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Battleground for new diesel regs goes beyond ARB

A classic dispute before the Air Resources Board, pitting environmentalists against builders over a multibillion-dollar plan to cut diesel pollution, has gone beyond the confines of the ARB and is spilling over into the state budget and the highest levels of the Schwarzenegger administration.

Environmentalists have successfully pushed into the 2007-08 Senate budget version a provision that requires builders, with some exceptions, who win new infrastructure-construction contracts to use specially approved exhaust filters to block harmful diesel emissions. The language could be worth hundreds of millions of dollars–directly from the pockets of equipment owners.

“The point here is to make sure the state is not subsidizing the use of high-polluting equipment in areas that are going to have a lot of impact on the public,” said Kathryn Phillips, an air-quality advocate for Environmental Defense. “We think it makes sense that equipment used on bond-financed construction sites should be clean,” adding that language also proposes $20 million annually to defray the costs of modifying the equipment.

The construction industry doesn’t see it that way and contends the proposed ARB regulation will thwart the voters’ desire for new construction of waterworks, highways and other infrastructure. The rule “will undermine California’s ability to make critical infrastructure improvements and will fail to deliver promised air quality benefits,” David Sbaffi of Granite Construction Inc. wrote to the ARB. “This regulation cannot create an unfair competitive advantage for small, medium or large companies.”

The industry also believes that the ARB’s research and market knowledge is faulty, noting that an ARB survey sent to 79,000 builders elicited only 551 responses, representing about 12,000 pieces of equipment. The “survey is sufficiently of insufficient size to build a regulation on,” Sbaffi added.

Parties in the dispute, involving the most important environmental regulation since last year’s law to curb greenhouse gases, have gone directly to the governor. On Tuesday, Capitol sources said, the governor and chief of staff Susan Kennedy met with a number of the major players on ARB regulation and the budget language, including builders and contractors. Details of the meeting were not disclosed.

The language, adopted by Senate Budget Subcommittee No. 2 and inspired by Environmental Defense, cites the health hazards of diesel pollution. “Diesel engines emit a complex mix of pollutants, the most visible of which are very small carbon particles or ‘soot.’

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