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The Carl Moyer Memorial
Air Quality Standards
Attainment Program:
Improved Practices in Applicant Selection, Contracting,
and Marketing Could Lead to More Cost-Effective Emission
Reductions and Enhanced Operations
June 2007 Report 2006-115
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CALIFORNIA STATE AUDITOR
Elaine M. Howle
State Auditor
Doug Cordiner B u r e a u o f S t a t e A u d i t s
Chief Deputy
555 Capitol Mall, Suite 300 Sacramento, CA 95814 916.445.0255 916.327.0019 fax www.bsa.ca.gov
June 14, 2007 2006-115
The Governor of California
President pro Tempore of the Senate
Speaker of the Assembly
State Capitol
Sacramento, California 95814
Dear Governor and Legislative Leaders:
As requested by the Joint Legislative Audit Committee, the Bureau of State Audits presents its audit
report concerning the administration of the Carl Moyer Memorial Air Quality Standards Attainment
Program (Moyer Program) by the State Air Resources Board (state board) and the four local air districts
we visited.
This report concludes that some policies and practices used by the state board and the four local
air districts resulted in the Moyer Program achieving less cost-effective emission reductions than it
otherwise could have achieved. California law impedes emission reductions by allowing the state board
to set aside only 10 percent of Moyer Program funds for projects that operate in more than one district.
A higher cap could lead to projects having intended emission reductions with lower costs per ton. Also,
the methodology the state board uses to select projects for the multidistrict component undervalues
the cost-effectiveness of emission reductions. As a result, the state board did not select some projects
with lower costs per ton of intended emission reductions. Additionally, most projects the Bay Area
Air Quality Management District used to meet the Moyer Program fund-matching requirement for
fiscal year 2003–04 exceeded the maximum cost per ton of emission reductions established by the
state board.
Further, we identified some concerns with the administration of the Moyer Program at the state board
and the local air districts. The South Coast Air Quality Management District did not spend $24.1 million
in Moyer Program funds by the statutory deadline. Thus, the district cannot ensure that it is achieving
the prompt emission reductions intended by law. The state board is monitoring the district to ensure
it spends the funds by July 1, 2007. Also, the state board may not perform on-site audits of local air
districts’ Moyer programs with sufficient frequency. Without sufficiently frequent on-site audits, errors
in the districts’ program administration may occur.
Finally, this report includes additional findings related to marketing and project inspections. It also
identifies several best practices that can help local air districts select projects that will reduce pollution
emissions more cost-effectively, reduce workload, or allow more time for applicants to complete
their projects.
Respectfully submitted,
ELAINE M. HOWLE
State Auditor
The Carl Moyer Memorial
Air Quality Standards
Attainment Program:
Improved Practices in Applicant Selection, Contracting,
and Marketing Could Lead to More Cost-Effective Emission
Reductions and Enhanced Operations
June 2007 Report 2006-115
California State Auditor Report 2006-115 vii
June 2007
Contents
Summary 1
Introduction 7
Chapter 1
Policies and Practices Related to Selection, Contracting,
and Marketing Need Improvement 23
Recommendations 43
Chapter 2
Three Areas of Concern Weaken Otherwise Reasonable Oversight
and Administration Practices 45
Recommendations 62
Appendix A
Map of California’s Air Pollution Control Districts and Air Quality
Management Districts 65
Appendix B
Formula for Calculating the Cost-Effectiveness of
Emission Reductions Under the Carl Moyer Memorial
Air Quality Standards Attainment Program 67
Responses to the Audit
California Environmental Protection Agency, State Air Resources Board 69
Bay Area Air Quality Management District 73
California State Auditor’s Comment on the Response From
the Bay Area Air Quality Management District 79
Sacramento Metropolitan Air Quality Management District 81
California State Auditor’s Comments on the Response From
the Sacramento Metropolitan Air Quality Management District 99
San Joaquin Valley Unified Air Pollution Control District 103
California State Auditor’s Comments on the Response From
the San Joaquin Valley Unified Air Pollution Control District 107
South Coast Air Quality Management District 109
California State Auditor’s Comments on the Response From
the South Coast Air Quality Management District 115
California State Auditor Report 2006-115 1
June 2007
Summary
Results in Brief Audit Highlights . . .
The Carl Moyer Memorial Air Quality Standards Attainment Our review of the Carl Moyer
Program (Moyer Program) is an incentive program offered Memorial Air Quality Standards
by the State Air Resources Board (state board) in conjunction Attainment Program (Moyer
with participating air pollution control districts and air quality Program) revealed the following:
management districts (collectively, local air districts). The Moyer
Program provides funds to help private companies, public agencies, » California law impedes emission
and individuals undertake projects to retrofit, repower, or replace reductions by allowing the
existing engines to reduce pollution emissions beyond what is State Air Resources Board (state
required by law or regulations. A local air district can fund a board) to set aside only
project that provides cost-effective emission reductions. Emission 10 percent of Moyer Program
reductions are considered cost-effective when the cost to reduce funds for projects that operate in
1 ton of emissions is at or below the cost ceiling imposed by the more than one local air district.
state board.
» The methodology the state
Some policies and practices of the state board and the four local board used to select projects
air districts we visited resulted in projects funded by the Moyer for the multidistrict component
Program not maximizing emission reductions; that is, the projects undervalues the cost per ton of
did not achieve the same emission reductions for a lower cost intended emission reductions.
or more emission reductions for the same cost. California law
impedes emission reductions by allowing the state board to set » For fiscal year 2003–04, 14 of
aside only 10 percent of Moyer Program funds for projects that the 16 projects the Bay Area Air
operate in more than one district. A higher cap could lead to Quality Management District
emission reductions with lower costs per ton. For example, if the designated as matching projects
cap for multidistrict projects were increased to 15 percent for exceeded the Moyer Program’s
funds appropriated in fiscal year 2004–05, the state board could ceiling for cost per ton of
have selected three additional projects with intended emission intended emission reductions.
reductions costing an average of $2,600 per ton. Shifting this
funding would have reduced the money available to local air » The South Coast Air Quality
districts, thus preventing the four districts we visited from selecting Management District did not
13 projects. However, the average cost of the intended emission spend $24.1 million in Moyer
reductions from those projects was nearly $11,000 per ton, clearly Program funds within the
not as good a value as the multidistrict projects. required two years and the state
board is monitoring the district
Further, three of the six categories the state board uses to assign to ensure these funds are spent
points when scoring applications for multidistrict projects are by July 1, 2007.
neither required nor encouraged by state law. Of the 100 possible
points, these three categories accounted for 35 and 55 points, » We identified several best
respectively, in the two fiscal years we reviewed. An applicant practices that, among other
who received no points for any one of the three categories likely things, can help local air
had limited ability to compete with other applicants under districts select projects with
consideration. As a result, the state board selected some projects lower costs per ton of intended
with higher costs per ton of intended emission reductions than emission reductions.
it would have if the point values for the three optional categories
were lower.
2 California State Auditor Report 2006-115
June 2007
Also, we believe the changes the state board made to its method of
selecting multidistrict projects for Moyer Program funds for fiscal
year 2006–07 still place too much weight on factors not required
or encouraged by law. Our modeling shows that had the state board
placed less weight on these optional factors, it could have achieved
298 more tons of emission reductions and reduced the average
cost per ton for those emission reductions by more than half, from
$3,247 to $1,555, based on fiscal year 2005–06 project data.
State law requires local air districts to provide their own funds to
match Moyer Program funds provided by the state board. Further,
projects funded with these matching funds must meet all Moyer
Program criteria. Our review revealed that projects funded by one
local air district did not meet the Moyer Program requirements
for cost per ton of intended emission reductions. As allowed by
state law, the Bay Area Air Quality Management District (Bay Area
air district) designated 16 projects funded by other programs it
administered as matching projects for the Moyer Program for fiscal
year 2003–04. However, 14 of the 16 projects it identified exceeded
the state board’s cost ceiling of $13,600 per ton, and therefore did
not meet the fund-matching requirement of the Moyer Program.
The Bay Area air district knew the costs per ton for the projects
it selected for matching exceeded the cost ceiling. Instead of
selecting other eligible projects, the district attempted to make the
14 projects qualify as match under the Moyer Program by counting
only a portion of the projects’ total costs when it calculated
the projects’ costs per ton. Specifically, the district counted as the
matching fund portion for the Moyer Program only $740,000 of
the $2.5 million it awarded to these 14 projects. This approach is
contrary to state law and Moyer Program guidelines because the
district did not include all funds under its budgetary control when it
calculated the costs per ton of intended emission reductions.
Local air districts use various methods to market the Moyer
Program, such as brochures, mailing lists, Web pages, and
workshops, but they do not adequately evaluate their efforts to
determine whether they are reaching the business sectors that
might be able to provide more cost-effective emission reductions.
The districts rely primarily on one measure—whether they receive
enough applications to distribute all Moyer Program funds—
to evaluate their marketing efforts. Thus, they cannot ensure
that their marketing efforts are resulting in applications that help
maximize cost-effective emission reductions.
Our review revealed several best practices that can help local
air districts select projects with lower costs per ton of intended
emission reductions, reduce workload, or allow more time for
projects to reach completion. For example, two districts used
measures of pollution or the effects of pollution in their methods
California State Auditor Report 2006-115
June 2007
for identifying communities that were disproportionately impacted
by pollution. Other best practices relate to selecting and contracting
for projects.
We also identified three concerns with the administration of the
Moyer Program at the state board and the local air districts. First,
as of December 2006 the South Coast Air Quality Management
District (South Coast air district) had $24.1 million in Moyer
Program funds it had not spent within the two-year time frame
established by law. Unspent Moyer Program allocations are a
strong indicator that intended emission reductions likely are not
occurring. When allocating its fiscal year 2004–05 Moyer Program
funds, the South Coast air district selected projects intended to
reduce 1 ton of emissions for every $4,256 it spent, on average. Had
the South Coast air district spent the $24.1 million on similarly
cost-effective projects by the statutory deadline of June 30, 2006,
5,600 tons of pollutants would have been removed.
The South Coast air district cited differences in definition as its
reason for not spending all the funds. State law requires that Moyer
Program funds be “expended” within two years of allocation to
the local air districts; funds not expended are to revert to the state
board. The state board and the Department of Finance (Finance)
define expended to mean “spent.” The South Coast air district,
however, interpreted expended to mean “obligated”; under its
interpretation the $24.1 million was expended. We agree with the
state board and Finance that the appropriate definition of expended
is “spent.” The state board noted that it has the district’s assurance
that it will fully expend all applicable Moyer Program funds by
July 1, 2007. The state board is monitoring the district to ensure that
this happens.
Our second concern with administration of the Moyer Program
is that the timing requirements for conducting preinspections—
inspecting the engine to be retrofit, repowered, or replaced to
ensure that it is still operational—are overly restrictive. The Moyer
Program guidelines generally require local air districts to perform
preinspections after the districts have awarded funds but before
they execute the related contracts. One district chose not to follow
this requirement because delaying the execution of the contract
would have delayed project implementation. The state board stated
that it is considering whether to change this requirement for the
next version of the Moyer Program guidelines.
Finally, the state board may not be performing on-site audits of
local air districts with sufficient frequency. It conducted four
on-site audits in 2006 and plans to complete four more in 2007. If it
maintains the rate of four audits per year, the state board will audit
districts participating in the Moyer Program, on average, once every
California State Auditor Report 2006-115
June 2007
seven years. Audits released in 2006 demonstrate that some local
air districts improperly administer the Moyer Program. More
frequent audits would address identified problems earlier.
Recommendations
To maximize the use of Moyer Program funds, the state board
should do the following:
• Seek legislation to revise state law to increase the 10 percent
maximum proportion it can allocate for multidistrict projects. If
the state board opts not to seek this revision, the Legislature may
wish to consider it.
• When evaluating applications for multidistrict projects, assign
more points to categories that help the state board achieve the
lowest cost per ton of emission reductions.
To maximize the use of Moyer Program funds, local air districts
should do the following:
• Include all funds under their budgetary control as part of the
calculations when determining the cost per ton of a project’s
intended emission reductions. Further, districts should develop
and implement policies and procedures that enable them to meet
the requirements in the Moyer Program guidelines regarding
matching funds.
• Develop and implement techniques to measure the effectiveness
of their marketing methods, including targeting business sectors
that could generate projects with the lowest cost per ton of
emission reductions and assessing the results.
To improve their administration of the Moyer Program, local
air districts should consider implementing the best practices we
identify in this report.
The South Coast air district should ensure that by July 1, 2007,
it spends Moyer Program funds that are beyond the two-year
availability period as required by law and as interpreted by the
state board and Finance.
To help ensure that the South Coast air district spends Moyer
Program allocations that are beyond the two-year limit, the state
board should continue monitoring the district’s efforts and take
appropriate action should its efforts falter. If the South Coast air
California State Auditor Report 2006-115 5
June 2007
district does not spend the funds by July 1, 2007, the state board
should initiate appropriate administrative action, up to or including
recovering all remaining unspent funds.
To help streamline the process for performing preinspections, the
state board should revise its requirement that local air districts
must perform preinspections before executing contracts.
To ensure that local air districts administer the Moyer Program
according to state law and Moyer Program guidelines, the state
board should ensure that it audits a sufficient number of districts
each year.
Agency Comments
The state board generally agreed with our recommendations and
indicated it is taking steps to implement them. Although they
generally agreed with our recommendations, the Bay Area air
district provided more recent information on its program staffing,
and the San Joaquin Valley air district raised a concern about a
best practice we identified. The Sacramento Metropolitan and the
South Coast air districts expressed concerns with our conclusions
regarding increasing the cap for the multidistrict component
and marketing. Also, the South Coast air district objected to our
conclusions regarding its unexpended Moyer Program funds.
6 California State Auditor Report 2006-115
June 2007
Blank page inserted for reproduction purposes only.
California State Auditor Report 2006-115 7
June 2007
Introduction
Background
California has 21 air pollution control districts and 14 air quality
management districts (collectively, local air districts). These local
air districts and the State Air Resources Board (state board) are
responsible for developing and implementing strategies to reduce
air pollution and meet air quality requirements established by
the federal government. The Carl Moyer Memorial Air Quality
Standards Attainment Program (Moyer Program), established
in 1998, is an incentive program offered jointly by the state board
and participating local air districts to help reduce air pollution.
Incentive programs provide monetary grants to achieve specific
purposes—in the case of the Moyer Program, to encourage private
companies, public agencies, and individuals to achieve more
emission reductions than those required by federal, state, or local
governments. Like other incentive programs, the Moyer Program
is voluntary; therefore, local air districts can choose to participate
by offering the Moyer Program, and private companies, public
agencies, or individuals can choose to participate by applying
for Moyer Program funds and agreeing to adhere to stricter
emission standards.
Originally designed as an incentive program for diesel-powered
equipment, the Moyer Program now includes nondiesel engines
and other types of equipment. Eligible vehicles or equipment that
can be included in projects funded by the Moyer Program are
divided into categories, including locomotives; stationary and
portable agricultural engines; on-road vehicles such as buses,
street sweepers, and delivery trucks; off-road vehicles such as
construction and farm equipment and forklifts; marine vessels
such as tugboats, ferries, and nonrecreational fishing boats; and
airport ground support equipment such as baggage vehicles,
cargo vehicles, and air-conditioning units. In some instances
light-duty vehicles such as passenger cars, pick-up trucks, and vans
are also eligible. According to the state board, more than 1.2 million
diesel-fueled engines operate in California, powering most trucks,
buses, off-road equipment, agricultural equipment, locomotives,
and marine vessels.
1 Dr. Carl Moyer, who died in 1997, was a scientist who worked to improve air quality. According
to the state board, he was an advocate for positive solutions to the air pollution challenges in
California and sought to unite business, government, and environmental groups in a common
effort to reduce pollution from heavy-duty vehicles. The state board also indicates that the Moyer
Program is his vision for how to meet current air quality goals through reductions in emissions
from heavy-duty sources.
California State Auditor Report 2006-115
June 2007
Projects eligible to receive Moyer Program funds typically fall
into three categories: retrofit, repower, or replacement. Retrofit
projects involve modifying or purchasing add-on equipment to
reduce emissions from existing engines. For example, a retrofit
project might install diesel emission control devices on a fleet of
city buses. Repower projects involve replacing old engines with
newer ones that have zero or very low emissions, or with newer
engines certified as meeting more stringent emission standards.
An example of a repower project is removing old diesel engines
in construction equipment and installing new low-emission diesel
engines. Replacement projects involve opting to purchase new
engines or vehicles with very low or zero emissions rather than
buying other new engines or vehicles that emit higher levels of
pollutants, even though they meet existing emission requirements.
For example, instead of purchasing new diesel-powered refuse
trucks, a project could include purchasing refuse trucks powered by
liquified natural gas.
Under state law, emission reductions to be achieved under the
Moyer Program must be real, enforceable, quantifiable, and surplus.
Although the state board asserts that the Moyer Program guidelines
describe the criteria for ensuring that projects funded by the
program achieve this requirement, it does not specifically define
all these terms individually. State law also limits the funding of a
project to its incremental cost. The Health and Safety Code defines
incremental cost as the total cost of a project less a baseline cost
that might otherwise be part of the normal course of business. For
example, instead of rebuilding a vehicle’s diesel engine for $10,000,
an applicant for Moyer Program funds might propose to repower
the vehicle with a newer, less polluting engine for $25,000. If
selected as a recipient, this project could receive up to the $15,000
incremental difference.
Roles and Responsibilities
The Moyer Program is a partnership between the state board
and the local air districts. As illustrated in Figure 1, several other
entities are also involved.
The state board has primary responsibility for protecting air quality
in California. According to state law, this responsibility includes
coordinating efforts to attain and maintain ambient air quality
standards, conducting research into the causes of and solutions
2 The only term defined is surplus. The Moyer Program guidelines state that to be labeled surplus,
emission reductions must be early or extra—that is, occurring before a required compliance date
or exceeding the requirements of a rule or regulation.
California State Auditor Report 2006-115
June 2007
Figure 1
Entities Involved in the Carl Moyer Memorial Air Quality Standards Attainment Program
= Direct Moyer Program participants
= Involved parties
U.S. Environmental = Lines of communication
Protection Agency* between participants
= Lines of communication between
participants and involved parties
State Air
Resources
Board*
California
Stakeholders† Air Pollution
Control Officers
Association
Local Air
Districts*
Vendors,
including engine
dealers and
consultants
Applicants
and Project
Owners‡
Sources: State law and information provided by the State Air Resources Board and local air districts.
Note: Under state law, the State Energy Resources Conservation and Development Commission (commission) is responsible for the fueling
infrastructure demonstration program and the technology development efforts under the Carl Moyer Memorial Air Quality Standards Attainment
Program (Moyer Program). Commission staff told us these types of programs have not received appropriations under the Moyer Program since fiscal
year 2000–01.
* These entities are government entities.
† Includes environmental groups, industry groups, and members of the general public.
‡ Entities under Moyer Program contracts.
10 California State Auditor Report 2006-115
June 2007
to air pollution, and systematically attacking the serious problem
caused by motor vehicles, which is a major source of air pollution in
many areas of the State.
The state board’s responsibilities for the Moyer Program include
issuing guidelines for administering the program, allocating
program funds to local air districts, monitoring districts’
administration of their Moyer Program projects, and selecting
projects for the program’s multidistrict component. The
multidistrict component allows the state board to select projects
that operate in more than one district and, according to the
state board, may not otherwise be eligible to receive Moyer
Program funds because of the operational restrictions imposed by
most districts.
The Moyer Program guidelines establish the minimum
requirements the state board and local air districts must follow to
administer projects. The guidelines are binding and enforceable.
Further, California law requires the state board to monitor
participating districts to ensure compliance. Although these
guidelines provide the framework for districts to implement the
Moyer Program, the state board allows them to impose stricter
requirements and to determine how they will implement the
guidelines. For example, although the guidelines require projects
to operate at least 75 percent of their “activity” (typically measured
in hours of operation, fuel consumption, or miles traveled) in
California, some districts require projects to operate at least
75 percent of their activity within the funding district.
According to a program manager at the state board, although
organizational differences formerly existed between the two types
of local air districts (air pollution control districts formerly served
single counties and air quality management districts encompassed
multiple counties), no legal distinction currently exists between
them. Appendix A includes a map of California’s 35 local
air districts.
Local air districts are separate governmental entities with their own
boundaries, jurisdictions, governing boards, executives, staff, and
policies. Table 1 shows some characteristics of the four districts we
visited as part of this review. Among the differences we observed,
the most notable is that the South Coast Air Quality Management
District (South Coast air district) received the largest allocations of
Moyer Program funds for fiscal years 2004–05 and 2005–06, more
than the other three districts combined.
All participating local air districts are responsible for administering
their Moyer Program funds and reporting project results to the
state board. Districts also solicit applications and conduct outreach
California State Auditor Report 2006-115 11
June 2007
to encourage applications from all eligible sectors. The districts
select projects to fund and then monitor those projects to ensure
that they are meeting program goals.
Table 1
Characteristics of Audited Local Air Districts and Their Moyer Programs as of
February 2007
Bay area saCraMento san JoaQuin south Coast
air Quality Metropolitan air Valley unifieD air Quality
ManageMent Quality ManageMent air pollution ManageMent
CharaCteristiC DistriCt DistriCt Control DistriCt DistriCt
Headquarters San Francisco Sacramento Fresno Diamond Bar
Number of whole/
partial counties in the 7/2 1/0 7/1 1/3
air district
Number of governing
22 14 11 12
board members
1 manager/ 3 managers/ 2 managers/ 1 manager/
Staffing levels for
supervisor*, supervisors*, supervisors*, supervisor,
Moyer Program 2 staff† 11 staff 11 staff 12 staff
Total Moyer Program
allocations, fiscal years $12.8 million $8.7 million‡ $14.7 million $46.5 million
2004–05 and 2005–06
When are projects
March Year-round Year-round February
selected
Source: Information provided by the four local air districts we reviewed.
* Staff work only part of their time on the Carl Moyer Memorial Air Quality Standards Attainment
Program (Moyer Program).
† Does not include one additional staff member recently hired.
‡ The Sacramento Metropolitan Air Quality Management District (Sacramento Metropolitan air
district) also administers the Moyer Program for the El Dorado County and Yolo-Solano Air Quality
Management districts as well as the Placer County Air Pollution Control District. Moyer Program
allocations for the Sacramento Metropolitan air district reflect all four of these districts.
Private companies, public entities such as public works departments
and transit agencies, and individuals can apply to local air districts
for Moyer Program funds. Projects may include single or multiple
engines—for example, single agricultural irrigation pumps,
dual-engine commercial fishing vessels, or fleets of multiengine
construction vehicles. Applicants are responsible for ensuring that
their applications are complete and accurate and for performing
the projects as described in their contracts. Entities under program
contracts (project owners) are required to periodically report on the
use of their engines or vehicles for a specific number of years after
implementing their projects.
12 California State Auditor Report 2006-115
June 2007
Sources of Moyer Program Funds
Funding for the Moyer Program currently comes from specific
statutorily defined sources, although this was not always the case.
According to the state board’s January 2007 report on the Moyer
Program, for fiscal years 1998–99 through 2001–02 the program
received funding through annual appropriations. Voter approval
in March 2002 of Proposition 40—the California Clean Water,
Clean Air, Safe Neighborhood Parks, and Coastal Protection Act
of 2002—provided funding for the Moyer Program in fiscal years
2002–03 and 2003–04. The state board’s report shows that through
fiscal year 2003–04, annual funding levels for the Moyer Program
ranged from $16 million (fiscal year 2001–02) to $44 million
(fiscal year 2000–01).
Legislation enacted in 2004 designated two sources of funds for the
Moyer Program: fees on new tire purchases and smog abatement
fees. The state board estimated that these sources would increase
annual funding levels to an estimated $30.5 million for fiscal year
2004–05 and an estimated $86 million for fiscal year 2005–06.
Figure 2 depicts these new fund sources.
According to the Health and Safety Code, $6 of each smog
abatement fee collected by the Department of Motor Vehicles
may be used to fund the Moyer Program to mitigate or remediate
the harm caused by the type of motor vehicles on which the fee is
imposed. According to the Public Resources Code, 75 cents per tire
sold in California beginning January 1, 2005, will be transferred by
the Board of Equalization to the state board for funding programs
or projects that reduce the types of air pollution caused by the tires
subject to the fee. The state board uses revenues from tire fees for
the Moyer Program.
State law mandates that local air districts match one local dollar
for every two state dollars to implement Moyer Program projects.
The law also allows the state board to adjust the matching amount
to maximize the use of the Moyer Program or the air quality
benefits it provides based on the financial resources of districts.
For the two fiscal years we reviewed, the state board established
a total maximum matching amount per year of $12 million to
be distributed proportionately among the districts to which
it annually allocated Moyer Program funds. For example, the
state board allocated 44 percent of the Moyer Program funds
appropriated in fiscal year 2005–06 to the South Coast air
district. The South Coast air district’s share of matching funds was
$5.2 million, or 44 percent of the $12 million total.
3 The state board generally waived the matching requirements for local air districts receiving
$200,000 or less in Moyer Program funds each year.
California State Auditor Report 2006-115 1
June 2007
Figure 2
Current Flow of Funding for the Carl Moyer Memorial Air Quality Standards Attainment Program
Surcharges
Fees on Smog on motor
new tire abatement vehicle
purchases fees registration
fees
Board of Equalization Department of Motor Vehicles
$ Tire$ fee of $ $Smog a$batement$ $Surchar$ge of up to$ $Surcha$rge of up to$
fee of $6 per $2 per vehicle $4 per vehicle
75 cents*
$ $ $ vehicle† $ $registration fee‡$ $registration fee‡$
State Air Resources Board
$Moye$r Program $
allocation
$ $
$Interes$t earned on$
Moyer Program
Local Air Districts§
$ funds $
Project Ownersll
= Funding sources
= Revenue collectors
= Moyer Program participants
Sources: State law and information provided by the State Air Resources Board (state board).
* Under the Public Resources Code this fee is to fund costs related to reducing air pollution.
† Under the Health and Safety Code this fee is to be used to fund the Carl Moyer Memorial Air Quality Standards Attainment Program (Moyer Program)
to the extent that the state board or a participating local air district determines that the project will mitigate or remediate the harms caused by the
type of motor vehicles on which the fee is imposed.
‡ The $2 and $4 registration fee surcharges are shown separately as they have different spending restrictions. Under the Health and Safety Code local
air districts can adopt the surcharge of up to $2 to help remediate the air pollution caused by motor vehicles. They adopt the surcharge of up to $4 to
help implement the California Clean Air Act of 1988. Both are potential sources of matching funds under the Moyer Program for local air districts.
§ Includes air pollution control districts and air quality management districts.
ll Entities under Moyer Program project contracts.
