BOARD MEETING DATE: December 3, 2004
AGENDA NO. 4

Execute Contract to Cosponsor Development and Certification of Natural Gas-Powered Ford Crown Victoria and E-450 Cutaway Vehicle

SYNOPSIS:

Two major automobile manufacturers have recently ceased production of natural gas-powered vehicles. Ford announced their entire natural gas vehicle product line will be unavailable after the 2004 model-year, and General Motors announced their full size natural gas-powered vans will be similarly unavailable. To ensure the availability of rule compliant natural gas-powered vehicles after the 2004 model-year, BAF Technologies has proposed the development and certification of CARB-compliant natural gas conversion systems for the Ford Crown Victoria and E-450 Cutaway Vehicle. The total cost for this project is estimated to be $1,227,600. This action is to execute a contract to conduct this project at a cost not to exceed $300,000 from the Clean Fuels Fund.

COMMITTEE:

Technology, November 19, 2004, Recommended for Approval

RECOMMENDED ACTION:

Upon notification that all co-funding commitments have been finalized, authorize the Executive Officer to execute a contract with BAF Technologies to develop and certify with CARB a retrofit system that converts 2005 and subsequent model year gasoline-powered Ford Crown Victoria and E-450 cutaway vehicles to dedicated compressed natural gas operation in an amount not to exceed $300,000 from the Clean Fuels Fund.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

Further achievements in air quality goals and reductions in air toxic exposure depend on the commercial availability of alternative fuel vehicles and other advanced emissions control technologies. Unfortunately, recent progress made through the increased use of alternative fueled vehicles to improve air quality has become more challenging with both Ford and General Motors’ recent business decisions to discontinue production of natural gas vehicle models starting in 2005. Specifically, Ford ceased production of all natural gas-powered vehicle models, while General Motors announced the discontinuation of their natural-gas powered full size van.

Despite the unavailability of certain natural gas vehicle models for the foreseeable future, companies that specialize in the production of aftermarket alternative-fuel conversion systems could provide continued availability of natural gas vehicle models for use by the public and vehicle fleets. These companies must comply with CARB retrofit system certification regulations in order to make their alternative fuel conversion systems commercially available for installation on approved gasoline vehicle models. The retrofit system regulations contain specific emission, warranty, durability, and onboard diagnostic system (OBD) requirements, similar to requirements applicable to vehicle models produced by original equipment manufacturers (OEMs).

Proposal

AQMD staff received an unsolicited proposal from BAF Technologies for the certification of retrofit systems that would convert 2005 model year gasoline-powered Ford Crown Victorias and E-450 cutaway vehicles to dedicated compressed natural gas operation. The project would be a joint effort between BAF Technologies, Teleflex/GFI Control Systems (TGFI), and Clean Energy. The proposal indicated that BAF Technologies would be responsible for the overall engineering, hardware procurement, and conversion system installation, and TGFI would be responsible for the design, emissions calibration, and CARB certification of the natural gas retrofit system.

BAF Technologies also indicated funding requirements and cost share allocations. The total project cost is estimated to be $1,227,600 with BAF Technologies and TGFI performing the work outlined as follows:
 

TGFI/BAF	Development of On-Board Diagnostic II (OBD II) Compliance	$533,300
TGFI/BAF	Development of Emissions Calibration/Certs	$277,600
TGFI/BAF	Development of Compliance and Emissions	$300,000
BAF	Application Engineering	$66,700
BAF	Vehicle Integration (2 Prototypes)	$50,000

As indicated in the cost breakdown, a major cost component of this project pertains to on-board diagnostics II (OBD II) compliance as part of retrofit system certification requirements. OBD II, which is CARB’s second generation of OBD requirements, specifies that all original equipment manufacturer (OEM) 1996 and newer vehicles less than 14,000 lbs. (e.g., passenger cars) must be equipped with OBD II systems for the purpose of monitoring and ensuring that virtually every component that can affect the emission performance of the vehicle is operating properly. OBD II requirements applicable to aftermarket retrofit systems become fully operational beginning with the 2005 model year. These requirements will most likely cause significant cost impacts to aftermarket companies that certify these systems due to: 1) the complexity of determining the emissions impact of individual emission components when they have sufficiently deteriorated or have failed as part of the certification requirements, and 2) the complexity involved with integrating aftermarket OBD components with corresponding base gasoline vehicle OBD components.

