BOARD MEETING DATE: September 11, 2009
AGENDA NO. 3

PROPOSAL:

Execute Contracts to Replace Heavy-Duty Diesel Drayage Trucks Serving the Ports of Los Angeles and Long Beach, Replace and Retrofit Trucks Serving Intermodal Rail Yards, and Execute Contracts to Secure Technical Assistance for Implementation of Proposition 1B Program

SYNOPSIS:

At its July 2009 meeting, the Board approved the issuance of a program announcement to fund truck replacement projects at the Port of Los Angeles and Long Beach with funds from the Proposition 1B – Goods Movement Program, the two ports, and the AQMD. These actions are to approve projects for replacement of pre-2004 heavy-duty diesel trucks with 2007 certified or newer diesel and natural gas drayage trucks at the Ports of Los Angeles and Long Beach, approve projects for replacement and retrofit of trucks serving intermodal rail yards and execute contracts to secure technical assistance for implementation of the Proposition 1B Program.

COMMITTEE:

None

RECOMMENDED ACTIONS:

Proposition 1B Awards
Authorize the Executive Officer to execute any necessary contracts for

  1. New truck replacements serving the Ports of Los Angeles and Long Beach to be selected and approved as eligible by CARB from the list in Table 1 in an amount not-to-exceed $70,450,000 from the Proposition 1B – Goods Movement Program Fund (81), comprised of up to $45,450,000 in Proposition 1B funds and up to $25,000,000 from the AQMD and the Ports of Los Angeles and Long Beach;
     
  2. New truck replacements and retrofits serving intermodal rail yards, as listed in Table 2, and subject to CARB approval in an amount not to exceed $2.46 million, from the Proposition 1B – Goods Movement Program Fund (81); and
     
  3. Projects from the backup list, in order of their ranking as set forth in Table 3, in the event any of the contracts in Table 2 cannot be executed.

    Non-Proposition 1B Awards
  4. Recognize additional funds upon award from the California Energy Commission for up to $7 million, the Department of Energy for up to $9.4 million, the Department of Transportation for up to $1.925 million, and any additional funds from the Ports of Los Angeles and Long Beach and place them in the Proposition 1B – Goods Movement Program Fund (81) as “mixed funds.”
     
  5. Authorize the Executive Officer to
     
    1. Revise the MOU with the Ports of Los Angeles and Long Beach to provide $100,000 per natural gas truck in lieu of Proposition 1B funding; and
       
    2. Execute contracts for all the natural gas trucks deemed ineligible by CARB and in the order listed in Table 1, until the “mixed funds” from the Proposition 1B – Goods Movement Program Fund are exhausted.
       
  6. Temporary Loan of Funds
    Approve the transfer of up to $25,000,000 from the Carl Moyer Program AB 923 Fund to the Proposition 1B – Goods Movement Program Fund for contract executions as a temporary loan until the receipt of the state, federal, and other local agency funds designated for the implementation of this program.
     
  7. Technical Support
    Authorize the Executive Officer to execute contracts with the following entities from the Clean Fuels Fund to provide technical assistance for the implementation of the Proposition 1B – Goods Movement Program:
    1. TIAX, in an amount not to exceed $150,000;
       
    2. Gladstein, Neandross & Associates in an amount not to exceed $100,000; and
       
    3. Clean Fuel Connection in an amount not to exceed $100,000.
       

 

Barry R. Wallerstein, D.Env.
Executive Officer

Background

In May 2009, CARB authorized the re-initiation of the Proposition 1B – Goods Movement Emission Reduction Program and directed $49 million to the Ports of Los Angeles and Long Beach (Ports) to replace heavy-duty diesel drayage trucks. Shortly thereafter, the AQMD was asked to administer the program by both CARB and the Ports. At the June 5, 2009 Board meeting, the AQMD Governing Board agreed to administer the Ports’ Proposition 1B Clean Truck Program, acknowledging the severe time constraints and potential administrative costs associated with the program. At the time, the Governing Board expressed concerns regarding these two issues and whether CARB would engage with all stakeholders in partnership to complete these projects by the end of the year or AQMD would encounter unnecessary obstacles.

On July 10, 2009, the Board authorized the release of Program Announcement (PON) #2010-02 to solicit projects involving the replacement of heavy-duty diesel drayage trucks with new diesel or alternative fuel trucks. Subsequently, on August 3, 2009, the Board approved the execution of a Memorandum of Understanding (MOU) with the Ports, which outlines the financial and other responsibilities for administration of the program, at a special meeting called for that sole purpose. The program funding will include: up to $49 million from CARB in Proposition 1B funds less the previous amount incurred by the Port of Long Beach for 71 trucks, $12.5 million from the Port of Los Angeles, $5 million from the Port of Long Beach, and $7.5 million from the AQMD. Funds from the Ports and the AQMD are for alternative fuel trucks. At the close of the Program Announcement on July 24, 2009, the AQMD received a total of 1,120 applications consisting of approximately 1,700 trucks.

Under a separate program announcement in March 2009, AQMD solicited applications for the replacement and retrofit of trucks serving intermodal rail yards. The AQMD received 78 applications including 95 trucks at the close of this announcement, including mostly truck replacement projects. All of these applications were evaluated based on their emission reductions and cost-effectiveness according to CARB’s Proposition 1B program guidelines. The recommended projects have been selected based on the ranking order submitted to CARB for final approval.

During the very short time period between the issuance of the July PON and submission of the applications, AQMD, the Ports, AQMD consultants and CARB have all been in close communication. However, on August 26, 2009, AQMD was notified of a change in operating protocol regarding the timing of the ownership of the truck to be scrapped. CARB staff indicated that they now interpret the Proposition 1B Guidelines to require that the applicant must hold title of the old truck prior to submission of the application. This was a departure from the collective understanding of the Ports, the AQMD and the consultants helping both the Ports and AQMD run the program. CARB, however, has denied that a change in position occurred. The outreach to truck operators was conducted in a manner where the ownership need only be finalized before contract execution of the individual awards. Despite numerous efforts to negotiate for appropriate and equitable flexibility on their interpretation of the Proposition 1B Guidelines, CARB has refused to allow applications where the applicants are not the current title holder even though the title change of the older truck identified for scrapping would occur before signature to the individual grant contracts. Individual and small operators use this approach because they do not have the resources or the financing to purchase an older truck without the certainty of getting the grant. This method is their best opportunity to participate in this program. CARB staff’s interpretation of the guidelines Guidelines eliminates approximately 500 of the targeted 900 trucks.

AQMD staff strongly believes that the current Guidelines can be read to allow ownership to occur prior to execution of the contract. Moreover, on May 28, 2009, when CARB reinitiated the Proposition 1B Program, the CARB Board approved resolution 09-40, containing the following:

“BE IT FURTHER RESOLVED that the Board affirms the existing authority of the Executive Officer to interpret or clarify the Program Guidelines, and delegates to the Executive Officer, or his or her designee, the authority to adopt changes to the Program Guidelines that he or she deems necessary to enable effective implementation of the Program, provided that such changes are consistent with statute and the goals established by the Board. Staff shall identify those changes when the Board considers the next comprehensive update to the Program Guidelines.”

Staff believes this also clearly gives the CARB Executive Officer, especially in light of the extraordinary circumstances, the authority to include the truck applications in question. Again, CARB staff’s rigid and unnecessary interpretation of the Guidelines will make close to 500 trucks ineligible for funding, especially the lowest emitting natural gas powered trucks.

It is important to note that in this short two-month period, the AQMD has expended over $350,000 in consultant resources for outreach, verification (QA/QC) and application evaluation as well as dedicating 10 full-time technical staff and 7 inspectors to review, evaluate and prepare for the final awards. AQMD staff has been working overtime and on weekends since the closing of the PON to ensure the expeditious processing, evaluation and submission of the applications to CARB. AQMD staff has acted, and continues to act, in good faith to deliver the program, despite the very difficult timing constraints and resource impacts. As an example, pre-inspections of the old trucks are continuing despite the uncertainty of the applicants’ eligibility. Thus, AQMD has more than fulfilled its commitment to make herculean efforts to help provide clean trucks to port service. In fact, to date, AQMD has moved the process along quicker and more efficiently than either CARB or the Ports could accomplish.

Both AQMD and CARB staff are continuing to negotiate and try to resolve the impasse on these issues. As late as Wednesday, September 9, 2009, CARB discussed several potential options to help address some of AQMD’s regarding interpretation of the Proposition 1B Program Guidelines.
 

Proposal
Proposition 1B Awards
Staff recommends the Board approve the entire list of applications, as listed in Table 1, from which CARB will indicate the eligible projects for new truck replacements serving the Ports of Los Angeles and Long Beach. Funding for these trucks will not exceed $70,450,000 from funds to be placed in the Proposition 1B – Goods Movement Program Fund (81), comprised of up to $45,450,000 in state Proposition 1B funds and $25,000,000 in “mixed funds” from the AQMD and the Ports of Los Angeles and Long Beach. The “mixed funds” are comprised of up to $7.5 million from AQMD, up to $12.5 million from the Port of Los Angeles and up to $5 million from the Port of Long Beach. These funds will be used to provide an additional $50,000 incentive for natural gas trucks according to the MOU between the AQMD and the Ports that was approved by the Board on August 3, 2009.

Pursuant to the Guidelines, a number of the projects selected for awards will be part of a lease-to-own program. In the Tables, the owner/lessor of the truck and the lessee are both identified. For some of those projects, a financial institution will be the owner/lessor and AQMD will enter into contracts with those entities as well.

