BOARD MEETING DATE: May 2, 2008
AGENDA NO. 3

RECOMMENDED ACTIONS:

Authorize the Chairman to

1. Recognize $13.8 million from CARB under the Goods Movement Emission Reduction Program and place it in the AQMD’s Proposition 1B – Goods Movement Fund (81); and
2. Upon receipt of award, recognize $4.922 million of EPA Section 103 funding for cost-effective emission reduction projects in the Clean Fuels Fund 31;
3. Upon receipt of the $13.8 million of Proposition 1B Goods Movement Reduction Funding, execute the following contracts:
1. A contract with California Cartage Company to replace 130 Class 8, pre-2003 diesel trucks (pre-2003 engines) with 130 Class 8, 2007 or newer LNG trucks (2007 or newer engines) through a lease program in an amount not to exceed $11.7 million, $6.5 million is from the Proposition 1B Goods Movement Fund 81, $5.2 million is from the Clean Fuels Fund 31. Of the $5.2 million of the Clean Fuels Fund funding, $4.922 million is being loaned until the receipt of the $4.922 million in Federal funds from the U.S. EPA under Section 103 grant is received;
2. A contract with S.G. Leaseco LLC (Apex Bulk Commodities) to replace five Class 8, pre-2003 diesel trucks (pre-2003 engines) with Class 8, 2007 or newer diesel trucks (2007 or newer engine) in an amount not to exceed $250,000 from Proposition 1B Goods Movement Fund 81;
3. A contract with Dependable Highway Express to replace 12 Class 8, pre-2003 diesel trucks (pre-2003 engines) with Class 8, 2007 or newer diesel trucks (2007 or newer engines) in an amount not to exceed $600,000 from Proposition 1B Goods Movement Fund 81;
4. A contract with BCI Coca Cola Bottling Co. of Los Angeles to replace 30 Class 8, pre-2003 diesel trucks (pre-2003 engines) with Class 8, 2007 or newer diesel trucks (2007 or newer engines) in an amount not to exceed $1.5 million from Proposition 1B Goods Movement Fund 81;
5. A contract with Ecology Auto Parts to replace 33 Class 8, pre-2003 diesel trucks (pre-2003 engines) with Class 8, 2007 or newer diesel trucks (2007 or newer engines) in an amount not to exceed $1.65 million from Proposition 1B Goods Movement Fund 81;
6. A contract with KKW Trucking to replace five Class 8, pre-2003 diesel trucks (pre-2003 engines) with Class 8, 2007 or newer diesel trucks (2007 or newer engines) in an amount not to exceed $250,000 from Proposition 1B Goods Movement Fund 81;
7. A contract with New Bern Transport Corp. (Pepsi Bottling Group) to replace six Class 8, pre-2003 diesel trucks (pre-2003 engines) with Class 8, 2007 or newer diesel trucks (2007 or newer engines) in an amount not to exceed $300,000 from Proposition 1B Goods Movement Fund 81;
8. A contract with Ralphs Grocery Company to replace 34 Class 8, pre-2003 diesel trucks (pre-2003 engines) with Class 8, 2007 or newer diesel trucks (2007 or newer engines) in an amount not to exceed $1.7 million from Proposition 1B Goods Movement Fund 81; and
9. A contract with Three Rivers Trucking to replace five Class 8, pre-2003 diesel trucks (pre-2003 engines) with Class 8, 2007 or newer diesel trucks (2007 or newer engines) in an amount not to exceed $250,000 from Proposition 1B Goods Movement Fund 81.
    

Barry R. Wallerstein, D.Env.
Executive Officer

Background

The Goods Movement Emission Reduction Program is a $1 billion bond program funded by Proposition 1B that was approved by voters in November 2006. This is a new incentive program designed to reduce diesel emissions and public health risks from goods movement activities along California’s trade corridors. The program will provide financial incentives to upgrade vehicles and equipment used in goods movement to cleaner technologies.

