South Coast Air Quality Management District

Adopt Proposed Rule 1195 – Clean On-Road School Buses

SYNOPSIS: 

Proposed Rule 1195 will require public fleet operators with 15 or more school buses to purchase rule compliant school buses when adding or replacing school buses in an existing fleet or forming a new fleet.

COMMITTEE: 

Mobile Source, February 23 and March 23, 2001, Reviewed.

RECOMMENDED ACTION:

Adopt the attached resolution:

1. Approving the finding that potential adverse environmental impacts from adopting Rule 1195 – Clean On-Road School Buses are within the scope of the previously prepared and certified Final Program Environmental Assessment for the Proposed Fleet Vehicle Rules and Related Rule Amendments, and no new environmental document is required; and
   
   
2. Adopting Rule 1195 – Clean On-Road School Buses

Barry R. Wallerstein, D.Env.
Executive Officer

Background

The results from AQMD’s recent Multiple Air Toxic Exposure Study (MATES-II) indicates that mobile source emissions are major contributors to the potential cancer risk from air pollution in the South Coast Air Basin. In addition, recent findings from long-term epidemiological studies of school age children conducted by University of Southern California and University of California at Los Angeles indicate that nitrogen oxides, acids, and particulate matter have much greater impacts on limiting lung growth in children than believed in the past. Mobile source emissions have become the major emission sources to the ozone and fine particulate matter air quality problems in the South Coast Air Basin. Despite current regulatory actions that have reduced overall mobile source emissions dramatically over the past twenty years, and will continue emission reductions in the future, additional mobile source emissions reductions are needed in the near-term. As such, the AQMD Governing Board has adopted clean fleet vehicle rules to reduce mobile source emissions.

California Health and Safety Code (HSC) Section 40447.5 provides that the AQMD may adopt rules requiring public and private fleets with 15 or more vehicles to acquire vehicles using "methanol or other equivalently clean burning alternative fuel" when "adding vehicles to or replacing vehicles in an existing fleet or purchasing vehicles to form a new fleet" and to require that these vehicles be operated substantially on alternative fuels.

In addition to Section 40447.5, under HSC Section 40919(a)(4), "serious" or worse ozone nonattainment areas may require "the use of a significant number of low-emission motor vehicles by operators of motor vehicle fleets." The definition of "low-emission motor vehicles" is further defined in HSC, Section 39037.05. Section 39037.05 excludes the use of diesel fuel in the "low-emission" vehicle definition. However, vehicles that operate on gasoline that are certified at hydrocarbon emission levels that are twice as low as the applicable hydrocarbon exhaust emission standards by year and class are considered "low-emission" [HSC Section 39037.05(c)].

The basic requirement of PR 1195 is that, upon adoption of the rule, public and private school bus fleets with 15 or more school buses purchase new CARB-certified alternative-fueled heavy-duty school buses (or ultra-low emission vehicle (ULEV) or cleaner non-diesel medium-duty school buses) when adding or replacing buses in an existing fleet. If the operator is considering purchasing pre-owned (used) school buses, the operator must repower the school bus to operate on an alternative fuel if the bus is a heavy-duty school bus. Under the current rule proposal, school bus fleet operators who are purchasing pre-owned medium-duty school buses must purchase buses that are CARB-certified as LEV or cleaner non-diesel buses. However, the rule requirements are structured in steps so that, in general, operators must acquire the cleanest type of bus for which external funding is available. Public and private school bus fleet operators may purchase "intermediate diesel"-powered school buses if external funding (beyond the school bus fleet operator’s fiscal budget) is not sufficient to offset the differential cost of a rule-compliant alternative-fueled school bus (new or pre-owned) or to offset the cost to build an alternative fuel infrastructure, as defined in the rule. However, if external funding is not available for "intermediate diesel" (sometimes referred to as "green diesel", then conventional diesel may be purchased. The conventional diesel-powered school bus must be equipped with a CARB-approved control device and operate on low-sulfur diesel fuel. Also, when operators acquire conventional diesel buses, they must consider the suitability of a gasoline-powered vehicle and submit a demonstration of particular need for a diesel vehicle.

Under the current rule proposal, school bus operators with between 15 to 50 school buses have an option to delay implementation to July 1, 2002 if 25 percent of the existing school bus fleet is retrofitted with approved control devices. An additional year is provided to July 1, 2003 if 50 percent of the existing fleet is retrofitted with approved control devices.

