Contractors in the Portland-metro area will be forced to phase out older, dirtier diesel engines according to state legislation passed at the hurried end of the 2019 session.

Companies will have until Jan. 1, 2023, to convert their diesel fleets to vehicles with engines made beginning with the 1996 model year, and until Jan. 1, 2029, to vehicles with engines 2009 or newer. The rules apply to medium- and heavy-duty vehicles titled in Multnomah, Washington and Clackamas counties.

The law passed June 30 in a flurry of action before the Oregon Legislature adjourned. Legislators struck a deal to exempt Oregon counties outside the Portland-metro area from the regulations. That move reduces the regulatory burden for contractors in sparsely populated areas, but also threatens to widen the state’s urban-rural divide and leave residents of cities from Eugene to Medford, and John Day to Coos Bay, breathing dirtier diesel emissions near construction sites.

The diesel legislation, House Bill 2007, also regulates off-road construction equipment on state-funded construction projects of $20 million or more in the three metro counties – where 44 percent of Oregonians reside. Those requirements will take effect on Jan. 1, 2022, and impact large contractors that bid on major public projects.

Environmental advocates pushed the bill, saying the Portland area has the state’s highest concentration of particulate emissions, caused by a confluence of interstates and other vehicle traffic, and the epicenter of Oregon’s busy construction industry.

“A new diesel engine runs far cleaner when it comes to particulate matter, when it comes to the pollution embedded in diesel,” said Chris Hagerbaumer, spokeswoman for the Oregon Environmental Council.

With deadlines looming, construction firms can begin the work of modernizing their diesel equipment, she said.

“Setting that deadline really tells folks we have to build this into our business plan to update our engines,” Hagerbaumer said. “That’ll basically accelerate the cleanup, and that’s really the most important piece.”

The legislation, which Gov. Kate Brown is expected to sign, will make available some dollars from the Volkswagen diesel settlement to help small firms and disadvantaged ones upgrade their equipment.

The effects may not be limited to the metro area. Contractors and subcontractors frequently rent equipment, and Portland’s largest construction firms work at major projects around the state. Still, environmental advocates will likely push in future sessions to expand the requirements statewide.

“We do think to some extent it’ll provide some broader benefits, but not enough that we don’t need to keep our eye on the ball in future sessions,” Hagerbaumer said.

Advocates are likely to try to extend the diesel rules statewide in future sessions.

“We think it’s important,” Hagerbaumer said. “Every Oregonian’s lungs and hearts and brains are important, so we want to make sure we’re protecting everybody. But this is an excellent start.”

Oregon is the second state to enact tight restrictions on diesel equipment, after California established ones even more stringent. Oregon Democrats have looked to California as a model for environmental regulations.

The bill was opposed by the Associated General Contractors and Oregon Trucking Associations. California’s approach isn’t right for Oregon, longtime AGC lobbyist John Rakowitz said.

“Our economy is fundamentally different than that of the state of California,” he said. “We have an economy largely dominated by homegrown, small businesses.”

Industry stakeholders were able to carve out some exceptions and amendments. For one, medium- and heavy-duty trucks are classified by gross vehicle weight, eliminating an earlier provision that would have counted combined weight and swept up pickup trucks towing trailers. As enrolled, medium-duty trucks are those weighing 14,000 to 26,000 pounds, while heavy-duty trucks weigh more than 26,000 pounds.

AGC and other industrial interests scored a big win when Democrats failed to advance a cap-and-trade bill after Senate Republicans left Salem, depriving the Senate of a quorum. However, Rakowitz said he’s concerned Democrats will bring back the legislation at the next opportunity.

“I worry about it coming back even as early as 2020,” he said.

The AGC opposes the proposed cap-and-trade program because it would affect the highway trust fund, which receives fuel taxes and serves as a major funding source for roads, bridges and other public-sector construction projects.

“It is the most serious threat we have seen in many, many years to what has been a longtime fundamental investment in Oregon’s transportation infrastructure,” Rakowitz said.

