CALIFORNIA ENVIRONMENTAL PROTECTION AGENCY

AIR RESOURCES BOARD

STAFF REPORT: NEW EMISSION STANDARDS, FLEET REQUIRE MENTS, AND

TEST PROCEDURES FOR FORKLIFTS AND OTHER INDUSTRIAL EQUIPMENT

This report has been reviewed by the staff of the C alifornia Air Resources Board and approved for publication. Approval does not signif y that the contents necessarily reflect the views and policies of the Air Resources Board, nor does the mention of trade names or commercial products constitute endorsement or re commendation for use.

Date of Release: March 3, 2006 Scheduled for Consideration: April 20, 2006i

EXECUTIVE SUMMARY

Air quality in California has improved dramatically over the past 30 years, due in large part to the continued progress in controlling pollu tion from mobile sources. Despite the achievements to date, the vast majority of Californ ians live in areas of the state that still

do not meet State or federal health-based ambient a ir quality standards. Clearly, ozone – or smog – continues to be a serious health proble m throughout much of our state. The California Air Resources Board (ARB or Board) p ursues emissions reductions from all feasible sources in order to continue our progr ess toward clean air and to meet and sustain our air quality goals.

In 1998, the ARB first adopted emission standards f or new spark-ignited engines used in propane forklifts and other similar industrial e quipment. These engines are referred to as large spark-ignition (LSI) engines. In addit ion to forklifts, the LSI category includes airport ground support equipment (GSE), sweepers an d scrubbers, generator sets, small irrigation pumps, and a variety of other simi lar equipment. The full implementation of these first emissions standards in 2004 required engine manufacturers to achieve approximately a 75 percent reduction in smog-formin g pollutants. This was done with the incorporation of basic emissions control techno logy that had been successfully used in passenger cars for more than 20 years.

The 75 percent reduction was an important step, but still left the level of control for these new engines relatively basic. Building on th is success, the United States Environmental Protection Agency (U.S. EPA) harmoniz ed with California’s standards and adopted more stringent requirements for new eng ines produced for the 2007 and later model years. The federal program demonstrate d that additional reductions from new engines were technically feasible and cost-effe ctive.

In developing the ARB’s 2003 State Implementation P lan (SIP) for Ozone, it became clear that additional emissions reductions were pos sible from not only new LSI engines, but also in-use LSI equipment. The regulation of i n-use LSI equipment represents an enormous opportunity since each uncontrolled forkli ft has the same emissions per day as over 700 clean passenger cars. Currently, there are over 30,000 uncontrolled forklifts in California. The Board-adopted SIP inc luded a commitment to achieve additional reductions from the LSI category of betw een 6.1 and 13.0 tons per day of hydrocarbons (HC) and oxides of nitrogen (NOx) stat ewide by 2010. This proposal is designed to meet that 2003 obligation.

In June 2005, the ARB presented an initial LSI prop osal to the Board. At that time, questions arose about the economic impact of the in -use portion of the proposal on forklift dealers and agricultural-related businesse s that could not be fully answered. In addition, several stakeholders asked for more time to work with staff on its regulatory proposal. Accordingly, the Board listened to staff ’s presentation and to public testimony but deferred action to a later date. Subsequent to the June 2005 hearing, ARB staff has had numerous meetings and telephone conversations w ith dealer and agriculturalii

business representatives in order to better underst and their business practices and the economic impacts of the proposal.

The current proposal is similar to the June 2005 pr oposal, but revises several key modifications based on these meetings and ARB staff ’s subsequent analysis. The modifications are designed to reduce the economic i mpacts on agricultural businesses and address the unique business practices of forkli ft dealers. The main elements of this proposal are highlighted below, along with the key revisions to the previous proposal.

In late 2002, air carriers operating in the South C oast air basin signed a memorandum or understanding (MOU) with ARB committing to reduc e HC and NOx emissions from new and in-use GSE used in airport operations. The MOU was intended to address the

air carriers’ contributions to the air basin’s extr eme ozone nonattainment classification. The airlines terminated the MOU on October 28, 2005 . To retain those benefits, staff is proposing that GSE fleets in the South Coast air ba sin meet the same fleet average emission requirements as other fleets, and meet the zero-emission requirement of the MOU applied to the LSI fleet.

Proposed Requirements

Requirements for Engine Manufacturers

 Alignment with the engine certification standards adopted by the U.S. EPA beginning in 2007.

 Alignment with additional requirements of the fede ral rule including more rigorous test procedures and on-board diagnostics.

 More stringent emissions standards for 2010 and la ter model-year engines.

 Optional lower-emission standards to give manufact urers more flexibility.

Requirements for Fleet Users

 Fleet average emission limits for operators of spe cific LSI equipment (forklifts, sweeper/scrubbers, industrial tow tractors, and air port ground support equipment) beginning in 2009.

 An alternative compliance option for agricultural fleets to address issues specific to the agricultural industry.

Verification Procedure for Manufacturers of Retrofi t Control Systems

 A new procedure for verifying LSI retrofit emissio n control systems.iii

Key Modifications to the June 2005 Proposal

For Equipment Dealers

Small fleets (one to three units) are no longer cov ered by the proposal. This

modification reduces the in-use emissions benefit o f staff’s earlier proposal by less than 20 percent (roughly one ton per day of HC+NOx in 20 10) while exempting an estimated 60 percent of fleets (the very smallest ones) from the fleet rules. This change not only eases the burden on small users, but also provides an ongoing purchaser pool for dealers that have uncontrolled equipment coming off existing leases. The primary concern with staff’s 2005 proposal was that it was believed to impose unreasonably high control costs on relatively low-value equipmen t coming off lease. The proposed exemption for small fleets solves that problem whil e still controlling the majority of in-use engines.

For Agriculture

The alternative agricultural proposal would require control of only those owned forklifts for which a verified retrofit system is commerciall y available (40 percent of current agricultural forklifts). In addition, the timefram e for compliance provides an opportunity for 80 percent of this equipment to be eligible for Carl Moyer Program incentive funds if the owners act quickly to install retrofits. The p roposal would allow those forklifts for which retrofit systems are not available to continu e to operate, avoiding the cost of replacement. With full use of incentive funds, the modification reduces the cost by approximately 90 percent while retaining over one t on per day HC+NOx benefit during

the summer ozone season.

For Air Carriers

Special requirements applicable to commercial airli nes operating airport GSE in the South Coast air basin that implement provisions of a recently terminated MOU.

Economic and Environmental Impacts

The proposed 2007 new engine emission standards are not expected to create significant economic impacts because engine manufac turers are already developing engines to comply with the federal 2007 standards. The proposed California standards for 2010 and later can be met by optimizing emissio n controls used to meet U.S. EPA’s 2007 standards, and thus provide extremely cost eff ective emission reductions estimated at $0.13 per pound.

In general, in-use fleet rules provide significant opportunities for emissions reductions but also require careful consideration due to their possible economic impacts on owners and users of the equipment. In many ways, the LSI category is well-positioned to

achieve in-use emissions reductions. Available ret rofit technology reduces emissions by 75 to 90 percent and is cost-effective. Because emission standards for new enginesiv

have been in effect only for the past few years, a significant number of high-emitting, uncontrolled equipment is still in operation and av ailable for retrofit. Operators can meet the proposed in-use fleet-average emission sta ndards by procuring low- and zero-emission equipment and by retrofitting uncontr olled equipment in their fleets. The use of new controlled engines and the retrofit of e xisting engines can reduce fuel use and improve engine life, creating cost savings that offset a portion of the additional equipment cost. As a result, the fleet requirement s are cost-effective and range from $0.13 per pound for lower-emission equipment to $1. 40 per pound for electric equipment.

The proposed in-use fleet-average emission standard s will result in additional costs for some dealers of LSI engines. The costs depend on t he number and age of the uncontrolled equipment in their possession, the rat e at which they currently turn-over old equipment, the extent to which additional costs can be passed along, and the ability to sell equipment to small fleets that are exempt f rom the proposed regulations. This latter provision significantly reduces the economic impact of the proposal on dealers.

The ARB staff proposal will reduce statewide HC and NOx emissions by 5.7 tons per day in 2010 and 6.2 tons per day in 2020. These re ductions are near or within the range of the commitment established within the 2003 SIP.

Staff Recommendation

The ARB staff recommends that the Board adopt the a mendments as set forth in the proposed Regulation Order in Appendices A, B, and C and as described in this Initial

Statement of Reasons.TABLE OF CONTENTS

1 INTRODUCTION.......................................

................................................... ........ 1

1.1 Regulatory Authority ...............................

................................................... 1

1.2 Applicability......................................

................................................... ....... 2

1.3 Outreach...........................................

................................................... ...... 2

2 CURRENT REGULATIONS AND INVENTORY.................. ................................. 3

2.1 California LSI Regulation .......................... ................................................. 3

2.2 Federal LSI Regulation ............................. ................................................. 3

2.3 2003 State Implementation Plan for Ozone ........... .................................... 4

2.4 Airport Ground Support Equipment Memorandum of Unde rstanding ........ 4

2.5 LSI Inventory......................................

................................................... ..... 5

3 REGULATORY PROPOSAL ................................ ................................................ 6

3.1 More Stringent Emission Standards for New Engines .. ............................. 6

3.2 In-Use Emission Standards .......................... ............................................. 8

3.3 Proposed Verification Procedures for Retrofits ..... ................................... 10

3.4 Alternative Compliance Option for Fleets used in Ag ricultural CropPreparation Services............................... ................................................. 11

4 TECHNOLOGY REVIEW .................................. ................................................. 12

4.1 Emission Control Strategies........................ ............................................. 12

4.2 Emission Controls for LSI Engines .................. ........................................ 13

4.3 Impact of Transient Testing ........................ ............................................. 13

4.4 Lead Time..........................................

................................................... ... 14

4.5 Fuel Quality.......................................

................................................... .... 14

5 ENVIRONMENTAL IMPACTS.............................. .............................................. 15

5.1 Air Quality Impacts................................

................................................... 15

5.2 Other Impacts ......................................

................................................... . 17

6 ECONOMIC IMPACTS – COST AND COST-EFFECTIVENESS..... .................. 18

6.1 Incentive Programs................................. ................................................. 18

6.2 Potential Impact on Manufacturers .................. ........................................ 19

6.3 Potential Impact on Distributors and Dealers....... .................................... 21

6.4 Potential Impact on Equipment Operators ............ ................................... 23

6.5 Potential Impact on Agriculture .................... ............................................ 25

6.6 Cost-Effectiveness................................. .................................................. 2 6

6.7 Potential Impact on Business Competitiveness, Emplo yment, and

Business Creation and Elimination .................. ........................................ 27

7 ALTERNATIVES AND RECOMMENDATION .................... ................................ 27

7.1 Alternatives Considered............................ ............................................... 27

7.2 Conclusion.........................................

................................................... ... 28

REFERENCES.........................................

