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PowerPoint Presentation - NorCal Valuation

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    Truck & Bus
    Replacement
     Regulation
     Workshop
      July 8, 2008
Agenda

    •    Welcome and Introductions
    •    Overview of ARB Rule
    •    How Fleets Are Affected
    •    Overview of Proposed Draft Alternative
    •    Coalition Strategy & Efforts
    •    Questions on ARB Rule
    •    What’s Coming…More Truck Regulations
         On Their Way!
OVERVIEW OF
 ARB RULE
CARB On-Road Diesel Regulation - Private Fleet Rule
DRAFT Regulatory Concepts as of 5/12/2008


• Regulation applies to on-road medium and heavy duty diesel-
fueled or alternative diesel-fueled vehicles with a manufacturers
gross vehicle weight rating (GVWR) greater than 14,000 pds


Except: Military Tactical vehicles, emergency vehicles, vehicles that travel less than 1000 miles,
off-road vehicles, motor homes for private use, historic vehicles, dedicated snow removal
equipment and trucks engaged in port/drayage service over 33,000 GVWR until Dec 31, 2017.
CARB On-Road Diesel Regulation - Private Fleet Rule



    CARB staff has identified Three concepts for
              regulatory compliance:

•Best Available Control Technology (BACT)
•BACT Turnover for NOx and PM Retrofit Limits
•Fleet Averaging
CARB On-Road Diesel Regulation - Private Fleet Rule
Best Available Control Technology (BACT) for PM and Nox: Section 2025 f (1) (2)

PM BACT Standard: (2 options)
1). Highest level Verified Diesel Emission Control Device (VDECS) for PM.
2). An engine originally equipped with a diesel PM filter by the manufacturer.

NOx BACT Standard: (3 options)
1). Engine certified to 2010 model year emission standard or cleaner.

2). Engine certified to the 2004 to 2006 emissions standards with a VDECS
    NOx device with control greater than 85%.

3). Engine equipped to the 2007 model year emission standard with a VDECS
    NOx device with control greater than 70%.
CARB On-Road Diesel Regulation - Private Fleet Rule
                                Compliance Schedule
         Compliance Deadline,
                                     Engine Model-Years   BACT Requirements
          as of December 31

                2010                     Pre-1994          PM BACT ONLY

                2011                    2003 – 2004        PM BACT ONLY

                                        2005 – 2006        PM BACT ONLY
                2012
                                        1994 – 1999       NOx and PM BACT

                2013                    2000 – 2002       NOx and PM BACT

                2014                     Pre-1994         NOx and PM BACT

                2015                    2003 - 2004       NOx and PM BACT

                2016                    2005 - 2006       NOx and PM BACT

                2017                        NA                   NA

                2018                        NA                   NA

                2019                        NA                   NA

                2020                       2007           NOx and PM BACT

                2021                       2008           NOx and PM BACT

                2022                       2009           NOx and PM BACT
CARB On-Road Diesel Regulation - Private Fleet Rule
              BACT Turnover for NOx and PM Retrofit Limits
                                   Percentage of Total Fleet Complying with BACT
        Compliance Deadline,
         as of December 31
                                 PM BACT                                  NOx BACT

