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Revised Regulatory Impact Statement 6 NYCRR Parts 248 and 200

1. Statutory authority:

The statutory authority for this revision to 6 NYCRR Part 248 is the Environmental Conservation Law (ECL) sections 1-0101, 3-0301, 19-0103, 19-0105, 19-0301, 19-0303, 19-0305, 19-0323, 71-2103 and 71-2105. Section 1-0101 outlines the policy declaration for the Department of Environmental Conservation (Department) regarding the protection of New York State's environment and natural resources including the control of "air pollution, in or to enhance the health, safety and welfare of the people of the state and their overall economic and social well being" (ECL 1-0101(1)). Section 1-0101 also states: It shall...be the policy of the state to foster, promote, create and maintain conditions under which man and nature can thrive in harmony with each other, and achieve social, economic and technological progress for present and future generations by:

"Providing that care is taken for the air...and other resources that are shared with the other states of the United States and with Canada in the manner of a good neighbor" (ECL section 1-0101.3(e)).

Section 3-0301(1)(a) gives the Commissioner authority to "[c]oordinate and develop policies, planning and programs related to the environment of the state and regions thereof...". Pursuant to section 3-0301(1)(b) of the ECL, the Commissioner is charged with promoting and protecting the air resources of New York including providing for the prevention and abatement of air pollution. Section 3-0301(2)(a) permits the Commissioner to adopt rules and regulations to carry out the purposes and provisions of the ECL. Section 3-0301(2)(g) allows the Commissioner to enter and inspect sources of air pollution and to verify compliance. Section 3-0301(2)(m) gives the Commissioner authority to "adopt rules, regulations, and procedures as may be necessary, convenient, or desirable to effectuate the purposes of this chapter."

Under Section 3-0301(2)(n) of the ECL, the Commissioner has the authority to "study, monitor, control and regulate pollution from motor vehicle exhaust emissions." The Commissioner's authority under section 3-0301(2)(n) is expressly granted to further the State's policy to "[c]onserve, improve and protect its natural resources and environment and control ... air pollution, in order to enhance the health, safety and welfare of the people of the state...".

Section 19-0103 is a declaration of the State's policy with specific reference to air pollution. "It is declared to be the policy of the State of New York to maintain a reasonable degree of purity of the air resources of the State ... and to that end to require the use of all available practical and reasonable methods to prevent and control air pollution." Section 19-0105 sets out the purpose of Article 19, "to safeguard the air resources of the State from pollution ..." consistent with the policy expressed in section 19-0103 and in accordance with other provisions of Article 19.

Sections 19-0301(1)(a) and (b) state that:

1. Consistent with the policy of the state as it is declared in section 19-0103, the department shall have power to:

a. Formulate, adopt and promulgate, amend and repeal codes and rules and regulations for preventing, controlling or prohibiting air pollution in such areas of the state as shall or may be affected by air pollution . . .

b. Include in any such codes and rules and regulations provisions establishing areas of the state and prescribing for such areas (1) the degree of air pollution or air contamination that may be permitted therein, (2) the extent to which air contaminants may be emitted to the air by any air contamination source . . .

Section 19-0301(2)(a) further provides:

It shall be the duty and responsibility of the department to:

Prepare and develop a general comprehensive plan for the control or abatement of existing air pollution and for the control or prevention of any new air pollution recognizing varying requirements for different areas of the state.

In addition, section 19-0301(2)(e) provides authority for the Commissioner to "[p]romulgate standards for the use of fuels for use in motor vehicles or motor vehicle engines, taking due recognition of federal standards and requirements." Section 19-0305 provides the Commissioner with general enforcement power.

Section 19-0303 provides that the terms of any air pollution control regulation promulgated by the Department may differentiate between particular types and conditions of air pollution and air contamination sources.

