Clean Truck Fund rate approved by California ports
March 10, 2020
Harbor commissions in Southern California have approved of a Clean Truck Fund rate that will be applied to certain diesel-powered trucks.
On Monday, March 9, the ports of Los Angeles and Long Beach Harbor Commissions approved a Clean Truck Fund rate of $10 and $20. The Long Beach Harbor Commission passed the proposal with a 3-2 vote, while the Los Angeles Harbor Commission approved it unanimously during a special joint meeting.
Cargo coming out of the two ports will be hit with a fee of $10 per loaded 20-foot equivalent unit or $20 per loaded 40-foot equivalent unit. The fee will be charged to the “beneficial cargo owner” for loaded containers hauled by a truck.
Commissioners also voted to eliminate language regarding certain exemptions. Zero-emission trucks will be exempt from the Clean Truck Fund rate. However, language exempting low-NOx or near-zero emission trucks was waived.
Monday’s vote identifies the Clean Truck Fund rate only. Exemptions through 2031 and collection authority will not be established until future commission meetings.
Tracy J. Egoscue, Long Beach Board of Harbor commissioner, was one of the two opposed to the Clean Truck Fund rate. Egoscue cited concerns over the lack of protections for truck drivers.
“I question why there are no details surrounding this rate,” Egoscue said during the special meeting. “For example, we have an opportunity as a board to review the details to ensure that any rate does not fall disproportionately on the backs of the truck drivers. There is no detail in this plan that I can see that can ensure that this does not happen.”
The approved rate could be a considered a win for the trucking industry and a blow to environmentalist groups. The $10/$20 fee is the low end of a range outlined in an economic study for the Clean Truck Fund rate released in December. During a public workshop held on Dec. 18, many speakers wanted a much higher Clean Truck Fund rate.
Todd Campbell, vice president of public policy and regulatory affairs for Clean Energy Fuels, expressed his strong disapproval of the proposed rate.
“I think $10 is a nonstarter,” Campbell said. “It’s not going to create a significant transition, not the one that you’re anticipating, and I certainly wouldn’t call it a zero-emission plan, because you’re never going to get zero with $10.”
Campbell said he would like to see a rate closer to $70 per FEU, the highest end of the feasible range within the study. Other stakeholders echoed that sentiment, including representatives from SoCalGas, the California Hydrogen Business Council, Breathe L.A., the Coalition for Clean Air and the Natural Resources Defense Council.
Public opinion of Clean Truck Fund rate
The four-hour special joint meeting was spent mostly on dozens of public comments. Many speakers supported the rate, while others opposed what they believed is a rate too low. Other speakers were against any fee at all, claiming the logistics industry has done plenty to curb air pollution.
In addition to the dozens of speakers during the March 9 meeting, dozens of letters were submitted to the Harbor Commissions.
Other than the environmentalist groups that opposed the rate they feel is too low, several trucking companies also want to see a higher Clean Truck Fund rate.
Maxlink Logistics CEO Mary Liu requested that the ports raise the rate to $100 per container. Maxlink is a six-truck fleet that replaced two of those trucks with cleaner trucks through grants. Liu said the replacements have put her company at a “competitive disadvantage” with higher truck costs. She said a higher rate will support companies like Maxlink.
“This will protect my business that is already investing in clean trucks and will encourage other companies to also invest in clean trucks.” Liu said. “Without the support of a good container rate, there is no reason to invest in more expensive clean trucks.”
Green Fleet Systems, Pacific 9 Transportation and MBD Transportation were among the trucking companies that echoed Liu’s sentiment.
On the other hand, many opposed any kind of fee.
Among those opposing the Clean Truck Fund rate are the American Trucking Associations, Target and Walmart.
ATA argues the Clean Truck Fund fee on any truck not meeting certain emission standards is likely preempted by the Federal Aviation and Administration Authorization Act of 1994. Meanwhile, Target argues the lack of available and feasible zero-emissions options renders the fee punitive.
“Given the unavailability of (near-zero emission) and (zero emission) trucks for purchase there seems to be little need of such an urgent roll out of this fee,” said Natalia Chan, Target’s senior director of international logistics. “It would essentially be a penalty for not having equipment that will not be readily available for some time.”
Walmart had several concerns. First, Walmart Vice President of Inbound Transportation Ken Braunbach stated that the economic study concludes that implementation of the fee would have little to no impact on early adoption of clean trucks. Second, Walmart wants more clarity on which trucks are considered near-zero emission. The retail giant also wants a “concise and detailed explanation” regarding how the new revenues will be used.
Clean Trucks Program
The Clean Truck Fund rate stems from California’s Clean Truck Program and Clean Air Action Plan.
Phase one of the Clean Trucks Program update requires any new truck registered in the Port Drayage Trucks Registry after Oct. 1, 2018, to be model year 2014 or newer. The goal is to have all port trucks at zero emissions by 2035.
However, trucking companies need incentive to get there. The Clean Truck Fund is being established to give trucking companies that incentive. Those that reach near-zero or zero emissions will be exempt. In the meantime, money from the fund will be used to subsidize newer, cleaner trucks.
More than 18,000 trucks are registered. However, only nine are zero-emissions trucks. When collection of the Clean Truck Fund rate begins in fall 2020, CARB-certified low-NOx engines or better will be exempt. However, CARB is not scheduled to set low-NOx standards until next spring. Until then, fleet and truck owners are in the dark regarding what kind of truck will be accepted for rebates.
Beginning 2023, newly registered trucks will be required to have CARB-certified low-NOx engines or better. Those standards will be set later this year. Trucks that have already been registered before 2023 will be able to continue operating regardless of emissions quality.
Although ultra-low NOx natural gas trucks are technically feasible, the infrastructure needs improvement for widespread deployment, according to the report. Battery and zero-emission trucks are in the “demonstration phase.”
Additionally, price differentials between diesel trucks and low-NOx trucks are as high as $150,000. If the Clean Truck Fund rate generates $90 million a year, about 600 trucks can be fully transitioned. However, the fund will likely generate less revenue each year as trucks slowly reach emissions compliance.