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Contractors are working to adjust to new rules requiring cleaner diesel equipment on sizable city of Portland construction projects.

The city’s rules are for its projects with values greater than $1 million. The requirements are phased to take effect beginning Jan. 1, 2020, through Jan. 1, 2026.

Multnomah County and other local agencies have been involved in ongoing work on the rules and are expected to follow by adopting similar requirements.

Portland’s Clean Air Construction Procurement Standard, approved by the City Council in December, requires significant particulate matter emission reductions from older diesel engines. The rules apply to non-road diesel equipment with 25 horsepower or more, and road-going dump and cement trucks.

Diesel emissions contribute to soot and ground-level ozone, and are classified as a potential human carcinogen. Diesel emissions have been linked to lung conditions, autism and neurodegenerative disease, according to public health authorities.

In Portland, 65 percent of diesel emissions come from non-road equipment – mostly from the construction industry, according to the Bureau of Planning and Sustainability.

North and Northeast Portland had particularly high levels of diesel particulates, according to the biennial Portland Air Toxics Study in 2017. Beaverton, Aloha and Hillsboro also fared poorly.

Yet for small contractors, upgrades to cleaner equipment may be an economic burden, some industry officials said.

“When you consider that about 80 percent of the contractors in Oregon are small businesses, it’s pretty easy to conclude that the impact would be substantial, if not devastating,” said Mike Salsgiver, executive director of the Associated General Contractors‘ Oregon-Columbia chapter.

Contractors are in the process of conducting a survey of diesel equipment, Salsgiver said. “Our advice would be to await the outcome of that data,” he said.

The AGC chapter did not comment on the city’s diesel standard, Salsgiver said.

“We have not, frankly, been engaged in that process, and for that matter the city didn’t reach out to us,” he said.

AGC has been more engaged with policy development concerning diesel emissions at the state level than at the local level, Salsgiver said.

Multnomah, Washington and Clackamas counties, the Port of Portland, Metro and the Oregon Department of Environmental Quality have also been involved in the effort to reduce construction emissions. Multnomah County is expected to soon become the second jurisdiction to issue diesel rules.

Portland will house the program in the Office of Procurement Services.

“Portland has the highest volume of construction across the region,” said Kyle Diesner, climate action program coordinator for the Bureau of Planning and Sustainability. “In general, the city does the most construction work, so it made sense for our procurement office to house the program.”

A rule to limit idling will take effect first in Portland. Non-road diesel equipment must be shut off after it has been idling unused for five minutes. By Jan. 1, 2024, no pre-2007 engines will be allowed.

California has enacted a similar standard for 25 horsepower equipment. Portland originally proposed a 100-horsepower standard, but lowered it to meet California’s threshold to ensure the city doesn’t become a secondary market for older, dirtier equipment.

City officials also found a significant number of excavators fall below 100 horsepower, Diesner said.

“Research has shown it’s the earthmoving equipment that has the biggest impact in terms of diesel emissions,” he said.

The rules are likely to spark a round of spending by construction firms on pollution-control technology, new equipment or engine overhauls, or equipment that doesn’t burn diesel, such as electric or propane-powered equipment.

As the standard spreads throughout the Portland-metro region, the cleaner equipment will also be used on more private-sector projects, Diesner said.

“We think as contractors make these investments, they will be using this cleaner equipment on private-sector jobs,” he said.

The city is pursuing funding to help disadvantaged minority-owned, women-owned and emerging small businesses upgrade their equipment to comply with the new rules. Some funding could come from Oregon’s portion of the Volkswagen emissions settlement – if approved by the Legislature – and from federal diesel emissions reduction grants.

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The latest attempt to curb diesel emissions by construction equipment in the Portland area would represent a “gut punch” to the industry, according to John Rakowitz, a lobbyist for Associated General Contractors‘ Oregon-Columbia chapter.

Senate Bill 1008 has several provisions, but the one that’s the biggest point of contention for builders in Oregon would disallow the addition of construction equipment manufactured prior to 2007.
The federal Clean Air Act pre-empts states from creating their own air quality program unless they write a law like California’s. But Rakowitz said the Beaver State’s air quality issues aren’t nearly as significant as those in the Golden State. He said no part of Oregon is in non-attainment with the Environmental Protection Agency – unlike California.

