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Beating back reefer emission rules

With all due deference to an old propaganda film, the attempt by the state of California to regulate refrigeration unit exhaust emissions in fleets based outside the state amounts to reefer madness, because it has a chance to set a precedent for the country, Glen Kedzie told the annual meeting of the Refrigerated Division of the Truckload Carriers Association.

Kedzie is assistant general and environmental counsel at the American Trucking Associations. The Refrigerated Division meeting was held on July 12 to 14, 2006, in Coeur d'Alene, Idaho.

California has established itself as a laboratory for environmental approaches and for environmental laws that affect the rest of the country, Kedzie said. Worse, what happens in California impacts the rest of the country, because a law on the books in that state creates a path to national standards. That gives businesses two choices — they can comply with the law to avoid potential citations, or they can stop going into California.

In typical fashion, California does not refer to its refrigeration unit exhaust emission standards as regulations. The state prefers to call the rules an “airborne toxic control measure,” thus making the subject at hand sound much more menacing, Kedzie said. The rule was approved by the California Air Resources Board in February 2004 and became effective on December 10, 2004. In simple terms, the rule attempts to reduce the amount of airborne soot produced by refrigeration units.

Same data, different conclusions

In 1998, California defined all diesel exhaust as a toxic air contaminant. At that time, the state declared diesel exhaust to be a “known human carcinogen,” Kedzie said. “The state is absolutely, positively certain that diesel exhaust causes cancer,” he said. “The federal government looked at the same data, analyzed the science behind it, and drew the conclusion that diesel exhaust is a ‘likely’ cause of cancer — much different, less powerful terminology.”

To deal with their newly declared known human carcinogen, California developed a program it titled a “diesel risk reduction plan” in 2000, Kedzie said. The state regulation is intended to apply to any truck, trailer, rail car, or shipping container with a refrigeration unit as well as the diesel electric generator needed to operate an intermodal container on the highway. The rule applies to owners and operators of refrigeration units anywhere in California regardless of where they are based. To make sure the rule applies to out-of-state operators, it also seeks to regulate warehouse facilities with 20 or more loading doors serving refrigerated facilities.

Most carriers now serving customers in or from California will want to continue providing that service. That gives carriers a choice among seven options, Kedzie said. Carriers can replace their current fleet of refrigeration units with new units that meet the California standard at a current average cost of about $20,000 per refrigeration unit. Carriers can retrofit existing refrigeration units to bring them into compliance at a cost, estimated by the air resources board, of $2,000 to $4,000 per unit. A third option is to repower all refrigeration units — replacing only the engine instead of the entire unit — at an estimated cost of $5,000 to $10,000 per engine.

Another option suggested by the state is to use one of an approved group of alternative technologies, Kedzie said. The three remaining options could be to operate a completely separate fleet for use only in California, to refuse to serve shippers and receivers in California, or to take a chance and ignore the rule altogether.

California-only trailers?

The idea of California-only trailers came from the air resources board, Kedzie said. They apparently thought that carriers could designate a small group of trailers to serve the state. “I wouldn't say that we were dealing with an uneducated group of people writing the regulations, but they certainly were under-educated,” he said.

The California rule provides for a phased approach to reducing exhaust emissions beginning in 2008 and running through 2020, Kedzie said. The rule for 2008 applies to all refrigeration units built in 2001 or before. In 2009, units built in 2002 become regulated and so on for the life of the rules. Those 2002 model year refrigeration units will be required to reduce particulate emissions by 50% from the allowable level for 2001 units. Emissions from covered units must fall another 50% in 2009, and in 2010, particulate emissions must be reduced 85% from the starting point for the regulation, he said.

For alternative technology, the air resources board recommends the use of electric standby so that refrigeration units can run on electricity while at shipping or receiving facilities, Kedzie said. California also approves cryogenic refrigeration as an alternative technology. The state also recommends using alternative fuels to run the refrigeration unit engine or equipping units with fuel cells to generate the needed energy.