ECL section 19-0323 mandates the Department to promulgate regulations requiring the use of ultra low sulfur diesel (ULSD) fuel for any diesel powered heavy duty vehicle that is owned by, operated by or on behalf of, or leased by a state agency and state and regional public authority. Section 19-0323 also mandates that any diesel powered heavy duty vehicle that is owned by, operated by or on behalf of, or leased by a state agency and state and regional public authority with more than half of its governing body appointed by the governor utilize the best available retrofit technology (BART). Section 19-0323 sets out specific provisions for the regulations which have been incorporated. Section 19-0323 has been recently amended to provide compliance date extension and a useful life waiver. Sections 71-2103 and 71-2105 set forth the civil and criminal penalty structures for violations of Article 19.

Based on the above-referenced sections, the Commissioner has very broad authority to regulate air pollution, including from motor vehicles. The Commissioner also has very specific authority and a legislative mandate to promulgate the 6 NYCRR Part 248 regulation entitled "Use of Ultra Low Sulfur Diesel Fuel and Best Available Retrofit Technology for Heavy Duty Vehicles."

2. Legislative objectives:

Article 19 of the ECL was adopted for the purpose of safeguarding the air resources of New York from pollution. To facilitate this purpose, the Legislature bestowed specific powers and duties on the Department including the power to formulate, adopt, promulgate, amend, and repeal regulations for preventing, controlling or prohibiting air pollution. In 2006, the Legislature passed and the Governor enacted the "Diesel Emissions Reduction Act of 2006" (DERA). The legislation charged the Department with implementing a regulatory program that would require the use of ULSD fuel and BART for any diesel powered heavy duty vehicle (HDV) that is owned by, operated by or on behalf of, or leased by a state agency and state and regional public authority. The Department subsequently promulgated Part 248, effective as of July 30, 2009, to implement DERA. The Department's initial Part 248 regulations included within the program requirements trucks owned by sub-contractors (to contractors) that provided services to State agencies and authorities. That aspect of the regulation was subsequently challenged in a CPLR Article 78 proceeding. Although Supreme Court (Saratoga County) initially upheld the regulations, the Appellate Division reversed, finding that the Legislature "did not intend to impose DERA's requirements on vehicles other than those used by prime contractors under direct contract with State agencies and public authorities." 'Matter of N.Y. Constr. Material Ass'n v. DEC', 83 A.D.2d 1323, 1328 (3d Dep't2011); 'see also Riccelli Enterprises, Inc. v. Grannis', 30 Misc. 3d 573, 579 (Sup. Ct. Onondaga Co. 2010) (regulations are 'ultra vires'... due to the improper expansion of the meaning of the term 'on behalf of' in the regulations").

Additionally, the Legislature amended ECL section 19-0323 in calendar years 2010, 2011 and 2012, in three ways: (i) to provide an extended time frame until December 31, 2013 for all applicable vehicles to comply with the DERA BART requirement; (ii) to allow for a waiver of the DERA requirements to otherwise applicable vehicles that are permanently taken out of service in New York State on or before December 31, 2013; and (iii) to eliminate the 33 percent and 66 percent phase-in deadlines for BART compliance of December 31, 2008 and December 31, 2009 respectively. 'See' L.2010, ch. 59, pt. C. section 1, Enacted Budget SFY 2011-2012, S2810-C/A 4010-C, Part BB and Enacted Budget SFY 2012-2013, S6258-D/A 9058-D, Part EE. This proposed rulemaking is being revised as a result of the extension of the compliance deadline included in the state budget bill passed in March 2012. Although the Legislature extended the BART compliance date and added the waiver provision, it nevertheless maintained the retrofit requirement for existing vehicles, making plain its continued interest in reducing emissions from heavy duty vehicles owned by or operated on behalf of the State. The Department is seeking comments on the revision to the compliance deadline.

The purpose of this rulemaking is to make Part 248 consistent with both the court decisions in 'Matter of N.Y. Constr. Material Ass'n' and 'Riccelli Enterprises, Inc.' and the amendments to DERA signed into law in 2010, 2011 and 2012.

