Two draft regulations made available today for public comment by the California Air Resources Board (CARB) will require fleets that operate in the state to begin installing diesel exhaust filters in 2010. In addition, the rules would also require fleets to retrofit their vehicles with more environmentally-friendly engines and install fuel efficient tires and aerodynamic devices.

The first regulation regards rulemaking for the use of on-road vehicles, while the second regulation focuses on heavy-duty vehicle greenhouse gas reduction.

The state is offering over one billion dollars to offset the cost of the proposed diesel rule through Carl Moyer grants, offered to fleets that comply with the regulations early or further than required; Proposition 1B funds, for air quality improvements related to goods movement, and AB 118, which establishes a truck loan program to help pay for early compliance.

"This diesel regulation is absolutely vital to the well-being of all Californians, but we know there are financial challenges," said CARB chairman Mary D. Nichols. "The Governor, legislature and voters have approved more than a billion dollars in loans and grants to truckers and business owners to help them comply with this crucial public health measure. If passed, these regulations will ultimately help improve both public health and the economy, especially when you account for the reduced health care costs we will see thanks to fewer hospital visits, mortalities and work days lost caused by exposure to big rig diesel exhaust."

According to CARB, the emission reductions will prevent approximately 9,400 premature deaths over the course of the regulation, also leading to about 150,000 fewer asthma-related cases and 950,000 fewer lost work days. This will result in an economic benefit between $48 and $68 billion, CARB added.

The draft offers three compliance options to meet the regulation requirements. “First, a fleet could retrofit and replace vehicles in its fleet, according to a prescriptive schedule, based on each vehicle’s engine model year,” the report said. “Second, a fleet could meet a limit that sets an annual cap on the number of retrofits to be installed and the minimum number of engines to be replaced that meet the 2010 engine requirements. Third, a fleet could meet a fleet average option, with targets that decline over time. Each fleet has the flexibility to meet any one of these options each year, and is not required to meet the same option for both pollutants. That is, a fleet could meet the BACT schedule for PM, but meet the fleet average for NOx, and be fully compliant with the proposed regulation.”

To lessen the load on small fleets, CARB added a provision under the truck regulation that states that fleets with three vehicles or less are exempt from any cleanup requirements until 2012. In 2012, they would have to clean up one vehicle, although it would not need to meet 2010 engine requirements until 2018. Under the greenhouse gas reduction regulation, fleets with between one and 20 trailers can delay compliance until 2013.

CARB estimated the combined total cost of the two proposals at approximately $15.9 billion. However, it said that the truck regulation’s cost of $5.5 billion would be spread over 16 years, with about 40% incurred directly by the transportation industry. It noted that the costs for newer fleets would be minimal, but for fleets that need to upgrade a significant number of vehicles “the cost will be significantly more substantial.” CARB added that it expects most affected businesses to pass the costs onto their customers through higher shipping rates or higher costs for manufactured goods.

For the greenhouse gas reduction regulation, CARB estimated the lifetime equipment cost of compliance at about $10.4 billion, but said the total estimated fuel savings will be about $14.7 billion, leading to savings of approximately $4.3 billion. According to CARB, a tractor-trailer combination that complies with the proposed regulation will be able to realize a 7 to 10% fuel economy gain, allowing the fleet owner to recover the initial capital and maintenance costs for both the tractor and the trailer in less than a year and a half.

Driving Toward a Cleaner California, a coalition of California trucking companies and businesses, took a strong stance against the regulations.

“The ARB needs to understand the harsh economic realities and how things have changed in just the past three months,” said Jay McKeeman of California Independent Oil Marketers Association. “Nearly every sector that would be affected by this rule already faces compliance with multiple other regulations recently imposed by the ARB. We are in the midst of unprecedented financial turmoil at home and abroad, so any new regulation must strike the necessary balance of cleaning our air while ensuring that our fragile economy is not even further impacted. That is why the DTCC has been working with the ARB to craft a sensible alternative proposal.”

“Small trucking companies are already struggling due to the economic downturn, the fiscal uncertainty and the credit freeze,” said Bob Ramorino, president of Roadstar Trucking, Inc. “With financing to replace or retrofit our fleets so hard to come by, small businesses like mine very well may have to choose between staying in business or cutting back our fleets and laying off our employees, in which case everyone loses out. In the first half of this year alone, nearly 2,000 trucking companies nationwide went bankrupt, and the number of bankruptcies has more than doubled from 2007. It is evident that the money being offered by the state to help with this regulation will barely scratch the surface on what is really needed for companies to comply.”

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