................................................... .................. 29

APPENDIX A: MANUFACTURER STANDARDS AND TEST PROCEDU RES................ i
APPENDIX B: FLEET AVERAGE EMISSION LEVEL REQUIREMEN TS........................ i

APPENDIX C: VERIFICATION PROCEDURE................. ................................................ i1

1 INTRODUCTION

The California Clean Air Act, adopted in 1988, gran ts the Air Resources Board (ARB) the authority to regulate a wide variety of off-roa d mobile engines and equipment. These sources include, but are not limited to marin e vessels, locomotives, utility engines, off-road motorcycles, and off-highway vehi cles. Forklifts, and other off-road large spark-ignition (LSI) equipment, are a subcate gory of off-road mobile equipment subject to ARB regulation. Approximately 88,000 pi eces of LSI equipment exist in California, with current hydrocarbon (HC) and oxide s of nitrogen (NOx) emissions of approximately 15 and 54 tons per day, respectively.

In addition to forklifts, off-road LSI equipment in cludes portable generators, large turf care equipment, irrigation pumps, welders, air comp ressors, scrubber/sweepers, airport service vehicles, and a wide array of other agricul tural, construction, and general industrial equipment. Forklifts comprise roughly h alf of the LSI inventory and contribute more than 85 percent of the category’s emissions. The basic engines used in off-road equipment are similar to, and typically derived fro m, automobile engines, although they have significantly fewer emissions controls. They are most commonly fueled by gasoline or liquefied petroleum gas (LPG).

The ARB first adopted emission standards for off-ro ad LSI equipment over 25 horsepower (19 kilowatts) in 1998, with implemen tation beginning in the 2001 model year, and fully implemented in 2004. The proposed amendments in this rulemaking

continue ARB’s efforts to achieve additional cost-e ffective reductions from the category. Requirements are proposed that would provide signif icant near- and mid-term reductions by addressing the remaining high-emittin g uncontrolled equipment in-use. The proposal would also provide significant mid- an d long-term reductions by establishing more stringent new engine HC and NOx e mission standards in 2007 and 2010. Finally, the proposal would allow engine man ufacturers to certify to optional lower-emission standards, and provide retrofit equi pment manufacturers a test procedure for certifying retrofit systems.

In late 2002, the ARB signed a memorandum of unders tanding (MOU) with air carriers to reduce HC and NOx emissions from ground support equipment (GSE) in the South Coast air basin. The MOU included provisions for t he early introduction of clean units, with a requirement for an average 2.65 grams per br ake-horsepower hour HC+NOx fleet. The MOU also called for a specified percent age of zero-emission equipment and the use of diesel oxidation catalysts and diesel pa rticulate filters to significantly reduce particulate matter emissions from the diesel portio n of the fleet.

1.1 Regulatory Authority

As noted above, the ARB has been granted the author ity to regulate emissions from offroad mobile sources. The authority, however, does not extend to new equipment under 175 horsepower used primarily in construction or fa rm equipment or vehicles. The United States Environmental Protection Agency (U.S. EPA) has sole authority to control2

emissions from this equipment, i.e., California is preempted from regulating this equipment. In the LSI category, the preempted equi pment includes welders, air compressors, and irrigation pumps. Because of this preemption, some emissions from the subject engine category are beyond ARB's author ity to regulate. However, the ARB staff works closely with the U.S. EPA in their deve lopment of federal rules to cover all engines in this category. It should be noted that the preemption does not prohibit the ARB from regulating a piece of equipment under 175 horsepower that is used in construction or farming; instead, it prohibits the ARB from regulating categories of equipment that are primarily used in construction and farming. The ARB has established a list of the types of equipment that a re not primarily used in construction or farming. All equipment over 25 horsepower but less than 175 horsepower is considered to be construction or farm equipment except for the 11 categories listed below.

 Airport Ground Power

 Baggage Handling

 Forklifts that are neither rough terrain nor power ed by diesel engines

 Generator Sets

 Mining Equipment not otherwise primarily used in t he construction industry

 Off-highway Recreational Vehicles

 Other Industrial Equipment

 Refrigeration Units less than 50 hp

 Scrubbers/Sweepers

 Tow/Push Equipment

 Turf Care Equipment

1.2 Applicability

The new engine emission standards discussed in Sect ion 3 apply to engines greater than 19 kilowatts (25 horsepower) used in the 11 ca tegories of equipment listed above. The in-use requirements apply only to users of fork lifts, sweeper/scrubbers, industrial tow tractors and GSE. Examples of GSE include fork lifts, tugs, belt loaders, bobtails, cargo loaders, lifts, air conditioners, service tru cks, de-icers, fuel delivery trucks, and ground power units.

Diesel equipment is not subject to the requirements of this proposal. Instead, separate requirements for in-use diesel forklifts are being developed and are expected to be proposed in late 2006.

1.3 Outreach

Outreach and public participation are important com ponents of ARB’s regulatory development process. In preparing the proposed reg ulations, ARB staff developed an outreach program to engage LSI engine and equipment manufacturers and distributors, emission control system manufacturers, propane fuel refiners and distributors, end-user facility operators, agricultural interests, federal regulatory agencies, environmental organizations, public health advocates, and other i nterested parties.3

Through these efforts, ARB staff has been able to o btain detailed information on the use of, and emissions from, LSI equipment. Additionall y, these entities participated in the development and review of the manufacturers advisor y correspondence (MAC) for voluntary early certification of lower-emission eng ines and the interim retrofit verification procedure for retrofit emission control systems.

As part of the outreach efforts, ARB staff made ext ensive personal contacts with industry and facility representatives as well as ot her affected parties through meetings, telephone calls, and mail-outs. These activities i ncluded holding five public workshops, forming an LSI regulatory working group and holding 20 conference calls with the working group, more than 100 telephone conversation s with the working group and facility operators, and visiting more than 15 facil ities.

In June 2005, ARB presented a similar LSI proposal to the Board. At that time, questions arose about the impact of the proposal on forklift dealers and agriculturerelated businesses that could not be fully answered and the Board took no action. In response, the ARB staff has conducted a series of m eetings with both stakeholder groups, focusing on better understanding their busi ness operations. This more detailed analysis has allowed staff to better understand the potential economic impacts to these two stakeholder groups. The current proposal is si milar in structure to the previous proposal, but revises several key provisions in res ponse to these discussions and analyses.

2 CURRENT REGULATIONS AND INVENTORY

2.1 California LSI Regulation

In 1998, ARB adopted LSI regulations in collaborati on with U.S. EPA. The regulations phased-in an emission standard for new engines of 3 .0 grams per brake-horsepowerhour (g/bhp-hr) of HC and NOx beginning in 2001.

2.2 Federal LSI Regulation

Federal law preempts California from regulating eng ines less than 175 horsepower used primarily in farm and construction equipment. To address these engines, the ARB staff worked closely with U.S. EPA in its developme nt of a nationwide federal rule to cover all new engines in this category. The federa l rule, adopted in 2002, established nationwide emission standards for new LSI engines, including those used in farm and construction equipment. The U.S. EPA regulation re quires that LSI engines nationwide meet the same 3.0 g/bhp-hr standard beginning in 20 04 as required in California. The federal regulation also includes a more stringent s tandard: beginning in 2007, new LSI engines must meet a 2.0 g/bhp-hr standard using a m ore rigorous transient testing procedure. It additionally contains evaporative em ission and in-use requirements that were not included in the 1998 California regulation . As a result of the State and federal4

regulations, new LSI engines are now 75 percent cle aner than uncontrolled LSI engines and will become even cleaner beginning in 2007.

2.3 2003 State Implementation Plan for Ozone

LSI equipment accounted for approximately six perce nt of all off-road emissions in 2000 and this percentage is increasing (ARB, 2003). The re are large numbers of uncontrolled LSI engines still in use. These engin es can emit 12 g/bhp-hr or more of HC+NOx, contributing significantly to the smog prob lems in California. To put this in perspective, one uncontrolled LSI engine can emit a s much pollution in three 8-hour shifts as a passenger car certified to California’s cleanest standard emits during its entire life. Yet, LSI engines are generally based on automotive engine technology and can thus incorporate advanced automotive-inspired e mission control technologies to dramatically reduce emissions while still meeting o perational requirements. Finally, zero-emission forklifts are available to provide ev en greater emission benefits while in many cases reducing overall life-cycle costs.

