### TITLES 13 AND 17. CALIFORNIA AIR RESOURCES BOARD

NOTICE OF PUBLIC HEARING TO CONSIDER THE ADOPTION O F A PROPOSED

REGULATION TO REDUCE EMISSIONS FROM IN-USE ON-ROAD DIESEL VEHICLES, AND AMENDMENTS TO THE REGULATIONS FOR IN- USE OFF ROAD VEHICLES, DRAYAGE TRUCKS, MUNICIPALITY AND UTILITY VEHICLES, MOBILE CARGO HANDLING EQUIPMENT, PORTABLE ENGINES AND EQUI PMENT,

HEAVY DUTY ENGINES AND VEHICLE EXHAUST EMISSIONS ST ANDARDS AND

TEST PROCEDURES AND COMMERCIAL MOTOR VEHICLE IDLING

The Air Resources Board (ARB or Board) will conduct a public hearing at the time and place noted below to consider adopting a regulation to reduce emissions of diesel particulate matter (diesel PM), oxides of nitrogen (NOx), and greenhouse gases from inuse on-road diesel vehicles that operate in Califor nia. The proposed regulation would also establish requirements for any in-state or out -of-state motor carrier, Californiabased broker, or any California resident who hires or dispatches vehicles subject to the regulation. The Board will also consider amendments to several existing regulations to ensure that these regulations and the proposed regu lation work together effectively, to clarify a number of issues with the existing regula tions to provide additional compliance flexibility, and to improve enforceability in gener al. Specifically, the proposal would amend existing regulations for in-use off-road dies el vehicles, mobile cargo handling equipment at ports and intermodal rail yards, in-us e on-road diesel-fueled heavy-duty drayage trucks, on-road heavy-duty diesel-fueled ve hicles owned or operated by public agencies and utilities, reducing idling emissions f rom new and in-use trucks, heavy duty engines and vehicle exhaust emissions standards and test procedures, the airborne toxic control measure (ATCM) for portable diesel-en gines rated at 50 horsepower and greater, and the portable equipment registration pr ogram.

This notice summarizes the proposed regulatory acti on, including the regulation proposed for adoption and the regulations proposed for amendment. The staff report (Initial Statement of Reasons) and a technical supp ort document present the proposed regulations and information supporting the adoption or amendment of the regulations in greater detail.

DATE: December 11, 2008

TIME: 9:00 a.m.

PLACE: California Environmental Protection Agency

Air Resources Board Byron Sher Auditorium

1001 I Street Sacramento, California 958142

This item will be considered at a two-day meeting o f the Board, which will commence at 9:00 a.m., December 11, 2008, and may continue at 8 :30 a.m., December 12, 2008. This item may not be considered until December 12, 2008. Please consult the agenda for the meeting, which will be available at least t en days before December 11, 2008

, to determine the day on which this item will be consid ered.

During the course of the Board’s consideration of t his proposal, it may adjourn to allow the public and interested parties to view new and e merging technologies that are being developed for use in complying with the proposed ru lemaking.

For individuals with sensory disabilities, this doc ument and other related material can be made available in Braille, large print, audiocasset te, or computer disk. For assistance, please contact ARB's Reasonable Accommodations/Disa bility Coordinator at 916-323-4916 by voice or through the California Rel ay Services at 711, to place your request for disability services, or go to http://www.arb.ca.gov/html/ada/ada.htm

.

If you are a person with limited English and would like to request interpreter services to be available at the Board meeting, please contact ARB' s Bilingual Manager at 916-323-7053.

INFORMATIVE DIGEST OF PROPOSED ACTION AND POLICY ST ATEMENT

OVERVIEW

A. Sections Affected : Proposed adoption to California Code of Regulatio ns (CCR), title 13, new section 2025, entitled “Regulation to Reduce Emissions of Diesel Particulate Matter, Oxides of Nitrogen and Other Cr iteria Pollutants from In-Use HeavyDuty Diesel-Fueled Vehicles;” Proposed amendments t o CCR, title 13, section 2020, “Purpose and Definitions of Diesel Particulate Matt er Control Measures;” Proposed amendments to CCR, title 13, sections 2022 and 2022 .1, “Diesel Particulate Control Measure for Municipality or Utility On-Road Heavy-D uty Diesel-Fueled Vehicles;” Proposed amendments to CCR, title 13, section 2027, “Regulation to Control Emissions from In-Use On-Road Diesel-Fueled Heavy-Duty Drayag e Trucks;” Proposed amendments to CCR, title 13, sections 2449 and 2449 .3, “Regulation for In-Use Off-Road Diesel-Fueled Fleets;” Proposed amendments to CCR, title 13, sections 2451, 2452, 2453, 2455, 2456, 2458, 2461, and 2462 of the “Statewide Portable Equipment Registration Program;” Proposed amendments to CCR, title 13, section 2479, “Regulation for Mobile Cargo Handling Equipment at Ports and Intermodal Railyards;” Proposed amendments to CCR, title 13, section 2485, “Airborne Toxic Control Measure

to Limit Diesel Fueled Commercial Motor Vehicle Idl ing;“ Proposed amendments to CCR, title 13, section 1956.8, “Exhaust Emissions S tandards and Test Procedures – 1985 and Subsequent Model Heavy-Duty Engines and Ve hicles;” and Proposed amendment to CCR, title 17, sections 93116.1, 93116 .2 and 93116.3 of the “Airborne

Toxic Control Measure for Diesel Particulate Matter from Portable Engines Rated at 50 Horsepower and Greater.”3

B. Background: Proposed Regulation to Reduce Emiss ions of Diesel PM and

NOx from In-Use On-Road Diesel Vehicles

Over the past 30 years, as part of its mission to p rotect public health, the Board has established requirements to reduce emissions from n ew and in-use on-road motor vehicles and engines, and other sources. Since 199 0, ARB and the United States Environmental Protection Agency (U.S. EPA) have wor ked together to harmonize emission control requirements for new heavy-duty di esel engines. In 2001, ARB adopted amendments that aligned the California exha ust emission standards for heavy-duty diesel engines with those promulgated by the U.S. EPA for 2007 and subsequent model year engines. The standards repre sented a 90 percent reduction of NOx emissions, 72 percent reduction of non-methane hydrocarbon, and 90 percent reduction of particulate matter (PM) emissions comp ared to 2004 model year standards. When fully implemented, it is anticipated that the emissions reductions from the new emissions standards will only be achieved with dies el particulate filters and NOx

exhaust aftertreatment. 1 Because of the long useful lives of diesel engine s, through normal replacement of older vehicles, these newer l ower emitting engines will be

introduced into the state and national fleets relat ively slowly. Consequently, contribution of these emissions reductions in meeting national a mbient air quality standards (NAAQS) for fine particulate matter (PM2.5) and ozo ne will be slow to materialize. The proposed regulation would provide the necessary emi ssions reductions by the mandatory deadlines for meeting the NAAQS for PM2.5 and ozone by requiring the

installation of retrofits for PM exhaust emissions control on existing engines and by accelerating the introduction of cleaner engines in to fleets operating in California.

Control of Toxic Air Contaminants

The California Toxic Air Contaminant Identification and Control Program (Air Toxics Program), established under California law by Assem bly Bill 1807 (Stats. 1983, Ch. 1047) and set forth in Health and Safety Code ( HSC) sections 39650 through 39675, requires ARB to identify and control toxic a ir contaminants (TAC) in California. The identification phase of the Air Toxics Program requires ARB, with the participation of other state agencies, such as the Office of Envi ronmental Health Hazard Assessment, to evaluate the health impacts of, and exposure to, substances, and to identify those substances that pose the greatest he alth threat as TACs. ARB's evaluation is made available to the public and is f ormally reviewed by the Scientific Review Panel (SRP) established under HSC section 39 670. Following ARB's evaluation and the SRP's review, the Board, pursuan t to section 39662, may formally identify a TAC at a public hearing. Following iden tification, HSC sections 39658, 39665, 39666, and 39667 require ARB, with the participatio n of the air pollution control and air quality management districts (districts), and in co nsultation with affected sources and interested parties, to prepare a report on the need and appropriate degree of regulation for that substance and to adopt airborne toxic cont rol measures (ATCM).

