handlers, side handlers, RTG cranes, or many other non-yard truck equipment types. Yard trucks are commercially avai lable with CNG/LNG or LPG engines, but the cost differential is significant, sometimes up to 70 percent more for an alternative-fueled yard truck versus the traditiona l diesel-fueled yard truck.V - 9

Currently, the Port of Los Angeles has over 50 LPG yard trucks that have been in use for several years as a result of a law suit settlem ent requiring alternative-fueled yard trucks. The experience with the LPG yard trucks ha s included high fuel infrastructure costs and a significant increase in required mainte nance. (ARB, 2005a) Issues with LPG fuel quality can result in a residue build-up o n certain engine components, such as vaporizers, carburetors, and injectors, which reduc es the effectiveness of heat transfer and ultimately causes poor delivery of the fuel and inaccurate fuel-to-air ratios. (ARB, 2005b)

The ARB yard truck testing program, mentioned earli er in this chapter, has completed chassis dynamometer testing of a 2004 LPG-fueled ya rd truck. Results from earlier

tests conducted with certified off-road and on-road diesel yard trucks were used for comparison. The test results indicated that both t he total hydrocarbon (TCH) and NOx emissions were higher for the LPG engine compared t o the same model year on-road diesel engine. Particulate matter emissions were s ignificantly lower for the LPG engine than either the on-road or off-road engines, which was an expected result since LPG

does not emit diesel PM.

Several terminals across the state use spark-ignite d engine (i.e., electric and/or LPG) forklifts, often in addition to compression-ignitio n engine (i.e., diesel) forklifts. The fuel type for forklifts is usually determined by the des ired lift capacity and the type of operation. Diesel forklifts usually start with a l ift capacity above 6,000 pounds, while spark-ignited forklifts are generally used for lift capacities up to 16,000 pounds. (Moyer, 2003)

Staff is not recommending that alternative-fueled e ngines be considered BACT for the purposes of this regulation. This is based on staf f’s review of cost, cost-effectiveness, availability of both equipment and fuel, and applic ability of these engines to the types of equipment covered by the regulation. However, for the purposes of complying with the in-use requirements for non-yard truck equipment, a lternative-fueled engines that are certified to the appropriate on-road or off-road st andard are an approved compliance option. Appendix F contains further discussion of alternative fuels.

D. Verification of Diesel Emission Control Devices

In support of the ARB’s regulatory efforts to reduc e diesel PM, the Verification Procedure, Warranty and In-Use Compliance Requireme nts of In-Use Strategies to Control Emissions from Diesel Engines (Verification Procedure) was adopted by the

Board in March 2002. The Verification Procedure es tablishes a process through which manufacturers of emission control equipment can dem onstrate and verify the emission reduction capabilities of control technologies. Ex amples of emission control technologies that can be considered for verificatio n include diesel particulate filters, diesel oxidation catalysts, exhaust gas re-circulat ion, selective catalytic reduction systems, fuel additives and alternative diesel fuel systems. The Verification Procedure is voluntary and applies to emission control techno logies for on-road, off-road andV - 10

stationary applications. A brief discussion on the Verification Procedure is provided in

this section.

The Verification Procedure requires emission contro l strategy applicants to establish the emissions reduction capabilities for an emission co ntrol device, conduct a durability demonstration, conduct a field demonstration and su bmit results along with other information in an application to the ARB following a prescribed format. The applicant verifies the product for a specific engine manufact urer, years produced, engine family and series. If the ARB approves the application, i t will issue an Executive Order to the applicant stating the verified emission reduction a nd any conditions that must be met for the diesel emission control strategy to function pr operly. The Verification Procedure also requires that the applicants provide a warrant y to the end-user and conduct in-use compliance testing.

The results of the Verification Procedure testing d etermine the control technology classification. The multi-level verification syste m consists of three PM reduction levels. The Verification Procedure also has provisions for verifying strategies that reduce NOx

emissions. Control device verifications for both P M and NOx are classified by level as

listed in Table V-2.

Table V-2: Verification Classifications for Diesel Emission Control Strategies

Pollutant Reduction Classification

<25% Not Verified

> 25% Level 1

> 50 % Level 2 PM

> 85% or < 0.01 g/bhp-hr Level 3

<15% Not Verified NOx

> 15% Verified in 5% increments

Once a device has been verified, the executive orde r and accompanying information is posted on the ARB's web site at http://www.arb.ca.gov/diesel/verdev/verdev.htm . The ARB has the Diesel Emission Control Strategy Verifi cation Procedure and the U.S. EPA’s Voluntary Retrofit Verification Program. Both programs share a common goal of verifying the emission reductions from dies el emission control systems. The agencies have made tremendous efforts to harmonize key requirements in both programs; still differences exist between the two p rograms. In general, the ARB Verification Procedure is designed to support regul atory requirements while the U.S. EPA’s program is voluntary. For more detail of the program differences visit http://www.arb.ca.gov/diesel/verdev/frmlregdocs.htm

.

There are currently three manufacturers offering Le vel 1, 2, and 3 VDECS for in-use off-road engines, including some engines used in ca rgo handling equipment. Level 1 DOC options include the Donaldson Series 6000 with spiracle closed crankcase filtration, Extengine Transport Systems Advanced Di esel Emission Control, and Lubrizol

AZ Purifier and AZ Purimuffler. Lubrizol offers a Level 2 DOC, the AZ Purifier or an AZ Purimuffler, which requires the use of Lubrizol’ s emulsified diesel fuel, PuriNOx.V - 11

The Level 3 VDECS is a Lubrizol Unikat Combifilter, which is an actively regenerated uncatalyzed DPF that operates using either CARB die sel or ultra low-sulfur diesel fuel. Each of the technologies above have specific model year and engine requirements. Appendix G contains the executive orders for each o f the verified devices.

As stated earlier, using VDECS is one possible comp liance option for non-yard truck cargo handling equipment. The proposed regulation allows for compliance extensions to be granted in situations where VDECS are not ava ilable for a specific engine and equipment type, and/or if the owner or operator cho oses to use an experimental diesel emission control strategies due to feasibility issu es with an available VDECS. Because non-yard truck cargo handling equipment is so diver se, several factors can affect the feasibility of VDECS, such as duty cycle, load fact or, speed, and idling time. Therefore, while verification may extend to specific engine fa milies and model years, VDECS are not always the right fit for all applications or eq uipment types.

The ARB project (mentioned earlier in this chapter) to test and demonstrate highefficiency control systems for RTG cranes, top hand lers, and side handlers, along with the use of experimental diesel emission control str ategies, are both intended to lead to the verification of more controls for cargo handlin g equipment and off-road engines in general. As part of the implementation efforts for the proposed regulation, staff plan to create a technology workgroup, whose goal will be t o monitor the available control strategies, address concerns regarding the use of t he technologies in non-yard truck cargo handling equipment, and encourage manufacture rs to apply for ARB verification.V - 12

REFERENCES:

(Allansson, 2000) Allansson, R, Cooper, BJ, Thoss, JE, Uusimake, A, Walker, AP, Warren, JP. European Experience of High Mileage Durability Of C ontinuously Regenerating Diesel Particulate Filter Technology ; SAE 2000-01-0480; 2000.

(ARB, 2000) California Air Resources Board. Risk Reduction Plan to Reduce Particulate Matter Emission from Diesel-Fueled Engi nes and Vehicles ; October 2000.

(ARB, 2002) California Air Resources Board. Staff Report: Initial Statement of Reasons Proposed Regulation for the Verification Procedure for In-Use Strategies to Control Emissions from Diesel Engines, Appendix B, Diesel E mission Control Technologies ;
2002.

(ARB, 2003a) California Air Resources Board. Staff Report: Technical Support Document, Proposed Control Measure for Diesel Parti culate Matter from On-Road Heavy-Duty Diesel-Fueled Residential and Commercial Solid Waste Collection Vehicle Diesel Engines ; 2003.

(ARB, 2005a) California Air Resources Board. Phon e call with Mr. Kenton Pope, Marine Terminals Corporation; March 11, 2005.

(ARB, 2005b) California Air Resources Board. Staff Report: Initial Statement of Reasons for Proposed Rulemaking, Public Hearing to Consider Adoption of Emission

Standards and Test Procedures for New 2007 and Late r Off-Road Spark-Ignition (LSI) Engines and Fleet Requirements for Users of Off-Roa d LSI Engines ; May 6, 2005.

(ARB, 2005c) California Air Resources Board. Phon e call with Mr. Don Lawrence, Ottawa (Kalmar Industries); September 22, 2005.

(ARB, POLA) California Air Resources Board e-mail f rom Ms. Shokoufe Marashi with the Port of Los Angeles. August 3, 2005.

(ARB, POLB) California Air Resources Board e-mail f rom Ms. Heather Tomley with the Port of Long Beach. August 30, 2005.

(ARB, Port of Oakland) Summary Report #10 Vision 2000 Air Quality Mitigati on Program , Port of Oakland, Environmental Planning Departmen t, August 2004.

(DieselNet, 1998) DieselNet. Technology Guide: Emission Control Technologies

, http://www.dieselnet.com ; 1998.

(DieselNet, 2002) DieselNet. Technology Guide: Diesel Oxidation Catalyst

, http://www.dieselnet.com ; 2002.V - 13

(Diesel, 2003) Diesel Technology Forum. Clean Air, Better Performance: Strategies for Upgrading and Modernizing Diesel Engines ; May 2003.

(Kendall, 2002/2003) Kendall, Tom; Johnson Matthey. Platinum 2002, http://www.platinum.matthey.com/publications/105154 3656.html ; Platinum 2003, http://www.platinum.matthey.com/publications/105913 8410.html ; May 2002 and May 2003.

(Khair, 1999) Khair, Magdi, McKinnon, Dale L. Performance Evaluation of Advanced Emission Control Technologies for Diesel Heavy-Duty Engines , SAE 1999-01-3564;

1999.

(MECA, 2003) Manufactures of Emission Controls Asso ciation. Exhaust Emission

Controls Available to Reduce Emissions from Non-Roa d Diesel Engines ; April 2003.

