Memorandums of Understanding—Broadening the Impact of State Actions

Updated February 9, 2015

States are increasingly taking action to influence the alternative fuel and advanced vehicle market and improve related policy objectives. Realizing that there is power in numbers, states have found unique ways to collaborate and achieve synergistic results from their collective actions. Memorandums of understanding (MOUs) have proven an effective first step in formalizing a commitment between states to achieve the end goal of conserving petroleum in the transportation sector.

The MOUs discussed below are just two examples of multi-state commitments that have furthered alternative fuel technologies by:

• Increasing purchasing power
• Positively affecting state energy planning and state legislative action
• Sharing best practices and regional trends
• Influencing funding decisions
• Encouraging collaboration between states and with local entities and industry.

Other successful multi-state MOUs have been integral in the development of interstate alternative fuel corridors, such as the I-5 corridor MOU signed by California, Oregon, and Washington in 2008, which resulted in the West Coast Electric Highway.

Multi-State Natural Gas Vehicle Procurement MOU

As a result of an initial collaboration between officials in Colorado and Oklahoma in 2011, 16 governors from across the United States (see box) signed an MOU to stimulate the production and demand for original equipment manufacturer (OEM) natural gas vehicles (NGVs). The MOU aims to aggregate state vehicle procurement through a joint request for proposals (RFP) to encourage OEMs to offer functional and affordable NGVs, boost private investment in natural gas fueling infrastructure, and encourage greater coordination between state and local agencies. By signing the MOU, the governors pledged their support and participation.

Subsequently the National Association of State Procurement Officials coordinated the solicitation of a joint RFP, which the Oklahoma Department of Central Services (DCS) issued on behalf of 22 states (see box). After evaluating more than 100 individual bids, inclusion in state vehicle purchasing was awarded to dealers in all 22 states, plus California, Georgia, Maryland, Missouri, New Hampshire, and New Jersey. These 111 Chrysler, Ford, General Motors, and Honda dealers agreed to offer at least one of the NGV model options outlined in the table below for use in state fleets. Additional awards in the future may mean even more NGV options for fleets.

Vehicles Awarded

Make & Model	Type	Dedicated	Bi-fuel
Chevrolet Express 2500	Cargo van	X
Chevrolet Express 3500	Cargo van	X
Chevrolet Silverado 2500	Pick-up truck		X
Dodge Ram 2500	Pick-up truck		X
Ford E-250	Cargo van	X	X
Ford E-350	Cargo van	X	X
Ford F-250	Pick-up truck	X	X
Ford F-350	Pick-up truck	X	X
Ford Transit Connect	Cargo van	X	X
GMC Savana 3500	Cargo van	X
GMC Sierra 2500	Pick-up truck		X
Honda Civic Natural Gas	Compact car	X

Successes

States that are party to the natural gas MOU now have access to more affordable NGVs for government fleets. In Oklahoma, for example, the post-RFP cost of a Dodge Ram 2500 pick-up truck was reduced by about 17% compared to the previous contract option, resulting in a savings of $6,300 per vehicle.¹ The cost of a Ford F-250 pick-up truck available in Colorado after the RFP was 19% less, or an $8,000 savings per vehicle.² Colorado purchased more than 230 NGVs between 2012 and 2014.³ "By aggregating vehicle purchases, state fleets have the ability to provide a demand base sufficient to support the design, manufacture, and sale of functional and affordable NGVs, in turn saving public dollars and encouraging the use of domestic energy resources," affirmed Wes Maurer, Transportation Program Manager for the Colorado Energy Office. Oklahoma state agencies, political subdivisions, and higher education entities purchased a total of 543 NGVs in Fiscal Years 2013 and 2014. Estimated lifetime savings from those purchases is over $4.2 million.⁴

The positive impacts of the MOU extend far beyond state fleet vehicle purchases. The participating states have seen additional commitment to and investment in infrastructure, engagement by local entities, and vehicle availability for consumers. For instance, Colorado leveraged its participation in the MOU to procure $30 million in grant funding from the Federal Highway Administration's Congestion, Mitigation and Air Quality Improvement (CMAQ) program to increase natural gas fueling infrastructure.⁵ Colorado also developed a separate MOU between 29 entities (including the state, cities, natural gas utilities, infrastructure providers, and state associations) to accelerate the deployment of NGVs and associated infrastructure, and passed legislation to further expand tax incentives for NGVs. "By removing barriers for alternative fuel vehicle (AFV) adoption through station development and vehicle deployment, individual vehicle owners and fleet managers are able to more confidently take advantage of lower fuel costs and emissions savings," Maurer commented.

