Hog Wild

Community Drives Additional Controls for Heavy Duty Vehicles

No one likes dirty air. Its exposure knows no boundary. In California, the venerable Air Resources Board (CARB) has used study after study linking diesel particulate matter exposure to negative health impacts to justify strict in-use rules. Other states have opted into new engine standards that are identical to California, but outside of two port complexes, California remains the lone island for in use diesel regulations.

The ports of Seattle and Tacoma (SeaTac) have truck standards that are slated to go into effect at the end of 2017. The Port Authority of New York and New Jersey are also looking at an imminent truck implementation standard for the end of 2016. However, it has been reported that their implementation date was delayed by one year after numerous trucking firms voiced concern over their ability to meet the standards.

The NY/NJ and the SeaTac standards are identical to the CARB standards that have been in effect for California ports and intermodal railyards since 2014. Currently, the NY/NJ plan calls for trucks to meet 2007 model year engine standards as of January 1, 2017.

Although this date has not changed in their paperwork, there is currently discussion of different relief options which may in fact include a delay.

One popular mechanism to assist in truck turnover are grants or other incentives. While California is the granddaddy for all grant programs related to heavy duty trucks, some other states as well as the federal government offer truck replacement or retrofit grants to end users.

Both SETAC and NY/NJ offer truck replacement grants, as do the Ports of Virginia, Baltimore, Delaware and a handful of others. While most programs are specific to ports, other state programs seek municipal replacements or focus on natural gas engines. Diesel to diesel replacement options are out there but are limited. Really, only California and Texas have offered sizable grant amounts for diesel to diesel replacement.

For better or worse, most grant programs are starting a shift towards alternative fuel or hybrid platforms. Which may be a prelude to future mandates for non-diesel platforms in California and beyond. Of course, only California really has the regulatory muscle to force turnover of entire industries under clean air act mandates from the Federal government.

Nonetheless, other parts of the country haven’t quite jumped on the truck turnover-wagon just yet. The closest came when Oregon legislature considered giving their EPA authority to pass CARB like standards. But, due to its controversial nature and lack of support, the issue has so far been shelved for future discussion.

Meanwhile, the rest of the country will be looking at a lower ambient Ozone standard that will be implemented over the next few years once the lawsuits settle down. Its existence, which in and of itself may still not be enough to force states to look at the heavy duty trucking industry, will still need to be addressed by several states, with or without looking to truck turnover rules.

Nevertheless, states and municipalities may have other tools at their disposal to deal with emissions from heavy duty truck operation. If a constituency raises concerns over excess emissions from facilities near their homes or schools, it is just a matter of time before someone reacts.  

In Louisville, Kentucky, a Hog processing plant found itself on the receiving end of some zoning standards that required installation of CARB compliant engines on refrigerated trailers. A neighborhood association convinced a local zoning body to impose refer engine standards after the local APCD failed to act. The Louisville Board of Zoning Adjustment, with consent of the property owner, imposed the requirement with air district approval. Only new engines will be allowed to operate on the property.

This may be a harbinger for CARB like rules, even stricter than existing regulations for specific facilities across the country. Well, maybe not everywhere. But, it may encourage local groups to push harder on local elected officials to change zoning laws if a facility is an emissions nuisance. In the case of the hog plant, the facility manager agreed in order to maintain their good neighbor policy, but other facility operators may not be so willing to bend. Of course time will tell.

Stay Tuned!

2016 CARB Compliance Continues
CARB Rules Ratcheting Down

All California fleets with active heavy duty vehicles over 26,000 pounds GVWR must operate retrofitted or OEM emissions controlled equipment or must have registered with CARB for an exemption.  Any truck 26,000 GVWR or below equipped with a 1996 or earlier engine is also out of compliance.

This is old hat to many fleets operating in California, the on-road rules have been in effect since 2012 and still have another 7 years before all control measures are fully implemented.   There is concern within the industry that CARB is not done and many fear that strict GHG focused standards will rear their ugly head in particular sectors. While we will see what the future will hold, today, not only must heavy duty trucks meet the 100% control standards, but 53’ or greater box type trailers will need to have aero dynamic control measures installed.  In order to avoid the standards they will need to register with CARB for an exemption if they qualify.  The GHG tractor trailer regulation is the second major phase for CARB rules governing emissions from HDD vehicles. 

