Friday, August 4, 2017

Bringing the Heat!

The summer of 2017 so far has been chalk full of exciting developments in the intriguing world of tansportation and air quality here in California. Just a quick once over below, in case ya missed it... 

Surprise! CARB has again thrown down the regulatory gauntlet, this time on warranty enhancements for new truck sales in California, ZEV Sales requirements for HD Truck OEMs, cold storage limits for TRUs, enhanced maintenance procedures for existing equipment and lower opacity levels for the entire fleet over 10,000pds GVWR. 

CARB has also begun the dialogue on controlling emissions from freight facilities. Most people familiar with the concept call it what it is:  "Facility Caps” where a private business may require users of said facility to install specific levels of control  technology because the state says they need to stay under a “cap”. 

This all comes along with a brand spankin’ new CARB enforcement policy that after many discussions with stakeholders across many different industry sectors, will be adopted this September, probably with little fanfare, despite, or maybe because of, all the hard work by CARB enforcement staff.

While the cold storage rule is “on ice” during the current public outreach phase, a very near future rulemaking will set the stage for control measures that will phase in the use of zero emissions TRU technologies starting sometime in 2020. It is no secret that the goal for the state transportation sector is zero emissions with near zero emissions everywhere else.

Of course, in that vein and not to be outdone, the proverbial mother of all plans, the Sustainable Freight Action Plan under the direction of no less than 7 state agencies (that we know of) is gaining momentum on its way to fulfilling the Governor’s goal of reducing GHG 40% below 1990 levels and reducing petroleum use up to half from current levels by 2030.  


Part of the plan seeks to implement freight focused pilot projects and so far they have peeked through the curtain and pronounced their presence with the release of 3 separate work plans related to 3 separate pilot projects focused on California’s primary freight corridors.

The concepts attempt to integrate advanced technologies, alternative fuels, freight and fuel infrastructure and local economic development opportunities. 
Of particular interest are the concepts surrounding advanced truck corridors that are meant to be coupled with a statewide freight information platform giving drivers insight into traffic patterns and congestion in real time.

Dynamic Truck Parking is also of note, similar to parking sensors at the local shopping mall, notifications would be provided regarding available parking at state run rest stops. Although the most interesting plan in this cabinet of curiosities (not merely for the potential acronym that may accompany this particular plan in the future) is the pilot project seeking to use dairy bio-methane for freight vehicles; pretty self-explanatory.  
The other parts of the Action Plan are much more direct in their attempt to reduce emissions from the freight sector. The biggest push will be felt in the local and last mile delivery sectors; CARB is taking the reins and in theory will first force the OEMs to sell a certain percentage of ZEV’s compared to their total sales in CA. They will then roll over into the end user; drayage, PnD, local, pretty much any sector that goes home to the same terminal every night will more than likely be under the electric eye before they know it. 

Speaking of electric eyes, the Ports of Los Angeles and Long Beach have also recently released the latest version (3.2?) of their Clean Air Action Plan (CAAP), where their collective electric eye is set on an entirely zero emission fleet starting in 2035. 

In the interim, all new trucks entering LA/LB drayage service in “early 2018” will need to have a vehicle equipped with an engine meeting the USEPA 2014 engine standard. Then, in 2023, all new trucks entering port service for the first time will need to meet the ultra-low NOx standard, with all other non ultra-low NOx engines being charged a “rate” that will be billed to the cargo owner or shipper. 

The only snag in this otherwise genius plan is that legally, the ports of LA/LB cannot mandate a particular level of NOx control on engines in port service until the EPA certifies a national or California only engine to that standard of control  (More Info), the 2035 ZEV date is a different story all together. 

The efforts of our air regulators are always evolving and continually changing, or at least, it feels like they are. More often than not the standards have not changed, it is interpretation or implementation of the standards, which leave many fleet operators with little confidence in a system that only seems to take and rarely has anything to give. 