1 NOx is a precursor to both PM2.5 and ozone.4

In 1998, the Board identified particulate matter em itted from diesel engines (diesel PM) as a TAC and in 2001, adopted the Risk Reduction Pl an to Reduce Particulate Matter Emissions from Diesel-Fueled Engines and Vehicles ( Diesel Risk Reduction Plan or diesel RRP). The diesel RRP identified ATCMs and r egulations that would set more stringent exhaust emission standards for new diesel -fueled engines and vehicles, establish retrofit requirements for existing engine s, vehicles, and equipment, and require the sulfur content of diesel fuel to be red uced to no more than 15 parts per million by weight (ppmw). The new sulfur standard was needed to enable the performance of the emission control technologies. The scope of the Diesel RRP was broad, addressing all categories of engines, both m obile and stationary, and included control measures for private and public fleets of o n-road and off-road diesel vehicles. The ultimate goal of the Diesel RRP was to reduce C alifornia’s diesel PM emissions and

associated cancer risks from 2000 baseline levels b y 85 percent by 2020.

Attainment of Ambient Air Quality Standards

The federal Clean Air Act (CAA) requires U.S. EPA t o establish NAAQS for pollutants considered harmful to public health, including fine particulate matter (PM2.5) and ozone.

The standards are based on a review of health studi es by experts and a public process and are set at levels which are protective of publi c health. Ambient PM2.5 is associated with premature mortality, aggravation of respirator y and cardiovascular disease, asthma exacerbation, chronic and acute bronchitis and redu ctions in lung function. Ozone is a powerful oxidant and exposure to this pollutant can result in reduced lung function, increased respiratory symptoms, increased airway hy per-reactivity, and increased airway inflammation. Exposure to ozone is also ass ociated with premature death, hospitalization for cardiopulmonary causes, and eme rgency room visits for asthma.

The existing fleets of heavy-duty diesel trucks are among the largest contributors to PM2.5 and ozone forming emissions. The vehicles af fected by the proposed regulation produce approximately 40 percent of the statewide e missions of oxides of nitrogen (NOx) and about 32 percent of the statewide PM emis sions generated by diesel mobile

sources.

Fifteen areas in California are designated nonattai nment of the federal ozone standard, including the South Coast Air Basin, the San Joaqui n Valley, the Sacramento region, San Diego, Ventura, and a number of air districts d ownwind of urban areas. In addition, the South Coast Air Basin and the San Joaquin Valle y are designated nonattainment of

the federal PM2.5 standard. Federal law mandates t he development of State Implementation Plans documenting the actions the st ate will take to attain the federal air quality standards in these areas.

In September 2007, ARB adopted a State Implementati on Plan (SIP) committing the State to develop measures to achieve emission reduc tions from sources under State regulatory authority. The reductions are needed to attain the NAAQS for ozone and PM2.5. While multiple areas across the State excee d federal air quality standards, the air quality in the South Coast and the San Joaquin Valley poses the greatest challenge

and defines the amount of reductions needed. Reduc tions are needed by 2014 to meet5

the PM2.5 attainment deadline and by 2023 to meet t he ozone attainment deadline. An interim target date of 2017 was adopted by ARB for the San Joaquin Valley to meet the ozone NAAQS as part of an effort to accelerate prog ress toward attainment before

2023.

The largest share of new emission reductions in the 2007 SIP is expected from trucks. In 2014, reductions from both NOx and PM2.5 are nee ded to meet the federal air quality

standard for PM2.5. To meet the emission reduction targets necessary to meet the ozone NAAQS in 2017 and 2023, the focus of emission reductions is on NOx. Accordingly, in its SIP submittals to U.S. EPA, ARB has adopted 2014 reduction commitments for both NOx and PM2.5, and further NOx reduction commitments in 2017, 2020 and 2023. As part of the overall SIP co mmitment, ARB staff is also obligated to bring measures to the Board for its co nsideration. This rule is one of these commitments. ARB staff has used the targeted reduc tions estimated in the SIP as the goal for this rulemaking.

The California Global Warming Solutions Act of 2006

The California Global Warming Solutions Act of 2006 established requirements for a comprehensive program of regulatory and market mech anisms to achieve real, quantifiable, cost-effective reductions of greenhou se gases (GHG). 2 The legislation gave ARB responsibility for monitoring and reducing GHG emissions. The statute requires ARB to adopt regulations and other require ments that would reduce by 2020 statewide GHG to the equivalent of 1990 levels.

C. Background: The Proposed Amendments to Existing Regulations

Purpose and Definitions of Diesel Particulate Matte r Control Measures: This regulation (section 2020 of title 13, CCR) defines terms that apply generally to the regulations that

control diesel PM emissions from on-road vehicles. It was adopted by the Board in July 2003 and modified in February 2005.

Municipality or Utility On-Road Heavy-Duty Diesel-F ueled Vehicles:

ARB adopted this regulation in December 2005 to reduce public exposu re to diesel PM emissions from on-road heavy-duty diesel fueled vehicles owned or operated by public agencies or utilities. The regulation requires municipalities and utilities to apply best available control technology (BACT) to on-road heavy-duty die sel-fueled vehicles with a 1960 to 2006 model year medium heavy-duty or heavy heavy-du ty engine having a manufacturer’s gross vehicle weight rating (GVWR) g reater than 14,000 pounds. BACT can be an alternative fuel engine, a diesel engine certified to a 0.01 grams per brake

2 Established under California law by Assembly Bill 32 (Stats. 2006, ch. 488) and set forth in HSC § 38500 et seq. Greenhouse gases are those tha t tend to increase average global temperatures through absorption of infrared radiati on or other mechanisms. These include, but are not limited to, carbon dioxide (CO2) and me thane (CH4)6

horsepower-hour (g/bhp-hr) PM standard, or applicat ion of the highest level ARB verified diesel emission control strategy (DECS) to a diesel engine. A municipality or utility may receive credit toward their BACT requir ement by retiring a vehicle.

The rule divides these engines into three model yea r groups: Group 1 (1960-1987), Group 2 (1988-2002), and Group 3 (2003-2006). BACT must be applied according to a specified implementation schedule that sets complia nce deadlines and the percentage of the fleet that must be equipped with BACT by eac h deadline.

Regulation for In-Use On-Road Diesel-Fueled Heavy-D uty Drayage Trucks: In December 2007, ARB adopted a regulation to reduce e missions from diesel-fueled drayage trucks – described as trucks that transport containers, bulk, and break-bulk goods to and from ports and intermodal rail yards. The regulation applies to owners and operators of diesel-fueled drayage tractors hav ing a GVWR greater than 33,000 pounds that operate at California ports, int ermodal rail yards, or both. There are approximately 100,000 drayage tractors of which nea rly 20,000 frequently service ports and rail yards.

The requirements of the regulation will be implemen ted in two phases. In Phase 1, by December 31, 2009, all drayage trucks must be equip ped with a 1994 to 2003 model year engine and a level 3 verified DECS for PM emis sions or they must be equipped with a 2004 model year or newer engine. In Phase 2 , all drayage tractors are required to meet the 2007 model year engine standard by Dece mber 31, 2013. All drayage trucks involved in work at affected ports and rail yards must be registered in the ARB’s drayage truck registry (DTR) by late 2009.