The full amount of the $70,450,000 is not expected to be exhausted due to CARB rejecting many of the applications as noted above but allows staff to move forward with some clean Port truck projects. Due to the inflexibility of CARB to work with the local stakeholders in the region, staff recommends that AQMD not issue another program announcement for the unused portion of the Proposition 1B funds. However, staff does recommend that AQMD administer any contracts and complete implementation of new projects if CARB conducts the solicitation, performs the evaluation of applications and selects the eligible projects, similar to the previous Carl Moyer multidistrict projects.

Staff also recommends the Board approve the awards in Table 2, for the replacement and retrofit of 51 trucks serving intermodal rail yards in an amount not to exceed $2.46 million from the Proposition 1B – Goods Movement Program Fund. In the event that any of these contracts cannot be executed, staff recommends the Board approve execution of contracts from the backup list in Table 3 in order of their ranking. The ranking orders in Tables 2 and 3 have been approved by CARB.
 

Non-Proposition 1B Awards
Many of the truck projects deemed ineligible by CARB are natural gas replacement trucks, which are substantially cleaner than their new diesel counterparts. In order to fund these trucks, staff recommends adding more funds from recent federal awards and revising the MOU with the Ports to allow funding of these trucks without Proposition 1B money. The additional funds are from the California Energy Commission for up to $7 million, the Department of Energy for up to $9.4 million, the Department of Transportation for up to $1.925 million, and any additional funds from the Ports of Los Angeles and Long Beach. These funds will be placed in the Proposition 1B account as “mixed funds” to support the $100,000 per natural gas truck incentive. Staff recommends that the ranking and cost-effectiveness used to develop Table 1 be used for natural gas trucks until all of the “mixed funds” are exhausted.
 

Technical Support
At its June 5, 2009 meeting, the Board approved the release of the RFP #P2009-23 for technical assistance for implementation of incentive programs. In response to the RFP, four proposals were received among which three were from local consulting companies with past experience with the AQMD, the Ports and other local agencies in the Basin. Hence, staff recommends the Board approve execution of contracts with those three entities as listed below with funds from the Clean Fuels Fund to provide technical assistance for the implementation of the Proposition 1B – Goods Movement Program and Non-Proposition 1B awards outlined above:

  1. TIAX, in an amount not to exceed $150,000;
  2. Gladstein, Neandross & Associates in an amount not to exceed $100,000; and
  3. Clean Fuel Connection in an amount not to exceed $100,000.

The Board previously approved (June 5, 2009) the use of up to $3.5 million in Clean Fuels funds to cover implementation costs of the Proposition 1B Program while seeking reimbursement from CARB. The above additional technical support costs will also be within the June 5, 2009 approved overall expenditure amount.


Outreach
In accordance with AQMD’s Procurement Policy and Procedure, a public notice advertising the RFP/RFQ and inviting bids was published in the Los Angeles Times, the Orange County Register, the San Bernardino Sun, and Riverside County Press Enterprise newspapers to leverage the most cost-effective method of outreach to the entire South Coast Basin.

Additionally, potential bidders may have been notified utilizing AQMD’s own electronic listing of certified minority vendors. Notice of the RFP/RFQ has been 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. Information is also available on AQMD’s bidder’s 24-hour telephone message line (909) 396-2724.
 

Benefits to AQMD
The successful implementation of the program will reduce NOx, PM and other pollutant emissions in a cost-effective and expeditious manner which will help achieve the goals of the 2007 AQMP. The projects involving replacement of a diesel engine with an LNG engine will provide additional benefits by reducing greenhouse gas emissions by about 25%. The vehicles funded under this program are expected to operate for many years which will provide long-term emission reduction benefits at the Ports and in the region.
 

Resource Impacts
The drayage truck replacement program will be cost shared through a combination of funding sources, including the state Proposition 1B – Goods Movement Program funds, EPA’s Congressional earmark grant, and funding contributions from the Ports of Los Angeles and Long Beach that will all be placed in the AQMD’s Proposition 1B – Goods Movement Program Fund (81). Total funding for the recommended drayage truck replacement projects shall not exceed $70,450,000 from the Proposition 1B – Goods Movement Program Fund.

Total funding for natural gas replacement trucks not approved by CARB and only funded with “mixed funds” shall not exceed the balance of available “mixed funds” from the Proposition 1B – Goods Movement Program Fund (81).

Total funding for the intermodal rail yard truck replacement and retrofit projects shall not exceed $2.46 million from the Proposition 1B – Goods Movement Program Fund.

Total funding for technical assistance shall not exceed $350,000 from the Clean Fuels Fund.

Sufficient funds are 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 (EXE, 133k)

  • Table 1 – Recommended Awards for Drayage Truck Replacement Projects Subject to CARB’s Selection and Approval
  • Table 2 – Recommended Awards for Intermodal Rail Yard Truck Replacement and Retrofit Projects in Order of Ranking
  • Table 3 – Backup List of Intermodal Rail Yard Truck Projects in Order of Ranking


This page updated: June 25, 2015
URL: ftp://lb1/hb/2009/September/09093a.htm