BOARD MEETING DATE: July 10, 2009
AGENDA NO. 11

PROPOSAL:

Execute Contracts for Natural Gas Refueling Station Infrastructure

SYNOPSIS:

AQMD staff has received unsolicited funding requests from the County of Orange, Applied LNG Technologies (ALT) and Waste Management, Inc. (WM) to cost-share the installation of new and upgraded natural gas fueling equipment. This action is to execute sole source contracts with the County of Orange, ALT and WM for three fueling stations for a total amount not to exceed $615,680 from the Clean Fuels Fund. Staff has recognized the agreement not to implement prior funding commitments by Burrtec, Merit Oil Company, First Student, City of Burbank and Yellow Cab Company for fueling infrastructure totaling $870,137 and has returned these funds to the Clean Fuels Fund, which will be sufficient to cover the recommended actions.

COMMITTEE:

Technology, June 19, 2009. Less than a quorum was present for the discussion of this item; the Committee members present communicated their concurrence and recommended that this item be forwarded for Board consideration.

RECOMMENDED ACTIONS:

Authorize the Chairman to execute contracts with the following entities from the Clean Fuels Fund:

1. The County of Orange in an amount not to exceed $252,321 to cofund the purchase and installation of a new public access CNG fueling station at a county yard;
2. Applied LNG Technologies in an amount not to exceed $113,359 to cofund emergency repairs at their L/CNG Ontario fueling facility; and
3. Waste Management, Inc. in an amount not to exceed $250,000 to cofund a new public access CNG fueling station at their fueling facility in Santa Ana.
    

Barry R. Wallerstein, D.Env.
Executive Officer

Background

Alternative fuel vehicles play an important role in Southern California’s efforts to meet the federal standards for fine particulate and ozone. As such, the SCAQMD has a long history in supporting the development and commercialization of alternative fuel vehicles. SCAQMD recognizes the importance of having a large network of alternative fuel fueling stations as more vehicles are deployed and therefore continues to support the expansion of the natural gas fueling network. Continued expansion of the natural gas fueling infrastructure needs to occur in order to support increased public and private fleet fueling needs and support future incentive program awards through the Chairman’s School Bus Replacement Initiative, the Carl Moyer Program, and the Proposition 1B Program.

Staff has been working with public and private entities that have expressed interest in establishing new or upgrading existing alternative fuel fueling stations. Recently, staff submitted applications on behalf of those entities in response to the Department of Energy (DOE) “Clean Cities FY09 Petroleum Reduction Technologies Projects for the Transportation Sector,” Area of Interest 4 – Alternative Fuel and Advanced Transportation Vehicles Pilot Program solicitation, and to the California Energy Commission (CEC) solicitation to assist in funding projects submitted to the federal government as part of the American Recovery and Reinvestment Act of 2009. Those submittals proposed funding for 23 new natural gas fueling stations and the upgrade of eight existing stations. Award notifications from DOE and CEC are not anticipated until sometime in late August or early September of this year. After award notification, staff will propose to release RFP’s for funding of projects that may not receive awards.

In the meantime, staff has received three urgent requests for funding outside of the DOE and CEC solicitations that require immediate attention.

Proposal

County of Orange

The County of Orange has requested cost-share funding in the amount of $252,321 to offset the capital investment costs for a fast-fill, 24-hour, seven days a week public-access compressed natural gas (CNG) fueling station. The new station will be centrally located in Orange county on county property near the Anaheim Stadium and Disneyland. The site is within proximity of four major transportation and infrastructure corridors – Interstate 5, State Route 57, State Route 91 and State Route 22 – which serve Orange, Los Angeles and Riverside counties and will support several municipal and private fleets subject to the AQMD Fleet Rules, as well as support several CNG infrastructure corridors and the Southern California region’s alternative fuel strategy and fueling network.

The County of Orange, due to the current economic crisis, will be unable to contribute any additional funds for the public/private CNG station. If the remainder of the needed funds is not obtained on a timely basis, the project is in serious jeopardy of being terminated and the county funds of $700,000 will be re-distributed to cover other budget shortfalls.

