Clean Air Panel

January 11, 2007

• Recent Bond Measures Approved November, 2006 – Proposition 1B • • • • $19.9 billion Transportation Bond Makes $1 billion available to CARB for emission reductions, not otherwise required by law or regulation, for activities related to the movement of freight along California’s trade corridors. Makes $2 billion available for improvement of the movement of goods highways and rail systems, and between California and Mexico.

– through the ports, on the state Goods Movement Action Plan recommendation from BTH & CARB to CTC by December, 2006.

Final decision-making by CTC.

CARB’s Emission Reduction Plan Statewide Trucks – Plan seeks to apply the best available control technology to the entire truck fleet in private ownership, with a targeted program to modernize the subset of trucks serving ports – Plan targets an 88% reduction in diesel PM, and about a 60% reduction for NOx and ROG by 2020

CARB’s Emission Reduction Plan Statewide • Locomotives: – Plan seeks upgrades for engines in switcher locomotives – Plan calls for retrofit diesel PM controls on existing engines – Plan recommends federal standards that would achieve 90% control of diesel PM and NOx for new engines

Clean Air Action Plan POLA - POLB Trucks – CAAP calls for replacement or upgrade of all frequent and semi-frequent caller trucks, and all older (model year 1993 and older) trucks that call at both Ports by the end of 2011 – Development of alternative fuel infrastructure to provide additional options for cleaner trucks

Clean Air Action Plan POLA - POLB • Locomotives – CAAP seeks upgrades of all existing PHL switch engines to Tier II engine standards by end of 2007 – Use of idle restrictions, Tier III equivalent locomotives, cleaner fuels, and retrofit controls on all Class I switcher, helper, and long haul locomotives operating on Port property – Stringent standards for new or modified railyards, implemented via the CEQA process, to ensure significant reductions from locomotives, CHE, and truck operations – Implementation via contract or memoranda of understanding – On-going legal and cost-effectiveness analyses prior to adoption of port wide tariff’s or ordinances

Industry Efforts: Railroad

US Railroad Intermodal Flows (car loads) for 2002

Adopted SCAQMD NOx Inventories

250 200 150 100 50 1987 1997 2005 2010 0 % SCAQMD NOx Inventory HHD Trucks Offroad Equip

21% 17% Data Sources: SCAQMD AQMPs & Other Materials

Ships

7%

Aircraft Trains

4% 2%

Adopted SCAQMD PM 2.5 Inventories

25 20 15 1987 1997 2005 2010 10 5 0 HHD Trucks Offroad Equip Ships % SCAQMD PM2.5 Inventory

2.4% 7.9% Data Sources: SCAQMD AQMPs & Other Materials 3.2%

Aircraft Trains

0.4% 0.7%

Inherent Efficiencies of Rail

vs.

Capacity Fuel Efficiency NOx Emissions 1 double stack train equals up to 280 trucks Trains are 2-4 times more fuel efficient than trucks on a ton-mile basis Trains are 2-3 times cleaner than trucks on a ton-mile basis

Comparison of Mobile Source Requirements (South Coast Inventory 2010)

Trucks Off-Road Equipment Ships Inventory NOx PM Standards for New Units 21% 2.4%

Yes

Retrofit Existing Units

No

Rebuild to New Standards NOx Fleet Avg. in SCAQMD

No No

Statewide PM 2005 MOU

No

17% 7.9%

Yes

7% 3.2%

Yes No No No No No No No No

Aircraft 4%

Yes

4%

No No No No

Urban Buses 2%

Yes Yes No No No

Loco motives

2% Yes Yes Yes 0.8% Yes (22% Done) Yes

Freight Railroads’ California Environmental Improvement Program • 1994 -- Supported the US EPA’s standards for new and re-manufactured locomotives • 1998 -- Developed enforceable MOU with ARB and US EPA to achieve accelerated reductions in Southern California • 2000 -- Created an end-user research & development program for new technologies

Additional Railroad Emission Reduction Program Components • 2001 -- $5 million in funding by the railroads for particulate trap research at Southwest Research Institute • 2005 -- Concluded an MOU with the Air Resources Board to accelerate PM reductions in and around rail yards • Ongoing -- Funding & demonstrating new locomotive technologies: – Spark ignited LNG technologies – Idle reduction devices – New switch engines using truck engine technologies – Hybrid locomotives

South Coast Fleet Average from 1998 MOU

Reductions from EPA Loco. Tiers 1 and 2 only … continental US 40 50 60 70 0 10 20 30 80 90 100 Reductions when Loco. Tier 0 added to Tiers 1 and 2 … continental US

67% NOx reduction from South Coast Fleet Average Program in Southern California!

2000 2005 2010

Southern California commitment from the Railroads

How the ARB Described the 1998 MOU “ This compliance requirement would be met by the use of only the cleanest engines within the SCAB non attainment area by an aggressive phase-in of these engines over five years. In essence, this fleet average requirement represents the most aggressive scrappage and replacement program of any transportation source in the SCAB (in effect, 100 percent scrappage/replacement with the latest, low emitting locomotives over 5 years from 2005-2010). It would lead to an overall emission reduction of 67 percent by 2010 .” [Emphasis Added] The California State Implementation Plan for Ozone, Vol. II: The Air Resources Board's Mobile Source and Consumer Products Elements, Appendix B, at B-20 (Nov. 15, 1994).

