California Off-Road Diesel Rules Becomes Law June 15, 2008

Construction industry foresees loss of jobs and businesses. Other states may adopt California Air Resources Board rules.

By Loren Faulkner -- Associated Construction Publications, 5/19/2008

California’s Office of Administrative Law has approved California Air Resources Board’s (CARB) controversial off-road diesel regulations (Article 4.8, section 2449). The regulations are aimed at drastically reducing diesel particulates and fumes, allegedly sparing the lives of thousands each year.

While California construction industry spokesmen agreed during CARB public discussions that everyone wants to see an improvement in the air we breathe, some questioned the validity of data showing several thousand lives would be spared each year by adopting these regulations. (see public comments and view the entire set of the new CARB regs at : http://www.arb.ca.gov/regact/2007/ordiesl07/ordiesl07.htm)

Arguments Rejected

Public testimony by multiple contractors, engineers, and construction industry experts such as AGC of California, EUCA, SCCA, and Construction Industry Clean Air Coalition (CIAQC) argued CARB regs are prohibitively expensive and unrealistic in the time period needed (2009-2020) to comply. The following CIAQC (www.ciaqc.com) commentary summarizes much of California’s construction industry objections:

Unrealistic Demands

• The construction industry supports efforts to clean the emissions from our equipment, but the solution must be technologically feasible and economically possible. The technological solution resides with equipment makers, not equipment owners.
• Under the proposed rule, every single piece of construction equipment in the state must be re-powered, replaced, retired and/or retrofitted to meet the requirements. It will cost the industry $21 billion over the next 12 years to replace all 164,000 engines—and in most cases engine replacement is not possible so expensive new equipment will have to be purchased to achieve the goals, driving costs even higher.
• CARB says—"Charge your customers more to pay for it." This will drive up the cost of construction on every house, office building, hospital and highway.

Business Losses

• A large share of the 25 percent of companies engaged in public works construction will go out of business because they will not be able to afford this regulation. They can’t charge their customers more because every job is competitively bid. Hardest hit will be women-owned and minority contractors who have smaller capital reserves. The loss of these companies will have big impacts on public projects.
• Construction industry cash flow will drop to zero during this period as they pour everything they have into acquiring new equipment, which runs from $92,000 for a backhoe to $3.5 million for a crane.

Job Losses

• It will cause the loss of 28,000 to 39,000 jobs based on CARB’s estimated costs of $3.7 billion. If the industry’s cost figures are used the job loses will be much, much higher as equipment is "retired." Job loss will primarily affect the highly skilled equipment operators, but other jobs will go as well, including mechanics, internal staff and among our suppliers.

Manufacturing Shortfalls

• The construction equipment manufacturers cannot meet the demand to replace 164,000 pieces of equipment in 12 years. Manufacturers are already 18 months to two years behind in meeting current demand. Over the last decade, they have shipped an average of 7,000 new units in the state each year. At that pace, it will take 23.5 years to replace the fleet.
• The manufacturers of diesel emission control systems cannot meet the demand to retrofit the California fleet. Only two are verified by CARB and they have no distribution chain in the state. These devices generally must be engineered to each application and there are no technicians available who could install them.

Extensive Record Keeping Required

• The recordkeeping and reporting requirements alone will cost the industry $65.6 million every year, based on CARB’s estimate of cost from the Portable Engine Registration Program of $400 per engine.

CARB administrators have said non-compliance may cost $10,000 per day, per violation, but would probably start at only $500 per day per violation.

States May Follow CARB

Other states are expected to follow in the footsteps of California. According to the EPA Green Book (www.epa.gov), the following states are similar in air pollution problems. They may adopt California’s regs, eventually:

Alabama, Connecticut, Delaware, Georgia, Illinois, Indiana, Kentucky, Maryland, Missouri, Montana, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia.