BOARD MEETING STATE OF CALIFORNIA AIR RESOURCES BOARD KERN COUNTY BOARD OF SUPERVISORS BOARD CHAMBERS FIRST FLOOR 1115 TRUXTUN AVENUE BAKERSFIELD, CALIFORNIA THURSDAY, DECEMBER 7, 2006 9:00 A.M. JAMES F. PETERS, CSR, RPR CERTIFIED SHORTHAND REPORTER LICENSE NUMBER 10063 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 ii APPEARANCES BOARD MEMBERS Dr. Robert F. Sawyer, Chairperson Ms. Sandra Berg Ms. Dorene D'Adamo Dr. Henry Gong Mr. Barbara Patrick Mrs. Barbara Riordan STAFF Ms. Catherine Witherspoon, Executive Officer Mr. Tom Cackette, Chief Deputy Executive Officer Mr. Michael Scheible, Deputy Executive Officer Ms. Lynn Terry, Deputy Executive Officer Mr. Tom Jennings, Acting Chief Counsel Mr. Bob Barham, Assistant Chief, Stationary Source Division Mr. Richard Bode, Chief, Health and Exposure Assessment Branch Dr. Kenneth Bowers, Population Studies Section Ms. Janette Brooks, Chief, Air Quality Measures Branch Ms. Edie Chang, Manager, Carl Moyer Off-Road Section Mr. Kevin Cleary, Research Division Mr. Richard Corey, Chief, Research and Economics Studies Branch PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iii APPEARANCES CONTINUED STAFF CONTINUED Dr. Bart Croes, Chief Research Division Mr. Bob Cross, Chief, Mobile Source Control Division Mr. John DaMassa, Chief, Modeling & Meteorology Branch Mr. Michael Fitzgibbon, Manager, Emission Control Technology Section Mr. Bob Fletcher, Chief, Stationary Source Division Mr. Chris Gallenstein, Air Pollution Specialist Ms. Annette Hebert, Chief, Mobile Source Operations Division Ms. Kitty Howard, Manager, Stationary Source Division Mr. Vernon Hughes, Manager, Atmospheric Modeling & Support Section Mr. Bob Jenne, Senior Staff Counsel Mr. John Kato, Manager, Carl Moyer Innovative Strategies Section Mr. Jack Kitowski, Chief, On-Road Controls Branch Ms. Diane Kiyota, Staff Counsel Ms. Johanna Levine, Air Pollution Specialist Mr. Harold Mace, Supervisor, Field Inspection and Testing Section Ms. Karen Magliano, Chief, Air Quality Data Branch Ms. Sylvia Morrow, Manager, Particulate Matter Analysis Section Ms. Linda Murchison, Chief, Planning & Technical Support Division Mr. Kirk Oliver, Senior Staff Counsel PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iv APPEARANCES CONTINUED STAFF CONTINUED Mr. Andrew Panson, Air Pollution Specialist Mr. George Poppic, Senior Staff Counsel Mr. Tom Roemer, Air Pollution Specialist Ms. Sobna Sahni, Technical Evaluation Section Ms. Carla Takemoto, Manager, Technical Evaluation Section Mr. Mike Tollstrup, Chief, Project Assessment Branch Mr. John Urkov, Chief, In-Use Vehicle Programs Branch Mr. Tom Valencia, Air Pollution Specialist Ms. Patricia Velasco, Air Pollution Specialist Dr. Barbara Weller, Manager, Population Studies Section ALSO PRESENT Mr. Ed Appleton, Metal Finishing Association of Southern California Ms. Nikki Ayers, Ayers Automotive Repair Mr. Brian Bateman, Bay Area Air Quality Management District Mr. Richard Battaini, Sheedy Drayage Company Mr. Dennis Becvar, Metal Finishers Mr. Sam Bell, Metal Surfaces, Inc. Mr. Geoffrey Blake, Drilube/All Metals Mr. John Cabaniss, Association of International Automobile Manufacturers Mr. Les Clark, IOPA PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 v APPEARANCES CONTINUED ALSO PRESENT Ms. Gloria Cordle, California Association of Tree Trimmers and Landscapers Horticultural Industry Ms. Carol Coy, South Coast Air Quality Management District Mr. Manual Cunha, National Farmers League Mr. Daniel Cunnigham, Metal Finishing Association of Southern California, Service Technology Association Mr. Mike Cusack, American Concrete Pumping Association Mr. William Davis, MCCA, SCCA, EUCA, ACPA Mr. Steve Douglas, Alliance of Automobile Manufacturers Mr. Lance Ericksen, Monterey Bay Unified Air Pollution Control District Ms. Paula Forbis, Environmental Health Coalition Ms. Ann Gallon, Sierra Club Mr. Frank Grana, California Electroplating, Inc. Mr. Seth Hammond, Specialty Crane & Rigging Mr. Jim Jacobs, Operating Engineers Ms. Francisca, Jimenez, Environmental Health Coalition Mr. Denny Kahler, Automotive Service Association Mr. Marty Keller, California Automobile Business Coalition Mr. Bob Klingenberg, Automotive Service Council of California Association Mr. Mike Konle, Champion Crane Rentals, Inc. Mr. Michael Lewis, Construction Industry Air Quality Coalition Mr. Bob Lieberman, Putzmeister PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 vi APPEARANCES CONTINUED ALSO PRESENT Mr. Aaron Lowe, Automotive After-Market Industry Association Mr. Ray Lucas, Metal Finishing Association of Southern California, Service Technology Association Mr. Kingsley Macomber, Motorcycle Industry Council Mr. Jed Mandel, Engine Manufacturers Association Mr. Alvan Mangalindan, Crane Owners Association Mr. John Marrs, Chrome Craft, Surface Technology Association Mr. Tony Martino, General Motors Mr. Bob McBride, A.C. Plating Mr. John McClelland, Ph.D., American Rental Association Ms. Renee Nelson, Clean Water & Air Matter Mr. Carl Nord, Environmental Systems Products Mr. Alan Olick, Metal Finishing Association of Southern California Ms. Trina Panaqua, Garvey Equipment Company Mr. Dave Patterson, Mitsubishi Motors Mr. Norman Plotkin, California Automotive Wholesalers Association Mr. Alan Prescott, Ford Motor Company Ms. Cathy Reheis-Boyd, Western States Petroleum Association Mr. Gary Rohman, Association of General Contractors Ms. Blanca Romero, Environmental Health Coalition Mr. Sara Rudy, Ford Motor Company PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 vii APPEARANCES CONTINUED ALSO PRESENT Mr. Seyed Sadredin, San Joaquin Valley Air Pollution Control District Mr. Dean Saito, South Coast Air Quality Management District Ms. Sarah Sharpe, Coalition for Clean Air Mr. Dick Stuart, Maxim Crane Works Mr. James Thomas, Nabors Well Services Mr. Arthur Sadredin, Sierra Club Mr. Phil Vermeulen, ECA Ms. Jill Whynot, South Coast Air Quality Management District Ms. Jane Williams, California Communities Against Toxics PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 viii INDEX PAGE Pledge of Allegiance 1 Roll Call 1 Opening remarks by Chairperson Sawyer 2 Resolution to Barbara Patrick 3 Item 06-11-1 Chairperson Sawyer 13 Executive Officer Witherspoon 15 Staff Presentation 15 Item 06-11-2 Chairperson Sawyer 21 Executive Officer Witherspoon 21 Staff Presentation 22 Board Discussion & Q&A 32 Ex Parte Communications 34 Motion 34 Vote 35 Item 06-11-3 Chairperson Sawyer 35 Deputy Executive Officer Terry 36 Executive Officer Witherspoon 37 Staff Presentation 38 Board Discussion and Q&A 49 Mr. Sadredin 58 Mr. Cunha 59 Ms. Reheis-Boyd 63 Mr. Clark 64 Item 06-11-4 Chairperson Sawyer 68 Executive Officer Witherspoon 69 Staff Presentation 70 Ombudsman Quetin 79 Board Discussion and Q&A 81 Ms. Coy 90 Mr. Lewis 92 Mr. Jacobs 98 Mr. Vermeulen 104 Mr. Davis 106 Mr. Mangalindan 112 Mr. Hammond 117 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 ix INDEX CONTINUED PAGE Item 06-11-4(continued) Mr. Konle 120 Mr. Battaini 130 Mr. Stuart 132 Mr. Cusack 133 Ms. Cordle 136 Mr. McClelland 139 Mr. Rohman 142 Mr. Ericksen 143 Mr. Lieberman 146 Ms. Panaqua 149 Mr. Thomas 151 Mr. Sadredin 153 Ex Parte Communications 156 Board Discussion and Q&A 157 Motion 161 Vote 162 Afternoon Session 163 Item 06-8-3 Chairperson Sawyer 163 Executive Officer Witherspoon 163 Staff Presentation 166 Ombudsman Quetin 178 Mr. Bateman 180 Mr. Cunningham 181 Mr. Blake 184 Mr. Appleton 189 Mr. Becvar 190 Mr. Grana 193 Mr. Olick 194 Mr. Marrs 196 Mr. Bell 200 Mr. McBride 204 Mr. Lucas 206 Mr. Pomeroy 210 Ms. Forbis 213 Ms. Jimenez 218 Ms. Romero 224 Ms. Williams 230 Ms. Sharpe 233 Ms. Whynot 234 Board Discussion and Q&A 237 Ex Parte Communications 245 Motion 251 Vote 252 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 x INDEX CONTINUED PAGE Item 06-11-5 Chairperson Sawyer 252 Executive Officer Witherspoon 253 Staff Presentation 254 Ombudsman Quetin 266 Board Discussion and Q&A 267 Mr. Douglas 270 Mr. Patterson 274 Ms. Rudy 276 Mr. Martino 283 Mr. Prescott 285 Mr. Kahler 306 Mr. Cabaniss 310 Mr. Mandel 313 Mr. Keller 320 Ms. Ayers 321 Mr. Plotkin 324 Mr. Lowe 329 Mr. Klingenberg 332 Mr. Macomber 334 Ms. Gallon 337 Mr. Saito 338 Board Discussion and Q&A 340 Motion 345 Vote 346 Item 06-11-6 & 06-11-7 Chairperson Sawyer 346 Executive Officer Witherspoon 347 Staff Presentation 347 Ombudsman Quetin 358 Mr. Saito 359 Mr. Nord 360 Board Discussion and Q&A 361 Motion 362 Vote 362 Item 06-11-8 Chairperson Sawyer 362 Executive Officer Witherspoon 363 Staff Presentation 365 Board Discussion and Q&A 369 Public Comment Ms. Nelson 372 Mr. Unger 374 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 xi Adjournment 377 Reporter's Certificate 378 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 1 1 PROCEEDINGS 2 CHAIRPERSON SAWYER: Good morning. The 7 3 December 2006 Public Meeting of the Air Resources Board 4 will now come to order. 5 Would all please rise and join me in the Pledge 6 of Allegiance. 7 (Thereupon the Pledge of Allegiance was 8 Recited in unison.) 