Regulation for In-Use Off-Road Diesel Vehicles: In July 2007, ARB adopted a regulation to reduce diesel PM and NOx emissions fr om in-use off-road heavy-duty diesel-fueled engines with maximum power of 25 hors epower (hp) or greater. These engines are used to provide motive power in a worko ver rig or any other motor vehicle that cannot be registered and driven safely on-road , and is not an implement of husbandry or recreational off-highway vehicle. The regulation applies only to engines that drive self-propelled vehicles (that is, it doe s not apply to stationary equipment or portable equipment like generators). Examples incl ude loaders, crawler tractors, skid steers, backhoes, forklifts, and airport ground sup port equipment.

The regulation establishes fleet average emission r ate targets for PM and NOx for all off-road vehicles operating in the State. By the a pplicable compliance date for each year, the regulation requires each fleet to meet th e fleet average emission rate targets for PM or apply the highest level verified DECS to 20 percent of its horsepower. Each year, the regulation also requires large and medium fleets to meet the fleet average emission rate targets for NOx or to turn over a cer tain percent of their horsepower (8 percent in early years, and 10 percent in later yea rs). “Turn over” means repowering with a cleaner engine, rebuilding the engine to a m ore stringent emissions configuration, retiring a vehicle, replacing a vehicle with a new or used piece, or designating a dirty7

vehicle as a low-use vehicle. If retrofits that re duce NOx emissions become available, they may be used in lieu of turnover as long as the y achieve the same emission

benefits.

Large fleets are subject to the PM and NOx requirem ents beginning in 2010. Medium fleets are subject to the PM and NOx requirements b eginning in 2013. Small fleets are subject only to the PM requirements beginning in 20 15.

Regulation for Mobile Cargo Handling Equipment at P orts and Intermodal Rail Yards: In December 2005, ARB adopted the Regulation for Mobil e Cargo Handling Equipment at

Ports and Intermodal Rail Yards to reduce emissions of diesel PM and NOx from these vehicles. Mobile cargo handling equipment includes any motorized vehicle equipped with a diesel-cycle engine that is used primarily o ff road at a port or intermodal rail yard to handle cargo or to perform scheduled or predicta ble maintenance or repair activities. The regulation includes requirements, based on BACT , for equipment newly added to a fleet on or after January 1, 2007, as well as for i n-use equipment. Vehicles such as mobile cranes and sweepers were required to comply beginning December 31, 2007, for the oldest engines, and compliance is phased in through 2013, depending on the number of vehicles in the fleet and the age of a ve hicle’s engine.

Statewide Portable Equipment Registration Program: In March 1997, the Board adopted a regulation establishing the Statewide Por table Equipment Registration Program (PERP) which became effective on September 17, 1997. The Board has since approved amendments to the Statewide Regulation on December 11, 1998, February 26, 2004, June 22, 2006, and March 22, 200 7. The regulation includes record keeping and reporting requirements and sets fee sch edules for registration and inspection of the portable engines and equipment th at have registered in the program. Most of the engines associated with portable equipm ent are diesel fueled, making these engines also subject to the requirements of the Por table Engine ATCM.

Portable Engine ATCM: In February 2004, ARB adopted an ATCM that requir es a phase-in of cleaner technologies that would result in the reduction and eventual elimination of high-emission engines. The ATCM req uires most portable engines larger than 50 hp that were permitted by local air quality management or air pollution control districts (air districts) or registered in PERP as of December 31, 2005, to be certified to Tier 1, 2, or 3 U.S. EPA/ARB new off-road engine em ission certification standards by January 1, 2010. Uncertified diesel engines that a re designated as emergency use or low use may operate beyond 2010 if they will be rep laced with Tier 4 engines within two years of such engines becoming available. In addit ion, starting in 2013, all fleets of portable engines would have to meet diesel PM emiss ion averages that become progressively more stringent in 2017 and 2020. In March 2007, the ATCM was amended to allow statewide registration and distric t permitting of Tier 1 and Tier 2 engines that had been operating in California betwe en March 1, 2004 and October 1, 2006. These amendments also allowed loc al air districts to permit resident uncertified engines at their discretion. In order to be registered in PERP after January 1, 2010, the ATCM requires that the engines must be certified to the most8

stringent ARB or U.S. EPA off-road emission certifi cation standards in effect at the time of application. The current ATCM does not have a t ime limit for when a district must stop issuing new permits for uncertified engines

ATCM to Limit Diesel-Fueled Commercial Motor Vehicle Idl ing: The ARB adopted the

Airborne Toxic Control Measure to Limit Diesel-Fuel ed Commercial Motor Vehicle Idling in July 2004 and amended it in October 2005. The A TCM requires diesel-fueled vehicles over 10,000 pounds GVWR to comply with a f ive-minute idling restriction at all times and at any location. Starting with the 2008 model year, new truck engines are also required to either be equipped with a non-prog rammable and tamper-resistant engine shutdown system that automatically shuts dow n the engine after 5 minutes of idling or optionally to meet a NOX idling standard of 30 grams per hour. The engine shutdown system could be overridden when the engine is operating power take-off (PTO) equipment. Operators of pre-2008 model year trucks are required to manually shut down the vehicle’s engine after five minutes o f continuous idling. The idling limitations would not apply when idling is necessar y to perform work for which the vehicle was designed.

Exhaust Emissions Standards and Test Procedures – 1 985 and Subsequent Model Heavy-Duty Engines and Vehicles: Section 1956.8 of the CCR specifies exhaust emissions standards and test procedures applicable to 1985 and subsequent model year heavy-duty engines and vehicles. With the ado ption of the sleeper berth idling provisions of the Commercial Motor Vehicle Idling A TCM, section 1956.8 regulation was modified to add new engine requirements for new 200 8 and subsequent model year onroad diesel engines with a GVWR greater than 14,000 pounds to be equipped with an engine shutdown system that automatically shuts dow n the engine after five minutes of continuous idling. In lieu of the engine shutdown system requirement, manufacturers may optionally certify their engines to a NOx idlin g emission standard of 30 grams per hour under loaded, low and high idle operating cond itions. The engine requirements of

section 1956.8 would have to be amended as necessar y to be consistent with any

modifications to the Commercial Motor Vehicle Idlin g ATCM.

D. DESCRIPTION OF THE PROPOSED REGULATORY ACTION – PROPOSED

REGULATION TO REDUCE EMISSIONS OF DIESEL PM AND NOX FROM IN-USE

ON-ROAD DIESEL VEHICLES

Applicability

The proposed new regulation would apply to any pers on, business, or federal government agency that owns or operates affected ve hicles in California. Affected vehicles include heavy-duty diesel-fueled vehicles with a GVWR greater than 14,000 pounds, yard trucks with off-road certified engines and diesel-fueled shuttle vehicles of any GVWR that have a capacity of 10 or more passengers and routinely drive an average of 10 trips per day to or from air port terminals, marine terminals, and rail based stations. Drayage trucks and utility ow ned vehicles would be subject to the regulation beginning January 1, 2021. The proposed regulation would be applicable regardless of where the vehicle is registered. The proposed regulation would also9

establish requirements for any in-state or out-of-s tate motor carrier, California-based broker, or any California resident who hires or dis patches vehicles subject to the regulation. California sellers of a vehicle subjec t to the proposed regulation would have to disclose the regulation’s potential applicabilit y to buyers of the vehicles. The proposed regulation would not apply to military tac tical support vehicles, authorized emergency vehicles, and private motor homes not use d for commercial purposes.

Performance Requirements

In general, the regulation would require owners to reduce PM and NOx emissions from their fleet by upgrading the vehicles to meet BACT standards for PM and NOx. The BACT standard for PM is an engine equipped with the highest level verified DECS for PM or an engine originally equipped with a diesel p articulate filter by the engine manufacturer. The BACT standard for NOx is an engi ne newly manufactured in 2010 or later or a 2010 emissions equivalent engine.

