BILL ANALYSIS
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: sb 1156
SENATOR ALAN LOWENTHAL, CHAIRMAN AUTHOR: cedillo
VERSION: 6/16/10
Analysis by: Jennifer Gress FISCAL: yes
Hearing date: June 22, 2010 URGENCY: YES
SUBJECT:
Funding for drayage trucks
DESCRIPTION:
This bill appropriates $20 million from the Air Quality
Improvement Fund to provide grants to heavy-duty diesel truck
owners that service the state's ports and intermodal rail yards.
ANALYSIS:
Air Resources Board (ARB) Regulations for On-Road Heavy-Duty
Diesel Trucks
Existing law charges ARB with primary responsibility for the
control of mobile source air pollution, including the adoption
of rules for the reduction of harmful vehicle emissions and the
specification of vehicular fuel composition. In the past two
years, ARB has adopted two significant regulations to reduce
emissions and public exposure to diesel particulate matter
(diesel PM), oxides of nitrogen (NOx), and other air
contaminants from heavy-duty diesel vehicles.
Drayage Truck Regulation. In December 2007, ARB adopted the
In-Use On-Road Diesel-Fueled Heavy-Duty Drayage Trucks, referred
to as the drayage or port truck rule, by setting emission
standards for in-use, heavy-duty diesel-fueled vehicles that
transport cargo to and from California's ports and intermodal
rail facilities. The rule establishes different compliance
standards and deadlines for different model-year trucks and will
be implemented in two phases, as described in the following
table:
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SB 1156 (CEDILLO) Page 2
| | |
| Truck Engine | Emission Requirement Schedule |
| Model Year | |
|-------------------+----------------------------------------------|
| | |
| 1993 and older |Prohibited by December 31, 2009 |
| | |
|-------------------+----------------------------------------------|
| | |
| |Phase 1: By December 31, 2009, reduce PM |
| 1994 - 2003 |emissions by 85% |
| | |
| |AND |
| | |
| |Phase 2: By December 31, 2013, meet 2007 |
| |engine standards |
|-------------------+----------------------------------------------|
| |Phase 1: By December 31, 2011, reduce PM |
| |emissions by 85% |
| 2004 | |
| |AND |
| | |
| |Phase 2: By December 31, 2013, met 2007 |
| |engine standards |
|-------------------+----------------------------------------------|
| |Phase 1: By December 31, 2012, reduce PM |
| |emissions by 85% |
| 2005 - 2006 | |
| |AND |
| | |
| |Phase 2: By December 31, 2013, meet 2007 |
| |engine standards |
|-------------------+----------------------------------------------|
| | |
| 2007 and newer | Not applicable, fully compliant |
| | |
------------------------------------------------------------------
Truck and Bus Regulation. In December 2008, ARB adopted the
In-Use On-Road Diesel Vehicle Regulation to reduce emissions
from existing on-road diesel vehicles operating in California.
The regulation establishes a variety of compliance options, but
in general, it requires trucks and buses to meet performance
requirements between 2011 and 2023. By January 1, 2023, all
vehicles must have a 2010 model year engine or equivalent.
SB 1156 (CEDILLO) Page 3
Air Quality Improvement Program (AQIP)
AB 118 (N??ez), Chapter 750, Statutes of 2007, established the
AQIP, which is a voluntary incentive program administered by ARB
to fund clean vehicle and equipment projects, research on
biofuels production and the air quality impacts of alternative
fuels, and workforce training. Each fiscal year, ARB adopts a
Funding Plan that establishes priorities for the funding cycle,
describes the projects ARB intends to fund, and sets funding
targets for each project. About 80 percent of AQIP funds for
the 2009-10 fiscal year will be used to support vehicle and
equipment deployment projects for what ARB considers to be the
next generation of advanced technology vehicles and equipment
just reaching commercialization, including hybrid trucks and
buses.
This bill appropriates $20 million from the Air Quality
Improvement Fund to ARB to provide grants to drayage truck
owners that have not yet complied with ARB's drayage truck
regulation, subject to the following conditions:
The funds are administered in a manner that is consistent with
the Goods Movement Emission Reduction Program, as authorized
by Proposition 1B, except that the funds may be used for
emission reductions that are currently required by law or
regulation.
The funds are only available for trucks in small fleets
(fleets with three or fewer trucks).
The funds may only be used for the purchase of equipment that
meets the 2007 model-year or newer engine standards.
The funds are only available for these grants until January 1,
2013, after which time the funds revert to the Air Quality
Improvement Fund.
COMMENTS:
1.Purpose . According to the author, this bill is intended to
address the economic hardships truck drivers face complying
with ARB standards by appropriating $20 million dollars to
provide grants to truckers in order to retrofit their
vehicles. Currently, there is incentive money available in
SB 1156 (CEDILLO) Page 4
many areas of the state but none to cover the immediate cost
of retrofitting to help meet compliance standards.
