BOARD MEETING DATE: February 3, 2006
AGENDA NO. 10

Adopt Resolution Accepting Terms and Conditions for FY 2005-06 Carl Moyer Program Award and Issue Carl Moyer Program RFP for FY 2005-06

SYNPOSIS:

This action is to adopt a resolution recognizing up to $35,277,055 in Carl Moyer grant award under SB 1107 with its terms and conditions for FY 2005-06. The grant designates $34,478,932 for project funding and $798,123 for administrative cost. This action is also to approve the release of an RFP to provide incentives for low emission on- and off-road vehicles and equipment for the FY 2005-06 Carl Moyer Program. Total amount of available funding will be approximately $30.1 million comprised of approximately $21.8 million from SB 1107 and approximately $8.3 million from AB 923. Staff is also proposing that the Board set aside an additional $12 million for fleet modernization projects and heavy-duty LNG truck projects at the ports. If more funds become available by the time of awards approval, more projects will be awarded accordingly.

COMMITTEE:

Technology, January 27, 2006. Less than a quorum was present during the discussion of this item; the Chairman communicated his concurrence and recommendation that this item be forwarded for Board consideration. Administrative, February 10, 2006, Recommended Approval.

RECOMMENDED ACTIONS:

1. Adopt the attached resolution to recognize up to $35,277,055 from CARB under SB 1107 for the Carl Moyer Program and place it in the Carl Moyer Fund and accept the terms and conditions for the FY 2005-06 Carl Moyer Grant award.
2. Approve issuance of RFP# P2006-15, in the amount of $30.1 million, to solicit projects for the FY 2005-06 Carl Moyer Memorial Air Quality Standards Attainment Program.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

The Carl Moyer Memorial Air Quality Standards Attainment Program (CMP) provides funds on an incentive basis for the incremental cost of purchasing cleaner than required engines and equipment. Eligible projects include cleaner on- and off-road, marine, locomotive, and agricultural engines, as well as forklifts, airport ground support equipment, and auxiliary power units.

This is the eighth year of the CMP and the second year of the program with funding from SB 1107 and AB 923. CARB has allocated $35,277,055 to the AQMD under SB 1107 for implementation of the FY 2005-06 CMP. Of this amount, $798,123 is designated by CARB for administrative and outreach efforts, and $34,478,932 for projects funding. In addition, $5,230,664 is required from the AQMD as its local match funding. AQMD receives revenues for AB 923 directly from the Department of Motor Vehicles and as previously approved by the Board uses that revenue for its required local match.

Proposal

For year eight of the CMP, staff is requesting approval to release RFP# P2006-15 for ap-proximately $30.1 million, consisting of $21,778,932 in funding from SB 1107 and $8.3 million in funding from AB9 23. Staff is recommending that the Board set-aside the re-maining $12 million from SB 1107 for truck modernization projects and heavy-duty LNG truck projects at the ports. The details of the funding are outlined in Table 1:

Table 1. Details of Available Funding

If additional funds become available by the time of award approval, additional projects will be recommended for award up to the total amount of funds available. The new pro-gram guidelines approved by CARB on November 17, 2005, will be used for the imple-mentation of this program. The CMP guidelines require that the emission reductions be a minimum of 15 percent for repower or retrofit applications and 30 percent for new en-gines. Staff proposes more stringent criteria for cost-effectiveness in some sectors based on experiences derived from past solicitations. Table 2 outlines the proposed minimum funding allocations and the maximum allowed cost-effectiveness requirements for each category and subcategory:

Table 2. Proposed Funding and Cost-Effectiveness Limits

                                                 Minimum Amount*                    Cost-Effectiveness
Category                                          ($ millions)                                    $/ton
______________________________________________________________________________
     ON-ROAD
          (A) Trucks
                - Class 7-8                              3.5                                         14,300
                - Class 5-6                              1.0                                         14,300
                - Other**                                 0.5                                         14,300
          (B) Buses
                - Transit                                 2.5                                         14,300
          (C) Heavy-Duty Diesel
                Vehicle Retrofits                      2.5                                         14,300
          (D) Fleet Modernization***              6.0                                         14,300
          (E) LNG Trucks in the Port***          6.0                                         14,300

