South Coast Air Quality Management District

Allocate Rule 2202 AQIP Funds to Assist in the Purchase of Natural Gas Vehicles for Taxicab Services

SYNOPSIS: 

Rule 1194 – Commercial Airport Ground Access, contains a provision allowing taxicab operators authorized to pickup passengers at commercial airports to access funding assistance prior to January 1, 2002 for the purpose of purchasing rule compliant alternative fuel ULEV vehicles. Staff received requests from six taxicab organizations who desire to purchase new natural gas Ford Crown Victoria ULEV vehicles to put into service in early 2002. Based on the estimated emission reduction benefits associated with the purchase of a ULEV compared to the historical purchase of an existing pre-owned TLEV, staff believes that funding assistance at this time would provide early clean air benefits. The funding could be made under the Rule 2202 AQIP and the emission reductions would go towards meeting the rule’s emission reduction targets. Staff is recommending that the Board consider providing assistance to the six taxicab organizations at a cost not to exceed $2,948,787 from the CY 2001 3^rd quarter Rule 2202 AQIP. Remaining 3^rd quarter Rule 2202 AQIP funds will be recommended for disbursement at a future date.

COMMITTEE: 

Administrative, December 14, 2001, Recommended for Approval

RECOMMENDED ACTION:

1. Authorize the Executive Officer to execute contracts with the six taxicab organizations listed in Attachment A, to assist in the purchase of natural gas vehicles for taxicab services and to conduct a clean air advertisement program, in an amount not to exceed $2,948,787 from the CY 2001 3^rd quarter Rule 2202 AQIP.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

Staff recently received requests from six taxicab companies or cooperatives to seek funding to offset the cost of purchasing alternative-fueled vehicles for taxicab services. A list of the six organizations and the number of vehicles requested by each organization (totaling 309 vehicles) is provided in Attachment A. Under Subparagraph (d)(6) of Rule 1194, taxicab operators may apply for funding to offset the cost of a rule-compliant alternative-fueled vehicle, less $10,000 as provided in the Rule exemption [Section (e)(3)], prior to January 1, 2002. Based on the currently available buydown incentives provided by the automobile manufacturer and the MSRC and CEC buydown programs, staff estimates that another $9,543 per vehicle would be needed to bring the cost to the operator to the $10,000 level (as provided under Subparagraph (e)(3) of Rule 1194). The estimation is based on the purchase of a Ford CNG Crown Victoria P72 model. This is the basic model and the cost does not include any optional accessories that the operator may desire.

The taxicab organizations are requesting a response from the AQMD relative to the availability of funding assistance as soon as possible since Ford Motor Company will be basing its vehicle production quantities for the current model year on the number of orders placed by mid-January 2002. If funding is not available, the taxicab operators will continue to purchase existing pre-owned gasoline powered Ford Crown Victoria vehicles that are readily available at public auctions.

Proposal

Staff evaluated the potential funding programs available at this time and is recommending that the Board consider providing funding assistance to the six taxicab organizations listed in Attachment A through the Rule 2202 AQIP. In addition, in return for the funding assistance, staff is proposing that the taxicab operators provide clean air advertisement for the AQMD. The cost of installing brochure racks for the advertisement or exterior advertisement would be borne by the taxicab organizations.

Staff calculated the emission reductions associated with the purchase of a new natural gas ULEV Ford Crown Victoria compared to an existing pre-owned TLEV gasoline-powered Ford Crown Victoria. The emissions reductions on an annual basis are provided in Table 1. The emission calculations are based on an estimated annual miles traveled of 100,000 miles. As shown in Table 1, there will be significant emission reductions associated with the natural gas ULEV compared to an existing TLEV.