A fleet may meet these performance requirements by retrofitting a vehicle with a verified

DECS 3 that will achieve PM or NOx reductions or both as required, replacing an engine with a newer cleaner one, or replacing a vehicle wi th one having a cleaner engine.

The regulation provides three options for complying with the performance requirements. First, a fleet would be able to comply with a presc ribed BACT schedule that would

determine the number of verified DECS that must be installed and the required vehicle replacements based on the vehicle’s engine model ye ar. Second, a fleet could meet a BACT percent limit option that sets the minimum num ber of verified DECS to be installed and the minimum number of engines require d to meet the 2010 engine requirements each year. Third, a fleet could meet a fleet average option. The owner

would use PM and NOx emission factors established b y the regulation to calculate the average emissions of the fleet. By the applicable compliance date each year, the owner

would have to demonstrate that the fleet met the PM and NOx fleet average emission rate targets set by the regulation. The targets wo uld decline over time, requiring fleets to reduce their emissions further as time goes on.

During the first two years of the regulation, start ing January 1, 2011, fleets would be required to install PM verified DECS for certain en gine model years. The regulation would then require owners to reduce both PM and NOx emissions from the fleet by accelerating engine or vehicle replacement between January 1, 2013 and the end of 2022 so that by January 1, 2023, all engines would be the cleanest available – that is, having a 2010 or later model year engine or be retr ofitted to achieve equivalent

emission reductions.

3 A retrofit device that has been verified under AR B’s Verification Procedure, Warranty and InUse Compliance Requirements for In-Use Strategies t o Control Emissions from Diesel Engines, title 13, CCR, sections 2700 et seq.10

In coordination with changes being made to other re gulations regarding dual engine street sweepers, the auxiliary engine on the street sweepers would be required to meet the PM performance requirements on the same schedul e as that of the propulsion engine. The operation of Tier 0 auxiliary engines on dual engine street sweepers would be limited to a maximum of 250 hours per year until January 1, 2014 and then lowered to a maximum of 100 hours per year thereafter.

Special Provisions for Small Fleets

Fleets with one to three vehicles would be exempt f rom the 2010 and 2011 PM exhaust retrofit requirements. By January 1, 2013, small f leets would need to show they consist of at least one vehicle equipped with a 2004 model year or newer engine and a PM exhaust retrofit. By January 1, 2018 that vehicle would need to meet the PM and NOx performance requirements. The second vehicle in a fleet with two vehicles would be required to meet the PM and NOx performance require ments by January 1, 2014. A fleet of three vehicles could comply in one of two ways: (1) by having its two remaining vehicles meet the PM and NOx performance requiremen ts by January 1, 2014 or (2) electing to have its second vehicle meet the 2010 e ngine emissions requirements by January 1, 2014 and the third vehicle meet the PM a nd NOx performance requirements by January 1, 2016.

Exemptions, Compliance Extensions and Special Circu mstances

The proposed regulation would exempt all vehicles o perated less than 1000 miles and 100 hours per year (low-use vehicles) from the regu lation’s PM and NOx performance requirements. These vehicles would still, however, be subject to the regulation’s reporting requirements.

Schoolbuses would be exempt from any NOx performanc e requirements. The regulation would also exempt the following vehicles from the NOx performance requirements until the dates listed below:

• January 1, 2018

o Cab-over-engine truck tractors exclusively pullin g 57 foot trailers

• January 1, 2021

o Unique vehicles;

o Vehicles that operate exclusively in counties tha t the regulation identifies as

attainment of the federal ozone and PM ambient air quality standards and

do not contribute to downwind exceedances of the st ate ozone standard;

o Vehicles with a GVWR less than 33,000 pounds that are operated less than 5000 miles. Those using power take off (PTO) to pe rform work while stationary must also operate the engine less than 1 75 hour per year; and

o Truck tractors and vehicles with a GVWR greater t han 33,000 pounds that are operated less than 7500 miles. Those using PTO to perform work while stationary must also operate less than 250 hours pe r year;11 o Yard tractors that operate less than 250 hours pe r year.

The regulation would also provide a compliance exte nsion for fleets that take action to comply early. If a fleet installs the highest leve l verified DECS on one or more vehicles by January 1, 2010, the vehicle would be exempt fro m the NOx performance requirements until January 1, 2014 for each of thos e vehicles.

The proposed regulation would also allow a fleet to use hybrid vehicles for credit toward compliance with the fleet average as long as the fl eet can demonstrate that the fuel economy of the hybrid vehicle is at least 20 percen t better than an equivalent vehicle. The credit would expire January 1, 2018. The propo sed regulation would allow the fleet to double count the number of hybrid vehicles in th e fleet that may be used to calculate the PM and NOx indices and fleet average target rat es or for determining the percent limit requirements.

Credit would also be granted for fleets using vehic les equipped with alternative fuel or heavy-duty pilot ignition engines in calculating th e NOx and PM fleet average target rates for determining compliance with the fleet ave rage option. The PM emission factor

would be zero and the NOx emission factor would be based on the engine model year to which the engine has been certified.

The proposed regulation would also provide fleets w ith effective compliance extensions if the retrofits, repowers, or new engines needed f or compliance with the regulation are not available because of manufacturer delays.

Special Provisions for Agricultural Vehicles

The proposed regulation would provide certain heavy -duty on-road diesel vehicles used in agricultural operations (agricultural vehicles) with additional time to meet the PM and NOx performance requirements. Agricultural vehicle s are those vehicles that are used exclusively in agricultural and forest operations, those used exclusively to transport agricultural products to the first point of process ing after harvest, and certain heavy-duty vehicles that exclusively deliver fertilizer or cro p protection products from a distribution

center to farms.

The regulation would allow agricultural vehicles th at operate below specified mileage thresholds to delay compliance with the performance requirements provided they remain below the specified thresholds. Agricultura l vehicles that operate over the thresholds would be required to meet the same requi rements as other on-road vehicle fleets. The mileage thresholds to qualify for exem ption and the period of exemption are

as follows:

• for vehicles that operate below 10,000 miles annua lly until January 1, 2023;

• for vehicles with engine model year 1995 and older that operate up to 15,000 miles annually until January 1, 2017;

• for vehicles with engine model year 1996 through 2 005 operate below 20,000 miles until January 1, 2017;12

• for vehicles with engine model year 2006 and newer that operate below 25,000 miles until January 1, 2017.

The regulation would also define a limited number o f specialty agricultural vehicles that would be exempt from the NOx and PM performance req uirements until January 1, 2023.

By January, 2010, the proposed regulation would req uire an agricultural vehicle fleet owner to designate the agricultural vehicles in its fleet that qualify for exemption. Once the fleet owner has identified and designated the a gricultural vehicles in its fleet that qualify for compliance under a specific mileage thr eshold category, it cannot add any further vehicles to that category. By January 1, 2 023 all heavy-duty on-road diesel agricultural vehicles would be required to meet 201 0 model year engine emissions requirements regardless of annual mileage driven.

Record Keeping and Reporting Requirements

Fleet owners who chose the BACT compliance schedule would not be required to report on their fleets. Under the proposed regulation, al l other fleets would be required to report their affected vehicles and associated engin e data annually to ARB starting in 2010. These fleets would also be required to keep records of all data reported, as well as any changes made to their respective fleets sinc e the last report filed until December 31, 2022, or as long as the owner owns the vehicles.

At the hearing, the Board may consider other elemen ts that may provide additional flexibility to affected vehicles.

Penalties

Under the proposed regulation, fleets that fail to comply with the regulation’s requirements would be subject to penalties consiste nt with the penalty provisions set forth in the Health and Safety Code.