Measures to reduce harmful pollutants in California will not subside, the Golden State has a history of getting its way when it comes to environmental protection and the Trump administration will be hard pressed to slow it down. Get used to it my fellow Californians; at least the weather is nice!

Stay Tuned!

Friday, February 17, 2017

Three Years and a Maybe

Electric Freight Transport Forges Forward

The public policy goal is clear, move the California freight transport network to zero emissions everywhere feasible and near zero emissions everywhere else. While the idea is nothing new, 20 years ago, it was thought to be basically impossible.

Today, in the heavy duty truck market, we are starting see electric drive engine platforms emerge for particular sectors, especially in the short haul, package van and drayage segments. Transit buses, shuttle vans and school buses have found success with all electric drive engines in recent years by leveraging heavy subsidies from state, local and federal sources.  So, it is only a function of natural progression that freight specific projects would be next, specifically heavy duty trucks.

CARB is focusing a three year plan on how to encourage zero emissions equipment into the commercial marketplace. There are two main levers, money and regulatory measures. Money is easy, it is coming from all sorts of sources and the three year plan speaks to concepts for effective investments moving towards the goal. Regulation, while as abundant, it proves occasionally to be an erratic endeavor.
Within the larger scope of the zero emission transition, the sustainable freight plan has called out a segment for a direct regulatory measure affecting short haul and local haul delivery possibly including drayage trucks.

The regulatory side might prove more difficult since the equipment isn’t fully commercialized now and we are years away from a product that makes operational sense for fleets. But in the interim, there is money out there and CARB is looking to use it to help remove some of the biggest roadblocks to implementation.

The challenges, which CARB has readily accepted include battery durability, weight and payload capability, range, infrastructure, charging uniformity and finally the main culprit, cost.

Of course, manufacturers speak to reducing the overall operating cost hurdles based on battery efficiency and weight reduction advancements, but, the real cost challenge is the upfront cost.

Once an operator can afford to pony up the $300-$450K to purchase the electric drive vehicle and if he is cognizant when he is charging the equipment, diesel fuel cost savings running 50,000 miles per year could pay him back that initial investment within 5 – 10 years.
His operating costs will based on how far he can go and how much he can haul and so range and weight will of course be the deciding operational factors.

Nevertheless, even if range and weight can be adapted, without massive commercialization, upfront costs are not going to change much, in fact, they are probably going up. And with a 10 year payback period for a port operator who is making two-three turns a day on a good day is completely unrealistic. NO bank or finance company is going to extend a ten year note on experimental equipment that has no secondary market without a MASSIVE down payment and gold star credit.
Enter the State of California.

Millions, if not Billions will be invested in the electric boogaloo over the next 3-10 years, enticing manufacturers to come to market with commercially viable products while soliciting fleet participation though good  old fashioned bribes. Well, not actual bribes, but, massive amounts of incentive or demonstration money to offset the initial costs making the equipment more affordable if not at least palatable.

Although he doesn't know it...he's next...
CARB figures that once fleet operators have an opportunity to log some windshield time behind the wheel of an all-electric drive vehicle, they will be singing its praises from the mountaintops, cajoling their counterparts into ditching the dirty diesel and compelling manufacturers to engineer a cost reduction. Well, in a perfect world anyway

In reality, this will be more than a challenge. Regardless, California is committed to this transportation future and will push the envelope all the way to the brink of no return. In fact, the ports of LA/LB have already thrown down the gauntlet with a 2035 date for zero emissions trucks. It is a sliding date based on where the technology is, but a line in the sand nevertheless. So really, it has already begun…Grab the extension cord, it’s gonna be along decade.

Stay Tuned!


Tuesday, February 14, 2017

Out of Touch and Out of PLACE?

The state of California is up to its old tricks again….an established program is up for a revamp!
While the state has set their sights on zero and near zero transport, a legacy program is being bled out to make way for “sustained” investments in the zero emission future. Since the piggy bank is being shaken dry, CARB is looking for ways to have their bacon and eat it too.

