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Crazy Happenings In The World Of GHG Phase 2 And Trailers

While they may initially seem like not-too-exciting topics, GHG Phase 2 rules and trailers have been heating up in the news lately. Court filings have begun to stack up as GHG Phase 2 rules are challenged on trailer-related provisions.

The newest of these came in the form of an October 12 filing, in which the Environmental Defense Fund, along with a coalition of health advocacy groups, asked that the U.S. Court of Appeals for the District of Columbia Circuit reject another motion filed by the Truck Trailer Manufacturers Association (TTMA).

The statement released by the group argued that the Phase 2 trailer provision motion to stay “attempts to artificially divide the tractor from the trailer to claim that TTMA’s members cannot be regulated directly because they are not manufacturers of motor vehicles.”

The group went on to note that the TTMA “has likewise failed to demonstrate that its members will be irreparably harmed absent a stay of standards that simply require manufacturers to equip more of their trailers with widely used technologies that deliver fuel savings.”

So, What’s the Deal?

As you likely know, business people really dislike uncertainty. And they got a full dose of it when the Environmental Protection Agency (EPA) announced it would potentially roll back the trailer and glider kit provisions spelled out in the GHG Phase two fuel efficiency regulations.

Jointly written by the National Highway Traffic Safety Administration (NHTSA) and put to paper October of 2016, GHG Phase 2 was designed to reduce carbon emissions. It builds on the work previously completed on GHG Phase 1 regulations.

As the rule is laid out, Phase two rules were set to go into effect for trailers beginning in January of 2018. Limitation of glider kit production began last January. The rule also spells out how manufacturers should design equipment for the next decade. The goal of the rule was to reach emissions reductions by cutting the amount of fuel burned while sidelining older technologies – thus clearing the way for newer, more fuel-efficient technologies.

The change comes in the form of an August announcement from both the EPA and NHTSA that they may in fact reconsider the rules. Specifically, targeted were regulations regarding box-type trailers. This definition includes dry and refrigerated freight and glider kits.

While neither agency has come out with specifics on what a potential rollback may look like, they have clearly laid out there intent to review the rules, which are set to go into effect in less than 60 days. This is where the uncertainty question comes in.

The original fight started when the TTMA filed a lawsuit in December of 2016 requesting that the D.C. Circuit throw out the trailer section of the GHG Phase 2 rule set to go into effect in January 2018.

In their initial argument, TTMA stated that “most heavy-duty trailers are custom-ordered, and the required lead time for scheduling production means that trailer manufacturers are having to quote orders for 2018 delivery that will force customers to purchase equipment they do not want and that will not produce any fuel efficiencies in the customers’ operations.”

The case has also been joined by California – who we will talk more about later – and Connecticut, Washington, Vermont, Iowa, Massachusetts, Rhode Island, Oregon and Vermont. In a joint statement released by the EDF, associated groups and the states represented, the groups stated that granting a stay of the rule would “delay these critical health and environmental protections for the duration of the litigation, which could last for years.”

The attorney representing the groups released a separate stating that “the trailer provisions of the [GHG Phase 2] Clean Truck Standards are based on cost-effective and widely available measures that have long been used by industry leaders, and have been effectively incorporated into state standards for the past decade. It is critical that these common-sense protections remain in place to reduce the dangerous pollution that causes climate change and save money for American families by reducing the costs for shipping goods.”

At the same time, the TTMA has been hard at work lobbying on behalf of regulatory relief across the board where trucking rules are concerned. Still, neither agency involved has yet taken any action, despite notifying the TTMA that they agree further rulemaking is needed.

Despite the recent litigation, many companies are operating as though there will be no change. In fact, most large fleets have already invested a lot of time and energy into complying with a rule most in the industry expected to stay intact. Still, that doesn’t mean everyone is on board.

The Trailer Industry Speaks Out

The trailer industry itself has had mixed reactions to the news. While one manufacturer was quotes in a news outlet as saying that they “We are encouraged by the EPA’s decision to reconsider the trailer provision in the GHG2 regulation,” others have complained that they need more certainty, for both them and their customers. Not knowing what equipment to include or not include puts some manufacturers in a bind.

Still, the TTMA couldn’t be more pleased by the news, arguing that the rule puts onerous requirements on trailer manufacturers whether the benefits of said requirements are proven or not. They specifically mention:

  • Aerodynamic enhancers
  • Special tires
  • Tire-pressure-monitoring systems

In their argument, the agency stated that many trailers operate at very low average speeds or sit a lot while loading and unloading. In these scenarios, they argue there would be little to no gain in fuel savings under the GHG Phase 2 trailer rules.

Another trailer manufacturer was quotes as saying that while they support efforts to make trailers more efficient, “the current EPA regulation for trailers is flawed in that it takes a ‘one size fits all’ approach, which in some cases offers no fuel savings and arguably increases fuel consumption, and even puts some fleets at a disadvantage.”

In the meantime, the other big player in the room, the American Trucking Associations (ATA) came out strongly against the move to squash the regulation, saying that rolling back the regulation would “upset national uniformity.”

In a statement released by their CEO, the ATA stated that in their belief, “by reopening the rule to reexamine trailers and glider kits, EPA has opened the door to California taking the lead, and a more aggressive track, in setting trailer standards. As representatives of an interstate industry. ATA believes a single national standard, set by federal regulators, is preferable to at worst, a patchwork of state standards or at best, a de facto national standard that is set without the appropriate opportunity for the entire regulated community – many members of which are not based in California – to weigh in.”

So, what, exactly, does California have to say?

The California Air Resources Board (CARB) has certainly made a statement regarding all this action around an otherwise back-of-the-room rule. According to an industry insider, CARB is quite likely to finalize its own regulations next year, lending credence to the ATA’s claim. It has even been reported that if the EPA plans on scrapping the rule, California may push even more aggressively on their regulations, setting up quite an intriguing showdown next year should all this come to pass.

Where many think there may be movement is in the area of glider kits.

What Are Glider Kits?

Glider kits are essentially new trucks powered by older, rebuilt or repurposed diesel engines and drivetrain components. Fleets operating specialty trucks have been known to utilize big rigs with reused engines and other components in a bid to save money. Certainly, there is nothing wrong with wanting to cut costs.

The problem is that under current GHG rules, starting in January of 2021, they will only be allowed into circulation as reclaimed equipment from junked commercial motor vehicles. The EPA’s assertion at the time was that glider kits using older, less-efficient diesel combustion engines produced far more emissions.

The EPA in their original ruling sited an increase in sales of glider kits from just a few hundred per year a couple of decades ago to more than 200,000 a mere two years ago. While some may have been designed in an effort to get around emissions, most were from fleets who simply had a cost-analysis that required them to look at used components to ensure the bottom line didn’t lurk into the red.

Under the new Phase 2 regulations, glider kits were to come under increasing restriction, with a whole new round set to go into effect this coming January. If the rule does not go into effect, it is likely we will see environmental groups take this battle to the courts.

Once stuck in the courts, any changes to the rule’s publication could be drawn out for years, in which case manufacturers will have already shifted into the new paradigm. What does this mean for the trucking industry? That uncertainty we were talking about is sure to stick around for some time longer.

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