               2010                25%                                       NA

               2011                50%                                       NA

               2012                75%                                       25%

               2013               100%                                       50%

               2014               100%                                       60%

               2015               100%                                       70%

               2016               100%                                       80%

               2017               100%                                       80%

               2018               100%                                       80%

               2019               100%                                       90%

               2020               100%                                       90%

               2021               100%                                       90%

               2022               100%                                      100%
CARB On-Road Diesel Regulation - Private Fleet Rule
                                        Fleet Averaging Targets
    NOx Fleet Averaging Targets                          PM Fleet Average Targets
                                                                         Fleet PM Targets for each
                     Fleet NOx Targets for each           Compliance        compliance deadline
      Compliance        compliance deadline                Deadline,
       Deadline,                                        as of December
    as of December                                             31        MHD                HHD
           31
                      MHD               HHD
                                                            2010          0.38              0.710
                                                            2011          0.29              0.530
        2012           8.5              14.4
                                                            2012          0.17              0.320
        2013           5.8               9.8
                                                            2013          0.06              0.110
        2014           4.6               7.8
                                                            2014          0.06              0.110
        2015           4.6               7.8
                                                            2015          0.06              0.110
        2016           4.0               6.0
                                                            2016          0.06              0.110
        2017           4.0               6.0
                                                            2017          0.06              0.110
        2018           4.0               6.0
                                                            2018          0.06              0.110
        2019           3.2               4.4
                                                            2019          0.06              0.110
        2020           3.2               4.4
                                                            2020          0.06              0.110
        2021           1.6               3.0
                                                            2021          0.06              0.110
        2022           0.8               1.6
                                                            2022          0.06              0.110
CARB On-Road Diesel Regulation - Private Fleet Rule

                   Fleet Averaging For Small Fleets (3 or less)
An owner of a small fleet (3 or less) may elect to participate in fleet averaging. Fleet
   operators will be subject to reporting [2025(o)] and record keeping requirements
   [2025(n)].
One Vehicle Fleet –By December 31, 2012 if the engine model year is 2004 or newer
   and equipped with a PM trap, this vehicle will not have to reach BACT standards until
   December 31, 2017.
Two Vehicle Fleet – If by December 31, 2012 one engine model year is 2004 and newer
   and equipped with a PM trap, the other engine model year will not need to reach
   BACT standards until December31, 2013 regardless of engine year. The 2004 or
   newer engine will remain in compliance until December 31, 2017.
Three Vehicle Fleet – If by December 31, 2012 one engine model year is 2004 or newer
   and equipped with a pm trap, the other two engines will not need to reach BACT
   standards until December 31, 2013 regardless of engine year. The 2004 or newer
   engine will remain in compliance until December 31, 2017.
CARB On-Road Diesel Regulation - Private Fleet Rule

                                Other Considerations
 •   Other compliance strategies include a fuel based strategy for verified diesel
     emission control [2025(l)(6)] as well as the use of experimental diesel emission
     control strategies. These compliance strategies require approval from the Executive
     Officer of the ARB [2025(l)(10)] for operators to utilize them.
 •   Vehicles in the possession of dealers, financing companies, or other entities
     awaiting sale are NOT subject to any of the requirements of the regulation as long
     as the vehicle is not offered for hire [2025 (l)(9)].
 •   Owners of new fleets must meet performance requirements immediately upon
     purchasing vehicles subject to the regulation or bringing such vehicles into
     California for the first time after December 31, 2010 [2025(k)(1)].
 •   Considerations for compliance extension based upon manufacturing delays are also
     being examined [2025(l)(11)].
CARB On-Road Diesel Regulation - Private Fleet Rule

                           Exemptions

• If a fleet owner installs the highest level VDECS on one or more
  vehicle before December 31, 2009 then the owner will delay NOx
  compliance until December 31, 2013.

• Heavy-duty diesel vehicles (33K+) that are operated fewer than
  7,500 miles and less than 250 hours per year and Medium Heavy
  Duty (14K- 33K) that are operated less than 5000 miles and less
  than 175 hours per year regardless of where operated are exempt
  from the NOx requirements until December 31, 2020 as long as the
  vehicle remains at or below the threshold.
CARB On-Road Diesel Regulation - Private Fleet Rule

                   Exemptions (Cont’d.)

• Specialty vehicles for farm operations – lift carriers,
  spay or fertilizer rigs, nurse rigs, cotton module, silage
  truck, mixer feeder truck, truck tractor or semitrailer
  combos that are used exclusively for the harvest of melons
  or tomatoes – must meet the NOx requirements starting
  December 31, 2012 but are exempt from the PM
  requirements until December 31, 2017 if the model year
  of the engine is 1994 or newer.
CARB On-Road Diesel Regulation - Private Fleet Rule

                    Exemptions (Cont’d.)