The unfortunate reality of the CARB on-road truck and bus rule is that is expensive to comply with, very expensive. CARB is synonymous for throwing good money after bad at HD truck incentives to help offset escalating costs. While these programs do help, especially grant programs, a supplemental program that assists with residual financing has been instrumental in the compliance rate for the truck and bus rule and it is currently under threat of a change for the worse.  

The threatened program is administered through the state treasurer’s office and in some circles is known as the Providing Loan Assistance for California Equipment (PLACE) program. While in reality its true moniker is the California Capital Access Program (CalCAP) on-road truck loan program. It started back in 2009 with a onetime $35m investment from AB118, the bill that basically created the Air Quality Improvement Program (AQIP).
The initial investment was used to create the program and start enrolling qualified trucking fleets that could not obtain financing anywhere else. However, the program was hopelessly underutilized until SB 832 in 2010 and in SB 225 in 2011 when the laws were changed to allow for private finance company participation and for the enrollment of Terminal Rental Adjustment Clause (TRAC) leases, respectively.Hoiwever, no one began seriously partic Since then, the program has received close to $100 Million and has enrolled over 10,000 vehicles into the program with over a dozen active lenders

Back in 2009, when the AQIP was created, legislative direction was given to create a low-interest loan guarantee program to assist small trucking fleets who cannot access financing in order to achieve early compliance with CARB rules.

This was the original intent of the program.

Today, the intent is there but a couple things were massaged a little to take into account the realities small trucking fleets were facing.

First, the early compliance provision definition needed to be revisited because the people who needed the loans most were the exact ones who were out of compliance.

Second, the individual loan guarantee program didn’t have enough oomph to help all the people that needed the helping.

A more robust approach was eventually adopted.

Instead of the loan guarantee approach, CARB agreed on a concept that shared basic DNA with the original CalCAP program for small business; the pooled reserve. Basic difference between a loan guarantee and a pooled reserve is a that a loan guarantee is a guarantee on a single loan, the pooled reserve is exactly what it sounds like, a pool of reserved contribution money that is used across an entire portfolio or pool of loans.

More simply, if a loan with a loan guarantee goes bad, there is a set amount dedicated up front to that particular loan which is then paid back to the lender to help cover losses incurred on the original net investment should a default occur.

The pooled reserve concept is where individual loans are each given a set contribution rate which is then put into a reserve account that the lender can draw from once a loan is terminated in order to cover any losses after liquidation.
The pooled approach is more effective because it spreads out the risk across a larger portfolio, making the money go further. The loan guarantee is on a loan by loan basis, there is no co-mingling. While the loan guarantee concept has merit, shifting from a loan reserve pool to a loan guarantee once a loan reserve pool is established is akin to changing horse mid-stream. 

Nevertheless, for lenders, the larger the reserve pool, the more it can be leveraged against the risky credit profiles that the state of California essentially created the program for. Since the effective reserve percentage (which is calculated by taking the total dollar amount in a particular lenders reserve account and dividing that into the total outstanding balance) was being used to justify loans to these risky credit profiles that lenders would have never lent to without the reserve threshold.

The mere thought of having the reserve account gutted by a recapture program while simultaneously shifting the program to a loan by loan guarantee is chilly to say the least.  
The original mission of the program was to help those who could not secure traditional financing for compliant truck purchases. The majority of credit profiles enrolled in the CalCAP on-road program are those exact people. To put it bluntly, there is a reason they couldn’t get financing.

So, living up to its job, the pooled reserve account justified issuing affordable loans to folks who have little or no positive credit history to lean on. Compounding this issue was the fact that in 2014, the eligible fleet size limit was lowered from 40 or fewer trucks to 10 or fewer trucks. This has been directly responsible for shifting the overall average credit profiles for eligible loans enrolled in the program to higher credit risk tiers.
Complicating the issue further is the fact that over the years, CalCAP has been lowering the contribution rate for participating lenders with larger reserve accounts. It started at a 20% contribution, went down to 14%, then 10%, and it is now currently at 4%. With a 4% contribution rate, effective reserve thresholds of active lenders are dwindling since new loans are being enrolled at a greater rate than the 4% contribution can cover.   

