The economic engine should be the only one being prodded and poked in the shop these days.

However, the state of California is proceeding with its massive overhaul order despite the threatening business conditions. The “In-Use Off-Road Diesel-Fueled Fleets Regulation” was passed by the California Air Resources Board (CARB) in 2007 and requires all highway and bridge contractors in the state to retrofit, retire or replace almost all of their heavy construction equipment. Since the rule was put in place, California’s construction industry has fallen $22 billion short of the state’s economic forecast and has lost approximately 120,000 jobs.

The Associated General Contractors of America (AGC) wants the bleeding to stop, and has joined with CARB in filing a petition against the measure.

“The last thing we want to do is force even more staggering losses and layoffs in the construction industry,” said Stephen Sandherr, CEO of AGC. “This is the wrong time to put people out of work and put a new drag on economic growth.”

Before the economy took a sour turn, state officials even admitted that the cost to adhere to the rule was at “the economic limit of what the industry could bear.” In its petition, AGC said “the economic costs and the environmental benefits of the rule are much different than expected.”

Adding weight to the burden is the discovery by California’s Department of Industrial Relations that retrofitting existing construction equipment to meet the new standards could actually violate construction safety standards. That would force contractors to throw more money on the problem because they would choose to replace rather than retrofit, and the additional cost is one the state did not even consider when the rule was originally passed.

Furthermore, AGC said the rule is no longer necessary, because the economic downturn has led to a significant reduction in the construction industry’s diesel fuel consumption. At current levels the industry is actually below California’s emission targets.

“It’s long past time to inject some common sense into the discussion of construction equipment,” said Tom Holsman, CEO of the AGC of California.

CARB completed its emission cleansing in mid-December, ordering owners of heavy-duty diesel trucks to install soot traps on exhaust pipes of older vehicles or pull them from circulation.

The move prompted a familiar reaction from the trucking industry.

“Residential construction is down 70%. Commercial construction is down 40%. Now you are asking truckers to take on debt,” Bruce Wick, spokesman for the California Professional Association of Specialty Contractors, told the Sacramento Bee.