Private contractors who provide transportation services to public or private schools have somewhat more stringent requirements in that if funding is not available for alternative-fueled buses, they can acquire diesel vehicles with particulate traps and use low-sulfur diesel fuel. However, they must retrofit 15 percent of their fleet with particulate traps each year.

In addition to the overall recognition of the cost to purchase rule compliant vehicles, the proposed rule provides several exemptions that address operational concerns raised to date. These exemptions include: 1) recognition that an alternative-fueled engine/ chassis/body specification may not be commercially available or could not be used on a specific fixed school bus route; 2) the need to have additional school buses during the school year due to unforeseen circumstances; 3) school buses acquired due to business acquisitions or mergers; and 4) contract agreements to purchase school buses signed prior to the adoption of the proposed rule.

In addition to the above exemptions, three additional exemptions are provided in the current rule proposal. First, in recognition that school buses are used for field trips in and out of the South Coast Air Quality Management District, only 90 percent of the school fleet need to be rule-compliant for school bus fleets of more than 100 school buses. For school bus fleets with between 15 to 50 school buses, the school bus fleet operator can have up to five school buses that are non-rule compliant after the remainder of the fleet becomes rule compliant. Lastly, for school bus fleets with between 51 to 100 school buses, the school bus fleet operator can have up to ten school buses that are non-rule compliant after the remainder of the fleet becomes rule compliant. Staff believes that the majority of the school bus fleet would not need to have this exemption in the short-term given the long life span of school buses. Second, prior to January 1, 2003 and if external funding is not available for the development of an alternative fuel refueling station, fleet operators may purchase diesel-powered school buses if there is no refueling station within five miles of the school bus storage or maintenance yard. Third, to encourage and accelerate the removal of the oldest school buses in an existing fleet, an exemption is provided for school bus fleet operators who purchase a pre-owned school bus provided said operator scraps or renders the oldest school bus in its fleet permanently inoperable and purchases a pre-owned diesel-powered school bus that is less than six years old and equip it with approved control devices if external funding is available.

A summary of the proposed rule is provided in Attachment A. A flow diagram of the rule control approach and exemptions are also provided in Attachment A.

In November 1999, staff originally proposed an umbrella on-road motor vehicle fleet rule (PR 1190) and a preliminary draft staff report was prepared and released in December 1999. Two public workshops were conducted (December 21, 1999 and January 12, 2000) at which a total of over 700 members from the public attended. The most significant comments made related to: costs associated with alternative-fueled vehicle purchases and maintenance, development of alternate-fueling infrastructure, availability of alternative-fueled engines/chassis specifications to meet certain medium- and heavy-duty vehicle applications, and that the rule development schedule was too aggressive and more time was needed for public review and input.

In response to these comments, staff separated the original PR 1190 proposal into several standalone rule development efforts that cover each of the specific fleet vehicle types (i.e., light- and medium-duty vehicles, transit vehicles and urban buses, refuse collection vehicles, school buses, street sweepers, and airport ground access). The separation of former PR 1190 into seven separate rules provided the public a better understanding of the impacts of the rule development and staff the ability to address rule implementation issues more specifically. In addition, the rule development schedule was extended to allow more time for the public to review and comment on each of the rule proposals. The preliminary draft staff report (dated December 1999) continued to serve as the initial basis for the staff report for the seven separate rule proposals.

In addition to the public workshops, a series of fleet rule public meetings were conducted with affected parties to seek specific comments on the impacts of the fleet vehicle rule proposals including school buses covered under PR 1195. Implementation issues focused primarily on the cost impacts of any proposed rule to public school districts, the additional funding needed to purchase alternative-fueled vehicles and to develop the alternative-fueled refueling infrastructure, the additional costs associated with operating alternative-fueled vehicles, operational aspects of private school transportation providers, and the use of school buses for field trip purposes. These issues are discussed further in the following sections.

