Speed Bumps Before A Brick Wall

by Mark Scaramella, April 11, 2012

New state regulations require that most diesel trucks and buses in California be upgraded to reduce particulate and nitrogen-oxide emissions. Heavier trucks must be retrofitted with particulate filters beginning January 1, 2012, and some older trucks must be replaced starting in January 1, 2015. The rules are supposed to improve air quality and, by extension, public health.

By January 1, 2023, nearly all trucks and buses must have engines that are no earlier than the 2010 models. The law applies to nearly all privately and federally owned diesel fueled trucks and buses as well as most school buses. Small fleets with three or fewer diesel trucks can delay compliance for their heavier vehicles by applying to Sacramento on a case-by-case basis.

Most rural truckers like those here in Mendocino County don’t have enough work these days to allow them to finance an expensive new diesel even if they’re given a few extra years before they absolutely have to do it.

Local truckers also complain that many of their older trucks are not used much because of the economic slump except for the occasional special project. Even if business were better, some of the old vehicles would never generate enough work to pay for a $150k replacement vehicle. There’s no practical way to replace these trucks, upgrade their engines, or put filters on them even though many of them are still in good condition precisely because they are not used much.

On top of that, most of the older engines can’t even be sold because in a few years it won’t be legal to operate them in California.

Even with the extensions and the filter retrofits, all trucks built before 1996 will be illegal by 2023 at the latest.

Even though most of Northern California has been declared a “NOx exempt area” (meaning that the nitrogen oxide rules don’t apply to trucks operating in northern counties where the air isn’t so bad), they still have to have either a particulate filter or be replaced. And, if the truck should venture into, say, Sonoma County or Sacramento or points south for repairs or to do paying work, they can be cited as illegal while there.

By the time the Mendocino Board of Supervisors got around to discussing the new rules as they apply to Mendocino County, the deadline to file for some of the extensions and exceptions was only two days away on March 30.

Ms. Beth White, “On-Road Compliance Assistance Section Manager for the California Air Resources Board,” probably didn’t drive a diesel vehicle from Sacramento to Ukiah to make her presentation. Although Ms. White was cordial and certainly knowledgeable about the new regs, her inflexibility didn’t win her any friends in Ukiah — except for Supervisor Kendall Smith who thought the CARB was doing a swell job dealing with a difficult air pollution problem. (Like much of Mendolib, Smith has zero sympathy for working people.)

The rules are an absurd morass of fine print. Many of Mendo’s gray-haired truckers with their worn plaid shirts are dependent for techno-assistance on much younger persons, if they can find one to help them decode the regs or enter the e-world.

Ms. White insists that the new regs are more flexible, more trucker-friendly than they were first released in 2006. But most of the extensions, exclusions, phase-ins and financial assistance programs are either no help to Mendo-style truckers or are not applicable or available.

For example, CARB has a “voucher” program to help subsidize new engines for smaller fleets. But there are only two dealers in Northern California qualified for the voucher program — one in Santa Rosa and one in Sacramento. And there’s no guarantee that an application for a voucher will be approved.

The “minimum” requirements to qualify for a voucher (a partial subsidy to a truck vendor reducing the net cost to the buyer) are:

“1. Owned and operated in California 75% of the time for the previous two years. 2. Fleets with 10 or fewer heavy-duty diesel vehicles. 3. Old diesel vehicles with a Gross Vehicle Weight Rating (GVWR) of 19,501 pounds or more and operating a minimum of 15,000 miles per year or consuming 1,500 gallons of diesel fuel per year during the previous two years. [A killer requirement for many low-usage Mendo diesels.] 4. Replacement vehicle has a 2007 or newer engine that is at or below 1.20 g/bhp-hr NOx and 0.01 g/bhp-hr PM, and 5. Retrofits must be ARB verified.”

There are also several “loan guarantee” programs available to help finance the purchase of new vehicles. But all they do is help someone borrow money to finance something they can’t afford anyway.