     OFF-ROAD
          (A) Marine                                     2.7                                           5,000
          (B) Construction/Other Off-Road    8.0                                            5,000
          (C) Forklift                                    1.0                      electric 7,000/5,000
          (D) Locomotives                            3.0                                          14,300
          (E) Agricultural engines                  3.9                                            5,000
          (F) Ground Support Equipment,       1.5                                            5,000
               Truck Stop Electrification &
               Auxiliary Power Unit

Electronic Monitoring Cost****                    0.7
______________________________________________________________________________

*       The minimum amounts may be lowered if the category is undersubscribed and remaining amounts may be recommended to fund projects in other categories where there is an oversubscription.

**      Small fleets (20 or fewer vehicles, with GVW 14,001 lbs. and above), and public sector, APUs.

***     Funding for Fleet Modernization and LNG Truck Projects will be available separately with the Board’s approval.

****    The amount indicated above will be set aside for the installation and operation of electronic monitoring units required by the Carl Moyer Program as a program cost.

The sum of a project’s NOx, PM10 and VOC emission reductions will be used to calculate cost-effectiveness. This will allow projects that reduce one, two, or all of the covered pollutants to receive funding. VOC and NOx reductions will be given equal weight. However, emission reductions for PM will carry greater weight in the calculation (per the Carl Moyer Guidelines). The formula for the cost-effectiveness calculation is shown below:

Cost-Effectiveness ($/ton) =         Annualized Cost ($/year)       
                                           (NOx + VOC + 20 x PMC) tons/year

Where NOx = NOx Emission reductions
VOC = VOC emission Reductions
PMC = Combustion-related PM10 reductions

The Carl Moyer Program RFP (RFP# P2006-15) is provided as Attachment 2. The proposed RFP will solicit projects for on- and off-road vehicles and equipment, including refuse haulers, on-road trucks, transit buses, locomotives, agricultural engines, marine and port applications, and other vehicles and equipment. New engines, repowers and retrofits are allowed within the program. As in previous years, AQMD will fund diesel to diesel applications only when alternative fuel engines/vehicles are not commercially available or certified by CARB. At least 40 percent of funding will be awarded to projects related to goods movement. Projects to retrofit on-road heavy-duty diesel vehicles with CARB verified particulate traps will be allowed to compete for funding, as particulate matter is now one of the criteria pollutants qualifying for funding. Projects must meet the established cost-effectiveness criteria and all other requirements of the program.

Proposals for all categories will be due by 1:00 pm on Friday, May 5, 2006. Staff antici-pates finalizing the review and evaluation of proposals received and recommend awards for Board approval on or before the September 8, 2006 Board meeting, contingent upon receiving the required funds from CARB.

Program Guidelines

At its July 8, 2005 meeting, the Board approved a long term Program Guideline for the implementation of the Carl Moyer Program in the South Coast air district with continuous funding from SB1107 and AB923 until 2015. The proposed funding distribution for different equipment categories is according to the criteria outlined in the Program Guideline with emphasis on the following priorities in order to achieve the highest emission reductions:

- Goods Movement (40 percent allocation)
- Environmental Justice (50 percent allocation)
- Cost Effectiveness
- Low Emission Engine / Vehicle Preference
- Early Commercialization of Advanced Technologies/Fuels
- Fleet Rules
- School Buses

Funding Distribution

As required by AB1390 (Firebaugh), the new CMP guidelines include the requirement that at least 50 percent of the program funds must be spent in disproportionately impacted areas. Funding allocated under SB1107 and AB923 will be approximately $41.8 million. Therefore, approximately $20.9 million will be awarded to projects located in disproportionately impacted areas. It has been the policy of the AQMD to allocate at least 50 percent of all funding available in the CMP, including roll-over funding from previous years and turn-back funds to disproportionately impacted areas.

Disproportionately Impacted Areas Point Ranking

The requirements of the CMP will be implemented according to the following criteria.