Out of $250 million budgeted for the Goods Movement Emission Reduction Program in
FY 2007-08, CARB has made $25 million available for Early Grant projects. In response to CARB’s Early Grant program solicitation, AQMD submitted projects totaling $125.2 million in November 2007. Due to limited time availability, these projects were solicited via consultants and industry associations. In February 2008, CARB awarded $13.8 million to AQMD for replacing older heavy-duty trucks with 2007 or newer model year diesel and LNG trucks. Fifty percent of the funds are allocated for replacing non-drayage trucks and the remaining balance is allocated for replacing drayage trucks in a lease-to-own program.
 

Proposal

Staff recommends that the Board recognize $13.8 million from CARB under the Proposition 1B Early Grant Goods Movement Program and place it in AQMD’s Proposition 1B Fund. The $13.8 million allocated by CARB is comprised of $13 million for projects and $800,000 for administration of the funds. Staff also recommends that the Board approve the projects as outlined in Table 1 to replace pre-2003 Class 8 diesel trucks with 2007 or newer diesel and LNG trucks. In total, 130 drayage and 130 non-drayage trucks will be replaced pursuant to CARB’s recommendation for the Early Grant award. The proposed projects meet CARB’s requirements as outlined in their Final Guidelines for Implementation as adopted on February 28, 2008.

All of the diesel, non-drayage trucks will be funded at $50,000 per truck from the Proposition 1B Fund. The 130 LNG trucks under the California Cartage contract will be funded at $90,000 per truck, comprised of $50,000 from the Proposition 1B fund, $2,138 from the Clean Fuels Fund, and $37,862 from the Clean Fuels Fund as a temporary loan until the Federal funds from the US EPA under Section 103 Federal Grant Fund are received.
 

Outreach

CARB released a Staff Draft Concepts for Implementation paper on September 17, 2007 to share their proposal on implementing the Goods Movement Emission Reduction Program and to initiate the public discussion. In October 2007, CARB held five public workshops around the State to educate the public on the program and garner suggestions on improving the program implementation.

AQMD did not have an opportunity to hold public workshops for the Early Grant Program due to the tight time constraints required for submittals but worked closely with the California Trucking Association and the California Dump Truck Owners Association in soliciting applications for the program. In addition, AQMD retained the services of several consultants such as TIAX LLC, Gladstein, Neandross & Associates, and Sol Source Energy in soliciting potential applicants.
 

Benefits to AQMD

The successful implementation of the proposed projects will reduce NOx and PM emissions in a cost-effective and expeditious manner to meet the goals of the 2007 AQMP. For example, the LNG truck engines are certified to the lowest NOx emissions standards of any heavy-duty engine available to date, representing a reduction of over 80% in NOx emissions. These vehicles will operate for many years and provide long-term emission reductions.
 

Sole-Source Justification

Section VIII.B.2 of the Procurement Policy and Procedure identifies four major provi-sions under which a sole source award may be justified. It is requested that a sole source award be made under provision B.2.d.: Other circum-stances exist which in the determination of the Executive Officer require such waiver in the best interest of the AQMD. Specifically, these circumstances are: B.2.d.(1) Project involving cost sharing by multiple sponsors. CARB will be providing $13.8 million to this Early Grant program and, upon receipt of the Section 103 Federal Grant, there will be an additional $4.922 million of Federal cost-share provided.
 

Resource Impacts

The total project costs shall not exceed $18.2 million, comprised of $13.0 million from the Proposition 1B Goods Movement Fund, $278,000 from the Clean Fuels Fund, and $4.922 million from the Clean Fuels Fund as a temporarily loan until the receipt of $4.922 million in Federal funds from the US EPA under the Section 103 Federal Grant.
 

Sufficient funds will be available, contingent upon receipt of the grant, from the Section 103 Federal Grant under the Consolidated Appropriation Act of 2008 that are for cost-effective retrofits, engine replacement, equipment replacement and technology development in the transportation, agriculture, and port sectors. These funds are to be used for emission reduction activities deemed necessary for compliance with a national ambient air quality standard and included in a State Implementation Plan submitted to the EPA.
 

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 Section 9250.11, establishes mechanisms to collect revenues from mobile 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.
 

Attachment

Table 1: Proposed Heavy-Duty Truck Replacement Projects

Table 1: Proposed Heavy-Duty Truck Replacement Projects