As several speakers pointed out, the new rules favor the big trucking operations which have higher vehicle turnover and are always buying newer replacements as part of their normal operations. Smaller operators routinely hang on to older vehicles for decades before reaching the economic replacement point.

Ernie Wipf of Wipf Construction in Ukiah: “The real problem that we have in Northern California is our trucks don't operate like they do in sunny Southern California. As you can see outside there are not too many trucks rolling around. Because of the weather at least a third of our year we simply don't operate trucks very much. Because of that, our trucks are probably much older in this area than they are in areas where they work on a daily basis. I have six trucks with electronic ignition motors and 17 that have Tier 0 motors (mechanical ignition) in them and are not retrofitable. To replace those trucks at $100,000 apiece [even after a subsidy] is completely out of the question. You don't want to waste money putting electronic motors in them. So a lot of us are faced with the question: how do we keep our employees and provide the services? How do we keep doing that with trucks that may work only one third of the time depending on the nature of the work we have? You simply can't invest in the new trucks or even the electronic ignition engines. We have invested money in these trucks and now because of these new rules most older trucks will have almost no value. The people who wrote the rules say that we should just go out and buy a new truck. Well, if you go to the bank there is a certain loan value that you need in the 60-65% range on a new piece of equipment. But with equity erased by these rules it's very difficult to achieve that. People won't finance you because you don't have the down payment to get started and you don't have the revenue stream to support the financing afterward.”

Supervisor John Pinches (who originally brought the item up for Board discussion): “Even if you push out these deadlines a few years that doesn't mean that much to small truckers because you could still be using these trucks for 10 or 20 more years.”

Wipf: “Many of our heavy-duty trucks run so few days per year that you simply can't replace them. For a lot of my heavier trucks I just can't see how I could replace them all with 2010 or later models by 2023.”

Ms. White described a “low use exemption” for vehicles that are used less than 1,000 miles in California per year. However, in vast Mendocino County just getting a vehicle to a worksite can put on a lot of miles and you can run up to the exemption quickly, so that exemption has limited value.

Logging trucks have a somewhat relaxed phase-in schedule and are not required to have a particulate filters, but the older ones still must be replaced before 2023.

Miles Anderson, Anderson Logging, Fort Bragg: “According to our survey about 70% of the trucks operating in rural counties are older mechanical trucks. There is no filter available to put on these trucks. To comply with these rules you must replace them. All these exemptions and exceptions and phase-ins are nothing more than speed bumps to a brick wall for rural counties. We cannot comply with the replacement schedule as it exists. Our company would need to replace 18 trucks at $150,000 per truck. That's $2.7 million. We can't afford to finance $2.7 million with what we generate in a typical six-month season. There are only two options for rural operators to solve this problem: long-term debt or downsizing. I thank CARB for what they've done, but to get through this there are more things that need to be done. Subsidizing conversion to electronic ignition engines would be a huge savings in particular matter. A 10,000-mile low mileage exemption would be a step in the right direction. Or some kind of exception for going out of the exemption area usage.”

Ms. White replied that the CARB had already given the truckers “everything that they asked for” during previous discussions with them. “But even with the exceptions and exemptions they still feel financially challenged with the requirements. We are trying to find funding for their situations,” said White. “We are working with them right now. I see us trying to help them with financing more than amending the regulations anymore.”

Bill Daniel (of Daniel Steel and Machine Co., Ukiah): “We have a number of vehicles, cranes and things. Since the logging industry has taken a downfall to practically nothing we have ended up with equipment that we don't use very often. We are applying for low mileage, low hours exemptions. Some of the new vehicles available do not satisfy our needs — heavy-duty cranes for example. Used cranes will not comply for very long. And they cost upwards of $300,000 or $400,000. This area does not have the air pollution problem that other areas of the state have. There are many local businesses that just won't be able to comply with these rules — it's not going to happen. It will put them out of business. Big companies like Granite Construction can bring in many new vehicles and they can comply. But the smaller contractors can't comply so they will go out of business. They need to look at rural areas more seriously and take small business more into consideration, not try to put them out of business. At some point somebody has to have a little more conscientious thought process happening to preserve small businesses that built this country. If we are not going to help preserve them — if we are going to put them out of business, then fine. But I think that's a mistake, a step in the wrong direction. The board needs to fight these regulations and make them more small-business friendly and much less stringent. Small companies like mine will have a real tough time in the near future.”