In another example, the Oklahoma Secretary of Energy and Environment held a series of town hall meetings attended by state agency personnel, city managers, local elected officials, vehicle dealers, CNG retailers, and the general public.⁶ These events demonstrated public demand for new CNG infrastructure, publicized incentives available for infrastructure and vehicle conversions, and built local support to encourage retailers to make targeted investments in areas of the state needing additional fueling stations.⁷ Oklahoma also initiated a state-level MOU in December 2013 to develop a partnership between the governor, legislators, political subdivisions, and state and local entities to advance infrastructure development in the state.⁸ According to Craig Sundstrom, Oklahoma's Deputy Secretary of Energy, "Oklahoma is capitalizing on the opportunity presented by this clean, low-cost, abundant, and domestic transportation fuel. Transitioning to CNG in state fleets is translating to millions of dollars in net lifecycle savings and helping to support the growth of CNG fueling infrastructure around the region."

As intended, the multi-state MOU and resulting purchases are also influencing the NGV market across the country. More OEMs are releasing NGV models and providing additional options for consumers and fleets alike. For example, General Motors recently released the 2015 Chevrolet Impala bi-fuel NGV. In addition, coordinated efforts at the state and local levels continue to implement the MOU's goals. In October 2014, Virginia Governor Terry McAuliffe released the 2014 Virginia Energy Plan, which highlights opportunities for the use of a state contract to deploy alternative fuel vehicles and fueling infrastructure to meet the needs of the state fleet.⁹

For more information on the multi-state MOU, see the DCS Statewide Contract for Natural Gas Vehicles solicitation page.

Zero Emission Vehicle and Infrastructure Advancement MOU

The electric and hydrogen fuel cell vehicle industries have also benefited from a strong MOU between a diverse group of states. Once again building on initial discussions between a small group of state officials and with the support of Northeast States for Coordinated Air Use Management (NESCAUM), governors from eight states (see box) signed an MOU on October 24, 2013, to coordinate actions in support of deploying at least 3.3 million zero emission vehicles (ZEVs) and adequate fueling infrastructure by 2025. In addition to helping each state meet their goals for vehicle and infrastructure deployment, the MOU will assist OEMs in achieving sales targets, as OEMs are required to sell an increasing percentage of ZEVs. More specifically, signatory states agreed to:

• Participate in a ZEV Program Implementation Task Force and prepare a plan of action to accomplish the MOU goals
• Report annually on ZEV registrations and both public and workplace fueling infrastructure for ZEVs
• Take actions to promote ZEV use through efforts such as streamlining building codes and supporting consistent standards for EVSE installation
• Establish ZEV purchase targets for state agency fleets and seek to coordinate vehicle and fueling infrastructure procurement within and across signatory states
• Evaluate and pursue incentives for ZEVs, both monetary and non-monetary
• Develop uniform standards and promote interoperability to support ZEV consumer acceptance, industry compliance, and economies of scale
• Establish public-private partnerships with manufacturers, fuel providers, fleet owners, financial institutions, and others
• Share research, coordinate outreach campaigns, and collaborate with other efforts already working to support ZEV deployment, such as the U.S. Department of Energy's Clean Cities program
• Study deployment strategies and infrastructure requirements necessary to commercialize hydrogen fuel cell vehicles.

As a result of this initial MOU, in May 2014, the ZEV Program Implementation Task Force released the Multi-State Action Plan identifying the following 11 action items to support the MOU goals, guide interstate coordination, and advise state-specific action. Under the Action Plan, the states will:

• Promote the availability and effective marketing of all plug-in electric vehicle (PEV) models
• Provide consumer incentives to enhance the ZEV ownership experience
• Lead by example by increasing ZEVs in state, municipal, and other public fleets
• Encourage private fleets to purchase, lease, or rent ZEVs
• Promote workplace charging
• Promote ZEV infrastructure planning and investment by public and private entities
• Provide clear and accurate signage to direct ZEV users to charging and fueling stations and parking
• Remove barriers to ZEV charging and fueling station installations
• Promote access, compatibility, and interoperability of the PEV charging network
• Remove barriers to the retail sale of electricity and hydrogen as transportation fuels and promote competitive PEV charging rates
• Track and report progress toward meeting the goal of 3.3 million ZEVs on the road by 2025.

