BOARD MEETING DATE: November 3, 2006
AGENDA NO. 27

Status Report on Port of Los Angeles and Port of Long Beach Clean Air Action Plan, and AQMD Staff Comments; and Adopt Resolution to Set Aside Heavy-Duty Vehicle Clean-up Assistance Funding

SYNOPSIS:

On August 4, 2006, the Ports of Los Angeles and Long Beach presented the draft San Pedro Bay Ports Clean Air Action Plan (CAAP) to the Board.  This report provides an update on the status of the plan and the next steps.  One action the CAAP calls for is aggressive turnover and retrofitting of heavy-duty trucks that provide drayage service at the ports, with anticipated cost of more than a billion dollars over the next five years (projected committed funding level of $166 million from both ports).  In July 2005, the Board adopted a policy that 40 percent of the funding under SB 1107 and AB 923 go toward goods movement related mobile source projects.  In addition, the Board set aside $12 million for FY 2006-07 toward a truck fleet modernization program and alternative-fueled port truck program.  This action is to adopt a resolution to set aside another $36 million over the next five years ($7.2 million/year) to assist the ports in expediting the clean-up of heavy-duty trucks operating at the ports and affirming the need to expeditiously reduce port-related emissions.

COMMITTEE:

Mobile Source, October 27, 2006, Discussed

RECOMMENDED ACTION:

1. Receive and file Status Report.
2. Adopt the attached Resolution (Attachment A) to set aside Carl Moyer Memorial Air Quality Standards Attainment Program funds to assist in the heavy-duty vehicle clean-up program at the ports.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

The Ports of Los Angeles and Long Beach (Ports) released a draft San Pedro Bay Ports Clean Air Action Plan (CAAP) on June 28, 2006, that calls for emission reductions from port-related activities over the next five years.  The draft CAAP calls for emission reductions from marine vessels, harbor craft, cargo handling equipment, heavy-duty trucks, and locomotives operating to, from, and within the ports.  In addition, the draft CAAP recognizes the need to provide funding assistance to replace or retrofit heavy-duty trucks, build alternative fuel refueling infrastructure, construct shore-side power capabilities, and conduct assessments of advanced technologies that could be implemented beyond the initial five-year horizon of the plan.

The ports presented an overview of the draft CAAP to the Board on August 4, 2006.  The ports plan to shortly release a draft final CAAP for their respective Harbor Commissions to consider for adoption in early November 2006.  In addition, the ports are seeking external funding assistance to implement the CAAP.

A status report on the development of the draft final CAAP is provided below.  In addition, staff is recommending that the Board set aside Carl Moyer Program funds to assist in the cleanup of heavy-duty vehicles operating at the ports.

Status Report

AQMD staff has been participating on a technical working group in the development of the CAAP.  The other members of the technical working group are staff from CARB and U.S. EPA and the technical consultants to the Port of Los Angeles Port Community Advisory Committee.  In addition to providing inputs and comments on the development of the CAAP, AQMD staff separately submitted comments on the June 28, 2006 release of the draft CAAP.

The following sections provide a summary of the key elements of the draft CAAP and AQMD staff comments.

Summary of Key Elements of the Draft San Pedro Bay Ports CAAP
The draft San Pedro Bay Ports Clean Air Action Plan is a five-year plan to reduce emissions from port-related activities.  The CAAP will be updated on annual basis.  The CAAP contains six key elements:

• Standards and Goals
• Control Measures
• Implementation Strategies
• Technology Advancement Program
• Infrastructure & Operational Efficiency Improvements
• Estimated Budget Requirements

Standards and Goals
The draft CAAP proposes to establish three air quality standards for the two ports:

• San Pedro Bay Port Standards
• Project-specific Standards
• Source-specific Standards

The San Pedro Bay Port Standards will be the emission levels that the ports must achieve for the Basin, and the vicinity of the ports, to achieve clean air.  The standards will be established based on the AQMP.  The goals of the San Pedro Bay Standards are to: “1) reduce public health risk from toxic air contaminants associated with port-related mobile sources  to acceptable levels; 2) prevent port-related violations of the state and federal ambient air quality standards at air quality monitoring stations at both ports; and 3) reduce criteria pollutant emissions to the levels that will assure that port-related sources contribute their “fair share” to enable the South Coast Air Basin to attain state and federal ambient air quality standards.”