In recognition of these opportunities, the 2003 SIP included two measures for LSI engines. The first measure proposed that Californi a harmonize with the 2007 U.S. EPA 2.0 g/bhp-hr new engine emission standard. The sec ond measure proposed that emissions from existing or in-use LSI engines be re duced by 80 percent or to a 3.0 g/bhp-hr verification level. The proposed verifica tion protocol provides a range of percentage reductions from 75 percent to more than 90 percent based on the state of technology. The latter measure also proposed that new standards be developed that reflected the availability of zero- and near-zero-e mission technologies.

2.4 Airport Ground Support Equipment Memorandum of Understanding

In late 2002, air carriers operating in the South C oast air basin signed a MOU with ARB committing to reduce HC and NOx emissions from new and in-use GSE used in airport operations. The GSE performs a variety of function s, including: starting aircraft, aircraft maintenance, aircraft fueling, transporting cargo a nd passengers to and from aircraft, loading cargo, baggage handling, lavatory service, and food service.

The GSE MOU was developed in cooperation with the A ir Transport Association (ATA; representing the major South Coast air basin’s air carriers), the Federal Aviation Administration, U.S. EPA, and the South Coast Air Q uality Management District. It was

intended to address the air carriers’ contributions to the air basin’s extreme ozone nonattainment classification. The MOU included pro visions for the early introduction of clean units, with requirements for a 2.65 grams per brake-horsepower hour HC+NOx fleet average at the five major airports in the Sou th Coast air basin by December 31, 2010, and the use of diesel oxidation catalysts and diesel particulate filters to significantly reduce particulate matter emissions f rom the diesel portion of the fleet. The MOU also included a requirement to have electric or zero-emission vehicles represent at least thirty percent of the 1997 existing fleet, in aggregate, by December 31, 2010. The signatory airlines terminated the MOU on Octobe r 28, 2005 stating that the5

adoption of the Portable Engine Air Toxic Control M easure and other pending rulemaking that affects GSE is generally statewide in approach and largely inconsistent with the MOU, which is applicable only in the South Coast.

The staff proposal presented in Section 3 is intend ed to retain the benefits of the original MOU through 2010 and achieve slightly greater benef its by 2013.

2.5 LSI Inventory

The ARB’s OFFROAD emission inventory model (ARB, 19 98b), adopted in 1998 and updated regularly, was used in the development of t his rulemaking. The annual average statewide emissions from off-road LSI engin es are shown in Table 2.0. Offroad LSI equipment emitted about 70 tons per day of HC and NOx in 2004. By 2010, the emissions of these pollutants will be reduced t o about 35 tons per day. This decrease is due to the new engine emission standard s implemented in 2001. The trend, while positive, does not produce the same de gree of reduction achieved from some other off-road categories.

Table 2.0: Off-Road LSI Equipment Emissions Statewide Annual Average 1 (tons per day)

Year Population HC NOx

2004 87,687 15.4 54.8

2010 92,104 7.5 28.3

2020 96,964 4.4 19.0

1 The inventory shown in Table 2.0 includes engines preempted by federal regulations. The emissions estimates do not reflect the impact of U. S. EPA’s 2007 new engine emission standard.

The three equipment categories in Table 2.1 contrib ute the majority of off-road LSI emissions and are the focus of the regulatory propo sal to reduce emissions from in-use fleets. As calculated from Table 2.1, emissions fr om these three categories account for greater than 80 percent of the total statewide LSI emissions in 2004. In terms of population, in 2004, the categories account for 60 percent of all off-road LSI equipment.

Table 2.1: Off-Road LSI Equipment Emissions Top Three Equipment Categories (tons per day)

2004 2010 2020 Equipment Category HC NOx HC NOx HC NOx

Industrial Forklifts 11.8 40.4 5.3 19.9 3.4 15.6

Airport GSE 0.6 3.3 0.3 1.5 0.2 1.0

Sweeper/Scrubbers 0.2 0.8 0.1 0.3 0.1 0.26

3 REGULATORY PROPOSAL

Staff has worked with LSI engine and equipment manu facturers and distributors, emission control system manufacturers, propane fuel refiners and distributors, end-user facility operators, federal regulatory agencies, ai r carriers, environmental groups, and other interested parties since January 2004 to iden tify approaches that would reduce emissions from new and in-use LSI engines and equip ment. The most promising options involved lower-emissions standards for new engines, and fleet emission limits applicable to in-use fleets. Staff conducted works hops in May and August 2004 on these approaches. A proposal combining both approa ches was discussed at two workshops held in March 2005 and presented to the B oard in June 2005. Pursuant to the Board’s direction, additional information was s ought and the proposal was further

revised.

A central element of the proposed regulation is a f leet-average emission standard applicable to equipment operators. The requirement would reduce emissions from uncontrolled equipment through retrofit and/or repl acement with newer, lower-emission or electric equipment. More stringent emission sta ndards for new engines ensure that cleaner LSI equipment would be available for purcha se. The elements of the proposal

are discussed below.

3.1 More Stringent Emission Standards for New Engin es

The proposed emission standards for new engines inc lude the following components: adoption of U.S. EPA’s 2007 model-year emission sta ndard, a more stringent 2010 model-year emission standard, optional certificatio n standards and more rigorous test procedures.

3.1.1 2007 Standard

Beginning with the 2007 model year, U.S. EPA’s tail pipe emission standards for new LSI engines are more stringent than ARB’s adopted s tandards. Staff proposes to adopt the U.S. EPA standards so that they can be enforced by California. Engine manufacturers would be required to meet a 2.0 g/bhp -hr (2.7 g/kW-hr) HC+NOx and 3.3 g/bhp-hr (4.4 g/kW-hr) carbon monoxide (CO) emi ssion standards. Alternatively, a manufacturer could certify to the following formula :

(HC+NOx) x (CO) 0.784 ≤ 8.57

This formula, established by U.S. EPA, is represent ed by the curve shown in Figure 3.0. The alternative certification standard provides man ufacturers with the flexibility to certify engines with higher CO emissions if they achieve lo wer HC+NOx levels. Staff believes such a tradeoff is protective of public health.7 Figure 3.0: Alternative Federal Certification

3.1.2 2010 Standard

Staff proposes a more stringent emission standard f or new 2010 and subsequent model-year engines of 0.6 g/bhp-hr (0.8 g/kW-hr) HC +NOx and 15.4 g/bhp-hr (20.6 g/kW-hr) CO. The proposed standards lie on the alt ernative compliance curve, as show by the arrow in Figure 3.0. Stated another way, th e proposed 2010 standard limits the calibration flexibility of the engine manufacturer to achieve the lowest feasible HC+NOx emission level. For the 2005 model year, eight eng ine families used in industrial applications emitted at levels at or below the prop osed 2010 standards.

3.1.3 Optional Certification Standards

The staff also proposes to establish optional emission standards that are numerically lower than the 2007 and 2010 mandatory standards. During model years 2007 through 2009, engines could be certified to the optional ne w engine standards of 0.1, 0.2, 0.4, 0.6, 1.0, or 1.5 g/bhp-hr HC+NOx. For model year 2 010 and beyond, engines could be certified to optional standards of 0.1, 0.2, or 0.4 g/bhp-hr HC+NOx. A January 20, 2005, Manufacturers Advisory Correspondence already allow s manufacturers to certify their current engines to these interim lower-emission sta ndards.

The optional standards provide manufacturers that p roduce cleaner engines an opportunity to certify at a lower standard. This m ay translate into a product that is available for Carl Moyer Program incentives. It ma y also be a more desirable product

for the fleet owner that must meet an in-use fleet- average requirement.

3.1.4 Enhanced Test Procedures and Other Manufactur er Requirements

The U.S. EPA emissions standards that take effect i n 2007 also include more rigorous certification requirements and test procedures. Th is proposal adopts by reference the U.S. EPA certification and testing requirements for the 2007 to 2009 model years, and, 0.8 g/kW-hr standard8

with minor revisions, those requirements that begin in the 2010 model-year, as described in Appendix A, parts 4 through 7. The re visions include production line testing and in-use compliance procedures.

The ARB staff also proposes to adopt the new U.S. E PA requirements for evaporative emissions and for engine-diagnostics systems.

3.2 In-Use Emission Standards

The ARB staff is proposing that operators of large and mid-size fleets of forklifts, sweeper/scrubbers, 1 GSE and industrial tow tractors meet an average em ission

standard for their in-use fleet. Fleet size is det ermined by aggregating an operator’s equipment in the State of California. Large LSI fl eets as proposed are those with more than 25 pieces of equipment while mid-size LSI flee ts would be those with 4 to 25 pieces of equipment. The requirements would begin January 1, 2009.

Under the proposal, large fleets would have to meet a more stringent fleet average than mid-size fleets due to their greater flexibility in incorporating combinations of emission-reduction strategies. Likewise, the fleet average would be more stringent for the forklift portion of the fleet than for the non- forklift portion of the fleet reflecting the greater availability of zero- and low-emission tech nologies.

The fleet average would be determined using the cer tification levels of 2001 and newer LSI engines and the retrofit verification levels of engines with retrofit kits. To make the proposal less complex and less intrusive for the ty pical fleet operator while maintaining cost effective emission benefits, the fleet average will not incorporate load factors, horsepower, or hours of use.

The proposal provides the LSI fleet operator with t he flexibility to use any combination of retrofits, lower-emission purchases, and zero-emiss ion electric purchases to meet the fleet-average emission level, which becomes progres sively more stringent over time. A detailed discussion of the various compliance scena rios identified by ARB staff can be found in Appendix B.2. The following table summari zes the proposed fleet average

emission levels for forklift and non-forklift LSI f leets.