E. Effect of Proposed Regulation to Reduce Emissio ns Of Diesel PM and NOx

from In-Use On-Road Diesel Vehicles

The proposed regulation would provide diesel PM and NOx emissions reductions that would have a substantial positive air quality impac t throughout California. By reducing emissions of pollutants that contribute to elevated ambient levels of particulate matter and ozone, the regulation would help achieve attain ment of the NAAQS for PM and ozone. Significant additional health benefits woul d also be obtained with the reductions

of ambient levels of diesel PM.

The proposed regulation would not achieve the 2010 or the 2020 goals set forth in the 2000 Diesel RRP of reducing diesel PM by 75 percent and 85 percent, respectively from 2000 baseline levels. Staff projects that the prop osed regulation would reduce in-use

on-road vehicle diesel PM emissions from the 2000 b aseline by 16 percent in 2010 and13

80 percent in 2020. However, the proposed regulati on would achieve the maximum

achievable reductions of diesel PM emissions from i n-use on-road diesel vehicles.

The regulation would also reduce diesel PM and NOx emissions that contribute to
exceedances in the State of the NAAQS for both PM2. 5 and ozone. In 2020, the regulation is expected to reduce diesel PM emission s by 5.6 tons per day and NOx emissions by about 79 tons per day statewide, which represents a 43 percent reduction in diesel PM and a 23 percent reduction in NOx from emission levels that would be anticipated in the absence of the regulation.

The proposed regulation would meet or exceed the co mbined NOx and PM2.5 SIP fleet rule targets in both the South Coast and San Joaqui n Valley air basins for all years. In 2014, in the South Coast Air Basin, the SIP target would be met by achieving slightly more PM2.5 reductions and slightly less NOx than ex pected. The proposed regulation would also help achieve the SIP reduction goals in 2020 for attainment in regions downwind of the South Coast and the San Joaquin Val ley air basins.

The emission reductions from the regulation are exp ected to prevent approximately 9400 premature deaths over the course of the regula tion (2800 to 17000, 95 percent confidence interval), and would result in about 150 ,000 fewer asthma-related cases and 950,000 fewer lost work days. The economic valuati on of the health impacts are estimated to range from $48 to $68 billion.

The net climate change effect of the proposed regul ation would be slightly positive. Staff’s analysis of the climate change impact of th e proposed regulation addresses only

the direct emissions from the affected vehicles. S ome actions to comply with the proposed regulation could increase carbon dioxide ( CO 2 ) emissions by increasing fuel consumption, whereas other actions would reduce fue l consumption. For example, a vehicle owner who complies with the regulation by r etrofitting the vehicle with a diesel particulate filter (DPF) could potentially experien ce a decrease in the vehicle’s fuel economy of about 2 percent. However, as the fleet is modernized to comply with the regulation, selective catalytic reduction (SCR) is expected to replace exhaust gas recirculation (EGR) as the primary NOx emissions co ntrol technology. SCR for 2010 model year engines permits operation of the en gine at more optimal combustion temperatures to provide better power and fuel effic iency improvements as well as lower PM generation. The expected improvements in fuel e conomy of 3 to 5 percent would offset the potential climate change impacts of the widespread installation of DPFs on the overall fuel economy of the fleet. The propose d regulation would also reduce emissions of black carbon – a component of diesel P M and a likely contributor to global warming – which would further reduce climate change impacts attributed to the overall impact on fuel economy.14

F. DESCRIPTION AND EFFECT OF PROPOSED AMENDMENTS TO EX ISTING

REGULATIONS

The staff is proposing amendments to the regulation s identified above in section C. to clarify a number of issues with the existing regula tions, to provide additional compliance flexibility as it relates to the existing regulatio ns and to the proposed new regulation for in-use on-road diesel vehicles, and to generally im prove enforceability of the existing regulations. For example, the amendments will clar ify that mobile cranes are not subject to multiple regulations with different comp liance dates and requirements.

Purpose and Definitions of Diesel Particulate Matte r Control Measures: The proposed amendment would modify the definition of “municipal ity”. Under the current definition, agencies of the United States of America are subjec t to the regulation for municipality and utility heavy-duty diesel vehicles. The propos ed amended definition would exclude federal agencies and consequently fleets owned by t he federal government would not be subject to the municipality and utility fleet re gulation. This modification became necessary after it was determined that CAA section 118 did not require federal fleet operators to comply with the municipality and utili ty fleet regulation because the regulation did not generally apply to nongovernment al entities. Tribal reservations and

rancherias would also be excluded in the revised de finition of “municipality”. Fleets owned and operated by these entities would be subje ct to the proposed regulation for heavy-duty diesel vehicles.

Municipality and Utility Diesel-Fueled Vehicles: Staff is proposing modifications that would expand the scope of this regulation and would add new language to address ambiguities and omissions in the regulation when in itially adopted. Among other things, the proposed amendments would add requirements to e nsure that retirement credit is properly granted to fleets. Staff is also proposin g changes for utility fleets to improve compatibility with actions needed to comply with th e In-Use On-Road Heavy-Duty Vehicle regulation.

Staff’s proposed revision of section 2022(a) would expand the scope and applicability of the regulation to include light heavy-duty engines that were inadvertently omitted from the original scope of the regulation. Staff is als o proposing to expand the scope to include 2007 model year and newer engines certified under Averaging Banking and Trading (ABT) provisions at PM levels greater than the 2007 model year standard of 0.01 g/bhp-hr. This revision is consistent with th e original intent of the regulation to require upgrades of all engines that did not meet t he PM BACT standard of 0.01 g/bhp-hr.

A proposed compliance extension provision (section 2022.1(d)(7)) would allow municipalities and utilities to apply for a one-yea r extension of the intermediate 2009 compliance deadline for light heavy-duty engines. The municipality or utility would be required to document that the addition of light hea vy-duty engines to the scope of the regulation would have prevented the fleet from meet ing the 2009 compliance deadline.15

Staff is proposing an optional extension for privat ely-owned utilities (utility) that would provide a two-year delay of the intermediate and fi nal BACT PM deadlines, accompanied by requirements that, by December 31, 2 013, thirty percent of a utility’s vehicles meet the 2010 engine emission standards, a nd an additional twenty percent meet the 2007 or newer engine emission standards. Staff is proposing amendments that would also provi de a means of ensuring that owners get BACT credit for vehicles sold out of sta te and vehicles sold out of state for

retirement credit could not be re-sold in Californi a unless they met the BACT requirements. The proposed new language in section 2022.1(f)(1)(k) would establish a process for qualifying a vehicle that requires the municipality or utility to obtain a Department of Motor Vehicle (DMV) registration hold or “VIN Stop”. Proposed language in section 2022.1(h) establishes contract requireme nts for out-of-state sales through a third party vehicle seller. The contract language would ensure that the seller informs buyers of the prohibitions against re-registering o r operating retired vehicles in the

State.

Staff is also proposing to modify the definition of “retirement” in section 2022(b)(8) to grant credit for the sale within California of dual -engine street sweepers with 2004 – 2006 model year engines, provided that, in the cas e of private-sector buyers, they comply with the newly proposed on-road diesel vehic les regulation described in

section D. above. This would make used street swee pers available for purchase by private fleets and help to reduce the cost of the p roposed regulation for these private

fleets.

The proposed amendments would add new definitions f or “lease”, “operate”, “sold outside of the State of California”, “third party v ehicle seller”, and “VIN stop” to support the changes being proposed. The definition of “tot al fleet” was revised to make it consistent with the revised scope of the regulation

.

Drayage Trucks : Staff is proposing modifications to the drayage tru ck regulation to add a phase one requirement for drayage trucks with 200 4 – 2006 model year engines, a change in liquefied natural gas (LNG) fueled truck applicability, and clarifications on the applicability of alternative and dual-fueled diesel trucks.