(U.S. EPA 2000) U.S. EPA’s 2007 Final Rule on the C ontrol of Emissions of Air Pollution from 2007 and later Model Year Heavy-Duty Highway Engines and Vehicles; Revisions of Light-Duty On-Board Diagnostic Require ments (66 FR 5002, January 18, 2001).VI - 1

VI. ENVIRONMENTAL IMPACTS

This chapter describes the potential environmental impacts of this proposed regulation. This proposed regulation is intended to protect the health of California’s citizens by reducing diesel engine emissions from cargo handlin g equipment at ports and intermodal rail yards. An additional consideration is the impact that implementation of the proposed regulation may have on the environment . Based upon available information, the ARB staff has determined that no s ignificant adverse environmental impacts should occur as the result of adopting the proposed regulation. This chapter describes the potential impacts that the proposed r egulation may have on wastewater treatment, hazardous waste disposal, and air qualit y.

A. Legal Requirements

The California Environmental Quality Act (CEQA) and ARB policy require an analysis to determine the potential environmental impacts of pr oposed regulations. Because the ARB's program involving the adoption of regulations has been certified by the Secretary of Resources pursuant to Public Resources Code sect ion 21080.5, the CEQA environmental analysis requirements may be included in the Initial Statement of Reasons (ISOR) for this rulemaking. In the ISOR, A RB must include a “functionally equivalent” document, rather than adhering to the f ormat described in CEQA of an Initial Study, a Negative Declaration, and an Environmental Impact Report. In addition, staff will respond, in the Final Statement of Reasons for the regulation, to all significant environmental issues raised by the public during th e public review period or at the Board public hearing.

Public Resources Code section 21159 requires that t he environmental impact analysis conducted by ARB include the following:

• An analysis of reasonably foreseeable environmenta l impacts of the methods of compliance;

• An analysis of reasonably foreseeable feasible mit igation measures; and

• An analysis of reasonably foreseeable alternative means of compliance with the regulation.

Compliance with the proposed regulation is expected to directly affect air quality and potentially affect other environmental media as wel l. Our analysis of the reasonable foreseeable environmental impacts of the methods of compliance is presented below.

Regarding mitigation measures, CEQA requires an age ncy to identify and adopt feasible mitigation measures that would minimize an y significant adverse environmental impacts described in the environmental analysis.

The proposed regulation is needed to reduce the ris k from exposures to diesel PM as required by Health and Safety Code (HSC) section 39 666 and 39667, and to fulfill the goals of the October 2000 Diesel Risk Reduction Pla n. (ARB, 2000) The regulation isVI - 2

also necessary to fulfill ARB’s obligations under H SC 43013 and 43018 to achieve the

maximum feasible and cost effective emission reduct ions from all mobile source categories, including off-road diesel engines and e quipment. The emission reductions from the proposed regulation in ambient levels of P M, NOx and reactive organic gases (ROG) will help make progress in meeting the State and Federal ambient air quality

standards for ozone and PM in non-attainment areas of the State. Alternatives to the proposed regulation have been discussed earlier in Chapter IV of this report. ARB staff

have concluded that there are no alternative means of compliance that would achieve

similar diesel PM emission reductions at a lower co st.

B. Effects on Air Quality

The proposed regulation will provide diesel PM and NOx emission reductions throughout California, especially in areas having p orts and intermodal rail yards, areas

which in most cases are non-attainment for the Stat e and federal ambient air quality standards for ozone, PM 10 , and PM 2.5 . The projected controlled emissions from cargo handling equipment engines are presented in Table V I-1.

Table VI-1: Projected Annual Emissions for Cargo Ha ndling Equipment Used in

Ports and Intermodal Rail Yard Applications with Im plementation of the Proposed Regulation

2004 Emissions (Tons per Day) 2010 Emissions

(Tons per Day) 2020 Emissions

(Tons per Day) Category

PM NOx PM NOx PM NOx

Cranes 0.07 1.93 0.04 1.75 0.02 1.32

Excavators 0.01 0.24 0.00 0.18 0.00 0.04

Forklifts 0.03 0.54 0.01 0.38 0.00 0.17

Container Handling Equipment 0.11 3.25 0.09 3.33 0.04 1.63

Other General Industrial Equipment 0.00 0.08 0.00 0.08 0.00 0.03

Sweepers / Scrubbers 0.00 0.04 0.00 0.04 0.00 0.02

Tractors / Loaders /

Backhoes 0.01 0.18 0.01 0.17 0.00 0.07

Yard Trucks 0.42 12.78 0.15 6.49 0.05 1.12

Total 0.65 19.04 0.31 12.43 0.12 4.41

ARB staff estimates that, with implementation of th e proposed regulation, diesel PM emissions from cargo handling equipment will be red uced by approximately 0.25 tons per day in 2010, and 0.24 tons per day in 2015 rela tive to uncontrolled levels. As shown in Figure VI-1, it is about a 40 and 66 perce nt reduction from the projected 2010 and 2015 baseline levels, respectively. In 2020, A RB staff expects a 39 percent reduction in PM. We also anticipate reductions in reactive organic compounds andVI - 3

carbon monoxide; however, the emission reductions f rom these pollutants are not yet quantified in the emissions inventory.

Figure VI-1: Projected Diesel PM Emissions with and without the Regulation

Between 2007 and 2020, we estimate approximately 86 5 tons of PM will be removed from California's air as a result of the regulation . As shown in Table VI-2, ARB staff estimates that, as older engines are replaced with new engines or retrofitted with diesel emission control strategies, there will also be a r eduction in NOx of approximately 18,633 tons in the same time frame.

Table VI-2: Emission Benefits from Implementation o f the Proposed Cargo Handling Equipment Regulation

PM NOx

Emissions Reduced 2007 to 2020 (Tons) 865 18,633

Annual Average Reductions (Tons per Year) 67 1,433 0 50 100 150 200 250 30020042007201020152020

YearTPY PM Baseline

PM Reg InfluenceVI - 4

Figure VI-2: Projected NOx Emissions with and witho ut the Regulation

C. Health Benefits Analysis

Reduced Ambient Particulate Matter Levels

A substantial number of epidemiologic studies have found a strong association between exposure to ambient particulate matter (PM) and adv erse health effects. (ARB, 2002) For this report, ARB staff evaluated the impacts th e proposed regulation would have on potential cancer risks and conducted a quantitative analysis of four potential non-cancer health impacts associated with exposures to ambient levels of directly emitted diesel

PM.

Reduction in Potential Cancer Risks

The reductions in diesel PM emissions that will res ult from implementation of the proposed regulation will reduce the public’s exposu res to diesel PM emissions and the potential cancer risks associated with those exposu res. ARB staff used the air dispersion model and model inputs developed for the POLA and POLB health risk assessment to estimate the reductions in potential cancer risk that would result in the area surrounding the ports of POLA and POLB from im plementation of the proposed regulation. ARB staff believes that the results fr om this analysis provide quantitative results for exposures around the Ports of Los Angel es and Long Beach and are generally applicable to other ports and intermodal rail yards in California, providing a qualitative estimate for those areas.

To investigate the reductions in potential risks th at will result as emissions from cargo handling equipment decline, ARB staff used dispersi on modeling and the projected

2010 and 2020 emissions inventories to estimate the ambient concentration of diesel PM emissions that result from the operation of carg o handling equipment at the Ports of Los Angeles and Long Beach in 2010 and 2020. The p otential cancer risks from 0 1000 2000 3000 4000 5000 6000 7000 800020042007201020152020

YearTPY

NOx Baseline

NOx Reg InfluenceVI - 5

exposures to the projected 2010 and 2020 emissions were then estimated and compared to the 2002 levels to determine how the po tential risks will change. As shown in Figures VI-3 and VI-4, we expect a significant d ecline in the number of people exposed to high risk levels from cargo handling equ ipment emissions and the acres impacted as the proposed regulation is implemented. Based on our analysis, which is summarized in Appendix K, we estimate that in 2010 there will be a 56 percent reduction in the population-weighted average risk r elative to the risk levels in 2002 from cargo handling equipment emissions and an 82 percen t reduction in 2020.

Figure VI-3: Residential Areas Impacted by the Prop osed Regulation for Baseline

Year (2002) and Predicted 2010 and 2020 at the POLA and POLB

0 20,000 40,000 60,000 80,000 100,000 120,000 140,000Residential Areas (Acres) 2002 Baseline

2010 with Reg

2020 with Reg

2002 Baseline 119,000 4,100 410 50

2010 with Reg 61,700 300 80 10

2020 with Reg 14,640 40 10

Risk > 10 Risk >100 Risk > 200 Risk > 500

< 1VI - 6

Figure VI-4: Population Affected by the Proposed Re gulation for Baseline Year

(2002) and Predicted 2010 and 2020 at the POLA and POLB

0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000Number of Population 2002 Baseline

2010 with Reg

2020 with Reg

2002 Baseline 1,444,000 82,000 11,100 3,200

2010 with Reg 832,400 9,000 3,630 960

2020 with Reg 224,650 2,770 960 40

Risk > 10 Risk >100 Risk > 200 Risk > 500

Non-Cancer Health Impacts and Valuations

To determine the impacts from the proposed regulati on on non-cancer health endpoints, ARB staff used the methodology described previously in Chapter III but evaluated the change in ambient PM levels that are expected due t o implementation of the proposed regulation. This analysis shows that the statewide cumulative impacts of the emissions reduced through this regulation from year 2007 thro ugh 2020 are approximately:

• 32 premature deaths (16 to 48, 95% CI)

• 820 asthma attacks (200 to 1,400, 95% CI)

• 7,100 work loss days (6,020 to 8,200, 95% CI)

• 38,000 minor restricted activity days (31,000 to 4 5,000, 95% CI)

Value of Non-Cancer Effects

Premature Death : The U. S. EPA has established $6.3 million (in 2 000 $) for a 1990 income level as the mean value of avoiding one deat h. (EPA, 2003) As real income increases, people may be willing to pay more to pre vent premature death. The U.S. EPA further adjusted the $6.3 million value to $8 million (in 2000 $) for a 2020 income level. Assuming that real income grew at a constant rate from 1990 and will continue at the same rate until 2020, we adjusted t he value of avoiding one death for income growth. We then updated the value to 2005 do llars and discounted values of avoiding a premature death in the future back to th e year 2005. The U.S. EPA’sVI - 7

guidance of social discounting recommends using bot h three and seven percent discount rates. (EPA, 2000)

Based on these rates, the total valuation of the av oided premature deaths is about $160 million at seven percent discount rate, and $2 20 million at three percent discount rate. Based on using the annual avoided deaths as weights, the weighted average value of reducing a future premature death, discoun ted back to the year 2005, is around $5 million at seven percent discount rate, and $7 m illion at three percent.