1 With engine displacement greater than one liter. Of the engines certified in the 2004 model year for sweeper/ scrubbers, 46 percent had a displacement o f one liter or less (ARB, 2005). Engines with less than one liter displacement are not subject to the LSI proposal and the equipment containing them is n ot subject to the fleet average requirement.9 Table 3.0: In-Use Fleet Average Emission Requiremen ts

[g/bhp-hr (g/kW-hr) of HC+NOx]

LSI Fleet Type Number of units By 1/1/2009 By 1/1/2011 By 1/1/2013

Large fleet – forklift
component 26 + 2.4 (3.2) 1.7 (2.3) 1.1 (1.5)

Mid-size fleet – forklift
component 4-25 2.6 (3.5) 2.0 (2.7) 1.4 (1.9)

Non-forklift fleet N/A 3.0 (4.0) 2.7 (3.4) 2.5 (3.6 )

Small fleet 1-3 Exempt from Fleet Requirements

The fleet average proposal provides additional flex ibility to the fleet operator that increases its fleet size enough to jump from one ca tegory to the other by instituting twoyear transition periods that correspond with the fl eet average compliance dates. For example, on January 1, 2009, a mid-size fleet would have to meet a 2.6 g/bhp-hr standard. If that same fleet, through growth, beco mes a large fleet, they would not have to meet the 2.4 g/bhp-hr requirement. However, the y would have to meet the 1.7 g/bhphr requirement for large fleets, beginning on Janua ry 1, 2011, as that is the next fleet requirement.

3.2.1 Special Fleet Requirement for GSE in the Sout h Coast Air Basin

On October 28, 2005, ATA notified ARB that the air carriers who had signed the MOU were terminating the GSE MOU. The termination beca me effective 60 days later, December 27, 2005. The terminated MOU included a 2 .65 g/bhp-hr HC+NOx fleetaverage standard for the LSI and diesel fleets, and a requirement that 30 percent of the baseline fleet be zero-emitting. Staff is proposin g that GSE fleets in the South Coast air basin meet the same fleet-average emission requirem ents as other LSI fleets, and meet the MOU’s zero-emission requirement for their curre nt fleet.

3.2.2 Small Fleet Exemption

The ARB staff recognizes that small fleets, with on e to three pieces of equipment, are least able to absorb the costs of an in-use proposa l. In addition, it is believed that these users, in general, use their equipment fewer hours per year than the large- or mid-size fleets. Initially in considering these factors, th e staff proposed that small fleets meet a relaxed requirement, consisting of two additional y ears to comply, relative to other fleets, and a less stringent fleet-average requirem ent. This was part of the proposal presented to the Board in June 2005.

Staff has since revised its proposal to exempt flee t operators of three or fewer LSI engines. The exemption reduces the number of fleet s subject to the rule by as much as 60 percent while reducing the emission benefit by l ess than 20 percent. As discussed in Section 6.3, a substantial portion of the inventory of some forklift dealers is uncontrolled.10

The cost of retrofit or disposal of a large number of forklifts imposes a large cost on these dealers compared to other fleet operators who se cost of operating forklifts is only a small portion of revenues. Thus, the small fleet exemption reduces the cost of compliance for forklift dealers by providing a sale s outlet for some uncontrolled forklifts currently in their inventory.

3.2.3 Hours of Use Exemption

Low-use equipment may be temporarily exempted from the fleet-average emission level requirements if it meets the following provisions:

• The equipment is used, on average over any three y ear period, 250 hours per year or less,

• The equipment is equipped with an operational hour s-of-use meter,

• The fleet operator maintains hours-of-use records for the piece of equipment, and

• The fleet operator addresses any uncontrolled emis sions by January 1, 2011, by either retrofitting or repowering the equipment to meet at least Level 2 verification as described in Section 3.3.1 below or by replacing th e equipment with a new or used piece of equipment certified to a 3.0 g/bhp-hr HC+N Ox emission standard or better.

3.2.4 Specialty Equipment Exemption

Specialty equipment is defined as equipment that ha s unique or specialized performance capabilities that perform prescribed ta sks. Specialty equipment used in large- and mid-size fleets is permanently exempted from the fleet average requirements provided that:

• The Executive Officer approves the listing of the piece of equipment as specialty equipment,

• The cost of replacing or retrofitting the equipmen t is deemed by the Executive Officer to be excessive, and

• The equipment meets the first three provisions of the hours of use exemption (see Section 3.2.3 above).

3.3 Proposed Verification Procedures for Retrofits

The ARB staff is proposing a procedure to verify th e in-use emission performance of retrofit control systems that can be used to help m eet the proposed fleet-average emission requirements. The proposed verification p rocedures (contained and described in Appendix C) would apply to manufacturers of retr ofit systems sold in California. These systems include but are not limited to, close d-loop fuel-control systems, fuelinjection systems, and three-way catalysts.11

3.3.1 Retrofit Emission Verification Levels

Table 3.1 presents the LSI retrofit system verifica tion levels that a manufacturer could choose. Depending on the level selected, a system could be verified on the basis of a percentage reduction or on the basis of an absolute emission level. In addition, the proposed procedures allow retrofit technologies tha t reduce emissions from either uncontrolled engines or certified engines. These o ptions provide flexibility for manufacturers to develop a variety of control syste ms and determine the appropriate

level of emission control for each.

Table 3.1: Proposed LSI Engine Retrofit System Veri fication Levels

Classification Percentage

Reduction Absolute Emission Level

(g/bhp-hr HC+NOx)

LSI Level 1 1 > 25% 2 Not Applicable

LSI Level 2 1 > 75% 3 3.0

LSI Level 3a 1 > 85% 4 0.5, 1.0, 1.5, 2.0, 2.5

LSI Level 3b 5 Not Applicable 0.5, 1.0, 1.5, 2.0

1 Applicable to uncontrolled engines only

2 The verified emissions reduction is 25 percent rega rdless of actual emission test values

3 The verified percentage reduction for LSI Level 2 i s 75% or 3.0 g/bhp-hr regardless of actual

emission test values

4 Verified in five percent increments, applicable to LSI Level 3a classifications only

5 Applicable to emission-controlled engines only

At the time of the June 2005 hearing, ARB staff bel ieved that the majority of retrofit systems would be verified to Level 2, providing a 7 5 percent reduction from 12 g/bhp-hr to 3.0 g/bhp-hr. Comments from manufacturers indic ated that the applicability of the system would likely be limited to equipment that wa s approximately 1996 or newer. Since then, however, the ARB has verified a retrofi t system that brings uncontrolled 12 g/bhp-hr equipment to a level that is cleaner th an current new equipment – down to 1.0 g/bhp-hr. In addition, this system is applicab le to the majority of all forklifts as old as 1990. Two additional retrofit systems are now in t he process of being verified. The verified system is now available for many pieces of uncontrolled equipment.

3.4 Alternative Compliance Option for Fleets used i n Agricultural CropPreparation Services

Recognizing that forklift fleets owned and used in agricultural crop-preparation services are often significantly older than other fleets, an d that these businesses are often not in a position to fully recover costs, ARB staff is pro posing an alternative compliance option

for these fleets.

In June 2005, staff presented an option for fleets owned by agricultural crop-preparation businesses that was less stringent than the basic f leet requirement and allowed12

additional time for compliance. Nonetheless, conce rn has continued regarding the cost of the proposal, especially the costs related to re placing equipment that could not be retrofitted. Staff has revised its proposal to fur ther reduce costs by only requiring compliance of owned forklifts for which retrofit ki ts are available, thus avoiding the higher cost of replacing or retiring forklifts.

About 40 percent of the forklifts owned by agricult ural-related business are expected to have retrofits commercially available and be subjec t to retrofit; the remaining forklifts would not be affected by the proposal. Specificall y, owners of agricultural-related fleets would be required to reduce emissions (to a 3.0 g/b hp-hr level or less) of 20 percent of their equipment for which retrofits are available b y January 1, 2009, and the remaining 80 percent by January 1, 2012. In addition, the agr icultural proposal includes a low hours-of-use exemption and specialty equipment exem ption, similar to those in the basic fleet average requirement. However, the low hours-of-use equipment exemption is permanent.

The economic impact of this alternative proposal is described in Section 6.5 and the emissions benefits achieved (and foregone) from thi s proposal are detailed in Section 5. In summary, the proposal will result in substantial ly reduced costs to operators of agricultural forklifts, and provide an opportunity to receive incentive funds. The agricultural summer ozone season emission benefit o f the proposal is approximately one ton per day of HC+NOx by 2012, which is 1.5 ton s per day less than if full applicability were sought.

4 TECHNOLOGY REVIEW

Off-road LSI engines are similar to automotive engi nes, but have traditionally lacked some of the automotive-style emission controls that have been in use for more than 25 years. While off-road LSI engines are exposed t o duty cycles that can be more strenuous than those of their automotive cousins, t hey are suitable candidates for control, and manufacturers are now applying automot ive-style emission control technologies to LSI engines to reduce emissions. T hese technologies include closed-loop fuel controls, fuel injection, and thre e-way catalytic converters.

4.1 Emission Control Strategies

Since 1980 automotive emission control systems have used a closed-loop fuel control system to help reduce emissions. These systems use sensors to monitor exhaust gas oxygen concentrations, and feed this information ba ck to an electronic control module, which in turn keeps the air-to-fuel mixture at an o ptimum level. To help ensure more precise metering of fuel and optimum combustion, ca rburetors have been replaced by fuel injection. Today's advanced systems maintain an extremely tight stoichiometric airto-fuel balance during nearly all engine operations . This is important because

fluctuations from stoichiometric result in reduced efficiency in controlling HC, NOx, and

CO emissions.13

Central to automotive emission control systems is t he three-way catalytic converter.

Automotive manufacturers have installed tens of mil lions of them each year for more than 25 years. They are an integral component of a utomotive emission-control systems that have allowed the automotive fleet to meet prog ressively lower emission standards, effectively reducing emissions by more than 95 perc ent.