Project funding commitments are expected to be $313,800 from TGFI, $300,000 from New York State, $300,000 from AQMD, $213,800 from BAF Technologies, and $100,000 from Clean Energy. Staff recommends AQMD funding of $300,000 towards this project based on notification by BAF Technologies that the following co-funding commitments have been finalized: (1) $313,800 from TGFI, (2) $300,000 from New York State, (3) $213,800 from BAF Technologies, and (4) $100,000 from Clean Energy; or comparable co-funding commitment. This recommendation is also based on BAF Technologies and TGFI expertise in alternative fuel conversion system technologies and the overall importance of this project in advancing the commercial availability of light- and heavy-duty vehicle alternative fuel technologies.

Benefits to AQMD

The AQMP relies upon the expedited implementation of advanced technologies in Southern California to achieve federal and state ambient air quality standards and to continue reductions in air toxic exposure. The use of natural gas-powered Crown Victorias and E-450 cutaway vehicles will accomplish these objectives by early reduction of exhaust and evaporative emissions from high mileage fleets. At this time, the overall emission reduction benefits cannot be precisely determined since the emission benefits for this project depend on a number of factors that would directly affect the supply and demand of these vehicles, including: (1) final cost of natural gas-powered vehicles resulting from this project to fleet and/or individual purchasers, and (2) available monetary incentives to subsidize the purchase cost of converted natural-gas-powered vehicles in the South Coast. In addition, emission reductions depend on the certification emission levels of the natural gas conversion systems that result from this project. For the purpose of illustrating the potential emission benefits of this project, if 100 natural gas-powered Crown Victorias are sold in the South Coast in the 2005 calendar year, exhaust and evaporative emission reductions are expected to be approximately 5.5 tons of hydrocarbons and 12.5 tons of NOx over the life of the project. It should be noted that emission reductions resulting from this project could be generated for future model-year sales of converted natural gas-powered Crown Victorias and E-450 cutaway vehicles if the retrofit system qualifies for carry-over of the emission certification (e.g., the 2005 model year retrofit system certification application is deemed approvable by CARB for the 2006 model year). This situation would most likely occur if the emission control system and related components of the base gasoline models do not change significantly from one model year to the next. It should also be noted that BAF Technologies expects to certify the 2005 MY Crown Victoria and the E-450 at the Super Ultra Low Emission Level (SULEV) certification level.

Sole Source Justification

Section VIII.B.2 of the Procurement Policy and Procedure identifies four major provisions under which a sole source award may be justified. This request for a sole source award is made under provision B.2.d.: Other circumstances exist which in the determination of the Executive Officer require such waiver in the best interest of the AQMD. Specifically, these circumstances are: B.2.d.(1) Project involving cost sharing by multiple sponsors.

This program is cosponsored by several entities, where AQMD’s contribution will be leveraged at a ratio of approximately one to four. Project funding will be supplied by BAF Technologies, TGFI, and other major partners potentially including New York State and Clean Energy. BAF is a company that provides overall engineering, hardware procurement, and installation services for gasoline to natural gas conversion kits. TGFI is a company that provides the design, emissions calibration, and CARB certification of the natural gas retrofit systems. Clean Energy is a company that supplies natural gas refueling services to vehicle fleet customers in the AQMD, and is additionally supporting this project through monetary assistance and commitment for the sale of 200 natural gas-powered vehicles nationally that result from this project.

Resource Impacts

Total cost for the proposed project is approximately $1,227,600. AQMD’s contribution from the Clean Fuels Fund shall not exceed $300,000. The total estimated cost-share for this proposed project is:
 

Sufficient funds are available in the Clean Fuels Fund, which is established as special revenue from the state-mandated Clean Fuels Program. The Clean Fuels Program, under Health and Safety Code Sections 40448.5 and 40512 and Vehicle Code Section 9250.11, establishes mechanisms to collect revenues from mobile sources to support projects to increase the utilization of clean fuels, including the development of the necessary advanced enabling technologies. Funds collected from motor vehicles are restricted, by statute, to be used for projects and program activities related to mobile sources that support the objectives of the Clean Fuels Program.

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