Guide to Deploying Clean Truck Freight Strategies (2017)

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18 3.1 Introduction The researchers conducted interviews with a diverse range of public agencies, including fed- eral agencies, state departments of transportation (DOTs), metropolitan planning organizations (MPOs), state and regional air quality agencies, port authorities and airports, and local govern- ments. The involvement of these agencies in promoting clean truck strategies is generally reflective of their roles and jurisdictional authority. 3.2 Clean Truck Programs 3.2.1 Program Structure Public agencies play varying roles in developing and supporting clean truck strategies. Some agencies, such as CARB and port authorities, establish standards that directly regulate freight trucks within their scope of authority. Other agencies, such as FHWA, state DOTs, and MPOs, have planning roles; they articulate a vision for a clean transportation system and identify and prioritize infrastructure investment needs. A number of these agencies also provide research and development support, funding or leading pilot projects, and examinations of new strategies. Finally, many agencies fund grants and implement incentive programs to encourage deployment of low- and zero-emission trucks. Agencies often take on multiple roles to meet their emission goals from several angles; for example, they could pair emission standards with technology grants to both require and incentivize clean trucks. State DOTs are primarily focused on planning, building, operating, and maintaining the high- way system. Most state DOTs have developed statewide freight plans, as required under MAP-21, and they view freight system improvements as an important component of achieving state mobility and economic goals. State DOTs recognize that an efficient, smoothly flowing freight system can help to minimize air quality impacts. State DOTs may play a role in planning or funding freight system improvements that have air quality benefits, such as railroad grade separations. In a few cases, state DOTs are taking initial steps to support alternative fuel infrastructure, although to date this has been focused on light-duty electric vehicles. State DOTs are not involved in providing funding to fleets to deploy clean truck strategies. Table 10 lists all of the agencies interviewed and the types of programs managed by each agency. Note that the table does not necessarily indicate all of the types of programs adminis- tered by the agencies but only those that were discussed during the interviews. 3.2.1.1 Regulations Agencies such as the U.S. EPA and CARB have the regulatory authority to establish emissions standards and restrictions within their jurisdictions. Similarly, agencies managing ports may be C H A P T E R 3 Public-Sector Perspectives

Public-Sector Perspectives 19 able to impose emissions or fuel requirements within the port fence lines. As landlord agencies, PANYNJ and the Port of Long Beach (POLB) were able to develop rules for trucks operating on port properties by amending tariff agreements with their tenant terminal operators. Both ports established regulations restricting access of drayage trucks to the ports based on their engine model years; they developed a schedule progressively banning older engines until only trucks with MY 2007 engines and newer were allowed on property. The POLB truck restrictions were also supported by CARB statewide drayage truck regulations. Although CARB’s replacement time- line was less aggressive than the port’s compliance schedule, the state requirements provided a backstop for the port’s efforts, signaling to the trucking industry that meeting the 2010 emission standards would be unavoidable. Such truck restrictions can result in significant emissions reductions, which is especially ben- eficial in areas such as ports that have high diesel engine activity. When developing regulations, agencies should engage with stakeholders to try to get their buy-in to the program. However, even with stakeholder outreach, these regulations may face legal challenges from those negatively affected by the rules; the ports of Los Angeles and Long Beach had lawsuits brought against them for their truck bans. Agency Regulatory Planning Research and Pilot Testing Grant and Incentive CARB X X X X California Department of Transportation X California Energy Commission X X Chicago DOT X X FHWA X X X X Louisville Regional Airport Authority X Mid-Atlantic Regional Air Management Association (MARAMA)/Port of Virginia X New York City DOT (NYCDOT) X X NYSERDA X X PANYNJ X X Port of Long Beach (POLB) X X South Coast Air Quality Management District (SCAQMD) X X X Texas Commission on Environmental Quality (TCEQ) X X X U.S. DOE, Energy Efficiency & Renewable Energy X U.S. EPA X X X Washington State DOT (WSDOT) X X Table 10. Agencies interviewed and types of clean truck programs discussed during interview.