2005 CARB/Rail MOU – What It Does • Phase I: Brings about a 20% reduction in PM emissions from rail yards in California over the next three years • Phase II: Invites all local air districts and community groups to discuss longer-term locomotive emission control strategies • The reductions achieved by the MOU are larger and sooner than could have been required by any California regulatory or legislative body • The only way the State could get reductions from preempted sources was through a voluntary agreement • By using a cooperative approach, California has also avoided implementation delays due to disagreements over the State’s legal authority

2005 CARB/Rail MOU – Outcomes • ~425 locomotives will be equipped with automatic shutdown devices with 15 minute triggers • At least 80% of California fueling will be low-sulfur – six years earlier than required by federal regulation • At least 99% of all locomotives will comply with stringent smoke regulations – a much higher rate than any other mobile source • Health risk assessments will be carried out at the 16 major rail yards throughout California

Reductions in Rail Yard Diesel PM

Sources Through Trains Switcher Locomotives Loco Refueling Cargo Equipment Container Truck Total 2005 (Base) 10 7 2 34 7 60 EMISSIONS (tpy) & Reductions 2010 % Reduction Strategy 5 0.7

0.5

13.6

0.7

20 50% 90% 75% 60% 90% 65% ‘98 MOU ‘98, ‘05 MOU, CARB Diesel ‘98, ‘05 MOU ARB Rule Bond (or Moyer) Funding

Based on information the California Air Resources Board staff presented in 1/27/06 ARB Meeting

1.4

NOx Emissions per ton Mile of Freight South Coast Air Basin

South Coast Air Basin Truck NOx Rail NOx 1.2

1.0

0.8

0.6

0.4

0.2

0.0

2000 2002 2004 2006 Calendar Year 2008 2010 2012

0.025

PM Emissions per ton Mile of

Figure 2 -- PM Emissions per Ton Mile of Freight

Freight South Coast Air Basin

0.020

0.015

0.010

0.005

0.000

2000 2002 Truck PM Rail PM 2004 2006 Calendar Year 2008 2010 2012

Technology Developments

Comparative Markets: Locomotives & Trucks • Diesel engine technology is driven by the US over-the-road truck market – 211 Class 8 trucks have been sold for every locomotive since 1972 • Engine technologies “cascade down” through normal marketplace forces – Automotive  Marine Truck  Locomotive, Stationary, and – Example: Electronic Fuel Injection • Introduced into the auto market in

early

1980’s • Entered truck market in

late

1980’s • Entered locomotive market in 1994 – Engine technologies cannot be quickly and simply “scaled up”

Liquefied Natural Gas Switcher Locomotive 1200 sustainable horsepower, spark ignited

New Switch Locomotive Technology: Hybrids

2000 peak horsepower from batteries “Hybrid” light-medium duty switcher Batteries recharged by 290 HP EPA off-road Tier 2 diesel gen set Significantly exceeds EPA locomotive Tier 2 requirements

New Switch Locomotive Technology: Gen Set

(2) 700 sustainable horsepower diesel gen sets “Gen Set” heavy-duty switcher Powered by (2) EPA off-road Tier 3 diesel gen sets Projected to exceed EPA locomotive Tier 2 requirements

Diesel Particulate Filter (DPF) R&D • Two UP 1500 horsepower switchers will be equipped with DPF technology in 4Q ‘05 • Units will be tested for maintainability, durability and performance in California • Railroads have been co-funding 5-year R&D project investigating performance, durability and applicability of DPF to older switching locomotives • R&D work being performed by Southwest Research Institute (“SwRI”) through Association of American Railroads • There is no technical precedent for this work

Evaluate Emissions Reduction Possibilities from a Systems Perspective • Must balance the needs of shippers, transporters, commuters, adjacent communities, regulators, and many other stakeholders • Altering one part of the system can cause disruption to the entire goods movement system (ships, rail, and truck operations) – International port calls, labor opportunities, freeway traffic patterns, and even commuter rail operations • Unintended economic and environmental consequences of various public policy choices must be squarely addressed • This issue needs a statewide focus and management team (per the Governor’s recommendation)

Industry Efforts: Trucks

Recent Litigation

• PMSA v. CARB – Complaint filed in December, 2006 • PMSA Litigation Challenges – CARB Auxiliary Engine Rule – Multiple grounds for preemption

Recent Litigation

• BNSF, UP & AAR v. SCAQMD – Trial took place over three days, Nov. 28-30, in Federal District Court – Railroads challenged recently enacted SCAQMD rules regarding locomotives – Ruling expected at anytime

Recent Litigation

• RR Litigation Challenges SCAQMD Rules – Rule 3501 requires the Railroads to record and report data for locomotive idling events longer than 30 minutes – Rule 3502 imposes a penalty for certain locomotive idling events longer than 30 minutes – Retrofit with anti-idling technology

Recent Litigation

• RR Litigation Challenges SCAQMD Rules: – Rule 3503 requires the Railroads to gather information, develop an air emissions inventory, calculate the cancer and non cancer health risks posed by their operations at rail yards, and to annually notify the affected public if risks exceed the public notification levels.

Recent Litigation

• Causes of Action – Preemption under ICCTA – Preemption under Clean Air Act – Preemption under Boiler Act – Violation of Commerce Clause – Lack of authority under state law