• Specialty tractor-trailer combinations (cab-over engine
  truck tractor) used exclusively to pull 57-foot trailers are
  exempt from the NOx requirements until December 31,
  2017 as long as the engine model year is certified to 2004
  to 2006 standard and all other vehicles in the owner’s fleet
  have met the specific compliance requirements and
  targets.
CARB On-Road Diesel Regulation - Private Fleet Rule

                   Exemptions (Cont’d.)

• The NOx exemption also extends to vehicles that travel
  exclusively in the NOx exempt areas these vehicles will be
  exempted from the NOx requirements until 12/31/2017

•   NOx exempt areas: Counties of Alpine, Colusa, Del
    Norte, Glenn, Humboldt, Lake, Lassen, Mendocino,
    Modoc, Monterey, Plumas, San Benito, San Luis Obispo,
    Santa Barbara, Santa Cruz, Shasta, Sierra, Siskiyou,
    Trinity, Tehama and Yuba.
CARB On-Road Diesel Regulation - Private Fleet Rule

      The Air Resources Board (ARB) staff is developing this
        regulation to reduce diesel particulate matter (PM) and
       other emissions from in-use heavy-duty diesel powered
                    vehicles operating in California.

      This proposed regulation is scheduled to be presented and
         voted on by the Air Resources Board in October 2008
CARB On-Road Diesel Regulation - Private Fleet Rule

 CARB Private Fleet Rule Staff Contacts:
Erik White, Chief                            Gloria Lindner, Lead
Heavy Duty Diesel Strategies Branch          glinder@arb.ca.gov
ewhite@arb.ca.gov                            916-323-2803
916-322-1017
                                             Jackie Johnson
Tony Brasil, Manager                         jjohnson@arb.ca.gov
In-Use Control Measures Section              916-323-2750
tbrasil@arb.ca.gov
916-323-2927                                 Ron Nunes
                                             rnunes@arb.ca.gov
Website:                                     916-323-0376

http://www.arb.ca.gov/msprog/onrdiesel.htm
 HOW FLEETS
ARE AFFECTED
Potential Fleet Costs (BACT) - 5 Truck Fleet

  Model Year     PM retrofit?      Must meet 2010   2010 Replacement cost   Total cost in
                                    standard in…
                                                                                2016

    1995        No - Must meet         2012          2 year old Truck -        $80,000
                2010 standard                            $80,000

    1998        No - Must meet         2012           2 year old truck         $80,000
                2010 standard                             $80,000

    1998        No - Must meet         2012          2 year old Truck -        $80,000
                2010 standard                            $80,000

    2003           Yes - 2011          2013          3 year old Truck -        $64,000
               $12,000 – $14,000                         $50,000


    2006          Yes - 2012           2016          6 year old truck -        $44,000
               $12,000 - $14,000                         $30,000
                                                                            $358,000 total
Potential Fleet Costs (BACT) - 5 Truck Fleet
                                   Must meet 2010   2010 MY Replacement
                                                            cost
  Model Year     PM retrofit?       MY standard        (Assuming NO         Total cost in
                                        in…          availability of used       2015
                                                         equipment)

                  Yes – 2010                            New Truck
     1992      $12,000 - $15,000        2014            $120,000              $135,000

                No - Must meet                          New Truck
     2000       2010 standard           2013            $120,000              $120,000

                No - Must meet                          New Truck
     2001       2010 standard           2013            $120,000              $120,000

                No - Must meet                          New Truck
     2002       2010 standard           2013            $120,000              $120,000

                  Yes - 2011                            New Truck             $135,000
     2004      $12,000 - $15,000        2015            $120,000
                                                                            $630,000 total
Trucking Industry:
Revenue Per Mile vs. the Rate of Inflation

               350


               300


               250
 Index Level




               200


               150


               100


               50
                     1976

                            1978

                                   1980

                                           1982

                                                  1984

                                                         1986

                                                                1988

                                                                       1990

                                                                              1992

                                                                                     1994

                                                                                            1996

                                                                                                   1998

                                                                                                          2000

                                                                                                                 2002
                                          Inflation                                  Rev/Mile
   DRAFT
ALTERNATIVE
 PROPOSAL
CURRENTLY UNDER REVIEW BY DTCC
Mileage Exemptions
15,001 – 30,000 Annual Miles:
End of 2010: 2004 or newer until 2020
2020: 2010 Technology (NOx and PM BACT)