Staff is proposing to require that 2004 model year engines be equipped with the highest level verified DECS for PM by January 1, 2012, and that 2005 model year-2006 model year engines be equipped with the highest level ver ified DECS for PM by January 1, 2013. This requirement would align the drayage tru ck regulation with the proposed inuse on-road diesel vehicle regulation. This would h elp meet the State’s PM emission reduction commitments, and would ensure uncontrolle d trucks won’t cycle into the drayage fleet to avoid the in-use on-road diesel ve hicle regulation requirements.

Staff is also proposing additional changes to be co nsistent with the proposed In-Use Heavy Duty Diesel Vehicle Regulation. Staff is pro posing to define pilot injection LNG

fueled trucks consistent with the Alternative Fuele d vehicle definition. The proposed16

change would exempt subject pilot injected LNG fuel ed trucks from the emission requirements. Staff also is proposing to include ‘ alternative diesel-fueled and dualfueled’ trucks in the applicability section (b)(1).

Finally, staff is proposing to add or modify the fo llowing definitions: “Dual-Fueled Engine”, “Alternative Diesel Fuel”, “Compression Ig nition Engine”, and “Diesel-Fueled”. All definition additions or changes would not modif y the applicability or intent of the drayage truck regulation.

In-Use Off-Road Diesel Fueled Fleets: Staff is proposing to change the scope of the regulation for in-use off-road diesel fueled vehicl es to include both the drive engine and the secondary engine of all two-engine cranes opera ted in California. The drive engine would be included regardless of whether it is certi fied as an on-road engine or as an offroad engine. Two-engine cranes are currently subje ct to a number of regulations. The upper engine is subject to the requirements of the portable engine registration program and ATCM for portable engines. The drive engines a re subject to the in-use off-road diesel vehicle and would be potentially subject to the proposed in-use heavy-duty diesel vehicle regulation. The drive engine on cranes ope rating at ports or intermodal rail yards are subject to the requirements of the mobile cargo handling equipment regulation.

Staff is also proposing to modify section 2449.3(b) (2)(c) to exclude the horsepower in two-engine cranes from a fleet’s maximum horsepower . This would be consistent with the intent of the existing in-use off-road diesel-f ueled regulation that two engine cranes, which were never previously a part of the regulatio n and never considered that they would be used in determining fleet size and eligibi lity for the Surplus Off-Road Opt-in for NOx (SOON) program.

New language is proposed in section 2449(e)(15) tha t would clarify the repower requirements for workover rigs. The regulation wou ld require that any replacement engine must be an on-road engine if the workover ri g is to be registered and driven on public roadways.

Staff is proposing to modify section 2449 (e)(7) to clarify the exemption provision for low-use vehicles. The current regulatory language in the section exempts the low-use vehicles from all of the performance requirements i n section 2449(d). The proposed modifications would require low-use vehicles to com ply with the requirements for adding vehicles to the fleet and with the idling requireme nt.

Mobile Cargo Handling Equipment at Ports and Interm odal Rail Yards: Staff is proposing to exclude sweepers and mobile cranes fro m the scope of the regulation. No changes would be made regarding rubber-tired gantry cranes. This change would provide consistency for owners and operators who wo uld only be required to comply with one regulation. This proposal in combination with other changes to address cranes would also address other issues such as safety cert ification, and would provide more compliance flexibility. Many owners of these vehic les only provide service to the ports17

on a limited basis and, if not excluded from the mo bile cargo handling regulation would have to segregate their vehicles into two separate groupings – those required to comply with the mobile cargo handling regulation and those that would be required to comply with either the in-use off-road regulation or the p roposed in-use on-road regulation.

Portable Engine ATCM: Staff is proposing amendments to the Portable Eng ine ATCM as it applies to two-engine cranes and dual-engine street sweepers. Until now, the auxiliary engines on these vehicles have been regis tered in PERP or permitted by local air districts. Under the Portable Engine ATCM, the se engines must be replaced by December 31, 2010, if they do not meet U.S. EPA or ARB emission certification standard. In many cases, it is infeasible, if not impossible, to repower these vehicles with new engines; the only alternative would be to replace the entire vehicle, with a new vehicle having a certified engine. To address this , staff is proposing to amend the portable engine ATCM to exclude the secondary engin es on two-engine cranes and privately owned sweepers from the requirements of t he ATCM. The ATCM would also

be amended to delete the diesel PM standards and fl eet requirements of title 17, CCR, section 93116.3(b)(4) for lattice boom cranes. Lat tice boom cranes would be included in the proposed definition of two-engine cranes tha t would be added to the in-use offroad diesel-fueled vehicles regulation.

Additionally, staff is proposing that two new secti ons be added to the Portable Engine ATCM. New section 93116.1(b)(8), would require the secondary engine on a two-engine crane to comply with the requirements of the regulation for in-use off-road diesel-fueled vehicles, and new section 93116.1(b)( 9) would require the secondary engine on a dual-engine sweeper to comply with the requirements of the proposed regulation for in-use on road diesel vehicles.

Staff is also proposing to amend the portable engin e ATCM by adding a new definition for “crane” which would cross-reference to the prop osed definition of “two-engine crane,” which staff is proposing to add to the regu lation for in-use off-road diesel vehicles at title 13, CCR, section 2449(c)(56). Th e portable engine ATCM adds a new definition “street sweeper” which would cross-refe rence to the proposed definition of “dual-engine street sweeper,” which staff is propos ing to add to title 13, CCR, section 2022(b)(2) of the regulation for municipali ty and utility vehicles.

Statewide Portable Equipment Registration Program: Staff is proposing an amendment of the PERP regulation that would be consistent wit h the proposed changes to the portable engine ATCM. As with the ATCM, staff is p roposing to add new definitions for “crane” and “street sweeper” that would respectivel y cross-reference to the in-use offroad diesel-fueled vehicles regulation and the muni cipality and utility fleets regulation.

The proposed amendments would also exempt the secon dary engines on two-engine cranes and dual-engine street sweepers from all of the emission requirements of the PERP regulation, except the limits on opacity speci fied in section 2456(f)(5). Proposed new language would require that the secondary engin e on a crane comply with the applicable requirements of title 13, CCR, section 2 449 of the regulation for in-use off-18

road diesel-fueled vehicles, and that the secondary engine on dual-engine street sweepers comply with the applicable requirements of title 13, CCR, section 2025 of the regulation proposed for in-use on-road diesel vehic les.

Under the proposed amendments, if the secondary eng ine of a crane or street sweeper is registered in PERP, it would be exempt from the recordkeeping and reporting requirements of the PERP regulation, but would be r espectively required to comply with the applicable recordkeeping, reporting and other a dministrative requirements of the regulation for in-use off-road diesel vehicles and those proposed for the regulation for

in-use on-road diesel vehicles.

Secondary engines on cranes and sweepers registered under the statewide PERP would remain subject to the inspection requirements and fees listed in the PERP regulation.

Regulations to Limit Motor Vehicle Idling: Staff is proposing changes to title 13, CCR, section 2485 (Airborne Toxic Control Measure to Lim it Diesel-Fueled Commercial Motor Vehicle Idling) and section 1956.8 (Exhaust Emissio ns Standards and Test Procedures – 1985 and Subsequent Model Heavy-Duty Engines and Vehicles) to exempt armored cars and workover rigs from the vehicle idling limi ts. When an armored car is at a pickup location at least one guard must stay onboard. Since the environment inside of an enclosed armored car can become extremely uncomfort able, idling of the engine for

climate control is essential to the health and safe ty of the guard onboard. For this reason, staff is proposing to add new section 2485( d)(2)(M) to exempt armored cars idling while providing services for which the vehic le was designed.

