New regulations target construction equipment
It may be the most important action taken by state pollution regulators all year--as important as the implementation of last year's landmark greenhouse-gas legislation. The vote carries a potential price tag being measured in billions, and yet the state Air Resources Board's upcoming vote has gone virtually unnoticed by all but industry insiders.
California's air pollution regulators are poised to vote on new rules to curb emissions from some 180,000 unregistered diesel machines--the earth movers, backhoes, tractors, scrapers and other heavy equipment used to build highways, dams, housing developments, skyscrapers and other big projects, public and private.
The state ARB has scheduled a final vote on May 24 on the landmark rules, which would be phased in through 2020. The regulations, long sought by environmentalists and under discussion for seven years, target soot from diesel engines--called particulate matter, or "PM"--as well as nitrous oxide, or N0x, a trigger ingredient of smog. After years of focusing on PM, the anti-N0x provision was added to the proposed regulations in December--an 11th-hour move that construction-industry critics of the new rules say makes timely compliance all but impossible.
The board's actions could have regional, if not national, implications. The ARB is the premier air-quality enforcer in the nation--including even the federal government--and its actions often serve as guide for regulators in the industrial Northeast.
The costs of modifying engines, buying new equipment and retrofitting existing equipment are enormous. On major equipment that costs $500,000 or more each--not an unusual price tag for a huge grader or backhoe--engine retrofits can cost $50,000 alone. "There is no Toyota Prius version of the backhoe or bulldozer available on the market today. … [It] will have a devastating impact on construction companies," an industry analysis noted. "The technology doesn't even exist now."
"This is the most expensive rule the ARB has ever considered," said Mike Lewis of the Construction Industry Air Quality Coalition, which includes contractors, heavy-equipment firms, engineers and others. Estimates of financial impacts range from $3 billion, a number generated by the ARB staff, to $9 billion, a figure computed by the industry--and some estimates push the figure to $14 billion to $16 billion. "They are pushing the industry to the brink. In fact, they are pushing the industry over the brink," Lewis said.
"People don't understand the regulation, but it is going to have a huge impact on the industry and the economy," added Jim Earp of the California Alliance for Jobs, which represents contractors and builders.
Environmentalists agree on the significance of the regulation, which has flown almost entirely under the public's radar. "It is one of the ARB's two biggest jobs this year. One is the implementation of [the greenhouse gas law] and the other is this diesel rule," said the Sierra Club's Bill Magavern. Like AB 32, the new diesel regulation is likely to have ripple effects elsewhere in the country.
Environmentalists say the rule, aggressively enforced, would help clean the air and save billions of dollars in health costs. A coalition of environmentalists, scientists and health-care groups, in a letter to the ARB, described the "magnitude of these health and economic impacts." They wrote that "particulate matter and nitrous oxide emissions from construction equipment alone are estimated to cause 1,100 premature deaths per year, 30,000 asthma attacks and 180,000 lost work days. These health impacts and lost productivity cost California an estimated $9 billion per year."
Industry supporters note that they, too, want air-quality improvements. "Look, it's our workers who are out there breathing this, too. Of course we want clean air," said one. But the cost of reaching the goals set by the proposed regulations are prohibitive, and the timeline to meet those goals too restrictive, they added.
The off-road diesel equipment contributes perhaps 10 percent of the state's overall air pollution--about 1 percent of PM and some 9 percent of NOx. Within the off-road diesel sector, the rule would remove about three-fourths of PM emissions and a third of N0x. "These are not huge numbers, but to get to those numbers is very expensive," Lewis said.
Too, the original discussions over the rules envisioned an 18-year window to comply, between 2002 and 2010. But delays in putting the rule together, plus the N0x addition in December, compressed the time frame.
The regulation requires diesel fleets in to calculate their PM and N0x emissions and in 2010 to begin steady reductions, meeting benchmarks that are established by the rule and which factor in horsepower and usage. Industry critics say new engine technology doesn't currently exist to satisfy the regulation, although such engines are likely by 2014. However, after-market PM "traps"--canisters that capture PM in exhaust emissions--are available and have been in use for several years.
Apart from direct impacts, another issue looms. Observers in the industry, the environmental community and elsewhere agree that the regulations could force delays in the construction of some $43 billion worth of projects approved by voters and the Legislature last year. That's because compliance with the rule will be required of bidders who want to do the projects, and the rule will develop over much of the same time period as the bond projects. A related, potential impact: If compliance is difficult, fewer companies will be bidding, thus limiting competition. "Fewer roads, schools, housing and levees will be built and the pace at which these projects can be completed will be significantly slowed," the industry analysis said.
"The air has to be cleaned up. It's a good regulation and it is really necessary from a public-health standpoint," said Assemblyman Mark DeSaulnier, D-Concord, who spent a decade as a member of the AARB. "I am supportive of the regulations, but we do have to think about how we get the transportation bond projects effectively rolled out on the ground to help alleviate traffic congestion. This could be a significant--the timing of the regulation, combined with the bond projects.
"Over the last 10 years, we've become more aware of how deadly particulate matter is. Twenty years ago, people didn't acknowledge it. But we have a very high level confidence now that PM is a toxin and extremely dangerous," DeSaulnier said.