9 CHAIRPERSON SAWYER: Thank you. 10 Will the Clerk of the Board please call the roll. 11 BOARD CLERK ANDREONI: Ms. Berg? 12 BOARD MEMBER BERG: Here. 13 BOARD CLERK ANDREONI: Ms. D'Adamo? 14 BOARD MEMBER D'ADAMO: Here. 15 BOARD CLERK ANDREONI: Dr. Gong? 16 BOARD MEMBER GONG: Here. 17 BOARD CLERK ANDREONI: Ms. Kennard? 18 Mayor Loveridge? 19 Supervisor Patrick? 20 BOARD MEMBER PATRICK: Here. 21 BOARD CLERK ANDREONI: Mrs. Riordan? 22 BOARD MEMBER RIORDAN: Here. 23 BOARD CLERK ANDREONI: Supervisor Roberts? 24 Dr. Sawyer? 25 CHAIRPERSON SAWYER: Here. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 2 1 BOARD CLERK ANDREONI: Mr. Chairman, we have a 2 quorum. 3 CHAIRPERSON SAWYER: Thank you. 4 I have a few opening remarks. 5 First, I would like to thank the Kern County 6 Board of Supervisors staff for making this hearing room 7 available to us and for assisting the Air Resources Board 8 staff in making this meeting possible. 9 Next, I would like to recognize the extraordinary 10 service of Supervisor Barbara Patrick, who has served this 11 Board since 1997, and to our great dismay will be 12 participating in her final meeting as an Air Resources 13 Board member today. 14 Barbara, if you would please come forward, I'd 15 like to present you with a special plaque that 16 commemorates the number of air pollutant tons reduced 17 during your service on the Board. 18 (Laughter.) 19 CHAIRPERSON SAWYER: When I'm finished I'm going 20 to give my colleagues an opportunity to congratulate you 21 as well. Then you'll get the last word. But you must 22 wait until then. 23 (Laughter.) 24 CHAIRPERSON SAWYER: Barbara. 25 As you know, it's our tradition to present PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 3 1 outgoing Board members with a numerical accounting of the 2 number of tons reduced during their service. And in your 3 case it reads 260,000 tons per year of new emission 4 reductions from June 1997 through December 2006. Thank 5 you, for the people of California, for cleaning our air so 6 effectively. 7 BOARD MEMBER PATRICK: Thank you so much. 8 (Applause.) 9 CHAIRPERSON SAWYER: If I can find the next part. 10 We also wish to present to you an official 11 resolution from the Board. We'll put it this way. It 12 will be passed around for signatures, so we won't give it 13 to you until we get all the signatures of all the Board 14 members. But I would like to read the resolution. 15 "WHEREAS, Supervisor Barbara Patrick 16 has served with dedication and 17 distinction on the Air Resources Board 18 since 1997 and has also served Kern 19 County as a member of the Board of 20 Supervisors from 1994 to present, 21 Chairing that Board in 1996 and 2001; 22 "WHEREAS, Supervisor Patrick has 23 been singularly effective in Chairing 24 the Policy Committee of the Central 25 California Air Quality Studies Program, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 4 1 representing the study region in 2 Washington DC by working with Senator 3 Diane Feinstein and the House of 4 Representatives to raise substantial 5 funds and providing unique insight into 6 the issues of the San Joaquin Valley, 7 farm capital of the nation; 8 "WHEREAS, Ms. Patrick's many years 9 of experience as a kindergarten teacher 10 have given her the magical ability to 11 herd cats, patiently and calmly, 12 achieving consensus among vastly 13 divergent interest groups on important 14 public health and air quality issues; 15 "WHEREAS, Barbara is extremely 16 personable and gifted as a clear, 17 concise and insightful communicator who 18 can zoom in on what is essential and 19 wastes no time on what is not. 20 "WHEREAS, many at the Air Resources 21 Board have been touched by Barbara as a 22 mentor, leader and friend, whose zest 23 for life and ability to enjoy people and 24 listen to their concerns and 25 perspectives has made a difference in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 5 1 improving our air and bringing sunshine 2 into our lives; 3 "and, WHEREAS, Barbara -- Supervisor 4 Patrick is leaving the Air Resources 5 Board to enjoy the pleasures of travel, 6 gardening and choosing new pursuits; 7 "Now", therefore BE IT RESOLVED, 8 that the Board will greatly miss 9 Barbara's collegiality, foresight, 10 friendship and organizing abilities, and 11 thanks for her years of hard work to 12 improve California's air quality. 13 "BE IT FURTHER RESOLVED, that the 14 Board wishes Barbara the best that life 15 has to offer and sincerely hopes that 16 she will not forever leave the arena of 17 air pollution control behind." 18 Thank you, Barbara. 19 (Applause.) 20 BOARD MEMBER PATRICK: Thank you so much. 21 CHAIRPERSON SAWYER: And I suspect that some of 22 your colleagues may have something to say before we give 23 you the last word. 24 Start with -- 25 BOARD MEMBER RIORDAN: I'd be happy to start, Mr. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 6 1 Chairman. 2 You know, when I realized how many tons of 3 pollutants we have -- during Supervisor Patrick's tenure 4 have accomplished in terms of lessening, I'm impressed. 5 But we had such a good time doing it at the same time. 6 (Laughter.) 7 BOARD MEMBER RIORDAN: And, you know, I hope that 8 those of you in the audience that are from this wonderful 9 San Joaquin Valley realize how well she has represented 10 you and your interests. I can't think of anyone who has 11 reached out more to a lot of competing interests at times 12 to help resolve some of the issues that were before you. 13 This is an incredible woman who has given so much to the 14 health of the great San Joaquin valley, and you're very 15 lucky to have had her. And you'll be very wise to call on 16 her for many more years to come, because she has such a 17 wealth of information. 18 I'd also like to say that in looking at the 19 picture of the San Joaquin Valley, Barbara Patrick never 20 lost sight of all of California. And I think that's a 21 real gift. You sometimes can represent your own interests 22 quite well, which she did; but she never forgot that it's 23 all of California that needed to be protected. And so she 24 did a wonderful job. And we are sorry to see her go, but 25 know that she will have a wonderful retirement, I hope. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 7 1 And we hope to see her in the very near future. 2 Thank you. 3 CHAIRPERSON SAWYER: Thank you. 4 (Applause.) 5 CHAIRPERSON SAWYER: Ms. D'Adamo. 6 BOARD MEMBER D'ADAMO: Well, I'm not sure how 7 this works. 8 I don't think I can really add to what Mrs. 9 Riordan just said, because she really did say it all. We 10 had a dinner for you last night. And it was just, once 11 again, wonderful to sit across from you and enjoy your 12 friendship. 13 And I'm just so struck by your unique ability to 14 see a path in particular for the valley. I think for many 15 of us when we venture into a new arena, of anything, but 16 especially when it comes to regulation, it can be quite 17 fearful. And you know firsthand from dealing directly 18 with the affected industries. But you never lost sight of 19 public health; and, more importantly, the path to get 20 there was with patience and with the facts and all those 21 efforts that you made tracking back and forth to 22 Washington DC and to Sacramento to get the funds so that 23 the fears of many in the valley could be allayed and they 24 could rest certain that this Board and the many other 25 regulatory bodies that are using that information were on PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 8 1 solid footing. And as a result we see here complete 2 consensus in the valley and moving forward toward the 3 goals so that those numbers on that plaque will be doubled 4 some day soon. 5 So thank you so much. And I just look forward to 6 our continued friendship, Barbara. 7 BOARD MEMBER PATRICK: Thank you, Dede. 8 (Applause.) 9 BOARD MEMBER BERG: Barbara, as I listen to our 10 colleagues and look out at the audience and just have a 11 sense of excitement for you as you move on and a little 12 bit of sadness for us, because we will miss you terribly. 13 And one of the things that has struck me in the comments 14 from last night and the comments this morning is the fact 15 that your passion just spread on this Board; and because 16 of your leadership and your mentoring, I was a better 17 Board member, and I so appreciate that. 18 And so I have just jotted down a few words that 19 just so remind me of who you are and sets an example for 20 who I want to be, and that is a leader, a mentor, a 21 friend, with determination, grace, humor and fun. And I 22 will miss that smile at that end of the table. 23 Thank you. 24 BOARD MEMBER PATRICK: Thank you very much. 25 (Applause.) PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 9 1 BOARD MEMBER GONG: I second all the previous 2 comments again. I agree with them 110 percent. In my 3 actually relatively brief span on the Board, I have come 4 to appreciate individuals as well as the entire Board as a 5 whole. And, Barbara, you really stand out in my mind, as 6 listed before, as a mentor, a leader, a colleague, and as 7 a friend and a person. 