Staff is also proposing that the idling requirement s for workover rigs be amended. Typically, in vehicles with power take off (PTO), t he engine shutdown system is normally overridden when in PTO mode. For most veh icles this occurs when a truck’s engine is idling and the engine’s power is used to perform certain specialized non-mobile functions. However, unlike other vehicl es, workover rigs use PTO to propel the vehicle and do not use PTO to power the special ized work while stationary. Staff is proposing to add a new provision in section 2485(d) (2)(N) to exempt workover rigs from the motor vehicle idling limit while they are perfo rming the work for which the vehicle was specially designed. This proposal would allow a workover rig to carry out its specialized function when the vehicle is stationary and the engine is working.

Staff is proposing to modify the engine requirement s of title 13, section 1956.8 of the CCR to be consistent with the change proposed to th e Commercial Vehicle idling limit ATCM for workover rigs and armored cars. The propo sed changes to these engine requirements would add armored cars and workover ri gs to the list of exempted vehicles in section 1956.8(a)(6)(B).19

G. COMPARABLE FEDERAL REGULATIONS

Pursuant to its authority under CAA section 202(a), U.S. EPA has established emission standards for new diesel, alternative fuel, and gas oline on-road heavy-duty engines (Title 40, Code of Federal Regulations, Part 86). U.S. EPA, however, does not have authority to establish emission standards for in-us e on-road motor vehicles. Although California must obtain a waiver of federal preempti on under CAA section 209(b) before implementing new engine emission standards for new motor vehicles sold in California, no federal preemption exists for requirements regar ding in-use motor vehicles and engines adopted by the State.

CAA section 209(e)(2) allows California, upon obtai ning authorization from U.S. EPA, to adopt and enforce emission standards and other requ irements related to the control of emissions for new and in-use off-road engines not e xpressly preempted (i.e., as set forth in CAA section 209(e)(1), new off-road engine s under 175 hp used in farm and construction equipment and vehicles and new locomot ives and locomotive engines).

To the extent that the amendments to ARB’s off-road regulations require authorization, ARB will request that U.S. EPA grant such authoriza tion.

There are no federal regulations comparable to the proposed regulation to reduce

emissions of diesel PM and NOx from in-use on-road diesel vehicles that operate in California. Similarly, there are no federal regula tions comparable to the existing California on-road regulations that are being propo sed to be amended: the regulations to reduce diesel PM emissions from diesel engines o wned by municipal and utility fleets, emissions of diesel PM and NOx from drayage trucks that operate at ports and intermodal rail yards in California, and that porti on of the mobile cargo handling regulation that applies to vehicles that may operat e on road.

Presently, there are also no comparable federal on- road regulations to California’s heavy-duty vehicle idling requirements. The amendm ents to the California idling requirements do not require a waiver in that the am endments modify an in-use operational control for which states are not preemp ted. (See CAA section 209(d).) This exception has also been applied to off-road engine idling requirements. (See Engine

Manufacturers Association v. EPA (D.C. Cir. 1996) 88 F.3d 1075.)

There are also no federal regulations comparable to California’s in-use off-road regulations that are being proposed to be amended. Those regulations include the mobile cargo handling regulation, the in-use off-ro ad diesel regulation, the portable ATCM and PERP proposed amended regulation to reduce emissions of diesel PM and NOx from in-use off-road diesel engines that operat e in California, including those that operate at ports and intermodal rail yards.

AVAILABILITY OF DOCUMENTS AND AGENCY CONTACT PERSON S

The ARB staff has prepared two documents for the pr oposed regulatory action: a Staff Report: Initial Statement of Reasons (ISOR) for th e proposed regulatory action, which includes a summary of the economic and environmenta l impacts of the proposed action20

and a Technical Support Document (TSD) that describ e the basis of the proposed action in more detail. The Staff Report is entitle d: “Staff Report: Initial Statement of Reasons for Proposed Rulemaking – Regulation to Con trol Emissions from In—Use On-Road Diesel Vehicles.” The Technical Support Do cument is entitled: Technical Support Document: Proposed Regulation to Control Em issions from In—Use On-Road Diesel Vehicles.” Together with the needs assessme nt (i.e., the Diesel RRP), these two documents serve as the report on the need and appro priate degree of regulation for in-use on-road diesel vehicles operating in Califor nia.

Copies of the ISOR with the full text of the propos ed regulatory language, in underline and strikeout format to allow for comparison with t he existing regulations, where applicable, and the Technical Support Document may be accessed on the ARB’s website listed below, or may be obtained from the P ublic Information Office, Air Resources Board, 1001 I Street, Visitors and Enviro nmental Services Center, First Floor, Sacramento, California, 95814, (916) 322-299 0, at least 45 days prior to the scheduled hearing.

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

accessed on the ARB’s website listed below.

Inquiries concerning the substance of the proposed regulation may be directed to the designated agency contact persons, Tony Brasil, Man ager of the In-Use Control Measures Section, at (916) 323-2927, or Gloria Lind ner, from the Heavy Duty Diesel In-Use Strategies Branch, at (916) 323-2803.

Further, the agency representative and designated b ack-up contact persons, to whom nonsubstantive inquiries concerning the proposed ad ministrative action may be directed, are Lori Andreoni, Manager, Board Adminis tration & Regulatory Coordination Unit, (916) 322-4011, or Trini Balcazar, Regulation s Coordinator, (916) 445-9564. The Board has compiled a record for this rulemaking act ion, which includes all the information upon which the proposal is based. This material is available for inspection upon request to the contact persons.

This notice, the ISOR, TSD, and all subsequently is sued regulatory documents, including the FSOR, when completed, are and will be available on the ARB website for this rulemaking at www.arb.ca.gov/regact/2008/truckbus08/truckbus08.ht m

.

COSTS TO PUBLIC AGENCIES AND TO BUSINESSES AND PERS ONS AFFECTED

The determinations of the Board's Executive Officer concerning the costs or savings that would be necessarily incurred by public agenci es and private persons and businesses in reasonable compliance with the propos ed regulations are presented

below.21

Costs to State Government and Local Agencies

Pursuant to Government Code sections 11346.5(a)(6), the Executive Officer has prepared an estimate in accordance with instruction s adopted by the Department of Finance, of the cost or savings to any state agency , the cost to any local agency or school district that is required to be reimbursed u nder Government Code, title 2, division 4, part 7 (commencing with section 17500), other no ndiscretionary cost or savings imposed on local agencies, and the cost or savings in federal funding to the state.

The Executive Officer has determined that while ARB would incur costs to implement and enforce the proposed new regulation to reduce e missions from in-use on-road diesel vehicles, and the amendments to the existing regulations, the adopted regulatory actions will not affect federal funding to the Stat e.

The proposed regulation would also impose additiona l costs to ARB. ARB staff has

identified a need for additional staff and other re sources for outreach and education and for the implementation, and enforcement of the prop osed regulation. The Executive Officer has further determined that the proposed re gulatory action would not create any additional .costs or savings for other state agenci es. Vehicles owned by state agencies would not be subject to the proposed regulation. S tate agency vehicles are subject to the existing regulation for municipality or utility fleets. One of the proposed changes to the regulation for municipality or utility fleets w ould add light heavy-duty engines to the engines currently subject to the regulation. State agencies have already counted these engines in their fleets as was the original intent of the regulation when it was adopted, and had already accounted for them in the cost of c ompliance with the regulation for municipality and utility fleets. Therefore, State agencies are not expected to incur additional cost as a result of the proposed regulat ory action.

