BOARD MEETING DATE: November 5, 2004
AGENDA NO. 11

Approve Grants to Purchase New CNG School Buses, and Retrofit School Buses with Particulate Traps and Diesel Oxidation Catalysts

SYNOPSIS:

At its September 3, 2004 meeting, the Board authorized: 1) the issuance of Program Announcement PA #2005-01 for the replacement of older diesel school buses with new CNG buses for up to $9,475,000, and the retrofit of 1991-1993 school buses with diesel oxidation catalysts for up to $250,000; and 2) the issuance of Program Announcement PA #2005-04 for the retrofit of 1994 and newer school buses with particulate traps for up to $3,966,000. The application submittal due date for both program announcements was October 13, 2004. This action is to recommend awards for the replacement of older diesel school buses with new CNG buses and the retrofit of diesel school buses with particulate traps and oxidation catalysts.

COMMITTEE:

Technology, October 22 , 2004, Recommended for Approval

RECOMMENDED ACTIONS:

1. Authorize the Chairman to approve grant awards to public schools for a total of 70 school bus replacements and infrastructure as set forth in Table 3, in an amount not to exceed $9,395,710 from the Lower-Emission School Bus Fund.
    
2. Authorize the Chairman to approve grant awards to public schools to retrofit a total of 49 school buses with diesel oxidation catalysts as set forth in Table 5, in an amount not to exceed $122,500 from the Lower-Emission School Bus Fund.
    
3. Authorize the Chairman to approve grant awards to public schools and private operators to retrofit a total of 781 school buses with particulate traps as set forth in Table 6, in an amount not to exceed $3,962,545 from the Lower-Emission School Bus Fund.
    
4. Approve re-issuance of Program Announcement & Application PA #2005-01, Part B, and accept applications from public schools to retrofit school buses with diesel oxidation catalysts until adequate applications are received to retrofit buses at a cost of up to $2,500 per bus for a total amount of $127,500 from the Lower-Emission School Bus Fund.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

Exhaust emissions from high emitting diesel-fueled school buses present a risk to children and are a source of public exposure to toxic diesel particulate matter and smog-forming pollutants. There are thousands of older school buses on the road that have remained in service simply because school districts lack funds to replace them. To reduce emissions from these vehicles, AQMD has used state funds and its own funds to replace older diesel buses with new lower-emitting diesel or CNG buses, and to retrofit particulate traps on school buses. Over 50 percent of these funds have gone to school buses operating in communities meeting legislated criteria for disproportionate impacts, as set in Health and Safety Code Section 43023.5 (AB1390, Firebaugh).

Table 1 summarizes awards made under previous AQMD program announcements for replacement of pre-1987 school buses, and retrofits of 1994 and newer school buses with PM traps.

Table 1: Summary of AQMD’s School Bus and PM Trap Awards
 

*Includes 10 percent funding for CNG Refueling Infrastructure

At it is September 3, 2004 meeting, the Board issued program announcement PA #2005-01 making $9,725,000 available in new funding. This funding consisted of

PART A:	$9,475,000 to purchase new CNG replacement school buses
i)	$2,030,000 in state Proposition 40 moneys
ii)	$7,200,000 as part of AQMD’s Chairman’s Initiative
iii)	$   245,000 in U.S. EPA funds

PART B:

$   250,000 in U.S. EPA funds to retrofit 1991-1993 school                  buses with diesel oxidation catalysts.

 Program Announcement PA #2005-01, Part A
i) Proposition 40 Funding ($2,040,000 for new replacement CNG buses):
The AQMD has been granted $2,030,000 from CARB for the school bus replacement program. These funds originated from Proposition 40, passed by the state electorate on March 5, 2002, to conserve natural resources and improve state and local parks. Assembly Bill (AB) 425 (Campbell) (Statutes of 2002, Chapter 379) set aside 20 percent for school bus funding from Proposition 40 to public school districts to purchase clean burning buses transporting school children. In FY 2002-03, on a statewide basis, this amounted to $4,920,000, of which AQMD had been allocated $2,175,000 to purchase 16 new CNG buses. For FY 2003-04, out of a total state allocation of $4,600,000, the AQMD was granted $2,030,000 to cover the cost of about 15 to 16 new CNG buses.