8 I wish again, as I mentioned last night, that you 9 weren't leaving. There's much to be learned from you, I 10 think. You've already given so much, and much has been 11 accomplished as was already mentioned. And I just wish I 12 could just have you here again at more of these meetings 13 with your lovely smile and personality and decision 14 making. 15 In fact I was thinking I wish I even had you as 16 my kindergarten teacher. 17 (Laughter.) 18 BOARD MEMBER GONG: I think that's your secret. 19 BOARD MEMBER PATRICK: You know, you probably 20 would have been a doctor if you'd had me as your -- 21 BOARD MEMBER GONG: Look what happened to me. 22 (Laughter.) 23 BOARD MEMBER GONG: Anyway, but we really 24 appreciate you obviously, the people of California, San 25 Joaquin Valley, the Air Resources Board and ourselves. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 10 1 Thank you very much for your time with us. 2 BOARD MEMBER PATRICK: Thank you very much. 3 (Applause.) 4 CHAIRPERSON SAWYER: Supervisor Patrick. 5 BOARD MEMBER PATRICK: Okay. Just a few brief 6 comments. 7 First of all, I want to introduce some important 8 people. I'd like to introduce Supervisor Ray Watson from 9 Kern County. He is one of my colleagues. He's my 10 alternate on the San Joaquin Valley Air Pollution Control 11 District. And I'm very, very grateful that he's here 12 today. Thank you very much, Ray. 13 I want to introduce Supervisor Judy Case from 14 Fresno, who was here for our symposium that we had 15 yesterday and stayed over so she could see part of today's 16 meeting. 17 And then of course my staff, because we've all 18 mentioned that I've been gone a lot. When you're on a 19 statewide board, you're gone a lot. And we know who keeps 20 the home fires burning, who keeps the constituents happy. 21 And I'd like to introduce Stephanie Lynch, if you'd stand 22 please; Paul Sorenson; and Bert McCarthy -- are you 23 here? -- and Burt McCarthy. Please give them a big round 24 of applause. They've been so helpful. 25 (Applause.) PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 11 1 BOARD MEMBER PATRICK: I can't tell you how 2 grateful I am that all of the folks from ARB arranged to 3 have this meeting here. It really means a lot. And what 4 they didn't tell you about the dinner last night is how 5 they kind of gave me the impression that I'm a little 6 bossy, a little opinionated. They're being really nice 7 now compared to what they said last night. But of course 8 that was away from the TV screens. 9 But, you know, people have asked me for the last 10 12 years, "Has this been what you" -- "Has being on the 11 Board of Supervisors been what you thought it would be?" 12 And I can say absolutely, other than I never in my wildest 13 dreams could have imagined that I would serve three 14 governors on this Board. It has been an honor. It has 15 been a great honor. 16 And I see Manny Cunha. I don't know if any of 17 your colleagues are around. 18 You know, San Joaquin Valley has come a long way. 19 Dede has talked a lot about how we've come a long way. 20 First of all, we definitely have the attention of our 21 statewide air quality folks. Not that we didn't before, 22 but I think our struggles here in the valley are of top 23 importance to my colleagues on this Board, to all the 24 thousand or so people that work for the Air Resources 25 Board. And it has been a partnership all the way. And PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 12 1 when we go back to Washington DC and we say we need money 2 for these air quality studies, we are there hand in hand 3 with the Air Resources Board, the Valley Air District and 4 all of our good friends that represent industry in this 5 area. Because all of us recognize that we have air 6 quality challenges and that the people of the valley 7 deserve clean air just like everyone in our great nation 8 does, and we are all committed to working on that. 9 So I'm going to be gone for a short period of 10 time. I've promise them I'll be sitting in the back of 11 the room up there in Sacramento one day and watching the 12 good work that you do. But I will never forget all that 13 you have all done for me. And we will continue to work on 14 valley issues. I'm not going anywhere. So I won't be on 15 this Board anymore, but I will still be committed to my 16 great San Joaquin valley. 17 Thank you. 18 (Applause.) 19 CHAIRPERSON SAWYER: Thank you so much, Barbara. 20 Three more brief announcements and then we'll get 21 started. 22 First, there's been a minor change to today's 23 agenda. The closed session noticed for today's lunch 24 period has been canceled. 25 Second, all witnesses signing up to speak today, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 13 1 please be aware that we will be imposing our usual 2 three-minute time limit so that everybody gets a chance to 3 speak. I suggest that each speaker put his or her 4 testimony into his or her own words. It is easier for the 5 Board to follow you if you go straight to your main 6 points. You do not need to read your written testimony to 7 us since that will be entered into the record in its 8 entirety. 9 Finally, everyone in the room, please note the 10 emergency exits in the Board chamber. In the event of a 11 fire alarm or real emergency, please use the main doors at 12 the rear of the chamber. Exit to the left of the security 13 desk and gather across the street in front of the Rabobank 14 Arena by using the crosswalk at the corner of Truxtun and 15 N Street. When the "all-clear" signal is given, we will 16 return to the hearing room and resume the Board hearing. 17 Thank you for your attention. We'll now move on 18 to our first agenda item. 19 Agenda item 6-11-1. 20 Good morning. Anyone in the audience who wishes 21 to testify on today's agenda items, please sign up with 22 the Clerk of the Board. Also, if you have a written 23 statement, please provide 30 copies when you sign up to 24 testify. 25 I'd add a little bit to that. The rules under PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 14 1 which we operate do not require you to provide your name 2 and organization when you sign up. If you feel that you 3 don't wish to do so, let us know that you wish to speak so 4 that we can save a place for you to talk. But I do remind 5 you, it's not essential that you identify yourself in 6 order to speak before our meeting. That was brought to my 7 attention recently. 8 The first item on the agenda is our Monthly 9 Health Update. 10 The San Joaquin Valley suffers from some of the 11 worst air quality in California, second only to the South 12 Coast Air Basin. Everything this Board does to control 13 and reduce criteria air pollutants from the emission 14 sources under our jurisdiction is aimed at improving air 15 quality and public health protection in these regions. 16 The San Joaquin Valley Air Pollution Control 17 District shares this concern. We were pleased to be able 18 to participate with the district in their air quality 19 symposium yesterday to discuss the impacts of air 20 pollution in the San Joaquin Valley and solutions to these 21 problems. 22 The Air Resources Board health effects research 23 is focused on the areas of greatest concern. Accordingly, 24 public health impacts in the San Joaquin valley related to 25 air pollution exposures have been the subject of several PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 15 1 recent studies and will be discussed in this health 2 update. 3 Ms. Witherspoon, please introduce this item. 4 EXECUTIVE OFFICER WITHERSPOON: Thank you, Dr. 5 Sawyer. And good morning, members of the Board. 6 We have known for some time that children in the 7 San Joaquin Valley have higher than average rates of 8 asthma, also that adults in the San Joaquin Valley with 9 respiratory illnesses have an elevated rate of 10 hospitalizations as compared to the general population. 11 These and other concerns have led health researchers to 12 probe the root causes of these health effects and the 13 degree to which air pollution exposure plays a role. This 14 health update will describe some of the avenues 15 investigators are using to study these issues. 16 The presentation will be given by Dr. Barbara 17 Weller from our Research Division. 18 (Thereupon an overhead presentation was 19 Presented as follows.) 20 POPULATION STUDIES SECTION MANAGER WELLER: 21 Thank you, Ms. Witherspoon. 22 Good morning, Dr. Sawyer and members of the 23 Board. 24 In today's health update we will present an 25 overview of the health impacts of air pollution in the San PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 16 1 Joaquin Valley. We will also present results from the 2 recent studies and describe research still in progress in 3 the valley. 