Thursday, March 20, 2014

Industry Listens as CARB Reacts

Statewide Truck and Bus Rule Amendments Become Inevitable Reality

It is no secret that thousands of operators in the industry are struggling to survive the harsh regulatory environment that exists here in the Golden State. Until recently, many were speeding headlong into a regulatory brick wall; despite lawsuits, threats of more lawsuits and even outright boycotts, there was little relief and even less sympathy for those in this particularly precarious position.
Fleets of all shapes and sizes are finding themselves in this conundrum. They are spread throughout the state and throughout many different vocations and specialties; these are 3rd and 4th generation companies, mom and pop shops, single truck operators, two man fleets, corporations, partnerships and LLC’s.  Every configuration under the trucking business umbrella has found themselves behind the 8 ball at one point or another over the last 4 years. Suffice it to say, it has not been easy.
Many fleets have handed in the keys; others have just sold their businesses, while others are merely scraping by; making just enough to afford their monthly truck or retrofit payments. Granted, there have been opportunities to help offset upgrade costs from “Uncle Sugar's Goody Sack” in the form of buy downs, grants, and loan assistance programs but, alas, it has fallen well short of the needed capital to become fully compliant, and adding to the conundrum is the fact that not everyone can qualify.

The unfortunate sons who don't qualify for these incentives have had no choice but to go it alone, and now their efforts and hard earned capital expenditures seem all for naught as their businesses hang in the balance, teetering on the whims and fancies of those seeking to save face 4 years after the fact.  
Although the recent changes are being proposed under the mantra of helping the industry, it stops well short of recognizing the investments made by fleets across California. It does little to provide immediate relief to help offset mounting costs and competition from non-compliant carriers.
CARB chairwoman Mary Nichols was recently quoted as saying that, “the industry spoke, and we listened”.  With many barely able to make monthly payments on equipment that was purchased in anticipation of regulatory deadlines, fleets are wondering, “Who was doing the talking?”
The idea of regulatory certainty has been turned on its head, and is now boiling down to, “damned if you did”.
For a fleet who has expended literally MILLIONS of dollars on compliance, or even a single truck guy who spent up to $100,000 on a new (or at least newer) truck, the latest “changes” that CARB is proposing  leave a whole heck of a lot to be desired.  Some provisions are easily accepted; while others need more than a spoonful of sugar to swallow (Click here HERE for Link to CARB Summary), even Mary Poppins herself would reconsider.  
Unless the industry can convince CARB that allowing a 4 year compliance pass through an unenforceable loan denial provision is just bad public policy, the for-hire trucking market in California may collapse under the weight of depressed rates and historic indifference by CARB.

There are provisions that currently exist that allow enforcement discrimination in the event of proven financial hardship. If someone cannot actually secure a loan (and can prove they actually applied), then the CARB Mobile Source Enforcement Division can use their discretion to scale back fines for non-compliance. There is no need to codify this cockamamie loan concept just for the sake of optics.
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Thursday, March 6, 2014

Anticipation Grips the Industry

CARB Releases Major Changes to Truck and Bus Rule

Over the past several months there has been a groundswell of concern over recent efforts by CARB to provide proposed relief to an industry struggling to survive in the demanding regulatory environment that exists here in California. In part, the proposed relief is a response to mounting criticisms (and lawsuits) over how the truck and bus rule is impacting fleets of all sizes, all over the state in all types of vocations. The proposed changes were inevitable, and in many regards completely necessary. Nevertheless, how they will be interpreted is an entirely different story altogether.
The proposed changes do clear up some inconsistencies in the regulation and serve to close the loop on the "Good Faith Extension", but most of all, the relief is targeted to the many fleets who have either ignored or struggled to achieve compliance as of late, with little immediate relief to those who have already shelled out tens of thousands, if not millions of hard earned currency towards compliance since the regulation went into effect leading up to 2012.
Of great interest is how industry will respond to the proposed changes and how the available material will be used to build or break down a case for the changes. By law, CARB is required to release all pertinent data used to justify the regulation, it does stop short of allowing the public to duplicate their findings without PRA requests or potential litigation, but,  it is however an insightful treasure trove of data into how the changes are being justified.
The data contains inventory and cost estimates, sales forecasts and emission penalties and benefits along with fleet size data and estimates of the various compliance exemptions that are being utilized.  While the data does not cover the greater economic impacts of allowing regulatory passes for a specific subset of the industry, it does cover why they think it is necessary to do so. This specific industry subset consists of fleets with three or fewer vehicles over 14,000 GVWR and has been the subject of much controversy since the original exemption was proposed in 2010.

