The twin regulations that are expected to have an enormous impact on truck purchases in California — and beyond — could have their first reverberations by the end of this year.
One rule, the Advanced Clean Truck (ACT) regulation, is in place. The second, the Advanced Clean Fleets rule, has not been formally introduced. But a preliminary draft of the rule has already received public comments before it starts down the road to formal introduction and final approval.
As Matt Schrap, CEO of the Harbor Trucking Association, described it, the two rules work in concert. The ACT requires manufacturers of trucks in California to sell a certain portion of zero-emission vehicles (ZEVs) among their total sales. The Clean Fleets rule is aimed more at buyers, requiring them to acquire a certain portion of ZEVs as they replace existing vehicles in their fleets.
Two provisions in the rules have the potential to start biting the trucking sector as early as next year.
The ACT regulation will impact decisions on buying new trucks beginning with the 2024 model year. A certain percentage of those trucks will need to meet the definitions of ZEVs. California’s definition of ZEVs is largely battery-powered vehicles, with a small opening for hydrogen-powered fuel cells.
The most aggressive number for ZEV requirements under ACT is for Class 4-8 trucks, which range from.14,000 to 33,000 pounds. That requirement is that 9% in that class be ZEVs in model year 2024 and 75% by model year 2035.
But for Class 7-8 tractors, it’s a 5% requirement in 2024 rising to 40% by the 2032 model year. It stays flat after that. There also are requirements for the smaller Class 2B-Class 3 trucks.
“The timelines are aggressive,” Brett Marston, an attorney with Wiley Rein who has focused much of his work on engine regulation, said of the rules.
Meanwhile, if the Clean Fleets rule is formally proposed and adopted by the end of 2022 — not a certainty — it may be the drayage requirements that have the most immediate impact on trucking.
Under the rule, whose outlines were first released in September, the California Air Resources Board (CARB) would require a phase-in of ZEVs into the drayage sector beginning in November 2023. If a new drayage truck is registered after that date, it must be a ZEV.
Existing internal combustion engine-powered vehicles must be retired from the fleet under two guidelines: They can operate for 13 years from their vehicle year (so a 2023 vehicle bought at the end of 2022 or early 2023 would be allowed to operate until 2035) or the earlier of 18 years or 800,000 miles from when the original engine was certified. But even with that latter rule, all drayage trucks must be a ZEV by 2035, even if the 18-year or 800,000-mile mark has not been reached.
Patricio Portillo, a transportation analyst in the climate and clean energy program at the Natural Resources Defense Council, said the drayage requirements were one of the “four pillars” of the Clean Fleets rule.
Another “pillar,” the High Priority and Federal Fleet Requirement, outlines percentages of private fleets that must be ZEVs on a sliding scale up by 2035 to 2042, depending on the type of truck. It falls on “all entities” that generate more than $50 million in total U.S. revenue, own or control more than 50 trucks, or on a broker that “owns, operates or dispatches more than 50 trucks,” according to a summary of the rule written by Leah Silverthorn, a senior policy advocate at the California Chamber of Commerce. That latter stipulation would bring brokerage companies under the rule.
Portillo said the other two pillars are a public fleet component rule and a rule requiring sales of 100% ZEVs for new medium- and heavy-duty vehicles starting in 2040.
As Silverthorn wrote last year, when the outlines of the regulation were first released by CARB, “very few exemptions [were] contemplated by the rule.”
“Essentially, if a ZEV version of the body type of the vehicle you (intend) to purchase is offered for sale, the regulation applies,” she said. The exemptions include some emergency vehicles.
The Harbor Trucking Association, which represents the drayage industry in the ports of Long Beach/Los Angeles, did not submit a lengthy comment to CARB regarding its Clean Fleets rule and the drayage requirement specifically. Instead, last October it sent a letter offering support to the broader comments submitted jointly by the American Trucking Associations and the California Trucking Association.
But in an interview with FreightWaves, HTA CEO Schrap expressed specific concern about the drayage requirements. A forced switch to 100% ZEVs for new purchases would be in a market where just a handful of those types of vehicles are in service now — Schrap put it at 29 in the LA/Long Beach ports — against a universe of approximately 20,000 drayage vehicles.
Schrap listed several headwinds that the drayage EV mandate would face. They include a shortage of chips for building new vehicles, a lack of charging infrastructure, the likelihood that the process to build new ones would be slow and the initial $400,000 cost of the vehicles — in a field where many drayage vehicles are secondhand tractors repurposed into the ports.
“It’s hard to believe they would be so cavalier, but this is CARB here,” Schrap said.
He conceded some agreement with the backers of the regulation: that a variety of incentives enables the acquisition of a ZEV drayage vehicles. But he laid out the scenario of a “catastrophic failure” of an existing vehicle that leaves the driver with nothing. For example, a grant application he just completed for a clean vehicle won’t see a truck actually delivered until June or July. For a driver who suffered the loss of a vehicle but has to wait that long to buy a new truck, “then what?” Schrap said.
The ATA/CTA formal comment on the proposed Clean Fleets rule is a lengthy document, raising objections to several provisions. One notable point made by the two groups regards the coverage of brokers under the proposal. While brokers are noted as coming under the rule, the ATA/CTA letter said CARB staff had “indicated” that brokers “dispatching loads on ad-hoc or limited term basis” as well as load boards would not fall under the rule.
“Plainly, this is a disastrous, highly subjective provision that would undermine CARB’s regulatory scheme by placing covered fleets at an enormous competitive disadvantage against multi-billion dollar freight brokers and digital load boards,” stated the letter, signed by Chris Shimoda, senior vice president of government affairs at CTA, and Mike Tunnell, director of environmental affairs and research at ATA.
The initial point made by ATA/CTA in its letter is that the ZEV requirements for the largest trucks are “premature.” Shimoda and Tunnell say in the letter that an exemption built into the proposed rule for trucks that run a certain number of miles likely means that most Class 7 and 8 tractors will qualify for the exemption, given the combination of average daily miles driven, hours-of-services rules and battery life. So many trucks will seek the exemption, the CTA/ATA letter says, that CARB staff “would need to process approximately 51 exemptions per day during the course of a 12-year phase-in.”
Other concerns the two organizations raise in their letter include the lack of charging infrastructure (similar to the point raised by Schrap) and the lack of a consolidated compliance system for the alphabet soup of reporting requirements. Also at issue is the fact that rental vehicles are under the same requirements as private fleets, even though the users of the rental fleet are “highly transient and [serve] many small businesses which may not have access to charging infrastructure for the foreseeable future.”
While California can be seen as an outlier, the reality is that regulations it adopts often become the standard that other states eventually follow. Attorney Martson said engine manufacturers would like to avoid having a split market where there are significantly different regulations than in other parts of the country.
“A split has emerged between California and the federal government, and the OEMs get caught in the middle,” Marston said. “California has a lot of power here as a huge economy.”
And it isn’t alone. Five states — Oregon, Washington, New York, New Jersey and Massachusetts — have approved the California ACT rules for their states. That would amount to about 22%-23% of the nation’s population in combination with California, giving those rules greater heft.
That was driven home earlier in January, when GM said it recognized California’s authority under the Clean Air Act to set its own vehicle emissions standards, a position not granted to other states. When it did so, according to an article in the Detroit News, it joined several other companies, including Ford and BMW, on the list of companies that recognized the state’s Clean Fleets rules whose approval will be a key development for the trucking sector to watch in 2022.