Draft rule language for PR 1195 (the seventh in the series of "PR 1190" fleet rules), was released on December 14, 2000. A public workshop was conducted on January 9, 2001 to solicit public comments on PR 1195. A draft staff report on PR 1195 was released in January 2001 that represented a revision to the December 1999 Preliminary Draft Staff Report on PR 1190. A revised rule proposal and revised staff report was released in February 2001. In addition, a public consultation meeting was conducted on February 21, 2001 to solicit further comments and inputs regarding the rule proposal. Numerous school bus working group meetings were held to solicit more specific inputs. Revised versions of the rule proposal were released on March 20, 2001 and April 11, 2001. The current staff proposal is attached and is dated April 12, 2001.

Limited Financial Resources to Public School Districts
To date, the single most significant concern raised by public school district is the cost to implement PR 1195 relative to the purchase of alternative fueled school buses. To address this concern, the proposed rule provides an exemption if external funding (beyond that of the school district’s fiscal budget) is not available to offset the differential capital cost of the vehicles or the development of the alternative fuel infrastructure. During the discussions on the development of the rule proposal, several public school districts indicated that alternative fuel technology starts at about $40,000 for a fueling system for one to five school buses. In addition, it was noted that additional costs would be incurred when the facility must be upgraded in order to work on the alternative-fueled vehicle within an enclosed environment. Staff’s estimate of $8,000 per bus is appropriate when a fleet consists of at least five alternative-fueled buses. However, for a fleet with one or two alternative-fueled school buses, a simpler less costly system can be deployed and a larger system would not be needed until a majority of the fleet is operating on alternative fuels. One system produced by FuelMaker costs about $12,000 per alternative-fueled school bus (worst case) and can time-fill a single bus. Such a system would be economical to smaller fleets of alternative-fueled school buses. In a more recent effort to develop the infrastructure needed for 34 compressed natural gas school buses, it was estimated that up to $250,000 would be required for a combination of 20 time-fill units and one fast-fill unit. The estimated cost on a per-bus basis would be about $7,350. It is more economical to proceed with the modular units for smaller numbers of alternative-fueled buses. As the number of alternative-fueled school buses increases, the operator may continue to add more filling units or choose to replace the system with a combination of time-fill and fast-fill units. As such, the cost criteria proposed in the rule exemption is $13,000 per alternative-fueled school bus for the first two years and $8,000 per vehicle in the subsequent year as fleet size increases and fueling unit costs likely decrease.

Relative to facility upgrades, the cost can range from a few thousand dollars to over $200,000 depending on the conditions of the existing facility. Several operators of alternative-fueled school buses have been performing maintenance outdoors due to the limited funding for facility upgrades. One facility has been using lower-cost canvas-type enclosures to service the alternative-fuel vehicles. Some government funds are expected to be available to help offset some of the costs associated with facility upgrades and/or capital costs of vehicles beyond the differential for the alternative fuel components. These latter savings can be used to help offset any other costs.

Alternative-Fuel Refueling Infrastructure Availability
As with the other clean fleet vehicle rules adopted to date, the cost of alternative fuel infrastructure continues to be of concern for potential PR 1995 fleet operators. Since the proposed implementation date is upon adoption of the rule, those school districts purchasing alternative-fuel school bus would need to find a nearby alternative fuel refueling station capable of fueling a school bus or begin building a fueling unit as soon as possible prior to the delivery of the alternative-fueled school bus. Operators prefer to have a central fueling station on-site if possible to reduce overhead and labor costs of having buses refueled offsite. To refuel a school bus on compressed natural gas at a fast-fill unit takes up to 20 minutes depending on the remaining amount of fuel in the school bus and the capacity of the fueling site. The Governing Board has authorized $12M to assist in regional infrastructure development for natural gas fueling. Some state funding is also available for this purpose. Additional funds will be needed in future years as more school bus fleets begin conversion of their fleets to natural gas.

To further address the concerns relative to fueling infrastructure availability, PR 1195 proposes that, prior to July 1, 2003, if no refueling infrastructure capable of fueling an alternative-fueled school bus is located within five miles of the vehicle storage or maintenance yard and if the operator applied for external funding and did not receive such funding, the operator may purchase a diesel-powered school bus. The school bus shall be equipped with an approved control device. A sunset date is provided, anticipating that the alternative-fuel refueling infrastructure will expand over the next few years as a result of implementation of the clean fleet vehicle rules. If the fueling infrastructure does not expand sufficiently over the next couple of years, the Board could reconsider the sunset date.