As stated in the state guidelines, the ratio of new CNG buses to new cleaner diesel buses on a statewide basis is to be on the order of 2:1. Since many districts outside of AQMD plan to purchase cleaner diesel buses, the AQMD has been given the flexibility to allocate its share towards new CNG buses exclusively. The new buses must meet CARB’s NOx + HC and PM engine certification standards of 1.8 g/bhp-hr and 0.03 g/bhp-hr, respectively, and must be equipped with an oxidation catalyst. In reality, CNG buses are certified at lower NOx emission levels.

ii) AQMD Chairman’s School Bus Initiative ($7,200,000 for new CNG replacement buses):
The requirements under the AQMD’s Chairman’s School Bus Initiative are similar to those in Proposition 40 program. The exceptions are as follows:

1. Unlike Proposition 40, the AQMD Chairman’s Program allows public school districts, private school bus operators, and private schools to apply. Preference is given to public school districts in that public schools would be funded first, and in the event of any surplus applications from private school bus operators and private schools would be considered.
    
2. Trading of 1987-90 school buses is allowed. Public school districts would be allowed to replace a 1987-90 diesel school bus with a new alternative fuel bus, provided they donate their 1987-90 bus free of charge to another public school district within the AQMD jurisdiction, and the receiving school, in turn, crushes a pre-1977 bus. The donor public school district would receive a new CNG bus for a maximum of $10,000 as its local match.

i) U.S. EPA Grant Funding($245,000):
AQMD has been awarded $495,000 in school bus grant funding by the U.S. EPA. The grant funding is comprised of $245,000 for school bus replacement and $250,000 for the purchase and installation of diesel oxidation catalysts. U.S. EPA funds would pay for the incremental cost of a new CNG bus over a new diesel bus, which is approximately $35,000. To leverage the purchase of more buses, U.S. EPA funds of $35,000 per bus for a total of $245,000, have been added to the $7,200,000 fund in the Chairman’s School Bus Initiative Program.

To purchase a new CNG bus under both Proposition 40 and the Chairman’s programs, applicants are required to match a maximum of $25,000 for the replacement and crushing of a pre-1987 diesel bus, and a maximum of $10,000 for the replacement and crushing of a pre-1977 diesel bus.

Program Announcement PA #2005-01, Part B
AQMD has committed $250,000 in U.S. EPA funds to fund diesel oxidation catalysts (DOCs). These catalysts can control at a minimum 25 percent of exhaust emissions from older diesel buses. Public school districts have been invited to apply for DOCs that have been verified by CARB. AQMD is offering a maximum of $2,500 per DOC installed. Only 1991 to 1993 diesel buses are eligible under this program.

Program Announcement PA #2005-04
At its September 03, 2004 meeting, the Board approved issuance of program announcement, PA #2005-04 in an amount not to exceed $3,966,000. This program announcement invited applications from public school districts and private operators to retrofit their 1994 to 2002 buses with PM traps. For each eligible bus, $7,000 will be provided to cover the purchase, sales tax, and installation of the PM trap, and an additional $250 will be provided for insulation blanket. Public school districts and small private transportation operators with fewer than 50 buses eligible for retrofit will be fully funded in an amount not to exceed $7,250 per bus. Large private transportation operators are invited to offer cost-sharing for the purchase and installation of the traps. These offers will be ranked by the degree of cost-sharing. The operator offering the greatest amount of cost-sharing per trap will be ranked first, followed by the other operators in descending order.

New CNG School Bus Purchases through Competitive Bids

School districts typically order new school buses (CNG, diesel or gasoline) through bids issued by other public school districts, joint power authorities, etc. In previous rounds of funding, school districts, have the option to purchase new buses through vendors listed by either the California Department of General Services (DGS) or alternative bids such as the Waterford District bid or the South-West Transportation bid. State DGS bids have expired, and unless renewed in the future, are no longer valid. Thus, at its December 6, 2002 meeting, the Board approved that schools purchase their buses through either the Waterford or the South-West Transportation bids as long as they are valid. Subsequently, at its September 5, 2003 meeting, the Board also approved the Covina-Valley School District bid. The school buses purchased through these three bids were required to comply with all current California and Federal motor vehicle performance, safety, and emission standards in effect at the time of bid. Such competitive bids allow more options and flexibility for school districts. Staff recommends that the Board approve school bus purchases through these three valid bids and any other subsequent valid bid as long as the funds expended for purchase of new school buses do not exceed the maximum amount approved by the Board for the buses for each school district.

