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BOARD MEETING DATE: September 10, 1999 AGENDA NO. 10

PROPOSAL:

Issue RFP to Solicit Projects for FY 1999-2000 Carl Moyer Memorial Air Quality Standards Attainment Program Funding

SYNOPSIS:

In 1998-99, ARB's budget included $25 million to provide incentives for low-emission on- and off-road vehicles for the Carl Moyer Program. The AQMD was allocated $11.3 million to administer the program in the South Coast Basin. The State’s FY 1999-2000 budget contains $23 million to continue the program. The AQMD expects to receive approximately $9.45 million of this funding. The proposed RFP for up to $13.5 million (including $4.05 million from Clean Fuels Program Fund) will provide additional incentives for low emission on- and off-road vehicles and equipment.

COMMITTEE:

Technology, August 27, 1999. Less than a quorum was present; those Committee Members who were present communicated their concurrence.

RECOMMENDED ACTION:

1. Submit a proposal to the ARB for the FY 1999-2000 Carl Moyer Program funds.
2. Submit a proposal to the California Energy Commission (CEC) for funding to support alternative fuel infrastructure.
3. Approve issuance of RFP #9900-06, in an amount not to exceed $13.5 million, to solicit projects for Carl Moyer Memorial Air Quality Standards Attainment Program Funding.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

The federal Clean Air Act Amendments of 1990 classified the South Coast Air Basin as "extreme" nonattainment for ozone, and "serious" nonattainment for fine particulate matter (PM₁₀) and carbon monoxide. With an increasing number of trucks and other heavy-duty vehicles and a multiplying of vehicle miles traveled (VMT), the need for reducing emissions from these sources is critically important to meet clean air goals.

The Basin includes 39% of the state’s Class 7 and 8 trucks, and accounts for 43% of the state’s VMT for these vehicles. Among the state’s eight largest air districts, the South Coast accounts for 36.8% of the heavy-duty engine NOx emission inventory, and represents 50.5% of the exposed population.

The majority of heavy-duty vehicles in the Basin are powered by diesel engines, which contribute significantly to the Basin’s emissions of NOx and particulates. The AQMD has long recognized the adverse air quality and health impacts of diesel exhaust. The AQMD’s Environmental Justice Initiative No. 7 targets the reduction of diesel exhaust in the Basin. The Board reaffirmed its position supporting the purchase and use of alternative fuel vehicles in transit and other fleets at its October 1998 meeting. At the January 1999 Board meeting, the Board adopted a "Children’s Air Quality Agenda" to pursue additional measures to protect children from the disproportionate impacts of air pollution. In September 1998, the ARB approved its Science Review Panel's recommendation and listed diesel particulate as a toxic air contaminant based on its potential human cancer risk.

In April 1999, the AQMD received a funding allocation of $11.3 million from the ARB for the Carl Moyer Program. The AQMD released an RFP and initiated an extensive outreach campaign announcing the program. The results were overwhelming. Proposals received totaled approximately $50 million and included a wide range of projects from both on- and off-road sectors. On-road truck awards, totaling $4,996,034 were approved at the August 1999 Governing Board meeting. The remaining on- and off-road projects are before the Governing Board for approval at the September 1999 meeting. A summary of the approved and proposed projects is attached as Table 1.

Governor Davis and the Legislature have placed $19 million in ARB's FY 1999-2000 budget to continue this incentive program for low-emission heavy-duty vehicles. The CEC received an allocation of $4 million in the FY 1999-2000 state budget to support the Carl Moyer Program. This funding was directed as $2 million for fueling infrastructure in support of Carl Moyer Program projects and $2 million to support research and development of low-emission heavy-duty engine technology. CEC is expected to distribute the $2 million infrastructure fund to air districts. If the two state agencies should decide to use the same approach in allocating funds to air districts as in FY 1998-99, the AQMD expects to receive $8.55 million and $900,000 from ARB and CEC, respectively.

Proposal

Staff proposes that the AQMD release an RFP to solicit projects for FY 1999-2000 Carl Moyer Program funding, at a cost not to exceed $13.5 million, for vehicle and equipment incentives, and fueling infrastructure support. Staff proposes to make up the $13.5 million total allocation with: (1) $8.55 million from ARB; (2) $900,000 from CEC; and (3) $4.05 million from Clean Fuels Program Fund. The proposed RFP will solicit projects for on- and off-road vehicles and equipment, including refuse haulers, over-the-road trucks, transit and school buses, construction equipment, marine and port applications, and other vehicles and equipment. New engines, repowers and retrofits are allowed within the program. After consulting with the AQMD’s Carl Moyer Program Advisory Group, staff proposes that $8 million be allocated for on-road vehicles, $4.5 million for off-road vehicles/equipment and $1 million for infrastructure support. Should insufficient qualifying proposals be received in any project area, the AQMD will reserve the right to reallocate funds to another category or subcategory.