This commitment to ZEV deployment does not stand on its own. The states are backing up their commitment with strong actions to achieve their goals for ZEV deployment in place. For example, Governor Dannel P. Malloy explained, "This initiative is consistent with Connecticut's Comprehensive Energy Strategy and our focus on providing cheaper, cleaner, and more reliable power for our residents and businesses. [...] In keeping with that approach, we launched a grant program to speed construction of 200 publically available electric vehicle charging stations by early 2014."¹⁰

For more information on the ZEV MOU, Action Plan, and related progress, see the NESCAUM Multi-State ZEV Task Force website.

Early Successes

Although the ZEV MOU has only been in place for a short period of time, several states have already made significant new commitments to vehicle and infrastructure deployment. For example, in June 2014, Massachusetts deployed a rebate program for consumers purchasing a PEV in the state. Maryland increased the available tax credit for the purchase or lease of a PEV from $1,000 to $3,000 and enhanced its charging equipment purchase incentive. In addition, Vermont formed an interagency working group and released a state ZEV Action Plan in September 2014, which describes specifically how the state will address the goals outlined in the multi-state MOU through efforts such as incentives and engaging other public and private entities. Other states are in the process of taking similar actions to grow the ZEV market.

Steps to Achieving Success with Multi-State MOUs

• Start small. Both the NGV and ZEV MOUs began with ongoing discussions between a defined group of states. Once the initial goals are outlined, other states can be asked to join the effort.
• Ensure high-level commitment, agency staff engagement, and public involvement. The respective state governors signed the NGV and ZEV MOUs directly, but agency staff must commit to implementing their provisions. Buy-in by the public can broaden the positive impact even further.
• Set milestones for progress toward goals. The ZEV MOU stated that within six months of signing, the ZEV Implementation Task Force should prepare a plan of action to accomplish the goals in the MOU.¹¹ The ZEV Action Plan was published in May 2014.
• Monitor progress toward goals, quantitatively if possible. States such as Colorado and Oklahoma are closely tracking how many vehicles are purchased under the solicitation resulting from the NGV MOU. To accurately track implementation, coordinating entities must have access to the appropriate data.
• Ensure the effort is consistent with other initiatives and goals that individual states are pursuing. New York Governor Andrew Cuomo stated that the ZEV MOU "builds on" the state's Charge NY Initiative.¹²
• Engage local partners. MOU efforts may start at the state level, but it is important to engage city and county governments that may be able to participate in state procurement and increase the impact of the MOU. Oklahoma continues to engage local communities, private retailers, and other interested stakeholders across the state to showcase the benefits of NGVs and attract the investment in CNG fueling infrastructure necessary to fully realize these benefits.

¹ The Multistate CNG MOU: An Oklahoma Update, presentation by Jay Albert, Jan 15, 2014
² Implementation of Multi-State NGV MOU, presentation by Tom Hunt, Jan. 10, 2014
³ Personal correspondence, Wes Maurer, Colorado Energy Office, Oct. 6, 2014.
⁴ Personal correspondence, Craig Sundstrom, Oklahoma Secretary of Energy and Environment, Nov. 4, 2014, and Oklahoma Office of Management and Enterprise Services, Central Purchasing Division, Procurement Savings Report.
⁵ State of Colorado, "Gov. Hickenlooper announces $30 million award to increase state's natural gas fueling infrastructure," Dec. 19, 2013
⁶ The Multistate CNG MOU: An Oklahoma Update, presentation by Jay Albert, Jan. 15, 2014
⁷ Personal correspondence, Craig Sundstrom, Oklahoma Secretary of Energy and Environment, Nov. 4, 2014.
⁸ The Multistate CNG MOU: An Oklahoma Update, presentation by Jay Albert, Jan. 15, 2014
⁹ 2014 Virginia Energy Plan, October 2014
¹⁰ State of Rhode Island and Providence Plantations, "Governors Announce Bold Initiative to Put 3.3 Million Zero-Emission Vehicles on the Road by 2025," Oct. 24, 2013
¹¹ State Zero-Emission Vehicle Programs: MOU
¹² State of Rhode Island and Providence Plantations, "Governors Announce Bold Initiative to Put 3.3 Million Zero-Emission Vehicles on the Road by 2025," Oct. 24, 2013