1 California State Auditor Report 2006-115
June 2007
Matching funds can come from any funds under a local air district’s
budgetary control. However, state law specifically designates
two surcharges on motor vehicle registration fees that districts can
impose on vehicles registered in their districts. The districts may
use funds from these surcharges as matching funds to pay for
Moyer Program projects. As previously shown in Figure 2, the
Department of Motor Vehicles sends these revenues directly to
the districts. The state board indicated that as of January 2007,
27 of the 35 local air districts had adopted the surcharge of up to $4,
which can be used to reduce air pollution from motor vehicles
and to perform the related planning, monitoring, enforcement, and
technical studies needed to implement the California Clean Air
Act of 1988. Four of the 27 districts charge only $2 or $3. Also,
17 districts had adopted the $2 surcharge, which can be used for
specified programs that remediate air pollution harm from motor
vehicles. According to the state board, the four districts we visited
as part of this review adopted both surcharges.
Timing for Distributing and Spending Moyer Program Funds
Moyer Program funds must be spent within three years from
when the State appropriates them to the state board. State law
requires the state board to allocate the funds to the local air districts
each year as expeditiously as possible. The state board allocated the
funds in December of each fiscal year we examined (2004–05 and
2005–06) to the districts we visited. Moyer Program guidelines
require local air districts to allocate the funds to specific projects
by June 30 of the first year following the allocation from the state
board. Finally, state law requires districts to expend their Moyer
Program allocations by June 30 of the second year following the
date they received the funds.
State law also allows local air districts to use a portion of their
allocated funds for costs incurred to administer the program.
Districts with populations greater than 1 million may use up to
5 percent of their allocated funds on administration, and districts
with populations less than 1 million may spend 10 percent.
According to Moyer Program guidelines, the state board generally
does not provide local air districts the entire amount of their funds
immediately after awarding the allocations. Districts may request
funds once they have met any stipulations to their awards. For
example, the state board required the San Joaquin Valley Unified
Air Pollution Control District (San Joaquin Valley air district) to
submit a resolution adopted by its governing board that accepted
the terms and conditions of the fiscal year 2004–05 allocations.
California State Auditor Report 2006-115 15
June 2007
To begin receiving their allocations, local air districts must also
show that they have obligated at least 90 percent of the previous
fiscal year’s Moyer Program funds and required matching funds.
They also must show that they have obligated and expended
100 percent of the Moyer Program and matching funds awarded
for at least the two years before the previous year. The state board’s
initial payment to a district is typically 10 percent of that district’s
allocation and 50 percent of the amount set aside for program
administration, although the district may submit documentation
demonstrating the need for a greater amount. To receive additional
payments, districts must show that they have obligated 100 percent
of previous years’ Moyer Program funds and 50 percent of their
initial disbursement for the current year. Districts may request
the remaining half of their administrative funds when they have
obligated 50 percent of the current year’s program funds.
Cost-Effectiveness of Moyer Program Projects
A key requirement for eligibility of a potential Moyer Program
project is cost-effectiveness, which is specified by state law. The
calculation of cost-effectiveness indicates the amount a project
requires and is eligible to receive to reduce 1 ton of emissions. For
example, cost-effectiveness of $5,000 means the Moyer Program
will pay $5,000 per ton of reduced emissions. A lower cost-
effectiveness value is better than a higher one because it means the
Moyer Program is paying less to achieve emission reductions. An
explanation of the formula for calculating cost-effectiveness appears
in Appendix B.
To ensure that Moyer Program funds are awarded only to projects
able to achieve cost-effective emission reductions, state law
originally imposed a $12,000 cost ceiling for each ton of reduced
emissions. An amendment later increased this amount to $13,600.
Because state law requires an adjustment to account for inflation,
the state board later raised the ceiling to $14,300 per ton beginning
with Moyer Program funds appropriated in fiscal year 2005–06.
The state board made available to the districts a spreadsheet for
calculating a project’s cost per ton of intended emission reductions.
Both the South Coast air district and the Bay Area Air Quality
Management District (Bay Area air district) use this spreadsheet,
while the Sacramento Metropolitan Air Quality Management
District (Sacramento Metropolitan air district) and the San Joaquin
Valley air district each developed a tool for calculating their
projects’ cost-effectiveness.
16 California State Auditor Report 2006-115
June 2007
Small projects can be competitive for funding with large ones
because of the cost-effectiveness calculation. They can have similar
cost-effectiveness values but markedly different ratios of total costs
to tons of annual emission reductions because of the effect of
other factors, such as project life. For example, state board records
indicate that, using Moyer Program funds appropriated in fiscal
year 2004–05, the Bay Area air district funded a project with a
calculated cost of $2,158 per ton of reduced emissions. The district
spent only $112,400 on this project and expects to achieve more
than 4 tons of reduced emissions per year over the project’s 10-year
life. For Moyer Program funds from the same fiscal year, the South
Coast air district selected a project with a cost-effectiveness value
of $2,163 per ton of reduced emissions. However, this project cost
$750,700 and expects to reduce more than 62 tons of pollutants per
year over its six-year life.
Although local air districts use these calculations for ensuring
that they select cost-effective projects, they use different methods
for identifying and selecting projects to fund. The Bay Area and
South Coast air districts issue public announcements similar to
requests for proposals calling for Moyer Program applications to be
submitted by a specific date. They then calculate the cost per ton
for each application’s intended emission reductions and use these
values in their rankings. This method works well when districts
receive more applications than they can fund; it helps ensure that
they select annually those projects that achieve more cost-effective
emission reductions.
On the other hand, the Sacramento Metropolitan and San Joaquin
Valley air districts provide Moyer Program funds to projects
on a first-come, first-served basis. When these districts receive
applications during the year, they calculate the cost per ton for
each application’s intended emission reductions, ensuring that they
are not funding projects that exceed the state board’s ceiling. This
method works well when local air districts have sufficient funds to
select all or nearly all eligible projects that apply; applicants do not
have to wait until a certain date to submit their proposals.
Scope and Methodology
The Joint Legislative Audit Committee (audit committee) asked the
Bureau of State Audits to review how key local air districts manage
administration of the Moyer Program. The audit committee asked
4 As mentioned in the Scope and Methodology, we did not determine the accuracy of the cost
per ton of intended emission reductions because of the lack of hard-copy documentation of the
calculations or because recalculating the values was beyond the scope of our audit. Thus, these
data are of undetermined reliability.
California State Auditor Report 2006-115 17
June 2007
us to examine several specific aspects of the Moyer Program.
It asked us to determine the roles and responsibilities of the
various entities involved and to evaluate the communication
and coordination of the various functions in carrying out the
Moyer Program. We were also asked to review the state board’s
policies, procedures, guidelines, and regulations related to the
Moyer Program to determine if they establish program goals and
measures; comply with laws; and encourage uniformity, consistency,
and fairness in application. The audit committee also asked us
to examine the state board’s monitoring and oversight policies
and practices to determine whether the state board exercises an
appropriate level of timely oversight to ensure uniformity and
consistency in how local air districts develop and implement their
program, and whether districts comply with the state board’s
policies and guidelines.
We were also asked to review and compare Moyer Program
processes at local air districts. We limited our review to four—the
Bay Area, Sacramento Metropolitan, San Joaquin Valley, and
South Coast air districts—because information in the state board’s
status report shows that it allocated to these districts 77 percent
of the Moyer Program funds from the program’s inception in
1998 through fiscal year 2005–06 and that these districts were the
four largest in terms of the Moyer Program funds they received.
Our review covered mainly fiscal years 2004–05 and 2005–06.
For the local air districts included in our review, the audit
committee asked us to review and compare the application,
eligibility, selection, funding, and monitoring processes and
practices and to do the following:
• Determine conformity to the state board’s guidelines, consistency
among local air districts, and best practices employed.
• Evaluate whether applicants received equitable treatment and did
not face barriers to participating in the Moyer Program.
• Calculate and compare the time it takes to process applications,
select projects, and distribute funds to determine whether those
times are within the state board’s guidelines.
• Determine whether the processes are streamlined, easy to use,
and ensure that vehicles spending time in different local air
districts receive funding from the Moyer Program.
5 For the two fiscal years covered by this audit report, the Sacramento Metropolitan air district
also administered the Moyer Program for the El Dorado County and Yolo-Solano Air Quality
Management districts as well as the Placer County Air Pollution Control District. Therefore, we
included funding to all four of these districts as part of our audit.
1 California State Auditor Report 2006-115
June 2007
• Determine the extent to which processes for distributing funds
consider public health protection and strive for achieving
maximum emission reductions.
The audit committee asked us to determine how local air districts
establish goals and priorities and whether those goals and priorities
align with the state board’s goals. Additionally, the audit committee
requested that we determine the extent to which those goals are
used in allocating funds. Finally, we were asked to review the state
board’s and local air districts’ public outreach efforts and goals.
Specifically, to the extent applicable, we were to determine how
the state board and the districts identify potential project owners,
disseminate public information, and market the Moyer Program
to promote maximum participation. Additionally, we were to
determine how the state board and the districts ensure that those
efforts are effective.
To identify the roles and responsibilities of the various entities
involved in the Moyer Program, we examined state law and the
state board’s guidelines. We also interviewed personnel from
the state board, the local air districts we visited, and the State
Energy Resources Conservation and Development Commission.
To evaluate the communication and coordination of the various
functions in carrying out the Moyer Program, we interviewed staff
members of the state board and the four districts we visited. We
also identified the tools each entity was using to communicate.
To determine whether the state board’s policies, procedures,
guidelines, and regulations related to the Moyer Program establish
program goals and measures; comply with laws; and encourage
uniformity, consistency, and fairness in application, we selected key
sections of the Moyer Program guidelines that established goals and
measures and compared those to relevant sections of the Health
and Safety Code. We also compared those sections to the draft
policies and procedures documents for the four local air districts in
our review.
To determine whether the state board exercised an appropriate
level of timely oversight and whether local air districts complied
with the state board’s policies and guidelines, we identified the
activities the state board included in its oversight process. We
also spoke with the liaisons—staff members of the state board
who communicate with the districts—and the state board’s
management to determine how they implemented monitoring and
what they did to ensure that districts complied with the Moyer
Program guidelines.
California State Auditor Report 2006-115 1
June 2007
To review and compare the application, eligibility, selection,
funding, and monitoring processes and practices among the
four local air districts, we obtained and reviewed relevant
documents from the state board and the districts and interviewed
staff members.
To determine conformity to the state board’s guidelines and
consistency among local air districts, we compared key portions
of the districts’ draft policies and procedures to the guidelines. To
identify best practices, to determine equitable treatment among
applicants, and to identify whether barriers to participation exist,
we maintained awareness while performing audit steps during
our visits to the districts. We defined equitable as “appropriate
for the circumstances” and defined barrier as “an unnecessary
impediment.” Other than the concerns we raise in this report, we
identified no inequitable treatment and no barriers to participating
in the Moyer Program.
To calculate and compare the time it takes for processing the
applications, selecting projects, and distributing funds, and to
determine whether the time taken is within the state board’s
guidelines, we examined allocation and award documents from
the state board and the four local air districts. We also examined
30 projects from each of the four districts we visited, a total of
120 projects. From each district we randomly selected 10 projects
to which the district allocated Moyer Program funds appropriated
in fiscal year 2004–05 and another 10 projects each for funds
appropriated in fiscal year 2005–06. Because the Bay Area air
district had not selected projects for fiscal year 2005–06 by the
dates of our visits in November 2006 and January 2007, we selected
20 projects to which it awarded Moyer Program funds appropriated
in fiscal year 2004–05. We then selected five projects with the
highest awarded amounts from either year’s Moyer Program
funds for each of the four districts. We subjectively chose the final
five projects for each district from either year’s Moyer Program
funds that seemed to take relatively longer to progress from the
application receipt date.
For the 120 projects selected, we measured progression by tracking
key dates (for example, the date a local air district sent a contract
to a project owner for signature) and determined compliance with
timing requirements found in Moyer Program guidelines. Because
some project owners were still implementing their projects at the
time of our review, we did not include the dates for all key events.
We also spoke with district staff and management to determine the
circumstances surrounding contracts that took relatively more or
less time than others we examined.
20 California State Auditor Report 2006-115
June 2007
To determine whether the application processes at the local
air districts were streamlined and easy to use, we judgmentally
selected several Moyer Program applicants, project owners, and
engine dealers from each district and asked whether they had
concerns with any part of the process. To ensure that applicants
with operations in more than one district receive funding from
the Moyer Program, we reviewed the state board’s multidistrict
component and the policies from the four districts regarding how
much time applicants must operate within each district to qualify
for funds. We also asked staff members of the four districts if they
had funded or planned to fund Moyer Program projects jointly with
other local air districts.
To determine the extent to which processes for distributing
funds consider public health protection and strive for achieving
maximum emission reductions, we examined the formula the
Moyer Program guidelines specify for local air districts to use
when calculating projects’ costs per ton of intended emission
reductions. Appendix B describes this formula. We also examined
whether the districts we visited considered measures of pollution
when determining whether a community was disproportionately
impacted by air pollution or the results of air pollution.
To determine how local air districts in our review established goals
and priorities, if they aligned with the state board’s goals, and the
extent to which the districts used those goals in awarding funds, we
compared the draft policies and procedures from the four districts
with the goals and measures established in the Moyer Program
guidelines and with state law.
To review the state board’s and local air districts’ public outreach
efforts and goals; to determine how the state board and the districts
identified potential applicants, disseminated public information,
and marketed the Moyer Program to promote maximum
participation; and to determine how the state board and the
districts ensure that their efforts are effective, we reviewed various
materials districts used to conduct outreach and asked how they
determined the effectiveness of their outreach and whether
they measured the effects of their outreach efforts.
We received electronic data from each of the four local air
districts we visited as well as the state board. The U.S. Government
Accountability Office, whose standards we follow, requires us to
assess the reliability of computer-processed data.
To assess whether the information was sufficiently reliable for
the purposes of our audit, we conducted tests to determine the
completeness and the accuracy of the information we were
provided. Generally, to determine accuracy, we compared the
California State Auditor Report 2006-115 21
June 2007
Table 2
Conclusions Regarding Our Assessment of Data Gathered From
Electronic Sources
sourCe Data testeD reliaBility DeterMineD
Dollar values for the purpose of determining
Sufficiently reliable
State Air Resources the total project contract amount
Board (multidistrict
Cost-effectiveness values for projects* Undetermined reliability
component)
Scoring information Undetermined reliability
Dollar values for the purpose of determining
Sufficiently reliable
the total project contract amount
Bay Area Air Quality
Cost-effectiveness values for projects Undetermined reliability
Management District
Selected dates during the processing of
Sufficiently reliable
applications
Dollar values for the purpose of determining
Not sufficiently reliable
Sacramento the total project contract amount
Metropolitan Air
Cost-effectiveness values for projects Undetermined reliability
Quality Management
District Selected dates during the processing of
Not sufficiently reliable
applications
Dollar values for the purpose of determining
San Joaquin Valley the total project contract amount Sufficiently reliable
Unified Air Pollution
Control District†
Cost-effectiveness values for projects Undetermined reliability
Dollar values for the purpose of determining
Sufficiently reliable
the total project contract amount
South Coast Air
Quality Management
District† Cost-effectiveness values for projects Undetermined reliability
Cancellation status of projects‡ Sufficiently reliable
Sources: Auditor determinations based on the data provided by the State Air Resources Board
(state board) and local air districts.
* For fiscal year 2004–05, the data provided by the state board included only the final cost-
effectiveness value; therefore, we could not trace the data to supporting documentation to
determine the accuracy of the final cost-effectiveness value. For fiscal year 2005–06, the data
provided by the state board did include sufficient information to recalculate the cost-effectiveness
values; however, recalculating the cost-effectiveness value was beyond the scope of this audit. In
both cases the data is of undetermined reliability.
† For the San Joaquin Valley and South Coast air districts, we relied solely on hard-copy information
for our testing of selected dates during the application process.
‡ Our analysis on cancellation rates in Chapter 1 involved only the South Coast and Bay Area air
districts as well as the state board’s multidistrict component. For the Bay Area air district and the
state board’s multidistrict component, we relied only on hard-copy documentation.
information that we were provided to hard-copy information we
were able to obtain and examined the differences. To determine the
completeness of the information, we compared the data provided to
us with other sources of information to ensure that all information
22 California State Auditor Report 2006-115
June 2007
that should have been provided to us was in fact provided. In
Table 2 as shown previously we present a description of all the
electronic information we used in our report and examined using
our testing method.
We determined some data were sufficiently reliable
for our purposes because we found no errors when we
Definitions of Data Reliability
compared the information with hard-copy evidence
• Sufficiently reliable data: Based on audit work, an and independent electronic reports. We determined
auditor can conclude that using the data would other data were of undetermined reliability for the
not weaken the analysis nor lead to an incorrect or purposes of this audit generally because the data were
unintentional message.
solely in electronic format and therefore could not be
• Not sufficiently reliable data: Based on audit work, verified to independent sources. However, because the
an auditor can conclude that using the data would information is vital to answering audit questions and
most likely lead to an incorrect or unintentional our examination of the data did not reveal excessive
message and the data have significant or potentially blank or unreasonable values, we used the data in our
significant limitations given the research question report and note their limitations.
and intended use of the data.
• Data of undetermined reliability: Based on audit We also determined that some data were not
work, an auditor can conclude that the use of the sufficiently reliable for the purposes of this audit
data could lead to an incorrect or unintentional because we found several errors while conducting our
message and the data have significant or potentially testing. Given that the errors could materially affect
significant limitations given the research question our analysis, using the data would likely lead to an
and the intended use of the data.
incorrect or unintentional message. However, we use
Source: Assessing the Reliability of Computer-Processed this information in a limited fashion only to help fill in
Data from the U.S. Government Accountability Office. when hard-copy evidence was not available, and note
its limitations when we do so.
California State Auditor Report 2006-115 2
June 2007
Chapter 1
PolICIeS And PRACTICeS RelATed To SeleCTIon,
ConTRACTIng, And MARkeTIng need IMPRoveMenT
Chapter Summary
Our review of the Carl Moyer Memorial Air Quality Standards
Attainment Program (Moyer Program) revealed several concerns
with the policies and practices that the State Air Resources
Board (state board) and air pollution control districts and air
quality management districts (collectively, local air districts) have
established for selecting applicants, contracting with entities
selected for projects (project owners), and marketing the program.
For instance, some policies and practices result in the state board
and local air districts not maximizing emission reductions under
the Moyer Program. Achieving the same emission reductions for a
lower cost or more emission reductions for the same cost is a key
goal for both the state board and the districts.
California law allows the state board to set aside up to 10 percent of
Moyer Program funds to pay for projects that operate in multiple
local air districts. This cap limits funding for projects that could
result in lower costs per ton of intended emission reductions
compared with some single-district projects funded by the Moyer
Program. Also, three of the six categories the state board uses
to score and select applications for multidistrict projects are
neither required nor encouraged by state law. The three categories
accounted for as much as 55 percent of the maximum possible
scores in the two fiscal years we reviewed and resulted in the state
board selecting projects that did not necessarily have the lowest
costs per ton of emission reductions.
Further, most projects the Bay Area Air Quality Management
District (Bay Area air district) used to meet the Moyer Program’s
fund-matching requirement for fiscal year 2003–04 exceeded the
maximum cost per ton for emission reductions established by
the state board. As allowed by state law, the Bay Area air district
designated 16 projects funded by other programs it administered as
matching projects for the Moyer Program for fiscal year 2003–04.
However, the district improperly excluded some project funds when
calculating the costs per ton of emission reductions for 14 projects.
Specifically, the district counted only $740,000 of the $2.5 million
it awarded to the 14 projects as matching funds. This approach is
contrary to state law and Moyer Program guidelines because the
district did not include all the funds under its budgetary control
when it calculated the cost per ton of intended emission reductions.
Instead of selecting other eligible projects, the district attempted
2 California State Auditor Report 2006-115
June 2007
to make these 14 projects qualify as matching by counting only
the portion of the projects’ costs that would be eligible under the
Moyer Program when it calculated their costs per ton.
The local air districts we visited use various methods to market the
Moyer Program, but none is adequately evaluating whether it is
reaching business sectors that could provide emission reductions
at a lower cost per ton. Thus, the four districts cannot ensure that
their marketing efforts are resulting in applications that help them
maximize the emission reductions from the projects they fund.
We identified several best practices that can help local air districts
select projects with lower costs per ton of intended emission
reductions, reduce workload, or allow more time for project
completion. For example, two districts used measures of pollution
or the effects of pollution in identifying communities in their
districts that were disproportionately impacted by pollution. Other
best practices relate to selecting and contracting for projects.
We found no concerns in two areas we examined. Projects that
operate in multiple local air districts do have opportunities to apply
for Moyer Program funds, and the relatively higher cancellation
rate for applications to the Bay Area air district’s projects does not
appear to be the result of the district’s procedures.
Some Policies or Practices Do Not Maximize Emission Reductions
Under the Moyer Program
We found policies or practices used by the state board and the four
local air districts we visited that did not maximize the intended
emission reductions from Moyer Program projects. California
law requires the state board to work closely with districts to
maximize the ability of the Moyer Program to achieve its goals.
AAccccoorrddiinngg ttoo CCaalliiffoorrnniiaa llaaww,, tthhee Further, according to the legislative findings and declarations for
ssttaattee bbooaarrdd aanndd llooccaall aaiirr ddiissttrriiccttss Chapter 707, Statutes of 2004, the state board and local air districts
sshhoouulldd iimmpplleemmeenntt pprrooggrraammss ttoo “should adopt and implement programs to achieve the maximum
aacchhiieevvee mmaaxxiimmuumm ccoosstt--eeffffeeccttiivvee feasible and cost-effective emission reductions from vehicular
eemmiissssiioonn rreedduuccttiioonnss.. sources and off-road engines.” Simply stated, one Moyer Program
project that provides a lower cost per ton of intended emission
reductions than another will provide a district with either greater
air quality benefits at the same cost or the same benefits at a lower
cost, thus enabling that district to maximize the intended emission
reductions for which it paid.
6 Many participants in the Moyer Program refer to this law by its bill number, AB 923.
California State Auditor Report 2006-115 25
June 2007
State Law Impedes Maximum Emission Reductions
Existing law allows the state board to spend up to 10 percent of
the appropriations for the Moyer Program on projects that take
place in more than one local air district. Under this multidistrict
component, using Moyer Program funds appropriated in fiscal
year 2005–06, the state board selected a project for $860,000 that
consisted of upgrading four dual-engine scrapers (construction
equipment) that operate in Los Angeles, Orange, Riverside,
San Bernardino, San Diego, and Ventura counties. These
six counties are located in three local air districts. We determined
that the 10 percent cap on the multidistrict component limits
the state board’s ability to fund projects that maximize emission
reductions in the State.
For the two fiscal years we examined, the state board allocated the
maximum portion of Moyer Program funds to the multidistrict
component. For appropriations in fiscal year 2004–05, the
state board allocated $2.9 million to eight projects; for fiscal year
2005–06, it allocated $8.6 million to seven projects. However, the
10 percent cap prevented the funding of additional projects that
could have provided lower costs per ton of intended emission
reductions than did other projects funded individually by the four
local air districts we visited. Thus, the cap imposed on the
multidistrict component impeded the state board’s ability to achieve
greater emission reductions with the same amount of funds.
The value of the project applications received by the state board
far exceeded the amount it could fund under the multidistrict FFoorr MMooyyeerr PPrrooggrraamm ffuunnddss
component. In fact, for Moyer Program funds appropriated in aapppprroopprriiaatteedd iinn fifissccaall yyeeaarr
fiscal year 2004–05, the state board received applications totaling 22000055––0066,, tthhee ssttaattee bbooaarrdd rreecceeiivveedd
900 percent of the amount of funds it had available for allocation, aapppplliiccaattiioonnss ttoottaalliinngg 335500 ppeerrcceenntt ooff
and it received applications totaling 350 percent of available Moyer MMooyyeerr PPrrooggrraamm ffuunnddss aavvaaiillaabbllee ffoorr
Program funds appropriated in fiscal year 2005–06. Conversely, the tthhee mmuullttiiddiissttrriicctt ccoommppoonneenntt..
four local air districts we visited funded all eligible applicants for
Moyer Program projects for the two fiscal years.
We compared the costs per ton of intended emission reductions
for those multidistrict projects the state board did not fund with
the projects funded by the four local air districts. The results show
that the low cap for the multidistrict component of the Moyer
Program caused the state board to miss opportunities to select and
fund projects that offered lower costs per ton of intended emission
reductions than those offered by the projects funded individually by
the four districts.
7 The state board allocated funds to projects under the multidistrict component for only one of the
six funding years before fiscal year 2004–05.
26 California State Auditor Report 2006-115
June 2007
Table 3 summarizes the results of our modeling to compare the
costs per ton of intended emission reductions. We applied the
selection procedures used by the state board and the four local air
districts to identify additional projects we believe the state board
would have funded with the increase in the cap and projects we
believe the four districts would not have funded if their allocations
were reduced. As Table 3 shows, had the cap been higher, the
state board could have achieved a lower average cost per ton of
intended emission reductions through projects selected from the
multidistrict component than some projects selected by the four
districts.
For example, when we increased the cap to 15 percent for fiscal
year 2004–05 funds, the state board could have funded three
IIff tthhee 1100 ppeerrcceenntt ccaapp iimmppoosseedd additional projects, while the four districts we visited would
bbyy llaaww wweerree iinnccrreeaasseedd,, tthhee ssttaattee not have been able to fund 13 projects. The cost of the intended
bbooaarrdd ccoouulldd hhaavvee ffuunnddeedd pprroojjeeccttss emission reductions from the state board’s three additional projects
tthhaatt aacchhiieevveedd ffoouurr ttiimmeess mmoorree would have averaged about $2,600 per ton, whereas the cost of
ccoosstt--eeffffeeccttiivvee eemmiissssiioonn rreedduuccttiioonnss the intended emission reductions for the 13 projects the districts
tthhaann pprroojjeeccttss sseelleecctteedd bbyy llooccaall did fund averaged nearly $11,000 per ton. In other words, with an
aaiirr ddiissttrriiccttss.. increase in the cap for its multidistrict component, the state board
could have funded projects that achieved four times more cost-
effective emission reductions than projects selected by the districts.
We acknowledge that increasing the 10 percent cap will affect each
local air district differently depending on the method used to select
projects. The greatest gain to the State in a lower average cost per
ton of intended emission reductions would be derived from districts
that use the public announcement method to select their Moyer
Program projects. Because these districts rank each potential
project based on the cost per ton of intended emission reductions,
they would not fund the projects with the highest costs per ton.
The average cost per ton of intended emission reductions of
projects lost by local air districts that use the first-come, first-served
method is less predictable. For example, under our model
the San Joaquin Valley Unified Air Pollution Control District
(San Joaquin Valley air district) would not have funded two projects
with costs of intended emission reductions under $1,000 per ton.
The district would not have funded these projects because they
would have been among the applications received too late in the
year. However, we observed that districts using the first-come,
8 As mentioned in the Scope and Methodology, we did not determine the accuracy of the cost
per ton of intended emission reductions because of the lack of hard-copy documentation of the
calculations or because recalculating the values was beyond the scope of our audit. Thus, these
data are of undetermined reliability.