Devin Daniel: “I'm discouraged about the future of our company and other small businesses like ours in this county. I don't know how much power this county has to stand up to the state agencies. We purchased these vehicles in good faith to accomplish tasks that are necessary for the community. And now we are being penalized because the people who built them used engines that don't burn that clean. That's not our fault. I think that the changes need to start with the people who made these engines. Why not just let the older vehicles phase-out naturally? Especially in rural areas? Over time we will just get smaller and smaller, and small businesses will be squeezed out.”

Ms. White replied that this area does not need NOx-reducing engine replacements, only filters. (But filters are not available for many of the older vehicles, and they only postpone the replacement date.)

Richard Hay of Gualala: “Most of the trucks in our fleet are used seasonally. We buy older trucks and fix them up to save money. We run what we think is a clean, well-maintained fleet. And now we are being punished for it. When we bought these trucks we did not realize they had a shelf life. No one told us until now. Thanks CARB.”

Mr. Hay then went on with a litany of more general complaints about bureaucrats, taxes, regulations, and so forth, many of which are valid but were not applicable to the discussion at hand. Mr. Hay concluded that his company could not finance new vehicles just to meet these rules.

Bill Hay (father of Richard Hay, and a long time south coast contractor): “We serve from Navarro to Timber Cove, about a 90-mile stretch of the Coast. And in that area there has been one house built in the last six months. One. We have 39 pieces of rolling stock. Many of these trucks have won awards from the Highway Patrol for their good condition.” Mr. Hay said that a CARB representative visited his equipment yard recently and told him that he had two options: sell all his trucks or put new engines in them. “About that time, I held my temper. I said, Well, it looks like we will probably go out of business. We simply cannot afford to do what they are asking for. We have some trucks like concrete mixer trucks that put on about 1000 miles or so a year. They run at least 50 miles sometimes just to get to a job site. Also, we go into Sonoma County for some work and sometimes we take our trucks for repair work in Santa Rosa and that's a different area. We also go to Sutter County to buy sand and gravel at times and we'd be out of compliance while we were there.”

Mr. Hay also wanted to know how enforcement would work. “Mendocino County will be in a world of hurts when this kicks in. If you think Brooktrails was bad, just think about these truckers. They won't be around. They won't be paying taxes.”

Ms. White addressed the enforcement question: Doors for exempt vehicles have to be marked as exempt with special decals and they have to have GPS systems to indicate when they are out of the area. “Three fourths of what we get in complaints are people telling on each other,” White added. “If someone says something about someone operating out of the area then we would hear about it that way. We are working with CHP. They are not necessarily running around pulling people over to check their engines. We work with them at places like truck scales. We would also look at DMV registration and what has been reported in our system. There are different enforcement methods.”

Ruth Valenzuela, Assemblyman Wes Chesbro’s local representative was as lame as you might expect, given her boss: “This is a complicated issue. I don't know of anything right now being done about it legislatively. The rules have already been changed a lot because people like those you heard today have asked for the changes. As far as from now forward, I don't know how much more is going to change. I can't say. I don't know. I will let us Mr. Chesbro know about some of the things I have heard today. He has spoken to a lot of the different trucking companies in the county and he has heard from them and people can continue to express concerns.”

Pinches: “Your boss, Wesley Chesbro, voted for this original legislation. I know it's not totally up to him, but he can sponsor legislation on his own to come up with at least some sort of fix to help rural counties. We need some sort of a fix, at least a partial fix. We have to get something through the state legislature to address some of the issues in rural areas because it's ridiculous to devastate the economy when we have already achieved the air quality goals and yet you want to go ahead and put people out of business. I wonder what the economic impact would be of just the reduced license fees on these older trucks. People won't license them anymore. That could be quite a bit of money. We get a lot of money from the vehicle license fees. We fund a lot of things with that. Part of it even goes to our Sheriff's office. Nobody has even thought about that. I want our representatives to come up with at least a partial fix on this because this ain't working.”