Non-Mortality Health Effects : To estimate the values of certain non-mortality health effects, we use U.S. EPA valuations, updated to 200 5 dollars, for avoiding non-fatal health effects (EPA, 2003):

• $49 for acute asthma attack

• $180 for work loss day

• $58 for minor restricted activity day (MRAD)

The expected reduction in acute asthma attack is ab out 820 cases. The total valuation is about $25,000 using a seven percent discount rat e, and $33,000 using a three percent discount rate.

For the 7,120 avoided work loss days, their valuati on is about $0.8 million using a seven percent discount rate, and $1.1 million using a thr ee percent discount rate. For the 37,820 avoided MRAD, their valuation is about $1.4 million using a seven percent discount rate, and $1.8 million using a three perce nt discount rate.

Reduced Ambient Ozone Levels

Emissions of NOx and ROG are precursors to the form ation of ozone in the lower atmosphere. Exhaust from diesel engines contribute s a substantial fraction of ozone precursors in any metropolitan area. Therefore, re ductions in NOx and ROG from diesel engines would make a considerable contributi on to reducing exposures to ambient ozone. Controlling emissions of ozone prec ursors would reduce the prevalence of the types of respiratory problems ass ociated with ozone exposure and would reduce hospital admissions and emergency visi ts for respiratory problems.

D. Reasonably Foreseeable Environmental Impacts as a Result of Potential Compliance Methods

We have identified potential adverse environmental impacts from the use of diesel oxidation catalysts (DOCs) and diesel particulate f ilters (DPFs). These include a potential increase in sulfate PM, a potential incre ase in NO 2 from some DPFs, and the potential for creating hazardous wastes. As descri bed below, options are available to mitigate these potential adverse impacts.VI - 8

Diesel Oxidation Catalyst (DOC)

Two potential adverse environmental impacts of the use of diesel oxidation catalysts have been identified. First, as is the case with m ost processes that incorporate catalytic oxidation, the formation of sulfates increases at h igher temperatures. Depending on the exhaust temperature and sulfur content of the fuel, the increase in sulfate particles may offset the reductions in soluble organic fraction e missions. Using low sulfur diesel fuel can minimize this effect. Starting in 2006 all off -road engines will be required to use CARB fuel (<15 ppm sulfur).

Second, a diesel oxidation catalyst could be consid ered a “hazardous waste” at the end of its useful life depending on the materials used in the catalytic coating. Because catalytic converters have been used on gasoline pow ered on-road vehicles for many years, there is a very well-established market for these items (see, for example, http://pacific.recycle.net – an Internet posting of buyers and sellers of var ious scrap materials). In the recycling process, the converte rs are broken down, and the metal is added to the scrap-metal stream for recycling, whil e the catalysts (one or a combination of the platinum group metals) are extracted and reu sed.

Because of platinum’s high activity as an oxidation catalyst, it is the predominant platinum group metal used in the production of dies el oxidation catalysts. There is a very active market for reclaimed platinum for use i n new catalytic converters, jewelry, fuel cells, cathode ray tube screens, catalysts use d during petroleum refining operations, dental alloys, oxygen sensors, platinum electrode spark plugs, medical equipment, and platinum-based drugs for cancer trea tment, to name a few. (Kendall, 2002) (Kendall, 2003)

Catalyzed Diesel Particulate Filters

These devices are composed of a ceramic diesel part iculate filter along with a platinum catalyst to catalyze the oxidation of carbon-contai ning emissions and significantly reduce diesel PM emissions. This is an obvious pos itive environmental impact.

However, there are also inorganic solid particles p resent in diesel exhaust, which are captured by diesel particulate filters. These inor ganic materials are metals derived from engine oil, diesel fuel, or engine wear and tear. While the PM filter is capable of capturing inorganic materials, these materials are not oxidized into a gaseous form and expelled.

Because these materials would otherwise be released into the air, the filters are benefiting the environment by capturing these metal lic particles, known as “ash.” However, the ash that is collected in the PM filter must be removed from the filter periodically to maintain the filter’s effectiveness

.

Ash collected from a diesel engine using a typical lubrication oil and no fuel additives has been analyzed and is primarily composed of oxid es of the following elements:VI - 9

calcium, zinc, phosphorus, silicon, sulfur, and iro n. Zinc is the element of primary concern because, if present in high enough concentr ation, it can make a waste a hazardous waste. Title 22, CCR, section 66261.24 e stablishes two limits for zinc in a waste: 250 milligrams per liter for the Soluble Th reshold Limit Concentration and 5,000 milligrams per kilogram for the Total Thresho ld Limit Concentration. The presence of zinc at or above these levels would cau se a sample of ash to be

characterized as a hazardous waste.

Under California law, it is the generator's respons ibility to determine whether their waste is hazardous or not. Applicable hazardous waste la ws are found in the HSC, division 20; title 22, CCR, division 4.5; and title 40 of the Code of Federal Regulations. Staff recommends owners that install a diesel parti culate filter on an engine to contact

both the manufacturer of the diesel emission contro l system and the California Department of Toxic Substances Control (DTSC) for a dvice on proper waste
management.

ARB staff has consulted with personnel of the DTSC regarding management of the ash from diesel particulate filters. DTSC personnel ha ve advised ARB that it has a list of facilities that accept waste from businesses that q ualify as a conditionally exempt small quantity generator. Such a business can dispose of a specific quantify of hazardous
waste at certain Household Hazardous Waste events, usually for a small fee. An owner who does not know whether or not he qualifies or wh o needs specific information regarding the identification and acceptable disposa l methods for this waste should

contact the California DTSC. 9

Additionally, the technology exists to reclaim zinc from waste. For example, the Swedish company MEAB has developed processes for ex tracting zinc and cadmium

from various effluents and industrial waste streams . Whether reclamation for reuse will be economically beneficial remains to be seen. (ME AB, 2003)

Because of the time and costs associated with filte r maintenance, there are also efforts by industry to reduce the amount of ash formed. Mo st of the ash is formed from the inorganic materials in engine oil, particularly fro m zinc-containing additives necessary to control acidification of engine oil – due in part t o sulfuric acid derived from sulfur in

diesel fuel. As the sulfur content of diesel fuel is decreased, the need for acid neutralizing additives in engine oil should also de crease. A number of technical programs are ongoing to determine the impact of cha nges in oil ash content and other characteristics of engine oil on exhaust emission c ontrol technologies and engine wear and performance.

It may also be possible to reduce the ash level in diesel exhaust by reducing oil consumption from diesel engines. Diesel engine man ufacturers over the years have reduced engine oil consumption in order to reduce P M emissions and to reduce

9 Information can be obtained from local duty office rs and from the DTSC web site at http://www.dtsc.ca.gov.VI - 10

operating costs for engine owners. Further improve ments in oil consumption may be possible in order to reduce ash accumulation rates in diesel particulate filters.

In addition, measurements of NOx emissions for heav y-duty diesel vehicles equipped with passive catalyzed filters have shown an increa se in the NO 2 portion of total NOx emissions, although the total NOx emissions remain approximately the same. In some applications, passive catalyzed filters can promote the conversion of nitrogen oxide (NO) emissions to NO 2 during filter regeneration. More NO 2 is created than is actually being used in the regeneration process; and the exc ess is emitted. The NO 2 to NOx ratios could range from 20 to 70 percent, depending on factors such as the diesel particulate filter systems, the sulfur level in the diesel fuel, and the duty cycle. (DaMassa, 2002)

Formation of NO 2 is a concern because it irritates the lungs and lo wers resistance to respiratory infections. Individuals with respirato ry problems, such as asthma, are more susceptible to the effects. In young children, nit rogen dioxide may also impair lung development. In addition, a higher NO 2 /NOx ratio in the exhaust could potentially result in higher initial NO2 concentrations in the atmosph ere which, in turn, could result in higher ozone concentrations.

Model simulations have shown that a NO 2 to NO X emission ratio of approximately 20 percent would nearly eliminate any impact of inc reased NO 2 emissions. (DaMassa, 2002). According to the model, at the NO 2 to NOx ratio of 20 percent, there will be a decrease of the 24-hour ozone exposure (g reater than 90 parts per billion) by two percent while an increase of the peak 1-hour NO 2 by six percent (which is still within

the NO 2 standard).

The health benefits derived from the use of PM filt ers are immediate and offset the possible adverse effects of increases in NO 2 emissions. For this reason, a cap of 20 percent NO 2 to NOx emission ratio was established for all dies el emission control systems through ARB’s Verification Procedure.

Alternative Fuels

As discussed in Appendix F, a number of alternative fuels and alternative diesel fuels show great promise in their potential to reduce die sel PM emissions. These include alternative diesel fuels such as biodiesel, emulsif ied diesel fuel, and Fischer-Tropsch fuels, and alternative fuels such as natural gas. No significant negative environmental impacts have been determined from the use of altern ative fuels. With respect to alternative diesel fuels, there may be a slight inc rease in NOx emissions as a result of biodiesel use. (Hofman and Solseng, 2002)

To ensure there are no adverse impacts from the use of alternative diesel fuels, the proposed regulation requires any alternative diesel -fuel or fuel additives used in a cargo handling equipment engine to be verified under the ARB’s Verification Procedure. The Verification Procedure permits verification only if a multimedia evaluation of the use ofVI - 11

the alternative diesel fuel or additive has been co nducted. In addition, verification requires a determination by the California Environm ental Policy Council that such use will not cause a significant adverse impact on publ ic health or the environment pursuant to HSC section 43830.8 (see Public Resource Code, s ection 71017).