9 We describe the selection methods that local air districts use in the Introduction.
California State Auditor Report 2006-115 27
June 2007
Table 3
Results of Our Modeling to Assess Increasing the Cap for the Multidistrict Component of the Carl Moyer Memorial
Air Quality Standards Attainment Program
state BoarD’s MultiDistriCt four loCal air DistriCts
reViseD Cap: CharaCteristiC CoMponent we VisiteD*
50–4002
raeY
lacsiF
Change in funding amount† +$1,464,000 -$1,067,760
Change in number of funded projects from 10 percent +3 projects‡ -13 projects§
15 percent
Average cost per ton of emission reductions for added/lost projectsll $2,568 per ton $10,957 per ton
Estimated emission reductions for added/lost projects 570 tons (97 tons)
Change in funding amount† +$2,928,000 -$2,220,497
Change in number of funded projects from 10 percent +6 projects -26 projects§
20 percent
Average cost per ton of emission reductions for added/lost projectsll $3,301 per ton $10,796 per ton
Estimated emission reductions for added/lost projects 887 tons (206 tons)
#60–5002
raeY
lacsiF
Change in funding amount† +$4,248,000 -$2,830,916
Change in number of funded projects from 10 percent +4 projects‡ -9 projects§
15 percent
Average cost per ton of emission reductions for added/lost projectsll $2,208 per ton $11,122 per ton
Estimated emission reductions for added/lost projects 1,924 tons (255 tons)
Change in funding amount† +$8,496,000 -$5,666,196
Change in number of funded projects from 10 percent +16 projects -17 projects§
20 percent
Average cost per ton of emission reductions for added/lost projectsll $2,659 per ton $11,360 per ton
Estimated emission reductions for added/lost projects 3,195 tons (499 tons)
Sources: Information provided by the State Air Resources Board and the four local air districts we visited.
* The Sacramento Metropolitan Air Quality Management District (Sacramento Metropolitan air district) also administers the Carl Moyer Memorial Air
Quality Standards Attainment Program (Moyer Program) for the El Dorado County and Yolo-Solano Air Quality Management districts and the Placer
County Air Pollution Control District. Numbers in this column reflect all four of these districts.
† The increase in funding for the multidistrict component represents the gain from all participating air districts, while the decrease represents the loss
from only the four local air districts we visited.
‡ In both fiscal years the multidistrict component partially funded two projects. If the percentage of funds were increased, these projects could be fully
funded. The additional funded projects include these projects.
§ For the Bay Area Air Quality Management District (Bay Area air district) and the South Coast Air Quality Management District (South Coast air
district), the projects no longer funded would be those with the highest cost per ton of emission reductions. For the Sacramento Metropolitan
air district and the San Joaquin Valley Unified Air Pollution Control District (San Joaquin air district), the projects not funded would be the last project
applications to arrive during the funding year.
ll As mentioned in the Scope and Methodology, we did not determine the accuracy of the cost per ton of emission reductions because of the
lack of hard-copy evidence of these calculations or recalculating the values is beyond the scope of our audit. Therefore, these data are of
undetermined reliability.
# At the time of our visits in December 2006 and January 2007, the Bay Area air district had not yet selected the projects to fund with Moyer Program
appropriations for fiscal year 2005–06. Therefore, the amounts for that fiscal year reflect the results of the Sacramento Metropolitan, San Joaquin
Valley, and South Coast air districts only.
2 California State Auditor Report 2006-115
June 2007
first-served method frequently considered applications during
the next year after they had run out of the current year’s Moyer
Program funds.
Notwithstanding the example from the San Joaquin Valley air
district, we believe the State could still achieve a lower average cost
per ton of intended emission reductions by increasing the cap for
the multidistrict component.
The state board has not sought a change in the 10 percent cap
because it believes it has not gained enough evidence over two years
of fully funding the multidistrict component to support an increase.
However, allowing a higher cap for the multidistrict component
should allow the state board to better evaluate the State’s ability to
maximize Moyer Program funds in the future. Also, by allowing the
state board to allocate up to a certain proportion, the state board
can adjust the amount it allocates to the multidistrict component
based on the needs of the State as a whole.
The Largest Local Air Districts May Not Lose Funding With an Increased
Cap for Multidistrict Projects
Although the number of projects the four local air districts we
visited could fund would decrease with a higher multidistrict cap,
the districts likely would not lose a significant amount of Moyer
Program funds, based on our model. Further, they likely would
achieve a lower average cost per ton of emission reductions overall.
Most of the projects the state board would have funded with a
higher cap operate mainly in these four districts.
The state board evaluates, ranks, and selects each project for the
multidistrict component. It then delegates the contracting and
monitoring responsibilities to the local air district where the project
is primarily located and allocates Moyer Program funds to that
district for the contract. The state board also provides funds to
the district to cover the cost of administering the project and will
begin providing direct administrative funds per project beginning
with projects selected in fiscal year 2006–07. For the periods we
reviewed, a minimum of 78 percent of the funds added to the
multidistrict component by increasing the cap would have returned
to the four districts we visited.
LLooccaall aaiirr ddiissttrriiccttss ccoouulldd aallssoo Emission reductions derived from increasing the 10 percent cap
bbeenneefifitt ffrroomm ggrreeaatteerr eemmiissssiioonn would benefit individual local air districts as well as the State.
rreedduuccttiioonnss iiff tthhee ccaapp oonn ffuunnddss For example, had the cap been 15 percent for Moyer Program
ffoorr tthhee mmuullttiiddiissttrriicctt ccoommppoonneenntt funds appropriated in fiscal year 2005–06, the South Coast Air
iiss iinnccrreeaasseedd.. Quality Management District (South Coast air district) would have
lost 20 projects from six applicants. (To be consistent with the
California State Auditor Report 2006-115 2
June 2007
one-contract-per-applicant method of administering projects that
three of the districts use, Table 3, as previously shown, reflects
these six applicants as six of the nine projects.) The annual emission
reductions from all those projects totaled 7.6 tons for nitrogen
oxide and reactive organic gases and 1.5 tons for particulate matter.
For 10 of the 20 projects, total annual emission reductions were
only 0.05 tons. On the other hand, two of the additional projects
that would have been funded by the multidistrict component
would have operated a portion of their time in the South Coast
air district. One project would have annually achieved emission
reductions totaling nearly 130 tons of nitrogen oxide and 4.5 tons of
particulate matter.
The Methodology the State Board Uses to Select Projects Has
Undervalued the Cost-Effectiveness of Emission Reductions
The state board’s ranking system for selecting projects for the
multidistrict component did not maximize the emission reductions
for Moyer Program funds appropriated in fiscal years 2004–05
and 2005–06. Table 4 on the following page shows that under
this system each applicant received points for the following
six scoring categories:
• Cost-effectiveness: how efficiently, in terms of dollars, the
proposed project intends to reduce emissions.
• Environmental justice:0 whether the proposed project intends
to operate in communities disproportionately impacted by air
pollution or the results of air pollution.
• Implementation plan: how quickly the proposed project can
be completed.
• Hard to regulate: how difficult it is for the local air districts to
fund the proposed project with their own Moyer Program funds
because of the multidistrict nature of the project.
• Application completeness: how clear and concise the information
is in the application.
• Zero emission: whether the proposed project will use zero-
emission technology.
10 In this report we use the term disproportionately impacted communities rather than environmental
justice, which is the term the state board uses.
0 California State Auditor Report 2006-115
June 2007
Table 4
Scoring of Applications for Funding Under the Multidistrict Component of
the Carl Moyer Memorial Air Quality Standards Attainment Program
MaxiMuM possiBle points MaxiMuM possiBle points
for appliCations for appliCations
sCoring Category fisCal year 2004–05 appropriations fisCal year 2005–06 appropriations
Cost-effectiveness 25 40
Environmental justice* 20 15
Implementation plan 20 15
Hard-to-regulate sources 20 10
Application completeness 15 10
Zero emission NA† 10
Totals 100 100
Source: Multidistrict project solicitations issued by the State Air Resources Board for Moyer
Program funds appropriated for the years indicated.
Note: NA = Not applicable.
* In our report we use the term disproportionately impacted communities rather than environmental
justice, which is the term the state board uses.
† The state board did not include the zero emission category until fiscal year 2005–06.
State law requires the state board to consider cost-effectiveness and
disproportionately impacted communities when selecting projects,
and encourages it to consider zero-emission engines. It does
not require three of the six scoring categories—implementation
plan, hard to regulate, and application completeness—that could
AAnn aapppplliiccaanntt wwhhoo rreecceeiivveedd nnoo ppooiinnttss have accounted for as much as 35 percent and 55 percent of the
ffoorr oonnee ooff tthhee tthhrreeee ooppttiioonnaall ssccoorriinngg maximum possible scores for the multidistrict component in fiscal
ccaatteeggoorriieess tthhee ssttaattee bbooaarrdd uusseedd ttoo years 2004–05 and 2005–06, respectively. By assigning as much as
sseelleecctt pprroojjeeccttss ffoorr iittss mmuullttiiddiissttrriicctt 35 or 55 points (of the 100 points possible) for these optional scoring
ccoommppoonneenntt wwoouulldd lliikkeellyy nnoott hhaavvee categories in its selection methodology, the state board selected
bbeeeenn sseelleecctteedd ttoo rreecceeiivvee MMooyyeerr projects that would provide higher costs per ton of intended
PPrrooggrraamm ffuunnddss.. emission reductions to receive funding under the multidistrict
component. In fact, because of the dollar value of the projects
considered and the degree to which the state board received more
applications than it could fund, an applicant who received no points
for one of the three scoring categories stood a good chance of not
being selected to receive Moyer Program funds.
We developed a model in which we determined the effect of each
of the three scoring categories on the cost per ton of intended
emission reductions, assessing one category at a time while holding
California State Auditor Report 2006-115 1
June 2007
the other five categories constant. For example, we controlled
for the effects of the implementation plan category by giving all
applicants the same score. We then reranked the proposed projects
based on the revised scores and identified any changes. When
controlling for the implementation plan category, we determined
that the state board would have funded two other applicants using
Moyer Program funds appropriated in fiscal year 2005–06. It did
not select these two applicants in part because it gave them only
10 of the 15 possible points for their implementation plans. These
two other projects would have produced a lower cost per ton of
intended emission reductions than the projects they replaced. The
multidistrict component in total would have removed 172 more
tons of nitrogen oxide and reactive organic gases and 6 more tons of
particulate matter over the life of the projects. Further, the changes
would have lowered the average cost per ton of emission reductions
under the multidistrict component by 47 percent.
Similarly, when controlling for the other two optional scoring
categories for the state board’s fiscal year 2005–06 selections, we
found that the state board would have lowered the average cost
per ton of intended emission reductions by 22 percent for the
application completeness category and nearly 7.5 percent for
the hard to regulate category. Thus, by including the three optional
scoring categories, the state board did not maximize the emission
reductions it could have otherwise achieved under the
Moyer Program.
The state board explained that it chose the scoring categories for
selecting projects under the multidistrict component and their
point values based on discussions among staff and management.
According to the state board, the three categories that are not
required by state law help in selecting the best applications and
maximizing the use of staff time. Staff members pointed out that
they are in only the third year of running a multidistrict program
and they are still revising their methods. We understand the state
board’s reasons for including the three optional categories in its
selection methods but question the need to give these categories
such high point values.
The state board revised its methods for selecting applicants in
fiscal year 2006–07. However, we do not believe these changes will
address our concern that those scoring categories state law does not
require or encourage impede the state board’s ability to maximize
emission reductions. The state board removed the environmental
justice category, added a category for small business projects,
11 As mentioned in the Scope and Methodology, we did not determine the accuracy of the cost-
effectiveness values because there is no hard-copy evidence of these calculations or recalculating
the values is beyond the scope of our audit. Therefore, these data are of undetermined reliability.
2 California State Auditor Report 2006-115
June 2007
and increased the points for the cost-effectiveness category
from 40 to 45. Also, for Moyer Program funds appropriated in
fiscal year 2006–07, the state board has allocated 50 percent
of its funds for the multidistrict component for projects from
disproportionately impacted communities.
Although we agree with its approach for selecting projects from
disproportionately impacted communities, we believe the state
board still places too much weight on scoring categories not
required or encouraged by law and thus is not maximizing the
emission reductions it could otherwise achieve. To determine
the impact of a revised scoring system that places greater weight
on categories required or encouraged by law and less weight on
optional categories, we created a model using the point values
shown in Table 5. We then rescored all applicants for fiscal
year 2005–06.
Table 5
Possible Scoring for the Multidistrict Component of the Carl Moyer Memorial
Air Quality Standards Attainment Program
state BoarD’s MaxiMuM point Values Bureau of state auDits’
sCoring Category fisCal year 2005–06 MaxiMuM point Values
Cost-effectiveness 40 75
Environmental justice* 15 NA†
Zero emission 10 10
Hard to regulate 10 5
Implementation plan 15 5
Application completeness 10 5
Totals 100 100
Source: Fiscal year 2005–06 multidistrict solicitation from the state board.
Note: NA = Not applicable.
* In our report we use the term disproportionately impacted communities rather than environmental
justice, which is the term the state board uses.
† To satisfy the requirement for disproportionately impacted communities, under our model we
allocated the first 50 percent of funds to projects from these communities based on the state
board’s fiscal year 2006–07 methodology.
Under our model, by not funding four of the seven projects
it selected, the state board would have funded an additional
12 projects. Moreover, the State would have achieved an additional
298 tons of emission reductions and overall would have achieved
twice the intended emission reductions than the seven projects
the state board selected. Further, the intended emission reductions
for the projects selected under our model cost an average
California State Auditor Report 2006-115
June 2007
of $1,555 per ton, less than half of the $3,247 average cost per
ton for the projects selected using the state board’s point values.
Although it need not adopt our point values when assessing project
applications, the state board should use point values that help it
maximize the emission reductions to be achieved by the limited
funds it has.
Some Projects the Bay Area Air District Funded for Match Purposes
Do Not Meet the Moyer Program Requirements for Cost-Effective
Emission Reductions
Existing state law requires local air districts to provide their own
funds to match the Moyer Program funds provided by the state
board. Matching funds are the districts’ “buy-in” to the Moyer
Program. They can use any funds under the districts’ budgetary
control as the source of their matching funds, including funds for
other programs. Further, projects funded with matching funds
must meet all Moyer Program criteria, including being at or
below the cost ceiling that the state board established for Moyer
Program funds.
Most projects the Bay Area air district designated as its matching
projects for fiscal year 2003–04 exceeded the state board’s cost
ceiling of $13,600 per ton for that year. For Moyer Program funding
appropriated in fiscal year 2003–04, the Bay Area air district
designated 16 projects funded by other programs it administered as
matching projects. However, 14 of these 16 projects had emission
reductions that exceeded the cost ceiling. The district calculated the
cost of the emission reductions from these 14 projects at an average
of nearly $54,400 per ton, ranging from $15,300 per ton to nearly
$143,000 per ton.
The Bay Area air district knew the costs for the projects it selected
as matching projects exceeded the cost ceiling imposed by the
CCoonnttrraarryy ttoo MMooyyeerr PPrrooggrraamm
state board. Contrary to the Moyer Program guidelines, rather
gguuiiddeelliinneess,, tthhee BBaayy AArreeaa aaiirr ddiissttrriicctt
than selecting other eligible projects, the district attempted to
aatttteemmpptteedd ttoo mmaakkee pprroojjeeccttss qquuaalliiffyy
make these projects qualify as match under the Moyer Program
bbyy ccoouunnttiinngg oonnllyy aa ppoorrttiioonn ooff tthhee
by counting only that portion of the projects’ costs that would be
pprroojjeeccttss’’ ttoottaall ccoossttss..
eligible under the Moyer Program when it calculated the projects’
costs per ton. Specifically, the district counted as matching funds
only $740,000 of the $2.5 million it awarded to the 14 projects as
Moyer Program match.
The approach used by the Bay Area air district resulted in a
calculated cost per ton of emission reductions for each project
that was at or under the state board’s cost ceiling. For example
in one project, the Bay Area air district paid $323,350 to convert
two buses to electric power. According to the district’s calculations,
California State Auditor Report 2006-115
June 2007
the cost to reduce 1 ton of emissions for this project was nearly
$120,000. To meet the Moyer Program limits, the district counted
as matching funds only $36,760 of the $323,350 paid for the project.
This approach is contrary to Moyer Program guidelines because the
district did not include all funds under its budgetary control when
it calculated the cost per ton of intended emission reductions of the
14 projects.
Although Local Air Districts Market the Moyer Program in Various Ways,
They Could Do More to Evaluate the Results of Their Efforts
The four local air districts we visited use several methods to
market Moyer Program funding opportunities, including e-mail
and regular mail lists, brochures, workshops and events, and Web
pages. In addition, the South Coast air district published public
notices in a number of area newspapers announcing the availability
of funding from the Moyer Program. The Sacramento Metropolitan
Air Quality Management District (Sacramento Metropolitan air
district) published an advertisement in a farm magazine and,
according to the district’s policy and procedures manual, required
projects funded with Moyer Program funds to display a sticker
beginning in 2006.
Three of the four local air districts we visited are beginning to use
mailing lists of specific types of individuals to advertise the Moyer
Program. These mailing lists could enable the districts to attract
new applicants who had not heard about the program through the
districts’ current outreach efforts. For example, the San Joaquin
Valley air district said it included a flyer about the Moyer Program
in a routine mailing to its list of holders of agricultural burn
permits. Similarly, in 2006 the Sacramento Metropolitan air district
purchased and used a mailing list of businesses it believed would be
interested in the Moyer Program and other incentive programs the
district offers. Neither district can say whether these mailings were
effective in generating interest, although the San Joaquin Valley
air district believes its mailing was responsible for generating calls
from individuals asking about the Moyer Program. The Bay Area air
district purchased a mailing list of owners of heavy-duty vehicles
from the Department of Motor Vehicles to identify potential
applicants to whom it could send information about the Moyer
Program, but as of March 2007 it had not yet used the list.
TThhee mmoosstt ccoommmmoonn mmeeaassuurree ooff Notwithstanding the various marketing efforts they used, the
mmaarrkkeettiinngg eeffffeeccttiivveenneessss tthhee ddiissttrriiccttss four local air districts we visited have not adequately measured
uussee iiss wwhheetthheerr tthheeyy rreecceeiivvee eennoouugghh the effectiveness of their efforts. The most common measure of
pprroojjeecctt aapppplliiccaattiioonnss ttoo aallllooccaattee aallll
tthheeiirr MMooyyeerr PPrrooggrraamm ffuunnddss..
12 One of the 14 projects the Bay Area air district identified as match was actually funded by a county
agency. Moyer Program guidelines require funds used to calculate costs per ton of emission
reductions to be under the budgetary control of the local air district.
California State Auditor Report 2006-115 5
June 2007
effectiveness, according to the districts, is whether they receive
enough project applications to allocate all their Moyer Program
funds. This measure, however, does not take into account
whether they receive a sufficient number of applications from
business sectors that can provide lower costs per ton of intended
emission reductions.
The South Coast air district has identified and targeted such
a sector. It indicated that cost per ton of intended emission
reductions is one criterion it uses for deciding where to target
outreach; it has identified off-road construction equipment
as a sector that meets that criterion better than other sectors.
The San Joaquin Valley air district said it targets its outreach
based on several factors, including the cost per ton of emission
reductions, the impact on air pollution, the available technology, the
appropriateness of a voluntary incentive program, and the district’s
action plans for reducing emissions. According to the Bay Area and
Sacramento Metropolitan air districts, they do not use the cost per
ton of emission reductions to target their outreach efforts, although
the Sacramento Metropolitan air district targets its efforts to
off-road projects because it uses another incentive program to fund
on-road projects.
Some types of projects currently eligible for Moyer Program
funding may soon move from the unregulated to the regulated
arena, thereby making emission reductions from these types of
projects no longer surplus and therefore no longer eligible for
Moyer Program funding. For example, the state board adopted
regulations that will, according to a senior air quality specialist SSoommee ttyyppeess ooff pprroojjeeccttss ccuurrrreennttllyy
at the San Joaquin Valley air district, reduce the number of eelliiggiibbllee ffoorr MMooyyeerr PPrrooggrraamm ffuunnddss
agricultural pumps eligible for Moyer Program funds after 2008. mmaayy lloossee tthheeiirr eelliiggiibbiilliittyy bbeeccaauussee ooff
The state board is also considering whether to implement nneeww rreegguullaattiioonnss..
regulations for off-road diesel engines beginning in 2009. As
mentioned earlier, the Sacramento Metropolitan air district targets
off-road projects for funding under the Moyer Program. Also,
the San Joaquin Valley air district reported to the state board that
agricultural pumps represented the largest share of engines in its
Moyer Program projects for fiscal year 2004–05.
Local air districts that provide Moyer Program funds to these
two types of projects may soon need to find new types of projects
to fund and will need to identify and target their marketing
efforts to new business sectors to continue receiving an adequate
number of applications. By not adequately evaluating their
13 As mentioned in the Introduction, state law requires emission reductions under the Moyer
Program to be real, enforceable, quantifiable, and surplus. The Moyer Program guidelines state
that to be considered surplus, emission reductions must be early or extra—that is, occurring
before a required compliance date or exceeding the requirements of a rule or regulation.
6 California State Auditor Report 2006-115
June 2007
marketing efforts, districts cannot know where to best target
their marketing efforts and whether their efforts are effectively
attracting applications that allow the lowest cost per ton of intended
emission reductions.
Local Air Districts Use Some Best Practices for Contracting and
Allocating Funds
During our visits to the state board and the four local air districts,
we observed best practices that we believe can help districts select
projects with lower costs per ton of intended emission reductions,
reduce district workloads, and allow more time for project
completion. Given the differences that exist among the districts,
these practices may not be applicable in all cases. However, we
believe they deserve serious consideration by the districts.
Some Best Practices Relate to Disproportionately Impacted Communities
One area in which we observed several best practices was the
local air districts’ identification of disproportionately impacted
communities. Section 43023.5 of the Health and Safety Code
requires local air districts with populations of 1 million or more to
spend at least 50 percent of their Moyer Program funds in a manner
that directly reduces air contaminants or the public health risk
of those contaminants in communities with the most significant
exposure to air contaminants, including communities of minority
or low-income populations or both. Under the Moyer Program
guidelines, each district can implement its own policy regarding
how it defines and selects projects from those communities, which
we call disproportionately impacted communities. Our legal
counsel has advised us that districts have considerable discretion
when making spending decisions under Section 43023.5 of the
Health and Safety Code but that they must spend those funds so as
to achieve the goals set out in that section.
The first best practice we observed was the Bay Area and South
TThhee BBaayy AArreeaa aanndd SSoouutthh CCooaasstt Coast air districts’ inclusion of a measure of pollution or the effects
aaiirr ddiissttrriiccttss iinncclluuddeedd aa mmeeaassuurree of pollution in their approaches for identifying disproportionately
ooff ppoolllluuttiioonn oorr iittss eeffffeeccttss wwhheenn impacted communities. One measure both districts use is the level
iiddeennttiiffyyiinngg ddiisspprrooppoorrttiioonnaatteellyy of particulate matter—a pollutant that can be created by diesel
iimmppaacctteedd ccoommmmuunniittiieess.. exhaust—in the community. By including measures of pollution
or the effects of pollution in their approaches, districts can better
identify communities with the highest concentration of pollutants.
In the two fiscal years we examined, we found a second best
practice in the state board’s inclusion of a measure of the cost
per ton of emission reductions when selecting projects from
California State Auditor Report 2006-115 7
June 2007
disproportionately impacted communities for the multidistrict
component of the Moyer Program. As described earlier, when
assessing applications for the multidistrict component, the state
board scores projects based on six categories, including the cost
per ton of intended emission reductions. Although the state board
could improve its process, assigning points for the cost per ton
of intended emission reductions increases its ability to maximize
emission reductions from multidistrict projects.
Although the Bay Area and South Coast air districts rank
potential projects for funding from disproportionately impacted
communities based on factors like cancer risk and exposure to
particulate matter, they generally do not include a factor intended
to maximize emission reductions. The state board’s practice is most
likely to help maximize emission reductions in local air districts
that use the public announcement method when selecting their
projects but may not be practicable for districts that operate on a
first-come, first-served basis. These districts typically fund projects
as their applications are received as long as the projects are under
the ceiling for the cost per ton of emission reductions established
by the state board.
Finally, the Bay Area and Sacramento Metropolitan air districts TThhee BBaayy AArreeaa aanndd SSaaccrraammeennttoo
include requirements in their contracts that projects selected from MMeettrrooppoolliittaann aaiirr ddiissttrriiccttss rreeqquuiirree
disproportionately impacted communities must continue to operate tthhaatt pprroojjeeccttss sseelleecctteedd ffrroomm
at least a specified percentage of their time in those communities ddiisspprrooppoorrttiioonnaatteellyy iimmppaacctteedd aarreeaass
after the project is completed and operational. This requirement ccoonnttiinnuuee ttoo ooppeerraattee aatt lleeaasstt ssoommee
helps local air districts ensure that completed projects reduce ppeerrcceennttaaggee ooff ttiimmee iinn tthhoossee aarreeaass..
emissions in disproportionately impacted communities.
Other Best Practices Pertain to Selecting Projects
We observed two best practices related to local air districts’
selection of projects to receive Moyer Program funds. First, the
Sacramento Metropolitan air district uses only one application
form for all its incentive programs, including the Moyer Program.
The other districts we visited used different application forms for
different incentive programs as well as for different air pollution
source categories within the Moyer Program (for example,
locomotives, on-road vehicles, off-road construction, or agricultural
vehicles). The San Joaquin Valley air district uses 20 different
application forms. Having one form streamlines the application
process for potential projects; applicants do not need to be
concerned about choosing the correct application form.
14 We describe the selection methods that local air districts use in the Introduction.
California State Auditor Report 2006-115
June 2007
We also observed that all but one of the four local air districts we
visited had, by December 31, 2006, already allocated to projects
their Moyer Program funds appropriated in fiscal year 2005–06.
This is well ahead of the deadline of June 30, 2007. By making
allocations before the deadline, these three districts allow more
time for completing projects before the end of the two-year
availability period. The Bay Area air district allocated its funding
from fiscal year 2005–06 in April 2007.
Several Best Practices Related to Contracting
We also observed several best practices related to contracting.
For instance, the Sacramento Metropolitan, San Joaquin Valley,
and South Coast air districts use an approach of one contract per
project owner. Local air districts that enter into only one contract
with each project owner can reduce the administrative burden
resulting from multiple contracts for one project owner with more
than one engine or piece of equipment. Under the one-contract
system, each contract can apply to multiple engines or vehicles
used by one project owner. For example, the South Coast air district
entered into one contract with a project owner for retrofitting
67 transit buses. The Bay Area air district, on the other hand,
generally used one contract per vehicle for projects using funds
appropriated through fiscal year 2004–05. If the South Coast air
district had used the one-contract-per-vehicle contracting method,
it would have required an unwieldy 67 contracts. The Bay Area air
district states that it is evaluating options regarding implementation
of this practice for contracts using funds appropriated in fiscal
year 2007–08.
A second best practice we observed is the inclusion of milestones
in Moyer Program contracts. Although all four local air districts
we visited complied at least minimally with the requirement in the
Moyer Program guidelines to include project milestones in their
contracts, the Bay Area and South Coast air districts included
more milestones for projects to meet for the years we examined.
