South Coast Air Quality Management District

Approve Funding Process for PM10 Trap Retrofit on School Buses or Other Emission Reduction Projects Using Mitigation Fees Collected under Rule 1309.1 - Priority Reserve

SYNOPSIS: 

At the April Meeting, the Board directed staff to place a priority on retrofitting diesel-powered school buses with PM10 traps and report back to the Board within 60 days on the funding process to be followed. Staff prepared a proposed funding process taking into consideration potential funding availability, demand, and technical feasibility. Staff is providing the original recommendation and, in addition, other potential emission reduction projects for the Board’s consideration.

COMMITTEE: 

Not Applicable.

RECOMMENDED ACTION:

1. Continue this item until after the state finalizes its next fiscal year budget and identifies specific dollar amounts for various emission reduction programs.
   
   
2. Direct staff to continue its analysis of potential emission reduction projects for the Board’s consideration.
   
   
3. Bring this item before the Board after the state budget is finalized

Barry R. Wallerstein, D.Env.
Executive Officer

During the adoption of Rule 1195 – Clean On-Road School Buses, it was evident that emissions from the existing school bus fleet need to be reduced in addition to the need to purchase the cleanest school buses as required under Rule 1195. As such, Rule 1195 provided that school bus fleet operators who were not able to obtain financial assistance with the purchase of new alternative-fueled school buses could still purchase diesel-powered school buses. However, the new school buses must be equipped with particulate (PM10) control devices (or traps) and 15 percent of the existing school bus fleet must be retrofitted with PM10 traps if external funding was available. In addition, the Governing Board placed a high priority on having the existing school bus fleet retrofitted with PM10 traps as soon as possible.

As part of the amendment to Rule 1309.1 – Priority Reserve at its April 2001 meeting, the Governing Board, directed staff to place a high priority in the use of mitigation fees collected pursuant to paragraph (a)(4) of Rule 1309.1 on retrofitting existing diesel-powered school buses. In addition, staff was to report back to the Governing Board within 60 days on the funding process to be followed. At its June meeting, the Governing Board discussed the possibility of using the Priority Reserve funds for other emission reduction/energy efficiency projects in recognition of the urgent need to reduce energy consumption during the summer and early fall months. In addition, the particulate traps to be used on existing diesel-powered school buses have not been approved by CARB and are expected to be approved at the earliest, the fall of this year. As such, the proposed funding process was continued from the June meeting.

As part of the staff report to PAR 1309.1, staff provided an estimate of the amount of mitigation fees potentially collected under Rule 1309.1. The estimate provided ranged from about $19.4M to $48.6M. The lower end of the range represents the potential fees collected if the utility companies purchased all of the existing PM10 emission reduction credits held by other parties. However, this situation will not be likely since this will deplete all of the PM10 credits in the market. The more likely situation is that the companies will pay the mitigation fees directly, resulting in more than sufficient funds needed to retrofit the existing fleet of diesel-powered school buses. The mitigation fees would be collected over a three-year period and to-date, the AQMD has collected about $8.6M.

As part of the analysis of the retrofitting of existing school buses with particulate traps, staff recommended that the priority reserve funds complement existing or future funding programs from the state or other entities. As of the writing of this letter, the state is in the process of developing its budget for the next fiscal year and specific funding levels have not been finalized. In discussions with the Chairman regarding potential state funds for emission reduction projects and their relationship with the priority reserve funds, the Chairman recommended that any project proposal funded by the Priority Reserve should be considered in conjunction with state funds. As such, it was suggested that this item be continued until the state funding programs for the next fiscal year are finalized. In addition, staff would continue to develop the list of potential emission reduction projects that could be funded by the priority reserve or other state funding programs and provide such materials for Board review prior to the future decision date.

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