E. Reasonably Foreseeable Mitigation Measures

ARB staff has concluded that no significant adverse environmental impacts should occur from adoption of and compliance with the prop osed regulation. Therefore, no mitigation measures would be necessary.

F. Reasonably Foreseeable Alternative Means of Comp liance with the Proposed Regulation

Alternatives to the proposed regulation are discuss ed in Chapter IV of this report. ARB staff has concluded that the proposed regulation pr ovides the most effective and least burdensome approach to reducing children’s and the general public's exposure to diesel PM, NOx, and other air pollutants emitted from dies el-fueled cargo handling equipment.VI - 12

REFERENCES:

(ARB, 2000) Air Resources Board. Risk Reduction Plan to

Reduce Particulate Matter Emissions from Diesel-Fue led Engines and Vehicles

. http://www.arb.ca.gov/diesel/documents/rrpapp.htm ; October 2000.

(ARB, 2002) Air Resources Board and Office of Envir onmental Health Hazard

Assessment. Public Hearing to Consider Amendments to the Ambien t Air Quality Standards for Particulate Matter and Sulfates, Staf f Report

. http://www.arb.ca.gov/research/aaqs/std-rs/pm-final /pm-final.htm ; May 2002.

(DaMassa, 2002) DaMassa, John

. California Air Resources Board. Presentation: Air Quality Effects of Trap-Related Emissions (Updated) ; February 6, 2002.

(Kendall, 2002) Kendall, Tom; Johnson Matthey. Platinum 2002 ; http://www.platinum.matthey.com/publications/105154 3656.html ; May 2002.

(Kendall, 2003) Kendall, Tom; Johnson Matthey. Platinum 2003 ; http://www.platinum.matthey.com/publications/105913 8410.html ; May 2003.

(MEAB, 2003) Metallextraktion AB (MEAB). http://www.meab-mx.se/en/index.htm ; August 2003.

(Krewski et al., 2000) Krewski D.; Burnett R.; Gol dberg M.; Hoover K.; Stemiatychi J.; Jerrett M.; Abrahamovicz M.; White W. Health Ef fects Institute, Cambridge,

Massachusetts. Reanalysis of the Harvard Six Cities Study and the American Cancer Society Study of Particulate Air Pollution and Mort ality

. http://es.epa.gov/ncer/science/pm/hei/Rean-ExecSumm .pdf ; 2000.

(Lloyd and Cackette, 2001) Lloyd, A.C.; Cackette, T .A.; J Air Waste Management

Assoc. Diesel Engines: Environmental Impact and Control ;., 51:809-847. http://www.arb.ca.gov/research/seminars/lloyd/AWMA2 001/JAWMADieselCriticalRevie w.pdf ; 2001.

(U.S. EPA, 1999) United States Environmental Protec tion Agency. The Benefits and

Costs of the Clean Air Act 1990 to 2010 . EPA-410-R-99-001. http://www.epa.gov/air/sect812/copy99.html ; November 1999.

(EPA, 2000) United States Environmental Protection Agency., Guidelines for Preparing Economic Analyses. EPA240-R-00-003. http://www.epa.gov/opei/pubsinfo.htm ; September 2000.

(EPA, 2003) United States Environmental Protection Agency, Assessment and Standards Division, Office of Transportation and Ai r Quality. Draft Regulatory ImpactVI - 13

Analysis: Control of Emissions of Air Pollution fro m Nonroad Diesel Engines and Fuel

. EPA420-R-03-008. CD-ROM. Research Triangle Park, No rth Carolina. http://www.epa.gov/otaq/cleaner-nonroad/r03008.pdf ; April 2003.VII - 1

VII. ECONOMIC IMPACTS

In this chapter, we present the estimated costs and economic impacts associated with implementation of the proposed regulation for cargo handling equipment. The expected capital and recurring costs for potential complianc e options are presented, the cost and associated economic impacts for businesses, as well as an analysis of the costeffectiveness of the proposed regulation.

A. Summary of the Economic Impacts

Air Resources Board (ARB) staff estimates the cost for compliance with the re gulation to be approximately 71 million dollars for the tota l capital and recurring costs. This corresponds to about 5.1 million dollars annually o n average for the years 2007 through
2020. This cost, which is based on 2004 dollars, r epresents the capital cost of equipment, maintenance and replacement, and reporti ng costs from 2007 through to

2020.

The cost for a business to comply with this regulat ion will vary depending on the number and type of cargo handling equipment and whether th e equipment is equipped with a verified diesel exhaust control system (VDECS) and/ or later replaced with a new Tier 4 engine in 2015. For example, the costs for a typic al crane engine (rated at 210 hp operated 1370 hours per year) with a diesel particu late filter (DPF) is about $17,500 for equipment and installation. The estimated annual o ngoing costs are based on a reporting cost of about $500 per terminal with the cost spread over many pieces of equipment. To determine the cost a typical busines s may incur, we used the ARB Survey data on the average number and type of equip ment operated by a port container terminal, a port bulk handling terminal, and an int ermodal rail yard and applied the annual average costs for the various equipment type s. Based on our analysis, we estimate that the total 2007 to 2020 costs to a typ ical business will be in the range of $343,000 to $1,373,000.

California businesses are affected by the proposed annual cost of the regulation to the extent that the implementation of the proposed regu lation reduces their profitability. Overall, most affected businesses will be able to a bsorb the costs of the proposed regulation with no significant adverse impacts on t heir profitability. This finding is based on the staff’s analysis of the estimated change in “return on owner’s equity” (ROE). The analysis found that the overall change in ROE range s from negligible to a decline of about 0.1 percent. Generally, a decline of more th an ten percent in ROE suggests a significant impact on profitability. Because the p roposed regulation would not alter significantly the profitability of most businesses, we do not expect a noticeable change in employment, business creation, elimination, or e xpansion, and business competitiveness in California. The change in ROE i s expected to be a little larger for a small business, but still well below the 10 percent limit.

Staff does not have access to financial records for most of the companies that responded to the survey. However, the small busine ss status of the surveyVII - 2

respondents was determined by including a query on the ARB Survey for the owner of the equipment to indicate if their business was a s mall business (annual gross receipts of $1,500,000 or less for transportation and wareho using per California Government Code Section 11342.610). Approximately 10 percent (7 out of 69) of the respondents

identified themselves as small businesses. Six of these small businesses provided sufficient data on their equipment inventory to all ow an estimation of the estimated costs for compliance with the proposed regulation. Based on our analysis, the total 2007- 2020 costs to small businesses ranged from $41,000 to $638,000 with an average cost of $227,000.

Cost-effectiveness is expressed in terms of control costs (dollars) per unit of air emissions reduced (pounds). The cost-effectiveness for the proposed regulation is determined by dividing the total capital costs plus the annual operation and maintenance and reporting costs by the total pounds of diesel PM reduced during the years 2007 to 2020. All costs are in 2004 equivale nt expenditure dollars. With a total cost of 71 million dollars reducing approximately 1 .73 million pounds of diesel PM, we estimate the overall cost-effectiveness of the prop osed regulation to be about $41 per pound of diesel PM reduced, considering only the be nefits of reducing diesel PM. Because the proposed regulation will also reduce NO x emissions, we could allocate half of the costs of compliance against these benefits, resulting in cost-effectiveness values of approximately $21/lb of diesel PM and $1/lb of N Ox reduced.

The health benefits of implementing the proposed re gulation are substantial. The estimated statewide benefit of reduced premature mo rtality is about $160 million using a seven percent discount rate or $220 million using a three percent discount rate (2005 dollars).

ARB staff performed the cost analysis relative to t he year 2004 (current value of the control costs), and unless otherwise stated, all co sts are given in 2004 dollars. Where

future costs are mentioned in the cost-effectivenes s and mortality sections, they are based on 2004 dollars. In addition, all cost estim ates are based on currently available technology as described below; staff believes it is likely that the costs will decrease as technology improves and production and sales volume s increase. Additional details on the cost analysis can be found in Appendix D.

B. Legal Requirements

In this section, we explain the legal requirements that must be satisfied in analyzing the economic impacts of the regulation.

Section 11346.3 of the Government Code requires Sta te agencies to assess the potential for adverse economic impacts on Californi a business enterprises and individuals when proposing to adopt or amend any ad ministrative regulation. The assessment shall include a consideration of the imp act of the proposed regulation on California jobs, business expansion, elimination or creation, and the ability of California business to compete with businesses in other states

.VII - 3

Also, State agencies are required to estimate the c ost or savings to any State or local agency and school district in accordance with instr uctions adopted by the Department of Finance (DOF). The estimate shall include any non- discretionary cost or savings to local agencies and the cost or savings in federal f unding to the State.

In addition, Health and Safety Code section 57005 r equires the Air Resources Board to perform an economic impact analysis of submitted al ternatives to a proposed regulation before adopting any major regulation. A major regu lation is defined as a regulation that will have a potential cost to California business e nterprises in an amount exceeding ten

million dollars. Because the estimated cost of the regulation does exceed 10 million dollars, we have conducted an economic analysis of submitted alternatives to the proposal.

The following is a description of the methodology u sed to estimate costs as well as ARB staff’s analysis of the economic impacts on Califor nia businesses and State and local agencies.

C. Methodology for Estimating Costs Associated with Implementation

In this section, we describe how we estimated the c osts associated with the proposed regulation. Briefly, the methodology entailed:

• estimating capital and recurring costs in 2004 dol lars associated with various compliance options i.e. purchasing a new engine, re powering, using a VDECS;

• identifying the preferred compliance option for th e different equipment types and age of engine;

• projecting the 2004 emissions inventory to future years using the OFFROAD model to determine the number of new engines in eac h year and the number of pre-2007 engines remaining that need to comply with the regulation in that year;

and

• assuming all terminals have 4 or more pieces of eq uipment, apply the estimated costs to the distribution of engines in each future year that need to come into compliance.