4 --o0o-- 5 POPULATION STUDIES SECTION MANAGER WELLER: One 6 of the reasons we are concerned about air pollution's 7 impacts in San Joaquin Valley is because both PM2.5 and 8 ozone levels regularly exceed the California and the U.S. 9 ambient air quality standards. The unique geography and 10 meteorology of the valley and the many air pollution 11 sources contribute to these levels and make it especially 12 difficult to bring them into attainment of the standards. 13 Although PM2.5 levels show improvement, much of the valley 14 still does not meet the air quality standards for PM2.5. 15 --o0o-- 16 POPULATION STUDIES SECTION MANAGER WELLER: 17 Despite improved over the past two years, the air 18 quality standards for ozone are exceeded for over 19 one-third of each year. 20 --o0o-- 21 POPULATION STUDIES SECTION MANAGER WELLER: 22 Another reason for concern is the increase in 23 population and poverty in the valley. The population in 24 the San Joaquin Valley has been steadily increasing, at a 25 rate somewhat greater than the state as a whole. There PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 17 1 are now well over 3.6 million persons in the valley. 2 In 2003, 13.7 percent of the population in 3 California, compared to about 17.8 percent in the San 4 Joaquin Valley population, were below the federal poverty 5 level. 6 --o0o-- 7 POPULATION STUDIES SECTION MANAGER WELLER: We 8 are also concerned about the potential health impacts of 9 air pollution on San Joaquin's most vulnerable citizens. 10 Asthmatics are known to be especially sensitive to air 11 pollution effects. There is a 25 percent higher 12 prevalence of childhood asthma in the San Joaquin Valley 13 than in the rest of the state, and a 10 percent higher 14 prevalence for adults. 15 Cardiovascular rates, which have also been linked 16 to high PM2.5 levels, are also higher in the valley than 17 statewide and are as high as in the South Coast Air Basin. 18 --o0o-- 19 POPULATION STUDIES SECTION MANAGER WELLER: 20 Reducing pollution to the levels of California's 21 health protective ambient air quality standards can have 22 significant health benefits for the valley. Shown here 23 are benefits from meeting the state annual PM2.5 standard 24 and the state eight-hour ozone standard. 25 For example, if the state standard for PM2.5 and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 18 1 ozone were met, we estimate about 1,400 premature deaths 2 would be avoided annually. Other health benefits, 3 including reduced hospital emissions, emergency room 4 visits, and school absences would also occur. 5 --o0o-- 6 POPULATION STUDIES SECTION MANAGER WELLER: A 7 number of air pollution research studies have been 8 performed in the valley. Professor Tom Cahill of UC Davis 9 conducted a study of cardiac and stroke mortality for the 10 American Lung Association and found a higher incidence of 11 heart attack, up to 33 percent above the state average, in 12 the Central Valley, which was correlated with PM10 levels. 13 However, this study has not been peer reviewed. 14 Dr. Stephen Van Den Eeden of Kaiser Permanente 15 found that the rates of acute and chronic hospitalizations 16 and acute and chronic emergency room visits in cities from 17 Sacramento to Fresno increased in association with 18 increasing PM2.5 and PM10 levels. 19 Professor Kent Pinkerton of UC Davis studied 20 changes in the airways of young Hispanic men during 21 autopsies following death due to non-respiratory causes. 22 The gas exchange regions of their lungs showed thickening 23 and physiological changes caused by carbonaceous and 24 mineral dust. 25 Professor Pinkerton also examined the effects of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 19 1 concentrated Fresno PM2.5 and ultrafine particles, and 2 found inflammatory effects in the respiratory system of 3 rats. 4 Professor Jane Hall of California State 5 University Fullerton analyzed the economic benefits of 6 meeting the federal air quality standards for PM2.5 and 7 ozone. This study indicates more than $3 billion in 8 potential benefits, based on improved health, preventing 9 premature deaths and fewer days of school and work missed. 10 Dr. Hall discussed this study at yesterday's air quality 11 symposium sponsored by the air quality -- San Joaquin 12 Valley Air Pollution Control District. 13 --o0o-- 14 POPULATION STUDIES SECTION MANAGER WELLER: Last 15 year the U.S. EPA established the San Joaquin Valley 16 Health Effects Research Center located at the University 17 of California Davis, with a principal field site at 18 Fresno. It's one of five PM centers across the country. 19 The Center has $8 million from the EPA to study 20 the mechanistic links between ambient particles and the 21 health effects that they elicit. 22 The initial phase of the FACES study funded by 23 the ARB in Fresno has been completed. The FACES project 24 will continue until 2010 with additional funding through 25 the NIH. The FACES researchers have also received a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 20 1 Mickey Leland Grant to study the properties of the 2 particulate matter the children are exposed to in Fresno. 3 In addition, ARB funded an augmentation of the 4 study to conduct additional analyses. The FACES 5 investigators are completing their analyses, and the 6 report for the augmentation funding will be available in 7 the spring of 2007. 8 --o0o-- 9 POPULATION STUDIES SECTION MANAGER WELLER: In 10 addition to the studies at the Center funded by the U.S. 11 EPA, the ARB is proposing to fund a UC Davis study of the 12 apportionment of PM. The study will result in relative 13 toxicity indices for particles derived from several source 14 categories. 15 This study was conditionally approved by the RSC, 16 and the study will be presented to the Board for approval 17 in January of 2007. 18 --o0o-- 19 POPULATION STUDIES SECTION MANAGER WELLER: The 20 studies discussed today highlight our concerns regarding 21 particulate matter and ozone pollution in the San Joaquin 22 Valley and the great importance of reducing these 23 exposures to benefit the health and well being of the 24 people living in the valley. 25 Thank you for your attention. And I would be PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 21 1 happy to answer any questions. 2 CHAIRPERSON SAWYER: Do Board members have any 3 questions? 4 Thank you very much, Dr. Weller. 5 There are no requests from the public to speak at 6 this time. 7 So the next item on the agenda is 6-11-2, 8 Consideration of Proposals for the Air Resources Board's 9 Innovative Clean Air Technologies Grant Program. 10 This is the 13th year for this program, which 11 supports demonstrations of technologies that have high 12 potential for providing emission reductions and benefiting 13 the state's economy. 14 Today we have before us 12 proposals for ICAT 15 funding being recommended for the Board's approval. 16 Ms. Witherspoon, would you please begin the 17 staff's presentation. 18 EXECUTIVE OFFICER WITHERSPOON: Yes. And thank 19 you, Dr. Sawyer. 20 The ICAT Grant Program co-funds projects that 21 move promising technologies from the 22 research-and-development phase into practical 23 demonstrations and, hopefully, to full commercialization. 24 This year, ARB received a one-time budget 25 increase for ICAT of $1 million over our base line of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 22 1 same amount, so we have about $2 million to spend. This 2 increase allows us to award larger than usual grant 3 amounts and to consider projects related to new areas, 4 such as emissions measurement air monitoring. 5 Staff received 20 eligible proposals for ICAT 6 funding, of which we are recommending 12 projects whose 7 commercial use would best support ARB's goals and 8 programs. The total grant is equal to $2.6 million, for 9 which ARB will provide 2 million, the South Coast Air 10 Quality Management District will provide 278 million -- 11 excuse me -- 278,000, and the California Energy Commission 12 is contributing 250,000. 13 I'll now turn the presentation over to Mr. Kevin 14 Cleary of the Research Division, who will summarize the 12 15 proposals and present staff's recommendation. 16 (Thereupon an overhead presentation was 17 Presented as follows.) 18 MR. CLEARY: Thank you, Ms. Witherspoon. 19 Good morning. Today I will discuss the 20 Innovative Clean Air Technologies Program, known as ICAT, 21 and the new projects for which we are requesting funding. 22 --o0o-- 23 MR. CLEARY: ICAT supports field demonstrations 24 of technical innovations that will control air pollution 25 or otherwise support ARB's clean air objectives that have PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 23 1 economic value for the state and that promote public 2 health. The intent is to facilitate the commercialization 3 of the technologies by demonstrating their viability in 4 commercial applications. 5 Besides looking for emission control 6 technologies, we invite applications for new air 7 monitoring instruments and new technologies to measure 8 emissions at their source of emission. 9 --o0o-- 10 MR. CLEARY: ICAT co-funds up to half the budgets 11 of qualified demonstration projects. It does not buy 12 equipment for host sites and it does not pay for overhead. 