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. 

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. http://www.arb.ca.gov/msprog/mailouts/msc1328/msc1328.pdf   - 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!

It's That Time of Year Again...Money is in The Air!!!

Proposition 1B Grant applications for truck replacement to be released August 26, 2013

In 2006, California voters approved several bond propositions which included 1 Billion Dollars that was earmarked for emissions reductions projects related to goods movement. In its fourth and final funding cycle, the Proposition 1B program has so far awarded $587 Million for truck replacement and other emission reductions projects dedicated to the goods movement transportation sector.

Over the past solicitations, the bulk of the funds have gone to replace Heavy Duty Diesel (HDD) trucks and this final allocation is no exception. Collectively, the six Air Districts participating in the program requested over $550 Million, mostly for truck replacement projects. However, there is only $154 million available for the entire state, indicating that the issuing Air Districts are seeing much more demand than the available funds can cover.

Fleets all over the state are already feeling the pinch of the regulatory regime and time is running out to utilize these public incentive monies for replacement. Tens of thousands of nclass 7 and 8  truck operators need to upgrade by the end of this year and thousands more are on the brink of non-compliance. Regardless of the unmet need, many operators will not qualify for the funds because of haul type, location or compliance status. Only fleets that are CARB compliant and utilize vehicles for Goods Movement are eligible.

Complicating an already complicated problem is the fact that in order to receive grant money, the fleet must demonstrate CARB compliance. If a fleet is out of compliance for 2013 or cannot demonstrate compliance for 2014 they will not be eligible for the funds. This is because all incentive fund projects in California must be surplus emission reductions above and beyond what is currently required by law. That means that public money does not pay for compliance. So fleets must achieve compliance, demonstrate compliance and maintain compliance to access grant funds.

Sadly, many fleets will not be able to achieve the 90% compliance rate required by the phase in option under the On-Road truck rule in 2014.  Adding to the conundrum is that single truck operators are mostly ineligible because their trucks are out of compliance in 2014 or they are too old. Although some single truck operators may qualify if they are operating trucks equipped with 1994-1995 engines, there is a limited number of  these vehicles that will be eligible; leaving many of those who would have applied for funding out in the cold, possibly leaving the districts with money to spare. 

With 100% compliance right around the corner in 2016, fleets who act now may have the remainder of their fleet compliance needs partially subsidized by public money. Although not the intention of the goods movement funds, the mere timing will help fund compliance for many fleets through 2022.

The program opens August 26, 2013 across the state. It will be a 45 day application period.   Visit www.cafleetsolutions.com for more information.

CARB Votes to Shore up PLACE Program - Verbal Terstimony Copy Below

7/25/2013 CARB Testimony

Matt Schrap, Crossroads Equipment Lease and Finance

CalCAP AQIP Allocation

Thank you Madame Chair and Board members, my name is Matt Schrap. I am Vice President of Government Programs for Crossroads Equipment Lease and Finance and the Velocity Vehicle Group of Companies. We appreciate the opportunity to share our support regarding the AQIP funding plan, specifically for the Providing Loan Assistance for California Equipment or PLACE truck loan assistance program administered through the treasurer’s office highly successful California Capital Access Program.

The truck loan assistance program is the most integral funding program available for small and medium sized California based trucking fleets. Leading to the consensus that the $2 Million currently allocated, although a step in the right direction, it is not nearly enough.  There is a reason why the program is so popular, Crossroads and our fellow participating lenders have been able to help 1000's of California based businesses secure commercial financing in one of the tightest credit markets in recent history. Without this program, most of these businesses would not have been able to secure the needed capital for equipment purchases required by law. These transactions are driven by state turnover mandates not mainstream consumer acceptance.

In that vein, it is important to remember that the PLACE truck loan assistance program has not only helped businesses who could not qualify for commercial credit on their own, but it has also helped reduce Particulate Matter (PM)and Oxides of Nitrogen (NOx) emissions by 1 ton and 4.5 tons per day ahead of regulatory deadlines.