Many have put the trailer requirements off specifically because CARB was not enforcing the rule. Despite the fact that the standards required full compliance by 2013 for any trailer older than 2011, not a single published enforcement settlement contains violations for the rule.  2011 or newer trailers needed to be SmartWay certified as of 2010. So that is potentially 6 years of retroactive fines that may potentially be levied against fleets. Tractors also need a SmartWay certification if they are model year 2011-2013. 2010 and older tractors and trailers need to have had tires installed by 2013. Sound familiar? If not, you are not alone, very few have heard about these dates because CARB has not been enforcing the rule.

This year, the agency has made it clear that the GHG tractor trailer rule will be apriority. They will begin enforcing it now that all phase in timelines are complete for large fleets with registered small fleets needing 75% compliance if they had signed up for the phase in option.

Much to the chagrin of anyone who is just finding out about the regulation, CARB will also have the ability to issue fines retroactively.  And more than likely, many may find themselves out of compliance and not even know it. 100% of the 53’ trailer fleet is supposed to be aerodynamically equipped   or registered for an exemption of some type.  

What always comes up is the question of what specific trailers are covered. The rule only pertains to box type 53’ or longer dry or refer vans. Flatbeds, containers, 48’, anything is not a 53’ box type trailer is not covered. Refer trailers have a slightly different schedule for 2003-2009 model year trailers. Nevertheless, if it is a dry van 53’ box type trailer it is covered.  

Several exemptions exist and a fleet will need strict analysis of their tractor and trailer fleet to see if it will be applicable to vehicles.

When an exemption is chosen for an eligible tractor, it exempts the trailers it is hauling at any time from the aerodynamic standards. Both the short haul and the local haul tractor exemption provide this. The difference between the two is that on the tractor side, a short haul tractor is exempt from all requirements including tires. A local haul tractor is exempt only from aerodynamic requirements, not the tire requirements.  On the trailer side, only a local haul exemption exists, if a trailer is not being pulled by an exempted tractor, it should be registered as a local haul to be exempt from the aerodynamic requirements.

If you or someone you love is hauling a 53’ trailer, let them know it is time to install skirts or register for an exemption. They are out there, and when they find you, they will fine you.

Stay Tuned!!!

Sustainable Freight and the Golden State

2015 is coming to a close and we are that much closer to the release of CARB’s draft plan for freight sustainability in the Golden State. Called appropriately enough the Sustainable Freight Transport Initiative (SFTI), it is the first coordinated plan of its kind that seeks to unite all transportation sectors operating in California under a clean air, high efficiency umbrella.

As we inch ever closer to its release, CARB and other agencies have been circulating clues for the potential direction of the plan. (Information for the SFTI can be accessed here: http://www.arb.ca.gov/gmp/sfti/sfti.htm.)

The previous incarnation of the SFTI outlined several concepts encouraging “sustainability” in the freight transport network. Without going into detail, suffice it to say the overall tone for the transportation sector had a strong push to zero emissions wherever technically feasible. They also have an eye on in-use emissions performance of existing engines, enforcement enhancements and potential cleaner standards for new engines sold in California. See more here: http://california-air-quality.blogspot.com/2015/04/back-from-drawingboard-carb-releases.html

 Several concepts are being thrown around in these early stages, however, one proposal in particular rings as a harbinger for future controls of on-road compliant equipment; the so called “facility cap” may potentially force covered facility operators to require the cleanest equipment available in order to access the facility. See more here http://california-air-quality.blogspot.com/2015/05/sustainable-freightplan-part3-of-3.html  

While all strategies are generally outlined in the plan, there have been no concrete proposals besides suggestions for regulatory measures coupled with incentives that will push towards their goals. The plan is slated for release in July; directly in line with the Governor’s Executive Order requiring an integrated freight strategy that sets clear targets for a transition to zero emission technology. http://california-air-quality.blogspot.com/2015/07/executiveorders-government-efficiency.html

Along with the zero emission strategy, the Governor has also proclaimed a need for strategies to increase freight industry efficiency while maximizing the competitiveness of California’s freight system. To this end, CalTrans, opened a solicitation for public input to identify freight pilot project ideas in California that ensure progress towards a sustainable freight transportation system.

While some creative concepts will no doubt emerge from the 53 some odd proposals they received before the November 30 deadline, one thing is for certain; the freight transport network cannot function without heavy duty vehicles, no matter how badly everyone wants to shift cargo from truck to intermodal rail.