20 Guide to Deploying Clean Truck Freight Strategies In some cases, agencies can implement or support regulations that enable the adoption of new technologies and strategies. For example, the FHWA is advocating the adoption of exemptions or adjustments to weight restrictions for natural gas trucks because natural gas fuel tanks weigh more than conventional diesel tanks, and this can act as a barrier to deployment of natural gas vehicles for fleets that are limited by overall gross vehicle weight restrictions (typically 80,000 lbs.). 3.2.1.2 Planning Many of the public-sector transportation and environmental agencies that are not directly involved in regulation help support freight emission reduction goals through planning efforts. Clean freight plans can identify significant pollution sources, propose reduction strategies, and coordinate steps toward achieving emissions goals. Government agencies at all levels are involved in developing freight transportation plans, with some accounting for environmental impacts of these transportation systems. For example, nearly all state DOTs have developed or are developing statewide freight plans, including Washington State DOT (WSDOT) and the California Depart- ment of Transportation. These plans typically highlight the fuel and emissions benefits of system efficiency improvements that reduce roadway congestion and delay for trucks; these plans may also identify the need for alternative fuel infrastructure for trucks. 3.2.1.3 Research and Pilot Testing Many agencies also provide support for emissions reduction efforts by conducting or funding research and pilot test projects. Achieving emissions levels that are significantly lower than the U.S. EPA’s MY 2010 standards requires advanced technologies and operational strategies, most of which have not been widely tested or deployed. Development of emerging emissions reduction technologies requires significant investment and comes with risk. Federal agencies have tradition- ally devoted significant resources toward such research. For example, the U.S. DOE has used the SuperTruck program to work with manufacturers and other stakeholders to improve the fuel efficiency of trucks by 50%. The FHWA is collecting truck activity data using truck probes and developing the Freight Advanced Traveler Information System to improve operations. Some of these agencies also work on pilot tests of new strategies; CARB, the California Energy Commis- sion (CEC), the Texas Commission on Environmental Quality (TCEQ), and the U.S. DOE have managed or funded pilot tests of advanced truck technologies. 3.2.1.4 Grants and Incentives Most of the agencies interviewed run one or more programs offering various types of finan- cial assistance to truck operators. Some programs are structured as rebates or grants in which a participant purchases a cleaner vehicle and then gets reimbursed for the purchase. For exam- ple, TCEQ administers the Texas Emissions Reduction Plan (TERP) program, which provides rebates after a grantee buys the equipment. Some programs, in conjunction with or separate from purchase programs, pay participants for scrapping older trucks. For example, the New York City Department of Transportation (NYCDOT) reimburses the owner. Some organizations also provide grants and other support for fueling infrastructure develop- ment, especially for areas looking to support the deployment of electric or alternative fuel trucks. The City of Chicago, TCEQ, and POLB have provided assistance through both vehicle and infra- structure programs to address the circular issue that vehicle operators will not buy alternative fuel trucks in areas without fueling stations and station operators will not install infrastructure without a vehicle market to support it. POLB provides support through favorable lease rates for natural gas fueling stations on port property. An increasingly popular format for administering rebates is a voucher program: when partici- pants purchase a truck from a dealer, the dealer confirms the driver’s eligibility in the program and applies a discount to the vehicle, and the agency or organization reimburses the dealer. Many

Public-Sector Perspectives 21 agencies and governments have moved toward this structure for their truck replacement programs, including the City of Chicago, CARB, PANYNJ, TCEQ, and NYCDOT. This format offers a num- ber of advantages for the agencies and the participants. Working with the dealers consolidates much of the administrative time and money required to interact with the many trucking compa- nies and independent owner-operators; the agencies can set up the administrative requirements to reimburse the relatively small number of truck dealers. Furthermore, the dealers often have established relationships with truck operators and can more easily reach potential participants, and they can assist trucking companies and owner-operators to apply