According to one provision in the proposal, if you have three or fewer trucks in this category, there is a possibility you will have a pass on your entire fleet until 2018, provided you qualify for the provision and more importantly if this particular provision makes it past the April 24th, 2014 CARB Hearing in Sacramento.
CARB staff has already prepared for a 15-day change notice to be released after the hearing, knowing full well that whatever is proposed before the Board in April will require additional changes since this proposal in its current form is really more of an exercise about what will stick against the wall as opposed to full recognition of the issues plaguing the industry.  
Granted, CARB on-road truck and bus staff should be commended for their diligence in releasing the proposed changes in a timely fashion. Nevertheless, there are major industry concerns that, on the one hand, the changes do not go far enough, while on the other hand, some changes go way past the mark and some may even be susceptible to fraud or other extra judicial activities. The playing field is being tipped; and in fact, what CARB is doing may be perceived as market interference by some, while others will cite CARB's complete obliviousness to the competitive forces driving the freight market in California.  

What cannot be denied is that millions of dollars have been invested in clean equipment upgrades over the last 3 years. Many in the industry have and are still competing against those who consciously chose to skirt the requirements; referred to in many circles as "scallywags" or "bottom feeders".  While many others in the industry just can’t afford it, CARB is lumping the two groups together, with little mechanism or attention dedicated to differentiating between the two.  From this it would seem that relief is in the eye of the beholder, but, time will only tell.

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Tuesday, March 4, 2014

Bad Faith?

Typical Indifference From our Favorite Four Letter Agency

CARB is up to its old tricks again, blaming lack of communication and regulatory indifference for a misinterpreted publically advertised exemption for fleets meeting 2014 On-Road deadlines.
Basically, if as a fleet operator, you took what CARB said in the Good Faith Advisory at face value  (See Out of Touch or Out of Reach – Monday, January 13, 2014), you thought that some relief was being provided in reaching the 2014, On-Road Truck and Bus deadline.
For the most part, you were correct, unless you happened to be applying for a Proposition 1B grant and you had more than 4 trucks in your fleet.
If that’s the case, then you do not get the “Good Faith” consideration, even though you might have drastically changed your compliance plan once the Advisory was released, albeit in full compliance with the pathways put forth in the Advisory.
Nothing in the Advisory informed fleets in this category that they would not be able to use the compliance “pass” until July 1, 2014, while maintaining eligibility for 1B grants because they needed to be in compliance on January 1, 2014.

According to CARB if you are using the Good Faith Extension (GFE), technically you are NOT in compliance for January 1, 2014; so, no grant. Suffice it to say, this came as a shock to fleets who thought they were doing everything correctly.

More or less, what it boils down to is that if you applied for grants you don’t get the GFE, if you didn’t apply for grants and didn’t do anything leading up to the release of the Advisory in November 2013, then you get until July 1, 2014 to demonstrate compliance.
Many fleets are benefitting from the GFE, and they should be allowed to continue to exercise the GFE for compliance, but, it is disingenuous to allow one set of the industry to receive relief, while the other subset must adhere to the original standards.
It would have been one thing if this was clearly laid out by CARB when they released the GFE, however, it was not, and in fact, nothing in the advisory gave anyone a different impression other than the GFE was open to anyone who could demonstrate one of the GFE options.
Unfortunately for many, a simple, innocent mistake in choosing GFE once the advisory came out has resulted in them being ineligible for 1B grants (thanks CARB!). The problem is that they were never told any differently. While CARB stationary division staff sits perched in their granite and marble tower in downtown Sacramento, hundreds of fleet operators out in the market are getting the shaft.
Shockingly enough, CARB cannot understand why this is an issue; per the guidelines, fleets knew they needed to demonstrate compliance above and beyond the trucks they were using to apply for grants.
For all intents and purposes the majority understood this issue and acted accordingly. However, once the GFE was released in November, after the application deadline for the first round of funding which closed October 10, 2013, fleets were now faced with a choice; continue down the same path, or exercise the GFE and receive a small amount of flexibility for 2014 compliance. Nothing in the GFE gave them any other indication that they would jeopardize their grant status by doing so.
Of course, CARB is sticking to their guns on this, even going so far to ask, “Is this even and issue?”.
CARB should recognize the good faith efforts of fleets applying for 1B grant funds and provide them the same opportunity for 2014 compliance demonstration just as they are allowing for everyone else in the industry. It would have been one thing if they explained this issue up front, but now, the horse is out of the barn, and the view isn’t changing.
Stay tuned…
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Tuesday, February 11, 2014

Saved by Zero?