And while Governor Brown has long abandoned his “small is better” approach in engaging the administrative might of several agencies in this ambitious plan, the economic and engineering implementation realities will no doubt rear their ugly heads to squash many of the concepts that will surface from the depths. It is possible that the proposals may be of more interest to folks who appreciate science fiction and fantasy, or macabre technical specification manuals rather than those who will be doing the regulating.

Regardless of public input or opposition or support for that matter, the Governor is moving forward and will hold his agencies accountable for a draft plan by July. Not coincidentally , CARB will  release the State Implementation Plan for Federal Ozone compliance during the same month. The two will no doubt be intertwined from the ground up when it come s to control of Ozone resutling from the transportation sector. This will include in-use mobile source control measures, a facility cap, new engine standards and in use engine emissions performance criteria just to name a few.

Stay tuned. Much, much more to come.

Got Financing?

Government Guarantee Financing for Clean Truck Purchases  

In California, most trucking fleets have become accustomed to the robust lexicon of regulatory measures which have resulted in billions of capital outlays to meet air quality standards. It has been argued that currently, the California based Heavy-Duty trucking fleet is the cleanest operating fleet in the world. The sour smell of uncontrolled diesel emissions is a thing of the past in the Golden State and citizens should thank fleet operators for this clean air reality.

This reality, of course, has not been without major challenges. Many fleets have handed in the keys because they can no longer afford to stay in business. While many more have seen the value of their retirement assets dwindle into something resembling a Madoff managed retirement account.

Beyond California, the Federal Government has been slowly implementing stricter engine efficiency and emissions controls dating back to the 1990’s; mostly driven by California. These Engine standards are a steadfast requirement that Original Equipment Manufacturers (OEMs) must meet in order to make an engine for sale in the United States.

The current and future Federal standards, affectionately referred to as the Phase 1 and Phase 2, are the latest reason for the astronomically high costs of new, heavy-duty trucking equipment. While Phase 1 standards increased per truck costs by more than $6,000. Cost increases for Phase 2 standards may reach up $13,000 per truck.  And of course, the higher the cost of the new truck, the higher the cost of that same truck in the used truck marketplace. 

Outside of limited incentive funds, fleets, whether they know it or not, may be eligible for government guaranteed financing programs that can help manage cash flow through lower down-payments and longer terms with both fixed and adjustable interest rates. The longer term financing, up to 10 years in some cases, provides operators with a lower monthly payment, which helps to conserve cash for working capital to create jobs and expand operations.

In California, the California Pollution Control Finance Authority and the California Air Resources Board offer a truck finance program to a limited pool of eligible fleets.  The program, known as the CalCAP On-Road Loan Program restricts eligibility to fleets with 10 or fewer trucks over 14,000 pounds Gross Vehicle Weight Rating (GVWR).  To qualify, fleets must agree to purchase 2007 or newer engines and adhere to California travel thresholds. CalCAP has a maximum interest rate of 20% and provides loan coverage for 10 years. However, few, if any lenders offer the 10 year term on equipment purchases, while 20% rates are more common than one would think.

Nationally, the U.S. Small Business Administration (SBA) 7(a) loan program maintains no fleet size restrictions, no travel restrictions and interest rates are capped at a much lower maximum.  Using current rates, customers would see a 6% cap for floating rates and an 8% cap for fixed rates.  For many fleets, obtaining capital at these costs may not be a reality, with SBA the reality is not only available, but achievable.  

In order to qualify for SBA, fleets cannot have a tangible net worth that exceeds $15 million or average net income (based on Federal Income Tax Returns) greater than $5 million over the past two years. And although many in the trucking industry would describe their business as “non-profit”, SBA requires the applicant to be a for-profit business entity, so no churches or other not-for-profit endeavors.  

One great feature of SBA is the tremendous flexibility how loan proceeds may be expended. Loans may be used for equipment, business-occupied commercial real estate, business acquisition and working capital for business expansion. Generally, 95% of US businesses qualify, and for eligible transportation businesses, the SBA program may offer the perfect opportunity to offset the rising costs of clean equipment by helping fleets manage capital expenditures with lower down payments and longer terms. And with a maximum loan amount of $5 million, the SBA 7(a) program will also help fleets ensure that no matter how expensive meeting the clean air standards gets SBA can help.  And in the ever evolving realm of Air Quality standards, fleets need all the help they can get.

Contact Crossroads Equipment Lease and Finance at 1-866-465-0181 for more information on SBA or CalCAP.