Under the Project-Specific Standards, “projects must meet the 10 in 1,000,000 excess cancer risk threshold, as determined by health risk assessments conducted during CEQA review and implemented through required CEQA mitigations associated with lease negotiations.  Projects that exceed the AQMD CEQA significance thresholds for criteria pollutants must implement the maximum available control and feasible mitigations for any emissions increases.

The Source-Specific Performance Standards are a series of standards applied to various types of sources that will be implemented through port lease requirements, tariffs (i.e. port-wide rules), incentives, or other mechanisms.

Discussions between the ports, CARB, and AQMD will establish the emissions targets for the ports after the 2007 AQMP is adopted by the Board. 

Control Measures
The draft CAAP contains 12 control measures as follows:

• Heavy-Duty Vehicles/Trucks – There are two measures proposed for existing heavy-duty diesel trucks providing drayage service at the ports.  The first measure seeks to replace about 9,000 frequent and semi-frequent callers with new trucks that meet the 2007 on-road heavy-duty NOx and PM emissions standards and retrofitting another 9,000 trucks with NOx and PM after-treatment control devices.  Half of the new trucks will operate on natural gas.  As such, the second measure proposed under this category is to build an LNG refueling infrastructure for the trucks and other natural gas vehicles and equipment operating at the ports.
   
• Ocean-Going Vessels – Five measures are proposed under this category.  The first measure is to require marine vessels entering and leaving the ports to limit their speed to 12 knots [initially within 20 nautical miles from Point Fermin and expanded to 40 nautical miles].  There are two measures that would require the use of 0.2 percent sulfur content marine gas oil fuel in the vessel’s main and auxiliary engines within 40 nautical miles of Point Fermin.  The fourth measure calls for greater use of shore-side power or alternative equivalently clean technologies.  The fifth measure calls for main and auxiliary engine emissions reductions through the use of after-treatment controls.
   
• Cargo Handling Equipment – This measure calls for the replacement of existing diesel cargo handling equipment with the cleanest alternative-fueled or diesel engines meeting the on-road 2007 or Tier IV off-road NOx and PM emissions standards.
   
• Harbor Craft – This measure would establish performance standards for harbor craft.  The measure would continue the diesel-to-diesel repowers that have occurred primarily through AQMD and state funding.  In addition, harbor craft would be required to use shore-side power.
   
• Locomotives – There are three measures under this category. The first measure would implement the current agreement that the ports have with Pacific Harbor Lines (which operates within the ports) to replace or repower all of existing switcher locomotives with new locomotives meeting more stringent NOx and PM emission standards.  In addition, the new locomotives will be required to install diesel particulate filters or oxidation catalysts.  The second measure seeks cleaner Class 1 railroad switcher and long-haul locomotives operating within port property.  The third measure establishes performance standards for new and modified rail facilities located on port property.

Implementation Strategies
The ports will use requirements in leases, such those with marine terminal operators, to require implementation of most measures.  The ports will also consider adopting port-wide rules to implement some measures.  Other implementation mechanisms include CEQA mitigations, and incentives.

Technology Advancement Program
The draft CAAP proposes to establish a Technology Advancement Program to evaluate and demonstrate new technologies such as cleaner engines, advanced transportation systems, and deployment of after-treatment on marine vessels and locomotives.  A coordination committee consisting of funding partners including the AQMD, CARB, and U.S. EPA will be established to develop research and demonstration projects.

Infrastructure and Operational Efficiency Improvements
Under this element, projects that improve infrastructure and operational efficiencies will be identified.  Example projects include on-dock vs. near-dock rail infrastructure, grade optical character recognition gates at terminals, terminal cargo handling/configuration efficiency improvements, and radio frequency identification.

Estimated Budget Requirements
The draft CAAP estimates that the cost to implement the control measures over the next five years would be in excess of $2 billion.  Funding assistance would be provided for replacement of heavy-duty trucks, shore power infrastructure, and the Technology Advancement Program.  The draft CAAP commits the ports to about $410 million in funding and an anticipated $36 million from the AQMD through the Carl Moyer Program.  The remaining funds must be realized from other sources, potentially including the bond measure (Proposition 1B) on the November 2006 ballot.

Summary of AQMD Staff Comments on the draft San Pedro Bay Ports CAAP
AQMD staff has been providing comments throughout the development of the draft CAAP.  In addition, AQMD staff participated in the four public workshops conducted by the ports to hear public comments and answer questions related to AQMD’s role and air quality in general.  As part of the public process, AQMD staff provided separate written comments.  Six of the key comments are discussed below.