If another economic downturn hit, lenders could be facing losses in the tens of millions of dollars. More immediately, regardless of pending economic downturns, the unfortunate reality of these credit profiles is that more often than average, these loans go bad, that’s why they are risky credit profiles to begin with.
Data from PayNet Inc., one of the leading collectors and distributors of information on commercial loans and leases, forecasts an increase in credit defaults for the Transportation industry in 2017. So right at the time this industry begins to contract taking several small, single truck fleets with it, the floor is simultaneously being pulled out from under the lenders who issued the loans because the floor was there in the first place.

With a sharp increase in defaults, CalCAP claims will skyrocket; resulting in the same millions of dollars in losses unless the reserve account thresholds are maintained at an appropriate level. Lenders are looking ahead towards these higher defaults on the exact loans they justified because of the effective reserve pool that the state created.
CARB would be well served to reconsider their across the board recapture concept and seek additional funds elsewhere or the program in its proposed form will dwindle and wither. Lately, it seems that money for zero and near zero emissions demonstration and grant projects, alternative fuel and the like are coming out of the wood work. In the VW settlement alone California is getting $800m for zero emissions transport projects over the next ten years. $800 Million! Surely CARB can redirect some AQIP allocations to sustain the program in light of the recent treasure trove for the all-electric boogaloo CARB is endeavoring towards.

And, instead of draining already invested money that has been used by banks and finance institutions to help justify loans to some of the most challenged credit profiles in the trucking industry, CARB and CalCAP should keep existing funds intact with guarantee for a reasonable effective threshold that lenders can count on. The program should continue, but not at the expense of the very lenders who have made it successful.
Stay Tuned!


Tuesday, January 10, 2017


CARB Levies $532,875 Fine to Close Out 2016

“Punitive…Rather Than Compensatory”

Make no bones about it, they will find you. And when they find you, they will fine you…eventually. Now that CARB has audited some of the largest fleets operating in California, requesting smoke testing data, truck and bus compliance, contractor info, ECL proof, drayage compliance, TRU compliance, idling polices, maintenance practices etc…it is just a matter of time before they lock their sights on the remaining fleets who have been flying under the radar and avoiding the rules for years.

CARB performs thousands of roadside inspections annually. In 2015, they executed close to 18,000 inspections on diesel trucks alone. While 129 “diesel investigations” for the truck and bus rule were settled in 2015, only 26% of all investigations across the diesel program suite resulted in a compliance finding. Although 26% is a low compliance rate, in reality, the smaller number comes from a more efficient approach.

CARB has shifted their enforcement tactics away from “complaint and referral” to a “smart audit” approach.  This new tactic is leading them towards the non-compliant carriers and away from the law-abiding folks who can’t be bothered anyway since they are constantly on the road, turnin’ and earnin’ to pay for all the new equipment has CARB scooched them into over the last 5 years.  

Smart audit or otherwise, you don’t have to be a genius to figure out that if you register your trucks with the DMV, then CARB has carte blanche access to that data for enforcement purposes. Despite what many would call the “shortcomings” of DMV customer service, you can bet dollars to DEF fluid that with the push of a button all registration information for any particular carrier registered in California can be shuttled over to CARB headquarters lickety-split.
So, one has to wonder how a massive, nationwide leasing and rental company like Penske could drop the ball so badly going all the way back to 2013. While their fleet is in the thousands or tens of thousands, or hundreds of thousands (231,000 according to their website), the only trucks that matter are the trucks that are operating in California. Regardless, CARB nailed the nearly 50 year old company for numerous violations including truck and bus rule and periodic smoke inspection (PSIP) compliance. Settlement Summary Click Here

During an audit, CARB throws pretty much everything at the fleet to see what sticks. In Penske’s case, it's likely that they didn’t realize they had 3 MHD vehicles with pre 1995 engines actively registered  as non-compliant for almost 24 months until CARB told them. Typically, each violation of the truck and bus rule is supposed to receive a $1000, per month, per truck fine. However, several factors come into play in how severe the citation is.