 Matt Schrap is VP Government Programs for Crossroads Equipment Lease and Finance and President of California Fleet Solutions he can be reached at mschrap@cafleetsolutions.com

Disconnected

EPA and NHSTA hold public Workshop to Discuss Phase 2 Engine Standards

EPA held their second hearing on proposed truck fuel efficiency and greenhouse gas emissions in Long Beach on the 18th of August.  According to many observers the second hearing had the same script as the first with industry calling for a more pragmatic approach while environmentalists and regulators screamed for accelerated standards.

For the end user, many of these standards are so far in the future it is hard to come to a concrete conclusion on how the standards will impact their day to day lives. Since there is only one state with in-use requirements, there is nothing mandating the purchase of the proposed equipment. The main impact for the end user is basically higher costs for equipment combined with promises of fuel savings from regulators.

The public comments were quite heavy on the demonization of the industry. Many accused trucks of causing asthma and cancer, blaming them for the air quality woes plaguing the nation. Here in California, unlike everywhere else, there are in-use requirements for Heavy Duty Engines, so some of the criticisms were a little misplaced.

Outside of a select number of ports in other states, California has gone it alone and directly sought cleanup of the in-use truck fleet. Nevertheless, the public workshop gave an opportunity to anyone who was interested in coming out to air their concerns about the upcoming engine standards.

Unfortunately, what was lost on most of the folks in attendance is that these standards are not a mandate on end users, but are a mandate for engine and equipment manufacturers to meet specific efficiency levels. Some even speculate that with additional requirements, end users would not purchase the new equipment, holding on to older, more polluting trucks for longer.

California wants to see implementation accelerated and to require a more stringent efficiency push out of the engines. Claiming billions of gallons of fuel savings, CARB  is also seeking a stricter NOx standard and has made effort to make sure everyone knows this fact.

The engine only standards that are currently being proposed are leaving the OEM’s in a bind. With the current proposed standards the famed “super truck” wouldn’t even qualify. The industry wants a complete vehicle standard, which looks at the total vehicle package and how the engine operates within the vehicle. This is a pragmatic approach that would allow for standards to be based up on real world applications. The engine only standard looks at how the engine is performing. Either the engine meets the standards as laid out in test procedures or it doesn’t.

In California, the regulatory regime requires several in-use engine standards to be met by the industry. The challenge with new engine standards, beyond the increasing costs, is the possibility of a pre-buy or no buy at all, forcing some states to go the way of California and begin a forced turnover mandate to meet theie air quality goals under the Clean Air Act. 

Regardless, the wheels of the EPA are turning and the industry can expect stricter new engine controls in the very near future. A complete vehicle standard would make the most real world sense but the burning question is whether or not California will seek their own standard or if the feds will bend under pressure from CARB and go with a single low NOx standard for the entire nation. Time will tell. 

Stay Tuned!

Matt Schrap is President of California Fleet Solutions and VP Government Programs for Crossroads Equipment Lease and Finance.

 

 

Executive Orders & Government Efficiency

No Longer Mutually Exclusive

Last Friday, while still glowing from the light of his papal encounter, the Governor issued an executive order directing his agencies to work together toward a zero emission future for the freight transport network in California. While this should be no surprise to anyone who has been paying remote attention to what has been happening in the golden state, it is still a relative shock to the Goods Movement system and those who exist within it.

California has always been the most progressive state when it comes to environmental protections. Elected officials and the public at large have never shied away from tighter environmental standards whether originating from the floor of the legislature or through the initiative process. The electorate has on more than one occasion indicated their support for environmental stewardship; directly rejecting efforts to water down existing standards, whether it be directed at land, sea or air.

Prior to last week’s Executive Order, CARB was plugging along on their own progressive vision for the freight network, throwing almost everything within the network at the wall to see what stuck.

CARB released their draft sustainability plan for the freight network earlier this year; it looks to every mode of the goods movement system for reductions (See  "Back from The Drawing Board" series ). For the trucking sector, this not only means additional reduction measures, but something that CARB has little if any experience in, efficiency mandates.

Despite the fact that the term government efficiency typically elicits laughter, efficiency is exactly what the government is getting into. Not their own efficiency, mind you, but the effort will involve mandating efficiency measures in the freight transport network that will reduce unnecessary truck trips or at least attempt make the moves more efficient.

Little, if any specifics have been made available on what these measures are. And besides a brief mention of technology, the right turn only route planning for UPS and other existing programs such as PierPASS in the ports of Los Angeles and Long Beach, there is little the industry can look to for an indication on what the heck CARB is planning on doing.