13 Projects are defined by work plans that include 14 performance milestones at which ICAT accepts invoices for 15 covered expenses. Invoices are paid only if milestones 16 are achieved and the co-funders have met their 17 commitments. If a grantee does not meet its commitments 18 or a project is not progressing, the project and the grant 19 are terminated. 20 --o0o-- 21 MR. CLEARY: The program began in 1994, and since 22 then 44 projects have been approved for technologies 23 related to the control of measurement of air pollution in 24 California. 25 Forty-one of the funded projects have been PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 24 1 technologies to reduce emissions from mobile, area and 2 stationary sources of air pollution. 3 Three projects are for novel or improved 4 instruments to measure fine particulate matter at low 5 cost. 6 Twenty-seven of the projects have been completed 7 and nine of the ICAT technologies have been 8 commercialized. 9 Two of the more successful projects include a 10 diesel particulate filter that is regenerated while the 11 diesel vehicle is not in use and a fleet of 12 electric-powered tractors used to transport baggage to 13 commercial airliners. 14 The Elk Grove School District in Sacramento 15 County has installed 49 of the diesel particulate filters 16 in its school buses. And Southwest Airlines has used the 17 electric-powered tractors at Sacramento International 18 Airport. 19 --o0o-- 20 MR. CLEARY: Our process for selecting projects 21 for new grants this year was the same as the process we 22 used in past years. 23 In February, we issued a solicitation for 24 proposal abstracts via e-mail. We received 104 proposal 25 abstracts, called pre-proposals, which we reviewed for PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 25 1 minimum qualifications under ICAT. From them we selected 2 27 applicants, from whom we invited full proposals. We 3 received full proposals from 20 of these invitees. 4 The proposals were reviewed by staff in the 5 Research Stationary Source, Mobile Source Control, and 6 Monitoring and Laboratory Divisions; by staff at the South 7 Coast AQMD; and by reviewers who were faculty at the 8 University of California and California State University 9 campuses. 10 The process allowed reviewers to ask questions to 11 the applicants and to include the applicants' answers in 12 their evaluations. 13 --o0o-- 14 MR. CLEARY: We applied four criteria in the 15 evaluation and ranking of the proposals: 16 The technology to be demonstrated must be 17 innovative in some respect. The proposed project 18 generally has to include a new or improved element of 19 technology to reduce emissions or the use of a proven 20 technology in a new application. 21 The technology must have the potential to reduce 22 emissions from sources which are significant contributors 23 to air pollution in California. 24 The proposed project must be well described and 25 useful for the eventual commercialization of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 26 1 technology. It must demonstrate the practical application 2 of the technology. Also, the applicant must have a 3 business plan by which the technology would be brought to 4 market. 5 And we look for economic benefits to California 6 from its commercialization. 7 --o0o-- 8 MR. CLEARY: Today we are recommending 12 new 9 grants, for a total ICAT funding of about $2.6 million. 10 For this year the Legislature approved a one-time 11 increase for ICAT of $1 million, bringing this year's 12 allocation to about $2 million. Normally ICAT is funded 13 at about $1 million dollars per year. This increase was 14 provided to us so that we could consider awarding larger 15 than usual grants and to consider projects related to 16 other air quality areas, such as emission measurement and 17 monitoring. 18 Of the 2.6 million in funding for the new 19 projects this year, the South Coast Air Quality Management 20 District will consider contributing $278,500 for half of 21 the ICAT funding for three projects; the Energy Commission 22 will contribute $250,000, all of the ICAT funding for one 23 project. 24 The ICAT funds would support projects whose 25 budgets total about $7 million. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 27 1 --o0o-- 2 MR. CLEARY: I will now give a brief summary of 3 the 12 new projects that we are recommending for funding. 4 The first two projects would demonstrate improved 5 and simpler methods to measure particulate emissions from 6 diesel engines. New methods for measuring PM would 7 support the ARB's programs in enforcing PM emission 8 standards, improving our PM emission inventory, estimating 9 exposure to PM, and possibly allowing the consideration of 10 an inspection and maintenance program for PM emissions. 11 The first project would demonstrate the 12 measurement of PM emissions by applying an electric charge 13 to the particles that are emitted. This amount of charge 14 is then measured. The mass is then calculated from this 15 measurement. The South Coast AQMD will consider providing 16 half the ICAT funding of $250,000 for this project. 17 The second PM measurement technology is a 18 technology that measures the solid carbon, or soot, 19 emissions by a method called laser-induced incandescence. 20 In this method a laser light is shined on the particles. 21 The temperature of the particles then increases to the 22 point where they emit light. The amount of this light 23 emitted is measured and is an indication of the 24 particulate mass. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 28 1 MR. CLEARY: Two of the new recommended projects 2 are for marine emissions control. 3 The first project would demonstrate selective 4 catalytic reduction to reduce NOx emissions and a diesel 5 particulate filter to reduce PM emissions from a passenger 6 ferry. The technology would be demonstrated on a 7 passenger ferry operated by the Blue and Gold fleet in the 8 San Francisco Bay. 9 The second marine project would be the 10 development and demonstration of a three-way catalyst 11 emission control system for four-stroke outboard engines. 12 The technologies to be demonstrated in these two 13 projects have been proven in motor vehicle applications. 14 And their demonstration in marine applications would 15 support the ARB programs in this area. 16 --o0o-- 17 MR. CLEARY: Three of the new projects are for 18 technologies to reduce emissions from motor vehicle diesel 19 engines. These technologies would support the ARB's 20 programs in reducing emissions in both new and retrofit 21 applications. 22 The first project would be the demonstration of a 23 lean-NOx trap and an on-board reformer to reduce NOx 24 emissions by at least 75 percent and a diesel particulate 25 filter to reduce PM emissions by 85 percent. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 29 1 The second motor vehicle diesel project would 2 demonstrate selective catalytic reduction and a 3 continuously regenerating trap in off-road engines. These 4 technologies have been demonstrated in on-road motor 5 vehicles to achieve NOx reductions of 75 percent and PM 6 reductions of 85 percent. And these levels are also 7 anticipated in off-road applications. 8 The third on-road diesel project would be to 9 demonstrate a system to store ammonia as a solid instead 10 of as a liquid or a gas in vehicles that use selective 11 catalytic reduction to reduce NOx emissions. In this 12 system, the ammonia is stored on board in blocks of 13 magnesium amine chloride. The ammonia is then vaporized 14 as it is needed by the SCR system. The solid storage of 15 ammonia would reduce the frequency of ammonia refill by 16 about 65 percent. 17 The South Coast AQMD will consider half the ICAT 18 funding for this project. 19 --o0o-- 20 MR. CLEARY: We are recommending two projects for 21 non-diesel on-road vehicle technologies. 22 The first would demonstrate a spark-ignited 23 natural gas fuel engine that will use exhaust gas 24 recirculation and three-way catalyst technology. 25 This technology will be capable of meeting ARB's PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 30 1 2010 NOx and particulate standards for heavy-duty engines. 2 The California Energy Commission plans to 3 contribute all of the ICAT funding for this project. 4 The second non-diesel on-road project would 5 demonstrate a lithium battery propulsion system in a 6 40-foot transit bus made of composite material. 7 Because of its greater energy density, the 8 lithium battery system reduces the frequency of battery 9 recharge and would permit an operating range of up to 300 10 miles between recharges. 11 The composite material used in the bus weighs 12 about 5,000 pounds less than the conventional steel bus 13 structure, which would also increase operating range. 14 The demonstration would be on an in-service bus 15 operated by the Los Angeles County Metropolitan Transit 16 Authority. 