By establishing detailed project milestones, districts can more
easily track the progress of their Moyer Program projects and take
appropriate action if the projects veer off track.
TThhee SSoouutthh CCooaasstt aaiirr ddiissttrriicctt The South Coast air district’s contracts for Moyer Program funds
iinncclluuddeedd ssppeecciifificc dduuee ddaatteess ffoorr appropriated in fiscal years 2004–05 and 2005–06 included
vvaarriioouuss mmiilleessttoonneess iinn iittss ccoonnttrraaccttss specific due dates for equipment delivery and acceptance, putting
wwiitthh MMooyyeerr PPrrooggrraamm ppaarrttiicciippaannttss.. the equipment in service, final receipt of invoices, and quarterly
15 As of April 2007 the Bay Area air district allocated a total of $25.9 million in Moyer Program funds
for fiscal years 2005–06 and 2006–07.
California State Auditor Report 2006-115
June 2007
progress reports. Some of its contracts from fiscal year 2005–06
also included due dates for issuing purchase orders and for engine
or equipment installation. The Bay Area air district’s milestones
were nearly as detailed as the South Coast air district’s. By
comparison, the Sacramento Metropolitan and San Joaquin Valley
air districts merely required project owners to purchase and operate
their new equipment within a certain number of months after
contract execution.
Although we laud the South Coast air district for its use of project
milestones, we also note that despite the presence of milestones in
its contracts, this district was still the slowest of the four we visited
to move projects past application receipt. We discuss this issue
more fully in Chapter 2.
Another best practice is that local air districts required projects
to be completed before the statutory limit for expending funds.
This practice can help districts ensure that they have sufficient
time to perform required inspections and pay project owners
before the two-year availability period for Moyer Program funds
expires. For projects we tested from fiscal year 2004–05, the Bay
Area air district included provisions requiring that final project
invoices be submitted to it on dates ranging from February 1
through May 15, allowing it time to perform required inspections
and issue payments well before the end of the fiscal year on
June 30. The Sacramento Metropolitan and San Joaquin Valley air
districts obtain similar results by requiring some project owners to
complete their projects within six to 12 months from the contract
execution date.
The final best practice for contracting that we observed relates
to delegating limited project approval and contract execution
authority to staff of the local air districts. According to district
policy and procedures manuals at the Sacramento Metropolitan
and San Joaquin Valley air districts, the district governing boards
delegate authority to approve Moyer Program projects and execute
contracts meeting certain criteria to the respective district’s air
pollution control officer. We believe this practice may enable TThhee ggoovveerrnniinngg bbooaarrdd ffoorr ssoommee
districts to issue contracts more quickly, thereby allowing more ddiissttrriiccttss hhaavvee ddeelleeggaatteedd lliimmiitteedd
time for implementing projects before the end of the availability pprroojjeecctt aapppprroovvaall aauutthhoorriittyy ttoo
period. The governing board for the Sacramento Metropolitan tthheeiirr ssttaaffff..
air district delegated authority to the air pollution control officer
to approve projects and execute contracts of up to $250,000 per
project owner without governing board approval. The governing
board for the San Joaquin Valley air district delegated authority
to its air pollution control officer to approve projects and execute
contracts up to $20,000, but also delegated to the chair of the
governing board the authority to sign contracts at or above the
$20,000 threshold. The San Joaquin Valley air district executed
0 California State Auditor Report 2006-115
June 2007
its contracts an average of 5.9 months from when it received the
applications, and the Sacramento Metropolitan air district averaged
7.5 months.
The governing boards for the other two local air districts we visited
do not delegate such authority to staff. The contracts we examined
at the South Coast air district took an average of 8.1 months to
execute, and the Bay Area air district contracts took an average
of 7.6 months. Project owners at the Sacramento Metropolitan
and San Joaquin Valley air districts, therefore, had more time to
implement the terms of their contracts than did project owners at
the Bay Area or South Coast air districts.
Projects Operating in Multiple Districts Have Opportunities to
Participate in the Moyer Program
A project that will operate in more than one local air district can
receive funding under the Moyer Program in various ways. First,
the state board administers the multidistrict component of the
Moyer Program specifically for projects operating in more than
one district. Through this component, an applicant can seek
Moyer Program funds despite not meeting a district’s operating
requirements (because, for example, a minimum proportion of the
project’s operating time or miles will not occur within the district).
For instance, in 2005 the state board allocated funds through the
multidistrict component to a project for repowering six pieces
of construction equipment operating throughout California but
especially in the Bay Area and South Coast air districts and the
San Diego County Air Pollution Control District. For the two
fiscal years we examined, the state board allocated $11.4 million to
15 projects through the multidistrict component.
Local air districts’ policies allow projects to spend time in multiple
LLooccaall aaiirr ddiissttrriiccttss aallllooww pprroojjeeccttss districts to varying degrees and still receive Moyer Program
ttoo ssppeenndd ttiimmee iinn mmuullttiippllee ddiissttrriiccttss ttoo funding. The Moyer Program guidelines require funded projects to
vvaarryyiinngg ddeeggrreeeess aanndd ssttiillll rreecceeiivvee operate at least 75 percent of the time within California. The Bay
MMooyyeerr PPrrooggrraamm ffuunnddss.. Area and South Coast air districts require projects receiving Moyer
Program funds to have at least 75 percent of their operations within
their respective districts. Projects may spend the other 25 percent
16 As mentioned in the Scope and Methodology, we could not verify the accuracy of some dates
used by the Sacramento Metropolitan air district because we were unable to trace the documents
to hard-copy evidence. However, we took steps to mitigate the effects of these data on our
analysis. Further, because of several data errors related to the dates the Sacramento Metropolitan
air district received its applications, we based our calculations for the average number of days
from when it received applications to when it received signed contracts on only the 14 projects for
which we found hard-copy evidence of the date received. This does not change our determination
that, for the purposes of this audit, the Sacramento Metropolitan air district’s data was not
sufficiently reliable.
California State Auditor Report 2006-115 1
June 2007
in other districts or out of state. Applicants whose projects
will operate less than 75 percent of the time in either of these
two districts can apply to the state board’s multidistrict component.
The San Joaquin Valley and Sacramento Metropolitan air districts
formerly imposed similar restrictions. A San Joaquin Valley air
district supervisor said the district recently lowered its minimum
from 75 percent to 25 percent. For example, the San Joaquin Valley
air district approved a project in October 2006 that was expected to
operate only 70 percent of its time in the district.
Additionally, according to its program coordinator, the Sacramento
Metropolitan air district chose to remove the 75 percent
requirement for operation in the Sacramento Federal Ozone
Nonattainment Area (nonattainment area). The district asks
applicants to state how many miles or hours they will operate both
inside and outside the nonattainment area. However, according
to the program coordinator, the district calculates the project’s
cost per ton of emission reductions, and therefore its eligibility
for Moyer Program funds, only on the hours or miles the project
operates inside the nonattainment area.
Despite the relatively relaxed operating requirements, these
two local air districts believe they received sufficient emission
reduction benefits for their Moyer Program funds. The Sacramento
Metropolitan air district stated that it funded only the portion of a
project that operated within the district. According to its program
coordinator, removing the restriction allows more projects the
opportunity to receive Moyer Program funds. The San Joaquin
Valley air district supervisor believes that by funding projects
based in the district but operating more broadly, the program
benefits not only the district but also the region and the State as a
whole. It should also be noted that the largest category of projects
the San Joaquin Valley air district reported it funded in fiscal
year 2004–05 was agricultural pumps, which the district supervisor
stated are not likely to move out of the district.
A final opportunity for projects operating in multiple local air
districts to participate in the Moyer Program is when districts TTwwoo llooccaall aaiirr ddiissttrriiccttss hhaavvee eeaacchh sseett
work together to fund projects. The Bay Area and Sacramento aassiiddee $$550000,,000000 ffoorr jjooiinntt pprroojjeeccttss
Metropolitan air districts signed a letter of agreement dated tthhaatt bbeenneefifitt bbootthh ddiissttrriiccttss,, aalltthhoouugghh
August 24, 2006, in which each assented to set aside $500,000 tthheeyy hhaavvee nnoott yyeett ffuunnddeedd aannyy
per year for joint projects that benefit both districts. According ssuucchh eeffffoorrttss..
17 The U.S. Environmental Protection Agency has designated the Sacramento region as a serious
nonattainment area for the federal eight-hour ozone standard and established a deadline of
June 2013 to meet federal air quality standards for ozone. The nonattainment area includes all of
Sacramento and Yolo counties and portions of El Dorado, Placer, Solano, and Sutter counties. With
the exception of Sutter County, the Sacramento Metropolitan air district administers the Moyer
Program for the local air districts within this area.
2 California State Auditor Report 2006-115
June 2007
to the program coordinator from the Sacramento Metropolitan
air district, as of February 2007 the districts had not funded any
projects under this agreement.
The High Applicant Cancellation Rate at One Local Air District Does
Not Appear to Be Caused by Problems With Its Procedures
As part of our work to determine consistency among the local air
districts we visited, we examined the project cancellation rates for
the three entities that use the public announcement method to
solicit applications for the Moyer Program: the Bay Area and South
Coast air districts and the state board’s multidistrict component.
(The two methods for identifying and selecting applicants are
described in the Introduction.) Cancellation rate refers to the
percentage of applicants that were selected to receive Moyer
Program funds but later canceled all their projects. Significant
differences in cancellation rates may indicate problems with the
procedures at an entity with a higher cancellation rate relative to
the others.
As of December 31, 2006, the Bay Area air district had a
substantially higher cancellation rate for Moyer Program funds
appropriated in fiscal year 2004–05 than did the other two entities
we visited. Specifically, 32 percent of the original applicants
approved by the Bay Area air district’s board canceled all their
projects. By comparison, only 13 percent of approved applicants
in the South Coast air district and 13 percent of those in the state
board’s multidistrict component canceled all their projects during
the same period.
Based on our conversations with five of the 11 applicants who
canceled their projects, we cannot attribute the Bay Area air
district’s higher cancellation rate to its procedures. Three of the five
applicants cited business-related reasons as the cause for canceling
their projects. One of the three said he anticipated replacing his
equipment before the end of the contract. Another said he no
longer felt he could meet the required hours of operation for an
agricultural pump because of changes in his irrigation methods.
The third applicant believed he was no longer getting as much use
out of the equipment for which he had applied for Moyer Program
funds and was trying to sell it. Mechanics for a fourth applicant told
him the work as originally planned could not be done. Although
the fifth applicant expressed concerns about the process, he said
he canceled because he could not meet the requirements for the
Moyer Program.
California State Auditor Report 2006-115
June 2007
Recommendations
To maximize the use of Moyer Program funds, the state board
should do the following:
• Seek legislation to revise state law to increase the 10 percent
maximum proportion it can allocate for multidistrict projects. If
the state board opts not to seek this revision, the Legislature may
wish to consider it.
• When evaluating applications for multidistrict projects, assign
more points to scoring categories that help the state board
achieve the lowest cost per ton of emission reductions.
To maximize the use of Moyer Program funds, local air districts
should do the following:
• Include all funds under their budgetary authority as part of the
calculations when determining the cost per ton of a project’s
intended emission reductions. Further, districts should develop
and implement policies and procedures that enable them to meet
the requirements in the Moyer Program guidelines regarding
matching funds.
• Develop and implement techniques to measure the effectiveness
of their marketing methods. Specifically, local air districts
should identify business sectors from which they will obtain
applications for more cost-effective projects, evaluate whether
their current marketing efforts are reaching those sectors,
implement marketing efforts to target sectors not being reached,
and assess whether their marketing efforts enable them to select
projects with more cost-effective emission reductions.
To improve their administration of the Moyer Program, local air
districts should consider implementing the following best practices:
• Include measures of pollution or the effects of pollution
in their approaches for identifying disproportionately
impacted communities.
• Include a measure for comparing the cost per ton of
intended emission reductions when selecting projects from
disproportionately impacted communities.
• Include in their contracts the requirement that projects selected
from disproportionately impacted communities continue to
provide benefits from reduced emissions to those communities
after implementation.
California State Auditor Report 2006-115
June 2007
• Use a single application for their Moyer Program
application process.
• Allocate Moyer Program funds to applicants as soon as possible.
• Implement a system of one contract per project owner.
• Include in their contracts specific milestones against which
the project owners and local air district staff can measure the
progress of their projects.
• Include in their contracts the requirement that project owners
complete projects and submit invoices a specific number of days
or weeks before the June 30 deadline.
• Obtain delegated authority from their governing boards to
approve Moyer Program projects and execute contracts. If their
governing boards are not comfortable in providing delegated
authority to approve all Moyer Program projects, obtain
delegated authority to approve the more routine projects or
projects costing less than a specified amount.
California State Auditor Report 2006-115 5
June 2007
Chapter 2
ThRee AReAS of ConCeRn WeAken
oTheRWISe ReASonAble oveRSIghT And
AdMInISTRATIon PRACTICeS
Chapter Summary
We found three areas of concern in our review of the oversight and
administration of the Carl Moyer Memorial Air Quality Standards
Attainment Program (Moyer Program). Two of our concerns relate
to management of the Moyer Program. Namely, air pollution
control districts and air quality management districts (collectively,
local air districts) that have unspent Moyer Program allocations
strongly suggest that the districts are not achieving their intended
emission reductions promptly. Also, overly restrictive requirements
for conducting project inspections led one local air district to devise
an alternative. The third concern relates to the State Air Resources
Board (state board) not performing on-site audits of districts with
sufficient frequency. Without sufficiently frequent audits, improper
administration of the Moyer Program at the districts may go
undetected longer than necessary.
In assessing whether local air districts’ processes for the Moyer
Program are streamlined and easy to use, we spoke with engine
dealers, applicants, and project owners (entities under contract
with a district to implement Moyer Program projects) who
identified the lengthiness of the process as an issue. We identified
three factors that can influence the length of the process: average
size of a project in dollars, a project’s participation in another
program that involves electric utility companies, and delegated
authority to approve projects. Also, for several areas of oversight
and administration, we identified no concerns. The technical
assistance provided by the state board to local air districts and
the desk reviews it performed seem reasonable. Further, districts
performed inspections of the projects they funded both before and
after applicants implemented their projects. Also, several avenues of
communication are used between the state board and districts and
between districts and applicants. Finally, we noted that policies
and procedures implemented by the state board and the districts
were consistent with major requirements of state law and Moyer
Program guidelines.
6 California State Auditor Report 2006-115
June 2007
The State Board Should Address Two Concerns Related to
Management of the Moyer Program
Under the broad heading of Moyer Program management, we
identified two concerns the state board should address. First, Moyer
Program funds remained in the hands of local air districts after
the end of the two-year availability period. When districts do not
spend their Moyer Program allocations promptly, they likely do
not achieve their intended emission reductions. Second, the Moyer
Program guidelines appear overly restrictive in their requirements
related to the timing of preinspections of projects. One district
told us it does not have sufficient time and staff to meet this
requirement and implemented a reasonable alternative.
Unspent Moyer Program Funds Remained at Local Air Districts After
Availability Had Expired
More than $26 million in Moyer Program funds reserved by
the state board for local air districts had not been spent within
two years as required by law. Further, funds not expended by
June 30 of the second calendar year following the date the state
board allocated them are to revert to the state board, and districts
must return them to the state board within 60 days after that.
The Moyer Program guidelines in effect before January 6, 2006,
encouraged districts to implement the program quickly and to have
all Moyer Program funds obligated under contract within one year.
The Moyer Program guidelines released on January 6, 2006,
restate this requirement and state that local air districts have one
year to obligate funds and two years from the allocation date to
expend them.
LLooccaall aaiirr ddiissttrriiccttss tthhaatt ddoo nnoott By putting a two-year limit on districts’ expenditure of Moyer
ssppeenndd MMooyyeerr PPrrooggrraamm ffuunnddss Program funds, the Legislature demonstrated its goal of achieving
wwiitthhiinn tthhee ttwwoo--yyeeaarr lliimmiitt aarree emission reductions promptly. It is also reasonable to conclude that
lliikkeellyy nnoott aacchhiieevviinngg tthhee iinntteennddeedd if local air districts are not spending their allocations, they likely are
eemmiissssiioonn rreedduuccttiioonnss.. not implementing projects as quickly as intended and thus are not
achieving the intended emission reductions from the projects.
Under the terms of Section 44287(k) of the Health and Safety
Code, the two-year period of availability of Moyer Program
funds appropriated by the Legislature and reserved by the state
board in fiscal year 2003–04 ended June 30, 2006. Further,
Section 44299.2(c) of the Health and Safety Code states that any
unexpended funds must be returned to the state board within
60 days of the end of the two-year availability period.
18 In the Introduction, we describe how the state board provides Moyer Program funds to local
air districts.
California State Auditor Report 2006-115 7
June 2007
Of the four local air districts we visited, the Sacramento Metropolitan
Air Quality Management District (Sacramento Metropolitan air
district) was the only one to report that it spent all its fiscal year
2003–04 Moyer Program funds by this deadline. The San Joaquin
Valley Unified Air Pollution Control District (San Joaquin Valley air
district) reported that it did not spend nearly $546,000 (20 percent)
of its $2.8 million allocation from fiscal year 2003–04, and the
Bay Area Air Quality Management District (Bay Area air district)
reported that it did not spend about $1.4 million (83 percent) of
its nearly $1.7 million allocation from fiscal year 2003–04. The
Bay Area air district, however, later reported that it spent all
these funds by January 2007, six months after the deadline. The
most notable spending shortfall occurred at the South Coast Air
Quality Management District (South Coast air district). As of
December 2006 the district reported that it had nearly $24.1 million
in unspent Moyer Program funds that had passed the two-year
availability period, but it has not returned those unspent funds to
the state board.
The South Coast air district’s unspent funds come from several
fiscal years. First, it held nearly $5.9 million (80 percent) of the
$7.4 million it was allocated in fiscal year 2003–04 and had up
to $5.5 million in unspent Moyer Program funds from earlier
fiscal years. The district also had $3.6 million that was beyond the DDeessppiittee hhaavviinngg ppaasssseedd tthhee ttwwoo--yyeeaarr
two-year availability deadline related to contracts for which it had ddeeaaddlliinnee,, uupp ttoo 3399 ppeerrcceenntt ooff
made partial but not complete payments to the project owners, tthhee ttoottaall ffuunnddss aallllooccaatteedd ttoo tthhee
including some funds it had held for as long as six years. Finally, SSoouutthh CCooaasstt aaiirr ddiissttrriicctt dduurriinngg
the district had $9.1 million that it had rolled forward from earlier tthhee fifirrsstt ssiixx yyeeaarrss ooff tthhee pprrooggrraamm
fiscal years into contracts for projects funded by Moyer Program rreemmaaiinn uunnssppeenntt..
allocations from fiscal year 2004–05. In total 39 percent of the
Moyer Program funds allocated to the South Coast air district
during the first six years of the program remained unspent and had
not been returned to the state board. This proportion is even more
significant considering that the South Coast air district received
44 percent of the total Moyer Program funds provided to all local
air districts during the first six years of the program.
Because the South Coast air district did not spend its Moyer
Program allocations within the two-year availability period, it
cannot ensure that it is achieving the prompt emission reductions
intended by law. For example, the projects it selected for funding
with its fiscal year 2004–05 Moyer Program funds are intended
to reduce 1 ton of emissions for every $4,256 spent, on average.
Had the district spent the $24.1 million on similarly cost-effective
projects by June 30, 2006, nearly 5,600 tons of pollutants would
have been removed. In addition, had the district returned the
unspent funds as required, the state board could have reallocated
the money for use on other eligible Moyer Program projects.
California State Auditor Report 2006-115
June 2007
A Difference in Definitions Led to Unspent Funds
Not all participants in the Moyer Program agree on the definition
of expended, as used in Section 44287(k) of the Health and Safety
Code. Most participants interpret the word expended as used in
the statute to mean “spent.” In its Moyer Program guidelines dated
January 2006, the state board, consistent with this interpretation,
states that districts expend funds when they pay project owners
for completing milestones of projects under contract. Under this
definition, when a local air district receives Moyer Program funds
from the state board, it has until June 30 of the second fiscal year
to pay contractors for completing their projects and must return
any unspent funds to the state board within the 60 days following
June 30 for reallocation.
The South Coast air district, however, interprets expended to mean
“obligated.” Under that interpretation, as long as a local air district
had obligated a specific amount of Moyer Program funds to pay
for a project that will be completed in the future, unspent funds at
June 30 would not revert to the state board. Therefore, the South
Coast air district argues that it was not under a statutory obligation
to spend the funds for which the two-year period of availability had
expired, nor did it have to return unspent funds to the state board.
The state board and the Department of Finance (Finance) have
recently both been critical of the lack of spending by the South
Coast air district. In an October 2006 audit report, the state
BBootthh tthhee ssttaattee bbooaarrdd aanndd tthhee board criticized the district for not expending at least $10 million
DDeeppaarrttmmeenntt ooff FFiinnaannccee eexxppeecctteedd of the $15.6 million it was allocated from fiscal years 2002–03
tthhee SSoouutthh CCooaasstt aaiirr ddiissttrriicctt ttoo ssppeenndd and 2003–04 within the two-year availability period. In an audit
MMooyyeerr PPrrooggrraamm ffuunnddss bbeeffoorree tthhee report released in April 2007, Finance also admonished the South
ddeeaaddlliinnee,, nnoott mmeerreellyy oobblliiggaattee tthheemm.. Coast air district for not fully expending Moyer Program funds as
required. It is clear that within the context of their reports, both
the state board and Finance expected the district to spend Moyer
Program funds within the two-year availability period, not merely
obligate them for projects.
The South Coast air district asserted that it was complying with
the Moyer Program guidelines in effect at the time. In its response
to Finance’s audit, the South Coast air district said the 2003 Moyer
Program guidelines required only that the funds allocated to a
district be obligated, which the district has done. Regardless of the
language in the guidelines in effect at the time, because state law
related to the Moyer Program seeks prompt emission reductions,
we agree with the state board and Finance that the appropriate
definition of expend is “spent.” If the funds are not being spent, the
intended emission reductions likely are not being achieved.
California State Auditor Report 2006-115
June 2007
In its plan of action responding to the audit report from the state
board, the district acknowledged that the most recent version
of the Moyer Program guidelines requires funds to be spent within
the two years and stated that it had revised its process to meet that
requirement. Also, the state board noted that it has the South Coast
air district’s assurance that it will fully expend all applicable Moyer
Program funds by July 1, 2007.
The state board is withholding future Moyer Program allocations
to the South Coast air district until it spends its expired funds.
Also, the state board is monitoring the district to ensure that it
spends the remainder of its expired funds by July 1, 2007.
By not spending its Moyer Program funds before the end of the
two-year availability period specified in state law, the South Coast
air district is not funding the projects needed to promptly achieve TThhee SSoouutthh CCooaasstt aaiirr ddiissttrriicctt iiss
its intended emission reductions. One purpose of the Moyer nnoott ffuullfifilllliinngg oonnee ooff tthhee MMooyyeerr
Program is to reduce emissions sooner than required by law or PPrrooggrraamm’’ss ppuurrppoosseess——aacchhiieevviinngg
other requirements. Further, had the district returned its unspent pprroommpptt eemmiissssiioonn rreedduuccttiioonnss ssoooonneerr
funds, the state board could have reallocated the money to other tthhaann rreeqquuiirreedd..
local air districts to fund projects that could have fulfilled the
purpose of the Moyer Program.
Timing Requirements for Preinspections Can Be Overly Restrictive
State guidelines generally require local air districts to perform
preinspections of all engines participating in the Moyer Program
after the districts award funds to the projects but before they
execute the related contracts. Contrary to this requirement, the
South Coast air district executed 20 of 23 contracts we examined
before performing preinspections. Preinspections ensure that the
old engines are operational and that the engine types and serial
numbers match the information provided on the applications. This
step helps ensure that local air districts and the State receive the
intended emission reductions from the project.
The South Coast air district told us it is aware of the requirement
to perform preinspections before it executes contracts but elected
not to follow it. The district stated that it has neither sufficient
time nor staff to do so. The project owners’ time and scheduling
restrictions also make this requirement impractical. Additionally,
district management believe the intent of the requirement related
to the timing of preinspections is to ensure that they do not slow
19 State guidelines provide an exception for public agencies such as public works departments,
transit agencies, and school districts. Local air districts may choose to allow public agencies to
provide documentation of the engine and its use.
50 California State Auditor Report 2006-115
June 2007
implementation of the project; had it followed this requirement, the
district believes delaying the execution of the contracts would have
slowed project implementation.
The state board is aware that the South Coast air district did not
follow this requirement and told us other local air districts have
also raised concerns about it. Further, the state board said it is
considering whether to change this requirement for the next
version of the Moyer Program guidelines, which it expects to
issue in February 2008. The state board likened this requirement
to something that looked good on paper but did not work well in
practice. It also indicated that it did not know of an ill effect that
would occur if it amended the guidelines to revise the requirement.
Although Some Aspects of Its Monitoring Efforts Appear Reasonable,
the State Board’s On-Site Audit Process Is Still Evolving
The state board appears to conduct both technical assistance and
desk reviews reasonably well in its oversight of the Moyer Program,
but its on-site audit process is still evolving. California law requires
the state board to monitor how local air districts implement the
Moyer Program to ensure that they operate in accordance with
the criteria and guidelines the state board has established.
Infrequent On-Site Audits Are a Concern
The state board’s policy is to periodically conduct on-site audits
of local air districts to ensure that their implementation of the
Moyer Program is consistent with applicable rules, regulations,
and guidelines. According to a program manager, the state board
began conducting full on-site audits of the Moyer Program at
districts in 2006. During an on-site audit the state board reviews
a district’s policies, procedures, and processes; ensures that its
Moyer Program contracts contain the minimum requirements
outlined in the guidelines; and examines a selection of the
district’s Moyer Program projects to ensure that the project files
contain all required information. Also, the state board conducts
on-site inspections of engines included in the selected Moyer
Program projects.
Under its current approach the state board may not audit local
air districts participating in the Moyer Program with sufficient
AAtt iittss ccuurrrreenntt ppaaccee,, tthhee ssttaattee bbooaarrdd frequency. For example, 28 districts received Moyer Program funds
wwoouulldd aauuddiitt eeaacchh ppaarrttiicciippaattiinngg aaiirr appropriated in fiscal year 2006–07. According to a program
ddiissttrriicctt oonnllyy oonnccee eevveerryy sseevveenn yyeeaarrss,, manager, the state board intends to conduct four audits in 2007. If it
oonn aavveerraaggee.. continues to audit four districts per year, it would audit each district
an average of only once every seven years. Further, if the state
California State Auditor Report 2006-115 51
June 2007
board audits any local air district more frequently—for example, it
audited the South Coast air district in 2006 and expects to follow
up on the audit again in 2007—other districts may be audited even
less frequently.