Pursuant to Government Code sections 11346.5(a)(5) and (6), the Executive Officer has further determined that the proposed regulatory act ion would create costs for school districts, and may impose a mandate that would not be reimbursable by the State, pursuant to Government Code, title 2, division 4, p art 7 (commencing with section 17500). The mandate which would require sc hoolbus engines to be retrofitted engines with the best available verified diesel emi ssion control strategy is not reimbursable because the costs would apply to all s choolbus owners, not just school districts, as well as all other heavy-duty vehicles that operate in the State. To the extent that the proposed regulation would require school d istricts to remove all schoolbuses manufactured before April 1, 1977, that requirement also applies to all schoolbus

owners and not to school districts alone. Addition ally, school districts qualify for public funding grants under the California Clean School Bu s Program (HSC section 4299.90) for replacement of all pre-1997 school buses that w ere in operation as of December 31, 2005. It is estimated that the direct regulatory cost of the proposed regulation for public school districts is $27 million from 2010 through 2 017 based on 2008 dollars.22

Costs to Businesses and Private Individuals

In developing this regulatory proposal, the ARB sta ff evaluated the potential economic impacts on representative private persons or busine sses. The determinations of the Board's Executive Officer, pursuant to Government C ode section 11346.5(a)(9), concerning the costs or savings necessarily incurre d by representative private persons and businesses in reasonable compliance with the pr oposed regulations are presented

below.

The total cost of the regulation is expected to be $5.5 billion in 2008 dollars. Approximately $4.5 billion is attributable to Calif ornia based vehicles and approximately $1.0 billion is attributable to vehicles registered out of state. The cost would be spread over the years 2010 to 2030, with the highest costs occurring in the years 2012 and 2013 and the lowest costs occurring in 2014. The t otal cost is the result of early replacement with newer, cleaner vehicles, cost of r etrofit devices, and other annual costs. The cost impact of the in-use on-road heavy -duty diesel vehicle regulation would vary with the different business sectors. A detaile d analysis is available in the Staff Report.

Costs to individual fleet owners would vary dependi ng on the size of the fleet, the vehicle types, vehicle age, and normal vehicle repl acement practices. Costs also would vary depending on the compliance strategy chosen by each fleet. The average increased cost for in-state heavy heavy-duty vehicl es is $15,800 per vehicle.

Staff has determined that the regulatory action wou ld not have a significant cost impact on a representative private person, above and apart , from a person’s occupation as a

fleet owner.

Pursuant to Government Code section 11346.5(a)(7)(C ), the Executive Officer has made an initial determination that the proposed reg ulatory action may have a significant statewide adverse economic impact directly affectin g businesses, including the ability of California businesses to compete with businesses in other states.

ARB staff has considered proposed alternatives that would lessen any adverse economic impact on businesses and invites you to su bmit proposals. Submission may include the following approaches for consideration:

(i) The establishment of differing compliance or re porting requirements or

timetables that take into account the resources ava ilable to businesses.
(ii) Consolidation or simplification of compliance and reporting requirements for

businesses.
(iii) The use of performance standards rather than prescriptive standards
(iv) Exemption or partial exemption from the regula tory requirements for

businesses.23

Alternatives that staff considered are described in more detail in the Staff Report.

In accordance with Government Code section 11346.3, the Executive Officer has determined that the proposed regulatory action woul d likely have an effect on the creation or elimination of jobs within the State of California, the creation of new businesses or elimination of existing businesses wi thin the State of California, or the expansion of businesses currently doing business wi thin the State of California. A detailed assessment of the economic impacts of the proposed regulatory action can be found in the Staff Report.

Because of the potential cost imposed by this regul ation, it is possible that some

businesses with affected fleets would be eliminated . It is also possible that some businesses would choose to consolidate (or merge), change owners, rent vehicles (rather than own), or relocate due to this regulati on. It is also very likely that additional businesses would be created or existing businesses expanded to aid in the making, distribution, cleaning, and maintenance of these ve rified DECS through the duration of the regulation. Overall, staff expects that most a ffected businesses would be able to absorb or pass on the costs of the proposed regulat ion with no significant adverse impacts on their profitability.

This regulation would increase the use of verified DECS and accelerate vehicle modernization. It is therefore likely that the reg ulation would cause many jobs to be

created due to this increase in demand for verified DECS, newer engines, and newer vehicles. Staff expects new jobs to be created for the production, sales, installation,

and maintenance of verified DECS. Staff estimates that over its course, the regulation would require the installation of over 150,000 veri fied DECS. Additional businesses could be created to aid in the manufacture, distrib ution, and maintenance of verified DECS through the duration of the regulation.

The Executive Officer has also determined, pursuant to CCR, title 1, section 4, that the proposed regulatory action would affect small busin esses. The proposed regulation

defines a small fleet as three or fewer vehicles an d allows additional time for compliance. Staff has estimated that 48 percent of all medium heavy-duty and heavy heavy-duty vehicles registered in California are in small fleets. Staff expects that small fleets will, in general, be small businesses. Some small fleets would experience no increased costs while other would experience higher costs. The total estimated cost over the lifetime of regulation for small fleets is approximately $1.7 billion in $2008

dollars.

In accordance with Government Code sections 11346.3 (c) and 11346.5(a)(11), the Executive Officer has found that the reporting requ irements of the regulation which apply to businesses are necessary for the health, s afety, and welfare of the people of the State of California. The reporting requirement s are necessary for the enforcement of the regulation. Without effective enforcement, the emission reductions and public health benefits associated with the proposed regula tion cannot be achieved.24

Before taking final action on the proposed regulato ry action, the Board must determine that no reasonable alternative considered by the Bo ard, or that has otherwise been identified and brought to the attention of the Boar d, would be more effective in carrying out the purpose for which the action is proposed, o r would be as effective and less burdensome to affected private persons than the pro posed action.

SUBMITTAL OF COMMENTS

Interested members of the public may also present c omments orally or in writing at the meeting, and in writing or by e-mail before the mee ting. To be considered by the Board, written comments submissions not physically submitt ed at the meeting must be

received no later than 12:00 noon, December 10, 2008 , and addressed to the following:

Postal mail: Clerk of the Board, Air Resources Boa rd

1001 I Street, Sacramento, California 95814

Electronic submittal: http://www.arb.ca.gov/lispub/comm/bclist.php

Facsimile submittal: (916) 322-3928

Please note that under the California Public Record s Act (Government Code §6250 et seq.), your written and oral comments, attachments, and associated contact information (e.g., your address, phone, email, etc.) become par t of the public record and can be released to the public upon request. Additionally, this information may become available via Google, Yahoo, and any other search e ngines.

The Board requests, but does not require, that 30 c opies of any written statement be

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

STATUTORY AUTHORITY AND REFERENCES

This regulatory action is proposed under that autho rity granted in Health and Safety Code, sections 39600, 39601, 39650, 39658, 39659, 3 9665, 39666, 39667, 39674, 39675, 40000, 41511, 41752, 41754, 41755, 42400, 42 400.1, 42400.2, and 42402.2,
42410, 43000, 43000.5, 43013, 43016, 43018, 43023, 43600. This action is proposed to implement, interpret, or make specific Health an d Safety Code sections 39600,
39601, 39650, 39658, 39659, 39666, 39667, 39674, 39 675, 40000, 41511, 41752, 41754, 41755, 42400, 42400.1, 42400.2, and 42402.2, 42410, 43013, 43016, 43018, 43023, and 43600.

HEARING PROCEDURES

The public hearing will be conducted in accordance with the California Administrative Procedure Act, title 2, division 3, part 1, chapter 3.5 (commencing with section 11340).25

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

The public may request a copy of the modified regul atory text from the ARB’s Public Information Office, First Floor, Sacramento, Califo rnia, 95814, (916) 322-2990.

CALIFORNIA AIR RESOURCES BOARD

James N. Goldstene

Executive Officer

Date: October 14, 2008

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

.