• Tariffs to expedite implementation of measures – Staff commented that the ports need to utilize all implementation strategies within their authority to expeditiously implement the CAAP measures.  While implementation of most measures relies on negotiating lease agreements, the ports have the ability to apply tariffs to require port-wide implementation of some measures.  Use of low sulfur (0.2 percent) marine oil fuels in vessel main engines is a key measure where staff believes a tariff could be applied.
   
• Funding – Identifying additional funding is critical to the success of the CAAP.  The ports need to develop fee mechanisms to generate additional funding as early as possible.
   
• Mechanism to implement advanced control technologies – The ports commonly enter into long-term leases with terminal operators, some in excess of 30 years duration.  Staff has commented that a mechanism needs to be developed to ensure implementation of new control technologies (such as seawater scrubbing and advanced at-dock controls) that become available after signing of such leases. 
   
• Project approvals need to consider long-term air quality goals – Due to the extended duration of many leases, long-term cumulative emission reduction needs must be considered as projects are approved.
   
• Insert 2007 AQMP emission reduction targets – As soon as the 2007 AQMP is adopted by the Board, emission reduction targets for the ports need to be inserted into the CAAP to establish the San Pedro Bay Standards.
   
• Need for greater specificity – Several of the proposed measures need greater specificity in terms of milestones, monitoring, and tracking.

The ports are in the process of revising the June 2006 draft CAAP.  It is anticipated that the draft final CAAP will be released shortly and the Boards of Harbor Commissioners will consider adopting the CAAP in November. 

Proposal

As described above, the San Pedro Bay Ports CAAP contains a measure to accelerate the replacement of older diesel trucks that make frequent calls to the marine ports (Measure HDV-1).  In addition, Measure HDV-1 calls for diesel trucks that make less frequent calls to either be replaced or equipped with after-treatment control devices.  The draft CAAP estimates that the cost to implement HDV-1 will be about $1.8 billion.  Under the draft CAAP, the ports will provide $166 million over the next five years to implement HDV-1.  The Ports have requested additional funding assistance from the AQMD, CARB, and U.S. EPA.

On July 8, 2005, the Board approved the Carl Moyer Air Quality Standards Attainment Program Guidelines.  The Carl Moyer Program guidelines calls for 40 percent of the Carl Moyer Program be used for goods movement related mobile source emission reduction projects.  In addition, on February 3, 2006, the Board allocated $6 million to a truck fleet modernization program and $6 million to a liquefied natural gas port truck program.  To expedite the cleanup of heavy-duty trucks operating in and out of the ports, staff is requesting the Board to consider setting aside an additional $36 million ($7.2 million per year) over the next five years to assist in the cleanup of heavy-duty trucks.  Upon approval by the Board, staff will work with the two ports in preparing Program Announcements or RFPs for future projects to replace older diesel trucks.  Staff has prepared the attached resolution for the Board’s consideration to set aside $36 million ($7.2 million per year) for Years 9 (2006-07) to 13 (2010-11) of the Carl Moyer Program.  In addition, each year staff brings to the Board a recommendation for allocating the Carl Moyer Program funds to certain emissions categories.  As part of this recommendation, the Board may consider providing additional funds to assist in mobile source cleanup at the ports.

Benefits to AQMD

Mobile source emissions represent a significant portion of the South Coast inventory of nitrogen oxides, sulfur oxides, and directly emitted particulate matter.  Mobile sources operating at marine ports are generally less well controlled than other sources.  The AQMD has limited authority to establish emission standards for these sources and must rely on the state and federal governments to adopt emission control regulations.  However, the AQMD has been expediting emission reductions through incentive programs and adopting regulations within its authority.  Expeditious replacement of existing heavy-duty diesel trucks as called for in the draft 2007 AQMP and by the draft San Pedro Bay Ports CAAP is needed in order for the South Coast Basin to attain federal ambient air quality standards. 

Resource Impacts

Funds proposed to be set aside are from revenues collected under the SB 1107 and AB 923 programs.  On February 3, 2006, the Board allocated $6 million to fund a Truck Fleet Modernization Program as part of the Year 8 (2005-06) Carl Moyer Program.  In addition, the Board set aside $6 million to a LNG Port Truck Program.  Sufficient funds will be available to cover the additional $36 million set-aside based on the projected revenues collected under SB 1107 and AB 923.