When local air districts are audited infrequently, improper Moyer
Program administration may occur. The few full on-site audits the
state board has performed so far have shown that districts do not
always adhere to Moyer Program requirements. As of March 2007
the state board had issued reports for its on-site audits of the Butte
County Air Quality Management District, the Ventura County
Air Pollution Control District, and the Sacramento Metropolitan
and South Coast air districts.0 These audit reports noted several
concerns, including not spending funds by deadlines, allocating
Moyer Program funds to ineligible projects, and improperly
calculating the costs per ton of the projects’ intended emission
reductions. The state board set deadlines for these four districts
to submit written action plans to correct identified deficiencies.
All four districts submitted their responses, which included their
corrective action plans, by the deadline. The state board’s liaisons
to the districts are responsible for monitoring their progress in
implementing the plans.
The State Board Is Revising Its On-site Audit Process
The state board is updating the procedures it uses to conduct on-
site audits of local air districts, according to a program manager.
These changes are based on findings from a 2006 review by Finance
of the Moyer Program guidelines as well as feedback from the
audited districts and from the state board’s audit staff about the on-
site audits it had already completed. In its report in December 2006,
Finance made eight observations with recommendations for ways
the state board could improve the Moyer Program guidelines
and procedures. These recommendations included addressing a
possible lack of agreement among program participants concerning
ambiguities in state law about recapturing unexpended funds from
a district and addressing the way the state board plans audits of the
districts. Also, Finance recommended 12 revisions to the guidelines
to make the language clearer, define terms, and provide more detail.
The state board told us it has implemented or is still considering
Finance’s recommendations.
20 According to the lead auditor for the Moyer Program, as of March 2007 the state board was
performing on-site audits of the Bay Area and San Joaquin Valley air districts.
52 California State Auditor Report 2006-115
June 2007
Regarding oversight, Finance recommended that the state board
adopt a systematic, risk-based approach to selecting local air
districts to audit. Some of the risk factors Finance suggested the
state board include are the adequacy of the districts’ policies and
procedures documents, timeliness of districts’ disbursements to
project owners and updates of project data, and the validity of
invoices and compliance with contract provisions.
To address this recommendation, according to the program
manager, the state board contracted with Finance to assist it in
developing a risk assessment matrix. Also, Finance will conduct
TThhee DDeeppaarrttmmeenntt ooff FFiinnaannccee wwiillll the financial portion of future on-site audits, allowing the state
aassssiisstt tthhee ssttaattee bbooaarrdd iinn ccoonndduuccttiinngg board’s staff more time to focus on the programmatic portion of
ffuuttuurree aauuddiittss ooff llooccaall aaiirr ddiissttrriiccttss.. these audits. The program manager also described other changes
the state board is making to its audit procedures, including
establishing an audit coordinator, designating one person to have
the lead responsibility for on-site audits, and revising the file review
process to minimize the time state board staff will need to be at
the districts.
Finance made additional recommendations regarding the state
board’s monitoring of the Moyer Program. It recommended that
the state board either incorporate or reference an audit plan in the
guidelines that includes a clearly defined work plan and evaluations
of the local air districts’ fiscal controls, application processing,
reporting and follow-up, and other issues. The state board is in
the process of revising its audit plan. Finance also recommended
that the state board consolidate the sections of the Moyer Program
guidelines related to monitoring. The state board indicated that
it would seek input on this recommendation during the public
process to revise the Moyer Program guidelines.
The State Board Reviewed Local Air Districts’ Cost-Effectiveness
Calculations as Part of Its On-site Audits
State requirements dictated that a project’s cost-effectiveness
(the cost to reduce 1 ton of emissions) not exceed a cost ceiling of
$13,600 per ton for Moyer Program funds appropriated in fiscal
year 2004–05; the cost ceiling was $14,300 per ton for funds
appropriated in fiscal year 2005–06. The state board’s Moyer
Program guidelines set a specific formula local air districts use to
derive a project’s cost per ton of intended emission reductions.
This formula is presented in Appendix B. According to the lead
auditor of the Moyer Program, as part of its on-site audits, the state
board validates the calculations each district used to generate the
costs per ton and matches the input data, such as engine type and
horsepower, emission ratings, or miles of use, from the application
to the reporting spreadsheet to the contract.
California State Auditor Report 2006-115 5
June 2007
As of March 2007 the state board has issued reports for its on-site
audits of two of the four local air districts we visited. It reported
no findings related to the calculation of costs per ton of emission
reductions at the Sacramento Metropolitan air district. It did,
however, develop a finding about the South Coast air district’s
calculation of costs. The state board found two miscalculations
that resulted in projects exceeding the state board’s cost ceiling.
The state board required the district to seek repayment from one
contract and amend the other. It also required the district to revise
and submit progress reports for all affected years.
The State Board Provides Technical Assistance to Local Air Districts
The state board’s methods for providing technical assistance as
part of its monitoring role seem reasonable. Technical assistance
includes providing guidance to local air districts regarding
changes to the Moyer Program guidelines and implementing the
program. To provide technical assistance, the state board employs
staff members who act as liaisons between it and the districts.
The liaisons help districts with understanding the Moyer
Program guidelines and act as points of contact at the state board.
According to the state board’s liaisons for the four districts we TThhee ssttaattee bbooaarrdd aassssiiggnnss lliiaaiissoonnss
visited and district staff, communication between the liaisons and ttoo eeaacchh llooccaall aaiirr ddiissttrriicctt ttoo pprroovviiddee
the districts is frequent—often more than once a week. Much of the tteecchhnniiccaall aassssiissttaannccee aanndd aacctt aass aa
communication between liaisons and the districts is by e-mail, ppooiinntt--ooff--ccoonnttaacctt..
allowing both parties to document interactions. Liaisons maintain
electronic and paper records of their communications, and the
districts often print out and retain communications relevant to
particular projects in the project files.
Liaisons may also refer district staff to the state board’s experts
for air pollution source categories—staff who are responsible
for knowing the contents of the Moyer Program guidelines on
categories of air pollution sources such as on-road or off-road
vehicles—and to its Moyer Program management. One of the
program liaisons indicated that the liaisons meet weekly with
management of the state board’s Moyer Program to discuss issues
that arise during the course of their work. Finally, liaisons also
monitor the implementation of the districts’ Moyer Program
projects by performing desk reviews and participating in
on-site audits.
5 California State Auditor Report 2006-115
June 2007
The State Board Performs Desk Reviews of Reports Submitted by Local
Air Districts
The state board’s methods for performing desk reviews also appear
reasonable. Desk reviews consist of the liaisons reviewing reports
that local air districts submit periodically. The state board requires
each district to submit an annual report by June 30 of the year
following the year of allocation. In the annual report the district
describes its implementation of the Moyer Program. A final
report, which each district must submit by June 30 of the second
year following the allocation, must show that the district spent all
the funds. The state board also requires districts to submit status
reports documenting the districts’ progress in spending the Moyer
Program allocations. As part of their annual and final reports,
districts must submit data on the projects to which the reports
refer, copies of at least the signature and project description pages
from contracts, and copies of invoices.
Several liaisons indicated that when they receive the reports, they
review the local air districts’ calculations of cost per ton of intended
LLiiaaiissoonnss ttoo tthhee llooccaall aaiirr ddiissttrriiccttss emission reductions and conduct spot checks of project data.
rreevviieeww ccaallccuullaattiioonnss ooff iinntteennddeedd The liaisons also compare the information in the contracts and
eemmiissssiioonn rreedduuccttiioonnss iinn ppeerriiooddiicc invoices with the information the districts reported. If liaisons find
rreeppoorrttss ttoo eennssuurree tthheeyy aarree aaccccuurraattee.. discrepancies, they contact the districts for correction. For example,
the liaison to the South Coast air district noted the district was
requesting additional Moyer Program funds but had not submitted
invoices demonstrating it had spent previous funds. In its audit the
state board verified that these funds had not been spent.
If a report shows that a local air district is not making adequate
progress, the state board may withhold further allocations. As
noted earlier the South Coast air district has a large amount of
unspent Moyer Program funds. The program manager said that
in response the state board withheld $10.9 million of the district’s
$12.2 million allocation for fiscal year 2004–05 and it has not paid
any of the district’s $35.3 million allocation for fiscal year 2005–06.
Monitoring by Local Air Districts Is Also Evolving
Monitoring by local air districts of project owners’ performance
is evolving as well. Although districts perform the required
inspections both before and after project completion, they have not
yet fully implemented the process for monitoring ongoing emission
reductions after project implementation.
California State Auditor Report 2006-115 55
June 2007
Local Air Districts Performed Required Project Inspections
Notwithstanding the timing of conducting preinspections
previously discussed, the four local air districts we visited
did perform preinspections and postinspections. For Moyer
Program funds appropriated in fiscal year 2005–06, the
Moyer Program guidelines generally required districts to inspect
the engines involved in a project both before (preinspections)
and after (postinspections) the owner implements the project.
Preinspections ensure that the old engines are operational and
that the engine types and serial numbers match the information
provided on the applications. Postinspections allow districts
to verify that the project owners complied with the terms of
their contracts. The guidelines also require districts to take
photographs of engines and serial numbers at both preinspections
and postinspections.
For Moyer Program funds appropriated in fiscal year 2004–05, AAlltthhoouugghh nnoott rreeqquuiirreedd ffoorr tthhee
preinspections and postinspections generally were not required. 22000044––0055 fifissccaall yyeeaarr,, tthhee
However, each local air district we visited performed varying llooccaall aaiirr ddiissttrriiccttss wwee vviissiitteedd
degrees of these inspections. For example, the Sacramento ppeerrffoorrmmeedd vvaarryyiinngg ddeeggrreeeess ooff
Metropolitan air district consistently performed preinspections and pprroojjeecctt iinnssppeeccttiioonnss..
often took photos to document engine information.
Our examination revealed that for Moyer Program funds
appropriated in fiscal year 2005–06, both the Sacramento
Metropolitan and San Joaquin Valley air districts complied with
the inspection requirements. These districts performed both types
of inspections within appropriate time frames and documented
the inspections through photographs of the vehicles and engine
serial numbers. The South Coast air district also performed both
preinspections and postinspections, but as stated earlier in this
chapter, it deviated from Moyer Program guidelines by executing
most of its contracts with the applicants before performing
preinspections. The Bay Area air district, as of December 31, 2006,
had not selected the projects to which it will provide Moyer
Program funds appropriated in fiscal year 2005–06. Consequently,
this district has not yet performed its preinspections.
While examining the processes the four local air districts we visited
used to perform their preinspections and postinspections, we
observed a best practice. The South Coast air district performed
multiple inspections at the same time when possible. For example,
district staff performed the required inspections on a $1.6 million
project for construction equipment powered by 16 diesel engines
at two sites on the same day. The staff found that this practice of
consolidating inspections allowed them to save time and allowed
the affected projects to move forward without unnecessary
delay. They also discovered that as dealers became more familiar
56 California State Auditor Report 2006-115
June 2007
WWhheenn ppoossssiibbllee tthhee SSoouutthh CCooaasstt aaiirr with Moyer Program requirements, they helped ensure that all
ddiissttrriicctt ppeerrffoorrmmeedd mmuullttiippllee pprroojjeecctt required information was easily verifiable, further speeding the
iinnssppeeccttiioonnss aatt tthhee ssaammee ttiimmee.. preinspection process.
Postimplementation Monitoring Has Not Yet Been Fully Carried Out
For Moyer Program funds appropriated in fiscal year 2005–06
and later, Moyer Program guidelines require local air districts to
perform postimplementation monitoring of funded projects. The
guidelines require project owners to submit reports to the districts
annually for the first five years after the completion of the project
and biennially for the remainder of the project life. These reports
must include a detailed listing of usage information for the project.
For Moyer Program funds appropriated in fiscal year 2004–05, this
type of monitoring was voluntary.
Postimplementation monitoring has yet to be fully carried out
because projects receiving Moyer Program funds appropriated in
fiscal year 2005–06 do not require completion until June 2008.
As of December 31, 2006, none of the projects we examined that
local air districts funded with fiscal year 2005–06 allocations had
been completed for at least one year (the point at which the first
annual report would be due). However, information provided by
the districts we visited showed that they performed varying levels
of postimplementation monitoring on their own for earlier fiscal
years. The Sacramento Metropolitan, San Joaquin Valley, and South
Coast air districts told us they generally have required project
owners to submit annual reports.
Further, these local air districts indicated that they took actions
based on the information in these reports. For example, the
Sacramento Metropolitan and San Joaquin Valley air districts
told us they have extended the terms of some contracts because
the annual reports showed the project owners had not met the
minimum usage amounts stated in the contracts. The Bay Area
air district stated that it has required only two project owners to
submit annual reports; it believes the reports were necessary in
these cases to ensure the contract requirements were met.
The state board encouraged but did not require postimplementation
reporting in the past. It indicated that it moved to require
such reporting when, among other things, it noticed that
some local air districts were not following its advice to require
monitoring reports.
California State Auditor Report 2006-115 57
June 2007
At Least Three Factors Influenced the Length of Time Local Air
Districts Required to Complete Projects
We identified three factors that appear to affect the length of time
it takes local air districts to move projects through the Moyer
Program process. To assess whether the processes used by districts
to select, approve, and pay for their Moyer Program projects were
streamlined and easy to use, we contacted a total of 19 engine
dealers, applicants, or project owners from the four districts we TThhee lleennggtthhiinneessss ooff tthhee aapppplliiccaattiioonn
visited. These participants identified several concerns with the pprroocceessss wwaass aa ccoonncceerrnn ffoorr mmaannyy ooff
process, including excessive paperwork, burdensome reporting tthhee MMooyyeerr PPrrooggrraamm ppaarrttiicciippaannttss
requirements, and changing rules and regulations. However, wwee ccoonnttaacctteedd..
only one concern was mentioned by more than four participants;
11 voiced concern about the lengthiness of the process. Some
participants were concerned about the time from the date a district
approved an application to issuance of a contract, while others
mentioned the long time it took a district to issue payments.
To review the length of time it took projects to move through
the Moyer Program process at the local air districts, we divided the
process into two major parts:
• From the date a district received an application to the date it
received an applicant’s signed contract, the date the applicant
withdrew, or December 31, 2006, whichever occurred first.
• From the date a district received an invoice to the date it paid
the invoice.
We then calculated the number of days between the dates in
each part of the process for 100 projects, 25 from each of the four
districts. For the first part of the process, the San Joaquin Valley
air district was the quickest, averaging 5.9 months. The Sacramento
Metropolitan air district took an average of 7.5 months, the Bay
Area air district’s average was 7.6 months, and the South Coast air
district’s average was 8.1 months.
21 Because we did not want to skew the results of our review of how long it typically took districts
to process Moyer Program projects, we did not include in this review the five projects we selected
from each district that took relatively longer to proceed through the process.
22 As mentioned in the Scope and Methodology, we could not verify the accuracy of some dates
used by the Sacramento Metropolitan air district because we were unable to trace the documents
to hard-copy evidence. However, we took steps to mitigate the effects of these data on our
analysis. Further, because of several data errors related to the dates the Sacramento Metropolitan
air district received its applications, we based our calculations for the average number of days
from when it received applications to when it received signed contracts on only the 14 projects for
which we found hard-copy evidence of the date received. This does not change our determination
that, for the purposes of this audit, the Sacramento Metropolitan air district’s data was not
sufficiently reliable.
5 California State Auditor Report 2006-115
June 2007
We identified the following three factors that we believe
contributed to the time it took local air districts to move their
Moyer Program projects from receipt of application to receipt of
signed contract:
• Average size of a project in terms of dollars: It is reasonable
that more costly projects are also more complex; they typically
involve more engines, which adds to the length of time it takes
a district to perform the steps necessary to receive signed
contracts. It took the South Coast air district, whose average
cost per project was $1.1 million for the projects we reviewed,
an average of 8.1 months to move its projects from application
receipt to receipt of a signed contract, withdrawal by the
applicant, or December 31, 2006, whichever occurred first.
The averages for the Sacramento Metropolitan air district were
$151,000 and 7.5 months per project, and the averages for the
San Joaquin Valley air district were $140,000 and 5.9 months
per project.
• Participation in both the Moyer Program and an electrification
program: Projects involving agricultural pumps can participate
in both the Moyer Program and another program designed to
convert these pumps from diesel to electric power. Because these
projects involve not only a local air district but also an electric
utility company, it is reasonable that they can take longer to
implement. Of the 19 agricultural pump projects we reviewed
at the San Joaquin Valley air district, 11 participated in both
programs; this district averaged an additional eight weeks to
receive signed contracts for those 11 agricultural pump projects
(one contract was still pending at December 31, 2006) than it did
for eight projects not involved in the electrification program.
• Delegated authority to approve projects: We identified this factor
as a possible best practice in Chapter 1. For the projects included
in our review, those from the San Joaquin Valley air district
took an average of 5.9 months to move from application receipt
to receipt of the signed contract, withdrawal by the applicant,
or December 31, 2006, whichever occurred first, and the
Sacramento Metropolitan air district’s average was 7.5 months.
Both districts have delegated authority. It took the Bay Area air
district an average of 7.6 months and South Coast air district an
average of 8.1 months.
23 Because the Bay Area air district generally issued one contract per vehicle (project owners could
therefore have multiple contracts with this district), we did not include its projects in this analysis.
California State Auditor Report 2006-115 5
June 2007
For that part of the Moyer Program process from the invoice
receipt date through payment date, the projects we examined
averaged 33 days overall. The averages ranged from a low of 19 days
at the Bay Area air district to a high of 52 days at the South Coast
air district. However, because two of the four districts had paid
invoices for only a total of seven of the 50 projects we examined, we
believe it would be inappropriate to draw conclusions from such a
small number.
Other Areas of Moyer Program Management Appear Reasonable
We examined several other areas of the administration of the
Moyer Program and found no issues. For instance, program
participants were using many avenues for communicating with each
other. Further, the policies and procedures developed by the state
board and the local air districts included critical components.
Communication and Coordination Occur in the Moyer Program
Given the complexity of the Moyer Program and the partnership
between the state board and local air districts to operate it,
communication and coordination are necessary to ensure the
program’s success. Multiple avenues of communication and
coordination exist in the Moyer Program. The state board issues TThhee ssttaattee bbooaarrdd aanndd llooccaall aaiirr
guidelines that establish minimum requirements it and the ddiissttrriiccttss uussee aa nnuummbbeerr ooff aavveennuueess
districts must follow to administer the Moyer Program. These ffoorr ccoommmmuunniiccaattiinngg aabboouutt tthhee
guidelines also foster communication and coordination by requiring MMooyyeerr PPrrooggrraamm..
the districts to report periodically on their Moyer Program
implementation and by describing how the state board provides
training and technical assistance to the districts. As mentioned
earlier, the state board designated specific employees to act as
liaisons between it and each district.
Communication also occurs during quarterly meetings between the
state board and the local air districts. These meetings are held to
assess any issues the districts may have and serve as a convenient
time for training on changes to the guidelines. The state board uses
a collaborative approach with the districts when revising the Moyer
Program guidelines biennially. According to the lead staff for the
2007 guidelines revision, the state board initiates working groups
with the districts on potential revisions and holds public meetings
to get input from interested parties. Following release of the
2005 Moyer Program guidelines, the state board conducted training
sessions for the districts. Participants in these sessions identified
areas of the guidelines that were unclear, and the state board
issued clarifications in March 2006. These sessions also provided
districts an opportunity to bring up issues with the program.
60 California State Auditor Report 2006-115
June 2007
For example, the liaison to the South Coast air district recalled that
the state board learned about that district’s practice of conducting
preinspections after issuing the contract during a training session
shortly after the 2005 guidelines were released.
Local air districts have another communication tool available to
them—the California Air Pollution Control Officers Association
(association). Each district is led by an air pollution control officer
who is a member of this association. According to its Web site, the
association provides training to districts and information to
the general public. The Web site also states that the association
meets regularly with federal and state air quality officials to develop
rules and ensure the consistent application of rules and regulations.
The association developed the current formula for allocating Moyer
Program funds to districts. One of the members stated that the
association is an effective tool because it allows the air pollution
control officers to discuss the challenges they face and develop
solutions they all agree on.
Several avenues of communication also exist between the local
air districts and program applicants. For instance, the districts
market their Moyer programs by using electronic and hard-copy
mailings, brochures and other printed material, and workshops.
They also communicate with applicants during the application
process. Project owners can communicate with districts during
preinspections and postinspections and by submitting annual
monitoring reports.
Policies and Procedures Are Consistent With the Major
Requirements of Moyer Program Guidelines and State Law
Nine elements to be addressed in policies
and procedures manuals at local air districts:
The Moyer Program policies and procedures of the
• Marketing
state board and the local air districts we visited are
• Project selection consistent with the major requirements of state law
and the Moyer Program guidelines. Our comparison
• Obligation of funds to projects
focused on selected major program requirements,
• Contract development and boilerplate including those related to calculating the cost per ton
language of intended emission reductions, disproportionately
• Project monitoring impacted communities, matching of state funds,
oversight, and monitoring. In November 2006 the state
• Fund expenditures
board required districts to create written policies and
• Project auditing and fund recapturing procedures manuals for their implementation of the
Moyer Program and submit them for approval. Each
• State board reporting
district’s policies and procedures must address the nine
• Disbursement requests to the state board
elements identified in the text box.
Source: State Air Resources Board.
California State Auditor Report 2006-115 61
June 2007
The Moyer Program guidelines establish goals and measures
for the program and for the local air districts’ implementation
of the program, based on requirements in the Health and Safety
Code. The guidelines include the calculations districts must use to
determine whether a project meets the requirements for achieving
emission reductions at or below the ceiling established by the
state board, directions to districts with populations of more than
1 million to ensure that 50 percent or more of their Moyer Program
funds are expended in disproportionately impacted communities,
and requirements for targeting outreach to encourage applications
from all sectors. The guidelines also require districts to provide
matching funds for the Moyer Program, as described in state law.
The Moyer Program guidelines include specific criteria for the
various kinds of projects a local air district might fund. For example,
the state board set a default project life—the length of time a
project will be under contract—for various air pollution source
categories and project types. To measure the effectiveness of the
program, the guidelines require districts to submit annual reports
on their progress in obligating and spending Moyer Program funds
and to audit selected projects each year to ensure that they are
operating as indicated in the contracts.
The state board also created its own policies and procedures
manual, which incorporates its guidelines by reference, to guide its
day-to-day work. According to a project manager, the document is
meant to be a “living document.” For example, Moyer Program staff
are currently working on changes to the section of their policies and
procedures on auditing the districts.
As of March 2007 all four of the local air districts we visited
had submitted their draft policies and procedures to the state
board. In general, the districts developed them based on current
practices, state board sample language, and comments from their
staff and management. The state board’s district liaisons reviewed Liaisons to the local air districts
the documents to ensure that they addressed the nine required reviewed the districts’ policies and
elements. The liaison to the Bay Area air district found that the procedures and made suggestions
district’s draft policies and procedures had some information for improvement.
missing for four of the nine required elements, and each district
liaison had suggestions for improvements. The state board asked
the districts to provide updates on their policies and procedures
when the districts apply for next year’s Moyer Program funds. The
state board also indicated that it will use the districts’ policies and
procedures during on-site audits.
The guidelines require districts to audit at least 10 percent of
projects with more than a three-year project life and all projects
whose owners fail to report annually. Each district included
these requirements in its draft policies and procedures. Also, the
62 California State Auditor Report 2006-115
June 2007
guidelines require districts to take action when a project reports its
usage was not within 30 percent of that specified in the contract.
Each district indicated that it would do so and listed potential
actions, including extending the life of a project, referring the
contract to the district’s legal department, or asking the project
owner to return the funds. Moreover, in their draft policies and
procedures, all districts acknowledged the requirement of state law
and the Moyer Program guidelines that the districts provide $1 in
matching funds for every $2 of Moyer Program funds.
Local air districts we visited set goals and priorities for selecting
projects based on, and in some cases stricter than, Moyer
Program guidelines. In fact, two districts used a best practice of
imposing stricter funding requirements for projects. This best
practice enables them to fund more projects; for example, they
require project owners to pay a greater share of the costs. One
of the districts—South Coast—requires that projects for off-road
construction equipment not exceed $5,000 per ton for intended
emission reductions rather than the $14,300 ceiling set by the
state board for Moyer Program funds appropriated in fiscal
year 2005–06. One way for a project owner to meet the stricter
limit would be to agree to pay a greater share of the project’s cost
out of pocket, thus reducing the potential contract amount and
making more funds available for other projects.
The San Joaquin Valley air district set maximum amounts it was
willing to pay for certain project types and also set minimum
baseline amounts. For example, this district set a baseline cost of
$5,000 for each new irrigation pump to be funded under the Moyer
Program and caps payments for those pumps at $30,000 each.
Neither district believes participation in the Moyer Program is
diminished by these requirements.
Recommendations
To comply with its action plan, the South Coast air district should
ensure that it spends by July 1, 2007, all remaining Moyer Program
funds that are beyond the two-year availability period.
Also, to help ensure that the South Coast air district spends
the allocations, the state board should continue monitoring the
district’s efforts and take appropriate action should its efforts
falter. If the South Coast air district does not spend the funds
24 We explain baseline costs in the Introduction.
California State Auditor Report 2006-115 6
June 2007
by July 1, 2007, the state board should initiate appropriate
administrative action, up to or including recovering all remaining
unspent funds.
To help streamline the process for performing preinspections, the
state board should revise its requirement that local air districts
must perform preinspections before executing contracts.
To ensure that it monitors local air districts’ implementation of
the Moyer Program effectively, the state board should continue to
implement its planned changes to audit procedures and address
the recommendations in Finance’s 2006 audit report, including the
development of a risk-based approach to selecting districts to
audit. As part of this effort, the state board should consider how
frequently it will audit districts.
To improve their administration of the Moyer Program, local air
districts should consider implementing the following best practices:
• Conduct consolidated preinspections to the extent practicable.
• Impose stricter standards (for example, caps on individual
contract amounts or lower costs per ton of intended emission
reductions) on project categories to the extent that such action
does not reduce involvement in the Moyer Program.
We conducted this review under the authority vested in the California State Auditor by Section 8543
et seq. of the California Government Code and according to generally accepted government auditing
standards. We limited our review to those areas specified in the audit scope section of this report.
Respectfully submitted,
ELAINE M. HOWLE
State Auditor
Date: June 14, 2007
Staff: Nancy C. Woodward, CPA, Audit Principal
Dale A. Carlson, CGFM, MPA
Nathan Briley, MPP
John Lewis, MPA
Richard Power, MBA, MPP
6 California State Auditor Report 2006-115
June 2007
Blank page inserted for reproduction purposes only.
California State Auditor Report 2006-115 65
June 2007
Appendix A
MAP of CAlIfoRnIA’S AIR PolluTIon ConTRol
dISTRICTS And AIR QuAlITy MAnAgeMenT dISTRICTS
Figure A on the following page shows the boundaries for
California’s 21 air pollution control districts and 14 air quality
management districts (collectively, local air districts). It also
highlights the four local air districts we visited.
