California Air Resource Board’s Advanced Clean Fleet Rule: A Path to Cleaner Transportation

By Sara Sweeney, July 25, 2023, Updated October 26, 2023

The Advanced Clean Fleet (ACF) Rule, enacted by the California Air Resources Board (CARB), is an ambitious and significant step towards accelerating the adoption of zero-emission vehicles (ZEVs) in various fleets across the state. The ACF has set its sights on every vehicle over 8,500 pounds that operates in California falling under its jurisdiction. It requires a phased-in transition toward ZEVs, and it will go into effect on January 1, 2024.

Which fleets does the Advanced Clean Fleet regulation affect?

1. Fleets performing drayage operations
2. Fleets owned by state, local, or federal government agencies
3. High priority fleets, which are defined as entities that own, operate, or  direct the operation of at least one vehicle in California and that either:
   a. have $50 million or more in gross annual revenue
   b. or own, operate, or direct the operation of a total of 50 or more vehicles
4. Federal government agencies that own, operate, or direct the operation of at least one vehicle in California.

Which Vehicles Are Affected?

The regulation affects medium-duty and heavy-duty on-road vehicles with a gross vehicle weight rating greater than 8,500 pounds. It also impacts off-road yard tractors, and light-duty mail and package delivery vehicles.

When does ACF got into effect for high priority fleets?

The first compliance requirement is to submit a compliance report–the initial report must be submitted by February 1, 2024. Fleet owners must annually submit a compliance report for their California fleet, as it is composed as of January 1 of the corresponding calendar year. The annual reporting period is during the month of January and reports must be submitted no later than February 1 of each year until February 1, 2045, through the Truck Regulation Upload, Compliance, and Reporting System.

In addition to reporting, high priority fleets must comply with the Model Year Schedule OR may choose to use the ZEV Milestones Option to phase zero-emissions vehicles (ZEV) into their fleets.

How Do High Priority Fleets with Medium-Duty and Heavy-Duty Assets Comply?

There are two ways to be compliant with ACF. It’s important to understand that until January 1, 2030, fleet owners may switch between the compliance options if their California fleet follows both the requirements of the currently elected compliance option and the desired alternative compliance option. They must also follow the desired alternative compliance option from January 1, 2024, through the date the option is switched.

The first option is a ‘Model Year Schedule Timeline’. Fleets can comply by replacing internal combustion engine (ICE) vehicles at the end of their useful life with ZEV vehicles. So, beginning January 1, 2024, when affected vehicles need to be replaced, they must be replaced with a ZEV.

Beginning January 1, 2025, fleet owners must begin removing internal combustion engine (ICE) vehicles from their California fleets by January 1 of the calendar year after those vehicles exceed their minimum useful life mileage thresholds, or January 1 of the calendar year the engine model year is 18 years old or older, whichever occurs first. Starting in 2024, any new ICE vehicle, 2024 or newer, added to the California fleet must have an engine certified to applicable California emissions standards and emissions related requirements, and any used ICE vehicle added to the California fleet must have a 2010 or newer model year engine. 

The second option is a ‘Zero-Emission Milestone Timeline’ which is governed by a percentage milestone according to preset vehicle groups. Until January 1, 2030, High Priority Fleets may opt-in to the ZEV Milestones Option and meet zero-emissions vehicle (ZEV) targets as a percentage of their California fleets, as an alternative compliance option to the Model Year Schedule. It allows fleets full flexibility to manage composition over the phase-in period if ZEV milestone targets are met. This option allows continued purchase of fossil-fuel vehicles if the fleet composition target is met before the year when all ZEVs are required. When opting into the ZEV Milestones Option, the fleet owner must report this intention. The following table outlines the groups and targets:

ZEV Fleet Milestones by Milestone Group and Year

The Advanced Clean Fleets Rule: Exemptions and Flexibilities

Exemptions and flexibilities exist to allow fleets to realistically comply with the regulation. These exemptions and exceptions cover a broad range of use cases and in some instances, will require fleet operators to report on, apply for, and/or maintain recordkeeping requirements. CARB has made clear that they expect fleets to adjust their operations to be compliant, so while exemptions and exceptions exist, fleets should likely not rely on them or assume all their planned exceptions will necessarily be approved by CARB.

The following vehicle types are currently exempt from the regulation: School buses, military tactical vehicles, vehicles awaiting sale, emergency vehicles, historical vehicles, dedicated snow removal vehicles, two-engine vehicles, heavy cranes, and vehicles in a test fleet.

The following exemptions have been outlined by CARB:

Below are additional details on some of the exemptions we believe may be most impactful to our customers. More details can also be found here:

ZEV Purchase Exemption – The ZEV Purchase Exemption allows fleet owners to postpone adding certain vehicles to their fleet if those vehicles are not yet available as ZEVs. The latest updates to this provision introduce two options for utilizing the exemption.

