Clean-air regs cost Nevada companies big bucks

Nevada transportation companies that do business in California are finding it costly to comply with rules and regulations enacted to clean up California's air.

Beginning Jan. 1, new California Air Resources Board rules require privately owned diesel trucks to be retrofitted with exhaust filters to capture pollutants before they are emitted to the air.

CARB regulations also stipulate replacement of older vehicles beginning in 2015 so that from 2020 to 2023 all older vehicles would be upgraded to meet 2010 exhaust emissions standards.

Fines for vehicles that are out of compliance can run about $1,000 a day, says the California Trucking Association. Many northern Nevada transportation companies have found it most prudent to begin upgrading their fleets - at no small cost.

Jeff Lynch, president of ITS Logistics in Sparks, estimates his company has spent between $5.5 and $6 million over the last two years revamping his fleet of more than 300 big rig trucks to comply with CARB regulations. ITS Logistics purchased 33 new tractors in 2011, and it purchased 16 new Volvo tractors in 2010.

"Our entire fleet is under one-and-a-half years old," Lynch says. "It is really not practical for most of the industry to retrofit, so it creates an investment in new equipment."

The bottoms of trailers also must be skirted to reduce wind drag and improve fuel performance, and Lynch says ITS already retrofitted 60 trailers at a cost of nearly $120,000. He purchased 40 new trailers and plans to purchase another 60, as well as upgrade existing trailers with skirting.

Despite the expenses, Lynch says ITS drivers now are logging much better fuel efficiency.

Brad Meyer, operations manager for NevCal Trucking in Sparks, says the CARB regulations put northern Nevada transportation companies at a competitive disadvantage with California-based competitors that received subsidies to offset retrofitting or replacement costs. CARB is offering up to $60,000 in grants to replace trucks and up to $20,000 to install exhaust retrofits.

Depending on the manufacturer, Meyer says, the new diesel emissions packages cost between $9,000 and $14,000 and push total costs for a new tractor truck between $140,000 and $160,000. To offset some of that expense, NevCal Trucking was forced to raise rates $25 to $50 per container.

"We have had to do it out of pocket, whereas California has been subsidized," Meyer says. "The problem is that if someone got $40,000 towards a new truck, they are only spending $90,000 on a new truck and can afford to keep their rates lower. For some customers, any rate increase can be detrimental to them, and we have been kind of hamstrung by that."

NevCal runs 50 to 60 trucks daily between Reno and Oakland picking up marine containers.

Because trucks spend a great deal of time idling while waiting for a container, CARB rules currently stipulate that no truck with an engine built after 2004 is allowed in California ports (the stipulation changes to engines built before 2007 in 2014).

NevCal Trucking has purchased 20 new big rig tractors each of the last four years, Meyer says.

"We knew it was coming, so we started on our trucks back in 2007," Meyer says. "Our goal was to be ready when the 2015 regulations go into effect; we were more worried about that date."

Construction-oriented companies that haul material in California also have to comply with the new regulations. Clint Capurro of Capurro Trucking in Sparks says his company does a great deal of highway work in and around Sacramento, Truckee, Lake Tahoe and Portola.

Capurro Trucking has purchased 16 new 2012 tractor trucks, and it needs to purchase about that many more to have the required 30 percent of its fleet of nearly 100 vehicles in compliance with CARB regulations. New tractors cost the company upwards of $160,000 each, Capurro says.

"This is a huge deal for us," he says. "In a down economy it is killing a lot of companies. I don't know how California companies are still operating; it has taken a lot of them out."

The recession and new regulations have created a brisk resale market for older big rigs, however. Capurro Trucking has downsized its fleet by more than 30 percent over the past few years due to the construction downturn, and ITS Logistics routinely phases out its older vehicles.

"Used pricing has increased 50 percent in value in the last year," Lynch says. "As the economy collapsed, big fleets stopped buying, and nobody was building, which depleted the used market. There still is a place for (older trucks). In parts of country you can run as old as you want."

Tractors are usually upgraded every five to six years, Lynch adds, but now it's being done on an accelerated schedule to benefit from newer technologies in diesel emissions that burn off soot from the engine before it is released into environment.

"The reality is that these are good changes for our industry," he says. "It makes it tougher for smaller guys to compete, but our fuel economy has increased over a mile-and-a-half per gallon with this new technology. We are seeing huge payback, and the air coming out of a truck now is much cleaner than the air going in."