66 California State Auditor Report 2006-115
June 2007
Figure A
California’s Local Air Districts
SISKIYOU MODOC
NORTH SHASTA LASSEN
COAST
UNIFIED Local air districts included in our review
Local air districts not included in our review
TEHAMA = Air district borders = County borders
MENDOCINO NORTHERN
SIERRA
GLENN BUTTE
COLUSA FEATHER PLACER
LAKE RIVER
YOLO-SOLANO EL DORADO
NORTHERN SONOMA
SACRAMENTO METROPOLITAN*
AMADOR
CALAVERAS
BAY AREA TUOLUMNE
MARIPOSA
SAN JOAQUIN GREAT BASIN
VALLEY UNIFIED UNIFIED
MONTEREY BAY
UNIFIED
SAN LUIS
OBISPO EASTERN
KERN
MOJAVE DESERT
SANTA BARBARA
ANTELOPE VALLEY
VENTURA
SOUTH COAST
IMPERIAL
SAN DIEGO
Source: State Air Resources Board.
Note: Includes air pollution control districts and air quality management districts.
* For the two fiscal years covered by this audit report, the Sacramento Metropolitan Air Quality Management District had agreements to administer
the Carl Moyer Memorial Air Quality Standards Attainment Program for the El Dorado County, Placer County, and Yolo-Solano air districts. We
included funding to all four of the districts as part of our audit.
California State Auditor Report 2006-115 67
June 2007
Appendix b
foRMulA foR CAlCulATIng The CoST-
effeCTIveneSS of eMISSIon ReduCTIonS undeR
The CARl MoyeR MeMoRIAl AIR QuAlITy STAndARdS
ATTAInMenT PRogRAM
State law requires that projects seeking funding from the
Carl Moyer Memorial Air Quality Standards Attainment
Program (Moyer Program) not exceed a certain cost per ton of
intended emission reductions (cost-effectiveness). The State Air
Resources Board established the following formula to calculate
cost-effectiveness:
Annualized project cost
(Moyer Program funds awarded x capital recovery factor)
= Cost-effectiveness
Annual weighted emission reductions (per ton)
• Annualized project cost consists of the Moyer Program funds
awarded and the capital recovery factor.
• Moyer Program funds awarded is the amount of funds provided
by the local air district.
• Capital recovery factor uses an interest rate and project life
to determine the rate at which earnings could reasonably be
expected if the same funds were invested over the length of
time equaling the project life. A longer project life improves
the cost-effectiveness value. According to the Moyer Program
guidelines, the capital recovery factor for a 10-year project
life is 0.123 while the factor for a five-year project life is 0.225.
Thus, providing funding of $10,000 to a project with a 10-year
life would result in an annual cost of $1,230 while one with
a project life of five years will have an annual cost of $2,250. If
both projects had similar annual emission reductions, then the
10-year project will have a better cost-effectiveness value than
the five-year project.
• Annual weighted emission reductions are the reductions in
pollutants that the project intends to achieve. Pollutants
include nitrogen oxides, reactive organic gases, and particulate
matter. Greater amounts of reduced emissions improve its
cost-effectiveness value. For example, if other factors are
similar, a project to replace a 25-year old engine that intends to
reduce 10 tons of nitrogen oxides likely will have a better cost-
effectiveness value than a project to replace a 10-year old engine
that intends to reduce 5 tons.
6 California State Auditor Report 2006-115
June 2007
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California State Auditor Report 2006-115 6
June 2007
(Agency response provided as text only.)
California Environmental Protection Agency
Linda S. Adams, Secretary for Environmental Protection
1001 I Street
Sacramento, California 95814
Elaine M. Howle, State Auditor
Bureau of State Audits
555 Capitol Mall, Suite 300
Sacramento, CA 95814
Dear Ms. Howle:
Thank you for providing the opportunity to respond to the Bureau of State Audits’ (BSA) draft report, The
Carl Moyer Memorial Air Quality Standards Attainment Program: Improved Practices in Applicant Selection,
Contracting, and Marketing Can Lead to More Cost-Effective Emission Reductions and Enhanced Operations.*
I would also like to thank the BSA audit team for its hard work in evaluating the program and for its
insightful recommendations.
While the audit report notes some areas of the Carl Moyer Program that need improvement, I am
pleased the report finds the statewide program is well run overall. Your recommendations come at a good
time. The Air Resources Board (ARB or Board) is in the process of revising the Carl Moyer Program Guidelines.
I am enclosing ARB staff’s more detailed response to the five recommendations BSA specifies for the ARB.
The report also includes recommendations for the four air districts BSA audited as well as a number of
best practices that districts should consider. Although the enclosed responses do not address the specific
recommendations for air districts, the ARB will work with the four air districts audited and the California Air
Pollution Control Officers Association to implement your recommendations.
Thank you again for your recommendations and suggested improvements. If you have any questions or
need further information, please contact Catherine Witherspoon, Executive Officer, ARB, at (916) 445-4383.
Sincerely,
(Signed by: CKT, Acting Secretary for)
Linda S. Adams
Secretary for Environmental Protection
Enclosure
* While preparing our draft report for publication, our title changed slightly.
70 California State Auditor Report 2006-115
June 2007
Air Resources board Responses to bureau of State Audits Recommendations
Recommendation: To maximize the use of Moyer Program funds, the state board should seek legislation
to increase the 10 percent maximum proportion it can allocate for multidistrict purposes. If the state board
opts not to seek this revision, the Legislature may wish to consider it.
Response: We agree with the goal of maximizing the emission reductions achieved through the Carl
Moyer Program. During the first six years of the program, projects averaged about $2,600 per ton of
nitrogen oxides reduced, about one fifth of the statutory limit. However, we continue to look for ways to
improve the program’s cost-effectiveness.
We appreciate Bureau of State Audit’s (BSA) confidence in the Air Resources Board’s (ARB) ability to run a
robust multidistrict program. The multidistrict solicitation is a relatively new component of the program.
The ARB has funded about $11 million in multidistrict projects over the past two years, and we are in the
process of awarding an additional $8 million. Once the third multidistrict funding cycle is complete, we
will have more data to evaluate whether the program would benefit from a legislative change increasing
the multidistrict holdback. Past Carl Moyer Program legislative changes have been developed through
a collaborative process with a broad array of stakeholders. We anticipate using the same collaborative
approach for any future proposed changes.
Recommendation: To maximize the use of Moyer Program funds, the state board should identify and give
weight to those categories that help it achieve the lowest average cost per ton of emission reductions when
determining methods for selecting projects to receive funds from the multidistrict component.
Response: We agree. In our next multidistrict solicitation, we will increase the weighing of cost-
effectiveness in the project ranking criteria. However, we also believe other factors should continue to
have a role in the ranking criteria. For example, the ability of an applicant to follow through and complete
a project is critical to actually achieving emission reductions and meeting statutory expenditure
deadlines, so we award points for complete applications and project implementation plans.
Recommendation: To help ensure that the South Coast air district spends Moyer Program allocations that
are beyond the two-year limit, the state board should continue monitoring the district’s efforts and take
appropriate action should it falter. If the South Coast air district does not spend the funds by July 1, 2007,
the state board should initiate appropriate administrative action, up to or including recovery of all remaining
unspent funds.
Response: We agree. We are concerned about the unexpended funds and the resulting unrealized
emission reductions in the South Coast Air Quality Management District (SCAQMD). The BSA audit
report identifies $24.1 million in funds allocated to the district that were not expended within the two
year period allowed in state law. The ARB evaluated the SCAQMD program in 2006 and also found
expenditures not meeting the two year deadline.
We are closely monitoring the SCAQMD’s progress in remedying the shortfall. We are requiring that
the SCAQMD submit quarterly progress reports, and we are not releasing a requested disbursement of
approximately $10 million pending an evaluation of the district’s progress. We are also conducting a
follow up evaluation, with a site visit scheduled for the first week of June 2007. If the funds have not been
1
California State Auditor Report 2006-115 71
June 2007
fully expended by July 1, 2007, then the SCAQMD will be deemed an “at-risk” district, and the ARB will look
to recapture funds as outlined in the October 2006 Carl Moyer Air Quality Standards Attainment Program
Audit Report: South Coast Air Quality Management District Fiscal Years 2002/2003 and 2003/2004.
On a broader note, we plan to improve the Carl Moyer Program Guidelines to be clearer regarding the
consequences for air districts failing to meet the statutory two year expenditure requirement as well as
the conditions and mechanisms for returning unspent funds. We will propose these clarifications as part
of the revisions to the Carl Moyer Program Guidelines currently under development
Recommendation: To help streamline the process for performing preinspections, the state board should
revise its requirement that local air districts must perform preinspections before executing contracts.
Response: We agree. The ARB works closely with air districts to understand any unintended
implementation challenges that result from guideline requirements. This particular issue has been
brought to the ARB’s attention, and, in the interim, we have provided air districts with flexibility regarding
preinspection timing. We will follow up by proposing this additional flexibility as part of the revisions to
the Carl Moyer Program Guidelines currently under development.
Recommendation: To ensure that it monitors local air districts’ implementation of the Moyer Program
effectively, the state board should continue to implement its planned changes to audit procedures and
address the recommendations in Finance’s 2006 audit report, including the development of a risk-based
approach to selecting districts to audit. As part of this effort, the state board should consider how frequently
it will audit districts.
Response: We agree. In the spring of 2006, the ARB contracted with the California Department of
Finance, Office of Audits and Evaluations (DoF) to conduct an evaluation of the Carl Moyer Program
administrative procedures. The DoF recommended the ARB develop a risk based approach to determine
the frequency of its audits of air districts. The ARB has already executed a second contract with the DoF
to develop the appropriate risk factors to determine how frequently a district should be evaluated and to
assist the ARB by conducting fiscal audits of districts’ programs.
We share BSA’s concern that our current rate of up to four on-site district evaluations per year does not
provide adequate oversight. Limited staffing has prevented the ARB from conducing more frequent on-
site monitoring. The ARB request for six new positions to expand Carl Moyer Program oversight has been
included in the May revision of Governor’s fiscal year 2007/2008 budget. If approved, these additional
resources will allow the ARB to increase program evaluation frequency.
2
72 California State Auditor Report 2006-115
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California State Auditor Report 2006-115 7
June 2007
(Agency response provided as text only.)
Bay Area Air Quality Management District
939 Ellis Street
San Francisco, California 94109
June 1, 2007
Elaine M. Howle*
State Auditor
Bureau of State Audits
555 Capitol Mall, Suite 300
Sacramento, CA 95814
Dear Ms. Howle:
This letter constitutes the Bay Area Air Quality Management District’s (District) response to the Bureau of
State Audit’s (Bureau) confidential draft of audit Report No. 2006-115 (Report) regarding the Carl Moyer
Memorial Air Quality Standards Attainment Program (Moyer Program) (Response). The District appreciates
this opportunity to provide a response to the Report.
As an initial matter, the District appreciates the recognition in the Report of those District practices that
the Bureau recommends as best practices for the Moyer Program. In particular, the Bureau cited the
District’s identification of impacted communities through the use of measured affects of air pollution. This
is a reference to the District’s use of data currently developed through its Community Air Risk Evaluation
program in defining those areas to which funds must be directed pursuant to California Health and Safety
Code section 43023.5. The Bureau also identified as a best practice the District’s contract provision for
projects undertaken in impacted communities that ensures that those projects continue to provide benefits
to those communities throughout implementation. In addition, the Bureau recognized as a best practice the
District’s use of contract provisions requiring applicants to complete projects and submit invoices before the
June 30 deadline to ensure that funds are expended prior to the statutory cutoff for expenditures from the
Moyer Program. Finally, the Bureau recognized the District’s use of contract-specific milestones to measure
project progress as a best practice.
As you know, in addition to the Bureau’s audit, the California Air Resources Board (CARB) staff is presently
conducting its first-ever audit of the District’s implementation of the Moyer Program. In addition, the
California Department of Finance (DOF) has worked with CARB to perform a portion of CARB’s audit relative
to financial processes and controls for the District’s implementation of the Moyer Program. Although neither
CARB nor DOF have yet released written reports on these audits, during the course of the audits, CARB and
DOF staff shared with District staff some preliminary issues regarding the District’s implementation of the
Moyer Program. By letter dated May 2, 2007 to Tom Cackette, Chief Deputy Executive Officer for CARB, the
District outlined its plans to conduct a comprehensive review of its Moyer Program and to work with CARB
to implement changes necessary to improve that program (May 2 Letter). The May 2 Letter is included with
this Response to be incorporated in, and made a part of, the District’s response to the Bureau’s audit of the
Moyer Program.
* California State Auditor’s comment appears on page 79.
7 California State Auditor Report 2006-115
June 2007
Ms. Howle
June 1, 2007
Page 2 of 3
To follow are the District’s responses to relevant recommendations in the Bureau’s Report:
Chapter 1 Recommendations:
Include all funds under budgetary control as part of calculations for average cost per ton, and implement
policies and procedures to meet the matching requirements found in the Moyer Program guidelines.
• District Response: As outlined in the May 2 Letter the District has initiated a thorough review of all Moyer
Program projects and funds for all years, as well as all District Moyer Program procedures, processes and
controls for adherence to statutory requirements, to CARB Moyer Program guidance, and, where appropriate,
to best practices for grant program administration. To the extent that the review identifies projects and
funding that do not meet Moyer Program requirements, District staff will work with CARB staff to identify
replacement projects and/or funding to meet the District’s obligations under the Moyer Program.
Implement techniques to measure the effectiveness of marketing methods.
• District Response: The District recognizes the importance of ensuring that expenditure of Moyer Program
funds results in the maximum amount of emissions reductions per dollar spent. The District will take steps to
improve its marketing of the Moyer Program, including increasing outreach, and using additional methods
to evaluate effectiveness.
Recommendations for best Practices:
As noted above, the District appreciates the Bureau’s recognition of four best practices employed by the
District. The District also appreciates the Bureau’s recommendations of several other best practices identified
during the course of its audit of the Moyer Program. The District anticipates that the CARB and DOF audit
reports may contain recommendations for best practices as well. As set forth in the May 2 Letter, the District
is undertaking a comprehensive review of the District’s Moyer Program. This review will encompass all of the
programmatic, administrative, and financial aspects of the District’s implementation of the Moyer Program.
This review is described in greater detail in the May 2 Letter. In the course of this comprehensive review, the
District intends to examine and implement appropriate best practice recommendations from all sources,
including the Bureau, CARB, DOF, and its own consultants.
Clarification:
In reviewing the information set forth in the Report, the District identified certain information in Table 1
1 that requires clarification. The District Grants Program has one Program Manager, one recently upgraded
Supervisor position that oversees Moyer Program projects (currently vacant), and three staff planner
positions that are assigned at least part-time to Moyer Program projects. In addition, support staff assist
with administrative functions for the Moyer Program. District staff selects proposed projects, which it
recommends to the District Board of Directors’ Mobile Source Committee; the Board’s Mobile Source
Committee then recommends projects for approval by the full Board of Directors. For Moyer Years 8 and 9,
the Board’s Mobile Source Committee selected the projects in March 2007 that it recommended to the full
Board in April.
California State Auditor Report 2006-115 75
June 2007
Ms. Howle
June 1, 2007
Page 3 of 3
Closing:
The District appreciates this opportunity to provide a response to the Bureau’s draft Report on its audit of
the Moyer Program. As set forth in this letter and its May 2 Letter to CARB, the District is committed to a
comprehensive examination of all aspects of its Moyer Program and to implement changes to improve that
program. The District’s Moyer Program has been, and remains, an integral component of the District’s efforts
to continually improve air quality for the benefit of the residents of the Bay Area and beyond. The District
appreciates and commends the Bureau’s efforts to both recognize the strengths and identify areas for
improvement in the District’s Moyer Program. Please let me know if you have any questions regarding this
letter, or if I can provide additional assistance.
Sincerely,
(Signed by: Jack P. Broadbent)
Jack P. Broadbent
Executive Officer/APCO
Enclosure
76 California State Auditor Report 2006-115
June 2007
May 2, 2007
Tom Cackette
Chief Deputy Executive Officer
California Air Resources Board
1001 “I” Street
P.O. Box 2815
Sacramento, CA 95812
Dear Mr. Cackette:
As you know, the California Air Resources Board (CARB) staff is in the process of conducting its first-ever audit
of the Bay Area Air Quality Management District’s (District) implementation of the Carl Moyer Memorial Air
Quality Standards Attainment Program (Moyer Program). As you also know, during the course of the audit,
CARB staff shared with District staff some preliminary issues regarding the District’s implementation of the
Moyer Program. District staff appreciates this opportunity to outline a number of steps the District staff
intends to take to address the issues identified by CARB staff. In taking these steps, District staff will continue
to consult and cooperate with CARB staff to ensure that acceptable improvements are implemented in the
District’s Moyer Program.
Due to the nature of the issues identified by CARB staff, District staff believes that the best approach is to
undertake a comprehensive review of the District’s Moyer Program. This review will encompass every aspect
of the programmatic, administrative, and financial aspects of the District’s implementation of the Moyer
Program. District staff has engaged and will engage consultants to assist with this review. This broad review
will include:
(1) A review of all District Moyer Program projects currently under contract or committed for funding to
confirm eligibility in accordance with CARB Moyer Program guidance;
(2) A review of all District Moyer Program “match” projects and funding to determine eligibility; and
(3) A review of all District Moyer Program procedures, processes and controls (including, but not limited to,
outreach efforts, evaluation of applications and award of grants, file management, contracting, auditing,
verification of project expenses, and timeliness of distributions) for adherence to CARB Moyer Program
guidance, and, where appropriate, to best practices for grant program administration.
District staff expects that the comprehensive reviews in each of these areas will result in recommendations
for improvements in the District’s Moyer Program. To the extent that the reviews of projects under contract
or committed for funding and of match projects and funding identify projects and funding that do
not meet Moyer Program requirements, District staff will work with CARB staff to expeditiously identify
replacement projects and/or funding to meet the District’s obligations under the Moyer Program. District
staff expects that these broad reviews of the District’s Moyer Program and implementation of anticipated
recommendations for improvements will address all of the issues identified by CARB staff.
The District has already retained consultants to assist with the comprehensive review of the District’s
Moyer Program outlined above. Cindy Sullivan has agreed to assist with a review of Moyer Program
projects currently under contract or committed for funding. If necessary, the District will retain additional
consultants to assist with this review. In addition, the District has retained Gilbert and Associates to assist
with a comprehensive review of the District’s Moyer Program processes, procedures and controls. Gilbert
California State Auditor Report 2006-115 77
June 2007
and Associates previously assisted the District with a similarly comprehensive review of the District’s financial
processes, procedures and controls. Gilbert and Associates will review the District’s compliance with
CARB Moyer Program guidance, as well as provide recommendations for best practices for grant program
administration. District staff anticipates seeking authorization from the District’s Board of Directors to retain
additional consultants to assist with implementing anticipated recommendations for improvements to the
District’s Moyer Program through computer hardware and software systems, as appropriate.
In addition to undertaking the comprehensive review of the District’s Moyer Program and implementation
of anticipated recommended improvements outlined above, District staff will take the following actions.
First, the District will formally allocate interest earned to date to the Carl Moyer Program accounts
maintained by the District. Second, the District will formally document its Board of Directors’ approval of the
receipt of all Moyer Program funds. Third, the District will develop and present to the District’s Board of
Directors a request for additional staff to assist in administering the District’s Moyer Program. Fourth, based
on the recommendations of its consultants, the District will develop and provide training in Moyer Program
guidance and best practices for grants program administration for all existing and new staff involved with
the District’s Moyer Program.
District staff believes that the steps outlined above will significantly strengthen the District’s Moyer
Program. District staff hopes that CARB staff agrees and will consider these efforts and commitments as it
finalizes its review of the District’s Moyer Program.
Please let me know if you have any questions regarding this letter, or if I can provide additional assistance.
Sincerely,
(Signed by: Jack P. Broadbent)
Jack P. Broadbent
Executive Officer/APCO
7 California State Auditor Report 2006-115
June 2007
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California State Auditor Report 2006-115 7
June 2007
CoMMenT
CAlIfoRnIA STATe AudIToR’S CoMMenT on
The ReSPonSe fRoM The bAy AReA AIR QuAlITy
MAnAgeMenT dISTRICT
To provide clarity and perspective, we are commenting on the
response to our audit from the Bay Area Air Quality Management
District (Bay Area air district). The number corresponds with the
number we have placed in the district’s response.
1 As we mention on page 11, the information on Table 1 is as of
February 2007. We appreciate the Bay Area air district’s clarification
that appears to reflect more current information.
0 California State Auditor Report 2006-115
June 2007
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California State Auditor Report 2006-115 1
June 2007
(Agency response provided as text only.)
May 31, 2007
Sacramento Metropolitan Air Quality Management District
777 12th Street, 3rd Floor
Sacramento, CA 95814-1908
May 31, 2007
Elaine M. Howle*
State Auditor
Bureau of State Audits
555 Capitol Mall, Suite 300
Sacramento, California 95814
Dear Ms. Howle:
This is in response to your draft report entitled, “The Carl Moyer Memorial Air Quality Standards Attainment
Program: Improved Practices in the Applicant Selection, Contracting, and Marketing Can Lead to More Cost-
1
Effective Emission Reductions and Enhanced Operations.”
For your convenience, we have organized our comments on the report in the attached table by page
2
number. There were three areas of the audit that raised concerns for the district including the reliability of
our database, the evaluation of marketing strategies and the average length of time to execute contracts.
We are constantly looking for ways to improve the efficiency and effectiveness of our programs to increase
the benefits to the residents of the Sacramento region. Knowing that the various air districts around the
State have differing goals and objectives that they need to meet, it is important to ensure that there is
adequate flexibility in the requirements of programs like Moyer to allow for variations in implementation.
We appreciate the comments you have provided and we hope that you will accept our comments with the
understanding that our goal is also program improvement.
I want to express my appreciation for the high level of professionalism your staff maintained while they did
their work in our offices. They were sensitive to our deadlines and worked around our schedules whenever
possible. They were open to our explanations and comments regarding issues identified for improvement.
Please feel free to contact Larry Sherwood, the Manager of the Mobile Source Division, at (916) 874-4880, if
you have questions.
Sincerely,
(Signed by: Larry Greene)
Larry Greene
Air Pollution Control Officer
Attachment
* California State Auditor’s comments begin on page 99.
2 California State Auditor Report 2006-115
June 2007
–2– May 31, 2007
Page Summary of Audit Statement District Comments
3 3 Recommendation to increase The District has some concerns with this recommendation. While
the percentage of Carl Moyer it may be true that statewide benefits for emission reductions
funds for interdistrict projects may increase if the percentage of interdistrict funds increases, the
from 10% to 15% District could lose funding towards projects within the Sacramento
non-attainment region. This may lead to fewer emissions reduced
in the non-attainment area.
In addition, the Carl Moyer funds are included as a strategy in
the local air districts State Implementation Plan (SIP) goals and a
reduction in dollars spent within the non-attainment region could
lead to a loss of federal highway dollars.
Increasing the State interdistrict funds from 10% to 15% would not
guarantee that the funds will come back to the District as more
cost effective projects.
4 5 Districts rely on only one In 2002, the SMAQMD conducted a SECAT participant survey,
measure to evaluate which the District assumed would have similar results for the
outreach–whether they Moyer Program. In January of this year, the SMAQMD conducted
receive enough applications another participant survey for both Moyer and SECAT project
to distribute program funding participants. The purpose of each survey was to identify
how participants had heard about our various incentive programs.
(The participant survey analysis is attached.)
Both the 2002 and the 2007 surveys showed similar results. Over
80% of our participants heard about our incentive programs
either through a dealership or by word of mouth. Less than 10% of
participants heard about our programs through mail outs, the
District website, or at district events.
Given the results of these surveys, the District believes that the
best way to reach participants is to continue to provide a high level
of customer support to applicants. In addition, it is important to
continue our ongoing efforts to keep the dealers apprised of the
latest program developments and marketing strategies.
8 Include all funds under our The District does not mix Moyer funding with other funding
authority in the calculations streams. Thus, the District already includes all funds under our
to determine the average authority when calculating the cost-effectiveness of projects. In
cost per ton of projects addition, the District does have a Moyer Policies and Procedures
emissions reductions. manual that indicates that all matching projects for the Moyer
Program must meet the Carl Moyer Program guidelines.
8 Develop techniques to See comments above related to page 5.
measure the effectiveness of
marketing efforts
California State Auditor Report 2006-115
June 2007
–3– May 31, 2007
Page Summary of Audit Statement District Comments
28 Reliability of the database The database is an internal tool used by the District to check on 5
the status of on-going and completed projects. The hard copy file
is the final authority on the status of all projects and hence, the
District maintains these records on-site.
The purpose for creating the database was to streamline access
to project information, but it was never intended to be the final
authority. In addition, when projects are in-process, the database
is continually updated. Therefore, providing a snapshot version
that was sent to the Bureau of State Audits, which may not have
reflected the most current project information since staff are
constantly updating information. The ARB is in the process of
developing a database that will be used by all districts for tracking
and monitoring.
As a result, some of the noted discrepancies between the database
and the working documents will be more accurate once a project
is completed.
30 Limiting the interdistrict See comments above related to page 3.
projects to 10% of the Moyer
funds reduces the program
effectiveness
31 Evaluation of marketing efforts See comments above related to page 5.
is inadequate in all districts
31-32 Projects could be funded Historically, off-road projects have been more than three times as
at lower cost-effectiveness cost-effective as on-road projects. As a result, we have specifically
levels if outreach efforts were targeted some of our outreach efforts towards the off-road vehicle
targeted towards more cost- industry, including construction and agriculture.
effective projects.
32 Best practice is to measure The District’s air monitoring sites are located based on State and
the level or effects of pollution Federal criteria and measure ambient pollution, not-point sources.
to evaluate the impact on
communities in the district Measurement for specific communities would be difficult,
expensive, and would require keeping special monitors in place
for long periods to measure trends. Moreover, disproportionately
impacted communities in Sacramento are scattered throughout
the County.
The District endeavors to do as many projects as possible in
disproportionately impacted population areas.
In addition, mobile source projects travel throughout the region,
not in one specific location.
California State Auditor Report 2006-115
June 2007
–4– May 31, 2007
Page Summary of Audit Statement District Comments
33-35 Limiting the interdistrict See comments above related to page 3.
projects to 10% of the Moyer
funds reduces the program
effectiveness
4 45-46 Evaluation of marketing efforts See comments above related to page 5.
is inadequate because it does
not provide a mechanism for In addition, the District has generally identified which business
selecting projects with the sectors provided the most cost-effective projects. We have
lowest cost effectiveness. specifically targeted marketing efforts towards construction and
agriculture because of their better cost effectiveness. Within
those business sectors, projects are awarded funding on a first-
come, first-served basis, rather than on a cost-effectiveness basis.
Nevertheless, our analysis indicates that in the end our overall cost
effectiveness is similar to districts which use the RFP process.
47 SMAQMD currently targets Light-duty accelerated vehicle retirement has been identified as
off-road vehicles for Moyer a measure in our 8-hour SIP. Agricultural equipment (other than
funding, but will need to ag water pumps) is not going to be regulated under the current
change once off-road rules are ARB rule (but could be included in a future ARB rule).
adopted. They should target
outreach efforts to identify
On-road vehicles can also be funded using Moyer funds until an
new sources of emissions.
ARB rule is adopted. Cost-effectiveness for projects will increase
due to a lower number of available qualifying projects.
