City Council
Report
City Council Meeting: May 23, 2023
Agenda Item: 5.A
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To: Mayor and City Council
From: Rick Valte, Public Works Director, Public Works, Fleet Services Subject: Authorization to Issue Purchase Orders to AAA Oil, Inc., for the Purchase and Delivery of Renewable Diesel Fuel
Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of Categorical Exemption pursuant to Section 15301 (Existing Facilities) of the California Environmental Quality Act (CEQA) guidelines
2. Authorize the Procurement Manager to issue purchase orders with AAA Oil, Inc., dba California Fuels and Lubricants, for the purchase and delivery of renewable diesel fuel for the Public Works Department and Fire Department. This recommended award is made as an exception to the competitive bidding process pursuant to Section 2.24.250 (c) and is for a total amount not to exceed $2,024,418 (including a 15% contingency) with future year funding contingent on Council budget approval.
Summary
The City of Santa Monica’s Fleet Management Division purchases renewable diesel fuel for certain heavy-duty vehicles and equipment to support the City’s Sustainable City Plan goals of reduced emissions. AAA Oil, Inc. is the current renewable diesel provider for the State of California in the Los Angeles County area. Staff recommends the issuance of purchase orders that utilize the State of California Contract No. 1-23-91- 31C, for the purchase of renewable diesel fuel for the Fleet Management Division and Fire Department for a total amount not to exceed $2,024,418 (including a 15% contingency for fluctuations in fuel pricing) for a three-year period, through May 1, 2026, with the option for two one-year extensions, for a total contract term of five years through May 1, 2028, if extensions are exercised by the City. 2 of 5
Discussion
The City’s vehicles and equipment run on a wide variety of fuel types, including renewable natural gas (RNG), electricity, propane, unleaded, and diesel fuels. Public Works staff, in coordination with the Sustainable Fleet Team, are actively working toward reducing greenhouse gas (GHG) emissions to meet the goals of the Sustainable City Plan and the Climate Action and Adaptation Plan, which aims for 80 percent reductions below 1990 levels by 2030 and carbon neutrality by 2050 or sooner (Attachment A).
Renewable diesel fuel sold in California is derived from waste animal fat from the food processing industry and from waste fat from the fish processing industry. Renewable diesel fuel generates fewer carbon and greenhouse gas emissions and is used by the City for certain heavy-duty vehicles and equipment when other alternative fuel equipment options are not available.
In February 2023, the State of California solicited bids for the purchase and delivery of renewable diesel fuel, which included a stipulation that the contract would be available for use by participating local agencies. The State of California’s three-year contract expires on May 2, 2026, with the option for two one-year extensions, which could extend the contract through May 1, 2028. The State of California’s procurement process allows for other local municipalities to use contract No. 1-23-91-31C for the purchase of renewable diesel fuel.
The City has used renewable diesel fuel since May 2017. A total of 100 City vehicles and pieces of equipment (67 in Public Works and 33 in the Fire Department) are powered with renewable diesel fuel. This includes heavy-duty Fire apparatus, mediumduty Fire Station Utility and command vehicles, crane trucks, backhoe loaders, tractors, and asphalt rollers. It is the City’s goal to reduce the number of diesel-powered equipment as new technologies become available. Since the last contract for renewable diesel fuel in 2019, the City has reduced its diesel-powered equipment by 10% and continues to explore alternatively fueled heavy-duty equipment when replacing old equipment as they become readily available.
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The chart below lists average reductions in criteria pollutants when comparing renewable diesel against conventional diesel usage, according to the California Environmental Protection Agency:
NOX emissions: -10%
Particulate Matter (PM) emissions: -28%
Carbon Monoxide (CO) emissions: -28%
Total Hydrocarbon emissions: -48%
With respect to greenhouse gas (GHG) emissions, the Environmental Protection Agency (EPA), calculates the carbon intensity of renewable diesel to be on average 60% percent lower than that of conventional diesel. The diesel delivered through the State’s bid is a combination of 95% renewable diesel and 5% biodiesel which provides a carbon intensity of 40, as opposed to 90 of conventional diesel. 4 of 5
Exception to Competitive Bidding
Staff recommends AAA Oil, Inc. to furnish and deliver Renewable Diesel Fuel as an exception to competitive bidding per Muni Code 2.24.250 (c). This purchase meets the City’s exception to competitive bidding criteria, as competitive procedures were followed by the State of California and the goods or services are supplied to the City at the same or better price. Due to economies of scale, the State of California is able to secure a better price for renewable diesel fuel, purchasing throughout the state, and in conjunction with other government entities, versus Santa Monica going out to bid on our own for the approximately 51,000 gallons used last year. c. competitive procedures were followed by a governmental agency, federal, state, county, city, joint powers agency, special district, or cooperative purchasing agency and the goods or services are supplied to the City at the same or better price; Environmental Review
The purchase order for renewable fuel is categorically exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15301 (Existing Facilities) of the CEQA Guidelines. Section 15301 exempts Class 1 (Existing Facilities) projects from CEQA, which include the operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities, mechanical equipment, or topographical features, involving negligible or no expansion of existing or former use. The purchase order for renewable fuel would not result in any modifications to existing fueling facilities and would not expand or materially change existing fueling operations or increase the fleet of vehicles or equipment using renewable fuel.
Therefore, the project is categorically exempt as set forth in Section 15301 of the CEQA State Guidelines.
Financial Impacts and Budget Actions
Staff seeks authority to approve funding from the Vehicle Management Fund and General Fund to award purchase orders with AAA Oil, Inc. for the purchase and delivery of renewable diesel fuel. Funds are included in the FY 2023-25 Proposed Biennial Budget.
Future year funding is contingent upon Council budget approval. 5 of 5
Purchase Order Request
FY 2023-
2024
Request
Amount
Future Years
Amount Department Account # Total Purchase
Order Amount
$132,250 $529,000 70500001.521810 $661,250
$272,634 $1,090,534 01190001.521810 $1,363,168
$404,884 $1,619,534 Total $2,024,418
Prepared By: Doris Mejia, Senior Administrative Analyst Approved Forwarded to Council
Attachments:
A. Sustainable City Plan
B. AAA Oil Oaks 2023