AGC Petitions California to Reopen Costly, Unsafe Rule on Off-Road Diesel Emissions

On Dec. 15, AGC of America and its two California chapters formally petitioned the state of California to reconsider or repeal a new rule that would force construction companies across the state to retrofit or replace almost all of their heavy construction equipment.  California's new standards are enormously complex and certain to cost California's contractors billions of dollars. The nation's first-ever statewide rules on the exhaust from existing fleets of off-road diesel equipment would impose an excessive burden on the state's struggling construction industry.  While sharing California's commitment to a cleaner environment, AGC maintains that the urgency behind the well-meaning rule is no longer necessary because the economic decline has led to a significant reduction in construction work and the industry's consumption of diesel fuel.  AGC's petition also notes that the California's Department of Industrial Relations has concluded that retrofitting existing construction equipment to meet the new standards may actually violate worker safety laws.  As a result, builders will now have to spend much more than the rule originally estimated to throw out and replace, instead of retrofit, their fleets of diesel-powered construction equipment.  This rule will needlessly force builders to throw away billions of dollars worth of equipment right when we need them to get to work on vital new infrastructure projects. In its petition, AGC included strong evidence that both the economic costs and the environmental benefits of the state's standards are quite different from what the California Air Resources Board (CARB) expected at the time it adopted the standards.  New technology has been slow to arrive and the available technology has come into conflict with safety standards.  Financial markets have frozen and the construction industry now stands on the edge of a sharp decline.  Since July of 2007, when the state adopted the rule, the volume of construction work in California has fallen by $22 billion below the state's economic forecast and the state's construction industry has lost approximately 120,000 jobs.  AGC strongly contested the cost effectiveness of the off-road rule during the rulemaking process.  But now that the construction industry has slowed down and emissions from off-road diesel equipment have also dropped, the cost effectiveness of the new standards has come into even greater question. California's off-road engine standards took effect on June 15, 2008, subject to federal approval of CARB's request for a so-called "waiver of federal preemption."  The U.S. Environmental Protection Agency (EPA) has announced plans to act on California's request in very great haste and without holding hearings in California.  AGC has notified and will continue to point out to both federal and state regulators the many compelling reasons to take a carefully measured approach to California's request for federal approval.  The federal Clean Air Act generally forbids the states to set emission standards for off-road diesel equipment.  The statute, however, makes an exception for the state of California, and if California's new standards meet with federal approval, other states with air pollution concerns will be free to adopt an identical rule.   AGC will continue to oppose California's off-road engine emission rules, persisting in its effort to bring reason to the long-running debate over this equipment. For additional information and future updates, please visit AGC's Web site at http://www.agc.org/carbrule. Regulation Overview The CARB rules apply to most off-road engines over 25 horsepower (hp), including bulldozers, loaders, backhoes and forklifts.  Out-of-state companies working in California must also comply.  Beginning in 2009, covered fleets of equipment must meet labeling and annual reporting requirements, idling limits, and restrictions on adding older vehicles to fleets.  In addition, those fleets must steadily and dramatically reduce their average emission rates for particulate matter (PM), and in many cases, nitrogen oxide (NOx).  Specifically, the rule sets a yearly target rate for average emissions of PM, and all fleets have to either meet the target rate or apply the highest level of verified diesel emission control technology to 20 percent of its total horsepower.  Each year, large and medium fleets also have to meet a target rate for average emissions of NOx, or in the alternative, "turn over" a certain percentage of their total horsepower (8 percent in early years, and 10 percent in later years).  Compliance dates for these so-called Best Available Control Technology or BACT requirements vary by fleet size, with large fleets deadlines (more than 5,000 hp) between 2010 and 2020, and small fleets (2,500 hp or less) between 2015 and 2025.   In this context, "turn over" means repower a piece of equipment with a cleaner engine, retire a piece of equipment, replace a piece of equipment, or designate a piece of equipment as low use.