17 --o0o-- 18 MR. CLEARY: We are recommending three projects 19 that would demonstrate technologies to reduce emissions 20 from stationary sources. 21 The first would demonstrate a technology to strip 22 paint from surfaces using a laser instead of the 23 traditional methods, such as abrasive blasting and 24 methylene chloride. This technology would reduce 25 particulate emissions and emissions of the toxic air PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 31 1 contaminant, methylene chloride. 2 The second stationary source technology is a 3 project to demonstrate an acoustic sensor that can be used 4 to eliminate liquefied petroleum gas emissions from the 5 filling of LPG storage tanks. The sensor determines when 6 the fill level has been reached and allows the storage 7 tanks to be filled with the external vent on the tank 8 closed, thus eliminating emissions. The South Coast AQMD 9 will consider providing half the ICAT funding for this 10 project. 11 The final stationary source technology is a 12 project to demonstrate an innovative closed-loop 13 combustion control system for microturbine generators. 14 The system uses an innovative sensor and fuel injector to 15 control the air fuel ratio over a wide range of load 16 conditions and fuel compositions. The system would reduce 17 CO and NOx emissions from microturbine generators and 18 would allow the use of fuels, such as landfill gas and 19 digester gas, to be burned with lower emissions. 20 --o0o-- 21 MR. CLEARY: In summary, we are proposing 12 new 22 grants for projects for a total funding of about $2.6 23 million, of which the South Coast AQMD and the Energy 24 Commission plan to contribute $528,500. 25 The South Coast AQMD intends to contribute half PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 32 1 the ICAT funding to three projects and the Energy 2 Commission would provide all of the ICAT funding for one 3 of the projects. 4 Thank you for your consideration. I'd be happy 5 to answer any questions. 6 CHAIRPERSON SAWYER: Thank you, Mr. Cleary. 7 Are there any questions? 8 Dr. Gong. 9 BOARD MEMBER GONG: Just a few comments. I have 10 to figure out where you are, sir. 11 I think this is a very efficient way of 12 leveraging our funds, and I'm glad the Legislature has 13 given us an additional $1 million one time around. 14 Two questions. One is on your 4th slide, on the 15 ICAT background, you mentioned that there were nine ICAT 16 technologies that had been commercialized. You gave me 17 the impression that the other 36 or 35 projects were not 18 commercialized. But does that necessarily mean that 19 additional knowledge or practical applications were not 20 forthcoming from those projects? 21 MR. CLEARY: I don't believe you would be able to 22 conclude that. No, I think even projects that haven't 23 been commercialized we've been able to understand possible 24 limitations of the technologies that were attempted. 25 BOARD MEMBER GONG: So there's more to it than PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 33 1 just commercialization of the end product? 2 RESEARCH DIVISION CHIEF CROES: Yes. And, Dr. 3 Gong, the other aspect is some of the projects that were 4 recently completed, they just haven't come to a 5 commercialization stage. That usually takes, you know, at 6 least a couple years. And so I think of the 27 projects 7 completed, while 9 have been commercialized, there is 8 potential for some of the remainder to be commercialized 9 as well. 10 BOARD MEMBER GONG: And I think as was pointed 11 out, there's more to it than just commercializing our 12 application. You have learned through the research 13 process what things to do and what not to do in future 14 research plans, I would assume, technologically. 15 And then just a second administrative question. 16 Are these ICAT proposals reviewed by the ARB's Research 17 Screening Committee as well? Or are they separately 18 reviewed by those three components, ARB staff, South Coast 19 AQMD, and academic reviewers? 20 RESEARCH DIVISION CHIEF CROES: Dr. Gong, since 21 they're not research contracts, they're not reviewed by 22 the Research Screening Committee. But we do form ad hoc 23 review committees of academic advisors. For instance, Dr. 24 Sawyer at one time was an ICAT reviewer. And we have, you 25 know, some of the top academics in the University of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 34 1 California and CSU system being part of the review teams. 2 BOARD MEMBER GONG: Okay. So there's a good 3 established system for that review. 4 Thank you. 5 CHAIRPERSON SAWYER: Are there any other comments 6 by Board members? 7 If not, just a reminder to Board members of our 8 policy concerning ex parte communications. While we may 9 communicate off the record with outside persons regarding 10 Board rule-making, we must disclose the names of our 11 contacts and the contents of our communications on the 12 record. This requirement applies specifically to 13 communications which take place after the public agenda of 14 the Board has been published. 15 Are there any communications that you need to 16 disclose on this item? 17 No. 18 Have all members of the Board reviewed the 19 proposals? 20 And are there any additional concerns or 21 comments? 22 If not, do I have a motion to adopt Resolution 23 Nos. 0647 through 0658? 24 BOARD MEMBER GONG: So moved. 25 BOARD MEMBER RIORDAN: I'll move approval. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 35 1 I'll second. 2 BOARD MEMBER GONG: I'll second. 3 CHAIRPERSON SAWYER: And a second. 4 BOARD MEMBER RIORDAN: And just a comment. 5 I'm delighted to see that we have some partners 6 in this. I think it's very helpful any time we can 7 leverage monies from other agencies. And so I think it 8 would be helpful for the Board, not only to approve the 9 resolutions, but maybe to express the appreciation to both 10 the Energy Commission and South Coast Air Quality District 11 for their contributions, and hope they contribute more 12 next year. 13 (Laughter.) 14 CHAIRPERSON SAWYER: Fine. 15 All those in favor, please indicate by saying 16 aye. 17 (Ayes.) 18 CHAIRPERSON SAWYER: Opposed? 19 The motion is carried. 20 Since this is not a regulatory item, it's not 21 necessary to officially close the record. 22 The next item on the agenda is 6-11-3, an Update 23 on the Central California Air Quality Studies. 24 These studies demonstrate the effectiveness of a 25 partnership approach among federal, state and local PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 36 1 governments, and private industry in developing a strong 2 scientific foundation for clean air plans. The studies 3 provide an improved understanding of the nature of ozone 4 and particulate matter throughout the San Joaquin Valley, 5 Sacramento Region, and San Francisco Bay Area. 6 Before we start staff's presentation, however, 7 I'd like to ask Ms. Terry to say a few words about Barbara 8 Patrick's important contribution as Chair of the Policy 9 Committee of these studies. 10 Ms. Terry. 11 DEPUTY EXECUTIVE OFFICER TERRY: Thank you, Dr. 12 Sawyer. 13 Before beginning our presentation I would like to 14 say just a few words on behalf of all the ARB staff who 15 have worked on these studies over the years. 16 For nearly ten years Supervisor Patrick has 17 served as the Chair of the Policy Committee that oversees 18 the Central California Ozone and Particulate Matter 19 Studies. Her leadership has been key to our ability to 20 prioritize and fund dozens of research projects with 21 clear, real world application. While these studies have 22 focused on the technical tools to improve our 23 understanding of the valley's air quality problem, she has 24 always been quick to remind us that the end game is to 25 improve public health. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 37 1 Over the years the Policy Committee has been 2 successful in obtaining nearly a one-to-one match in 3 federal funding. Barbara has led the team, kept us all on 4 message, and worn out many pairs of shoes in the process. 5 (Laughter.) 6 DEPUTY EXECUTIVE OFFICER TERRY: In the year 2000 7 the most recent ozone field study was carried out. The 8 Policy Committee worked very closely with the study's 9 technical committee to ensure all of the upfront actions 10 were taken in time to meet the very tight deadline. 11 Throughout the process Barbara has represented very well 12 not just the residence of the valley but also the 13 interests of neighboring regions, including the San 14 Francisco Bay Area and Sacramento. 15 Simply put, Barbara, we thank you. It has been a 16 pleasure to work with you. We will miss you, and we wish 17 you all the best. 18 CHAIRPERSON SAWYER: Ms. Witherspoon, please 19 begin staff's presentation. 20 EXECUTIVE OFFICER WITHERSPOON: Thank you, Dr. 21 Sawyer. 