Appellate Division of the New York Supreme Court has ruled unanimously that contractors engaged in state sponsored work are not required to abide by the requirements of that state's Diesel Emissions Reduction Act regulations.

According to the wording of the DERA, passed by the New York legislature in 2006, diesel powered heavy-duty vehicles "owned by, operated by or on behalf of, or leased by" state agencies and certain public authorities were to be required to use ultra low sulfur diesel fuel, and the best available retrofit technology in order to reduce the emission of air pollutants.

With ULSD now widely available, that portion of the regulation is no longer a concern, but the retrofitting requirements of DERA would have meant a considerable financial burden for groups of small fleets and owner-operators working on state contracts.

When the Legislature passed the underlying legislation, it intended to require new emission control systems for state-owned trucks because federal money was available to pay for retrofits. Private industry, however, did not have federal money to pay for such retrofits. The NY Department of Environmental Conservation expanded the legislative intent of the law to include private-sector heavy-duty trucks. If the DEC mandate remained unchallenged, experts estimated that it would have cost billions of dollars to the state economy.

The DEC took the definition to mean practically any truck doing business with the state, even at sub-sub-contractor level. The New York Construction Materials Association challenged the mandate saying the "on behalf of state agencies" term was too broad a definition. The group took their case to court last spring. The Saratoga County Supreme Court dismissed NYCMA's application to have the DEC requirement declared unconstitutional, and annul certain regulations promulgated by DEC.

After several appeals, the Appellate court ruled on April 21 that the "on behalf of" wording could not have initially been intended to include contractor, sub-contractors and the like. In its judgment, the court said, citing previous examples of inclusionary language, that if it was the intention of the legislature to include contractors, they would have -- as in the past -- specifically mentioned them in the language of the regulation.

In its judgment, the court noted, "We find nothing in the language of DERA, construed as a whole, indicating that the Legislature intended it to extend beyond prime contractors. The statute's grandfathering provision refers to vehicle[s] subject to a lease or public works contract, but makes no reference to subcontractors or other private suppliers with indirect relationships to the state. DERA similarly limits DEC's reporting requirements to vehicles "owned or operated" by state agencies and authorities."

At a very minimum, subcontractors and materials suppliers in New York will not be subject to the retrofitting requirements of DERA.