CARB releases updated AB 32 Draft Scoping plan for GHG reductions in California.

It should be of no surprise to anyone who has been remotely paying attention to CARB that the “clean up” of the freight transport network in California will never end. Recent discussions have only served the arguments that needed carbon reductions from the freight transport sector can only be achieved through the deployment of Zero-Emission Vehicles (ZEV’s) in the heavy duty trucking sector.
As far as policy makers in Sacramento are concerned, zero emission freight transport is an inevitable reality; maybe not today, maybe not tomorrow, but soon, and quite possibly sooner rather than later. The ZEV solution is gaining ground and according to CARB, deployment of these vehicles in California will more or less, save us from ourselves, while still allowing us to maintain our “California lifestyle”.
Regardless of the reductions already achieved through existing regulatory measures, major reductions are still needed.  And that, as laid out in the Scoping Plan, can only be achieved through the deployment of ZEV’s in the on-road heavy duty trucking (HDT) fleet.

For those of you who remember the 1980’s new wave band, The Fixx, the term “Saved by Zero” might take on a slightly different connotation.  Nevertheless, the freight transport sector in California remains in the Crosshairs for GHG reduction targets; and ZEV’s are the magic bullet.
It is obvious from this latest version of the plan that CARB’s intended pathways for reaching ZEV deployment in the HDT sector is constantly evolving.  The targets may not change, but the roadmap will morph and shift as technological solutions (or limitations) present themselves in the market.
Currently, there are zero options available for ZEV’s in the HDT sector. Anything over 26,000 pounds Gross Vehicle Weight Rating (GVWR) does not have a ZEV option commercially available. All projects are currently in the demonstration phase and all carry a heavy price tag. Even lighter trucks from 14,000 to 26,000 GVWR are in limited ZEV offerings, more are currently available on the Hybrid electric side.
CARB’s own admission in this latest draft plan speaks to the challenges in catching up the HDT fleet with ZEV technology, “(w)here the technology is available or being demonstrated, near-term challenges exist in terms of cost, vehicle range, payload, and the need for associated infrastructure.”  
This quote speaks volumes to the fact that these efforts are not going to materialize overnight. This is why CARB has come to see the light and determined that “Coordinated, comprehensive planning is critical to achieving deep emission reductions in the transportation sector…”  That translates into the fact that industry participants can expect the future formation of focus groups to address the physical, fiscal and political challenges that need to be overcome before CARB can hang their hat on anything for HDT ZEV’s.


Thursday, January 16, 2014

Diesel Starts with Die...?

The Environmental Protection Agency (EPA) has brought the health effects of goods movement to a national stage.

Although any facility or equipment operator doing business in California will see these discussions as old hat, those outside of the Golden State may be in for a rude awakening. Policy makers have begun to align the goals of health and community activists with national policy goals for the future of the goods movement system in the United States especially in around maritime port complexes in the US. This has led to the emergence of a renewed discussion around the consequences of our global marketplace on the future health of our country. Environmental, health and community activists see this as a national issue and have turned to California to inspire and encourage the control of Diesel emissions associated with the movement of goods in the United States.

One question that permeated the discussion over the adoption of in-use diesel regulations in California is when other states are going to follow suit. One reason that other states have not jumped on the diesel control bandwagon is the lack of regulatory authority. California is unique because several air districts in the state are in non-attainment of National Ambient Air Quality Standards (NAAQS). The Clean Air Act (CAA) directs the EPA to set NAAQS for the entire country which all states are required to meet. 

This is a unique form of cooperative federalism where the feds set the standards and the states act on their own to achieve the standards. The feds have the final say in the approval or denial of these State Implementation Plans (SIPs), the basic roadmaps prepared by states to demonstrate how the NAAQS are going to be met for the target years. If a state fails to provide an enforceable SIP or cannot enforce the standards within an approved SIP, the federal government will step in and enforce or write the standards to achieve the NAAQS. 