3. Needs and Benefits

The proposed regulation amends Part 248 to meet statutory requirements, comply with recent court decisions and the overall goal of protecting the health of the residents of New York by reducing the emissions of air pollution from certain on- and off-road diesel-powered vehicles and equipment. ECL section 19-0323 mandates that any diesel powered heavy duty vehicle that is owned by, operated by or on behalf of, or leased by a state agency and state and regional public authority with more than half of its governing body appointed by the governor utilize the best available retrofit technology. For purposes of the regulation, state agencies, state public authorities and regional public authorities have been designated regulated entities. State agencies and affected state/regional public authorities (those with more than half of its governing body appointed by the Governor) are designated BART regulated entities.

These revisions to Part 248 would make it consistent with the amendments to ECL section 19-0323 and recent court decisions by changing the definition of "prime contractor", "on behalf of", and "regulated entity work"; and further by changing the existing BART compliance schedule and adding a useful life waiver provision. "Prime contractor" will mean a person or entity that contracts directly with the regulated entity to perform regulated entity work and who is responsible for the completion of the contract with the regulated entity. As noted, recent court decisions require the Department to exclude subcontractors from applicability.

This rulemaking will revise the BART compliance schedule and include a useful life waiver provision as permitted by ECL section 19-0323. The Department will include a useful life waiver provision which allows the Department to issue a waiver of the requirements of this Part to a BART regulated entity or contractor upon receipt of request from such entity or contractor provided that such vehicle will be permanently taken out of service in New York State on or before December 31, 2013. The addition of a useful life waiver will provide additional regulatory flexibility to subject entities. The Department is also proposing several minor clarifications to the BART waiver application requirements, the vehicle and equipment labeling requirements, and the reporting and record keeping requirements. These clarifications should assist the regulated entity and contractor in complying with the Part 248 requirements.

The continued implementation of the diesel retrofit program will further improve the air quality in New York by decreasing particulate matter (PM), and in some cases oxides of nitrogen (NOx) emissions. ECL section 19-0323(1)(c) requires that consideration be given to a technology which reduces NOx emissions in addition to PM if it is available and applicable for the specific HDV engine in the same PM reduction classification level at a reasonable cost. The diesel vehicles covered in the Part 248 regulation include most on-road diesel-powered engines that are owned by, operated by or leased to a regulated entity. ECL section 19-0323 defines "heavy duty vehicle" as any on and off-road vehicle powered by diesel fuel and having a gross vehicle weight of greater than 8,500 pounds, subject to certain exceptions. The statute also requires that ULSD fuel be used on those applicable HDVs effective February 12, 2007 and that the BART be installed on those applicable HDVs on or before December 31, 2013.

According to the U.S. Environmental Protection Agency ("EPA"), reducing emissions from diesel engines is one of the most important public health challenges facing the country. EPA also found that diesel exhaust is likely to be carcinogenic to humans. Diesel engines emit large amounts of nitrogen oxides and particulate matter. Exposure to diesel exhaust can lead to eye, throat, and bronchial irritation. Headaches, nausea and lightheadedness have also been associated with exposure to diesel exhaust. In the short-term, these symptoms are not life-threatening but they are unpleasant and may be signs that the body is being exposed to harmful toxins. Individuals with existing respiratory ailments may experience deterioration in their condition if they are exposed to diesel exhaust. More serious health problems may develop if exposure to diesel emissions continues. In addition to the respiratory effects described above, there is increasing evidence showing an association between PM exposure and cardiovascular illnesses.

4. Costs

The Department has continued to evaluate the costs of various retrofit devices and recently assessed several sources to update cost information. Included in this analysis was actual cost data obtained by the Department from certain state agencies. The Department also considered cost data included in the October 2009 report entitled "Retrofitting Emission Controls for Diesel Powered Vehicles," issued by the Manufacturers of Emission Controls Association (MECA).