for programs. In addition to rebates, vouchers, and grants, some agencies have created or funded financing and microlending programs. Because the funding amounts are not sufficient to cover the full costs of replacing all trucks operating in their regions, most agencies only cover part or all of the incre- mental cost of new trucks; to help cover the additional costs for replacement, some agencies and governments, such as PANYNJ and the City of Chicago, set up financing programs. This strategy can be especially helpful for financing electric, hybrid, or alternative fuel trucks, which some lenders may not be willing to finance because of uncertainty in the new technologies and markets. Agencies have acquired money to run these programs from a number of funding streams. A majority of the programs relied in large part on Congestion Mitigation and Air Quality Improve- ment (CMAQ) funding, which can provide the significant capital required for these programs. Additional federal funding also came through Diesel Emission Reduction Act (DERA) grants, administered by the EPA. Some programs were funded through state legislation; Texas and California passed measures that raised and allocated money to their vehicle emissions reduction programs. And at least one program discussed in the interviews was self-funded; POLB assessed a Clean Trucks Fee of $35 per loaded 20-foot equivalent unit during the implementation period to help finance truck replacements. 3.2.2 Clean Truck Strategies Pursued To reduce emissions, public agencies considered either vehicle technologies or operational strategies. Most agencies interviewed implemented or researched technology-based programs to address emissions. Table 11 shows the varying technology strategies employed by each agency or government. Technology Strategy Agencies Engine aftertreatment device installation MARAMA POLB PANYNJ CARB TCEQ NYCDOT EPA (DERA) Diesel vehicle replacement MARAMA POLB PANYNJ TCEQ EPA (DERA) CARB Engine repowers TCEQ CARB Alternative fuel vehicle deployment POLB PANYNJ CARB CEC TCEQ NYSERDA EPA Hybrid and electric vehicle deployment Chicago CARB NYSERDA CEC Other technologies TCEQ CEC NYSERDA Table 11. Technology strategies implemented by each agency/ government interviewed.

22 Guide to Deploying Clean Truck Freight Strategies Some agencies that were interviewed administered strategies using engine aftertreatment technol- ogies such as diesel particulate filters and diesel oxidation catalysts. However, because these retrofits alone could not help vehicles meet some of the stricter 2010 emissions standards, many agencies do not focus efforts on these technologies. For example, many of the early technology grants admin- istered through the EPA’s DERA program were for retrofits, but truck replacement grants are now more common. Likewise, the managers of the clean truck program at POLB were surprised that they achieved full compliance with their 2010 engine requirements 2 years earlier than planned; they found that many trucking companies invested enough to attain the final truck stan- dards rather than achieving interim compliance options using retrofits. Similarly, although TCEQ provides grants for engine repowers, it reported that program participants were not repowering on-road trucks; most repowers funded were for marine vessels and some non-road equipment. Most agencies interviewed ran programs to replace older diesel trucks with lower-emission trucks. Many had success with programs to replace trucks with those powered by cleaner diesel engines (mainly MY 2007 or 2010 engines). These pathways are the lowest-cost approaches to achieving the latest truck emission standards. Some agencies also funded alternative fuel, hybrid, and electric vehicle replacements. TCEQ and NYSERDA reported that their natural gas vehicle replacement programs have been success- ful. However, this type of program is mainly popular with delivery company fleets; fewer trucking companies or owner-operators have applied to TCEQ’s programs to replace their heavy-duty diesel trucks with natural gas options. The ports reported having low interest in natural gas truck replacements, especially with the end of the limited funding for natural gas programs. Some of the interviewees attributed this low interest to concerns from private companies about inadequate fueling availability; to address this, some agencies also funded fueling infrastructure development. To support low- and zero-emission truck adoption, some agencies are funding hybrid and electric truck options, especially as more vehicle options come to market. CARB has funded the Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project for a number of years; interest in the program has gone up and down, but the program administrators see interest picking up again for smaller fleets and with new hybrid options such as Toyota’s Hino hybrids. Chicago recently started