7,501 – 15,000 Annual Miles:
End of 2010: 1998 with Level 3 PM Control until 2020
2020: 2007 Technology


Under 7,500 Annual Miles:
End of 2010: Level 3 PM control until 2020
2020: 2004 Technology
Early Incentive

• Equipment owners who are not specifically
  engaged in port service who order 2007 or newer
  technology before Dec. 31, 2009 will receive an
  additional two years of compliance under the
  current BACT regulatory structure starting in
  2020 for 2007.
Dedicated-Use/Specialty

• Starting at the end of 2012: all dedicated use
  vehicles must meet 1994 Engine MY or later with
  85% PM and 25% NOx control. In 2020 all
  dedicated use vehicles will meet 2007 standards.
Fleet Averaging PM Targets - PM Targets are Identical
   Best Available Control Technology (BACT)
   Schedule Differences

       CARB Proposal 5/12/2008                                 CTA Proposal 6/27/2008
Compliance Deadline,
                       Engine Model-Years                nts
                                            BACT Requireme
 as of December 31
       2010                Pre-1994            PM BACT
       2011               2003 Š 2004          PM BACT
                          2012 Š 2006          PM BACT
       2012
                          1994 Š 1999       NOx and PM BACT
       2013               2000 Š 2002       NOx and PM BACT
       2014                Pre-1994         NOx and PM BACT
       2015               2003 - 2004       NOx and PM BACT
       2016               2005 - 2006       NOx and PM BACT
       2017                   NA                  NA
       2018                   NA                  NA
       2019                   NA                  NA
       2020                  2007           NOx and PM BACT
       2021                  2008           NOx and PM BACT
       2022                  2009           NOx and PM BACT
BACT Percentages Limits Differences


CARB BACT Limits 5/12/2008     CTA BACT Limits 6/27/2008
Fleet Averaging NOx Target Differences

CARB Nox Targets 5/12/2008      CTA Nox Targets 6/27/2008
Fleet Averaging For Small Fleets

•   For one vehicle fleets, and for the exempt trucks for two and three
    truck fleets, move compliance for PM and NOx performance
    requirements to 2020, require 2004 technology starting at the end
    of 2012 for exempt truck.

•   For two vehicles, move compliance for non-exempt truck from
    December 31, 2013 to December 31, 2015. Exempt truck to meet
    2004 standard at end of 2012.

•   For three vehicle fleets; move compliance for non exempt trucks
    from December31, 2013 for both to December 31, 2015 for one
    and December 31, 2016 for the other. Exempt truck to meet 2004
    standard at end of 2012.
Other Considerations

•   Require CARB to address any safety concerns and allow for
    specific exemptions related to emissions reductions technology
    and the transport of hazardous or flammable materials.

•   Allow double credit in fleet averaging for Hybrids for the life of the
    regulation

•    The ARB must work closely with the DMV to determine the most
    appropriate course of action for prohibiting registration of non-
    compliant trucks. Tie motor carrier permit to emissions
    compliance as it is tied to BIT.
Other Considerations Continued …

•   Require CARB to compile a listing of eligible and ineligible
    equipment while simultaneously addressing compatibility issues.
•   Additionally, require CARB to create a more robust off-ramp for
    unavailable technology.
•   Have CARB create a “compliance corral” where shippers, brokers
    and members of the public can review a fleet to confirm if it is in
    compliance. Additionally, CARB should create a certificate of
    reported compliance for equipment owners if compliance corral
    cannot be available for the initial rule implementation.
Funding Concepts

•   Create self sustaining loan program available to all California
    based carriers. Possibility of tax-exempt bond coming from the
    State Treasurer’s office.

•   Allow for utilization of the tiered truck trade (aka: Triangular Truck
    Trade) for exemption vehicles
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