Granted, that was a pretty sparse explanation of a very complicated process, but more or less, that is the gist. Other states do not have the regulatory muscle to pass rules similar to the on-road truck and bus rule in California, which is why for now, outside of some limited port restrictions in other states, California has gone it alone, and has so far been relatively successful in implementing the in-use standards on heavy duty truck operators. The rule has also been successful in sending non-compliant trucks out of state or out of country, effectively exporting emissions to other jurisdictions.
Nevertheless, the only real hope for a consistent, nationally enforceable in-use diesel engine standard ports or otherwise, is to have the feds write their own national truck rule with state implementation required under any proposed SIP. Every Heavy duty diesel truck in the US would need to adhere to the standards unless an exemption is requested. Compliance would be achieved through a mix of financial incentives such as guaranteed loans, grants and buy downs with enforcement of the standards through a mix of state agency reporting and inspections with possible DMV registration bans of particular model year engines. 

Anational truck regulation would be the only concept that would be nationally enforceable; effectively removing the states from the regulatory development process and limiting the possibility of multiple rules for multiple jurisdictions or individual challenges to localized emission reduction efforts.  The national rule would also cease the exporting of the old diesel engines to other parts of the country; trucks would either need to be scrapped or moved outside the country.

Time will tell how this all pans out, it is worth it to note however that environmental, community and health groups are rallying around the need to control emissions from the national goods movement system and federal regulators are listening. The low hanging fruit of emissions reductions has and will continue to be the Heavy Duty Trucking fleet. Regardless of how one feels about the health effects of Diesel Particulate Matter (DPM) exposure, all on-road, and even non-road diesel equipment operators need to understand that they will continue to be in the crosshairs for emissions reductions until the diesel pollutants associated with negative health effects from uncontrolled engines go the way of the Dodo bird. 

Monday, January 13, 2014

Out of Touch or Out of Reach?

CARB On-Road Truck Rule Reporting Deadline Looms
Thousands of truck operators in California are on the verge of extinction. The reporting deadline for compliance with the 2014 requirements of the California Air Resources Board CARB) infamous on-road truck and bus rule is on January 31, 2014. It is no secret that many fleet operators waited until the very last minute to address the CARB compliance needs for 2014 (See Tuesday, July 16, 2013 “Expiring Exemptions Inching Ever Closer...Are You Ready?”). These fleet operators are now scrambling to get something done before CARB comes a knockin.

Although procrastination has helped many succeed and overcome insurmountable odds, for many others it has truly become the assassin of opportunity. If fleet operators took a series of steps prior to January 1, 2014, they could have received a “good faith” extension to July 1, 2014 before 2014 compliance must be demonstrated. If an operator did not take the steps outlined in the “good faith” extension, they must meet the rule deadlines as of January 1, 2014. It would seem that as of late, evidenced by those currently coming out of the wood work, many missed this deadline and are now facing immediate upgrade requirements.   - Click Here for Advisory

Operators across the state are slowly finding out that CARB means business; massive fines are still being issued for non-compliance with annual smoke testing requirements, a rule that has been on the books since the late 1990’s. Recently, as far as the on-road truck and bus rule is concerned, the CARB Enforcement Settlement website has become awash with settlements for truck and bus rule non-compliance going back to January 1, 2012. What adds insult to injuries inflicted from non-compliance is the fact that not only does a fleet operator need to pay the fines once they are issued, but they are given a short time-frame to upgrade their fleet to achieve full compliance. It becomes ad double whammy, all of which could have been avoided by being proactive and getting the fleet into compliance before the scheduled deadlines.  
Most of the time, that is easier said than done. With razor thin profit margins considered a good year for most in the trucking industry, little opportunity is afforded to fleets for purchasing new or minimally complaint equipment. Grant funding has all but dried up and even the statewide loan program is limiting reserve amounts for larger lenders, effectively removing a leg of the stool out from under those fleets that could have benefitted from a state sponsored loan.  Leave it to CARB to complicate the only viable program for fleets operating in California just for the sake of saving face.

Regardless of diminishing opportunities for assistance, Fleet Operators are still being faced with the stark decision, upgrade into compliance or face the regulatory gauntlet. There are resources that can help, but for the most part, fleets are left on their own to figure out what needs to be done to avoid fines. There are some limited educational opportunities available to fleets; anyone who is non-complaint and even those who think they are complaint should take all the help they can get. With complicated exemptions and expiring filing deadlines approaching fleets should welcome any and all outside direction.  One of these opportunities is right around the corner, on January 23, 2014 at 10am California Fleet Solutions will be hosting a FREE 2014 compliance webinar. Click Here to Register . This is a free event that will cover 2014 compliance requirements. It will be a live interactive meeting that will afford participants the opportunity to ask questions in real time. Don’t miss this opportunity; sign up now, space is limited. Get Compliant!