administering a similar program called Drive Clean Chicago. In addition to direct vehicle technology strategies, there were some examples of interviewees running programs to reduce emissions in areas related to freight trucking. For example, NYSERDA offers funding to support truck-stop electrification, hybrid truck refrigeration units (TRUs), idle reduction, and biofuel use. Similarly, TCEQ also offers Emission Reduction Incentive Grants, which are open to a wide range of projects that can reduce NOx emissions, including vehicle electrification, idle reduction, and non-road equipment strategies. Almost none of the agencies discussed operational strategies that they supported to reduce trucking emissions. In addition to its comprehensive set of vehicle options, NYSERDA men- tioned some operational strategies it is examining, including off-hour delivery opportunities and electronic prescreening of trucks to bypass inspections. Additionally, some state and federal agencies, such as WSDOT and FHWA, developed freight performance goals and conducted research to identify operational strategies. Furthermore, the ports of Los Angeles and Long Beach include operating practices in the Clean Air Action Plan. 3.2.3 Program Implementation and Evaluation 3.2.3.1 Engagement Agencies rolling out regulatory, pilot, or incentive programs found that engaging with stake- holders was essential during implementation, especially in the initial stages. They conducted marketing and outreach in a number of ways. TCEQ had a marketing campaign for TERP during

Public-Sector Perspectives 23 its initial year in 2002 that included billboards and other forms of advertisement. PANYNJ conducted workshops in multiple languages to educate trucker owners about its truck replace- ment program. These types of outreach efforts during the development of programs not only disseminated information, but interviewees also believed that workshops encouraged buy-in from the regulated parties. Regulations can initially meet resistance, regardless of engagement efforts; POLB and Port of Los Angeles faced lawsuits challenging their programs. However, once agencies addressed stakeholder concerns, they found that their regulations eventually became largely accepted by truck operators to be business as usual, and most incentive programs became oversubscribed. Some programs included an element of customer service to support implementation. The port truck programs and TCEQ provided staff in person or by phone who could help truck operators apply, pick up equipment, or confirm eligibility, and who could answer other questions regarding the programs. A number of agencies brought up the importance of supporting trucker owners and being flexible with program implementation rather than focusing solely on enforcement and com- pliance. This is especially important for regulatory strategies, which agencies typically coupled with financial incentive programs to help private industry achieve compliance. Two interviewees also discussed flexibly adapting to trucker owners who could not meet operational or financial requirements of a program; rather than immediately penalizing operators for failing to meet pro- grammatic requirements, they sometimes adjusted requirements. They were focused on helping trucker owners achieve compliance instead of driving trucking companies away. Interviewees pointed out that it was important to engage not only trucker owners, but also manufacturers and dealers. For research and pilot programs, contact with the vehicle manufac- turers is important in implementing such programs and identifying vehicle options for operators. For vehicle scrappage and replacement programs, dealers have been the cornerstone for success and have assisted in the expansion of voucher programs. In most early incentive programs, agen- cies provided rebates directly to the truck owner or company. Voucher programs allow truck owners to purchase from approved dealers, who get reimbursed by the implementing agency. Not only does a voucher program streamline the administrative processes because fewer dealers have to be reimbursed instead of each trucking company or owner-operator, but dealers often have relationships with trucker owners; thus, dealers can market these programs and more effectively reach truck and fleet owners than agencies can. Furthermore, dealers are incentivized to market the programs and sell more vehicles. To help support these programs, agencies such as NYSERDA hosted webinars, in-person meetings, and ride-and-drive events for fleets, vehicle manufacturers, and local dealerships. 3.2.3.2 Evaluation of Program Benefits Agencies employed a range of methods for evaluating the impact of their truck emissions reduction efforts. For some research and pilot test programs, the goal was to directly measure the tailpipe emissions from in-use test vehicles. But most agencies conducting planning and implementing regulatory and incentive programs estimated emissions reductions from their programs. The programs funded by CMAQ faced especially strict reporting requirements to demonstrate benefits. Agencies reported calculating emissions impacts using VMT and emissions factors for the various technologies. VMT was measured in a number of ways, depending on the level of effort required and the resources available. NYCDOT required automatic vehicle locator (AVL) devices to be installed in replacement trucks participating in its clean truck program. These global positioning system (GPS) devices allowed the agency to track mileage and confirm whether trucks were operating the required

