Monday, July 8, 2013

Skin in the Game? The Supply Chain is in the California Emissions Enforcement Crosshairs...

CARB Laws will hold shippers, receivers, brokers, motor carriers and drivers liable for emissions compliance.

Over the past five years and especially in 2012, the California Air Resources Board realized that practically the entire supply chain must be responsible for the dispatch of emission complaint vehicles if their in-use, On-Road diesel, GHG and Transport Refrigerated Unit regulations were going to be successful.

Currently, active enforcement of all major trucking rules is underway and motor carriers are feeling the pinch of putting off required compliance upgrades that have been in effect for the past several years. Fines in the hundreds of thousands have already been issued and several other cases are currently under review by CARB enforcement staff.
Adding insult to procrastination or outright disbelief is the fact that carriers must not only pay the fines, but must also still upgrade all their non-complaint equipment if they are cited. Not to mention the annual reporting and the continuing education classes that is a part of any settlement agreement with CARB.

The Drayage regulation and the On-Road regulation both hold motor carriers and California based brokers responsible for dispatch of emission compliant equipment to ports and intermodal railyards, and for over-the-road dispatch if the trucks are equipped with a particular engine model year category.

California based brokers and motor carriers are also held responsible for dispatch of non-complaint Transport Refrigerated Units or “refers” and non-aero-dynamically equipped “non-exempt” trailers under the TRU and GHG regulations respectively.
Within the rest of the supply chain, and coming as an unpleasant surprise to many, California Shippers may also be held responsible for dispatch of non-compliant refers and trailers. Furthermore, any Receiver based in California that has arranged for refrigerated transport may be cited if non-compliant equipment is used to move the goods. 

That means, if a non-compliant refer unit is found operating in California, the operator and the dispatching motor carrier will be fined, the broker that arranged for the transport will be cited and the shipper, the receiver and subsequently the beneficial cargo owner may be cited if they are based in California.

Any California based entity that arranges for the transport of goods is within the chain of enforcement. Recently, CARB has even proposed to include idling citations as something shippers and brokers may be held accountable for.
Several exemptions exist under the idling regulation, including an engine specific exemption for 2007 and newer model year engines that are controlled specifically for idling. And although several exemptions exist within the Drayage, On-Road engine and GHG trailer rules, all require specific reporting deadlines in order to utilize the options that provide additional flexibility.

So, if a carrier isn’t meeting the standards or has not reported to receive exemptions, they will be cited and after a CARB audit of the violating carrier or operator, other “responsible” parties will be receiving CARB correspondence asking for records in order to build the case for citations and eventually fines.

It is important to understand that CARB has come to these requirements in part, after discussions with motor carriers who are not getting the appropriate rate increases from their customers to pay for the more expensive compliant equipment and in part because shippers, receivers and brokers are still seeking the cheapest alternative for shipping of goods, essentially providing a market for non-complint carriers who operate outside the law, skirt the fines and fold up shop at the first sign of trouble.

The TRU, Drayage and On-Road rules have major engine upgrade requirements slated for a good chunk of the industry at the end of this year.  Millions of dollars will need to be spent in the coming months to meet the requirements. One way or another, someone needs to pay, and as grant opportunities dry up, many truck operators will be hard pressed to find the cash to comply.

In CARB’s mind, if shippers, receivers and brokers can be cited along with motor carriers, only compliant carriers will be dispatched and contracted with, thereby encouraging the market for those compliant carriers who have made the necessary investments to help achieve CARB's mission of cleaner air for California.

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