Table 1
Estimated Annual Emission Reductions Associated with a Ford Natural Gas ULEV
Crown Victoria Compared to a Ford Gasoline-Powered TLEV Crown Victoria

Staff calculated the yearly emission reductions associated with the 309 requested vehicles and compared the emission reductions to the Rule 2202 emission targets. The comparison provided in Table 2 shows that if the 309 alternative fueled vehicles were deployed, the associated emission reductions would achieve a significant portion of the Rule 2202 emission reduction targets for VOC, NOx, and CO. The remaining emission reduction targets would be achieved through other project proposals submitted (further discussion of the other proposals is provided in the section under "Sole Source Justifications"). Regardless, the Rule 2202 emission bank balance for CY 2002 (see Table 2) shows that there are sufficient emission reductions accrued at this time and that moving forward with the staff’s proposal to fund the natural gas vehicles would provide additional reductions to meet Rule 2202’s emission reduction targets for CY 2002. In addition, it is estimated that the natural gas vehicles used for taxicab services would have a five to seven years useful life (based on historical use of these vehicles in the taxicab industry) and would contribute to the Rule 2202 emission bank beyond CY 2002. As such, staff believes that providing funding assistance towards the purchase of the alternative fueled vehicles would provide significant air quality benefits at this time. Therefore, staff is recommending that up to $2,948,787 from the Rule 2202 AQIP be expended to assist in funding up to 309 vehicles (up to $9,543 per vehicle).

Table 2
Comparison of Rule 2202 CY 2001 2^nd and 3^rd Quarters Emission Reduction
Targets to the Emission Reductions Associated with the Purchase of
309 Natural Gas Ford Crown Victorias
 

Sole Source Justifications

The Request for Projects for the third quarter Rule 2202 AQIP funds closed on November 2, 2001. Thirteen proposals consisting of 27 separate projects were received by the closing date (see Attachment B). Staff is currently evaluating the submitted proposals and will be making a recommendation at a later date for project awards using the remaining funds available in the Rule 2202 AQIP. As shown in Attachment B, many of the proposed projects are for marine vessels and off-road equipment. While many of the projects would provide greater emission reductions compared to the natural gas vehicle purchase, staff believes that funding the natural gas vehicles would provide a significant enhancement to the Board’s Clean Fuel Vehicle Strategy. In addition, many of the marine vessel and off-road equipment project proposals could be funded under other programs such as the Carl Moyer Program or the State NOx and PM Emissions Mitigation Program.

Staff believes that the funding assistance for natural gas vehicles is an effective strategy to reduce emissions and to meet the Rule 2202 emission targets. Since the proposals were unsolicited, staff believes that sole source contracts could be executed with the six organizations based on the AQMD’s Procurement Policy and Procedure. Section VIII.B.2 of the Procurement Policy and Procedure identifies four major provisions under which a sole source award may be justified. Specifically, this request for sole source awards to the six organizations listed in Attachment A is made under Provision B.2.d: Other circumstances exist which in the determination of the Executive Officer require such waiver in the best interests of the AQMD.

Relative to Provision B.2.d, the operation of the alternative-fueled vehicles will increase the opportunities to expand the existing alternative-fueled refueling infrastructure needed by other fleets affected by the AQMD clean fleet vehicle rules. In addition, with Ford Motor Company’s anticipated closing in mid-January 2002 for production orders, staff believes that the funding of the requested vehicles will encourage Ford Motor Company to produce more ULEV vehicles for the current model year.

Fiscal Impact

The total third quarter Rule 2202 AQIP funds available is $3,838,609. Staff is requesting that up to $2,948,787 of the third quarter Rule 2202 AQIP be allocated to assist taxicab operators with the purchase of natural gas Ford Crown Victoria vehicles. Minor administrative costs would be incurred to execute the contracts and develop materials for the clean air advertisements.

Air Quality Benefits

Providing funding assistance to taxicab operators at this time to purchase cleaner alternative fueled vehicles will provide overall air quality benefits to the region. If funding is not available, the taxicab operators will most likely purchase existing pre-owned gasoline-powered vehicles. Staff estimates that the 309 alternative-fueled vehicles purchased with the funding assistance will result in 18 tons/year of NOx emission reductions. In addition, there will be about 71.5 tons/year of CO emission reductions and 13.2 tons/year of VOC emission reductions. In addition, there would be a reduction in air toxic emissions especially in areas where the taxicab vehicles will be operating.

Attachments

Attachment A – Taxicab Purchase Requests
Attachment B – Proposals Submitted Under the Rule 2202 AQIP
 

ATTACHMENT A

TAXICAB PURCHASE REQUESTS
 

Proposals Submitted Under the Rule 2202 AQIP
 

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