1. All projects must qualify for the Carl Moyer program by meeting the cost effectiveness limits established in the RFP.
2. All projects will be evaluated according to the following criteria to qualify for funding as a disproportionately impacted area:
   1. Poverty Level: All projects in areas where at least 10 percent of the population falls below the Federal poverty level based on the year 2000 census data, are eligible to be included in this category, and
   2. PM Exposure: All projects in areas with the highest 15 percent of PM concentration will be eligible to be ranked in this category. The highest 15 percent of PM concentration is 46 micrograms per cubic meter and above, on an annual average, or
   3. Air Toxics Exposure: All projects in areas with a cancer risk of 1,000 in a million and above (based on Mates II estimates) will be eligible to be ranked in this category.

The maximum score will be comprised of 40 percent for poverty level, and 30 percent each for PM and toxic exposures. Special circumstances exist in some areas, such as the Ports of Long Beach and Los Angeles. Since there are no residents within the ports, poverty ranking could not be established. In this case, the poverty ranking from the adjacent on-shore areas were extended to the port since these populated areas are directly impacted by port activities.

Outreach

In accordance with AQMD’s Procurement Policy and Procedure, a public notice advertis-ing the RFP/RFQ and inviting bids will be published in the Los Angeles Times, the Or-ange 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 be notified utilizing the Los Angeles County MTA Directory of Certified Firms, the Inland Area Opportunity Pages Ethnic/Women Business & Professional Directory; and AQMD’s own electronic listing of certified minority ven-dors. Notice of the RFP/RFQ will be mailed to the Black and Latino Legislative Cau-cuses and various minority chambers of commerce and business associations, and placed on the Internet at AQMD’s Web site (http://www.aqmd.gov where it can be viewed by making menu selections “Inside AQMD”/“Employment and Business Opportuni-ties”/“Business Opportunities” or by going directly to http://www.aqmd.gov/rfp/index.html). Information is also available on AQMD’s bid-der’s 24-hour telephone message line (909) 396-2724.

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 successful implementation of the Carl Moyer Program is a direct result of these Technology Advancement activities. The vehicles and equipment funded under this RFP will operate many years, providing long-term emissions reductions.

Resource Impacts

Total amount of available funds for the Carl Moyer Program under RFP# P2006-15 is approximately $30.1 million comprised of approximately $21.8 million from funds under SB1107 and $8.3 million from funds under AB923.

Attachments (EXE 6.7mb)

ATTACHMENT 1

RESOLUTION NO. 06-xx

A Resolution of the South Coast Air Quality Management District Board Recogniz-ing and Accepting the Terms and Conditions of the FY 2005-06 Carl Moyer Grant Award

WHEREAS, under Health & Safety Code §40400 et seq. the South Coast Air Quality Management District (AQMD) is the local agency with the primary responsi-bility for the development, implementation, monitoring and enforcement of air pollution control strategies, clean fuels programs and motor vehicle use reduction measures; and

WHEREAS, the AQMD is authorized by Health & Safety Code §§40402, 40440, and 40448.5 to implement programs to reduce transportation emissions, including programs to encourage the use of alternative fuels and low-emission vehicles; to develop and implement other strategies and measures to reduce air contaminants and achieve the state and federal air quality standards; and

WHEREAS, the Board has adopted several programs to reduce emissions from on-road and off-road vehicles, as well as emissions from other equipment, including the School Bus Incentive Program and the Carl Moyer Program; and

WHEREAS, the South Coast Air Quality Management District is desig-nated as an extreme nonattainment area for ozone and as such is required to utilize all feasible means to meet national ambient air quality standards.

THEREFORE, BE IT RESOLVED that the Board of the South Coast Air Quality Management District, State of California, in regular session assembled on Febru-ary 3, 2006, does hereby accept the terms and conditions of the 2005-06 (year 8) Carl Moyer Program grant award and recognizes up to $35,277,055 in SB 1107 funds.

BE IT FURTHER RESOLVED that the Executive Officer is authorized and directed to take all steps necessary to carry out this Resolution.

________________________ __________________________
Date Clerk of the Board

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