Based on the ARB Survey and updated emissions inven tory, we estimate that in 2004 approximately 120 private companies having about 3, 700 pieces of equipment using diesel engines will be affected by this regulation. Businesses will incur compliance costs to the extent that they have equipment that m ust meet the performance standards in the regulation. The compliance costs will vary depending on the number and operating parameters of the cargo handling equipmen t operated and the approach taken to comply with the proposed regulation. Costs were estimated for all categories of equipment except “other.” The other category conta ins a diverse set of equipment such as aerial lifts, railcar movers, and other off-high way trucks. ARB staff believes that theVII - 4

costs for this equipment should fall within the ran ge of costs estimated for the other more well-defined categories. Details of the cost analysis are provided in the following sections and in Appendix D.

Capital and Recurring Costs

The cost evaluation considers both capital and on-g oing or recurring operating costs. Costs associated with application of VDECS, early r etirement of equipment and any incremental costs associated with the purchase of c leaner equipment were considered

as described below.

VDECS: The capital investment costs for purchase and in stallation of VDECS were determined from actual costs of installing VDECS on cargo handling equipment dieselfueled engines or similar equipment in California o ver the last 3-5 years as shown in Table VII-1. Costs were developed for each type of cargo handling equipment. The VDECS costs were estimated for those VDECS likely t o be available for compliance in the regulation timeframe. (POLB DECS)

Table VII-1: Capital Costs Assumptions for VDECS

Equipment Category VDECS* Average Cost ($)

Crane Passive DPF $ 17,520 Excavator DOC $ 2,269 Forklift Active DPF $ 6,000 Container Handling Equip DOC $ 2,269 Sweeper/Scrubber DOC $ 2,269 Tractor/Loader/Backhoe DOC $ 2,269

Yard Tractor NA

*DPF means a diesel particulate filter and DOC is a diesel oxidation catalyst.

Fuel costs, in cases where operators of container h andling equipment with 2003 to 2006 model year engines choose to install a Level 2 DECS that uses emulsified diesel, were also estimated. In some cases, this may be the pre ferred compliance option since by using a Level 2 DECS with 2003 to 2006 model year e ngines, the owner/operator would not have to replace the equipment in 2015. The 200 3 to 2006 model year container handling equipment are candidates for this Level 2 DECS. The cost estimate assumed an additional cost of $0.20 per gallon of emulsifie d fuel applied to the average fuel consumption estimate of 9625 gallons per year. The resulting recurring additional fuel cost of $1925 per piece of equipment is applied.

Early Retirement:

For many categories, one compliance option is for accelerated turnover (early retirement) of an engine to a clean er engine. The cost associated with early equipment retirement is the remaining residua l value of the old equipment based on straight line depreciation according to the foll owing equation:VII - 5

Residual Value = (New Equipment Costs – Used Equipment Co sts) X # Years Early Retirement Expected Useful Life

The assumptions used for the average costs for new and used equipment i.e. equipment at the end of its useful life, are presen ted in Table VII-2 below. These cost

values are used to calculate the residual value of equipment subject to early retirement. For example, the residual value for a top pick (con tainer handling equipment) being replaced 3 years before the end of its normal expec ted life (16 years) is estimated to be:

$65,625 = ($400,000 - $50,000) X 3 years 16 years/useful life In this case, the early retirement costs attributed to compliance with the regulation for this top pick would be $65,625.

Table VII-2: Estimated Value of New and Used Equipm ent 10

Equipment Type New 2004 $ Used
Crane $ 1,200,000 $ 0** Excavator $ 350,000 $ 50,000

Forklift* NA NA Container Handling Equip $ 400,000 $ 50,000 Sweeper/Scrubber $ 50,000 $ 5,000

Tractor/Loader/Backhoe $ 75,000 $ 10,000 Yard Tractor $ 60,000 $ 6,000

*The estimated forklift values were difficult to es tablish due to the wide range of forklift sizes and costs. Only five forklifts in the state were estimated to be subject to early

retirement near the end of their modeled natural at trition. The costs for these two forklifts are expected to be very low and were not included in the analysis. ** Transportation costs could be equal to or more t han the resale value.

Incremental Costs Associated with Cleaner Engines: With the exception of yard trucks,

it was assumed that there would be no additional in cremental costs attributable to the regulation associated with purchasing a new cleaner off-road engine (i.e. replacing a tier 1 engine with a tier 3 engine). For yard trucks, which will be in most cases transitioning from an off-road engine to an on-road engine, we as sumed an incremental cost differential of $1,500 per yard truck. This cost d ifference is based on the current cost difference quoted by manufacturers for yard trucks with an off-road engine versus specifying an on-road engine. It is assumed that a fter 2010, when Tier IV engines are expected to become available, there will be no capi tal costs attributed to the purchase of yard trucks with on-road engines.

Recurring Costs:

Operating or recurring costs include expenditures for recordkeeping and reporting and possibly incremental fuel costs. Reporting costs for compliance with

10 Various data sources; conversations with terminal operators (ARB, APL, 2005), equipment sales personnel inquiries (ARB, Ottawa, 2004), use intern et sales websites.VII - 6

the record keeping and reporting requirements in th e proposed regulation was assumed to be $500 per terminal or business per year

. Staff estimated approximately 5 hours

would be needed to collect and send this informatio n at a pay rate of $100 per hour. ARB staff believes this is a conservative assumptio n since many companies already keep these records. For both the passive and activ e DPF, additional operating and recurring costs for cleaning and replacement is exp ected to be $3,020 and $1,100 annually for the cranes and forklifts, respectively . This additional operating and recurring costs for the cranes and forklifts is bas ed on a $300 cleaning once every three years and replacement every six years. Staff estim ates that the passive and active DPFs will last longer than the 4200 hours given in the warranties and six years for cranes and eight years for forklifts is approximate ly two times this warranty period. The cost for periodic cleaning of DPFs was assumed to b e $300. These recurring fuel, DPF replacement, and cleaning costs are included in the annual costs presented in Table VII-7, Table VII-8, and Table VII-9.

Preferred Compliance Option

Based on our understanding of the technology availa ble to comply with the proposed regulation and the compliance options, we identifie d likely compliance pathways that were then assumed for the cost analysis. While the proposed regulation provides flexibility to operators in determining what compli ance option to pursue and the costs will vary with the approach chosen, we believe that the assumptions used in this cost analysis provide a representative picture of the po tential costs associated with compliance. Tables VII-3 and VII-4 below summarizes the assumptions for new and inuse equipment respectively.VII - 7

Table VII-3: Compliance Assumptions for New Equipm ent

Equipment Category Compliance Path Assumed in Cost Analysis Cranes Until 2011, purchase new crane with current model year off-road engine. Apply passive DPF within one year of purch ase. After 2010, purchase crane equipped with Tier IV off-road engine. Excavators Until 2011, purchase new excavator with current model year offroad engine. Apply DOC within one year of purchase . After 2010, purchase excavator equipped with Tier IV off- road engine. Forklifts Until 2011, purchase new forklift with cu rrent model year off-road engine. Apply active DPF within one year of purcha se. After 2010, purchase forklift equipped with Tier IV off-r oad engine. Container Handling Equipment Until 2011, purchase new container handling equipme nt with current model year off-road engine. Apply DOC with in one year of purchase. After 2010, purchase container handli ng equipment equipped with Tier IV off-road engine. Sweeper/Scrubber Until 2011, purchase new sweeper/s crubber with current model year off-road engine. Apply DOC within one year of purchase. After 2010, purchase sweeper/scrubber equipped with Tier IV offroad engine.

Tractor/Loader/

Backhoes Until 2011, purchase new tractor/loader/backhoe wit h current model year off-road engine. Apply DOC within one y ear of purchase. After 2010, purchase tractor/loader/back hoe equipped with Tier IV off-road engine. Yard Trucks Purchase yard truck with current model year on-road engine until 2010. After 2010, purchase Tier IV off-road engine equipped yard

truck.VII - 8

Table VII-4: Compliance Assumptions for In-Use Equ ipment

Equipment Category Compliance Path Assumed in Cost Analysis Cranes For Tier 0 engines, early retirement, either the equipment or just the engine depending on age. For Tier 1-3, assume 91% apply passive DPF and 9% early retirement until 2012 when Tier IV engines become available. Excavators For Tier 0 engines, early equipment retirement. For Tier 1-3, assume 100% apply DOC until 2012 when Tier IV engines become

available. Forklifts For Tier 0 engines, early equipment retirement. For Tier 1-3, assume 100% apply Active DPF until 2012 when Tier IV engines

become available. Container Handling Equipment For Tier 0 engines, early equipment retirement. For Tier 1-3, assume 100% apply DOC until 2012 when Tier IV engines become

available. Sweeper/Scrubber For Tier 0 engines, early equipmen t retirement. For Tier 1-3, assume 100% apply DOC until 2012 when Tier IV engines become

available. Tractor/Loader/Backhoes For Tier 0 engines, early e quipment retirement. For Tier 1-3, assume 100% apply DOC until 2012 when Tier IV engines become

available. Yard Trucks Early equipment retirement following th e compliance phase-in schedule starting in 2007 replacing with new on- road engine yard trucks. Assume 65% of the 1996 – 2005 model years yard trucks are offroad engines with an ECS, 10% have offroad engines without any ECS, and 25% have on-road engines.VII - 9

Future Year Equipment Populations Subject to the Re gulatory Requirements

To determine the distribution of engines in future years and the number of engines needing to come into compliance in each year, the 2 004 port and intermodal rail yard cargo handling equipment inventory was projected to future years using the OFFROAD model. The OFFROAD model calculates equipment grow th, annual use, age distribution, and attrition for eight categories of equipment at ports and intermodal rail yards. Built into the model is the estimate of equ ipment by model year, by engine type (on-road or off-road) and with emissions control sy stems. Because the proposed regulation phases in compliance over several years, compliance with the proposed regulation in the early years will modify the distr ibution of engines in future years. To ensure the cost analysis was representative of futu re year equipment populations once the regulation takes effect, equipment populations in each year were evaluated after the compliance schedule for the previous year(s) had be en incorporated into the model.