22 Today staff will highlight how the results from 23 the Central California Air Quality Studies are being used 24 in the development of the upcoming state implementation 25 plans for ozone and particulate matter in the San Joaquin PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 38 1 Valley. The multi-million investments we've made over the 2 years in these studies is paying big dividends by giving 3 us a common, in-depth understanding of this region's air 4 quality problem, the most effective measures for abating 5 them, and the likeliest date by which attainment can be 6 achieved. 7 I will now turn the presentation over to Dr. 8 Patricia Velasco of the Planning and Technical Support 9 Division. 10 (Thereupon an overhead presentation was 11 Presented as follows.) 12 AIR POLLUTION SPECIALIST VELASCO: Thank you, Ms. 13 Witherspoon. 14 Good morning, Dr. Sawyer and members of the 15 Board. 16 Today I will describe the scope of the Central 17 California Air Quality Studies and update the Board on how 18 the study results are being used in the development of 19 state implementation plans for attaining the national 20 ozone and particulate matter standards. 21 --o0o-- 22 AIR POLLUTION SPECIALIST VELASCO: The Central 23 California studies comprise two multi-million dollar 24 programs, the Central California Ozone Study, or CCOS, and 25 the Central California Regional Particulate Study, or PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 39 1 CRPAQS. 2 The studies are designed to better understand the 3 nature and causes of ozone and particulate matter in 4 central and northern California, with a focus in the San 5 Joaquin Valley. 6 --o0o-- 7 AIR POLLUTION SPECIALIST VELASCO: CCCOS and 8 CRPAQS embody a collaborative partnership co-funded by 9 federal, state and local governments, and private 10 industry. These studies are a prime example of how 11 government, the private sector, and scientific community 12 can work together effectively to conduct long-term 13 scientific studies. 14 The CRPAQS study was initiated in 1992 and 15 resulted in a major field study conducted in 1999 to 2001. 16 Recognizing the benefits of studying ozone and particulate 17 pollution in parallel, the CCOS ozone program was added in 18 1998, with a field study in summer 2000. 19 The studies have and will continue to provide the 20 scientific basis for clean air plans. The studies were 21 instrumental in the development of the San Joaquin Valley 22 PM10 in one-hour ozone SIPs and are now playing an even 23 larger role in the development of the eight-hour ozone and 24 PM2.5 SIPs. While the focus has been on Central 25 California, many of the products and analysis tools are of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 40 1 national significance. 2 Due to the difficulty of the study region's air 3 quality challenge, tremendous resources have been devoted 4 to carrying out the multi-year CCOS and CRPAQS studies. 5 The effort represents an investment of over $45 million. 6 The particulate matter field study ran for 14 7 months, from December 1999 through February 2001. The 8 ozone field study was conducted during the summer of 2000. 9 The studies involved teams of experts monitoring at over 10 150 locations. Instrumented aircraft are remoted, 11 piloted. And a one-of-a-kind monitoring tower collected 12 data aloft. 13 The resulting database containing over 160 14 million records provides researchers with a capability to 15 investigate the relationships between air quality and 16 meteorology at a level of detail not previously possible. 17 Study researchers also developed numerous 18 improvements in methodologies for estimating emissions and 19 air quality models, making these state-of-the-science 20 analytical tools. 21 --o0o-- 22 AIR POLLUTION SPECIALIST VELASCO: The Federal 23 Clean Air Act requires our areas that do not attain 24 national air quality standards to develop SIPs identifying 25 the emission control strategies needed to attain the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 41 1 standard. The map on the left shows the areas that are 2 currently designated as nonattainment for eight-hour ozone 3 standard in yellow and areas that are nonattainment for 4 both the eight-hour ozone and PM2.5 standards in orange. 5 The large square shows the region covered by the ozone and 6 particulate matter studies. 7 ARB and the districts are jointly developing the 8 required SIPs for attaining these standards. Plans for 9 eight-hour ozone are due to U.S. EPA in June 2007 and 10 PM2.5 in April 2008. 11 --o0o-- 12 AIR POLLUTION SPECIALIST VELASCO: The CCOS and 13 CRPAQS studies are providing key technical information 14 needed to develop the eight-hour ozone and PM2.5 SIPs, 15 including: 16 An enhanced understanding of the location and 17 timing of high ozone and high PM2.5 concentrations. 18 Improved methodologies for estimating PM2.5 19 emissions and emissions of pollutants leading to the 20 formation of ozone and PM2.5 in the atmosphere. 21 Determination of the emission sources of PM and 22 evaluation whether these sources have a localized or more 23 regional impact. 24 And identification of specific pollutants that 25 need to be reduced leading to the most effective controls. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 42 1 --o0o-- 2 AIR POLLUTION SPECIALIST VELASCO: Let us start 3 with when and where high concentrations occur. 4 --o0o-- 5 AIR POLLUTION SPECIALIST VELASCO: The map on the 6 slide depicts the number of dates that the eight-hour 7 ozone standard was exceeded during the ozone study year of 8 2000 in the San Joaquin Valley. The map is color coded, 9 with green representing the lowest number of days 10 exceeding the national standard, and the dark orange the 11 most exceedance days. 12 Exceedances of the standard occur at both urban 13 and rural sites throughout the valley. In addition, we 14 see significant impacts at Sequoia National Park and 15 wilderness areas. 16 Exceedances of the standard occurred most 17 frequently in the central and southern portions of the 18 valley, most notably near or downwind from urban areas. 19 Summer weather conditions that lead to high ozone 20 concentrations in the valley include large scale high 21 pressure systems that develop over the western United 22 States, low wind speeds, and high temperatures. 23 --o0o-- 24 AIR POLLUTION SPECIALIST VELASCO: This next map 25 depicts the annual average PM2.5 concentrations measured PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 43 1 in 2000 during the particulate matter study. 2 The green dots represent concentrations below the 3 national standard. And all other dots reflect 4 concentrations exceeding the standard. 5 We can see that concentrations above the standard 6 occur throughout the valley, with highest concentrations 7 in the central and southern valley, similar to the ozone 8 problem. 9 Although concentrations tend to be higher in 10 urban areas, both urban and rural sites can exceed the 11 standard. 12 During the 2000 field study PM2.5 concentrations 13 over the federal standard were also a concern. The good 14 news is that since the field study concentrations have 15 decreased in the valley, now meets the current 24-hour 16 standard. 17 --o0o-- 18 AIR POLLUTION SPECIALIST VELASCO: PM2.5 also 19 varies by season, as can be seen from this graph of 20 monthly average PM2.5 concentrations at Bakersfield. 21 While concentrations above the annual average standard are 22 a concern year-round, higher concentrations occur during 23 the winter months. 24 The study showed that peak 24 hour PM2.5 25 concentrations can build up over a period of days to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 44 1 weeks, which we call episodes. In the winter, when the 2 air is very stagnant, temperatures are cool and humidity's 3 high, particulate matter can build up across a wide 4 region. During the PM study, we captured a very severe 5 region-wide episode lasting several weeks, from Christmas 6 2000 through early January of 2001. This episode has been 7 studied extensively. 8 --o0o-- 9 AIR POLLUTION SPECIALIST VELASCO: The 10 particulate matter and ozone studies also included 11 numerous improvements in methodology for estimating 12 emissions of PM 2.5 sources and ozone precursors. 13 --o0o-- 14 AIR POLLUTION SPECIALIST VELASCO: Emission 15 inventories characterize the location of pollutant sources 16 and quantify each pollutant emitted. CCOS and CRPAQS 17 developed new emission estimates for stationary and area 18 sources, including sources that operate on a seasonal 19 basis such as agricultural activities. Information to 20 geographically distribute emissions from various sources 21 was gathered and applied. 22 An improved hourly motor vehicle inventory was 23 developed which utilizes date-specific traffic count 24 information and, for the first time, includes an 25 integrated transportation network throughout the study PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 45 1 region. 2 Analyses were also conducted to determine the 3 detailed chemical composition of emissions from vehicles, 4 wood combustion, fugitive dust, and cooking. 