Funding for Mandated School Programs
Under state law, state mandated programs placed on public school districts must be funded. However, no such state law applies to local or regional requirements such as Rule 1195. Many school districts have questioned whether long-term operational and maintenance costs associated with purchasing Rule 1195 compliant school buses would be reimbursed in some manner. Staff has been informed that the only mandated transportation program for public school districts is providing school transportation for special education purposes. On-going operational costs are reimbursed by the state relative to this program. Since no such program exists relative to Rule 1195 implementation, school district representatives indicate that additional costs such as natural gas fuel costs, parts costs, and training of mechanics must be borne by the school district. Staff believes that the recent increases in natural gas fuel costs are due to short-term factors and are expected to be stable over the mid- to long-term. Relative to parts costs, for the first few years many of the parts are under manufacturer’s warranty and the cost of these parts are covered under warranty. At this time, parts are more expensive for alternative-fueled vehicles compared to diesel vehicles. However, as the implementation of the clean fleet vehicle rules proceed, it is envisioned that the cost of parts will decrease for natural gas vehicles and could increase for diesel engines with advanced electronics. Lastly, relative to training, the AQMD staff has been facilitating efforts to develop training programs for mechanics working on alternative-fueled engines and providing financial assistance to fleet operators to help cover the training materials or costs.

Private School Bus Operators and Private School Bus Transportation Providers
Under Rule 1195, private schools as well as school transportation providers (or contractors) that contract to public school districts and private schools, are defined as "private school bus fleet operators." Relative to private schools, there are a small number of private schools with 15 or more school buses. Private schools generally collect tuition fees to cover the schools’ expenses including school bus transportation. Under state law, public funds cannot be accessed by private schools. However, private schools may receive funds from private entities or non-profit organizations. Some religious private school have greater restrictions regarding public funds. Concerns have been raised relative to funding programs needed for private schools to offset the costs associated with Rule 1195 compliance. As such the rule provides the same exemptions as for public schools relative to the purchase of a new diesel-powered bus and that the bus must be equipped with an approved control device. In addition, private schools with less than 50 school buses may have up to July 1, 2003 before the primary rule requirements go into effect if the private school retrofits 50 percent of its buses.

Private school bus transportation contractors are not as restricted as private schools. As such, the rule requirements are the same as for public school districts. However, separate exemptions are provided in Rule 1195 to address private school bus contractors. Prior to January 1, 2004 (or earlier if a state or federal regulation is in place that requires existing school buses to be retrofitted), the private school bus contractor may purchase diesel-powered school buses equipped with an approved control device if 15 percent of the existing school bus fleet is retrofitted with an approved control device and there was not sufficient external funding (beyond the contractor’s fiscal budget) to cover the cost of a rule-compliant alternative-fueled school bus or the cost to develop the alternative fuel infrastructure. The private school bus contractor must cover the costs associated for the control devices. However, the contractor may apply for external funding to help offset the cost to retrofit existing vehicles.

Private school bus contractors indicated that the sunset date is too restrictive and applying for external funds would be complex given the long lead-time to determine if external funding is available. In addition, the private school bus contractors believe that retrofit costs should depend on external public funding. If such funding were not available, the cost to retrofit existing school buses would be passed on to public school districts. Staff believes that there will be sufficient funds available to retrofit a majority of the existing school buses with approved control devices. It is estimated that about 3,500 heavy-duty diesel-powered school buses could be retrofitted with particulate control devices in the future. (The particulate control devices do not work on all heavy-duty diesel-powered school buses at this time.) The South Coast Air Basin will receive $5.5 million under the statewide Lower-Emission School Bus Program to retrofit existing school buses.

In addition, the Adopt-A-School Bus Foundation presently has more than $1 million, and expects to raise additional funds, for use in reducing children’s exposure to diesel particulate. The Foundation has determined to embark upon an initial pilot program to provide funding to retrofit buses with diesel particulate traps and pay for some infrastructure costs with the monies it currently has on hand.

The combined funding at this time from the two programs is $6-7 million, which is enough funding for at least 1000 school buses. Due to the need to continue to reduce diesel particulate emissions, there is interest in providing funds for continued retrofitting of existing school buses. Staff believes that since private school bus contractors can apply for grant funding to retrofit existing school buses, there would likely be no additional costs or minimal costs to retrofit the existing school bus fleet at a rate of 15 percent per year. As such, staff has provided in the Adopting Resolution language to monitor the activities of private school bus contractors relative to implementation of this aspect of the rule.