Attachment

1. Resolution to Set Aside Funds to Assist in the Cleanup of Heavy-Duty Vehicles Providing Drayage Service at the Ports

ATTACHMENT A
RESOLUTION NO. 06-xx

A Resolution of the Governing Board of the South Coast Air Quality Management District to set aside funds to assist in the cleanup of heavy-duty vehicles operating at the Ports of Los Angeles and Long Beach.

            WHEREAS, the South Coast Air Basin is classified as “severe-17” nonattainment area for ozone and a nonattainment area for fine particulate matter (PM2.5) in accordance with the federal Clean Air Act; and

             WHEREAS, under Health & Safety Code §40400 et seq. the South Coast Air Quality Management District (SCAQMD) is the local agency with the primary responsibility for the development, implementation, monitoring and enforcement of air pollution control strategies, clean fuels programs and motor vehicle use reduction measures in the South Coast Air Basin and the desert portion of Riverside County known as the Coachella Valley; and

            WHEREAS, the SCAQMD is authorized by Health & Safety Code §§40402, 40440, and 40448.5 to implement programs to reduce transportation emissions, including programs to encourage the use of alternative fuels and low-emission vehicles; to develop and implement other strategies and measures to reduce air contaminants and achieve the state and federal air quality standards; and

            WHEREAS, the South Coast Air Quality Management District has released a draft 2007 Air Quality Management Plan Revision that provides for expeditious reduction in stationary and mobile source emissions including port-related emissions in order for the region to meet federal ambient air quality standards for PM2.5 by 2015 and 8-hour ozone by 2021; and

            WHEREAS, in June 2006, the Ports of Los Angeles and Long Beach (Ports) released a draft San Pedro Bay Ports Clean Air Action Plan (CAAP) for public review; and

            WHEREAS, the draft San Pedro Bay Ports CAAP calls for the expeditious replacement and retrofitting of heavy-duty trucks providing drayage service at the ports over the next five years (Measure HDV-1); and

            WHEREAS, due to the unique economic situation of the majority of the truck operators who provide drayage service at the ports, the draft San Pedro Bay Ports CAAP estimates that the cost to implement Measure HDV-1 is estimated to be about $1.8 billion, and

            WHEREAS, the draft San Pedro Bay Ports CAAP provides that the Ports will commit to $166 million in funding over the next five years to implement Measure HDV-1; and

            WHEREAS, the draft San Pedro Bay Ports CAAP seeks co-funding for Measure HDV-1 including a request to the SCAQMD to provide funding assistance; and

            WHEREAS, the SCAQMD Governing Board has adopted several programs to reduce emissions from on-road and off-road vehicles, as well as emissions from other equipment, including the Lower Emissions School Bus Incentive Program and the Carl Moyer Memorial Air Quality Standards Attainment Program; and

            WHEREAS, the South Coast Air Quality Management District Governing Board on July 8, 2005 adopted the “Carl Moyer Memorial Air Quality Standards Attainment Program Guideline Under SB 1107 and AB 923” establishing guidelines that 40 percent of the annual funds (or about $22.4 million of the estimated total of $56 million) available under SB 1107 and AB 923 will be used to fund goods movement related mobile source emissions reduction projects; and

            WHEREAS, the South Coast Air Quality Management District Governing Board on February 3, 2006 set aside $12 million under SB 1107 for a Truck Fleet Modernization Program and a Liquefied Natural Gas Port Truck Program.

            NOW, THEREFORE, BE IT RESOLVED, that the South Coast Air Quality Management District Governing Board does hereby find that emissions from port-related activities and goods movement in general must be reduced in an expeditious manner in order for the South Coast Air Basin to attain federal ambient air quality standards and meet state ambient air quality standards as early as practicable.

            BE IT FURTHER RESOLVED, that the South Coast Air Quality Management District Governing Board hereby sets aside $7.2 million per year for Years 9 (2006-07) through 13 (20010-11) of the Carl Moyer Memorial Air Quality Standards Attainment Program for a total of $36 million, to assist in the implementation of Measure HDV-1 of the San Pedro Bay Ports CAAP.

            BE IT FURTHER RESOLVED, that additional funding under the Carl Moyer Memorial Air Quality Standards Attainment Program may be allocated by the SCAQMD Governing Board in the future to cover heavy-duty trucks and other port-related mobile sources as part of the annual program allocation of funds.

            BE IT FURTHER RESOLVED, that the Executive Officer is authorized and directed to take all steps necessary to carry out this Resolution.

Dated:______________                                                                                                    
                                                                                            Clerk of the Board