Factors such as, "extent of harm to public health, safety and welfare caused by the violation; Nature and persistence of the violation, including the magnitude of the excess emissions;  Compliance history of the company, including the frequency of past violations; Preventive efforts taken by the company, including the record of maintenance and any program to ensure compliance....Efforts of the company to attain, or provide for, compliance; Cooperation of the company during the course of the investigation and any action taken by the company, including the nature, extent, and time of response of any action taken to mitigate the violation; and finally, The financial burden to the company".

Notice the very last consideration is the financial burden of the company. It is not that CARB is full of leather clad sadists; it’s that they need these penalties to sting. In part to punish the company in violation but to also act as a deterrent to any would-be scallywags who are skirting or thinking of skirting the rules (not to be confused with skirting the trailer).

Nevertheless, Penske is not alone.  Hundreds of fleets (and hundreds more) have received citations or can expect something from the air police sooner than later. CARB’s smart audit approach has already shown its effectiveness and the 2016 enforcement efforts should eclipse the 2015 statistics. They are sighting the non-compliant carriers, punishing them with fines and releasing them back into the wild as tagged game. For those who have already spent the money for compliance this is promising news; better late than never, but eventually, nonetheless.  

Stay Tuned!




Friday, December 23, 2016


California Has Done It Again….

EPA Grants Petition for Lower Engine Standard

Well, just when the light at the end of the tunnel was drawing near, the trucking industry is again seeing the one eyed freight train of environmental regulation headed right at them. This week the EPA released a response the petition filed by CARB, SCAQMD and SJAPCD et al. requesting a federal rulemaking for a lower NOx engine standard to take effect in 2024. EPA has granted their request and will begin a 24 month technical research period with a rulemaking coming in 2019 for a 2024 implementation date.
While this may all sound familiar, these new standards are not the kind that are designed to enhance fuel economy, like the Phase 1 and Phase 2 GHG standards,( Click here for More Info )  these are the type that directly control criteria pollutants and tend to degrade fuel economy. In this case, the criteria pollutants under control are the directly emitted oxides of nitrogen or NOx, which forms ozone in the atmosphere when it reacts with sunlight, eventually resulting the ever familiar shroud of smog that blankets many major cities and metropolitan areas in the world.

Since California is under strict federal standards to meet National Ambient Air Quality Standards (NAAQS) for Ozone attainment, their main focus to meet those standards outside of recent rulemakings, is the low NOx engine standard. Now that CARB is done decimating the in-state fleet through in-use rules, they have been granted passage into the next phase of their quest for clean air, a federal engine standard that no one can escape.

The challenge in California, especially southern California and the central valley, is that the NAAQS cannot be met without a lower federal NOx engine standard because the majority of trucks operating on California roads are from out of state.

These fleets (for the most part) turn over to newer engine technology through natural attrition due to  higher mileage accumulation and therefore avoid in-use standards because the technology they are using is ahead of the California rules. So, enter the federal government.  With a federal standard (More Info) the natural turnover would eventually lead to the implementation of the lower NOx standard across the out of state fleet with the in-state legacy fleet following close behind. In theory anyway (cue the Pre-Buy!).

Of course there will be a formal rulemaking procedure beginning sometime in 2019, where California will be leading the charge for the standard they feel they need, the .02 standard, while the OEM’s and possibly the EPA might take a more reasonable approach with a slightly higher, but lower than current standard, possibly with a maintenance and warranty enhancement such as the ARB is currently pursuing.

The new administration has been quiet on the new engine standard so far. Nevertheless, any attempt in unwinding what the Golden State has started may prove more complicated then it appears. The first hurdle is that California is mandated to meet the NAAQS as directed by the Clean Air Act .If they can't meet the goals, the EPA steps in to do it for them.