Jeff Tyrell, Senator Noreen Evans representative, former president of the Mendocino County Democratic Central Committee: “I don't have anything to add to what Ms. Valenzuela said. I will be glad to convey to Senator Evans the issues that have been raised here today. I believe that she will be helpful toward finding creative solutions as we learn what the implementation of this will be. I am sure she will be very sympathetic to the adverse impacts that will be experienced in rural areas and her district is entirely rural so she will be there to support any appropriate solutions that are found.”

Pinches: “This County has done a lot to make these rules maybe not as bad as they could be. But as Mr. Anderson said, all we did was put speed bumps in front of a brick wall. We are at the brick wall right now.”

Supervisor Dan Hamburg: “These are the kinds of rules that make people hate government. It's not only that these rules are designed for areas of the state that are more populated, but they are also designed to advantage large corporations at the expense of small business. It's easier for large businesses to comply with these regulations. But when you get down to the kind of businesses that we run in Mendocino County, they just don't fit. You have given a really great presentation and I know you've worked really hard and I know that our state representatives have worked hard. But this is just a non-starter. Just from things I've heard today, this is devastation for many, many businesses in our county. I guess the best thing the Board of Supervisors can do is to send the strongest message that it can to our state legislature and the Air Resources Board and tell them that this just doesn't work for us. I think you have heard from the people. I know you've heard some of it before. But this is the first time I've really heard a rundown of this and I'm devastated by it. This is one of the worst things I've heard all day. And it hasn't been a very good day. It's really frustrating to hear that if you live in the Bay Area, or you live in San Diego or Los Angeles you can get 60% of this paid for [via the voucher program]. But if you live in Mendocino County the best you can do is get yourself a loan where you will have to pay tens of thousands of dollars a month to amortize that debt and it will put you out of business. That is no kind of solution. It's also fundamentally so inequitable.”

Ms. White replied that she didn't know that vouchers were not available in Mendocino County. She said she would work on that.

Hamburg: “This situation is just intolerable.”

White: “The voucher program provides up to $45,000 per truck. It's the best thing going.”

Hamburg: “How can that be allowed in some parts of the state and not others? Is that what I'm hearing?”

White: “The funding program criteria is not met here and I didn't realize that. So we will see what we can do.”

Chris Brown (Chief of Mendo’s Air Quality Management District): “Our folks can go into a dealer in the Bay Area today and apply for that funding, they just may not get it. They may not qualify. It's very complicated.”

Pinches: “My brother is part of a group of small independent truckers in the Laytonville area who have been asking me about these rules. I told them I had no idea what they are, so I'll have some presentation made. I told him the other night that this was coming up today. He said he couldn't be there. I said, Don't worry. I'll tell you what the deal is. So when he calls me tonight I am going to say, Jim, go sign up for Social Security and park that truck and retire.”

Board Chair John McCowen said he wanted to emphasize that they find a way to make the voucher program work for Mendocino County. “This item was only on the agenda as an information item today. The Board did not have it agendized for action. But we might soon see an agenda item where we will have something to maybe direct some letters to our state legislators and see if we can help provide a little incentive for action there. Ideally there might be some clarification to be done on the voucher program and make some of these things work.”

White: “My suggestion is that you try to work through us first and if you are not getting what you want or not getting it in a timely enough fashion, then do whatever it is that you think you need to do. But obviously the second that you go to that level you would be adding a lot of time. So if you want a quick result, or you want a quick extension, or you want to be in compliance relatively fast, it would be a lot faster if you work with us directly and don't add bureaucratic layers to the problems.”

Pinches: “Can we request 100% exemption for Mendocino County?”

White: “You can request it.”

Pinches (to the audience): “Don't give up. Keep on truckin’.”

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