Funding Distribution for School Bus Replacement

Funds for the school bus replacement component of the program are proposed to be distributed proportional to each county’s general population as shown in Table 2.

Table 2: Approximate Distribution of Funds for School Bus Replacement
 

*The population number is for year 2000, obtained from the California Statistical
  Abstract, published by the Department of Finance.
**Funds allocated to each county will be close to the amount shown. If funds are
  undersubscribed in a particular county, the surplus will flow to the other
  counties proportional to their populations.

In each county, fifty percent of the funds will be awarded based on the requirements of AB1390, and fifty percent of the funds will be awarded on a first come first served bases as described below:

AB1390 (Firebaugh) Requirements
Funding under PA #2005-01 will be awarded in compliance with the requirements of AB1390 (Firebaugh). AB1390 requires funds be spent to reduce pollution or risks from airborne toxics and particulate matter in areas that have the most significant exposure to air pollution or localized air pollution, including low income communities or minority communities or both. All applications will be evaluated for poverty level, PM exposure, and toxic exposure according to the following criteria:
 

A)	Poverty Level: All school districts in areas where at least 10% of the population falls below the Federal poverty level based on the Year 2000 Census will be eligible to be ranked in this category.
B)	PM Exposure: All school districts in areas with the highest 15% of PM concentration will be eligible to be ranked in this category. Based on an annual average, the highest 15% of PM concentration is 46 micrograms per cubic meter and above.
C)	Toxic Exposure: Based on AQMD’s MATES II estimates, all projects in areas with the highest 15% of toxic exposure will be eligible to be ranked in this category. The highest 15% represents a cancer risk of 1,139 in a million and above (Mates II study).

Any applicant qualifying based on both the poverty level and either PM or toxic exposure categories qualify for disproportionate impact funding. Schools, unable to qualify or not receiving awards under AB1390, qualify for the remaining fifty percent of the funding. Under this category, first one CNG school bus is awarded to each school and then funds are awarded to schools on a first come first served basis until funds are exhausted.

Los Angeles Unified School District’s eligibility is limited to a maximum of fifty percent of the total funds allocated for Los Angeles County. No other school would be awarded more than thirty percent of the funds allocated to their respective county.

Proposal

Awards under PA #2005-01 Part A
By the closing date of October 13, 2004, a total of 31 applicants comprised of 29 public schools, one private school, and one private operator applied for a total of 149 new CNG buses. In addition, four public schools had already applied for seven buses under the initial Program Announcement PA #2004-07 for whom, at its September 3, 2004 meeting, the Board approved to give first preference under the revised Program Announcement PA #2005-01. Attachment 1 shows the complete list of all the requests received for school bus replacement.

Staff recommends the approval of school bus replacement awards for 70 CNG buses in an amount not to exceed $9,395,710, as set forth in Table 3. The recommended list shows school districts awarded both under AB 1390 (Firebaugh) and schools outside AB 1390.
 

*Arcadia, Los Alamitos, Alta Loma, and Moreno Valley applied first under the initial Program Announcement PA #2004-07 for whom, at its September 3, 2004 meeting, the Board approved to give first preference under the revised Program Announcement PA #2005-01. The additional applications submitted by these schools under the recent program announcement are treated in the same manner as other applicants.

**The AQMD contribution includes a fire suppressant option, which will be reimbursed at a cost of $4,000/bus.

Award Criteria

The awards recommended in Table 3 are based on the following criteria:

1. In the above table, schools are listed first based on their qualification under AB1390, followed by schools based on first come first served.
2. Funding requests in L.A. County were undersubscribed by $1,929,525. This amount was therefore distributed among Orange, San Bernardino, and Riverside counties proportional to their populations.
3. In each county awards were first given to schools qualified under AB1390, using up to half of each county’s funding allocation, and with no school receiving more than thirty percent of the total available funding in the county. Then each school was awarded one CNG bus, followed by more awards to schools under first come first served basis. This methodology was applied in accordance to the criteria outlined in Part A of Program Announcement PA2005-01.
4. Arcadia, Los Alamitos, Alta Loma, and Moreno Valley were awarded for all the buses they applied for under the initial Program Announcement PA #2004-07, as approved by the Board on September 3, 2004.
5. As shown in the above table, a total of seven schools did not request funding for infrastructure, and stated their fueling strategies in their applications.
6. Total funding to schools under AB1390 is $5,081,561, equal to 54 percent of the total funding amount.
7. One private school and one private operator applied for funding and were not awarded due to oversubscription of the program by public schools.
8. Pupil Transportation is a Joint Power Authority, and is evaluated the same way as public schools.
9. Schools local match is $25,000 per bus for replacement of a pre-1987 bus and $10,000 for replacement of a pre-1977 bus.
10. The 70 new CNG buses recommended for awards will replace 42 pre-1987 buses and 28 pre-1977 buses.
11. Alhambra, Norwalk-La Mirada, Pupil Transportation, Orange, Ontario-Montclair, and Colton took advantage of the school bus trading option for a total of 14 buses under the Chairman’s School Bus Initiative Program.