ARB requires that all projects meet a $12,000/ton cost-effectiveness for NOx reductions, and the emission reductions be a minimum of 25 percent for retrofit applications and 30 percent for repowers or new engines. Staff proposes that alternative fuel proposals submitted under RFP #9900-06 be given preference for funding. Further, staff proposes a more stringent criteria for cost-effectiveness in some sectors based on experiences derived from the first-year’s solicitation. Proposals received under each category will be ranked by their cost-effectiveness to achieve the maximum potential emission reduction. The table below describes the proposed funding allocations and maximum allowed cost-effectiveness requirements for each category and subcategory:

*Small fleets (20 vehicles or less, with GVW 14,000 lbs. and above), public sector, and diesel-to-diesel replacement (in order of preference)

**Construction, agricultural, ground support equipment, locomotive, etc.

Proposals for the on-road truck Class 7-8 category will be due no later than 5:00 p.m., Tuesday, November 16, 1999. Proposals for all other categories, including infrastructure, will be due no later than 5:00 p.m., Tuesday, January 11, 2000. This will provide ample time (2-4 months) for proposers to coordinate their plans with engine and chassis manufacturers, fuel providers, and others necessary to complete and submit proposals.

The staff expects to finalize the review and evaluation of the proposals and recommend for Board approval of awards on or before the March, 2000 meeting, contingent upon approval and awards of the required funds from ARB and CEC.

Outreach

In accordance with the AQMD’s consulting and contracting policies, a public notice advertising the RFP and inviting bids will be published in the following publications:

Additionally, potential bidders will be notified from the Los Angeles County MTA and Cal Trans Directories of Certified Minority, Women, Disadvantaged and Disabled Veterans Business Enterprises; the Inland Area Opportunity Pages Ethnic/Women Business & Professional Directory; AQMD’s own electronic listing of certified minority vendors; and AQMD Purchasing’s mailing list. Notice of the RFP will be mailed to the Black and Latino Legislative Caucuses and various minority chambers of commerce and business associations; and placed on the Internet at AQMD’s Web site [http://www.aqmd.gov, "Business and Job Opportunities"] and AQMD’s bidder’s 24-hour telephone message line (909) 396-2724. Staff will also conduct outreach efforts to specific sectors, such as airports and associated transportation providers, construction and building industry, and port operations.

Benefits to AQMD

AQMD’s Clean Fuels Program has been active in funding the development and demonstration of low emission, alternative fuel technologies within its Technology Advancement Office. The AQMD has also supported a number of activities directed to commercialization of low-emission alternative fuel technologies. The projects proposed for funding under RFP #9899-28 will result in NOx emissions reductions of over 400 tons per year. Projects funded as a result of RFP #9900-06 are expected to yield similar benefits.

Resource Impacts

The AQMD is expected to receive from the ARB and CEC approximately $9.45 million of the available Carl Moyer funds for FY 1999-2000. The Carl Moyer Program requires that the local air district provide matching funds for engine, vehicle and equipment incentives on a 1:2 basis. Staff estimates that the AQMD can provide adequate local match to be included in the proposals to ARB and CEC as appropriate, including the proposed $4.05 million direct funding from Clean Fuels Program Fund, program administration support, and other qualified Clean Fuels Program projects. Up to 15% of the match is allowed as in-kind costs. Therefore, up to $607,500 of the match funds required can be attributed to administrative support of the program.

Monies received from ARB and CEC will be placed in the Carl Moyer Program Fund. Funds from this program are restricted to be used as incentives to private companies or public agencies operating heavy-duty engines in California to cover an incremental portion of the cost of cleaner on-road, off-road, marine, locomotive engines and fueling infrastructure.

Sufficient funds are also available from the Clean Fuels Program Fund, established as a special revenue fund resulting from the state-mandated Clean Fuels Program. The Clean Fuels Program, under Health and Safety Code Sections 40448.5 and 40512 and Vehicle Code 9250.11, establishes mechanisms to collect revenues from mobile sources and stationary sources to support projects to increase the utilization of clean fuels, including the development of the necessary advanced enabling technologies. Funds collected from motor vehicles are restricted, by statute, to be used for projects and program activities related to mobile sources that support the objectives of the Clean Fuels Program.

Attachments

1) Table 1 – Summary of Proposed FY 1998-99 Project Awards – Carl Moyer Program Funds
2) RFP #9900-06 – FY 1999-00 Carl Moyer Memorial Air Quality Standards Attainment Program

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