At Construction Equipment we have been covering various aspects of the California Air Resources Board’s regulation limiting emissions from in-use off-road diesel for a while now. The way the ruling is written, it seems to encourage most equipment owners to move machines with Tier 0 or Tier 1 engines – all those built before 1997, and most construction-sized machines built before 2003 – out of their fleets because they can’t be effectively retrofit with verified emissions-reducing devices. We assume that the effective obsolescence in California of machines at these ages will impact the value of these machines in California, and perhaps in surrounding states. Have you seen any resale-value changes that you think can be attributed to emissions regulations? Thanks, Larry Stewart Executive Editor Construction Equipment magazine
The compilance dates and fleet sizes are as follows : Above 5000 horsepower comply by 2010 2501-5000 HP ...............2013 25- 2500 HP ...............2015 What we are seeing is a flooded market of machines powered by unregulated engines and little interest in those machines from medium to larger contractors and the rental business. Personally I don't see how it can be possible to comply by those dates. There is talk of a $10000 fine for each violation after the compliance dates. We are already struggling with the poor economy and out of control petroleum prices, for some this will be the nail in the coffin. This buisness used to be alot of fun for me and it has turned into a PITA
I haven't been able to quantify any movement from California to Washington State yet. There is a court case moving up the chain to try and give states the right to regulate to higher standards than the Feds do. If this makes it through the Supreme Court like I think it may, then the whole west coast and several other states are lined up to do the same thing as Mexifornia. I agree with DPete and think the triple witching hour is coming. I've met some manufacturing and dealer people that think this will send a lot of iron to the scrap heap and require new. With the price of fuel and tightening of the credit markets I think a lot of people will just walk away from their businesses. Set the sea anchor and batten down the hatches. I can see a storm coming.
In Ohio it appears that we will most likely be the next state to fall under CARB regulation behind Texas, if it is not defeated in Washington, thus adding yet another large population of equipment to the disposal list. I have to admit that my education on CARB regulation and compliance has recently been sent into overdrive after grant monies were made available to contractors in Ohio who are pre-compliant to CARB regulations (almost 10 million in funding). The basic weighting used to qualify for the funding set aside looks at total tons of emissions reduced per dollar spent (generally speaking). The off road fleet that reduces the greatest amount of pollution per dollar spent will be provided the largest portion of the grant monies set aside. As the panic spread throughout the state of Ohio over CARB compliance, several large contractors started to evaluate their fleet makeup and began to determine the cost that would be incurred upgrade or dispose of units that were unable to be improved. By placing a dollar figure on pre-compliance several contractors learned that to meet CARB compliance they would be faced with a task that was not something that could be attacked from a single front, but looked at from a moving scale of compliance. This rolling compliance forced contractors to evaluate their fleet makeup and determine where it was most beneficial to retrofit first and then to upgrade next and finally to replace. It is this rolling upgrade that will work to reduce the “flood” of equipment that was initially expected to tank auction prices. At this time the grant proposals are still in the evaluation stage but CARB regulation is something that has pricked the ears of many large heavy highway contractors and any company running off road diesel engines bidding public work or performing tasks within CARB regulation compliant communities. As far as equipment values seeing erosion due to contractors dumping non-CARB regulation compliant equipment, it is my opinion that we will not continue to see the pricing deterioration that was initially expected, or experienced. With the weak US dollar and equipment demand growing in countries with less stringent emission requirements there should continue to be an outlet for US machines. The exporters/brokers, or contractors who have avenues for disposal overseas, will most likely be the parties that manage to be least affected and evolve and survive what could potentially be the largest disposal of US equipment in history (IF CARB REGULATION IS NOT DEFEATED IN THE COURTS). This is a time in history where the contractor or business that looks at things from several different vantage points, some of which are unconventional, will be the one to overcome the adversity that is at hand. There are several challenges that contractors are facing today that all have solutions, it is just whether the solution is palatable or not that will determine the victors.
Below is an email I received today concerning public meetings in Mexfornia about the new regulations. It is announcing a web cast to be held later this week and gives links so any can view it. The case in the court system concerns this very issue. Sweeping Industry News Alert From Diesel Rule Webcast Wednesday, June 4th The California Air Resource Board (CARB) is conducting workshops to explain their plan to reduce diesel truck emissions 85% by 2020. This will affect all diesel powered trucks over 14,000 gvw. Depending on the compliance option you select, enforcement and reporting start in 2010 and have an effect on all engines 2006 and older. This new regulation specifically does away with 'grandfathering.' Not in California? At the Riverside meeting May 29th, CARB stated there are 10 states simply waiting for the final language to be approved. CARB admits that this will be a "painful" regulation. There are also documentation requirements for how engines must be labeled, what must be kept in the vehicle and significant annual reporting requirements. Violation of the regulation can result in "civil or criminal penalties" for the business owner. Don't wait to get informed. Find out if the truck you buy today will be in compliance, or will you have to add a $10,000 to $20,000 particulate filter in only a few years. CARB Workshop Notice: http://www.arb.ca.gov/msprog/onrdiesel/documents/May_June_2008_Workshop_Notice.pdf CARB also has several live webcasts. Watch the meeting from your computer. Wednesday, June 4th, from 12-3pm and 5-8pm, Pacific Time. (Note: Webcast schedule shows 1pm start, this is confirmed as incorrect and will be changed to 12pm start) Public Workshop for Statewide Truck and Bus Regulation (webcast) http://www.calepa.ca.gov/broadcast/?BDO=1 (Note: at the bottom of the page there are links to test your connection and computer settings prior to the webcast) The latest draft of the proposal can be found at http://www.arb.ca.gov/msprog/onrdiesel/onrdiesel.htm Don't miss this opportunity to see the workshop from your computer.
Not sure about emissions, but I have seen a increase in resale value due to exporters. Talked to RB and they said that on avg, 30% of the equipment goes overseas.