49 Local districts are just as likely See comments above for page 31-32.
to fund projects with emission
reductions…at or near the This would not be practical for first-come, first-served incentive
cost ceiling ($14,300 / ton) programs. However, if the SMAQMD has more project applications
as…as they are with projects coming in than available funding, then one option would be to
valued at $1,000 a ton or less implement this recommendation of approving projects based on
cost-effectiveness.
49-50 Best practice is to include See comment above for page 32.
measures of emissions
(average cost per ton), or
a measure of the impact
of emissions (e.g., cancer
risk or exposure to PM) on
EJ communities, to select the
most cost effective projects.
May be impractical for districts
operating on first-come, first-
served basis.
California State Auditor Report 2006-115 5
June 2007
–5– May 31, 2007
Page Summary of Audit Statement District Comments
52 SMAQMD should add The SMAQMD runs a very streamlined program and requires most 6
milestones during project applicants to complete their projects within six months from
implementation the contract execution date. The District believes the six month
window is more than adequate to keep applicants on schedule
and does not believe that adding project milestones would
improve the progress of the projects. In addition, the additional
time taken to monitor steps such as invoices and quarterly progress
reports is burdensome to both District staff and to the participant.
Furthermore, including implementation milestones may be
problematic because there can be unexpected delays resulting
from issues like manufacturing problems, parts availability, and
design complexities, especially with off-road equipment.
The District currently monitors project usage on an annual basis.
We mail letters to participants notifying them if their usage is
below their estimated contractually required usage
54 SMAQMD executed projects Since the SMAQMD accepts applications throughout the year, the 7
took 217 days on average. number of days calculated by the Bureau for executing a contract
could be misleading. The District believes that many of the
applications likely reviewed by the Bureau were received months
prior to the availability of funding. Counting this period of time
against project execution is misleading.
The SMAQMD creates a pending file of applications prior to the
award funding from ARB. The District typically executes contracts
within 30-60 days once funding is available.
59 Develop techniques See comments above related to page 5.
to measure marketing
effectiveness
59 Use marketing methods to Also see comment for page 32
identify business sectors from
which more cost-effective
projects will result.
6 California State Auditor Report 2006-115
June 2007
–6– May 31, 2007
Page Summary of Audit Statement District Comments
60 All districts should consider See comments for page 32 for the first, second and third
implementing: bullets. See comments for page 52 for the fourth bullet.
• Measures of pollution for
identifying projects in
EJ areas
• Compare average cost
effectiveness for project
selection
• Include in the contract
provision that
projects operating in
disproportionately impacted
areas continue to reduce
emissions in those areas.
• Add project implementation
milestones
• SMAQMD already does all
the other items.
8 77 On-going monitoring has not On-going monitoring was not a requirement under the Moyer
been fully implemented. guidelines until 2005 for year-8 funded projects. In addition,
the monitoring requirements do not start until three years after
a project has been funded using Moyer year-8 funds. For most
year-8 projects, monitoring requirements will not be required
until 2009. The SMAQMD is implementing an annual monitoring
and audit program that will meet Moyer guideline requirements.
79 Best practice would include The SMAQMD began implementing this practice the beginning
grouping inspections so that of May, wherever practical.
several can be performed at
a time.
7 81 Average length of time for As noted on comments for page 54.
and funding to reach applicant for
83 SMAQMD was 7.2 months or
217 days.
California State Auditor Report 2006-115 7
June 2007
1
SACRAMenTo MeTRoPolITAn AIR QuAlITy MAnAgeMenT dISTRICT
PARTICIPAnT SuRvey AnAlySIS
Summary: The Sacramento Metropolitan Air Quality Management District’s Mobile Source Division mails
out an annual mileage and hour usage survey to participants of both on-road and off-road incentive funding
projects in order to evaluate their fulfillment of their contractual requirements. The survey forms sent out
during 2007 included a supplemental participant survey. The objectives of this voluntary participant survey
were to assess the following program areas: (1) marketing & outreach venues and (2) participant satisfaction.
Out of 392 total participants surveyed, 55% percent returned the survey to the District. The results show that
most participants originally heard about the Districts’ incentive programs primarily from equipment dealers
and secondarily by word of mouth. Less than 10% of participants stated they became aware of a program
from all other marketing and outreach efforts, including brochures, flyers, county fairs, District-sponsored
events, or the District website.
Results of the participant survey showed that three out of every four respondents reported a high level
of satisfaction with the incentive programs and only a total of five participants reported low satisfaction
in the incentive programs. However, this trend was not consistent across all funding source categories.
For example, off-road, repower project participants showed less overall satisfaction -- making up almost
three-quarters of those participants that said they experienced moderate or low satisfaction.
Approximately 40% of those surveyed provided written-in comments on their survey form. Of these
comments, 37% of were considered negative. Similar to response levels for satisfaction, a larger number
of negative comments were received from those participating in Moyer-funded off-road projects, with a
particularly high number were associated with agricultural irrigation pump projects.
Participant comments and survey results emphasize the importance of program outreach sources outside
of District staff efforts and District associated events. Future funding programs requiring an outreach
component may take into consideration these often used information resources. The District will evaluate
and address written comments and attempt to clarify negative reactions to program elements, where
possible, by mailing clarification letters to all affected participants.
bACkgRound
The Sacramento Metropolitan Air Quality Management District’s (SMAQMD) Mobile Source Division is
responsible for providing incentive funds to reduce emissions from on-road and off-road mobile sources.
Funding for these various programs come from several different federal, state, and local programs. There are
two main sources of funding: (1) the Carl Moyer Program (Moyer) and (2) the Sacramento Emergency Clean
Air & Transportation (SECAT) Program.
The Moyer program primarily provides funding for off-road repower projects including construction and
agricultural equipment, and irrigation pumps. The SECAT program exclusively provides funding for on-road
fleet modernization and retrofit projects. The main goal of these grant programs is to reduce pollutants
from these on-road and off-road emission sources by off-setting the overall cost of newer, cleaner-burning
technologies. Received applications are evaluated and accepted based on various criteria and the stipulated
contract requirements assessed for the life of the project.
Sacramento Metropolitan Air Quality management District
Participant Survey Analysis – 2007
California State Auditor Report 2006-115
June 2007
2
One of the participant contract’s performance requirements is the annual submission of a mileage or hourly
usage survey to the District. The usage survey sent in January of 2007 included a supplementary participant
survey for voluntary submittal. This brief survey had two main objectives: (1) assess where participants first
learned about the District’s incentive funding programs and (2) gauge participant satisfaction with the
programs. Because participation in these programs is completely voluntary, applicant feedback is vital to
evaluating program outreach opportunities and overall program reception. It is also an essential tool that
can be used to monitor program strengths and weaknesses.
SuRvey MeThodS
The survey form was developed to be simple and quick for participants to complete. It was restricted to
two questions: one pertaining to initial program information source and the second to address the level
of program satisfaction. Each question was followed by pre-typed responses that allowed participants
to check the most appropriate box (figure 1). A comment section was also included on the survey form
permitting participants to share their comments and suggestions. The participant survey form was included
in the annual usage survey packet that included a self-addressed stamped envelope for the return of all
survey materials.
Because roughly two-thirds of all participants fall into either on-road heavy duty diesel truck or agricultural
irrigation pump projects, and the remaining constitute various smaller funding projects, returned surveys
were categorized into three main program types: (1) SECAT, (2) agricultural pumps, and (3) other. The third
category included any construction or on-road projects, i.e. school buses, not specific to the first two
program categories. Participant comments were recorded and evaluated as either being positive, negative,
or suggestive. Responses were tallied and comparisons made between program type and (a) program
information source, (b) level of satisfaction, and (c) comment type.
ReSulTS
More than half (n = 216) of the 392 participants in all programs completed and returned the participant
survey. A higher percentage of agricultural irrigation pump participants submitted surveys compared to
those in the SECAT program and double that in the ‘other’ category (table 1). However, out of those surveys
returned, SECAT program participants submitted the largest overall number (figure 2).
Program participants heard about the various incentive programs from two main sources: equipment
dealers and by word of mouth with 48% and 35% response levels respectively (figure 3). In contrast, less
than 10% of program participants heard about an incentive funding program from a District-sponsored
information source and none reported hearing about a program from a county fair.
Nearly 75% of respondents reported being very satisfied with the program and only five reported that
they were less than satisfied with their respective program (figure 4). A larger percentage of participants
experiencing moderate to low levels of program satisfaction came from the agricultural pump and ‘other’
categories compared to the SECAT program (table 2). In a similar trend, comments received from agricultural
pump projects and ‘other’ projects were more negative compared to SECAT respondents who tended to be
more positive and suggestive (table 3).
Sacramento Metropolitan Air Quality management District
Participant Survey Analysis – 2007
California State Auditor Report 2006-115
June 2007
3
ConCluSIonS and SuggeSTIonS
The participant survey had a fairly high rate of return with similar levels of representation from both SECAT
and agricultural participant sectors. Factors including a postage-paid return address envelope in the survey
packet, keeping survey questions to a minimum, and limiting the survey to one page may have promoted
this level of participation. Less than 40% of participants in the ‘other’ program type returned the survey,
a 20 to 30% reduction in comparison to SECAT and agricultural programs, respectively. There may be various
reasons why they were less prone to return the survey including (a) time constraints (b) less desire to
participate in extra-program requests, or (c) people responsible for filling out the mileage/usage forms may
not be the owner/operator of the equipment. This last reason may contribute to a general feeling of apathy
about the program and the equipment resulting in a lower rate of return. Participants that have either very
positive or very negative feelings about the program are more likely to respond to a participant survey;
those who are fairly neutral may be less likely to participate and comment. To support this idea, only 14% of
participants in the ‘other’ program added a comment to their survey form compared to 20% and 28% from
SECAT and agricultural irrigation pump participants, respectively.
The results on where participants first heard about the program mirrored those found in the SECAT Program:
Fourth-phase Participant Survey conducted in 2002 that phone-interviewed 93 SECAT program participants.
Given that most program participants acquire information about incentive funding possibilities from
equipment dealers and by word of mouth, it is important for the District to assure accurate information is
being disseminated to dealerships if possible. One option to maintain consistent information distribution
could be to require on-going dealer training on program components and provide program updates
when necessary.
The District website, District-sponsored events, and other types of informational pamphlets or flyers appear
to play a minimal role in initial program outreach. However, the District website is probably an important
online information source for participants during other phases of the application and contract periods. If
a future participant survey is planned it may be beneficial to assess the level of use of on-line resources
by participants.
Overall participant reception to the various incentive funding programs has been very good. As stated in
the SECAT Program: Fourth-phase Participant Survey, satisfaction levels of 75% indicate a “favorable result”.
Nearly three out of every four participants in this survey reported being very satisfied indicating the District
implementation of incentive funding programs has been largely successful. For those participants providing
negative comments, 43% were concerned with GPS or high fuel costs, 37% were related to GPS unit
installation and “unnecessary” reporting obligations, and 17% were related to time issues, e.g. slow project
turn-around and time-consuming reporting requirements (see table 4 for complete list of comments).
However, half of the participants expressing negative attitudes toward some program aspects still indicated
high overall satisfactions levels.
Many participants who had GPS units installed on their equipment assumed that GPS units had been paid
for out-of-pocket and not from pre-established program funding leading to a sense of discontent. They
also believed that it would keep track of mileage/hour/location records and negate the necessity of them
having to complete the annual usage survey. For those customers that participated in the GPS monitoring
system, it may be beneficial to send out a brief educational letter explaining the District’s inability to use this
technology and reminding them of the original funding source.
Sacramento Metropolitan Air Quality management District
Participant Survey Analysis – 2007
0 California State Auditor Report 2006-115
June 2007
4
In summary, after a review of the participant survey results, there are several compelling conclusions that
emerged and corresponding suggestions that can be made:
• Participant surveys are generally well-received and returned by a majority of program participants. To reach
those non-responsive participants, incentives may be introduced in future participant survey mailings
such as entrance into a prize drawing for each survey submittal. District $50 gas cards could be offered
as a prize for this purpose.
• Participant surveys are an important way to gauge outreach venues and future outreach focus. Regular
program updates distributed to equipment dealers and/or periodic dealer training sessions may
assure accurate program information is being disseminated to potential participants and those already
in a program.
• Participant surveys are an important way to gauge levels of customer satisfaction. Participant surveys
should be done on an annual basis to continue to monitor program customer service matters.
• Comments are helpful to determine areas of program dissatisfaction and program aspects needing
clarification. Sending out educational flyers or letters may be a beneficial way to address negative
concerns participants face.
• Overall incentive funding program satisfaction is very high. The District should continue to strive to
implement successful programs and address issues as they arise.
As part of our continued efforts to ensure the District is implementing the most successful incentive
programs, staff will continue to seek feedback from participants by making the incentive program
participant survey a regular insert in our annual survey and monitoring program.
Sacramento Metropolitan Air Quality management District
Participant Survey Analysis – 2007
California State Auditor Report 2006-115 1
June 2007
5
Figure 1. Participant Survey form sent with annual usage surveys in Jan 2007.
Sacramento Metropolitan Air Quality management District
Participant Survey Analysis – 2007
2 California State Auditor Report 2006-115
June 2007
Table 1. The total number and percentage of participants that returned a participant survey by program
type.
Total Program % of Total
Program Type No. Responses % of responses
Participants Participants
SECAT 94 43.5 164 57.3
AGPUMP 82 38.0 121 67.8
OTHER 40 18.5 107 37.4
Total 216 100.0 392 55.1
Number of survey participants from each
program category
100 94
90 82
80
70
60
50
40
40
30
20
10
0
SECAT AGPUMP OTHER
Project type
sesnopser
fo
rebmuN
6
Figure 2. Number of participant responses received by program type. Numbers above bars represent
respective sample sizes.
Sacramento Metropolitan Air Quality management District
Participant Survey Analysis – 2007
California State Auditor Report 2006-115
June 2007
Percent of participants by program
information source
60.0
102
50.0
40.0
74
30.0
20.0
17
10.0
8 10
2
0.0
D e al er
W
or
d of M o ut h Br o c h ur e
Di
stri
ct w e b sit e
Di
stri ct E v e nt Ot h er
Information source
sesnopser
latot
fo
tnecreP
Figure 3. Percentage of participant responses by source where they first heard about incentive funding
programs. Numbers above bars represent respective samples sizes.
Percent of participants by program
satisfaction level
80.0 160
70.0
60.0
50.0
40.0
30.0 50
20.0
10.0 5
0.0
V M L
Overall progam satisfaction
sesnopser
fo
tnecreP
7
Figure 4. Percentage of participants reporting program satisfaction levels of high (V), moderate (M),
or low (L). Numbers above bars represent respective sample sizes.
Sacramento Metropolitan Air Quality management District
Participant Survey Analysis – 2007
California State Auditor Report 2006-115
June 2007
8
Table 2. The percentage of participants in each satisfaction category that came from either the SECAT,
agricultural irrigation pump, or other program types.
Satisfaction Level
Program Type Very Moderate Less than
SECAT 46.9 32.0 40.0
AG PUMP 36.3 46.0 20.0
OTHER 16.9 22.0 40.0
% Total 100 100 100
Table 3. The percentage of people in each program type that included positive, negative, or suggestive
comments on their participant survey.
Comment Type
Program Type Positive Negative Suggestive % Total
SECAT 29.2 33.3 37.5 100
AGPUMP 31.3 50.0 18.8 100
OTHER 25.0 50.0 25.0 100
Table 4. List of participant comments (comment type 1=positive, 2=negative, 3=suggestive
Comment
Participant Comment
Type
1 Everything has been great, great program! The last motor we purchased required us to have an expensive
automated hour/tracking/transmitting system to be installed. This is the only engine that we have had
recurring electrical problems with. I am completely unsatisfied with that system--especially since you
are requesting that I manually track the hours anyway. What a total waste of money! When will you start
offering incentives/credits for using biodiesel?
1 excellent program
Sacramento Metropolitan Air Quality management District
Participant Survey Analysis – 2007
California State Auditor Report 2006-115 5
June 2007
9
Comment
Participant Comment
Type
1 excellent program
1 Excellent program. Kay (?) was very helpful in walking us through the process.
1 Find more dough!
1 good
1 good
1 Great opportunity to keep fleet updated. Also helps keep the old trucks off the road, adding to the safety
among the truckers.
1 I am happy with program. I use the motor for pumping water.
1 I believe this to be a good beneficial program that should be continued.
1 I feel that the program has helped me clean up air and burning less fuel than my old truck. Thanks again.
K.S.
1 I think the program is a win win win situation. We get newer trucks. The state gets their federal funds. The
people breathe cleaner air.
1 I think this is a very good program
1 I would use this program again. I have told other people and companies of SECAT. Very good program.
Thank you Cliff
1 I’m satisfied.
1 It has helped me to update my equipment
1 it is a great program
1 it is a great program
1 Keep up the good work and I do love the news letter--very helpful. Thank you.
1 Keep up the great work and hopeful more programs for the future. I do like your new forms to fill out.
1 Only in America
1 Program works very well as we have participated in other programs SECAT recommend for emissions--
new mufflers and crankcase filters.
1 Service and work done on the bus was done well. Dealer assistance has been good.
1 The new cleaner engine is great but the fuel savings are not sufficient to justify us to make the change.
Your program does this for us.
1 The program has bee helpful to us and the cleaner burning motors have been good for environ. Now we
are going to AG ICE program as well.
1 The program is excellent! In our situation our vehicle dropped 10 gallons a day (excellent) =which equals
less pollution. Suggestion: is it possible to adjust the mileage use verses (lower) sum of money allotted?
1 This is a good program. It lowers emissions and improves fuel economy. Why now ask us to replace
these new engines with electric. The conversion to electric is very expensive, new service, motor mod. To
our pumps?
1 This program has been a great help to our operation. We can now get work on jobs which require cleaner
burning equipment. Thank you!
1 This program has been imminently better than ag-ice which has been expensive for growers.
1 Very good program
1 very happy think it is running smoothly
1 We very much appreciate the opportunity to participate in this very fine program
1 Working with Kristian makes the process easy. He is a great asset to the program.
2 1st project was great. 2nd project was a complete waste of my time and money.
Sacramento Metropolitan Air Quality management District
Participant Survey Analysis – 2007
6 California State Auditor Report 2006-115
June 2007
10
Comment
Participant Comment
Type
2 A-Z and Holts did not follow through with manuals and with diagrams or part list that was used. All of
the transmissions that were rebuilt for these jobs have failed. Need to pick a good not cheap rebuilder
next time.
2 Crazy to fill out this form after spending $600-800 for a remote meter.
2 Didn’t seem to make sense to install gps after contact requirements had already been fulfilled.
2 high diesel prices have made the program less attractive
2 I was told that GPS installed would keep track of everything to do with trucks. There is no paperwork to
follow up with miles/ozone etc. It takes too much of my time?
2 It has been great until the price of fuel has risen so much.
2 it was good before diesel got so high
2 Last bus purchased was budgeted by district. Grant among stated by SMAQMD was changed to a lesser
amount after receipt of bus and district. Had to find funding for the difference. Also, no plan in place to
assist with CNG tank replacement. Very costly for a school district to fund.
2 limited use downfall
2 On July 20, 2005 is sent check #5577 in the amount of $646.50 to Satellite Security Systems Inc. for which
they were to install a digital hour meter unit. As of this date 1/27/07 this unit has not been installed. Since
this unit has not been installed are we not entitled to be reimbursed for the $646.50?
2 One of the toughest things is the repetitive request for all mileages in each county? Especially strange
after the GPS odometer was installed. This would take entirely too much time and effort to get these
exact mileages.
2 Our SECAT engine is not cost effective. Our older motors averaged 7.5 mpg. Our SECAT averages 4.9
mpg.
2 Please give us a little more time to complete the survey!
2 The $600/engine for GPS/Time clock reporting was a waste of time/money.
2 The cost of fuel being so high is too expensive. Might change to electric motor for water pump depending
on cost.
2 The electronic tracking systems were expensive and difficult to get installed.
2 The mileage restrictions sometimes make it difficult when scheduling buses for field trips. Basically we
have to use this bus on all field trips whenever possible just to reach the minimum mileage requirements
2 The price of diesel is too high. The cost of switching back and forth to electricity is also expensive
2 The problem with these types of vehicles is the range. We were using these vehicles in the north Natomas
area but the customers were so unhappy with their performance we had to move them. We now use them
in a parking lot shuttle.
2 The program with the state is great trying to get things fixed or checked with the dealer is hard. No one is
responsible for warranty issues! After delivery of truck.
2 the satellite installers did a terrible job and messed up our electrical system
2 the satellite installers did a terrible job and messed up our electrical system
2 time frame between application to product delivery is too long
2 Turn around time is slow. Each project needs a lot of follow-up to get it completed. If questions call.
Thank you
2 Why did we spend $600 an engine for gps transmitters if we have to send in the times?
2 Why do you ask for mileage usage odometer reading when we have a hub meter
2 With the gps system installed why am I still reading the meter?
2 Would have been nice to get latest tier engines that were available.
Sacramento Metropolitan Air Quality management District
Participant Survey Analysis – 2007
California State Auditor Report 2006-115 7
June 2007
11
Comment
Participant Comment
Type
2 You need to fund the cost offset to be less than going with the Donaldson unit. Even with the funding it is
still over $1000 cheaper to put a Donaldson unit on which does not clean the air as good.
3 A summary form for reporting would be simpler with a lot less paper. Should be able to report online like
other programs
3 Equipment should not be limited to a single air district. Should be statewide.
3 I have not been traveling as far to work so my mileage maybe off. But I have averaged 1400 hours a year
and I feel that the hours should be looked at not mileage in my type of work
3 I have spoken to many of the trucking companies in the Sacramento area. I believe if you would have a
map of the area that you could five to these companies. They would be very interested. They believe all
driving must be in the Sacramento city limits.
3 I think area should include all of Yuba and Sutter counties. There would probably be more participation in
the program. The dirty air from Yuba and Sutter counties gets to Sac.
3 I would like to see the district use hours for monitoring instead of miles, construction in the sac area. We
idle a lot waiting to get loaded. A lot of jobs are very short hauls; we may put 12 hours running the truck
and not rack up many hours.
3 I would like to see some expenses in propane HP to 130
3 Increase the size of the attainment area north and south and more of our trucks would fit into the profile.
3 investment tax credit format per dollar value of horsepower re-powered would be a much better method
than Carl Moyer
3 It would be nice to have flexibility in hour usage since wet vs. dry years determines how much groundwater
pumping (engine usage) you do.
3 need program for old tractors ag tractors, harvesters, etc.
3 Need to take picture of the truck being traded in. When the application is first being submitted to the
program for approval.
3 please connect fleet number with future survey requests
3 Should go back to electric with a set rate. And no demand charge.
3 Sorry this took so long, at the pumps were all at the shop. The big engine had to be started because of the
digital tachometer and hours.
3 We are running a biofuel blend in this equipment. B99- i.e. 99% biodiesel in summertime. You might
consider added incentives for biofuel use since there are some NOx benefits
3 We use fleet number to identify our units crossing over vin numbers to our fleet number is time
consuming. You have the fleet numbers for those units on file. Can they be included in the mileage usage
survey requests?
3 What are you doing to promote use of bio-diesel which would have a much bigger effect than getting rid of
a few old trucks?
Sacramento Metropolitan Air Quality management District
Participant Survey Analysis – 2007
California State Auditor Report 2006-115
June 2007
Blank page inserted for reproduction purposes only.
California State Auditor Report 2006-115
June 2007
CoMMenTS
CAlIfoRnIA STATe AudIToR’S CoMMenTS on The
ReSPonSe fRoM The SACRAMenTo MeTRoPolITAn AIR
QuAlITy MAnAgeMenT dISTRICT
To provide clarity and perspective, we are commenting on
the response to our audit from the Sacramento Metropolitan
Air Quality Management District (Sacramento Metropolitan air
district). The numbers correspond with the numbers we have
placed in the district’s response.
1 While preparing our draft audit report for publication, our title
changed slightly.
2 While preparing our draft audit report for publication,
page numbers shifted. Therefore, the page numbers that the
Sacramento Metropolitan air district cites throughout its response
do not correspond to the page numbers in our final report.
3 We believe the district’s concerns are exaggerated. As we indicate
on page 24, maximizing emission reductions—achieving the same
emission reductions for a lower cost or more emission reductions
for the same cost—is a key goal of the Moyer Program. We clearly
point out that increasing the 10 percent cap for the multidistrict
component will better maximize emission reductions achieved
through the Moyer Program. We also point out on page 28 that,
for the periods we reviewed, a minimum of 78 percent of the funds
added to the multidistrict component by increasing the cap
would have returned to the four districts we visited. Further, we
mention on pages 28 and 29 that emission reductions derived
from increasing the 10 percent cap can benefit individual local
air districts as well. For example, had the cap been 15 percent
for Moyer Program funds appropriated in fiscal year 2005–06,
the South Coast Air Quality Management District (South Coast
air district) would have lost 20 projects from six applicants. The
annual emission reductions from all those projects totaled 7.6 tons
for nitrogen oxide and reactive organic gases and 1.5 tons for
particulate matter. For 10 of the 20 projects, total annual emission
reductions were only 0.05 tons. On the other hand, two of the
additional projects that would have been funded by the multidistrict
component would have operated a portion of their time in the
South Coast air district. One project would have annually achieved
emission reductions totaling nearly 130 tons of nitrogen oxide and
4.5 tons of particulate matter.
Finally, the district overstates the threat that a decrease in the
local air districts’ Moyer Program funds could lead to the loss of
federal highway funds. Although we acknowledge that under the
100 California State Auditor Report 2006-115
June 2007
Clean Air Act the federal government can prevent the approval of
highway projects or grants as one possible sanction if a state does
not submit an adequate state implementation plan or implement
part of its plan, but according to the U.S. Environmental Protection
Agency, such sanctions are rare. Additionally, we believe the risk of
federal sanctions solely because of changes in the Moyer Program’s
multidistrict component is negligible because, as indicated
previously, the net change in funding to the local air districts will be
small and districts could achieve even greater emission reductions
than they could have achieved through locally funded projects.
4 We thank the Sacramento Metropolitan air district for sharing the
results of its recent survey of participants in its incentive programs,
including the Moyer Program. Such a survey, which demonstrates
the importance of word-of-mouth advertising and provides
feedback from participants about the quality of the district’s
incentive programs, is an important element of evaluating the
district’s marketing efforts. However, it still does not demonstrate
that the district’s marketing efforts are effective at attracting
projects from sectors with lower cost per ton of intended emission
reductions. The district states that its “analysis indicates that in the
end [its] overall cost effectiveness is similar to districts which use
the RFP [request for proposal] process.” Evaluating the district’s
marketing efforts to determine whether they are attracting projects
with lower cost per ton of intended emission reductions would give
the district an indication of whether it could do better.
5 Our assessment that the Sacramento Metropolitan air district’s
data was not sufficiently reliable for the purposes of this audit is
narrowly defined to include only those data elements pertinent
to the audit. Some of the district’s project files did not contain
information—such as date-stamps—necessary to verify the
accuracy of certain data in the district’s database. Our assessment
should not be construed as an overall evaluation of the district’s
database, as such an evaluation was beyond the scope of this audit.