Firstly, CARB now maintains a list of vehicles that can be purchased as internal combustion engine (ICE) vehicles if ZEVs are unavailable in a specific configuration. Fleet owners are not required to apply for an exemption for vehicles on this list; they report the purchase when the ICE vehicle is received.

Secondly, fleet owners can apply for a fleet-specific exemption if the desired ZEV configuration does not meet the primary intended function required by the fleet. For example, if a fleet needs a truck up fitted with a bucket truck body capable of reaching 100 ft., but ZEVs are only available with a 50 ft. reach, the fleet owner may apply for an exemption. CARB will verify that no manufacturers can produce and sell the required configuration, and the exemption will be issued within 45 days.

To ensure fleet owner protections, additional modifications have been made when assessing ZEV availability. A newly added requirement states that a ZEV must meet the Zero-Emission Powertrain certification requirements, cannot be a demonstration vehicle, and must be available for purchase within the next two model years. Furthermore, the exemption coverage is now expanded to apply to all vehicle weight classes, except drayage trucks, as multiple tractor models are already available.

Daily Usage Exemption – The Daily Usage Exemption allows fleet owners to apply for an exemption to purchase an ICE vehicle if ZEVs are available in each configuration but do not meet the fleet’s daily mileage and stationary operational use needs. The latest updates to this provision aim to provide more flexibility and streamlined processes.

Fleet owners are required to submit information to CARB regarding the daily mileage or usage of existing vehicles in their fleet. This data demonstrates that the available ZEVs cannot adequately meet the fleet’s requirements based on miles and hours of operation within a 30-day period in the previous year. Fleets with mutual aid agreements can also utilize data from the last five years to support their exemption request.

The provision has been expanded to allow fleet owners to use operational data for comparison with fleets operating ZEVs in similar applications. This comparative analysis strengthens the fleet’s case for the exemption. Additionally, the period for collecting vehicle data to support the exemption request has been shortened, facilitating a more efficient process.

The Infrastructure Delay Provision – This provision enables fleet owners to receive an extension if the installation of ZEV infrastructure at their site is delayed due to reasons beyond their control. CARB has expanded this provision to address construction delays and utility delays.

In the case of unexpected delays after construction has started, fleet owners now qualify for an extension of up to two years, as opposed to just one year. These extensions include delays associated with ZEV infrastructure equipment, such as chargers and hydrogen dispensing equipment.

Zero-Emission Vehicle Delivery Delay – The Zero-Emission Vehicle Delivery Delay provision acknowledges situations where fleet owners face delays in receiving a ZEV that has been ordered one year prior to the compliance date due to factors beyond their control. Fleet owners can claim an extension during annual reporting by providing proof of the ZEV purchase.

The provision has been modified to streamline delays and clarify requirements. The updated language specifies the unique types of documentation required for vehicle purchases and leases, which will be utilized for extension applications.

Moreover, a provision has been added to allow for the extension to be renewed if a manufacturer cancels a purchase agreement. In such cases, fleet owners can submit documentation of a new zero-emission vehicle purchase agreement within 365 days (for government fleet owners) or 180 calendar days (for other High Priority Fleets and drayage trucks) to renew the extension.

Taking the Advanced Clean Fleet Rule Seriously

Compliance is not optional. If your fleet is noncompliant, you will be subject to penalties. In addition, other fleets may not work with you to avoid being penalized themselves. Further, even if you are compliant, working with noncompliant fleets may also result in penalties. Time is at a premium now. You should begin circulating the rule now internally and externally to educate stakeholders which shows a good faith effort. If you would like guidance and support in your efforts to understand, absorb and adopt ACF, we are here to help guide you. 

We’d also recommend using the many resources CARB has created and reaching out to them directly with specific use cases.

1. Home page for the Advanced Clean Fleets Rule: https://ww2.arb.ca.gov/our-work/programs/advanced-clean-fleets
2. Fact sheets: https://ww2.arb.ca.gov/our-work/programs/advanced-clean-fleets/advanced-clean-fleets-fact-sheets
3. Advanced Clean Fleets calculator: https://ww2.arb.ca.gov/resources/documents/advanced-clean-fleets-calculator
4. Available ZEV catalogs: https://globaldrivetozero.org/tools/zeti/ & https://californiahvip.org/vehiclecatalog/
5. ZEV Milestone Option: https://ww2.arb.ca.gov/resources/fact-sheets/advanced-clean-fleets-regulation-zev-milestones-option

Please understand that this article does not constitute tax, legal or accounting advice.  This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal or accounting advice.  You should consult your own tax, legal and accounting advisors with respect to the topics addressed herein.