24 Guide to Deploying Clean Truck Freight Strategies minimum amount of time in the program geography. Considering potential privacy concerns, there was not much resistance to the tracking devices; NYCDOT attributed this to having the requirement in place from the beginning of the incentive program. The ports of Los Angeles and Long Beach also used GPS units for vehicles receiving funds through their clean truck programs. Including a tracking system from the genesis of the program also avoided potential grant funding burdens; Chicago hoped to include a GPS tracker as part of its program after it had already received CMAQ funding approval, but the administrative requirements to change the program through CMAQ were prohibitive. For agencies running programs in areas with controlled access (e.g., port facilities), entrances and exits could be tracked using radio frequency identification (RFID) tags. Although GPS tracking would allow for an accurate assessment of impacts, most agencies stated that they did not have the resources to monitor vehicles as closely as they would have preferred. Most agencies rely largely on self-reporting of mileage from program participants; truck opera- tors reported quarterly or, more often, annually on the miles they operated in the program area. POLB conducts regular origin–destination surveys to capture VMT data. Many use standard calcu- lation methods to estimate emissions and cost-effectiveness based on VMT reporting: DERA and NYCDOT use the EPA’s Diesel Emission Quantifier; some California programs use the Carl Moyer cost-effectiveness approach; and TCEQ has a TERP cost-effectiveness calculation methodology. Although CARB pointed out that emissions benefits calculated from self-reporting are frequently criticized, implementing a more detailed monitoring system can be resource intensive; NYCDOT reported that running its AVL system is expensive, requiring a multiyear monitoring contract. 3.2.3.3 Implementation Barriers and Lessons Learned As early implementers of clean truck programs, the interviewees had many lessons learned to share. • Programs require extensive resources to implement and manage. Research and pilot test projects involve expensive vehicles and testing processes. Because of the higher costs of new vehicles, programs that cover incremental truck costs to meet the latest emissions standards require significant funding. PANYNJ even found a truck financing program expensive to run. • Monitoring and maintaining operational requirements in rebate programs is challenging. Most agencies running grant programs required trucks to operate a certain amount of time within a geographic area; however, compliance was difficult to monitor and enforce, and many truck operators could not afford to limit their operations to small areas. • CMAQ funding has strict restrictions and significant administrative requirements. Although CMAQ is an essential funding source, agencies found that it involved strict oversight and did not allow for program flexibility. A number of agencies also found the U.S. DOT’s Buy America provision—the requirement to purchase project components that were produced in the United States—a barrier because some vehicles—especially those with emerging technologies—are not manufactured domestically, and obtaining provision waivers delayed some projects. • Reaching smaller players in the trucking markets is important. Getting word about pro- grams out to smaller trucking companies or independent owner-operators requires signifi- cant outreach because many are not as well connected to the administrators of these types of programs. It is especially important to target owner-operators because they are more likely to be operating older vehicles than are larger trucking companies and may defer complying with impending regulations. Additionally, vendors in the trucking industry are also small and have limited resources to participate in programs. • Regulatory programs can be met with significant resistance initially. Many stakeholders in the port truck programs were unhappy with the restrictions, and in some cases, lawsuits were brought against the agencies. However, the programs were also highly successful once fully implemented.

