Weak economy could hurt proposed anti-pollution rules

Crucial pieces of California’s efforts to curb pollution from diesel-powered vehicles – everything from school buses to big-rigs to delivery vans – include providing financial help to vehicle owners to install the costly, soot-trapping cannisters on their engines. But as the economy tightens and credit is more difficult to get, forking over $5,000 to $25,000 for a trap or a few thousand dollars to streamline a vehicle is no easy chore and is likely to get a lot harder, trucking industry experts say.

The Air Resources Board which is writing the new regulations believes the economic impact of putting them into effect is offset by public health-care savings for pollution-related illnesses.

For environmentalists, the dispute over money is merely the latest skirmish in the fight over the diesel regulations engineered by the industry in its attempt to block or weaken the rules.

But diesel operators, fleet owners, truckers and others say the pocketbook impact on the industry is $5 billion or more – some industry estimates are much more – and that it drains strength from an already-weak industry. Another set of rules, to improve fuel efficiency through streamlining, properly inflated tires, improved fuels and the like, would cost billions more.

The ARB, from board Chairwoman Mary Nichols on down, is aware of the truckers’ and schools’ positions. The ARB staff has been meeting with industry representatives and environmentalists for the past 18 months on the regulations, and the ARB notes that it earlier made concessions to the industry. There are indications that the proposed rule may be modified to reflect the additional concerns,  but no public statements have been issued by either side.

According to the industry about $440 million is available for the disel-related upgrades through matching funds, although the ARB says that figure is higher, perhaps $1 billion.

Some within the trucking industry already have felt the economic pinch. “I upgraded my fleet to help clean the air and the only thing getting taken to the cleaners is me,” one Solano County trucking owner wrote to an industry representative. “My 800-plus FICO (credit) score is shot and I will have to file bankruptcy. I’ll be lucky to keep my house,” she wrote.

The dollars are important, because the success of the Air Resources Board’s soot-cutting regulations depends in part on the ability of diesel-engine operators to comply with the new rules. The ARB, facing a deadline, plans to adopt the new rules in December. The dispute reflects the classic debate in air-quality regulation – the economic reality of the pocketbook vs. the environmental reality of clean air.
Truckers, in particular, believe the rules will be hit hard by the new rules. Nationwide, nearly 2,700 trucking companies went out of business nationally through the end of the third quarter of 2008, about a fifth of them in California.

A total of 2,690 companies with five or more trucks went out of business between January and September across the country. In the third quarter alone, said Donal Broughton, a longtime trucking industry analyst and managing director of Avondale Partners LLC. Broughton said some 785 companies with approximately 39,000 trucks, or 2.0 percent of the nation’s over-the-road heavy-duty trucks, closed their doors in the third quarter.

There were more closures during the 2000-01 economic downturn, but the current crop of closures involve larger companies, Broughton told the publication Land Line Magazine, which tracks the trucking industry. “Never have more trucks been pulled off the road in a shorter period of time than in the first three quarters of this year,” he said.

If the pace continues through the fourth quarter, 2008 will be “the worst year to be a marginal trucker.” But, he acknowledges, it could be the “best year to have survived,” he added.

In 2000-2001, the average size of companies that failed was companies with between 20 and 35 trucks. This year, it’s companies with more than 45 trucks.

The proposed diesel rules are part of the state’s attempt to cut greenhouse gases. Overall, California hopes to reduce carbon emissions to 1990 levels by 2020.   Many scientists believe the emissions, also known as greenhouse gases, intensify global warming. The gases are largely the result of industry and manufacturing, among other sources.