6 As we state on page 36, given the differences that exist among the
districts, the best practices we identify may not be applicable in
all cases.
7 Its comments notwithstanding, the information we present
in our report related to the number days from application
receipt to receipt of signed contract, application withdrawal, or
December 31, 2006, whichever occurred first, is based on the
evidence the Sacramento Metropolitan air district provided.
Although the district told us that in some cases it held over
applications from one year to the next when it ran out of Moyer
Program funds, it did not provide sufficient evidence that would
California State Auditor Report 2006-115 101
June 2007
cause us to change our conclusions. Further, while the district was
reviewing our draft report, we converted our results to months to
be consistent with other text in this section.
8 It is not clear why the district simply restates information
we mentioned in our report. We state on page 56 that
postimplementation monitoring is a requirement for Moyer
Program funds appropriated in fiscal year 2005–06, which the
district calls “Year 8.” We also state that these projects do not have
to be completed until June 2008 and that, as of December 31, 2006,
none of the projects funded with fiscal year 2005–06 allocations
that we reviewed had been completed for at least one year
(the point at which the first report would be due). Further, we state
that the local air districts performed these inspections to varying
degrees for earlier fiscal years, even though such monitoring was
not required.
102 California State Auditor Report 2006-115
June 2007
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California State Auditor Report 2006-115 10
June 2007
(Agency response provided as text only.)
San Joaquin Valley Air Pollution Control District
Central Region (Main Office)
Seyed Sadredin, Executive Director
1990 E. Gettysburg Avenue
Fresno, CA 93726-0244
June 1, 2007
Elaine M. Howle, State Auditor*
Bureau of State Audits
555 Capital Mall, Suite 300
Sacramento, CA 95814
RE: San Joaquin Valley APCD Response to
Carl Moyer Memorial Air Quality Standards Attainment
Program Audit Recommendations
Dear Ms. Howle,
The San Joaquin Valley Air Pollution Control District (SJVAPCD) wishes to thank you and your staff for the
thorough and comprehensive audit report of the SJVAPCD’s implementation of the Carl Moyer Memorial
Air Quality Standards Attainment Program (Carl Moyer program). Additionally, we want to thank you for
recognizing and highlighting the “best practices” observed during your review of our program. The SJVAPCD
strives to provide the highest quality customer service across all of our programs, while maintaining the
utmost integrity and efficiency.
We appreciate this opportunity to gain important feedback on the operational efficiencies of our program
and value the recommendations that have been put forth. Independent programmatic evaluations such
as this often lead to substantial improvements in the administration of statewide programs like the Carl
Moyer Program.
The attached document provides the SJVAPCD’s responses to the referenced audit recommendations.
If you have any questions, please do not hesitate to call me at (559) 230-6000.
Sincerely,
(SIgned by: Seyed Sadredin)
Seyed Sadredin
Executive Director/APCO
* California State Auditor’s comments appear on page 107.
10 California State Auditor Report 2006-115
June 2007
San Joaquin Valley Air Pollution Control District
Responses to Bureau of State Audits Recommendations
1 Chapter 1 Recommendations – Pages 5-61
To better maximize the use of Moyer Program funds, local air districts should do the following:
· Develop and implement techniques to measure the effectiveness of their marketing methods.
Specifically, they should identify those business sectors from which they will obtain applications for
more cost-effective projects, evaluate whether their current marketing efforts are reaching these
sectors, implement marketing efforts to target the sectors, and assess whether these efforts enable
them to select projects with more cost-effective emission reductions.
SJVAPCD Response
The SJVAPCD has identified agricultural irrigation pump engines as the most cost-effective project-type in
the San Joaquin Valley and has conducted targeted marketing of the industry. SJVAPCD-funded projects
have historically been and continue to be extremely cost-effective. However, to enable the San Joaquin
Valley to attain Federal and State air quality goals, it may be necessary to fund less cost-effective projects
in certain areas or projects that provide additional air quality benefits that cannot be measured solely by
gauging a project’s relative cost-effectiveness. The SJVAPCD will continue to use cost-effectiveness as one of
many tools to measure the effectiveness of our grant programs.
To improve their administration of the Moyer Program, local air districts should consider implementing
the following best practices:
· Include measures of pollution or the effects of pollutants in their approaches for identifying
disproportionately impacted communities.
SJVAPCD Response
Thank you for the recommendation. The SJVAPCD will consider including measures of pollution or the
effects of pollutants for identifying disproportionately impacted communities.
· Include a measure for comparing the average cost per ton of intended emission reductions when
selecting projects from disproportionately impacted communities.
SJVAPCD Response
Thank you for the recommendation. The SJVAPCD will consider including a measure for comparing the
average cost per ton of intended emission reductions when selecting projects from disproportionately
impacted communities.
· Include in their contracts provisions that projects selected from disproportionately impacted
communities continue to provide benefits from reduced emissions to those communities
after implementation.
6/1/2007 1
California State Auditor Report 2006-115 105
June 2007
SJVAPCD Response
Thank you for the recommendation. For projects funded within communities disproportionately impacted
by air pollution, the SJVAPCD will consider including provisions in our contracts that would require a certain
percentage of usage within those disproportionately impacted communities for the life of the project.
· Use a single application for their Moyer Program application process.
SJVAPCD Response
The SJVAPCD uses separate guidance documents and applications for each project type to better assist
applicants with the complexities of the Moyer Program Guidelines. Each SJVAPCD guidance document 2
and application only contains the necessary information that is needed by the applicant for their specific
project. By only requiring the necessary information to process a particular project, the SJVAPCD has
significantly reduced the amount of confusion experienced by the applicants during the application process.
· Allocate Moyer Program funds to applicants as soon as possible.
SJVAPCD Response
The SJVAPCD currently employs several of the audit recommendations, including: delegated authority to
approve projects and execute contracts from the Governing Board, consolidated pre- and post-inspections,
and several operational streamlining measures that allows the allocation of Moyer Program funds in a timely
manner, as identified in the audit.
· Implement a one-contract-per-applicant system.
SJVAPCD Response
The SJVAPCD currently uses a one-contract-per-applicant system unless there are contractual or technical
reasons to use more than one contract. More than one contract has been issued to several agricultural
irrigation pump electrification projects due to the time it takes utility companies to perform their extensive
engineering analysis prior to project approval for larger, multiple engine projects. More than one contract
was executed in these instances to allow the applicants the ability to install a portion of their electric motors
as expeditiously as possible to meet critical irrigation schedules.
· Include in their contracts specific milestones against which the applicants and local air district staff can
measure the progress of their projects.
SJVAPCD Response
The SJVAPCD agrees with this recommendation, and is already in the process of adding measurable
milestones in Moyer Program contracts.
· Include in their contract specific provisions that require applicants to complete projects and submit
invoices a specific number of days or weeks before the June 30 deadline.
6/1/2007 2
106 California State Auditor Report 2006-115
June 2007
SJVAPCD Response
Thank you for the recommendation. The SJVAPCD will consider adding contract provisions that require
applicants to complete their projects and submit invoices a specific number of days or weeks before the
June 30 deadline, as appropriate.
· Obtain delegated authority from governing boards to approve Moyer Program projects and execute
contracts. If their governing boards are not comfortable in providing delegated authority to approve
all Moyer Program projects, obtain delegated authority to approve the more routine projects or those
projects below a specified dollar amount.
SJVAPCD Response
The SJVAPCD agrees with this recommendation. SJVAPCD staff currently has Governing Board-delegated
authority to approve projects and execute contracts.
1 Chapter 2 Recommendations – Pages -0
To improve their administration of the Moyer Program, local districts should consider implementing the
following best practices:
· Conduct consolidated pre-inspections to the extent practicable.
SJVAPCD Response
The SJVAPCD agrees with this recommendation. Due to the geographic size of the SJVAPCD, consolidated
inspections are already being conducted to maximize staff efficiency.
· Impose stricter standards (for example, caps on individual grant awards or lower average cost per ton
of intended emission reductions) on project categories to the extent that such action does not reduce
involvement in the Moyer Program.
SJVAPCD Response
The SJVAPCD agrees with this recommendation and currently imposes stricter standards on project
categories that do not reduce involvement in the Moyer Program.
6/1/2007 3
California State Auditor Report 2006-115 107
June 2007
CoMMenTS
CAlIfoRnIA STATe AudIToR’S CoMMenTS on The
ReSPonSe fRoM The SAn JoAQuIn vAlley unIfIed AIR
PolluTIon ConTRol dISTRICT
To provide clarity and perspective, we are commenting on the
response to our audit from the San Joaquin Valley Unified Air
Pollution Control District (San Joaquin Valley air district). The
number corresponds with the number we have placed in the
district’s response.
1 While preparing our draft audit report for publication, page
numbers shifted. Therefore, the page numbers that the San Joaquin
Valley air district cites in its response do not correspond to the page
numbers in our final report.
2 As we state on page 36, given the differences that exist between
local air districts, the best practices we identify may not be
applicable in all cases.
10 California State Auditor Report 2006-115
June 2007
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California State Auditor Report 2006-115 10
June 2007
(Agency response provided as text only.)
South Coast Air Quality Management District
21865 Copley Drive
Diamond Bar, CA 91765-4178
Office of the Executive Officer
Barry R. Wallerstein, D.Env.
909.396.2100, fax 909.396.3340
May 31, 2007
Ms. Elaine M. Howle*
State Auditor
555 Capitol Mall, Suite 300
Sacramento, CA. 95814
Dear Ms. Howle,
Enclosed please find the South Coast Air Quality Management District’s response to your audit report 1
titled “The Carl Moyer Memorial Air Quality Standards Attainment Program: Improved Practices in
Applicant Selection, Contracting, and Marketing Can Lead to More Cost-Effective Emission Reductions and
Enhanced Operations.”
An electronic version of our response was already e-mailed to you and Mr. Dale Carlson today, May 31, 2007.
As requested in your letter of May 24, 2007, we have enclosed both a hard copy and an electronic copy of
our response uploaded on the diskette that you have provided with the draft report.
We appreciate the professional and diligent work conducted by your staff, and I thank you for having the
opportunity to respond to your audit report.
Sincerely,
(Signed by: Barry R. Wallerstein)
Barry R. Wallerstein, D.Env.
Executive Officer
Enclosures
* California State Auditor’s comments begin on page 115.
110 California State Auditor Report 2006-115
June 2007
South Coast Air Quality Management district Staff’s Response and Comments
to the California State Auditor’s Report
The following are the comments of the South Coast Air Quality Management District (SCAQMD) staff on the
audit recently conducted by the California State Auditor (CSA) on the implementation of the Carl Moyer
Memorial Air Quality Standards Attainment Program in California.
As an initial comment, we appreciate the professional and the diligent work conducted by the CSA staff, and
we would like to thank the CSA for recognizing the SCAQMD for establishing many of the “best practices”
identified in the report for the implementation of the Carl Moyer Program such as including a measure of
pollution for projects in disproportionately impacted areas; having one contract per applicant for several
pieces of equipment; and establishing project milestones in the contracts.
The SCAQMD in cooperation with CARB has been able to manage hundreds of projects and expend funds
for implementation of thousands of low-emitting engines and heavy-duty vehicles in a successful manner.
Moreover, it should be noted that the SCAQMD has been able to achieve an average cost-effectiveness
of $4,000 per ton in projects funded by Carl Moyer, which is substantially lower than the program cap of
$14,300. This means that the SCAQMD has achieved anticipated emission reductions to date that are far
greater than expected by the legislature.
With respect to the audit findings and recommendations, SCAQMD would like to provide specific comments
and clarifications with regard to four issues: (1) timely expenditure of Carl Moyer Program funds (2) the
suggestion that the legislature increase funding to the California Air Resources Board for multi-district
projects; (3) the concern over reliability of SCAQMD data used to evaluate cost-effectiveness of projects; and
(4) the suggestion that the District’s need to improve the measures used to evaluate the effectiveness of
their Carl Moyer Program outreach to potential project applicants.
Expenditure of Funds
The audit concludes that for FY 2005-2006 and earlier the SCAQMD failed to meet the two year deadline in
California Health & Safety Code section 44287(k) to expend program funds. In making this determination,
CSA has correctly noted that “not all Moyer Program participants agree on the definition of the word
2 expended” as used in the Code. CARB has interpreted the term to mean “spend,” or otherwise to have paid
out on an invoice related to a project. SCAQMD, along with other Districts, interpret the term to require that
the funds be obligated within two years through issuance of a binding contract.
As an initial matter, given the specific clarification of this term by CARB in issuing its most recent Carl Moyer
Program guidelines, SCAQMD has conformed its program to CARB’s current definition of “expended.” In light
of these guidelines, SCAQMD has modified its Carl Moyer Program to adhere fully with CARB’s interpretation.
SCAQMD has developed specific project timelines, which were recently incorporated in the SCAQMD’s
Carl Moyer Program Guidelines, to ensure that all contracts are fully executed within one year and that
invoices are received and paid within two years. To ensure that these timelines will be strictly adhered to, the
SCAQMD has expanded its Carl Moyer staff significantly, and starting “Year 7” we require and are on schedule
with project obligations and expenditures. Most importantly, we have made substantial improvements and
have reduced the unspent funds from previous years significantly during the past year, and are on schedule
to spend the funds as defined by CARB.
California State Auditor Report 2006-115 111
June 2007
Although the SCAQMD program now conforms to CARB’s expectations that all funds will be obligated
and spent within two years, we continue to strongly disagree with all audit findings that our program
was previously in non-compliance with section 44287(k). As stated in our response to the Department
of Finance’s finding regarding unspent Moyer funds, the District and other parties must follow the plain
meaning of the statutory language establishing the program when determining a definition of “expended.”
That language makes it clear that Moyer funds are expended when an award is made. One of the provisions
in the Moyer statute, Health and Safety Code section 44291(d), requires the state Air Resources Board to
recapture Moyer funds not yet awarded when a District does not follow program criteria. One of those
criteria, as the Department of Finance and State Auditor has pointed out, is that Districts must expend Moyer
funds within two years. However, section 44291(d) states that the state board “shall not recapture funds
already awarded to approved projects.” We believe that this language does not support the Department of 3
Finance’s and State Auditor’s position on the proper interpretation of the term “expended” as it relates to the
recapturing of program funds. If the State Auditor and Department of Finance interpretation is correct, then
the state board would be obliged to recapture any funds that have not been paid to a contract recipient
within two years, even if a contract has been awarded. The quoted language of section 44291(d), however,
expressly forbids recapturing funds when an award had been made.
Moreover, as CSA has pointed out, South Coast’s interpretation of the legislative intent is supported in 4
CARB’s 2003 Carl Moyer Guidelines which require only that the funds reserved to a district be “obligated,”
which the District has done, and which we interpreted to mean encumbered so as to be consistent with
CARB guidelines. On pages 5-6 of the 2003 Guidelines, CARB states: “Districts must report project status
including specific projects, state fund expenditures, additional funds obligated via contract or contracts in
progress, and remaining funds that have not been obligated. Any funds not obligated by contract at the
end of fiscal year are subject to reallocation as determined by the interpretation of Proposition 40 by the
California Department of Finance.”
In auditing the South Coast and the other air districts, neither the State Auditor nor the Department of 5
Finance has made any mention of this contradictory language contained in the Carl Moyer legislation.
Without comment, nor a recommendation to review the legislation to correct what appears to be a
contradiction, these agencies have missed the opportunity to provide meaningful direction to improve the
Moyer program performance.
Finally, we would also like to note that during this audit CSA staff did not provide SCAQMD staff an 6
opportunity to discuss its view of section 44287(k) or provide information regarding the steps the SCAQMD
has taken to comply with the time requirements in CARB’s most recent program guidelines. We were
informed that CSA’s audit concentrated on the new Moyer Program starting “Year 7” funded with SB1107 and
AB923 funds and implemented under CARB’s new guidelines. We were not asked to provide information, 7
clarification, and details about the first six years of the program, but the CSA report refers to the findings
of the CARB and the Department of Finance audit reports regarding unspent funds during the first six
years of the program, which was conducted almost a year ago. During that period, the Carl Moyer Program
was implemented on a yearly basis with no guarantee of continuous funding and under a different set
of guidelines and requirements. As stated above, the guidelines back then only required obligation of
funds within a certain period of time with no time requirements for expenditure, which the SCAQMD fully 3 4
complied with. The SCAQMD implemented its program through an annual solicitation process for a large
variety of equipment, and although some of the projects are still in progress, we were able to choose
projects with cost-effectiveness levels of two to three times lower than the program limit and with a good
distribution in disproportionately impacted areas. Thus, we believe SCAQMD fully achieved the emission
reduction goals of the program.
112 California State Auditor Report 2006-115
June 2007
Increasing Multi-District Funding
The CSA report also recommends increasing funding to the CARB for multi-district projects, which CSA
concludes could qualify projects at a lower cost-effectiveness compared to some projects funded by the
Districts. The report also suggests that in some cases provisions in District contracts requiring the equipment
8 to operate a majority of the time in their jurisdictions (the “75% clause”) could result in greater benefit to a
larger region or the state as a whole.
9 We don’t believe that the report presents a bona-fide case for a substantial legislative change to the Carl
Moyer Program. Most importantly, the SCAQMD believes that the current Carl Moyer legislation recognizes
that each District has its own unique needs with regards to reducing air pollution. In Districts, like the
SCAQMD, that are designated as areas with severe air pollution problems, as many projects as possible
need to be implemented within these jurisdictions. The current legislation specifically provides that the
cost effectiveness of projects may vary from District to District. This recognizes that it may be justified to
pay more per ton to reduce air pollution in those areas of the state that require more reductions to achieve
the standards. While it might be more cost effective if the projects cover the state or larger regions, it would
surely mean that much needed reductions could be lost in the most polluted areas of the state.
Finally, to date, the multi-district projects selected by CARB and granted to SCAQMD for implementation
have been construction equipment projects. In our annual solicitation process, our maximum allowable
limit for these types of projects is only $5,000 per ton, and in reality most of the selected projects are within
the range of $2,000 to $3,000 per ton. Furthermore, as is the case with every other project, we have had
multi-district projects for which funds have been returned, and in those cases we have been told by CARB
to reallocate the funds to our local projects. In short, we believe that that the statute recognizes for good
reason that the Districts should primarily be the source of selecting projects to implement in that each
District’s air pollution reductions needs are different, and in any event it does not appear that increasing the
multi-district funding cap will actually reduce emissions more cost effectively throughout California.
Data Reliability
10 The CSA report states that the auditing staff was unable to determine average cost per ton of emission
reductions because there is no hardcopy evidence of these calculations and some data was of
undetermined reliability and some was sufficiently reliable. The SCAQMD is puzzled with this statement, as
all our calculations are available on spreadsheets with CARB-approved calculation formulas and emission
factors, and all the usage data used in calculations are available and verified in the submitted applications.
The SCAQMD was audited by both CARB and Department of Finance last year and our data and calculations
were reviewed and found reliable. We invite CSA staff to sit down with us and review the cost effectiveness
data for individual projects.
Outreach
11 The CSA report states that notwithstanding the various marketing efforts used, the effectiveness of the
efforts have not been adequately measured by SCAQMD staff. As we try to continuously improve this aspect
of the program, we believe we have done a lot of targeted outreach efforts with measured effectiveness.
As an example, through an annual competitive solicitation process we select consultants with proven
track records who are able to help us throughout the year to increase potential applicants’ knowledge and
awareness about our program and funding availability for specific equipment categories.
California State Auditor Report 2006-115 11
June 2007
The SCAQMD has invested time and funds into developing an effective outreach program. The effectiveness
of our outreach is measured in more then the number of program applications received – it is clearly
indicated by the success of the program in reducing emissions, the awareness in the community of the
program, the relationships between SCAQMD staff and industry that have been developed over the past
seven years, and most importantly the diversity of the various projects we have funded.
11 California State Auditor Report 2006-115
June 2007
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California State Auditor Report 2006-115 115
June 2007
CoMMenTS
CAlIfoRnIA STATe AudIToR’S CoMMenTS on The
ReSPonSe fRoM The SouTh CoAST AIR QuAlITy
MAnAgeMenT dISTRICT
To provide clarity and perspective, we are commenting on the
South Coast Air Quality Management District’s (South Coast
air district) response to our audit report. The numbers below
correspond to the numbers we have placed in the margins of the
South Coast air district’s response.
1 While preparing our draft audit report for publication, our title
changed slightly.
2 As we mention on page 48 of our report, it is clear that the State
Air Resources Board (state board) and the Department of Finance
(Finance) both expected the South Coast air district to spend
funds from the Carl Moyer Memorial Air Quality Standards
Attainment Program (Moyer Program) within the two-year period
of availability, not merely obligate them for projects. The state
board, as the department responsible for implementing the
Moyer Program, has considerable discretion in defining how this
program will be administered. This broad authority includes setting
standards and defining terms as long as they are consistent with
state law.
3 The South Coast air district’s mention of Section 44291(d)
of the Health and Safety Code is off point. Generally, this
section of law relates to the state board’s monitoring of local air
districts’ implementation of the Moyer Program and describes
actions the state board must take or cannot take. For instance,
it directs the state board to include provisions in its monitoring
procedures to “recapture” funds that a district has not yet awarded
to projects if the district fails to show that it is operating its
program within requirements. The last sentence of this section
mentions that the state board cannot recapture funds that the
district has already awarded to projects.
Although this section may not give the state board the authority
to recapture funds from local districts in certain circumstances,
other sections of the Health and Safety Code related to the Moyer
Program impose requirements on districts and their use of
unexpended funds. As we mention on page 46 of our report, funds
not expended by June 30 of the second calendar year after the state
board allocates them revert to the State. Further, districts must
return unexpended funds to the state board within 60 days after
that. We based our statements about these requirements on Section
44299.2(c) of the Health and Safety Code. This section states that all
116 California State Auditor Report 2006-115
June 2007
funds must be expended within two years of the date of allocation,
unexpended funds must be returned to the State within 60 days,
and these returned funds will be subject to reallocation. This
section clearly places responsibility on any entity with unexpended
funds, including local air districts, to return those funds to
the State.
4 We disagree with the South Coast air district’s assertion that
versions of the Moyer Program guidelines before January 2006
require only that funds be obligated. On page 162 of the guidelines
dated September 2003, in the section titled “Application to
Administer Program,” the state board plainly states that by June of
the second year, “all funds must have been spent [emphasis added]
on projects.”
5 Notwithstanding the assertions by the South Coast air district, the
slow spending of Moyer Program funds is a strong indication that
the South Coast air district is not achieving the prompt emission
reductions intended by law. Further, as we indicated in comment 2
earlier, Section 44291(d) of the Health and Safety Code relates to
the state board’s monitoring of local air districts’ implementation
of the Moyer Program while Section 44299.2(c) of the Health and
Safety Code relates to returning unexpended funds. We do not see a
contradiction between these two sections.
Finally, according to our legal counsel, the rules governing the
construction of statutes indicate that the statutes should be
harmonized, if possible, with other laws related to the same subject.
Also, there is a strong presumption that the law is valid. The
ultimate resolution of the meaning of a statute, however, always
rests with the courts. As noted previously we do not see a conflict
between the two provisions of law.
6 We disagree with the comment that staff of the Bureau of State
Audits (bureau) did not provide the South Coast air district an
opportunity to discuss its view. Contrary to its assertion, the bureau
provided the South Coast air district with ample opportunities.
On April 3, 2007, audit staff discussed with representatives of
the South Coast air district our tentative issues, including the
district’s slow spending. On May 9, 2007, audit staff held an exit
conference with the district, again discussing our issues, including
the district’s slow spending. During these discussions, the South
Coast air district raised no concerns with how we characterized
its position on this issue. Further, we told the district during these
meetings that if it had questions or concerns about any of the
issues discussed to please contact the audit team. In subsequent
conversations, the South Coast air district never mentioned that
the bureau did not offer it a chance to explain its position nor did it
refute the wording we used to describe its position. We based our
California State Auditor Report 2006-115 117
June 2007
report’s wording related to the South Coast air district’s position
on its nearly four-page written response to the state board’s audit
report on this issue and its one and one-half page written response
to Finance’s audit report.
7 The South Coast air district is incorrect when it states that it was
informed that our audit would concentrate on Moyer Program
funds starting in year 7 (fiscal year 2004–05). In an e-mail sent
November 16, 2006, in advance of our visits to the four local air
districts, the bureau’s audit team leader informed the district,
“Our audit scope is broad.” When the bureau held an entrance
conference with the district on November 28, 2006, the team leader
informed the district that although our audit would focus primarily
on Moyer Program funds appropriated in fiscal years 2004–05 and
2005–06, the audit team may obtain and review evidence related to
Moyer Program funds from other years as necessary.
8 Because we redacted the statement’s source in the draft version of
the report we sent to the South Coast air district for comment, the
district seems to incorrectly attribute this statement to the bureau.
On page 41 we state, “The San Joaquin Valley air district supervisor
believes that by funding projects based in the district but operating
more broadly, the program benefits not only the district but also the
region and the State as a whole.”
9 We acknowledge the South Coast air district has its own point of
view. Notwithstanding the district’s position, our report, beginning
on page 25, shows that increasing the 10 percent cap for the
multidistrict component will better maximize emission reductions,
a key goal of the Moyer Program. Further, we mention on page 28
that emission reductions derived from increasing the 10 percent
cap can benefit individual local air districts as well. For example,
had the cap been 15 percent for Moyer Program funds appropriated
in fiscal year 2005–06, the South Coast air district would have lost
20 projects from six applicants. The annual emission reductions
from all those projects totaled 7.6 tons for nitrogen oxide and
reactive organic gases and 1.5 tons for particulate matter. For
10 of the 20 projects, total annual emission reductions were
only 0.05 tons. On the other hand, two of the additional projects
that would have been funded by the multidistrict component
would have operated a portion of their time in the South Coast
air district. One project would have annually achieved emission
reductions totaling nearly 130 tons of nitrogen oxide and 4.5 tons
of particulate matter.
10 The South Coast air district’s concerns regarding data reliability
are misplaced. As we state in footnote 4 on page 16, we did not
determine the accuracy of the cost per ton of intended emission
11 California State Auditor Report 2006-115
June 2007
reductions because of the lack of hard copy documentation of
the calculations or because recalculating the cost-effectiveness of
projects was beyond the scope of our audit.
11 The South Coast air district appears to miss our point. On page 34
we acknowledge that the local air districts, including the South
Coast air district, use a variety of methods to market their Moyer
programs. Furthermore, we single out the South Coast air district
for special mention because the district has identified a business
sector—off-road construction—with the potential for projects with
a low cost per ton of intended emission reductions. However, the
district lacks defined goals and benchmarks with which to measure
whether its marketing effectively reaches those business sectors
with the potential for more cost-effective emission reductions.
California State Auditor Report 2006-115 11
June 2007
cc: Members of the Legislature
Office of the Lieutenant Governor
Milton Marks Commission on California State
Government Organization and Economy
Department of Finance
Attorney General
State Controller
State Treasurer
Legislative Analyst
Senate Office of Research
California Research Bureau
Capitol Press