Part 248 technology classification levels "1", "2" and "3" correspond to PM reductions of 25 percent to 49 percent, 50 percent to 84 percent and 85 percent or greater, respectively. Level "3" PM reduction also corresponds to the USEPA's PM emission standard for new 2007 HDD highway engines (<0.01 g/bhp-hr) and employs verified diesel particulate filters (DPFs). Level "2" employs primarily verified flow through filters and a fuel-water emulsified fuel; and level "1" includes verified technology using primarily diesel oxidation catalysts (DOCs). Only those retrofit devices verified by either EPA or CARB achieving level 3, 2 or 1 PM reductions are allowed for use in the Part 248 program. Part 248 describes the evaluation and selection process for BART devices. CARB's list of verified technologies also indicates NOx reductions for those products where NOx has been shown to be reduced by at least 15 percent. DERA requires that those verified technologies in the same PM classification level with applicable NOx reduction be considered BART if their cost is less than 30 percent of the cost of the BART device without the NOx reduction. Part 248 allows regulatory flexibility, in that there are other options available, in lieu of installing retrofit devices, including engine repower/replacement with a model year 2007 (or subsequent model year) EPA emission standard engine, vehicle replacement with an alternative fuel vehicle/engine, or vehicle/engine retirement.

Cost estimates for typical retrofit devices, based on on-road experience, were described in Appendix A of the above-mentioned MECA document. These estimates are detailed in Table 1. This information provides a range of costs depending on such factors as the horsepower of the engine and market availability. It is important to note that costs may vary considerably depending on the state of the economy, demand, competition, and technological change.

Table 1 Costs for Diesel Emission Control Strategies
Cost Description
Retrofit Strategy Estimated Cost
Passive Diesel Particulate Filter (DPF) $7,000 - $10,000
Diesel Oxidation Catalyst (DOC) $500 - $2,000
Flow-Through Filter (FTF) $5,000 - $7,000
Lean NOx Catalyst (LNC) with DPF $15,000 - $20,000
Active Diesel Particulate Filter (DPF) $15,000 - $30,000
Exhaust Gas Recirculation (EGR) with DPF $18,000 - $20,000

The Department compared MECA estimates with actual retrofit cost information obtained from New York City Transit (NYCT) for DPF retrofits installed on their transit bus fleet and from the New York State Energy Research and Development Authority (NYSERDA) for DOC and DPF retrofits installed on school buses. NYCT indicated a passive DPF kit vendor installed on a new bus delivery (MY 2004 - 2007) cost $9,850 while a DPF kit vendor installed on an existing bus (MY 1999) cost $8,088 (not including $2,828 for engine tune-up and dyno testing prior to installed DPF). NYCT purchased several hundred of these DPF units in 2004 and 2006. NYSERDA 2005/2006 cost information indicates a DOC installed price of $1,230 and a DPF installed price of $7,501 (base price ~$5,000 plus $2,501 for warranty, special insulating exhaust pipe and six years of cleaning services). NYSERDA ordered several hundred of these retrofit units in order to get bulk discounts. A review of the NYCT and NYSERDA retrofit cost data indicates that it fits well within the cost range shown in Table 1 and compares favorably with the Table 1 costs for DOCs and passive DPFs.

Additionally, recent retrofit cost information was obtained from the New York State Thruway Authority and Canal Corporation (NYSTA) for DOC retrofits and passive/active DPF retrofits installed on HDV's and from the NYSDEC for DOC and DPF retrofits installed on fleet trucks. NYSTA reported a DOC installed cost of $2,100 and a passive DPF installed price of $9,121 (since the DPF technology is a level 3, the vendor required that installation be done by the vendor). NYSTA also reported an active/passive DPF installed cost of $11,418 plus an additional $4,000 in infrastructure cost (i.e., regeneration control panel which is shared between many vehicles). NYSDEC indicated a DOC installed at approximately $2,500. NYSDEC Fleet HDV's have had both active and passive DPF units installed, and the approximate average price for the units was $16,750. NYSDEC also reported that over the last three years, $1,206,000 has been spent installing retrofit devices and support infrastructure for 75 fleet HDV's, or an average of about $16,000 per vehicle. This recent actual retrofit cost data correlates well with the cost estimates shown in Table 1.