Consistency with Future State or Other Public School Bus Programs
During the development of Rule 1195, concerns were raised regarding the ability to purchase diesel-powered school buses as provided in the Statewide Lower-Emission School Bus Program (LESBP). Comments were made that Rule 1195 would essentially prohibit a school district from purchasing the intermediate diesel school bus. Staff does not believe this to be the case. Rule 1195 would allow for such purchase if demand exceeds supply relative to funds for the alternative-fuel school bus purchases. That is currently the case. Therefore, those school districts that requested an intermediate diesel, may purchase the diesel-powered bus and would be in compliance with the provisions of Rule 1195. However, if there were other funding sources available at the time of the award, the operator would need to apply for those funds. The only other funding programs at this time are the MSRC and Carl Moyer Programs. The MSRC has about $950,000 remaining in this fiscal year and would cover about 22 school buses. However, the school bus operator must take delivery by the end of the fiscal year in order to receive funding from MSRC. At this time, it will be difficult for a school bus fleet operator to access the MSRC fund due to this condition. Relative to the Carl Moyer Program, only school buses that have higher annual vehicle miles traveled (VMT) or are older, are eligible for grant funds at this time. Based on the most recent cost-effectiveness criteria of the Carl Moyer Program, many school bus fleets would not meet the cost-effectiveness criteria. Therefore, all of the funds for the purchase of intermediate diesel school buses will likely be awarded to school districts that applied for the intermediate diesel school buses. However, AQMD staff hopes to expand future funding for natural gas-powered buses.

PR 1195 would affect approximately 8,500 diesel-fueled school buses in the current universe of public and private fleets that have 15 or more school buses. About half of the 8,500 school buses are heavy-duty conventional (front-mounted engine with a nose) or transit-type school bus. At this time, there is no alternative fuel engine/chassis configuration commercially available for some bus configurations. As such, Rule 1195 provides an exemption for these buses. Relative to larger transit-type school buses, several manufacturers produce alternative-fuel (primarily natural gas) school buses. Based on the school bus survey data collected last year, staff estimates that fewer than 200 new heavy-duty school buses are purchased annually in an average year. Given the low turnover of the existing fleet, Rule 1195 would affect a relatively small number of new school bus purchases while moving the existing diesel-powered school bus fleet towards particulate control device retrofits.

Staff believes that the primary choice should be the cleanest school bus available followed by cleaner diesel-powered school buses such as the intermediate diesel school buses offered in the LESBP. The intermediate diesel-powered school bus must meet a 3.0 g/bhp-hr NOx exhaust emissions requirement and a 0.01 g/bhp-hr particulate exhaust emissions requirement compared to the mandatory emission standards of 4.0 and 0.1 g/bhp-hr for NOx and particulates, respectively. More recently, International Truck and Engine Corporation’s diesel-powered engine for school buses was certified by CARB and U.S. EPA to meet the 3.0 g/bhp-hr NOx emissions level and the 0.01 g/bhp-hr particulate exhaust emissions level. International Truck and Engine Corporation calls its certified engine a "Green Diesel" engine or school bus. While the emission levels certified by CARB and U.S. EPA are about 25 percent cleaner in NOx emissions and greater than 90 percent cleaner in particulate emissions compared to other diesel-fueled engines used in school bus applications, the International engine emits higher levels of NOx compared to state-of-the-science alternative-fueled engines.

Relative to medium-duty school buses, Rule 1195 would require the purchase of ULEV or cleaner buses. These buses are used primarily for state-mandated special education programs. Rule 1195-compliant medium-duty school buses are available in gasoline or alternative-fueled versions. There are about 3,660 medium-duty school buses in fleets with 15 or more school buses.

Based on an average purchase/replacement rate of ten or more years for medium-duty school buses and 20 or more years for heavy-duty school buses, it is estimated that by 2010, nitrogen oxide emissions would be reduced by up to 90 tons/year, particulate matter emissions would be reduced by up to 6 tons/year, and hydrocarbons would be reduced by up to 0.53 tons/year. In addition, there would be a reduction in air toxic emissions. Finally, Rule 1195 will promote technology advancement that will likely result in emission reductions beyond those indicated above, especially when in-use emissions characteristics are considered.

