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Mobile Sources Technical
Review Subcommittee
Retrofit and Replacement Workgroup Plenary Session Notes
October 13, 2004
Washington, DC
Purpose
The purpose of the plenary session was to hear updates from the four sub-groups and discuss legislative and funding issues. The main goal - to clean up emissions from 11 million diesel engines by 2014 was reiterated. Meeting this goal will require a lot of funding and support at the political and local level
Ports
Michael Block reviewed the efforts of the Ports team. The core group for Ports activities will be Mike Block (NESCAUM), Meredith Martino (AAPA), Barbara Cole (Port of Seattle), Trish Koman (EPA), and Kathleen Bailey (EPA). His team had a summary presentation that addressed their work plan goals, identified existing partners, potential incentives for Ports to reduce emissions, issues to balance against those incentives, and a potential framework for emission reduction strategies.
Bill Becker reminded Mike to add state and local air pollution control agencies. Tim Johnson clarified that the coalitions will be used to build the group’s recommendations.
Based on the current chronology, the Port retrofit workshop will happen at the January 2005 meeting of the AAPA, and the results will be forwarded to the Port directors meeting in April 2005.
Terry Gulf discussed three different entities involved in a port with regard to the framework for emission reduction strategies. First, there are many benefits that could be derived through operational efficiencies. Second, ports themselves own a lot of equipment that could be retrofitted. Finally, private vendor equipment will be addressed.
The Puget Sound Air Program is very active in the West Coast Diesel Initiative. EPA Regions 9 and 10 started the program, helped them develop white papers, and identified funding opportunities. The program involves working on an emissions inventory, identifying water and land side activities, and identifying fuels issues (e.g., availability of low sulfur fuel), and identifying best practices. Ports and the maritime industry are very interested because ports are very competitive (getting a ship in and out quickly is very advantageous).
Ports do not typically own the equipment; however, they can provide leadership and help develop the emission inventories. The current SmartWay partners will be surveyed to determine what activities within a port they can influence. Ports have been working to get the ultra low sulfur diesel into the ferry fleets which result in a 60% sulfur reduction just through fuel switching.
Construction
Leah Wood reviewed the efforts of the Construction subgroup. The subgroup started by discussing the ultimate goal and the need for retrofits. The Tier 4 regulations will be effective in 2008, but there is equipment in use that has no emission controls. Either the old equipment must be retired or retrofitted. Typically, contractors do not retire the equipment. Instead, they sell it and it is used by a smaller business. In the construction industry, the value of a business is often the value of the equipment.
The subgroup discussed obstacles to retrofit. The first obstacle is technology. This sector of off-road equipment is very different from highway vehicles. There is a need for a technology jump start. There are also installation issues and concerns about warranties. Finally, there are funding obstacles. Questions such as, how does it happen; should it be mandated; who will pay for it, arose.
The subgroup identified next steps. They are working on a white paper that will address funding mechanisms and distribution models. They are also working with EPA under the sector strategy program. Subgroup members plan to talk to their constituents about incentives. The industry has an interest in the retrofits. TERP, which is a completely voluntary program in Texas, received hundreds of applications that were not funded because of a lack of resources.
There is a simultaneous project looking at the language for a tax incentive to completely write off the cost of the retrofit, including the cost for purchase, installation, and repowering, in the year the cost is incurred using the verified technology list (which includes the California ARB technologies). Bill Becker asked if the tax incentive would be enough of an incentive. Once a tax incentive is provided, it may be more difficult to obtain subsidies. Leah Wood responded that this would be included in future bid specifications as a way to help pay for the technology. Although bid restrictions do not exist in all areas, the industry is very aware of them. School buses are also looking for a tax incentive. Bill Becker cautioned that using tax relief for retrofit or early compliance would be acceptable, but tax relief is not an acceptable means of funding a recently proposed rule.
Freight
Bruce Bertelsen reviewed the efforts of the Freight team, including addressing equipment from the truck fleets, locomotives, and airport ground support equipment. The focus of the team has been truck fleets. SmartWay has been a very successful program with 88 formal participants, including carriers and shippers. SmartWay focuses on what makes business sense (e.g., reducing idling, truck stop electrification, and aerodynamic design). Emission reductions that are more difficult to obtain are from particle filters and diesel oxidation catalysts. They are working to integrate retrofits into Smartway. The team will develop a matrix to illustrate where different strategies make sense.
The team discussed other types of incentives, including tax credits and legislation to reduce idling. The construction team supports working with the other teams to develop a tax incentive package. This team would also like to tap into CMAQ funding and work with the metropolitan planning organizations (MPOs).