The quandary for the new administration  will boil down to if they are going to play nice with California or face imminent litigation which will result in California getting their way anyway. Unless congress changes the clean air act, California will get its engine standard one way or another nationwide or California only. For the golden state, there is no other way and currently, the EPA agrees.  

Based on California’s emissions modeling , they cannot meet the federal standards without the low NOx engine. It has been made clear to industry and everyone else that the 2010 technology will not be enough to get them to their attainment goals. This is relatively bad news for a just recently beat up California based trucking industry. While the ARB has given indication that no new, in-use, on-road rules will be implemented, there is little stopping local districts in pursuing facility caps in Environmental Justice areas to force the turnover to the cleaner standard.

While the in-state fleet thought they were out of the woods with the 2010 technology, the worse news is that according to recent research findings, cold engine operation and deterioration of emissions controls in 2010 engine technology is resulting in much higher in-use emissions than anticipated. So, CARB has the data and will be able to make a compelling case for the cleanest standard because, in their collective mind, there is no other pathway. If the feds try and stop them, they will sue, they will win and we will all be back to square one, maybe a couple years later, but square one nonetheless.  Never a dull moment….

Stay Tuned!


Thursday, September 22, 2016

Be Afraid, Be Very Afraid…

Legislature passes and Governor seals the future fate of transportation in California.

While cap and trade has been kicked down the road until the legal dust settles, the state of California is focusing their air quality sights on the transportation industry. Sacramento has been very busy committing to GHG reductions through legislation while the regulatory apparatus is waiting in the wings to begin the scorched earth policy that is Air Quality regulatory development here in California. Meanwhile, on a local level, a whole other cap and trade program may emerge as the perfect cover for a second forced truck turnover across the state.

It is no secret that unique emissions challenges exist within the air districts across California, especially the South Coast Air Quality Management District (SCAQMD). A major focus for SCAQMD and other metropolitan regions are oxides of nitrogen (NOx), a basic precursor to smog and something that is directly emitted from practically every vehicle out there, especially trucks.
The state of California has made NOx a priority after having had tackled the pesky Diesel Particulate Matter (DPM) problem with a slew of regulatory measures, aimed most recently at the on-road transportation industry, dating all the way back to the 90’s. Transportation has always been a major contributor to emissions, and with ever tightening ambient air quality standards that are set by the federal government, it is obvious that the industry would be the target of strict control measures now and well, forever.

Many measurers are currently in effect and being enforced on the transportation sector here in California. Beyond existing in-use measurers, the state has its own diesel fuel blend and has very recently petitioned the federal government for a cleaner federal diesel engine standard. California may also have buy in from 11 to 13 other states to also require the engine standard once it is all said and done. All the while, lurking in the shadows of the existing state regulatory lexicon is a whole new set of potential standards, both up front regulatory measures and backdoor turnover requirements. The leviathan never rests.  

At the local level, SCAQMD is embarking upon a mission to ratchet down on facility operators to monitor and control emissions from any facility associated with transportation, e.g. warehouses, seaports, airports, railyards etc, operating in the South Coast. The concept, known as a “facility cap” (FC), will be forced upon particular locations that fall within the covered facility definition, and depending on proximity to sensitive receptors, emissions levels will be capped appropriately.
In other words, equipment operating at a facility will count towards an overall emissions profile. Every diesel or gasoline or jet fuel or otherwise emitting engine will all be counted, if an operator gets close to the cap, activity may have to be curtailed or the facility operator will face fines or sanctions or public shaming or all of the above. All of the specifics will be determined once the SCAQMD Air Quality Management Plan (AQMP) is adopted in December.
Nevertheless there seems to be a clear commitment to control and cap emission at freight facilities, continuously. Incentives and other grant or voucher type programs have been suggested, but without serious public subsidies, some operators may find themselves looking for a buyout just to get out of debt and away from the clean air tornado. Because of course, it is always a question of money, not necessarily how much, but who's paying?
Part of the FC scheme may include something similar to a cap and trade program. In fact, it will be exactly like a cap and trade program. It will likely be a forced participation; at least the cap part will be, with covered facility operators left with little or any choice but to participate by meeting the standards or buying their way to more time. 