4.2 Emission Controls for LSI Engines

Current LSI engines use closed-loop fuel-control sy stems with three-way catalysts to

meet State and federal emission standards. The com ponents used, however, are generally cheaper and less effective than versions found in passenger cars. Even so, close to 50 percent of all LSI engines certified in 2004 emitted at 1.0 gram or less which is well below the 2007 2.0 grams per brake-horsepow er-hour standard. In addition, several current LSI engines already emit at 0.5 gra ms or less, demonstrating the feasibility of the more stringent 2010 standards. Engines tested and evaluated by U.S. EPA were used to establish the curve shown in Figur e 3.0, which has an endpoint of 0.8 g/kW-hr. Many of the engines being certified t o meet the 2007 standard are expected to also be able to meet the 2010 standard through calibration changes alone. For others, modest improvements in precious metal l oading, higher cell densities, and/or more effective washcoats may be needed. The se technologies are readily

available from the automotive sector.

4.3 Impact of Transient Testing

Some manufacturers have expressed concerns about th e impact of the 2007 transient test cycle on the feasibility of achieving the prop osed new engine standards. To date, information provided by the Southwest Research Inst itute indicates that, under the transient test cycle, hydrocarbon emissions from an LPG engine increased by about 30 percent, but NOx emissions remained relatively cons tant. In a review of 13 forklift engine families (of 19 total) in our 2004 certifica tion test database, NOx constituted approximately 50 percent of the HC+NOx emissions. 2 At 50 percent HC, the new test cycle could lead to a potential emissions increase of 15 percent over emissions from the steady state test cycle. However, all but one of t he 13 engine families would still have an HC+NOx certification level of less than 1.0 g/bh p-hr because in instances where the HC emissions were high, the corresponding NOx emiss ions were low. Clearly, the new test cycle does not prevent compliance with the pro posed 2007 standard.

Test results from emission control device manufactu rers using new catalysts and other emission control technologies, while not performed under the transient test cycle, show that emissions can be reduced by more than 90 perce nt when compared to the proposed 2007 standard (SwRI, 2004). The proposed 2010 standard requires a 70 percent emission reduction. Given that several cur rent production LSI engines emit well below the proposed standard and the exceptionally l ow emission levels demonstrated on modern passenger cars, meeting the proposed 2010 LSI standard is feasible.

2 Historically, NOx emissions constituted 80 percent of the total LSI emissions (September 1998, LSI St aff Report).14

4.4 Lead Time

When U.S. EPA promulgated the federal LSI standards , the Agency stated that the three-year period between the 2004 Tier 1 and 2007 Tier 2 emission standards (3.0 and 2.0 g/bhp-hr, respectively) allowed manufacturers s ufficient lead time to meet the more stringent standard. The U.S. EPA went on to state the expectation that the emissioncontrol technologies for the 2004 emission standard would be able to meet the 2007 standard with additional optimization and testing. The ARB’s staff expects that three years will also be sufficient time for manufacturer s to further optimize the emissioncontrol technologies needed to meet the 2010 ARB 0. 6 g/bhp-hr requirement. It also provides sufficient time to incorporate hardware ch anges, should they be necessary.

4.5 Fuel Quality

Liquefied petroleum gas is a mixture of various hyd rocarbons produced from crude oil refining or the processing of natural gas. Propane is the predominant component of LPG. The LPG used for motor vehicles must meet a q uality specification to ensure proper operation of motor vehicles and to achieve a nd maintain exhaust emission

standards. LPG fuel that does not meet these motor vehicle specifications can harm engine fueling systems and components and may preve nt an engine from complying with existing and future emissions standards.

In 1992, ARB established motor vehicle fuel specifi cations for LPG limiting the propene content to 10 percent by volume. Other heavier hyd rocarbons are also limited. Not all LPG produced meets the LPG motor vehicle specificat ions. The LPG not meeting the motor vehicle specification is considered commercia l grade propane and is used mostly for space heating and recreational purposes.

There are two separate concerns about LPG motor veh icle fuel quality - fuel contamination and high olefin content. Contaminate d fuel can have an immediate and sometimes damaging impact on the fuel delivery syst em and the emissions control system. Contamination typically occurs downstream of production during storage and distribution. For example, contamination can occur from fuel-hose degradation.

There is information to suggest that LPG containing high olefins, such as propene, can accumulate on fueling components and can adversely affect the fuel-delivery and emission-control systems. This accumulation is oft en the result of using commercial grade fuel in motor vehicles. Commercial grade fue l is intended primarily for heating and has a higher olefin content than motor vehicle grade LPG. Olefins react to create a plastic-like coating in the vaporizers, carburetors , and injectors. This coating gums up these engine components, reducing the effectiveness of heat transfer and ultimately causing poor delivery of the fuel and inaccurate fu el-to-air ratios. Heavy hydrocarbon residue may also cause similar problems.

The ARB is committed to working with industry to de termine if the existing specifications are adequate to support more stringent emission sta ndards. The ARB is executing a15

contract to analyze 150 LPG samples from various si tes statewide. The ARB is also following activities of the control device manufact urers, refiners, and LPG distributors to make low olefin LPG fuel, advanced fuel filters, an d fuel additives available to fleets, leading to reduced emissions and vehicle maintenanc e and improved fuel efficiency.

5 ENVIRONMENTAL IMPACTS

5.1 Air Quality Impacts

Staff used the ARB’s OFFROAD model to estimate emis sions from LSI engines. The key assumptions for population and activity are sho wn in Table 5.0.

Table 5.0: OFFROAD Model Input Factors

Input Unit All LSI Equipment 1

Horsepower hp 63

load factor unitless 0.47 activity hours/year 905 2010 population unitless 92,507 2020 population unitless 96,963
life years 10.8

1 Population-weighted

Staff calculated the emission benefit from the intr oduction of the 0.6 g/bhp-hr low emission standard using the difference between that standard and the federal 2.0 g/bhp-hr standard, new equipment sales volume, and the above input standards.

Staff calculated the emission benefit from the flee t-average requirements by taking the

difference between an established baseline fleet-av erage emission level and the proposed fleet-average emission levels for all affe cted fleets. The baseline takes into consideration the current use of electric equipment in many fleets.

Table 5.1 lists the 2010 and 2020 emission benefits of the proposed regulation. The inuse benefits are roughly 20 percent lower than thos e presented at the June 2005 Board hearing. The reasons for the decrease in emission benefit are shown in Table 5.3.16 Table 5.1: Statewide Emissions Benefits

HC+NOx Reductions (tons per day) Staff Proposal Element

Year 2010 Year 2020

Fleet Average Emission Requirements 1 4.5 < 1.0 2

New Engine Standards 1.2 6.2

Total 5.7 6.2

1 These requirements apply to fleets with 4 or more pieces of off-road LSI equipment.

2 The benefits from the in-use standards are expect ed to be minimal in 2020 as the vast majority of th e equipment will have been retired.

Table 5.2 shows the estimated 2010 and 2020 benefit s of the staff’s proposal for the

South Coast relative to the SIP emission reduction commitment for that region. The benefits in the South Coast are expected to decreas e in proportion to the statewide decrease, but will still represent 46 percent of th e statewide total. As shown in Table 5.2, the emission benefits of staff’s revised propo sal are just below the 2003 SIP commitment for 2010 and well within the range for 2 020.

Table 5.2: South Coast Air Basin Emissions Benefits

1 6.1 to 13.0 tons per day on statewide basis.

The staff’s revised proposal contains provisions to reduce the costs to small fleets and agricultural-related businesses. The effect of the se revisions is to reduce the emission benefit achieved in the post-2010 time-frame. The reduced benefits of the small fleet exemption does not impact the 2003 SIP commitment f or 2010 because small fleets were not originally required to have their equipmen t comply with prescribed standards until 2011. It additionally is not reflected in th e 2003 SIP commitment for 2020 because it is assumed all uncontrolled forklifts (except ag ricultural forklifts), will have been retired by that time.

The proposal for agricultural-related businesses is estimated to achieve 1.3 tons per day for the summer ozone season by 2012. The subst antial portion of the previous and current agricultural proposal occurred after 2010, therefore the 2010 benefits are not significantly impacted by this revision. By 2020, staff assumes that 40 percent of the agricultural-related forklifts will have been retir ed, reducing the emissions loss to about 1.0 ton per day. Table 5.3 shows the impacts from these revisions. HC+NOx Reductions (tons per day)

Year 2010 Year 2020

2003 SIP Commitment 2.8 -6.0 1 1.5 – 5.1

Staff’s Proposal 2.6 2.917 Table 5.3: Impact of Revised In-Use Proposal

(tons per day HC+NOx)

Agriculture Retrofit Only 1 (2.2)

Small Fleet Exemption (1.0)

1 The agricultural benefits are for the summer ozon e season, assuming that 75% of annual hours occur during this period.

It should be noted that dealers have questioned whe ther the existing LSI regulations have already achieved emission benefits not reflect ed in staff’s inventory because a significant number of LSI engines are certifying we ll below the standards. The emission benefits attributable to the LSI regulations alread y in effect were determined using the applicable certification standards consistent with the methodology for most other mobile source regulations. The ARB staff will continue, n onetheless, to assess and improve the LSI emissions inventory, including in-use emiss ions, and other factors such as hours of use, emissions deterioration, and equipmen t life.

5.2 Other Impacts

The ARB staff has also assessed the impacts from th e use of electric forklifts. An increase in their use would result in a correspondi ng increase in the electrical energy required to recharge the batteries on a regular bas is and in turn, would create a greater demand for electricity supplied at generating facil ities.