The group discussed the transient nature of trucks and the difficulty of assigning SIP credits. Perhaps a national program is needed, with SIP credits allocated based on the distribution of fuel taxes. Merrylin Zaw-Mon said that EPA is looking at the feasibility of using tax receipts as allocation mechanisms. Software problems that are suppressing NOx reflash emission reductions in California were mentioned. EPA is also looking into this issue.
The team suggested the development of a website to help identify funding sources. They would also like to see a report on where the funding has gone in the past. EPA is currently working on both of these issues. Gay MacGregor said EPA estimates that approximately $200 million has been spent on all of these programs to date.
The American Trucking Association is holding a meeting in February. The team will get some feedback from the industry at this meeting. The team will continue discussions about obstacles to retrofits and better define their objectives for the February meeting during their next conference call, scheduled for November 1st.
There is a consensus in this group that airport ground support equipment should be in a different group.
Clean School Buses
Charlie Gauthier reviewed a summary presentation from the Clean School Bus subgroup morning meeting. There is not enough information on the website about replacement. Also, the program is built as a demonstration program but does represent all of climates and does not seem to provide equal access to all of the funds.
There was a long discussion about the Toyota SEP funds which are very restrictive (e.g., only public fleets are eligible for funding), and the restrictions are not advancing the program. EPA clarified that negotiating SEP fund requirements is strictly an Office of Enforcement role, and EPA cannot augment their program office budget with SEP funds. Changing the rules through which SEPs are negotiated would require Congressional support. Is was suggested that the group could develop a model SEP.
The group discussed the current EPA budget. There was $65 million proposed for the Clean School Bus program. There may need to be clarification on why the school bus demonstration needs to continue. Some participants do not think that the “demonstration” phase has ended.
There was a discussion about attending the national conference of State Legislators to discuss the air quality benefits of retrofits. There will be a half-day program on Clean School Buses at the conference.
The team requested more input on future funding. They would like more balance in the programs including support for different technologies.
Legislative Issues
Tim Johnson summarized the status of the 2005 and 2006 fiscal year budgets. For clean School Bus funding - the administration had $65 million in the budget, the House had $10 million and the Senate zeroed the item out. They are working on a letter of support from Jim Imhoff to get the item back in the budget. Currently they have 29 signatures, an additional 4 Senators would sign but they are on the committee. This is a very bi-partisan effort.
With regard to construction equipment, Senator Clinton wanted
environmental impacts as a criteria for awarding contracts and providing
access to CMAQ funds under the Highway Bill. This was removed on
the Senate side and the committee was instructed to work it out.
Funding Updates
Region I and V are forming collaboratives. The sensitive population grants are allowing additional retrofit fundings. There is $1.5 million available to address $11 million in proposals. The competition closed in July, and EPA hopes to announce the winners next month.
For the FY 2003 money, there were 17 projects, 10 of which have been completed. For the 10 that are complete, they retrofitted 800 buses with after-treatment, with hundreds using cleaner fuels. There has been a lot of progress with anti-idling. There are 125,000 school children on cleaner buses which support schools with 370,000 children. EPA is planning an annual report and will discuss the lessons learned from the first 10 projects.
For the FY 2004 funding, there are 120 proposals for $64 million. In June, 20 projects were awarded the $5 million that was available. The projects demonstrated the value of partnerships and the value of support from the local air offices. This program needs funding. EPA is also working on cost/benefit numbers which will be very helpful in the work with Congress.
Leah Wood asked if it would be helpful to pool the sectors when requesting funding from Congress. The largest constraint EPA has encountered in the retrofit and replacement program is a lack of resources. Hopefully, retrofits will occur over a period 10 years to help offset the cost. The entire OTAQ budget is only $40 million and that includes running a laboratory. There is a need to look at leveraging resources. The legislative mechanisms for these sectors are completely different. There is a need to develop an implementation plan that will address funding through 2014. A tax with a sunset provision was suggested as a possible funding mechanism. Dennis McLerran reminded the group that Congress is not the only source for funding; State Legislators may also provide funding.
Wrap-Up
There is a need in all the subgroups for tax credits, tax incentives, subsidies, or using CMAQ funds for retrofits. Bill Becker suggested a process to develop a legislative package to support all of the teams. He also heard that the communities need a list of options of what they can do to clean up diesel emissions in a community. Mark MacLeod is working on this but he was unable to attend this meeting. Tim Johnson suggested that the report to the FACA will roll up these recommendations. EPA also heard a request for new School Bus materials, models that can calculate emission reductions from a fleet, and the need to build additional coalitions using the School Bus program as a model. There is a request to fix the website, address funding needs, send a message to OECA and future SEP funds, and plan to attend the next national conference of State Legislators.