Extensive paperwork requirements

In addition to reducing exhaust emissions, the California rules require a certain amount of paperwork. A facility report on warehouses and shipping and receiving points was due on January 1, 2006. The facility report asked for the average number of refrigeration units on the property along with an estimate of the number of engine hours at the facility in 2005. The report also asked for data on the number of inbound and outbound loads from the facility in 2005. These records are supposed to be maintained on site for at least three years. In addition, reports from operators are due on January 31, 2009. These reports require that all units operated in California be registered with the state and given an identification number. The identification numbers are intended to streamline their enforcement activity so that officers don't have to search for unit serial numbers. The operator report must be updated every time unit status changes. A change in status includes rental or lease, purchase, and sale. “The air resources board has begun a campaign to find out which warehouses have not submitted those reports,” he said. “Personally, I question whether or not they have the authority to take enforcement actions.”

The Clean Air Act gives the state of California authority to do things aimed at improving air quality differently than the rest of the country, Kedzie said. However, they cannot do whatever they want. California still needs approval from the federal government to implement its ideas. In practice, implementation is usually defined as enforcement. “That's why I question their authority to enforce the rules,” he said. “They can't take enforcement action until the plan is approved by EPA, which so far, it has not been.”

As the approval process moved forward, ATA contacted a lot of fleets to determine how many trailers would enter the state during their service life, Kedzie said. Two conclusions came from that contact. First, many fleets were completely unaware of the scope of the California rules. Secondly, ATA found that 85% to 90% of the trucks and trailers operating in the western states would venture into California at some time. This results in a California state regulation with a national impact.

Strange implications

Some of the provisions of the California rule look really strange, Kedzie said. According to one carrier contacted by ATA, taking a dry load into California in a non-certified reefer trailer and coming out with subsequent dry load would still be a violation of the regulations.

ATA's data led to a Washington DC hearing in front of the EPA, Kedzie said. The air resources board sent one representative to the hearing; all other attendees were from industry groups or motor carriers. “I left that hearing with a positive feeling about being able to show the air resources board how mistaken it was while developing its regulations,” he said.

The primary claim from ATA is that the California regulations impede interstate commerce, Kedzie said. Those regulations will change the way trucking conducts business, because carriers must make a conscious effort to determine how to serve California. According to the air resources board, only 30,000 refrigeration units can be found in California on any given day. Of those, 23,000 are said to be based in the state, and only 7,500 refrigeration units come into California from out-of-state.

ATA presented a completely different set of data, Kedzie said. According to ATA data, 340,000 refrigeration units spread throughout the US will feel the impact of the California regulations. At least 75% of the national refrigerated trailer fleet will enter California at some point. “The state says it is implementing a local regulation, but 75% of the total fleet sounds like a national standard to me,” he said. “We feel that the federal government and EPA are in a better position to establish national standard, if needed, than is the state of California. No single state is entitled to impose regulations that have national implications.”

California is involved in what is known as a “technology-forcing standards” with its new rules. The law limits the number of technology-forcing standards that can be proposed in a given period of time. Adequate notice must be given to develop the technology needed to comply with the rules. “In particular, industry cannot keep accepting unknown level of cost, nor can technology be pushed into areas where there are no known solutions,” Kedzie said.

Costs underestimated

In addition to asking for results that may not be possible, California wildly underestimated the cost impact of its regulations, Kedzie said. According to the air resources board, total compliance costs will fall into the range of $87 million to $156 million. The experts contacted by ATA suggest a much higher cost of compliance. With an impact on 340,000 refrigerated trailers, complying with the California regulations will cost fleet operators and their customers something between $775 million and $1.4 billion, he said.

So far, EPA has not approved the California request for a waiver of certain provisions of the Clean Air Act. The act does not require EPA to issue a ruling on a specific date, Kedzie said. In fact, EPA does not have to act at all and seems in no hurry to decide.

Obviously, the whole thing will end up in court. If EPA delays long enough, the air resources board will probably sue, trying to force a decision in its favor, Kedzie said. The air resources board also will sue if EPA rules in favor of the trucking industry. On the other hand, ATA will sue if EPA favors the California position. “ATA views the California reefer rules as a good test case to define what the states can do and how much California has overreached in this instance, getting too far ahead of the rest of the country,” he said. “The association has what it believes to be the best environmental law firm in the country ready to handle this case. Not only are the lawyers ready, ATA has the money available to pursue a court case.”

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