To determine the relative impact from the use of el ectric forklifts, staff assumed that the population of Class 1 electric rider-forklift truck s grew by 25 to 50 percent as a result of the regulation. Staff assumed that these electric forklifts had an average of 50 horsepower (37.3kW) and would be operated at a 30 p ercent load factor for 1,900 hours per year. Under these assumptions, the increased e nergy demand from the additional entire electric forklift fleet would be approximate ly 0.05 to 0.10 percent of the projected total energy demand in 2010. This increased demand , which includes losses associated with the distribution of electricity, wi ll not have a significant impact on the overall system.

The use of electric forklifts will increase electri city demand and consequent upstream emissions, primarily NOx, from power plants. The N Ox emissions from power plants attributed to the increased energy demand of electr ic forklifts will be small in comparison

to the NOx emissions from the LSI forklifts that ar e being replaced. Additionally, air district permitting programs are in place to minimi ze these emission increases and previous estimates have determined these upstream e missions to be extremely small compared to the benefits achieved.

While electrification of forklifts will result in t he increased production and use of batteries, lead-acid batteries are well regulated a nd banned from municipal solid waste landfills. Additionally, California has an establi shed recycling infrastructure, and the18

recycle rate for lead-acid batteries is currently o ver 95 percent. With these mitigation measures in place, battery disposal impacts should not be significant.

6 ECONOMIC IMPACTS – COST AND COST-EFFECTIVENESS

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, o r creation, and the ability of California business to compete.

State agencies are also required to estimate the co sts or savings to any state or local agency and school district in accordance with instr uctions adopted by the Department of Finance. The estimate shall include any non-discre tionary costs or savings to local agencies and costs or savings in federal funding to the state.

Any business involved in the production or use of L SI engines would potentially be affected by the proposed regulation. Also potentia lly affected are manufacturers that supply components for engines and industrial equipm ent, and distributors and retailers that sell such equipment.

6.1 Incentive Programs

Incentive programs have the ability to prompt emiss ions benefits early or beyond those required by regulations. California has the larges t incentive program in the nation, with over $140 million available each year through State and local funds. Even so, this level of funding is far from sufficient to pay for all th e reductions needed to provide clean air. Reductions required by regulations, and funded by o wners of the affected equipment, will still provide the majority of emission reducti ons.

Currently, incentive programs, such as the Carl Moy er Program, provide modest funding for forklift projects. In some cases, the incremen tal cost of electric forklifts can be funded (about $5,000) if the applicant can demonstr ate he or she is not in an occupation

where electric forklifts are the norm. Purchase of low-emission forklifts has not previously been an eligible category because no low -emission standards existed (“lowemission standards” refers to optional standards mo re stringent than otherwise required of all LSI engines). With the adoption of the prop osed optional low-emission standards, manufacturers could be eligible for the incremental cost of the low-emission equipment. Recently, retrofit systems for forklifts have becom e an eligible project category, with the full retrofit cost eligible for funding.

With the adoption of the proposed regulation, most of the incentive projects would no longer be eligible for funding. Several exceptions would remain:19

Small Fleets

Small fleets, from one to three units, are exempt f rom the regulatory proposal. As such, they would continue to be eligible for incentive fu nding. Eligible projects include the incremental cost to purchase electric forklifts, lo w-emission forklifts, and retrofits.

Agricultural-Related Fleets

The alternative proposal for agricultural-related b usinesses would not require implementation of the retrofit requirements until J anuary 1, 2012, for 80 percent of these fleets. As such, that portion of the fleet would b e eligible for incentive funds to pay the full cost of the retrofit through January 1, 2009. After that point, the project could not demonstrate a three-year project life, as required by the Carl Moyer Program.

Complying Fleets

Fleets that demonstrate full compliance with their fleet-average requirements would be eligible for incentive funds to further reduce emis sions. Eligible projects would include electric forklifts, low-emission forklifts, and ret rofits.

6.2 Potential Impact on Manufacturers

The proposed engine standards will impact manufactu rers of off-road LSI engines and original equipment using such engines. Engine manu facturers are located mostly

outside of California. As manufacturers are alread y developing engines to comply with the federal 2.0 g/bhp-hr standard for 2007, the pro posed adoption of California standards for 2007 to 2009 is not expected to resul t in significant additional work or costs. For reference, the U.S. EPA estimates that the additional cost to manufacturers of meeting the 2007 standards is approximately $50 per engine.

Most engines meeting the 2.0 g/bhp-hr standard are expected to use the same basic hardware to also meet the 2010 requirement of 0.6 g /bhp-hr, although calibration changes will be needed. To provide a conservative cost analysis, ARB staff assumed that 25 percent of all engines would need improveme nts to the catalyst system (increased volume and/or precious metal loading) re sulting in an average hardware cost increase of 40 percent. This cost is shown in Tabl e 6.0. U.S. EPA’s rulemaking for 2007 is the source for the base catalyst cost.20 Table 6.0: Incremental Hardware Cost

2010 Emission Standard

per engine

Base catalyst/muffler (2 gram standard) $295

Improved catalyst/muffler (0.6 gram standard) $415

Incremental cost (for the 25 percent of engines needing improvements) $120

Average incremental cost $30

Spreading the cost of the catalyst upgrade across a ll engines sold in California results in an average incremental per engine cost of $30.

The U.S. EPA analysis determined the fixed and vari able costs for manufacturers producing LPG, CNG, and gasoline engines to meet th e 2.0 g/bhp-hr standard. The ARB staff used the compliance costs from this analy sis to determine the engineering and compliance costs for engines designed to meet t he 0.6 gram standard. The

incremental hardware costs noted above were then in cluded to determine the overall cost presented in Table 6.1. As shown, the propose d new standards for 2010 are expected to add less than $100 to the cost of a new engine. This cost will be passed onto the fleet operator and is small enough to not significantly impact California competitiveness, employment, or business status.

Table 6.1: Incremental Retail Price Equivalent Cost s

To Meet 2010 Standard

per engine

Research and development $20

In-Use Testing $10

Certification $20
Hardware improvements (from Table 6.0) $30

Total Incremental Cost $80

The compliance costs in Table 6.1 assume that manuf acturers will produce and sell most 0.6 g/bhp-hr engines nationwide (the 75 percen t that do not require extra hardware to comply) and, thus, will be able to spre ad the fixed costs over a larger volume of engines. The ARB staff believes that thi s is reasonable given that the engines expected to be in production in 2010 are es sentially the same as those that will be produced to meet the federal regulations. ARB s taff did not, however, assume that21

the 25 percent of engines with more expensive and r obust catalysts would be sold nationwide. Therefore, the per engine certificatio n cost considers that these engines are only sold in California and, thus, the cost is greater than the per engine estimates presented by U.S. EPA.

The research and development costs in Table 6.1 ref lect the calibration changes needed to meet the 2010 standards. A portion of th e in-use testing cost derived by U.S. EPA is due to facility upgrades for transient testing to meet the federal 2007 standards. As these improvements will occur regard less of this proposed rulemaking, the in-use testing cost used by ARB staff is conser vative.

6.3 Potential Impact on Distributors and Dealers

Most engine and equipment manufacturers sell their products through distributors and

dealers. While distributors and dealers are not di rectly affected by the proposed standards, the proposed standards may affect them i ndirectly. Dealers earn income through the sale and lease of new forklifts, parts and service for in-use forklifts, forklift rental, and the sale of used forklifts. In the Jun e 2005 proposal, staff believed that forklift dealers would be able to pass through the vast majority of all costs associated with the proposal to the operators of the equipment . Since that time, staff has learned

that the business model for forklift dealers is mor e complex. The following discussion assesses how the various elements of the staff prop osal may affect dealers.

Regarding the sale or lease of new forklifts, this proposal is not expected to have a significant positive or negative impact on dealers. An increase in price could potentially reduce sales. However, the projected increase in co st is modest (less than 1 percent) and it is expected that it will be passed on to end -users since all competing equipment will increase in price. It is more likely that an impact of the proposal will be that fleets will turn over equipment more quickly in order to c omply with the fleet-average requirements. This would result in the increased s ale and lease of new equipment.

In the sale of parts and service for in-use equipme nt, the proposal is likely to have a slightly positive impact since the proposal would r esult in increased business to install retrofit systems in order to comply with the fleet- average requirement.

With regard to rental forklifts, the proposal would require that forklifts rented for less than one year meet a 3.0 g/bhp-hr emission standard by 2009. The impact on the dealers would depend on several factors, including when the dealers began purchasing controlled equipment, the average turn-over rate of their rental fleet, and the ability to pass along any increased rental costs due to more e xpensive equipment. A dealer that was receiving controlled equipment since 2003 and i s on a five-year lease turn-over cycle would not have any significant impact. A num ber of dealers are in this position. Most dealers, however, will have a small percentage of uncontrolled equipment still within their rental fleet by 2009. A few dealers w ere still receiving uncontrolled equipment in 2004 and if they are on a longer turn- over cycle may have to address a larger percentage of their fleet.22

A dealer may employ several options to address the uncontrolled fleet. A straightforward option is to install a retrofit sys tem. The cost of the retrofit system to the dealer and its installation are estimated to be $3, 500. The extent to which these costs may be passed along to the rental customer is unkno wn. Dealers have stated that they do not believe any increase in costs could be passe d along because they have not been able to increase rental costs for many years. Howe ver, in the new dynamic of a fleet rule, it seems reasonable to assume that some incre ase in costs could be

accommodated. Staff does not believe the full cost could be recouped.

A second option for the dealer would be to slightly accelerate the turn-over of the rental fleet to incorporate new or used equipment that is controlled. Again, this would require added costs on the part of the dealership for a por tion of the fleet, and it is unclear what percentage of that cost could be passed along. A r elated option is for dealers to adjust the make-up of their rental fleets. The revised st aff proposal would allow uncontrolled equipment to be sold to small fleets. Therefore, d ealers could guide uncontrolled equipment to small business sales and ensure more c ontrolled equipment is moved into the rental fleet. A third ption is for dealers to utilize the low-hours exemption. As discussed, equipment that is used less than 250 hou rs per year would have two additional years to comply.