What is of some concern is that although the PierPASS program has been successful in shifting cargo to night gate moves, the same exact inefficiencies exist at marine terminal gates at night that do in the day. Although cargo moves were shifted, PierPASS did nothing to address the extended waiting times that drayage drivers suffer through each time they show up at a gate day or night.

If CARB seriously wants to address some of the system inefficiencies that have plagued the industry for years, there needs to be a deeper examination of what exactly are the underlying causes of system inefficiencies. It can’t just be a surface skim effort that reincarnates existing programs to move cargo off peak hours. It is never that easy.  

While the welcoming sunshine from the Executive Order will illuminate the shadowy work CARB has been doing on the sustainable freight plan, it is an obvious and direct order to those would be the carriers of the children’s future that the Governor means business.

The moonbeam will be shining bright through 2018, so there is a whole heap of time for him to force regulatory measures up and down the supply chain. Hopefully, the efficiency endeavor will bear real fruit and not just more lip service. We have all had enough of that.

Stay Tuned!

Matt Schrap is President of California Fleet Solutions and VP Government Programs for Crossroads Equipment Lease and Finance.

CARB Provides No Quarter for After School Program

Boys and Girls Club Fined $14,500 for PSIP & Truck and Bus Rule Violations

If folks in the golden state and across the country haven’t caught on to the unrelenting regulatory authority of CARB, it is high time to wake up and smell the low hanging fruit. 

Tens of thousands of dollars in fines are currently being assessed for non-compliant trucks across the great expanse of California. It should be no secret that several rules require diesel powered fleets operating in the golden state to meet standards or face penalties.

The turnover and retrofit standards under the Truck and Bus rule and the annual testing requirements of the PSIP are a single component in the host of conditions heavy duty truck operators must adhere to in order to remain above board.

Many fleets can attest to the fact that once a citation is received a cascading aftereffect results. Once an operator is cited there is a limited window to not only pay the fines but also secure new equipment to meet the standards.

Typically, enforcement actions are the result of referrals, information requests or in-field inspections, no matter which way it happens, the results are the same. Once CARB finds a non-compliant vehicle, it sets off a chain of events that eventually leads to a compliance audit for other CARB programs.

The settlement agreement between the storied after school program founded in the 1830’s and the barely 40 year old Air Quality agency surrounds their school bus fleet and the lack of  data for the periodic smoke inspection program (PSIP) as well as non-compliance with the Truck and Bus Rule.  

The PSIP program  requires fleets of 2 or more to annually test smoke opacity for trucks over 6,000 pounds GVWR  equipped with engines that are over 4 years old (SEE March 23, 2015 Posting:   Where There's Smoke, There's CARB ).

The Truck and Bus rule has been on the books since 2008 and requires fleets of all shapes and sizes to meet in-use standards or face penalties. Turnover and retrofit requirements impact any diesel vehicle over 14,000 pounds GVWR, this includes tractors, straight trucks, street sweepers and school buses, to name a few. (SEE June 5, 2013 Posting: CARB Conundrum )

While it appears that CARB has given the Boys and Girls Club some consideration for previous violations, the non-profit will only have 45 days to demonstrate full compliance with the Truck and Bus rule or potentially face additional fines for missing the deadlines.

Many compliant carriers may wonder why CARB is pursuing non-profit organizations instead of the “bottom-feeders” who have skirted CARB requirements and depressed rates for years. The simple answer is no one is safe.

A quick read of settlement  summaries on CARB's website will show a host of hefty citations that have have been levied against small and large business alike. Rumor has it that several major settlements will be concluded soon, totaling millions of dollars in fines. In  fact, just recently a massive half million dollar settlement was inflicted on a Central Valley carrier for non-compliance (SEE February 18, 2015 posting   Truck Fleet Faces $523,675 Fine for Non-Compliance with CARB Rules ).

To their credit, CARB has always stated that they will work with carriers who are making an effort to comply, and all evidence so far indicates a willingness to discuss the particulars of any individual case; the Boys and Girls Club settlement agreement is no exception.

Nevertheless, this should a blatant indication that CARB means business, and that their latest stepped up enforcement efforts are in fact bearing fruit (low hanging or otherwise).

It is just a matter of time before they weed out the remaining non-compliant fleets resulting in an open landscape for those equipment operators who are committed to a clean air future…or, at least staying in business.

Stay Tuned!

Matt Schrap is President of California Fleet Solutions and VP Government Programs for Crossroads Equipment Lease and Finance.