Public-Sector Perspectives 25 • Using smart policy levers to achieve reduction goals should be considered before grant and incentive programs. There are a number of policy options that could be implemented to help achieve reductions before administering higher-cost incentive programs. For example, agen- cies can set project procurement requirements favoring lower-emissions technologies. Or, a city can include incentives in loading zone costs to delivery companies. • Maintaining flexibility during implementation can help truck operators meet an agency’s emissions reduction goals. POLB found that the trucking industry stakeholders did not want the agencies to require adoptions of specific vehicle technologies. They preferred to be told what they needed to achieve and to figure out themselves how to achieve it. As a testament to this, even though the port allowed trucks to meet interim compliance steps, most truck owners chose to skip the intermediate technology options and achieve full compliance. Also, some agencies avoided being heavy-handed with enforcement of incentive program operational requirements. Interviewees mentioned the need to work with the truck operators rather than against them to move toward the emissions reduction goals. Perhaps for these reasons, a number of agencies running grant programs reported that most participants were adhering to the program rules. • Connecting with vendors and dealers is essential for the success of many vehicle incentive programs. Some agencies have had success directing the rebate process through dealers rather than administering rebates directly with each truck or fleet owner. This type of voucher program can reduce administrative burdens and incentivize dealers to leverage their relationships with trucking companies and operators to market the program. There is potential for administering a similar type of program for retrofits, using certified repair shops in place of truck dealers. 3.3 Key Takeaways from Interviews The interviews yielded the following key takeaways: • Incentive programs are moving from grants to vouchers. Traditionally, funding agencies have provided a buy-down incentive in the form of a grant for the installation of pollution control technologies or truck replacement. The grant typically covers a portion of or the entire incremental cost of the technology. However, over the last several years, there has been a shift toward voucher incentive programs to deploy clean trucks. The concept of a voucher is to streamline the deployment of incentives for fleets and owner-operators by shifting the incen- tive to the point of purchase at dealerships. Grants programs typically require the technology or truck to be purchased (i.e., a significant cash outlay) and then a grant is provided after proof of purchase. The states of California and New York and the City of Chicago have implemented voucher incentive programs; clean truck programs at several ports (e.g., the ports of LA and Long Beach and Hunt’s Point) have some similarities with voucher incentive programs. It is worth noting that these programs are focused on clean truck deployment, not retrofits; the researchers are unaware of any voucher-type programs for truck retrofits at this time. • Carrot-and-stick approaches can be the most effective strategies. The agencies that reported the most success (generally measured by fleet participation and vehicle deployments) in the context of deploying clean truck freight incentives did so in an environment that included a regulatory driver. For instance, the clean truck program at the San Pedro Bay Ports provided an incentive in the form of a grant or loan subsidy as well as a date at which pre-1989 trucks would be banned from servicing the ports. In combination, these worked effectively to help identify retrofit and replacement opportunities. Despite this success, there was also recognition by many agencies that not all jurisdictions have the regulatory authority required to use the favored carrot-and-stick approach. • Most incentive programs include only a self-reporting mechanism. One of the key issues in the process of deploying clean truck strategies is identifying feedback loops to improve and enhance incentive programs. For instance, the voucher incentive programs identified

26 Guide to Deploying Clean Truck Freight Strategies previously were developed in part because of industry stakeholder response to cumbersome grant program requirements. In response to this, granting agencies sought to provide an incen- tive at the point of sale; this feedback was helpful and expanded participation in clean truck deployment programs. There is limited reporting, however, to demonstrate that the vehicles being deployed are achieving the levels of reductions expected. Where there are reporting requirements, they are generally limited to the submission of quarterly or annual VMT. • Outreach to dealers and owner-operators is a critical component of programmatic suc- cess. As part of the transition to point-of-sale incentives via vouchers in lieu of grants, agen- cies frequently recognized the importance of outreach to dealers and owner-operators. In the case of port truck programs, this was especially critical because there was the regulatory threat of not being able to serve the ports if the owner-operator was driving a noncompli- ant truck. In many cases, the dealers were easier to reach because there were fewer of them in a given local/regional market. Some dealer outreach and education was still required to enhance program performance and ensure success. 3.4 Additional Participation The following agencies indicated that they would be willing to help review the tool and guide or provide program information for the case studies for this project: • PANYNJ, • POLB, • SCAQMD, • TCEQ, • NYCDOT, • NYSERDA, and • The U.S. EPA.