The Department's current estimate for maintenance/cleaning per DPF unit installed on a DEC fleet vehicle is $600 per year. This includes all aspects of the cleaning, including counting any ash disposal requirements. The NYS Department of Transportation has estimated an annual cost for maintenance/cleaning DPF units at $320 per unit. Depending on duty cycles of the HDV, sometimes two cleanings per unit per year may be required.

Prime contractors will incur costs associated with the purchase of the retrofit device and administrative costs similar to many of those items noted above for state agencies and public authorities. Only the contractor's vehicles which are actually used on behalf of the state agency/public authority work (not necessarily the contractor's entire fleet) and while in use on the state project whether on or off state property are subject to the Part 248 requirements. Subcontractors will no longer be required to comply with DERA and are therefore no longer required to incur costs for this regulation.

No additional costs are expected to be incurred by the Department for the administration of the proposed revision to Part 248.

It is important to note that this rulemaking, which proposes to maintain existing requirements except as to subcontractors and to the extent waived (as allowed under the 2010 DERA amendments), would have lower overall program compliance costs compared to the existing requirements under Part 248. Indeed, although Part 248 would remain applicable to those heavy duty vehicles used by or on behalf of a state agency, state public authority, or regional public authority, requirements as to subcontractors would be removed. Of course, prime contractors would remain subject to both the ULSD requirements effective February 12, 2007 and the BART requirements. As noted in the 2009 rulemaking, the population of prime contractor vehicles affected by the proposed amended regulation is unknown. As with that rulemaking, the Department remains unable to provide a specific estimate of the number of contract solicitations or awards that will occur because of the difficulty in predicting the number of affected prime contractors at this time. As noted in the 2009 rulemaking, the Department expects the cost impact to those affected contractors to be similar to the impacts on government entities which, in turn, may result in somewhat higher bids proposed by prime contractors on state and public authority contract work to compensate for increased costs due to these regulatory requirements. Nevertheless, this rulemaking maintains existing requirements on prime contractors and thus is not expected to have any negative impact on such prime contractors.

Cost-Effectiveness

As stated in the EPA report entitled "The Cost-Effectiveness of Heavy-Duty Diesel Retrofits and Other Mobile Source Emission Reduction Projects and Programs", dated May 2007, retrofitting diesel engines is "one of the most cost-effective ways to reduce diesel emissions". EPA's report defines cost-effectiveness as "the cost per ton of emissions reduced" and goes on to state that cost-effectiveness can fluctuate depending on numerous factors such as specific pollutants of concern and the existing sources and level of control measures in place. The report also makes clear that cost-effectiveness does not inevitably match up with overall effectiveness.

In order to help compare cost-effective strategies, the EPA report includes tables that contain estimates of the cost per ton of pollutant reduced. As explained in the report, the estimates were established from the best data available to EPA at the time, but such an assessment is not without limitations (i.e., the data are based on a select sampling of projects that may not totally represent the potential cost-effectiveness of other techniques of implementing particular strategies).

Table 2 below uses information obtained from EPA's cost-effectiveness report, specifically Table 1 of the appendix. Table 2 is a summary of PM cost-effectiveness for representative diesel retrofit technologies that utilize a diesel oxidation catalyst (DOC) or catalyzed diesel particulate filter (CDPF). These cost-effectiveness estimates apparently did not account for the additional benefits from reducing other pollutants such as volatile organic compounds (VOCs). Again, the cost-effectiveness of diesel retrofit programs can vary considerably given a number of factors, including actual annual average activity (i.e., annual vehicle miles traveled for highway or annual operating hours for non-road vehicles).