When determining the percent of engines needing to come into compliance in a given year, it was assumed that all facilities had four o r more pieces of equipment. For example, in 2007, 50 percent of yard trucks without VDECS which are 2002 model year or older need to come into compliance. To estimate the number of yard trucks in this group required to come into compliance, the populat ion of yard trucks remaining in 2007 with model years 2002 or older, that do not have VD ECS, is multiplied by 0.50. Tables VII-5 and VII-6 below provide summaries of t he yard truck and non yard truck equipment populations in each year (2007-2015) that resulted in compliance costs attributable to the proposed regulation. Additiona l details on the population distributions are provided in Appendix D.

Table VII-5: Population of Yard Trucks Having Compl iance Costs Associated with

the Proposed Regulation

Yard Truck Population

Year New In-Use

2007 290 83

2008 213 329

2009 195 259

2010 192 46

2011 201 89

2012 218 266

2013 215 303

2014 215 218

2015 226 83

Notes: New includes new yard trucks added to the f leet due to growth and new yard trucks added due to replacement of yard trucks at the end of their life (not required by the regulation)VII - 10

Table VII-6: Population of Non-Yard Truck Equipment Having Compliance Costs

Associated with the Proposed Regulation

Population

Crane Excavator Forklift Container Handling Equipment Sweeper/

Scrubber Tractor/

Loader/

Backhoe Year

New IU New IU New IU New IU New IU New IU

2007 35 3 3 0 39 0 71 0 4 0 10 0

2008 37 14 5 0 34 4 70 5 4 0 12 1

2009 37 29 5 3 29 27 78 55 4 3 14 15

2010 41 86 4 5 30 99 88 107 5 6 15 20

2011 21 88 4 5 29 95 73 98 4 6 24 17

2012* 26 81 4 5 31 90 69 90 4 5 20 13

2013* 28 46 5 3 35 59 76 55 4 3 13 6

2014* 25 0 5 0 39 0 81 0 4 0 12 0

2015* 28 0 18 0 46 0 138 0 20 0 51 0 Notes: IU = In-Use. New includes new equipment ad ded to the fleet due to growth and new equipment added due to replacement at the end of th eir life (not required by the regulation) except in 2015 New includes compliance replacement.

* No associated cost for New due to available of Ti er IV engines.

Estimated Capital and Recurring Costs 2007-2020

The costs for compliance with the proposed regulati on were estimated using the cost estimates outlined previously, the compliance assum ptions provided in Table VII-3 and VII-4, and the populations of equipment subject to the requirements for each year. The detailed annual costs are provided in Appendix D an d a summary of the total annual costs for the various types of equipment at ports a nd intermodal rail yards is provided in

Table VII-7.VII - 11Table VII-7: Estimated Statewide Annual Costs forBusinessesAnnual Costs ($)Years 20072008200920102011201220132014201520162017201820192020PortCrane657,4491,267,4131,444,3452,304,4892,069,1581,756,1771,396,157792,553792,553792,553792,553792,553792,553792,553Excavator4,79116,22213,38516,81115,90610,4205,773 -1,086,971 -----Forklift224,202222,383335,599835,529890,455769,044650,304303,132303,132303,132303,132303,132303,132303,132ContainerHandlingEquip150,604324,865321,960536,765582,917516,350543,034423,5332,134,138423,533423,533423,533423,533423,533Sweeper/Scrubber9,22811,88416,39623,84120,64111,8687,336 -210,910 -----Tractor/Loader/Backhoe22,62435,13366,70179,50990,85129,98913,854 -650,386 -----YardTractor1,694,6736,668,3784,787,993964,6781,762,3134,500,2344,976,9883,201,9181,083,030 -----PortTotal:2,763,5708,546,2786,986,3784,761,6235,432,2427,594,0817,593,4464,721,1356,261,1191,519,2171,519,2171,519,2171,519,2171,519,217RailCrane165,493227,327255,086452,529450,616368,748287,177160,313160,313160,313160,313160,313160,313160,313Forklift8,32725,27037,53346,09647,50036,24722,68614,31814,31814,31814,31814,31814,31814,318ContainerHandlingEquip10,09089,30042,30626,15421,4299,6306,170 -1,950,325 -----Sweeper/Scrubber2993375459321,002496348 -9,171 -----Tractor/Loader/Backhoe2993495489321,002496348-13,247-----YardTractor124,077266,602134,19796,825154,28531,23238,446 - ------Rail Total:308,585609,185470,215623,469675,835446,849355,177174,6312,147,374174,631174,631174,631174,631174,631ReportingCost1,200,00060,00060,00060,00060,00060,00060,00060,00060,00060,000 60,000 60,000 60,000 60,000Reporting,Port & RailTotal:4,272,1559,215,4637,516,5935,445,0916,168,0778,100,9308,008,6234,955,7668,468,4931,753,8481,753,8481,753,8481,753,8481,753,848VII - 12

D. Estimated Costs to Businesses

In this section, we summarize the costs and economi c impacts on businesses. The analysis estimates the overall total statewide cost to businesses and the total costs to different sectors of the industry. We also estimat e the overall impact on business competitiveness, employment, and other business imp acts as required by state law.

Using the available information from the ARB Survey on the engine population and current in-use and expected PM emission rates, staf f determined the percent of engines that would potentially incur capital costs (either from installing a DECS or purchasing new cargo handling equipment) when complying with t he proposed regulation.

We estimate the statewide total costs to businesses to be approximately $71 million dollars. The annual costs range from $1.8 million to about $9.2 million per year. The

total statewide cost to businesses is derived from the combined capital and installation costs, using 2004 capital cost values, reporting co sts and equipment operating and maintenance costs associated with compliance with t he regulation. A summary of the expected annual costs was presented previously pres ented in Table VII-7.

Costs to a Typical Business

For those businesses that operate at ports or inter modal rail yards and have diesel powered cargo handling equipment, the cost will var y depending on the age, number and type of equipment operated. To provide some pe rspective on the costs that may be incurred by a business, ARB staff estimated the ave rage annual costs to comply with the regulation for the various types of equipment p er year. This average annual cost is calculated by dividing the total annual statewide c ost for each equipment type by the statewide inventory of that equipment type in a giv en year. This average annual cost can be used to determine the expected costs to a bu siness for compliance with the regulation (2007-2020). The annual average reflect s the fact that, while a single piece of equipment may incur a higher cost during a parti cular year if it needs to be retrofitted or replaced, not all pieces of equipment need to be retrofitted or replaced. To estimate the costs for a business, the average annual cost i s summed over the consecutive 2007 to 2020 years and multiplied by the number of piece s of equipment a business operates. For example, a business with 4 cranes wo uld potentially incur a cost of 14yrs X $4,736/yr X 4 cranes or approximately $265, 200. The annual average values used to estimate the costs for businesses are provi ded in Table VII-8.VII - 13Table VII-8: Estimated Statewide Average Costs perEquipment TypeAnnual Costs ($)Years 20072008200920102011201220132014201520162017201820192020AnnualAvgPortCrane 2,651 5,111 5,824 9,292 8,343 7,081 5,630 3,196 3,196 3,196 3,196 3,196 3,196 3,196 4,736Excavator 171 579 478 600 568 372 206 0 38,820 0 00 0 0 2,985Forklift 508 504 761 1,895 2,019 1,744 1,475 687 687 687 687 687 687 687 980ContainerHandlingEquip 327 705 698 1,164 1,264 1,120 1,178 919 4,629919 919 919 919 919 1,186Sweeper/Scrubber 342 440 607 883 764 440 272 0 7,811 0 0 00 0 826Tractor/Loader/Backhoe 246 382 725 864 988 326 151 0 7,069 0 0 00 0 768YardTractor 852 3,353 2,407 485 886 2,263 2,502 1,610 545 0 0 0 0 0 1,064RailCrane 2,267 3,114 3,494 6,199 6,173 5,051 3,934 2,196 2,196 2,196 2,196 2,196 2,196 2,196 3,257Forklift 362 1,099 1,632 2,004 2,065 1,576 986 623623 623 623 623 623 623 1,006ContainerHandlingEquip388 3,435 1,627 1,006 824 370 237 0 75,013 0 0 0 00 5,921Sweeper/Scrubber 299 337 545 932 1,002 496 348 0 9,171 0 00 0 0 938Tractor/Loader/Backhoe 299 349 548 932 1,002 496 348 0 13,247 00 0 0 0 1,230YardTractor 431 926 466 336 536 108 133 0 0 0 0 0 0 0210ReportingCost10,000 500 500 500 500 500 500 500 500500 500 $500 500 500 1,179VII - 14

Using these average costs, we estimated the costs t hat would be incurred by typical businesses. To determine a typical business, we us ed the ARB Survey to determine the average number and type of equipment operated b y a port container terminal, a port bulk handling terminal and an intermodal rail yard. As shown in Table VII-9, total costs to a typical business can range from about $343,000 to $1,373,000 depending on the type and numbers of equipment.

Table VII-9: Estimated Costs for Typical Businesse s

Port Container

Terminal Port Bulk Terminal Intermodal Rail

Yard Equipment Type Pop 2007-2020 Cost ($) Pop 2007-2020 Cost ($) Pop 2007-2020 Cost ($)

Crane 4 265,211 2 132,605 4 265,211

Excavator 0 - 2 83,591 0 -

Forklift 5 68,588 4 54,870 1 13,718

Container Handling Equipment 13 215,778 1 16,598 2 33,197

Sweeper/

Scrubber 1 11,559 1 11,559 0 -

Tractor/

Loader/

Backhoe 0 - 2 21,501 0 -

Yard Truck 54 804,711 1 14,902 17 253,335 Reporting

Costs 7,000 7,000 7,000

Total 77 1,372,847 13 342,627 24 572,460

Potential Business Impacts

In this section, we analyze the potential impacts o f the estimated costs of the proposed regulation on business enterprises in California. Section 11346.3 of the Government Code requires that, in proposing to adopt or amend any administrative regulation, state agencies shall assess the potential for adverse eco nomic impact on California business enterprises and individuals. The assessment shall include a consideration of the impact of the proposed or amended regulation on the abilit y of California businesses to compete with businesses in other states, the impact on California jobs, and the impact on California business expansion, elimination, or c reation.

