A new California diesel engine emission regulation applying to fleet owners deals differently with rental-lease obligations than a similar earlier rule involving off-road large spark ignition (LSI) engines.

The California Air Resources Board (CARB) adopted off-road emission-control regulations for "in-use" diesel engines on July 26 and LSI engines in May 2006. Each rule aims to reduce emissions in types of engines used to power forklifts and other equipment. Rather than setting new standards for new engines, the regulations aim to clean up existing fleets through retrofitting and faster replacement.

The confusing difference between the diesel and LSI approaches has significance for owners and operators on both sides of forklift rental-lease arrangements and may complicate accounting practices for their business operations. While rented or leased LSI equipment is always considered to be in the end user's fleet, a diesel forklift might become part of the fleet of a lessor/owner or that of a lessee/renter/end user, depending on the length of the contract, its other provisions or the type of financing used.

In voting to approve the diesel rule, CARB members "did not make changes to the rental and lease provisions" as industry requested for consistency with the LSI rule, says Gary Cross, an attorney representing the Industrial Truck Association (ITA) of Washington, DC. ITA represents makers of lift trucks and their suppliers doing business in the United States, Canada or Mexico.

The difference raises questions about how to do business consistently. "It is a basic problem, and we will need help from the (CARB) staff on how to interpret and apply the requirements," Cross says.

The new diesel rule applies to about 180,000 vehicles operating in the state, including 5,142 regular diesel forklifts, constituting the second-highest grouping in the industry category, and 6,771 rough terrain diesel forklifts, ninth highest in the construction and mining category.

Requirements and deadlines vary. Implementation begins in 2015 for small fleets that are owned by small businesses or municipalities and have a combined horsepower of 2,500 or less. Medium-sized fleets, with 2,501 to 5,000 horsepower, have until 2013, while large fleets, with more than 5,000 horsepower, must comply by 2010. Sacramento-based CARB analysed the economic impact on business and concluded the regulation would cost industry up to USD3.5 billion over its lifetime.