With the massive NOx reductions being sought in the SCAQMD and really across the Central Valley and the Bay Area and Sacramento Valley as well, the only way to get those reductions from the trucking industry is to force a second engine turnover beyond the existing truck and bus standards which are already forcing a full engine turnover in 2023. This turnover could possibly include a renewable natural gas engine platform or at least the cleanest diesel engine technology available to humankind; until something cleaner comes along that is.


This backdoor approach to a forced turnover removes the burden of regulatory scrutiny because it will be a private business merely making the determinations in how they will get below the cap.

You want to do business with that business, then standards will need to be adhered to or, you guessed it, no business (in theory anyway).

Nevertheless, without a truck turnover, it is unlikely the cap can be maintained. The bar is already so low with the existing PM and NOx control technology that they will have to go lower with zero or near zero emission engines (read: Electric etc..) to maintain levels below the cap. Adding more H2O to the grease fire is the fact that in all likelihood the cap will become stricter as the years wear on.  

Of course, the lower you go, no matter how well intentioned, like a limbo contest at the senior center, someone is going to get hurt.

Likely, the SCAMQD will be sued over the whole thing. Despite the “business friendly” tone of the SCAQMD Board as of late, many groups are already gearing up for a major legal battle if SCAMQD moves forward with a facility cap.

Of course all of this fits directly in line with the “Moonbeam Daydream”. No, not your uncle’s psychedelic jam band from the 70’s, but the Governor’s full frontal assault on emissions and greenhouse gasses (GHG) from the transportation industry, better known as Executive order B-32-15. CARB has been tapped as the headliner for this bureaucratic love fest that is combining the forces of agencies across the state to create the ultimate super group that will change the face of transportation in California and by doing so, solidify the Governor’s low carbon vision now and forever.
Between the new commitments in recently signed SB32 to reduce GHG down to 40% below 1990 levels, the new engine standard petition, the facility cap proposal and the logic defying efforts of CARB through their mobile source strategy in the Statewide Implementation Plan (SIP), the transportation industry across the country should take notice.

There needs to be a concerted effort to fully recognize the magnitude of what is happening here in California. It is getting serious. Or wait, it is getting even MORE serious, much more serious, indeed.

Stay Tuned!  

Tuesday, July 19, 2016


What the Truck?

Major developments in On-Road Truck and Bus Rule, Sustainable Freight and Mobile Source control in the South Coast
So far, 2016 has been a tumultuous year in the world of air quality here in the Golden State. Although within the past few weeks most mainstream air quality news tidbits have been related to the lack of cap and trade activity, the transportation sector is facing the perfect storm.
Strict new engine standards, facility caps and a potential zero emission last mile rule are all part of a larger complex web that is weaving the future for transportation here in the Golden State. It is no secret that California has the strictest regulatory standards for the trucking industry across the US. What may or may not be of a surprise is that the state of California is far from writing the final chapter on their air quality saga. While many believe that what happens in California stays in California, a closer analysis will demonstrate that what happens in California eventually makes its way across the US.