This analysis is based on a comparison of the annua l return on owner's equity (ROE) for

affected businesses before and after the inclusion of the equipment costs, associated recurring costs, and fees. The analysis also uses publicly available information to assess the impacts on competitiveness, jobs, and bu siness expansion, elimination, or

creation. ARB staff does not have access to financ ial records for most of the privately-VII - 15

owned companies that responded to the ARB Survey. However, the small business status of the survey respondents was determined by including a query on the ARB Survey for the respondent to indicate if their busi ness was a small business (annual gross receipts of $1,500,000 or less for transporta tion and warehousing per California Government Code Section 11342.610). Based on the A RB Survey responses, staff identified approximately 10 percent of the business es (7 out of 69 of the respondents)

identified themselves as small businesses.

The types of businesses that may be impacted includ e stevedoring, major shipping lines, rail lines, and equipment rental. Based on the ARB Survey, staff estimates approximately 120 businesses will be affected by th is regulation.

The approach used in evaluating the potential econo mic impact of the proposed regulation on California businesses is as follows:

(1) Affected businesses were identified from respon ses to the ARB survey. ARB staff identified four publicly traded companies represent ing various terminal types and Standard Industrial Classification (SIC) codes for evaluation. See Table VII-10.

(2) Annual costs for the regulation are estimated f or each of these businesses based on the estimated annual costs of typical businesses

.

(3) The total annual cost for each business is adju sted for both federal and states

taxes.

(4) These adjusted costs are subtracted from net pr ofit data and the results used to calculate the Return on Owners' Equity (ROE). The resulting ROE is then compared with the ROE before the subtraction of the adjusted costs to determine the impact on the profitability of the businesses. A reduction of more than 10 percent in profitability is considered to indicate a potential for significant adverse economic impacts. This threshold is consistent wit h the thresholds used by the

U.S. EPA and others.

Using Dun and Bradstreet financial data from 2001 t o 2004, staff calculated the ROEs, both before and after the subtraction of the adjust ed annual costs, for the typical businesses from each industry category. These calc ulations were based on the following assumptions.

• All affected businesses are subject to federal and state tax rates of 35 percent and 9.3 percent, respectively.

• An affected business neither increases the prices of their products nor lowers their costs of doing business through cost-cutting measur es because of the regulation.

These assumptions, though reasonable, might not be applicable to all affected

businesses.VII - 16

Table VII-10: Representative Affected Businesses

Co SIC Sales –

3 yr. Ave (million $) Cost

($) Net

Income (million $) Net Worth

(million $) Adj.

Fee ($) Adj. Net

Income ($) ROE -

Before ROE -

After %

Change

A
4412 3,279.8 98,061 350.37 1,265.40 57,812 350,312,188 27.688% 27.684% -0.017%

B
4424 1,269.4 98,061 80.10 812.87 57,812 80,042,188 9.854% 9.847% -0.072%

C
4789 9,823.3 31,928 1,657.30 10,027.70 18,823 1,657,281,177 16.527% 16.527% -0.001%

D
4821 12,085.7 36,351 1,176.70 11,886.70 21,431 1,176,678,569 9.899% 9.899% -0.002%

California businesses are affected by the proposed annual cost of the regulation to the extent that the implementation of the proposed regu lation reduces their profitability. Overall, most affected businesses will be able to a bsorb the costs of the proposed regulation with no significant adverse impacts on t heir profitability. This finding is based on the staff’s analysis of the estimated change in “return on owner’s equity” (ROE). The analysis found that the overall change in ROE range s from negligible to a decline of about 0.1 percent. Generally, a decline of more th an ten percent in ROE suggests a significant impact on profitability. Because the p roposed regulation would not alter significantly the profitability of most businesses, we do not expect a noticeable change in employment, business creation, elimination, or e xpansion, and business competitiveness in California.

Small Business Costs

Staff does not have access to financial records for most of the companies that responded to the survey. However, the small busine ss status of the survey respondents was determined by including a query on the ARB Survey for the owner of the equipment to indicate if their business was a s mall business (annual gross receipts of $1,500,000 or less for transportation and wareho using per California Government Code Section 11342.610). Approximately 10 percent (7 out of 69) of the respondents identified themselves as small businesses. Looking at these seven businesses, six provided sufficient data on their equipment invento ry to estimate the costs using the average equipment cost data presented in Table VII- 8. Based on our analysis, the total 2007-2020 costs to small businesses ranged from $41 ,000 to $638,000 with an average cost of $227,000. The company with the highest cos t identified on the survey as owning

nine cranes and four forklifts. The cranes are ass umed to be rubber tired gantry cranes with the potential high cost of retrofitting a DPF. The company with the lowest cost has only three forklifts. Based on the overall change in ROE found for a typical business, which ranges from negligible to a decline of about 0.1 percent, the change in ROE is expected to be a little larger for a small business , but still well below the 10 percent limit.

Potential Impact on Employment, Business Creation, Elimination or Expansion

The proposed regulation is expected to have no noti ceable impacts on employment and business’ status. Businesses that manufacture, sel l, install, repair, or clean diesel particulate emission control systems may experience an increase in demand for theirVII - 17

products or services, resulting in an expansion of those businesses or the creation of new businesses. Staff believes used engine dealers would not be eliminated; instead, we believe the dealers would adapt to incorporate a dditional refurbishment and upgrading of the engines for resale.

ARB staff believes jobs will not be eliminated as a result of the regulation, but it may lead to the augmentation or alteration of job dutie s, leading to no net result change in the number of jobs. For example, a mechanic who pr eviously worked on muffler installation would now be installing a VDECS. Staf f believes additional training and emissions testing may be required for these additio nal duties, if not provided by the

VDECS manufacturers. To the extent that VDECS are manufactured in California, some jobs may also be created. Some jobs will be c reated to install, repair, or clean

DECS.

E. Potential Costs to Local, State, and Federal Age ncies

This regulation does not directly affect any local, State, or Federal agencies. We anticipate some costs to the ARB to assist in imple mentation of the regulation; however,

we believe these costs can be absorbed in our curre nt and future budgets.

F. Cost-Effectiveness

In this section, the cost-effectiveness of the regu lation is estimated. Cost-effectiveness is expressed in terms of control costs (dollars) pe r unit of air emissions reduced (pounds). As described below, for example, the cos t-effectiveness for the proposed regulation is determined by dividing the total capi tal costs plus the annual operation and maintenance costs by the total pounds of diesel PM reduced during the years 2007 to 2020. All costs are in 2004 equivalent expenditure dollars.

Expected Emission Reductions

We estimated the projected total emission reduction s under the regulation using the statewide inventory. The following Table VII-11 pr ovides a summary of the annual

statewide diesel PM reductions that will result fro m the proposed regulation. The total diesel PM reduced by this regulation is expected to be 1.73 million pounds over the calendar years 2007 to 2020. Table VII-12 provides a summary of the annual statewide diesel NOx reductions that will result from the pro posed regulation. Negative values in the table represent NOx increases compared to the b aseline. These slight NOx increases represent slight changes in the equipment age distribution and the resulting increased activity for newer equipment and little c hange in NOx emission factors. The total NOx reduced by this regulation is expected to be 37.3 million pounds over the calendar years 2007 to 2020.VII - 18Table VII-11: Estimated Statewide Diesel PM AnnualEmission ReductionsAnnual Diesel PM Reductions (lbs)Years 20072008200920102011201220132014201520162017201820192020PortCrane1,9524,6367,52011,67213,79213,84513,78113,06612,12812,00611,62111,18410,86310,531Excavator572945287397658488717941,7511,5201,201914641460Forklift3819441,5162,4863,1653,7013,8963,7013,4133,1732,9762,6052,1311,831ContainerHandlingEquip1,5885,1619,96716,07619,25722,07223,68522,28424,95321,97218,06715,16012,2809,960Sweeper/Scrubber2783173275331378385350759647515400280199Tractor/Loader/Backhoe682135318911,0329569468921,3211,2101,136954682567YardTractor22,66463,31697,848106,072106,200113,659120,423126,311114,18994,27975,62158,11542,70628,010Port Total:26,73774,646118,082138,212144,542155,460163,987167,399158,516134,807111,13789,33369,58351,558RailCrane3611,0081,5862,1672,3292,5252,5802,3322,2622,1782,1032,0331,9421,820Forklift1189165203224233218191161139129122118105ContainerHandlingEquip997501,0241,2721,4301,4601,1701,1651,8831,7581,6381,5551,4281,234Sweeper/Scrubber13591112131327241915118Tractor/Loader/Backhoe0136891092118131075YardTractor1,2103,5175,4367,2559,5519,9649,9879,3007,9196,2384,3262,221705(0)Rail Total:1,6825,3688,21910,91113,55214,20313,97713,00912,27310,3548,2295,9554,2123,171Port & RailTotal:28,41980,014126,300149,123158,094169,662177,964180,408170,789145,162119,36695,28873,79554,729VII - 19Table VII-12: Estimated Statewide Cargo Handling Equipment NOx Annual Emission ReductionsAnnual NOx Reductions (lbs)Years 20072008200920102011201220132014201520162017201820192020PortCrane 11204 22919 34214 53154 69561 42473 28739 16391 0 0 0 0 0 0Excavator 0 2657 3651 3103 567 -515 -511 -499 5342744209 32218 21984 13141 8236Forklift 0 2184 1980 997 446 -81 -79 -74 -70 -59 -50 -53 -39 -17ContainerHandlingEquip0 27842 37884 66627 88567 111192 146843 143493 325862 245301 156578 103168 50901 30566Sweeper/Scrubber 0 372 510 433 157 -31 -30 -29 10796 9146 7156 5210 3157 1947Tractor/Loader/Backhoe 0 914 1044 1291 1452 -193 -192 -189 2498521854 19630 14556 7745 5632YardTractor 636829 1738421 2540635 2585306 2518664 2999365 3446610 3694956 3182828 2468170 1972152 16279531423547 1265214PortTotal:648033 1795310 2619918 2710911 2679412 3152209 3621380 3854049 3597828 2788621 2187685 1772819 14984511311578RailCrane 0 4245 7084 6395 4196 3283 2557 -1950 -1917 -1896 -1865 -1813 -1788 -1753Forklift 0 783 1375 1274 1192 938 714 355 -5 -172 -169 -159 -156 -156ContainerHandlingEquip 0 7130 8658 9955 11585 10711 5853 5818 4714242072 37269 33864 29193 22571Sweeper/Scrubber0 10 11 12 7 -2 -2 -2 853 723 552 390 255 154Tractor/Loader/Backhoe0 2 3 3 2 0 0 0 201 169 127 89 59 34YardTractor 18571 62796 88214 120082 176468 246560 306195 337829 314572 292611 261241 219205 168871 118722RailTotal:18571 74965 105346 137721 193449 261490 315316 342051 360847 333506 297156 251575 196434 139572Port &RailTotal:666605 1870275 2725263 2848633 2872861 3413699 3936696 4196100 3958675 3122128 2484841 2024394 16948851451150VII - 20

