South Coast Air Quality Management District

Approve Expenditure Plan for Air Quality Improvement Projects from Rule 1309.1 - Priority Reserve Revenues and Anticipated Statewide Energy Crisis Mitigation Fund Allocation

SYNOPSIS: 

At the April 20, 2001 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. At the June 15, 2001 Meeting, the Board directed staff to develop other emission reduction projects in addition to retrofitting school buses. In addition, the State of California budget contains $16 Million for energy crisis mitigation from which AQMD will receive a share of funds. Staff is providing the original recommendation and alternative projects for the Board's consideration.

COMMITTEE: 

Not applicable

RECOMMENDED ACTION:

Review and select emission reduction projects to be funded with Rule 1309.1 - Priority Reserve funds. Upon Board approval of expenditure plan, staff will proceed with contracting through the AQMD's standard procedures, with applicable Board review and oversight.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

As part of the amendment to Rule 1309.1 - Priority Reserve at its April 2001 meeting, the Board directed staff to place a high priority on 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 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 over the next few years. 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, in the fall of this year. As a result, the proposed funding process was continued from the June meeting.

Potential Future Funding
Since the June meeting, the Board requested that staff consider all additional funding that may be potentially available to retrofit existing school buses. As part of the next fiscal year budget, the State allocated statewide $16M to the Carl Moyer Program and $16M to the Statewide Lower-Emission School Bus Program. About $1.7M is available to the AQMD to retrofit existing school buses with particulate traps, with over $5.5M available for the purchase of clean-fueled buses.

In addition, the Governor and State Legislature established an energy crisis mitigation fund of $16M in the state’s FY 2001-02 Budget to assist in offsetting potential emission increases associated with the expansion of existing or construction of new power plants. If these monies are eventually disbursed, the AQMD should receive about 40 percent of these funds based on past funding allocation formulas for state programs. However, the timing for distribution of these funds, if ever, is uncertain.

Immediate Funding for Proposed Emission Reduction Projects
As requested by the Board, staff is proposing a series of alternative emission reduction projects for the Board’s consideration. The projects include the original Board directive, which would retrofit all existing diesel-powered school buses. However, if the Board desires to place other emission reduction or energy efficiency projects at a higher priority, a series of potential projects are provided for the Board’s consideration. It is important to note that $8.45M has accrued in the 1309.1 account and there are no particulate traps approved by CARB for use on existing diesel powered school buses at this time.

The list of proposed projects is provided in Table 1. Table 1 shows the original Board directive (Table 1a) and eight additional projects for the Board’s consideration (Table 1b). The cost to carry out the eight projects listed in Table 1b would be greater than the current available funds if fully implemented. Of the $8.45 M available for project expenditures from the Budget account, staff is requesting that $2M be expended as part of Agenda Item #29 (this item is shown in Table 1b as item #9). This would leave $6.45 M for expenditure of the remaining projects, should the Board approve item #9. However, the Board may consider either fully funding a subset of the nine projects or reducing the number of vehicles or off-road equipment funded under each project for a total of $8.45 M.

Relative to the Governing Board’s original directive to place a high priority on retrofitting diesel school buses, newer (post-1987) existing diesel powered school buses be retrofitted first (Table 1b, Item No. 2). Such action would reduce the original cost of about $23.3M to about $5.8M and would retrofit about 770 school buses compared to 4500 school buses in the original proposal. (Staff assumed that the Statewide Lower Emission School Bus Program funds would cover the cost to equip as many as 930 post-1987 heavy-duty school buses with particulate traps.) CARB recently verified two particulate traps for use on a limited number of diesel engines. However, to-date CARB has not approved any particulate traps for diesel engines in school buses operating in the Basin. At this time, staff does not know when CARB will verify particulate traps for engines in school buses operating in the Basin. For this project, the Governing Board may wish to continue to set aside funds for the school bus retrofit until CARB approves the particulate traps.

The remaining seven projects include:

• Provide funding assistance to offset the differential cost of alternative-fueled school buses (Item No. 3);
  
  
• Repower existing off-road heavy-duty diesel equipment with new lower emissions diesel engines and equipping them with approved particulate traps (Item No. 4);
  
  
• Replacement of existing portable diesel generators with microturbines (Item No. 5);
  
  
• Repower existing diesel school buses with natural gas engines (Item No. 6);
  
  
• Promote the use of low-sulfur diesel fuel for Metrolink locomotives and private truck fleets (Item Nos. 7 and 8); and
  
  
• Co-fund expansion of Liquefied Natural Gas (LNG) refueling infrastructure (Item No. 9).

An estimated number of vehicles, equipment, refueling station, or fuel usage that could be covered per million dollars expended for each of the proposed projects is provided in Table 1. In addition, Table 1 provides an estimate of the potential emission reduction per million dollars spent, the total tons of PM reductions that could be achieved if a nominal number of vehicles (or pieces of equipment) is considered; whether the proposed project will have funding from other programs; and other comments.

Table 1. List of Proposed Emission Reduction Projects
 

Staff originally estimated that up to $46M of fees could be collected over the next three years pursuant to paragraph (a)(4) of Rule 1309.1 could be used to fund emission reduction projects. Current revenues total $8.45 M. There would be minor administrative costs associated with administering these programs.

There are adequate resources to implement combination of a limited school bus retrofit program (post-1987 model year school buses) or other emission reduction projects as suggested by staff.

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