Emissions from diesel trucks have adverse effects on human
health and lead to 4,500 premature deaths per year. By large
majorities, Californians support clean air laws and reducing
air pollution saves the state billions of dollars per year in
reduced hospitalizations and emergency room visits, health
care costs, and lost work days due to illness.
At the same time, these laws sometimes impose hardships on
small businesses and others who, in a tough economy, may not
have the financial resources necessary to comply with
regulations. Rather than weaken the laws by relaxing the
standards or delaying their implementation, this bill provides
additional funding to help small- and medium-size trucking
businesses retrofit or replace their trucks.
In doing so, this bill will allow more truckers to stay in
business regardless of their ability to pay to comply with the
rules, helping to ensure that the state experiences the
economic benefits derived from maintaining goods movement
businesses such as drayage trucking, while simultaneously
advancing clean air efforts.
2.Need ? The problem this bill seeks to address is unclear. ARB
contends that there are currently a sufficient number of
drayage trucks in compliance with the drayage truck rule to
meet the freight movement needs at the state's ports and rail
yards. When ARB initially designed the drayage truck rule, it
estimated that about 20,000 trucks would need to comply in
order to support goods movement operations in the state. With
the global recession and the corresponding reduction in
freight movement, ARB now estimates that only about 14,000
drayage trucks are needed to support goods movement. As of
May 4th, 15,000 drayage trucks were in compliance with the
rule.
In addition, several financial assistance programs exist to
provide grants, loans and loan guarantees, vouchers, or
rebates to help truck owners with the purchase of cleaner
trucks and equipment. These include the Proposition 1B Goods
Movement Emission Reduction Program and the Carl Moyer
Memorial Air Quality Standards Attainment Program. These
programs, consistent with all other financial assistance
programs that support clean air efforts, fund emission
SB 1156 (CEDILLO) Page 5
reductions that are not otherwise required by law or
regulation. In addition, ARB, in partnership with the
California Pollution Control Financing Authority (CPCFA),
offers Providing Loan Assistance for California Equipment
(PLACE), which is a loan guarantee program to assist equipment
owners with financing upgrades.
There is no question that upgrading a truck, either by
retrofitting or replacing it, can be expensive. The average
cost to retrofit a truck, for example, ranges from $11,000 to
$20,000 per truck. Furthermore, given the current economic
climate, it is likely that many truck owners have struggled to
stay in business over the past few years. It is unclear,
however, whether their difficulties are due to ARB regulations
or to reduced freight activity caused by the global recession.
Equally unclear is whether providing funds to help truck
owners comply with ARB rules will help restore their business
in this environment.
3.Compromise . The previous version of this bill provided $10
million for grants to assist heavy-duty diesel truck owners
comply with any ARB regulation. Incentive programs typically
provide funds to pay for equipment that reduces emissions
above and beyond what is required by law or regulation. In
other words, the state has not traditionally provided funding
to help an equipment owner comply with a law after the law or
regulation has gone into effect. Paying solely for compliance
raised questions about equity given that 15,000 other truck
owners have complied with the rule on time. There were also
concerns about the cost-effectiveness of paying for
compliance, particularly for equipment that may not be in high
demand in the current economic environment.
As a compromise between paying for compliance and using
limited resources to achieve emission reductions above and
beyond what is required by law, the bill was amended to
provide funding only to those truck owners that are not
currently in compliance with the drayage truck regulation, but
requiring that recipients use the funds to purchase 2007
model-year or newer trucks, which will be needed to comply
with Phase 2 of the drayage truck regulation by December 31,
2013. In this way, the funding will help truck owners comply
with both current and future requirements, while also
achieving emission reductions earlier than they otherwise
would have occurred.
SB 1156 (CEDILLO) Page 6
4.Implications for AQIP . For the 2010-11 fiscal year, the
Governor has proposed allocating $40 million to AQIP, however,
revenues could be far less than anticipated. In the 2009-10
fiscal year, for example, the Governor originally allocated
$44 million but actual revenues totaled only about $29
million. In the coming year, ARB anticipates spending AQIP
funds to provide incentives for the purchase of heavy-duty
hybrid trucks and zero-emission vehicles. Comparing the
emissions of a 2007 model-year heavy-duty diesel truck and a
new heavy-duty hybrid truck, the hybrid truck reduces 25
percent more particulate, 85 percent more oxides of nitrogen,
and 25 percent more carbon dioxide than a 2007 model-year
diesel truck.
5.Urgency clause . This bill contains an urgency clause. If the
Legislature passes and the Governor signs this bill, it will
become effective immediately.
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
June 16, 2010)
SUPPORT: South Coast Air Quality Management District
Natural Resources Defense Council (if amended)
Blood Centers of California (if amended)
OPPOSED: None received.