In addition to reducing emissions, the PLACE program creates and retains jobs in California. According to the Treasurer’s office, in 2012 alone, close to 300 jobs were created and over 1500  retained because of loans that were enrolled in the on-road truck assistance loan program.

Whether funds are distributed through AQIP, 1B or other funding sources; the program needs your help. It should not be eclipsed by efforts to rebate vehicle purchases for consumers or businesses who can already afford particular configurations or platforms. There are literally tens of thousands of small and medium sized businesses all over the state who need your help.

CARB recognized the need for this program in 2009 because of regulatory needs and limited access to capital. Although the economy is improving, we are still left with the old adage, “good people, bad credit”. It is in fact an unfortunate reality for the trucking industry, especially for the small and single truck operators.

At Crossroads we see these Credit profiles daily and know that without CalCAP and PLACE, these operators would not be able to secure the affordable financing necessary to run their businesses.

Your leadership is again needed to direct additional funds to this laudable program. If the $5 Million additional surplus is realized, most if not all of it should be allocated to PLACE and CalCAP for additional enrollees through 2013 and beyond. The PLACE program is a proven, successful loan assitance program that can help small and medium sized California businesses secure the cleanest Heavy-Duty equipment today. In fact, CalCAP and PLACE is the public-private partnership model for transporation equipment finance assistance today.  

Please support and maintain funding for the truck loan assistance program and direct staff to seek out additional funds to help keep the wheels turning. Thank  you.

Driver Management and Reducing Emissions

New technology puts an industry asset to the test

It is no secret that the Golden State has driven engine standards for both on and off-road heavy duty equipment. Now that the major upgrades for national on-road engine standards are implemented, a new set of challenges is coming to the regulated community who is being forced to adopt technology they are not previously accustomed to. Sophisticated emissions control systems are at the heart of every heavy duty diesel engine manufactured for sale today. Ever-increasing costs of these sophisticated emissions controls has forced the industry to take a hard look at cost saving measures to offset the cost of the vehicles and to save on the bottom line as everything needed to operate a transportation company becomes more expensive. Aerodynamic devices, low rolling resistant tires, route maximizations, along with technological solutions are all worthwhile budget friendly measures that may in fact boost fuel economy with little up-front costs.

A not so recent discussion of potential fuel savings has started to emerge again around the actual operation of the vehicle. Those in the trucking industry know that you could give the same truck to two different drivers, with the same routes under the same conditions and get two drastically different results. The newest emissions technology is even more sensitive to driver habits. Without proper training and direction potential fuel savings could be lost under the pedal.

Drivers are the backbone of the transportation industry in this country. As a consumer society, we remain oblivious to the challenges faced by these brave men and women who dedicate their professional careers to transporting our medicine, our groceries and our mail. Trucking is an economic bellwether of the US; over 80% of the freight by volume is carried by truck. With population and consumption estimates on the rise, more trucks and more drivers will be needed to keep the wheels of our economy turning. With an already dwindling driver pool, it is up to the industry to best equip the hard working folks who haul our freight with the tools necessary to maximize the return potential of this valuable equipment.

 

Several driver training programs are being developed to help existing and incoming drivers understand efficient operation of these complex machines. Serious direction from those contracting or employing drivers to complete an efficiency management program is needed to realize additional fuel and maintenance cost savings. Motor carriers should step up and invest in training that providess a noticeable return in efficiency and fuel savings. After all, since drivers are their best assets, carriers should enrich their experience to reap the rewards.

Out of PLACE and Running Out of Time…

The California Air Resources Board to consider life support for highly successful program

In 2008 the California Legislature directed a one-time $30 Million appropriation to CARB for implementation of a Truck Loan Assistance Program, specifically directed towards turnover of vehicles ahead of the On-Road Truck and Bus Rule. CARB partnered with the California Pollution Control Financing Authority (CPCFA) in 2009 to develop the program based upon their highly successful small business loan program, the California Capital Access Program or CalCAP that the CPCFA administers through the California State Treasurer’s office.  