Table 2.
Summary of Cost-Effectiveness for Various Diesel Retrofit Scenarios
Vehicle Retrofit
Technology*
Range of $/ton
PM Emission Reduced**
Class 6&7 Truck DOC
CDPF
$27,600
$28,400
$67,900
$69,900
Class 8b Truck DOC
CDPF
$11,100
$12,100
$40,600
$44,100

*Retrofit technologies include diesel oxidation catalyst (DOC) and catalyzed diesel particulate filter (CDFP)
**The cost per ton of PM reduced will depend on a variety of factors including the age and activity levels of the vehicles or equipment. Source: U.S.EPA, 'Diesel Retrofit Technology: An Analysis of the Cost Effectiveness of Reducing Particulate Matter Emissions from Heavy-Duty Diesel Engines Through Retrofits.' EPA420-S-06-002. March 2006. http://www.epa.gov/cleandiesel/publications.htm

Potential Impact on Businesses and Employment.

The regulatory requirements would continue to affect several categories of businesses and employment including BART device (DPF and DOC) manufacturers, device substrate manufacturers, authorized installers/distributors of verified BART devices, new engine/vehicle (post model year 2006) manufacturers, and prime contractors of state agencies/public authorities. Again, because this rulemaking maintains existing requirements as to State agencies and authorities, as well as to prime contractors, the rulemaking itself would not be expected to have a negative impact on businesses or employment. Indeed, as already noted, the rulemaking proposes to remove trucks owned or operated by sub-contractors from coverage and thus, if anything, may have a positive direct impact on subcontractors.

The Department nevertheless re-examined the potential impact to business and employment associated with the existing regulations that would remain unchanged by this rulemaking. It is conceivable that prime contractors may elect to reduce the number of employees to cover the costs of purchasing/installing BART devices on their affected HDVs. Prime contractors may also elect to place higher bids on State contracts in order to compensate for the increased cost to comply with the ULSD and BART requirements on their affected vehicles. Again, there would be no reason to expect these impacts to change from those associated with the existing regulation.

As noted in the 2009 rulemaking, businesses and employment expected to be positively impacted as a result of the existing regulation include BART device manufacturers, device substrate manufacturers, authorized installers/ distributors of verified BART devices, new engine/vehicle manufacturers and alternative fuel engine/vehicle manufacturers. However, these positive impacts may be reduced by this rulemaking. Both the addition of useful life waivers and the subtraction of subcontractors from applicability will reduce the number of vehicles required to retrofit. This revision should not impact prime contractors differently from the existing regulation. However, sub-contractors will be positively impacted since they no longer have to comply with the Part 248 (including BART) requirements.

5. Local Government Mandates:

ECL sections 19-0323(2) and 19-0323(3) require state agencies and affected state and regional public authorities to use ULSD and BART. It does not directly apply to local governments.

6. Paperwork:

Applying for a useful life waiver will require the completion of a short form by the applicant.

Record keeping, vehicle labeling and reporting requirements continue for affected HDV owners/operators and include documentation to support the selection of a specific BART product for a specific, inventoried HDV and related HDV chassis and engine information. Completion of the vehicle inventory form also serves to meet the record keeping requirements.

7. Duplication:

There is no duplication except for the federally mandated availability of ULSD for on road and off-road engines.

8. Alternatives:

Make no revisions to existing Part 248. This is not a viable alternative since recent court decisions require the Department to remove subcontractors from applicability. Additionally, subsequent to the effective date of Part 248, ECL section 19-0323 has been amended three times, in 2010, 2011 and 2012.

9. Federal Standards:

The United States Environmental Protection Agency (USEPA) does not require in-use heavy duty diesel vehicles be retrofitted with BART.

10. Compliance Schedule:

Affected regulated entities and their prime contractors will be required to install BART on their applicable HDVs on or before December 31, 2013.

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