“We’re not sure – what problem are they trying to address with this?” Rakowitz said.

SB 1008 would exempt the agriculture and forestry industries, also another provision of the California law. For now, it would only apply to the Portland area.

Chief sponsor Sen. Michael Dembrow, D-Portland, said the air quality problem is in Portland, and construction equipment is a big part of it.

“Ag isn’t where the problem is,” he said. “To be honest, construction equipment out in the rural part of the state is not where the problem is. The major problem is in the Portland-metro area.”

A similar bill failed in the previous state legislative session, due in part to the strength of the coalition opposing it. This time around, Dembrow said, the bill focuses more on construction equipment to reduce opposition.

“We’re limiting the impact,” he said. “We’re trying to say, you can’t add dirty vehicles in the Portland area.”

The bill is currently in the Senate Rules Committee and has yet to be voted on.

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The May 17 ballot for Portland voters will ask them whether to approve a 10-cent gas tax to pay for repairs and maintenance of city streets. But left out of the equation is how to charge the diesel fuel users – a hole the City Council is now looking to shore up.

The problem revolves around one fact: Portland has only one truck stop company, Jubitz, and it’s believed that if Portland taxed diesel at the point of sale, heavy truck drivers would avoid filling up at Jubitz once they learned of the tax.

Groups opposed to the gas tax have argued that by omitting diesel, the city is leaving millions of dollars in revenue on the table.

“It’s important to let Portland voters know that we are not letting heavy trucks off the hook,” Novick said at Wednesday’s council meeting.

Ultimately, the hearing was placed on hold until next week, when the diesel tax ordinance will be given a second reading and City Council may choose to give final approval. Two amendments were passed Wednesday; the first requires the Portland Bureau of Transportation and Bureau of Revenue to return before City Council in August with options for an appeals process. The second directs the same bureaus to return before the council after all heavy trucks are fitted with GPS devices – a national move expected to come in the next few years.

Representatives of the freight industry complained at Wednesday’s meeting that the tax is unfair. It would charge 2.8 percent of a company’s weight-mile tax charged by the state. Big companies that only minimally use Portland city streets would still be hit with large charges.

“Currently, trucks already pay for the wear and tear on the roads, and that’s the weight and mile tax,” said Pia Welch, a project engineering specialist at FedEx Express and a member of the Portland Freight Committee.

PBOT has figured that around $18 million per year is needed to address the critical condition of city streets. The cost responsibility for diesel users has been figured to be around 13 percent, based primarily on miles driven in city limits. Assuming that the gas tax is approved by voters, drivers of light vehicles would pay 86.7 percent of the needed amount through the gas tax ($16 million per year), and drivers of diesel vehicles would pay about $2.5 million per year.

Both the gas and diesel taxes would be temporary, and sunset after four years.

Portland is the freight hub of the Pacific Northwest, and the need for modern infrastructure is greater now than ever before, said Robert McCullough, a board member of the Southeast Uplift Neighborhood Coalition.

“The equity issue is not perfect, but it’s about as fair as it’s going to get,” he said. “There is no perfect answer to the equity question. Frankly, if it were up to me, I’d ask for higher taxes for both cars and trucks because we have a big problem in front of us.”

The tax will be calculated based on a company’s statewide weight-mile taxes. An estimated rate of 2.8 percent would generate that amount.

PBOT estimates 85 percent of businesses would pay an average of $15 per month. But a smaller number of businesses accounting for far more heavy truck activity would pay an average of $500 per month.

The heavy vehicle use tax would apply to businesses that have a Portland business license and also pay the state weight-mile tax.

Other taxes were considered by the city’s Transportation Needs and Funding Advisory Committee. The group sought to charge only businesses that conduct some business in Portland, and not businesses that merely pass through, said Novick, who oversees PBOT.

“I think that it is very important for us to pass this legislation immediately,” he said.

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