Cost-Effectiveness

To determine the cost-effectiveness of the proposed regulation, we divided the annual costs by the diesel PM emission reductions attribut able to the regulation. The resulting cost-effectiveness in each year of implementation u p to 2020 is listed in Table VII-13. The estimated overall annual cost-effectiveness, to tal PM reduced divided by total cost, is $41 per pound of diesel PM reduced, if all the c osts of compliance are allocated to diesel PM reduction. The annual range is from $12 to $150 per pound of diesel PM

reduction.VII - 21Table VII-13: Summary of Annual Diesel PM Cost-Effectiveness for the Cargo Handling Equipment RegulationAnnual Cost-Effectiveness ($/lbs)Years 20072008200920102011201220132014201520162017201820192020PortCrane$337$273$192$197$150$127$101$61$65$66$68$71$73$75Excavator$84$55$25$23$21$12$7$0$621Forklift$589$236$221$336$281$208$167$82$89$96$102$116$142$166ContainerHandlingEquip$95$63$32$33$30$23$23$19$86$19$23$28$34$43Sweeper/Scrubber$336$142$95$87$62$31$19$0$278Tractor/Loader/Backhoe$334$165$126$89$88$31$15$0$492YardTractor$75$105$49$9$17$40$41$25$9PortTotal:$103$114$59$34$38$49$46$28$39$11$14$17$22$29RailCrane$459$226$161$209$194$146$111$69$71Forklift$749$285$228$227$212$156$104$75$89$103$111$118$121$137ContainerHandlingEquip$102$119$41$21$15$7$5$0$1,035Sweeper/Scrubber$329$133$113$110$95$41$27$0$344Tractor/Loader/Backhoe$615$302$195$167$132$55$36$0$620YardTractor$103$76$25$13$16$3$4$0$0RailTotal:$182$113$57$57$50$31$25$13$172$17$21$29$41$55Port &RailTotal:$150$115$59$36$39$48$45$27$49$12$15$18$24$32VII - 22

A summary of the overall average cost-effectiveness for the period 2007 through 2020 is presented in Table VII-14. Overall, the cost-ef fectiveness for all equipment averages about $41 per pound of PM reduction. Since the reg ulation will also result in reductions in oxides of nitrogen (NOx) emissions, staff conduc ted a second cost-effectiveness analysis in which half of the cost of compliance wa s allocated to PM benefits and half

the cost was allocated to NOx benefits. This resul ts in cost-effectiveness values of $21/lb diesel PM and $1/lb of NOx.

Table VII-14: Summary of Average Cost-Effectivenes s for the Period 2007-2020

Equipment Type Total Capital

Cost

2007 – 2020 Total PM

Reduced (lbs)

2007 - 2020 Total PM CostEffectiveness ($/lb) Total NOx

Reduced (lbs)

2007 - 2020

Port

Cranes $ 16,443,058 148,598 $111 278,655

Excavators $ 1,170,277 11,383 $103 181,668
Forklifts $ 6,049,440 35,918 $168 5,085 Container Handling Equipment $ 7,651,828 222,482 $34 1,534,823 Sweeper/ Scrubber $ 312,102 4,803 $65 38,793 Tractor/ Loader/

Backhoes $ 989,047 11,401 $87 98,530
Yard Tractor $ 29,640,206 1,169,414 $25 32,100,651

Intermodal Rail

Crane $ 3,329,164 27,227 $122 14,779 Forklift $ 323,886 2,107 $154 5,815 Container Handling Equip $ 2,155,406 17,864 $121 271,820 Sweeper/Scrubber $ 13,131 169 $78 2,961 Tractor/Loader/

Backhoes $ 17,222 120 $144 686
Yard Tractor $ 845,664 77,627 $11 2,731,939 Reporting $ 1,980,000

Total $ 70,920,430 1,729,113 $41 37,266,204

The cost-effectiveness of the proposed regulation f or diesel PM is somewhat higher than other regulations recently adopted by the Boar d (see Table VII-15 below). For example, the diesel PM cost-effectiveness of the so lid waste collection vehicle rule was estimated at $28 per pound, excluding the benefits of NOx and hydrocarbon reductions (ARB, 2003a). The cost-effectiveness of the statio nary diesel engine airborne toxic control measure (ATCM) was estimated to range from $4 to $26 per pound of diesel PM reduced (ARB,2003b). Finally, the transport refrig eration unit ATCM was estimated to have a cost-effectiveness of $10 to $20 per pound o f diesel PM reduced (ARB, 2003c). The cost-effectiveness of the proposed regulation f or diesel PM is influenced by the adopted new engine standards which reduce the futur e emission reductions and thusVII - 23

results in higher cost-effectiveness values. Never theless, the proposed regulation is an important step in reducing the serious public healt h impacts from diesel PM emissions in communities near ports and intermodal rail yards

.

Table VII-15: Diesel PM Cost-Effectiveness of the P roposal and Other Regulations/Measures (Attributes All Costs to Each Pollutant Individually)

Diesel PM CostEffectiveness Regulation or

Airborne Toxic Control Measure

Dollars/ Pound PM Cargo Handling Equipment Proposal $41 Solid Waste Collection Vehicle Rule $28 Stationary Diesel Engine ATCM $4 - $26 Transport Refrigeration Unit ATCM $10 - $20

G. Analysis of Alternatives

In this section, we compare the cost-effectiveness of the proposed regulation to two alternative control options. As described below, t he two alternatives analyzed would achieve significantly less emission reductions and associated health benefits. However, the cost of these alternatives would also be lower, resulting in lower cost-effectiveness compared to the proposal.

Alternative 1: Continue Voluntary Efforts

For alternative 1, it was assumed that the voluntar y efforts would continue with newly purchased equipment until 2012 when new equipment w ould have Tier 4 off-road engines. The estimated costs to the equipment owne rs is approximately $1.9 million during the five years from 2007 to 2011 with an ave rage annual cost of $380,000, if

terminals and intermodal facilities continued to vo luntarily continue their efforts to change-over their existing fleets at past rates. T he total PM reduction associated with this alternative is 121 tons during the same 2007 t o 2020 timeframe. The costeffectiveness for this alternative is lower than th e regulation at $8 per pound of diesel PM reduced. Voluntary efforts would result in emis sion reductions, however, the emissions benefits would be substantially less than that predicted from the proposed regulation. The voluntary efforts would forego abo ut 744 tons of PM and 18,215 tons of NOx that the proposed regulation would reduce.

Alternative 2: Regulate Yard Trucks Only

Alternative 2 is similar to the proposed regulation , but would only affect the yard trucks. This reduction in the scope of the regulation reduc es the cost by 50 percent and costeffectiveness by about 30%. The total cost would b e $32.5 million with a diesel PM reduction of 1,247,140 pounds resulting in a cost-e ffectiveness of $26 per pound PM
reduced. The NOx reduction would be 17,400 tons, a bout 1,230 tons less than theVII - 24

regulation’s NOx reduction. The full regulation wi ll cost $71 million and reduce diesel PM by 1,729,100 pounds. The full regulation is mor e costly at $41 per pound PM reduced, but reduces PM by an additional 481,970 po unds (241 tons) and NOx by an additional 1,230 tons during the same 2007 to 2020 timeframeVII - 25

REFERENCES:

(ARB, APL, 2005) California Air Resources Board. Phone call with Mr. Michael Gedney, APL Terminal in Oakland, CA; Used yard tru ck and RTG crane values; May 2005.

(ARB, Ottawa, 2004) California Air Resources Board . Conversation with Mr. Donald Lawerence, Ottawa; RTG Crane Costs, new and used, a nd yard truck cost differential for on-road engine; November, 3 2004.

(POLB DECS) Port of Long Beach diesel emission redu ction program retrofit cost data. Emission control device costs for different equipme nt. July 26, 2005.

(ARB, 2003a) Air Resources Board, Staff Report: Initial Statement of Reasons for Proposed Rulemaking, Proposed Diesel Particulate Ma tter Control Measure for OnRoad Heavy-Duty Residential and Commercial Solid Wa ste Collection Vehicles , June,

2003.

(ARB, 2003b) Air Resources Board, Staff Report: Initial Statement of Reasons for Proposed Rulemaking, Airborne Toxic Control Measurefor Stationary CompressionIgnition Engines , September, 2003.

(ARB, 2003c) Air Resources Board, Staff Report: Initial Statement of Reasons for Proposed Rulemaking, Airborne Toxic Control Measure for In-Use Diesel-Fueled Transport Refrigeration Units (TRU) and TRU Generat or Sets, and Facilities Where TRUs Operate , October, 2003.