None of these solutions fits all the situations or provides the entire solution. Those dealers with some uncontrolled equipment remaining in their rental fleet will likely need to incorporate several of the options in order to c omply with the regulations in the most cost-effective way. In addition, dealers will need to be prepared to make adjustments to how they currently conduct business in order to mai ntain a fleet of controlled equipment

available to rent.

The final income source for dealers is used forklif t sales. A number of dealers have portrayed this source of income as providing the la rgest profit for the dealership. In order for dealers to have an ample supply of used f orklifts coming back to them for resale, dealers often guarantee the value of any ne w lease that they enter. Consequently, the fleet rule, as structured in the June 2005 proposal, could have had a significant economic impact on some dealers, since it would have devalued the uncontrolled equipment for which they had guarantee d a specific value. Staff believes the current proposal significantly reduces, althoug h does not eliminate this impact. The proposed exemption of small fleets from the in-use fleet requirement will provide a continuing market for uncontrolled forklifts. Howe ver, not all used dealer forklifts are

sold to small fleets.

Table 6.2 provides a range of potential costs to de alers. The total number impacted is based on information from industry and is largely a ffected by normal turnover and placement of equipment in small fleets. The cost r ange assumes that a large portion of the equipment procured in 2004 was uncontrolled, th at all equipment impacted will be retrofit at a cost of $3,500 per unit, and that non e of the cost is passed along to the consumer. These assumptions provide a worst-case a nalysis for the industry as a23

whole. As shown in the table, staff estimates the total cost to be between roughly $2 million to $5 million. Rather than retrofitting th e forklifts, dealers may avoid this cost by limiting their sales of uncontrolled equipment to s mall fleets and selling the equipment over a longer period of time.

Staff’s June 2005 proposal did not include the smal l fleet exemption and would have impacted this segment of uncontrolled forklifts. S ince a large percentage of equipment is ultimately sold into small fleets, the June 2005 proposal would have represented two to three times the estimated costs presented in Tab le 6.2 below.

Table 6.2: Potential Costs to Dealers 1
Revised Staff Proposal

Total Impacted - low estimate 250 units - high estimate 1,400 units Cost per Retrofit $3,500
Total Cost to Equipment Dealers $875,000 to $4,900, 000

1 Dealers estimated a total of approximately 12,000 forklifts statewide. Based on a typical lease life of 5 years and typical rental life of 5-8 year s, and an estimate of 85 percent of forklifts sold to small fleets, the low and high estimates were deriv ed for the number of uncontrolled forklifts.

6.4 Potential Impact on Equipment Operators

Under the staff proposal, fleets would have the fle xibility to decide the mix of options to achieve the required fleet average emission levels. The fleet average approach will allow LSI fleet users to choose the lowest cost opt ion for their particular application. Among the possible options are retrofit equipment, purchase of certified cleaner equipment or purchase of zero-emission electric equ ipment. To determine a range of potential cost, staff analyzed the potential impact to end users of the requirements applicable to fleets of different sizes.

6.4.1 Lower-Emission Engines

Fleet operators can purchase new engines as necessa ry to meet the fleet standards. Incremental costs for engines in the 2007 to 2009 t imeframe are attributable to federal regulations that will require equipment to meet the 2.0 g/bhp-hr standard. For engines purchased in 2010 and beyond, staff expects that th e incremental cost will be minimal, less than $100. Fleet operators may also be able t o buy optional, lower emission engines. The incremental costs for these engines i s not known, but these costs are not expected to be significant as some engines already being sold emit at these low levels.

6.4.2 Zero-Emission

An electric forklift typically costs from $1,500 to $5,000 more than a comparable LSI forklift (EPRI, 2001). However, since an electric forklift has a longer useful life and reduced fuel and maintenance costs, the electric fo rklift can reduce life-cycle costs compared to a LSI forklift.24

Electric forklifts can provide reductions from 2.0 g/bhp-hr to 12.0 g/bhp-hr depending on the emissions rate of the equipment they replace. Assuming an average emissions-rate reduction of 7.0 g/bhp-hr (combined with horsepower , hours of use, and load factor, as noted above) yields an average emissions reduction of 500 pounds per year per forklift.

6.4.3 Retrofit

Retrofit systems reduce emissions from older, uncon trolled forklifts, which produce 12 g/bhp-hr HC+NOx, to a level of 3.0 g/bhp-hr HC+N Ox or lower. The cost of a retrofit system is estimated to be $3,500 as installed (Lubr izol, 2005). These systems provide an average benefit of approximately 690 pounds of H C+NOx reductions per forklift per year. It should also be noted that many of the 200 1 through 2003 engines that were certified as uncontrolled during the phase-in of th e 3.0 g/bhp-hr standard are already equipped with some of the emission-control componen ts. Lower cost retrofit systems could be available for these engines.

The installation of a retrofit system will improve engine operation and reduce fuel use. Closed-loop fuel systems generally operate close to stoichiometry, improving the engine’s efficiency. Information from retrofit con trol-system manufacturers and data from U.S. EPA indicate an estimated 10- to 20-perce nt reduction in fuel consumption with engines employing closed-loop systems (U.S. EP A, 2002). For a typical LPG or gasoline forklift, the annual fuel savings from a r etrofit system used in California is estimated at $600 as shown in Table 6.3. Thus, the retrofitting of existing uncontrolled engines can provide net savings over the equipment’ s life.

Table 6.3: Estimated Fuel Savings

Input LPG

Horsepower (hp) 66

Load factor (unit-less) 0.30

Use (hours) 1 1,200

Improved brake-specific fuel consumption (pound/hp-hour) 0.075

Fuel density (pounds per gallon) 4.2

Fuel cost (dollars per gallon) 1.50

Annual savings (dollars) 600

1 The fuel savings estimate is based on an annual usage of 1,200 hours as opposed to the average use-rate of 1,800 hours to reflect the fact that ol der equipment is used less than the average.

6.4.4 Incremental Capital Cost

Table 6.4 summarizes the estimated initial costs of each option available to fleet operators. These values were used to generate the estimated cost effectiveness25

presented below. Staff did not include in its calc ulation the reduced fuel and maintenance costs resulting from use of retrofitted and zero-emission equipment, which over the equipments’ life may exceed the incrementa l capital cost.

Table 6.4: Incremental Capital Cost

Compliance Option

Retrofit $3,500

Lower-Emission $30 - $80

Zero-Emission $1,500 - $5,000

6.5 Potential Impact on Agriculture

The proposed regulations include an alternative com pliance option for forklifts owned by agricultural fleets to address issues specific to t hat industry. This option reduces costs to agricultural businesses to a minimal level.

Applying the fleet average proposal to agricultural -related fleets results in a total cost to industry of over $30 million. Staff identified thi s as a concern, and prior to the June 2005 Board hearing staff developed a proposal that significantly reduced the cost and spread it over 10 years. Staff estimated that the June 2005 proposal would have a cost of between $5 million and $6 million. At that time , industry estimated the cost to be significantly higher. The main differences were th at staff assumed a modest level of turnover and industry assumed no turnover. In addi tion, staff assumed industry would purchase used forklifts when replacing an old forkl ift, and industry assumed new forklifts would be purchased.

Staff has revised its proposal for agricultural-rel ated fleets. Equipment for which a retrofit system is available must be retrofit. Equ ipment for which no retrofit system is available may continue to be used. This avoids the higher cost of replacing this typically older equipment, which would have been required und er staff’s June 2005 proposal.

Based on the information provided by the agricultur al industry, uncontrolled forklifts that can be retrofitted and thus would be impacted by st aff’s revised proposal account for 40 percent of their total owned forklifts. Assuming a conservative 10 percent of the affected forklifts will take advantage of one of th e two exemptions proposed (low-use, specialized equipment), only 830 forklifts will be required to be retrofitted. Table 6.5 presents the total costs, and the estimated cost to industry if the fleets take full advantage of the incentive monies that are availabl e under the revised proposal.26 Table 6.5: Potential Costs to Agriculture

1 As estimated by industry, 40 percent of the fle et is model-year 1990 or newer and can be controlled. 10 percent of this portion of t he fleet is assumed to meet the low usage or specialty equipment exemption.

On a per fleet basis, a typical business such as a packinghouse might have between 10 and 20 owned forklifts potentially impacted by this proposal. Of those, between four and eight would be required to have a retrofit. In centive funding could be available for up to 80 percent of these. If the typical packingh ouse takes advantage of maximum incentive funding and only needs to fund two retrof it systems, the cost to the packinghouse could be as low as $6,000 to $8,000. If incentive funding is not utilized, maximum cost would be in the range of $32,000. Fo r simplicity, the cost estimates do not incorporate fuel savings that the retrofit syst ems provide.

6.6 Cost-Effectiveness

The incremental capital cost estimates in Section 6 .4.4 were amortized over the expected life of the equipment 3 with an interest rate of five percent. The amorti zation formula yields a capital recovery factor, which whe n multiplied with the initial capital cost, gives the annual cost of the compliance optio n over its expected lifetime. Dividing the annual cost of the compliance option by the emi ssions benefit in pounds for that option yields the cost-effectiveness. For both ret rofitted and electric forklifts, the costeffectiveness is presented as a range to reflect bo th the full incremental capital costs and the overall life-cycle costs.