As stated in the program announcement, the sources of funding for the school bus replacement program are from: 1) Proposition 40; 2) AQMD Chairman’s Initiative; and 3) U.S. EPA funds. Table 4 shows sources of funds allocated to each school for their recommended awards.

Table 4: Sources of Funds Allocated to Each School for their Awards
 

Awards under PA #2005-01, Part B
A total of $250,000 granted from the U.S. EPA is available for retrofit of 1991-1993 diesel buses with oxidation catalysts at a cost of $2,500 per unit installed. This part of the program announcement was undersubscribed. Staff, therefore, recommends to award all the applicants as shown in Table 5. Staff also recommends to reissue this part of the program announcement and accept applications on a first come first served basis until the remaining available funds are exhausted.

Table 5: List of Recommended Awards for Diesel Oxidation Catalysts
 

Awards under PA #2005-04
Staff also recommends the approval of 781 PM traps for awards to public school districts and private school bus operators in an amount not to exceed $3,962,545 as set forth in Table 6. Public school districts and a private operator with fewer than 50 eligible buses for retrofits in its entire fleet are awarded up to $7,250 per unit, including $250 for insulation blanket. The remaining awards are made to private school bus operators with more than 50 eligible buses for retrofits starting with applicants offering the most cost-share. As the majority of the buses by the private contractors will serve the Los Angeles Unified School District, the requirements of AB1390 are met. A list of all the applicants with the number of the traps requested is shown in Attachment 2.

Table 6: PM Trap Retrofit Recommendation List
 

Since the funding requests exceeded the total allocated budget of $3,966,000, only 331 of the 341 traps requested by Atlantic Express in their first proposal are recommended for funding. The second application of Atlantic Express and the application from Laidlaw could not be awarded. Laidlaw did not offer any cost sharing.

Benefits to AQMD

The AQMP relies on the expedited implementation of advanced technologies and clean fuels in Southern California to achieve air quality standards. School buses operate in close proximity to students, teachers and neighbors. Many schools provide bus services in heavily populated areas. The successful implementation of the school bus replacement program will provide less-polluting and safer school transportation for school children. In addition, the program will maximize the potential emission benefits in low-income, high diesel and high PM10 exposure areas, and will enhance the objectives of the Environmental Justice and Children’s Health initiatives adopted by the Board.

Resource Impacts

a)	Total funding for replacement of school buses with Proposition 40 funding shall not exceed $2,023,779.
b)	Total funding for school bus replacement under the modified AQMD Chairman’s Initiative Program shall not exceed $7,371,931 comprised of $ 7,126,931 from unspent funds available under this program and $245,000 from U.S. EPA Grant funds.
c)	Total amount of funding for the retrofit of school buses with diesel oxidation catalysts shall not exceed $122,500 from U.S. EPA Grant funds.
d)	Total amount of funding for retrofit of school buses with particulate traps under the modified AQMD Chairman’s Initiative Program shall not exceed $3,962,545.

Sufficient funds will be available from the Lower-Emission School Bus Fund upon receipt of Proposition 40 funds from CARB. The Lower-Emission School Bus Fund has been established as a separate fund by the AQMD, to be used for the replacement and retrofit of school buses in the Basin.

Attachments

1. List of applicants for new CNG buses (PA #2005-01).
2. List of applicants for PM trap retrofits. (PA #2005-04)
    

(1) Applicants under PA #2004-07 issued earlier in the year
(2) Private school
(3) Private operator
(4) Didn’t request funding for fueling infrastructure money

*Public schools and private operators with fewer than 50 buses eligible for  retrofit in their
 entire fleet are exempt from cost-sharing.
** Model year 2004 diesel buses, hence not eligible for retrofit.

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