In accordance with the California Environmental Quality Act (CEQA), the AQMD, as the Lead Agency, has reviewed the proposed fleet vehicle rules and related rule amendments, which includes PR 1195. Pursuant to state CEQA Guidelines Sections 15168 and 15252, the AQMD prepared a Draft Program Environmental Assessment (PEA) for the proposed project which was released on March 10, 2000 for a 45-day public review and comment period. The Draft PEA analyzed potential adverse environmental impacts that are comprised primarily of cross-media impacts, including air quality, water resources, transportation, energy, hazards, public services and solid/hazardous waste, from refinery modifications to produce low sulfur fuel and construction of alternative fuel refueling stations. The analysis concluded that short-term construction-related air quality impacts were significant. Significant adverse construction air quality impacts were related primarily to refinery modifications to implement the amendments to Rule 431.2. All comments received on the Draft PEA were addressed and incorporated into the Final PEA for the proposed fleet vehicle rules including PR 1195.

The Final PEA for the proposed fleet vehicle rules and related amendments was certified by the SCAQMD Governing Board at the June 16, 2000 Public Hearing on three of the fleet vehicle rule proposals (Rules 1191, 1192, and 1193). CEQA Guidelines §15168(c) states that, "Subsequent activities in the program must be examined in the light of the program [EA] to determine whether an additional environmental document must be prepared." CEQA Guidelines §15168(c)(2) states further, "If the agency finds that pursuant to Section 15162, no new effects could occur or no new mitigation measures would be required, the agency can approve the activity as being within the scope of the project covered by the program [EA], and no new environmental document would be required." The Final PEA analyzes potential adverse environmental effects of the overall fleet vehicle rule program as specifically and comprehensively as possible given the level of detail of the program. Since the environmental analysis in the Final PEA provides sufficient detail of the potential adverse environmental impacts generated by the proposed fleet vehicle rule program, the environmental effects of implementing PR 1195 are considered to be within the scope of the Final PEA. Therefore, no further environmental documentation is required [CEQA Guidelines §15168(c)(5)].

AQMD staff has also prepared an Economic Report for the Proposed Fleet Vehicle Rules which includes PR 1195. The Economic Report was approved by the Governing Board on June 16, 2000 as part of its action on Rules 1191, 1192, and 1193. Additional socioeconomic impact assessment of PR 1195 was conducted and is provided as part of the PR 1195 Staff Report. The assessment assumes that the capital cost differential associated with the purchase of alternative-fueled vehicles compared to diesel-powered school buses equipped with particulate control devices would be covered by the various financial incentive packages. Comments were made that there would be additional operational and maintenance costs associated with alternative-fueled vehicles compared to conventionally-fueled vehicles. An additional socioeconomic impact assessment was conducted assuming that external funding would be available for alternative-fueled school buses. The socioeconomic assessment indicates that the cost effectiveness of PR 1195 would be $46,088 per ton of criteria pollutant reduced when funding is considered. The cost-effectiveness includes capital and operational costs.

PR 1195 would require public and private school bus fleet operators to purchase alternative-fueled vehicles at the time the operators are adding or replacing vehicles in their fleets. It is envisioned that operators will specify in their procurement process the purchase of school buses that would be Rule 1195 compliant. In addition, operators will be seeking external funding beyond their fiscal budgets to offset the additional costs of alternative-fueled school buses and associated infrastructure. If sufficient funds are not available, the operator may choose to purchase a diesel-powered school bus equipped with a control device. Staff believes that there will be minimal resource impacts on the AQMD since fleet operators keep records of their purchases and procurement information. However, staff would need to develop a streamlined approach to inform operators on the availability of external funds such that operators can procure school buses in an efficient manner. Staff will also provide miscellaneous information regarding rule interpretation and implementation. There will also be small administrative costs associated with random inspection of fleet operators for rule implementation and enforcement purposes and the tracking of the penetration of alternative fueled vehicles into the market.

Staff recommends that proposed Rule 1195 be adopted. The proposed rule will provide criteria pollutant air quality and toxic air pollutant benefits.

1. Summary of PR 1195 Proposal
2. Rule Development Process
3. Resolution
4. Proposed Rule 1195 Language
5. Staff Report
6. Final Environmental Assessment (available to the Public upon request)

Errata Sheet (added 04/17/2001)

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