For those businesses that can incorporate electric equipment without the need for battery-swapping or fast-charging, staff believes e lectric equipment provides a life-cycle saving. However, as many businesses are sensitive to the initial capital costs, the costeffectiveness is also listed with the full capital cost. Staff did not estimate the full lifecycle cost of electric equipment if fast-charging o r battery-swapping were necessary. Because the proposed fleet-average requirement prov ides flexibility, staff assumed that an operator would not choose to convert to electric equipment unless the operator could reasonably and cost-effectively incorporate such eq uipment within the fleet or had other reasons for doing so.

3 Conservatively, the expected life of a retrofitted forklift is five years, while that of a lower-emis sion forklift is seven years and an electric forklift is nine yea rs. Equipment 2,300 units Equipment Impacted 1 830 units Cost per Retrofit $3,000 - $4,000 Total Capital Cost $2.5-$3.3 million
Eligible for Financial Assistance 80 percent

Potential Net Cost $500,000-$660,00027 Table 6.6: Cost-Effectiveness

Compliance Option Dollars per pound

Retrofit 0 – 1.20

Lower-emission 0.13

Zero-Emission 0 – 1.40 1

1 Cost-effectiveness based on replacement of both c ontrolled and uncontrolled equipment.

Thus, as illustrated in Table 6.6 above, fleet oper ators have several cost-effective options to comply with the fleet standards. The co st-effectiveness for all options compares favorably with other regulatory programs a dopted by ARB.

6.7 Potential Impact on Business Competitiveness, E mployment, and Business

Creation and Elimination

The proposed regulation is not expected to have a s ignificant impact on the ability of California businesses to compete with businesses in other states. Requirements for the end users are not expected to be significant as new engines, electric equipment, and retrofit kits all provide performance and cost bene fits. The resale value of existing uncontrolled equipment that is not retrofitted will be reduced.

The proposed regulation is not expected to cause a noticeable change in California employment. California accounts for only a small s hare of the manufacturing employment in industrial equipment and components.

The proposed regulations are not expected to cause any significant change in the status of California businesses. The regulation would pot entially increase the retail price of LSI equipment. However, these costs are expected t o be minor. The regulation will stimulate demand for fuel-system components and ret rofit systems, resulting in an

increase in business for some California manufactur ers.

7 ALTERNATIVES AND RECOMMENDATION

7.1 Alternatives Considered

In June 2005, ARB staff presented a proposal that w as similar in structure to the current proposal, except that it retained a fleet average r equirement for small fleets and a more aggressive alternative option for agricultural-rela ted businesses. The June proposal achieved greater reductions; however, staff believe s the economic impact of that proposal was too high. The current proposal provid es a more appropriate balance between technical feasibility and cost to affected industries.

During the regulatory development process, ARB staf f evaluated various strategies for reducing emissions from LSI engines including:28

 Lowering Manufacturer Emission Standards

 Manufacturer-based Fleet-Average Standards

 Owner or User Fleet-Average Standards

 Near-Zero Emission Requirements

 Zero-Emission Requirements

 In-Use Retrofit Requirements

Each of the elements noted was considered both inde pendently and in combination. At one point, ARB staff actively pursued a requirement for electric purchase. This concept would have required medium and large fleets to meet a 10 percent electric component in 2007, 20 percent in 2008, 30 percent in 2009, an d 40 percent in the years 2010 through 2015. ARB staff decided this concept would not provide the necessary flexibility to industry, and might force the use of a specific technology in applications

where it would be unsuitable.

ARB staff also considered requiring that medium and large fleets reduce emissions from their existing uncontrolled LSI engines by the end of 2008 through the use of retrofit emission-control systems. Small fleets of one to t hree units would have had additional time to retrofit their equipment, and would have be en exempt from the electric purchase requirement. Again, staff rejected these concepts and instead developed a fleet average concept to allow fleets greater flexibility in reducing their emissions.

7.2 Conclusion

The proposal described herein would reduce HC+NOx e missions in a cost-effective manner. No alternative considered by the agency wo uld be more effective in carrying out the purpose for which the regulation is propose d or would be as effective as or less burdensome to affected private persons than the pro posed regulation.29

REFERENCES

ARB, 1998a. "Public Hearing to Consider Adoption o f Emission Standards and Test Procedures for New 2001 and Later Off-Road Large Sp ark-Ignition Engines," California Air Resources Board, September 4, 1998.

ARB, 1998b. "Notice of Public Meeting to Consider the Approval of California's Off-Road Large Spark-Ignited Engine Emissions Inven tory,” California Air Resources Board, October 22

, 1998.

ARB, 1998c. “Notice of Public Meeting to Consider the Approval of California's Off-Road Large Spark-Ignited Engine Emissions Inven tory," Attachment 1, Input Factors, California Air Resources Board, October 22 , 1998.

ARB, 2001. "Policies and Actions for Environmental Justice. "Sacramento, California. California Air Resources Board, December 13, 2001.

ARB, 2003. "Proposed 2003 State and Federal Strate gy for California State Implementation Plan," Section II Mobile Sources, In troduction and Chapter D, California Air Resources Board, August 25, 2003.

ARB, 2005a. California Air Resources Board, Large S park-Ignition Off-Road Summary, 2005 Model Year Certified Large Spark-Ignition Engi ne List: http://www.arb.ca.gov/msprog/offroad/cert/search_re sult.php , undated web page.

ARB, 2005b. Cost-Effectiveness Calculations Spreads heet, Air Resources Board, April 2005

ARB, 2006a. Criteria Pollutant Emission Benefits S preadsheet, Air Resources Board, February 2006

ARB, 2006b. Agricultural-Related Emissions Analysi s, Air Resources Board, February

2006

ARB, 2006c. Dealer Costs Spreadsheet, Air Resources Board, February 2006

EPRI, 2001. “Increasing Profits with Electric Indu strial Vehicles: A Case Study on the Alabama Power Company Electric Forklift Incentive P rogram,” Electric Power Research Institute Inc., 2001.

GRI, 1995. "Industrial Truck Market Analysis," Fin al Report (GRI-95/0422), page 12, Gas Research Institute, October 1995.

GSE MOU, 2002. “South Coast Ground Service Equipme nt Memorandum of Understanding,” An agreement between the California Air Resources Board and 17 airlines, November 27, 200230

ITA, 2005. Regular Member Products (by Class and L ift Code), http://www.indtrk.org/products.asp?id=rmp , April 25, 2005.

Lubrizol, 2006. Email from Cesar Baumann of Lubriz ol Engine Control Systems, February 2, 2006.

MECA, 2003. "Emission Control Systems for Spark Ig nited Vehicles & Engines: From PZEVs to Clean Lawn Mowers," Manufacturers of Emiss ion Controls Association presentation, May 2003.

MECA, 2004. “MECA Responses to ARB Questions Regar ding Three Way Catalyst (TWC) Technology for LSI Applications,” Manufacture rs of Emission Controls Association, prepared by Dr. Joseph Kubsh, MECA Dep uty Director, June 30, 2004.

Nett Technologies, 2006. Email from Wayne Borean, o f Nett Technologies, February 2,

2006.

SwRI, 2004. “Investigation of LPG Fuel System Techn ologies and Fuel Composition Effects on Emissions,” Presentation to the Industri al Truck Association Spring Meeting, Southwest Research Institute, March 23, 2004.

U.S. EPA, 2002. “Control of Emissions from Nonroad Large Spark-Ignition Engines, and Recreational Engines (Marine and Land Based); Final Rule,” Federal Register, Volume 67, Number 217, pages 68242 - 68447, November 8, 20 02.APPENDIX A: MANUFACTURER STANDARDS AND TEST PROCEDU RES

1. Proposed Regulation Order, Part 1: Amend Califor nia Code of Regulations, Title 13, Sections 2430, 2433, and 2434 for Off-Road Larg e Spark-Ignition Engines.

2. Proposed Regulation Order Part 2: Amendments to the incorporated “California

Exhaust Emission Standards and Test Procedures for New 2001 and Later OffRoad Large Spark-Ignition Engines” (40 CFR, Part 86 , Subpart A)

3. Proposed Regulation Order Part 3: Amendments to the incorporated “California

Exhaust Emission Standards and Test Procedures for New 2001 and Later OffRoad Large Spark-Ignition Engines” (ISO 8178)

4. Proposed Regulation Order Part 4: Adoption of in corporated “California Exhaust

Emission Standards and Test Procedures for New 2007 through 2009 ModelYear Off-Road Large Spark-Ignition Engines” (40 CFR , Part 1048)

5. Proposed Regulation Order Part 5: Adoption of in corporated “California Exhaust

Emission Standards and Test Procedures for New 2010 Model-Year and Later Off-Road Large Spark-Ignition Engines” (40 CFR, Par t 1048)

6. Proposed Regulation Order Part 6: Adoption of in corporated “California Exhaust

Emission Standards and Test Procedures for New 2007 Model-Year and Later Off-Road Large Spark-Ignition Engines” (40 CFR, Par ts 1065 and 1068)

APPENDIX B: FLEET AVERAGE EMISSION LEVEL REQUIREMEN TS

1. Proposed Regulation Order Part 8: Adopt Californ ia Code of Regulations, Title 13, Sections 2775, 2775.1, and 2775.2 for Large Spa rk-Ignition (LSI) Engine Fleet Requirements.

2. Fleet Average Compliance Scenarios

APPENDIX C: VERIFICATION PROCEDURE

1. Proposed Regulation Order Part 9: Adopt Californ ia Code of Regulations, Title 13, Sections 2780, 2781, 2782, 2783, 2784, 2785, 27 86, 2787, 2788, and 2789 for Verification Procedures for Retrofit Systems Ve rification Procedure, Warranty, and In-Use Compliance Requirements for Retrofits to Control Emissions from Off-Road Large Spark-Ignition Engines.

2. Description of the Proposed Verification Procedu res for Retrofit Emission Control Systems for Off-Road Industrial Engines