Within the larger universe of both the California and local air quality planning documents is a major reliance on a lower federal NOx new engine standard to meet air future federal air quality goals across the state. It is no secret that if the feds don’t act in implementing the lower standard, then California will seek an exemption to set their own standards with several other states possibly opting in under section 177 of the Clean Air Act. Although some have backed out, over a dozen states could also require the sale of the California engine if California receives the exemption.
However, according to CARB, a California only standard may not be enough. A federal standard is preferred since the majority of trucks operating in California are from out of state. The state and districts feel that a new engine standard will eventually be implemented by fleets across the country through normal turnover, thus resulting in the needed reductions as the engines trickle into California operation.  Furthermore, according to the state, the Federal standard is needed despite the major reductions achieved by current in-use rules, including the crown jewel of the on-road regulatory lexicon, the on-road truck and bus rule.
The on-road rule was initially adopted in 2008, changed in 2010 and implemented in 2012 as part of an effort to reduce criteria pollutants to meet federal air quality guidelines. The rule has forced the turnover of thousands of pieces of Heavy Duty equipment over the last 4 years. These efforts have resulted in significant improvements to air quality throughout the state but ironically enough may also be to blame for the slow adoption of the cleanest diesel technology available, the 2010 emissions and Phase I GHG standards.   

Despite the California only in-use standards under the truck and bus rule, when compared to other states, the in-state California fleet lags far behind in the deployment of the cleanest existing diesel technology. According to the Diesel Technology Forum, only 18% of the California fleet has 2010 or newer engines.
Speculation abounds that the on-road rule may have been the reason for this slow adoption since fleets have been focusing on interim targets instead of looking at normal turnover. The thought is that normal turnover may have resulted in greater penetration of 2010 engine technology since fleets would not be forced to install particulate traps on existing equipment and could instead retire and replace with newer technology.
Nevertheless, CARB could not rely on natural turnover to meet air quality standards, so back in 2008 a rule was imminent. Today, according to CARB, despite the on-road reductions, a federal engine standard is needed to meet the air quality goals were shooting for with implementation of the on-road rule. And adding even more irony to the fire, during their relentless pursuit of federal attainment since adoption in 2008, CARB, by their own admission, has been directly responsible for an actual increase in on-road emissions because of a rule modification that took place in 2014.

Although the complex exemption and phase in pathways provided relief for those who took advantage under the rule prior to the 2014 amendments, the strict standards were “unattainable” for small fleets and so a set of amendments that loosened the rule for this particular sector and others was adopted in 2014.
While CARB was playing the Good Samaritan in helping small fleets with the 2014 amendments, larger fleets felt they were left holding the bag while their smaller and non-asset competitors were given a free pass. Subsequently, a lawsuit was filed shortly after the amendments were adopted and on June 7th 2016, a superior court in Fresno ruled the 2014 amendments were invalid since proper administrative procedures were not adhered to during consideration, adoption and eventual implementation.
Although all amendments were essentially thrown out by the ruling, what this means is CARB will appeal and file for an injunction pushing a final resolution out months if not years. The regulation will exist in its current form until further notice, so although a major event in the CARB zeitgeist, it is not impacting the immediate future for the majority of the industry.
What is impacting the immediate future of the industry in addition to the potentially lower federal engine standards is a collaborative effort by CARB and several other executive agencies to fulfill the Governor’s low carbon vision for transportation trough a sustainable freight plan. The plan has been laid out on a document that to say the least is a comprehensive vision for a lower emission future, if not at a minimum, a wish list. The document is setting specific targets for the trucking industry and looking towards a future where zero emission equipment is everywhere feasible and near zero emission engines everywhere else.


Simultaneously, the South Coast has released a mobile source plan that amounts to an outline for a massive facility cap program across the southern California region. Although the South Coast plan is being ridiculed by environmentalists as business friendly, it still amounts to stricter control of emissions from otherwise currently unregulated “magnet sources” like warehouses and other transportation facilities such as ports and railyards where trucks operate. The plan also looks toward federal money to incentivize the turnover to ultra-low NOx near zero engines, but the money isn’t there yet and many wonder if it will ever be.
The two plans taken together and combined with a formal request to the feds for an even cleaner engine standard should leave the transportation sector with California much to ponder staring in the face of these tumultuous seas. And despite the potential fallout from a significant rule change back to the 2012 standards should CARB lose in court (again) nothing is standing in the way of more air quality improvement measures, compulsory, incentivized or otherwise.

Stay Tuned!