The CARB and CPCFA program is officially known as PLACE, or Providing Loan Assistance for California Equipment, and despite a very slow start, the program has been buoyed and supported by local finance companies and banks, growing into the model for public-private financing partnerships for clean equipment purchases. The program could not have come at a better time as the tightening credit markets during the great recession left those with less than stellar credit few, if any options.

The only requirements for PLACE eligibility is having 40 or fewer trucks, less than 100 employees and no more that $10 million dollars of average annual revenue for the past three years with 51% of business occurring in California. For most trucking companies operating in California these requirements were a no brainer and subsequently, as of June 2013, over 3,000 trucks had been funded in the program. This represents approximately $28 Million in truck loan assistance funding that has been leveraged into $187 Million in private financing.

Nevertheless, in spite of its success, the program is running out of money. Thousands of truck operators in California are still facing upgrade requirements. With little or no access to grant money and less than desirable commercial credit history the norm, they are at a Crossroads; upgrade or leave the industry. Adding to the conundrum is the fact that CARB staff has told the CPFCA and the participating lenders that there will be no more Air Quality Improvement Fund money allocated to the program after the final $2 Million is offered as a sacrificial lamb at the July 25, 2013 Board Hearing.

Although up to $5 Million extra or surplus dollars may be available, CARB has given indications that the additional money will be used to fund oversubscribed programs that provide discounts to commuter minded citizens who want to purchase an electric car and other such programs that do not involve financing assistance for the turnover of heavy duty truck tractors.  Heavy duty truck operators with marginal credit will soon lose access to their only refuge for competitive financing in California. With truck prices on the rise, and regulatory requirements baring down on the industry like and unregulated freight train, a perfect storm is on the horizon. The industry in California will need to step up and meet their own daunting financial challenges as state assistance is swept away on Leafs and Volts.

Order Early, Order Often

CARB Clarifies the 4-Month Early Order Provision for On-Road Truck and Bus Rule Compliance

Once and a while, most taxpayers will agree that the government “gets it right”…sometimes. With such a small consensus on actions of late that would qualify for that designation, it is refreshing to see the great state of California reminding people about a little known and often misunderstood provision within the On-Road Truck and Bus Rule that they “got right” so to speak.

 

In the era of cheaper, faster and NOW! We find ourselves becoming more and more intolerant of delayed gratification. While technology has made things move at the speed of light, it has also complicated matters for some industries (or generations) that are used to a snail’s pace. When it comes to new diesel engine or retrofit technology CARB did in fact recognize the need to give considerations for these highly technological pieces of custom equipment when they are being ordered directly from the factory. Many fleets have experienced delays from original equipment manufacturers when ordering vehicles with unique specifications, or when ordering retrofits at the same time as everyone else. Needless to say, there is only so much capacity to go around.

Because of these issues, CARB included into the regulation the so-called “4 month early Order Provision” or aptly named, Compliance Extensions for Emissions Control Device Manufacturer Delays 2025(p)(8)(A-E). Although it says “Emission Control Device Manufacturers”, it also applies to new truck or vehicle purchases. So if a fleet places an order by August 31 of the year preceding compliance, and has a bona fide order for the equipment, then if the equipment does not deliver until into the compliance year, they will not be cited. This DOES NOT delay the rule, but merely provides a small amount of flexibility for fleets who were thinking ahead and ordering equipment for compliance well before the deadlines.

If a fleet waits until September 2^nd to order the equipment, the extension will not apply. And it will definitely not apply to any equipment that is ordered in December for January compliance. Typical build time for custom spec trucks is 90 to 120 days at a minimum, so the 4 month provision will allow ample time to get the truck in the fleet or at least demonstrate a commitment to achieving compliance.  CARB does not want to punish fleets who are making the effort to comply, but, they want to see a legitimate effort being made. Check out the advisory from CARB below and happy trucking!

 http://www.arb.ca.gov/msprog/mailouts/msc1315/msc1315.pdf