South Coast Air Quality Management District

Modify Marine Vessel Contract Awards and Allocate Funds to Source Test, Acquire Global Positioning Systems, and Secure Letters of Credit for Marine Vessels Under Pre-Funded RECLAIM AQIP and Rule 118 Executive Order Programs

SYNOPSIS:

On April 20, 2001, the Board approved $2 million from the AES Settlement Pre-Funded RECLAIM AQIP account to execute marine vessel contracts. Also, on May 11, 2001, the Board approved $5.3 million for marine vessel contracts under Rule 118 Executive Orders #01-03 and #01-04 for NO_x and CO mitigation. Due to Rule 1631 requirements, these contract awards need to be modified to assure that the recommended vessels (1) will stay in District waters 100% of the time, (2) are equipped with global positioning systems (GPS) and data logger systems, and (3) engine emissions be source tested. Staff recommends that a total of 77 marine engines be funded under these two programs and that $75,000 be allocated to conduct source tests on these 77 engines.

COMMITTEE:

Administrative, July 13, 2001, Recommended for Approval

RECOMMENDED ACTION:

1. Cancel the marine vessel contract awards approved by the Board on April 20, 2001 and May 11, 2001.
   
   
2. Authorize the Chairman of the Board to execute the following contracts:

1. A contract with Seaboard Marine to acquire 1 new ARB certified diesel-fuel engines for 1 marine vessel, 1 GPS unit, and Letter of Credit or any other appropriate forms of security or surety in an amount not to exceed $87,350 from the Pre-Funded RECLAIM AQIP funds.
   
   
2. A contract with Oceanair Environmental to acquire 3 new ARB certified diesel-fuel engines for 2 marine vessels, 2 GPS units, and Letters of Credit or any other appropriate forms of security or surety in an amount not to exceed $1,051,450 from the Pre-Funded RECLAIM AQIP funds.
   
   
3. A contract with Millennium Maritime to acquire 4 new ARB-certified diesel-fuel engines for 1 marine vessel, 1 GPS unit, and Letter of Credit or any other appropriate forms of security or surety in an amount not to exceed $840,580 from the Pre-Funded RECLAIM AQIP funds.
   
   
4. A contract with Seaboard Marine to acquire 11 new ARB certified diesel-fuel engines for 6 marine vessels, 6 GPS units, and Letters of Credit or any other appropriate forms of security or surety in an amount not to exceed $435,308 from the NO_x and CO Mitigation funds.
   
   
5. A contract with Oceanair Environmental to acquire 58 new ARB certified diesel-fuel engines for 29 marine vessels, 29 GPS units, and Letters of Credit or any other appropriate forms of security or surety in an amount not to exceed $4,663,900 from the NO_x and CO Mitigation funds.

3. Authorize the Executive Officer to reissue RFP #P2001-42 to solicit contractors to complete source testing of marine vessels engines at a cost no more than $75,000, of which $10,000 is from the AES Settlement Pre-Funded RECLAIM/AQIP Account, and $65,000 is from the Rule 118 Executive Order Mitigation Account.
   
   
4. Authorize the Executive Officer to consult and secure approval from the Chair and Vice-Chair of the Board and the Chair of the Mobile Source Committee before completing the above contracts if the proposed letter of credit or any other appropriate forms of security or surety cannot be secured for the project.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

The Board, at its April 20, 2001 hearing, approved the use of $2 million from the $17 million AES settlement to purchase 23 new marine vessel engines under the Pre-Funded RECLAIM AQIP program. Also, on May 11, 2001, the Board approved the use of $5,334,862 under Rule 118 Executive Orders #01-03 and #01-04 for NO_x and CO emissions to purchase 37 new marine vessel engines.

The marine vessel projects included in these two programs are required to meet the requirements of Rule 1631, which was adopted on May 11, 2001. Due to Rule 1631 requirements, the two Board approvals must be revised. Rule 1631 requires that emission reductions eligible for Mobile Source Emission Reduction Credits (MSERC) must be achieved from marine vessel committed to stay in District waters 100% of the time. A number of vessels approved on April 20, 2001 and May 11, 2001 cannot meet this requirement. Currently, marine vessel projects are also being considered for funding under the third Phase of Carl Moyer and ARB's NO_x and PM Solicitation programs. Some marine vessel projects received under the third Phase of the Carl Moyer program and ARB's NO_x and PM Solicitation program were moved to the Pre-Funded RECLAIM AQIP and Rule 118 Executive Orders for NO_x and CO emission mitigation programs, to accommodate the requirements of Rule 1631. Rule 1631 also requires that the newly proposed 77 engines must be source tested for baseline NO_x emissions and the 39 marine vessels be equipped with GPS to document the location of these vessels.

The combined funding of $7,078,588 will generate annual NO_x emission reductions of at least 348 tons, which amounts to 6,970 tons over 20 years. To secure this investment, staff proposes to reimburse marine vessel owners or their contractors for the cost of securing irrevocable standby Letters of Credit or any other appropriate forms of security or surety. In order to do so, an amount up to $340,000 will be needed over a period of four years.

Proposal

The marine vessel projects under the $2 million AES Settlement Pre-Funded RECLAIM AQIP and the $5.3 million Rule 118 Executive Orders for NO_x and CO mitigation programs must be revised to meet the requirements of Rule 1631. The new proposed projects, the funding amounts, and the NO_x reductions are listed in Tables 1 and 2.

The MSERCs that can be generated from the above projects are needed immediately for the RECLAIM market. Due to this, the AQMD must solicit open bidding and award open solicitation contracts for source testing and GPS in an expeditious manner. Staff recommends that the Board authorize the Executive Officer to solicit and enter into contracts to accomplish these tasks as soon as possible.

Benefits to AQMD

The conversion of diesel marine vessels to low emissions technology is very cost effective, and can reduce significant amounts of NO_x emissions at a very competitive price as compared to other categories. The 77 marine vessel projects proposed for funding will produce real and surplus NO_x emission reductions of at least 6,970 tons over 20 years, which will be credited to the Pre-Funded RECLAIM AQIP and the NO_x and CO Mitigation programs.

Resource Impacts

The proposed funding of $1,979,380 (Table 1) will be obtained from the $2 million that was approved for pre-funding RECLAIM AQIP by the Board on March 16, 2001 for marine vessel projects. The proposed funding of $5,099,208 (Table 2) will be obtained from the Rule 118 Executive Orders #01-03 and #01-04 for NO_x and CO mitigation account. The proposed funding of $75,000 for source testing of which $10,000 will be obtained from the RECLAIM AQIP and $65,000 will be obtained from the Rule 118 Executive Order Mitigation Account.

Attachment

Table 1 - Pre-Funded RECLAIM AQIP Funding, Proposed Awards for Marine Vessels
Table 2 - Rule 118 NOx and CO Mitigation Funding, Proposed Awards for Marine Vessels

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