San Joaquin Valley Air Pollution Control District Governing Board Meeting. June 15, 2017

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1 San Joaquin Valley Air Pollution Control District Governing Board Meeting June 15, 2017

2 May 2015, Board approved comprehensive action plan for securing the Valley s fair share of Cap and Trade funds 20 of top 30 disadvantaged communities in California located in Valley per CalEnviroScreen District and its partners have secured nearly $72 million in Cap and Trade funding for a variety of projects in the Valley, Includes $500,000 for initial Ag Equipment Trade-up Program in April

3 District s 2007 Ozone Plan included commitment by ARB to reduce 5-10 tons NOx/day from ag equipment by 2017 District partnered with growers, NRCS and ARB to replace tractors; a great example of effective incentivebased strategies Replaced more than 6,000 Valley agricultural tractors $500 million in public/private investment Achieved more than 10 tons/day in 2015 (2 years early) Total reductions to date: more than 12.5 tons/day District/growers/ARB would like to replicate success in upcoming PM2.5 plan 3

4 Further reductions from ag equipment remains a top priority for the District more reductions from tractors needed in upcoming PM2.5 Plan attainment strategy Despite District efforts to date, still many old, high-polluting tractors in use in the Valley Cost of new tractors still infeasible for many farmers, even with incentives Particularly evident with small farmers District launched first-of-it s-kind tractor trade-up program in the spring of 2016 Program funds the purchase of new equipment, refurbishment of used, emission controlled tractors and the destruction of old, high-polluting tractors in a single two-step transaction 4

5 Initial pilot program funded with $500,000 in Cap and Trade funds from ARB To date, 16 tractors have been traded-up to small farmers that would not have otherwise participated in District s traditional replacement program Three additional projects pending (19 total projects) 35 tons of SIP-creditable reductions District applied for additional Cap and Trade funding to continue this important program Based on success of pilot program, ARB has awarded an additional $3,000,000 to the District for an expanded program 5

6 $3,000,000 award will be matched by $3,258,750 in District funds and $1,303,500 from grant recipients Funding will enable District to: Replace approximately 65 used Tier 2 or 3 tractors with new, Tier 4 tractors (80% cleaner) Provide those refurbished Tier 2 or 3 tractors to owners of older, high-polluting Tier 0 or 1 tractors (80% cleaner) Scrap approximately 65 old Tier 0 or 1 tractors District requires lower match contribution for owners turning in Tier 2 or 3 equipment to compel them to trade in tractors with significant value and useful life 20% match in trade-up program versus 40-60% match in replacement program 6

7 District will contract with Valley equipment dealerships with knowledge and ability to refurbish trade-up tractors to pre-determined usable condition District solicits farmers that currently operate old, high-polluting (Tier 0/1) tractors, and catalogs needs for replacement tractors District utilizes existing Agricultural Tractor Replacement Program outreach and application queue to identify and catalog late model mid-range (Tier 2/3) tractors that appear to be good candidates for trade-up 7

8 District and contracted equipment dealer evaluate Tier 2/3 tractors (after being made available due to replacement with new tractor) and generate estimates and approved funding amounts for refurbishment to pre-determined usable condition Using information from both parties, District matches needs of Tier 0/1 operator with available Tier 2/3 tractors and notifies Tier 0/1 operator Tier 0/1 operator chooses tractor from available Tier 2/3 tractors 8

9 Equipment dealer performs prescribed tractor refurbishment using pilot project funding and delivers refurbished Tier 2/3 tractor to Tier 0/1 operator Equipment dealer takes possession of the Tier 0/1 tractor and delivers it to a dismantler under contract with the District Original operator of Tier 2/3 tractor purchases and places into service a new Tier 4 tractor with assistance from District s Agricultural Tractor Replacement Program 9

10 Grant provides $2,550,000 to be used for the purchase of new equipment and for evaluating and refurbishing tractors $450,000 for District administration of program and outreach District providing $3,708,750 in match $450,000 in the form of in-kind support $3,258,750 to purchase new tractors through District s Agricultural Equipment Replacement Program Recipients of the new equipment will provide approximately $1,303,500 in out-of-pocket cost-share to complete the equipment purchases Recipients of traded-up tractor will contribute approximately $55,250 to fund up to 10% of the cost of refurbishment 10

11 1. Accept $3,000,000 in Cap and Trade funds from the California Air Resources Board (ARB) to fund the District s Agricultural Equipment Trade-Up Program. 2. Approve the attached Budget Resolution to amend the District Budget to appropriate $3,000,000 in unanticipated revenue and authorize the Executive Director/APCO to enter into agreements with ARB and subcontractors necessary to administer the expanded Ag Tractor Trade-Up Program in the San Joaquin Valley. 3. Authorize the Executive Director/APCO to make administrative changes to the program as necessary. 11