Staff recommends approval of a sole source contract with the County of Orange in an amount not to exceed $252,321 to cofund the purchase and installation of a new public access CNG fueling station at a county yard from the Clean Fuels Fund.

Applied LNG Technologies

Staff has received a request for emergency funding from Applied LNG Technologies (ALT) for their public access L/CNG refueling station located at the Ontario International Airport. The station has become increasingly important to a number of fleets throughout Southern California including UPS, port drayage trucks and 63 other companies that use this site on a daily basis. Since the beginning of the year, the station’s throughput has tripled. The equipment is thirteen years old and due to the age of the station, there have been a number of short-term outages. Immediate repairs are required to assure continued operation. It is ALT’s intent to submit grant proposals through normal announced funding opportunities to expand the station and build additional LNG storage and L/CNG dispensing; however, the timeline for award of these funds extends beyond immediate need. The upgrade of equipment consists of the PLC control panel, dual dispenser hoses, cascade CNG bottles and the installation of these equipment for a total project cost of $226,719.

Staff recommends approval of a sole source contract with Applied LNG Technologies in an amount not to exceed $113,359 to cofund the emergency repairs at their L/CNG Ontario fueling facility from the Clean Fuels Fund.

Waste Management, Inc.

WM has requested cost-share funding in an amount not to exceed $250,000 to offset the capital costs for a fast-fill public-access CNG fueling station. The new station will be in addition to their new time-fill station located in Orange county at 1800 S. Grand Ave., in the city of Santa Ana. The new fast fill station will support other commercial fleets subject to the AQMD Fleet Rules in the area including taxis and shuttle vans that service the John Wayne Airport. The new time-fill station is now in the permitting phase and with additional funding support from the AQMD the fast-fill portion of the station can be incorporated into the design and construction of the time-fill station.

Staff recommends approval of a sole source contract with Waste Management, Inc. in an amount not to exceed $250,000 to cofund the capital costs of a fast-fill station at their Santa Ana facility.

De-obligation of Infrastructure Awards

In August 2004, Board approved funding of five natural gas infrastructure projects with Burrtec, Merit Oil Company, First Student, City of Burbank, and Yellow Cab Company for a total amount of $870,137. These projects were never carried out due to a variety of reasons. The project proponents have also agreed not to implement these projects and this amount of $870,137 will be de-obligated and reverted back to the Clean Fuels Fund. The total reverted amount is sufficient to fund the three proposed projects.

Benefits to AQMD

The three proposed projects are included in the Technology Advancement Office 2009 Plan Update under “Development and Demonstration of Advanced Natural Gas Systems for Refueling Stations.” Also, the AQMP relies on the expedited implementation of advanced technologies and low-emission technologies, and the implementation of these two projects will help the AQMD to achieve its clean air goals.

Sole Source Justification

Section VIII.B.2 of the Procurement Policy and Procedures identifies four major provisions under which a sole source award may be justified.  These requests for sole source awards to the County of Orange, ALT and WM are made under B.2.d (1): Projects including cost sharing by multiple sponsors. All three proposals include at minimum 50% cost-share by the project proponents. Furthermore, these stations fill critical gaps in the region for CNG and LNG, and promote the utilization of the cleanest available fleet and passenger vehicles.

Resource Impacts

Funding, in an amount not to exceed $615,680, is proposed to fund the three proposed projects. The funds required for the installation of new and upgraded natural gas fueling equipment at the proposed stations are as follows:

County of Orange

Applied LNG Technologies

The proposed funding amount for the above ALT station is $113,359, which is 50% of the total upgrade cost of $226,719.

Waste Management, Inc.

The proposed funding amount for the above WM station is $250,000, which is 15% of the total station cost of $1,622,558.

De-obligation of Previous Awards

The funds that were approved to the awardees are as follows:

There are sufficient funds from these de-obligated awards to fund the proposed three stations. The remaining $254,457 would be returned to the Clean Fuels Fund for future projects.

Sufficient funds are available in the Clean Fuels Fund, which is established as special revenue 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.