BOARD MEETING DATE: November 2, 2007
AGENDA NO. 7

RECOMMENDED ACTIONS:

Approve issuance of Program Announcement #PA2008-01, to solicit projects for off-road vehicles and equipment subject to the Surplus Off-Road Opt-In for NOx (SOON) provision of the CARB In-Use Off-Road Diesel Vehicle regulation.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

The California Air Resources Board (CARB) adopted the in-use off-road diesel vehicle regulation in July 2007. The regulation requires fleets to meet increasingly more stringent fleet average PM and NOx target emission targets or to comply with Best Available Control Technology (BACT) defined as a minimum percent turnover and PM retrofits of the fleet’s total horsepower. The state regulation also includes a provision called the Surplus Off-Road Opt-in for NOx (SOON) which allows districts (which elect to opt-into this provision) to achieve additional NOx reductions beyond the state’s base regulation based on the more stringent SOON fleet average NOx targets through the use of incentive funds. The SOON provision applies to large fleets with a total maximum power greater than 20,000 horsepower (hp) on a statewide level consisting of more than 40% Tier 0 and Tier 1 vehicles and operating in respective air districts. These fleets must apply for funds for implementing sufficient number of projects (e.g., repowers) to meet the SOON NOx targets and must implement these projects if awarded funding. In order to participate in the SOON program, local districts will have to formally opt into this provision of the state regulation through a public hearing and issue a program announcement to provide the incentive funding. Staff will bring forward for Board’s consideration the SOON opt-in provision of the in-use off-road diesel regulation at a future Board meeting.

Proposal

In anticipation of AQMD’s formal opt-into the SOON provision, staff is requesting approval for issuance of Program Announcement #PA2008-01 to provide funding assistance for achieving additional NOx emission reduction from off-road vehicles and equipment subject to this provision of the state regulation. Staff is proposing to issue this early program announcement in order to provide affected fleets with maximum amount of time to comply with the SOON application and reporting requirements. Fleets subject to the SOON provision must also submit a compliance plan to demonstrate how they will meet the SOON NOx targets for both 2011 and 2014 targets as well as how they will comply with the applicable base rule NOx and PM targets through 2014. Staff believes additional time is needed for more extensive outreach for fleets, making it necessary to issue this program announcement as early as possible.

The Board’s Administrative Committee has given its initial approval for recommending to set aside $120 million ($30 million each year for four years) to fund the SOON projects. Funding will be set aside from the Carl Moyer Program fund AB932 and SB1107 accounts. Funding from other sources may also be considered for funding SOON projects and will be subject to Carl Moyer guidelines. Equal portions of the funding are expected to be awarded annually over the next four years.

Funding Distribution

Funding will be awarded based on the cost effectiveness of each piece of equipment. In order to ensure equitable distribution of funds, an individual fleet may not be awarded more than 10% of the solicitation value. The first 75 % of total project funding will be awarded to the most cost-effective projects. The remaining 25% of funding will be distributed so that at least one piece of equipment per applicant is funded, until funding is expended. If funds are still remaining after this distribution, they will be distributed according to cost effectiveness.

Disproportionately Impacted Areas

Historically, in the AQMD’s Moyer Program, over 60% of the awards given for the category of off-road equipment have operated in disproportionately impacted areas. As a result, the AQMD believes that about 60% of the SOON off-road equipment will be operated in disproportionately impacted areas. Nonetheless, to ensure that the policy objectives for disproportionately impacted areas is met to the required degree, staff will evaluate the distribution of SOON project awards after the first year of the program implementation and if the required degree is not met, staff will seek additional actions to support the Board’s Environmental Justice program.

Outreach

In accordance with AQMD’s Procurement Policy and Procedure, a public notice advertising the RFP/RFQ and inviting bids will be published in the Los Angeles Times, the Orange County Register, the San Bernardino Sun, and Riverside County Press Enterprise newspapers to leverage the most cost-effective method of outreach to the entire South Coast Basin.

Additionally, potential bidders may be notified utilizing AQMD’s own electronic listing of certified minority vendors. Notice of the RFP/RFQ will be mailed to the Black and Latino Legislative Caucuses and various minority chambers of commerce and business associations, the State of California Contracts Register website, and placed on the Internet at AQMD’s Web site (http://www.aqmd.gov where it can be viewed by making menu selections “Inside AQMD”/“Employment and Business Opportunities”/“Business Opportunities” or by going directly to http://www.aqmd.gov/rfp/index.html). Information is also available on AQMD’s bidder’s 24-hour telephone message line (909) 396-2724.

AQMD staff will host a workshop on Wednesday, January 16, 2008 to provide assistance to fleets applying for the SOON incentive funds. Several additional workshops will also be held in February, March, and April, as needed.

Benefits to AQMD

The SOON provision of the state rule was initiated by AQMD staff and developed jointly with CARB staff with input from industry. The program was designed to achieve an additional 12 TPD of NOx reductions beyond the reductions which would be obtained from the base rule. These reductions are critical to meeting the PM2.5 ambient air quality standard in the South Coast Air Basin by 2015, and implementation of the SOON program will ensure that AQMD meets its mandated air quality goals.

Resource Impacts

Total funds for the SOON Program Announcement #PA2008-01 are anticipated to be $120 million ($30 million per year) subject to Board formal approval.

Attachment (DOC 1mb)

Program Announcement #PA2008-01