5 --o0o-- 6 AIR POLLUTION SPECIALIST VELASCO: In addition to 7 characterizing PM2.5 concentrations, CRPAQS also provided 8 enhanced information on the sources of PM and other local 9 versus regional nature. Unlike ozone, PM2.5 is comprised 10 of many different components which reflect different 11 sources. 12 The chart on the left illustrates the chemical 13 composition of PM2.5 samples collected at urban sites 14 during days with high PM2.5 concentrations. PM2.5 15 components include directly emitted particles, which we 16 call primary particles, as well as particles formed in the 17 atmosphere from the reaction of precursor gases, which we 18 call secondary particles. Ammonium nitrate and ammonium 19 sulfate are secondary particles. 20 Ammonium nitrate and organic carbon are the two 21 largest components of PM2.5. Ammonium nitrate contributes 22 approximately half of the PM2.5 mass. It is formed in the 23 atmosphere from chemical reactions of nitrogen oxides, or 24 NOx, emitted from motor vehicles and stationary combustion 25 sources. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 46 1 As I mentioned earlier, the stagnant, cold, and 2 damp conditions in the winter promote the formation and 3 accumulation of ammonium nitrate. Organic carbon 4 contributes about one-quarter of PM2.5 mass. Burning, 5 such as residential wood combustion and cooking, are the 6 major sources of organic carbon. Other contributors 7 include ammonium sulfate, elemental carbon, and dust. 8 --o0o-- 9 AIR POLLUTION SPECIALIST VELASCO: I will now 10 describe what CRPAQS results have taught us about the 11 geographical distribution of the two major PM2.5 12 components, ammonium nitrate and organic carbon. 13 --o0o-- 14 AIR POLLUTION SPECIALIST VELASCO: As seen from 15 this map, high concentrations of ammonium nitrate, as 16 shown in the red and orange, occur over a large region 17 including both urban and rural areas. One of the 18 interesting findings from the field study is that while 19 cold and damp conditions promote the formation of ammonium 20 nitrate, very heavy fog actually decreases the 21 concentrations of PM2.5, as PM2.5 is deposited out when 22 fog droplets settle to the surface. 23 --o0o-- 24 AIR POLLUTION SPECIALIST VELASCO: In contrast, 25 as this map depicts, high concentrations of organic carbon PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 47 1 are more localized around urban sites, especially Fresno. 2 Further chemical analysis during CRPAQS assisted in 3 pinpointing residential wood combustion as the main source 4 of PM2.5 organic carbon. This information led the San 5 Joaquin Valley District to adopt the most stringent rule 6 to control emissions from residential wood combustion in 7 the state. 8 --o0o-- 9 AIR POLLUTION SPECIALIST VELASCO: Both ozone and 10 PM2.5 are formed from multiple pollutants. Therefore, we 11 need to determine which pollutant or mix of pollutants 12 provides the most control benefits. 13 --o0o-- 14 AIR POLLUTION SPECIALIST VELASCO: Air quality 15 models that link information on air quality, emission 16 inventory, meteorology, and atmospheric chemistry are used 17 to help us understand the relationship between emissions 18 and air quality. These models are one tool used to 19 estimate the emission reductions needed to attain air 20 quality standards and evaluate the effectiveness of 21 control strategies. 22 Using air quality modeling during the July-August 23 CCOS episode, we found that NOx controls are relatively 24 more beneficial. But both NOx and ROG reductions are 25 effective in reducing eight-hour ozone levels. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 48 1 --o0o-- 2 AIR POLLUTION SPECIALIST VELASCO: To determine 3 the most effective control approach for PM2.5, we modeled 4 air quality during the three-week winter CRPAQS episode. 5 The chart on the slide illustrates the effects that 6 reducing the emissions of the precursors of PM2.5, ammonia 7 and nitrogen oxides, have on ammonium nitrate levels. As 8 shown on the left, reducing ammonia emissions by 50 9 percent reduces ammonium nitrate only by 5 percent. On 10 the other hand, reducing NOx emissions by 50 percent 11 reduces ammonium nitrate concentrations by approximately 12 35 percent. 13 This analysis indicates that reducing NOx 14 emissions is the most beneficial control strategy to 15 reduce ammonium nitrate. 16 --o0o-- 17 AIR POLLUTION SPECIALIST VELASCO: The 18 information gathered from the studies is now being used in 19 an integrated manner in the SIP development process. 20 These SIP tasks include: 21 Identifying the most effective mix of pollutants 22 to support a combined ozone and PM2.5 strategy. 23 Determining attainment targets. How much do 24 emissions of identified pollutants need to be reduced to 25 attain the standard? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 49 1 And, finally, to the extent possible, modeling 2 the impacts of specific control strategies. 3 --o0o-- 4 AIR POLLUTION SPECIALIST VELASCO: In conclusion, 5 these landmark studies have provided a wealth of 6 information over the last 15 years and represent a strong 7 scientific foundation for upcoming SIPs. The studies are 8 now wrapping up and are in the final phase. Earlier this 9 year the Policy Committee completed fund raising and now 10 has prioritized projects for the final study funds. The 11 Policy Committee oversees the final contracts and reports. 12 The results of the studies will be used for many 13 years as we continue to evaluate study data and fundings. 14 In the process ARB will continue to collaborate 15 with the districts in integrating results from the studies 16 into the current and future SIPs. 17 Thank you for your attention. And I will be 18 happy to answer any questions. 19 CHAIRPERSON SAWYER: Thank you, Ms. Velasco. 20 Do Board members have comments or questions? 21 Dr. Gong. 22 BOARD MEMBER GONG: Well done summary of the 23 project. 24 I had two questions that occurred to me while you 25 were presenting. One is: Are there -- is there much PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 50 1 in-migration of pollutants, primary or secondary 2 pollutants from the Bay Area or other sites into the San 3 Joaquin Valley? Or are we just talking about in-house San 4 Joaquin Valley emission inventory, I guess? 5 MODELING AND METEOROLOGY BRANCH CHIEF DaMASSA: 6 Excellent question. This is John DaMassa. 7 What we've uncovered or discovered from previous 8 studies and analyses during this particular effort and 9 state implementation plan modeling that we've done is that 10 of course there are some contributions from upwind areas. 11 I mean it's inevitable. But previous work has shown that 12 the impacts of those contributions are mainly in the 13 northern parts of the valley and decrease rapidly as you 14 move south. So that as you get into the central and 15 southern parts of the valley, the air quality problem 16 appears to be mostly due to local emissions. 17 BOARD MEMBER GONG: Okay. So you factor that 18 into any future modeling of emission sources and emission 19 controls within the valley itself though? 20 MODELING AND METEOROLOGY BRANCH CHIEF DaMASSA: 21 Yes, the air quality modeling that is done 22 captures the source receptor relationships and includes 23 upwind areas as well as the valley itself. So that 24 emission patterns and the meteorology which transports 25 those emissions and the air chemistry which causes PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 51 1 photochemical reactions to take place, they'll all 2 included in the analysis. 3 BOARD MEMBER GONG: Very good. 4 And another quick question. This is about wood 5 smoke. 6 Is there much of an issue of that in the San 7 Joaquin Valley? I admit, that may be a pregnant question. 8 But is that included in this analysis as well somewhat? 9 AIR POLLUTION SPECIALIST VELASCO: Yes. 10 PARTICULATE MATTER ANALYSIS SECTION MANAGER 11 MAGLIANO: This is Karen Magliano. 12 Yes, as Patricia pointed out, we did identify 13 that wood smoke was a key contributor to part of the 14 problem that was observed in the wintertime. And as a 15 result of that, the Valley District took a strong 16 initiative to develop a wood smoke control program. And 17 as we've seen it being implemented over the past few 18 years, we've actually seen organic carbon concentrations 19 decrease substantially. And we believe that that as a 20 result of that control program. 21 BOARD MEMBER GONG: Thank you. I see it now on 22 this slide. I must have missed it. 23 Very good. Thank you. 24 CHAIRPERSON SAWYER: Supervisor Patrick. 25 BOARD MEMBER PATRICK: I would just like to add PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 52 1 for those of you who were here for the symposium 2 yesterday, as you know, there was a great deal of 3 scientific data that was presented, and most of it in very 4 understandable terms. And that is all an outgrowth of the 5 studies that have been conducted over the last ten years 6 in the air quality arena. It's a very expensive process. 7 But when we then go back either to industry or to the 8 public, as in the case of the fireplace rule, we can say 9 we know that this is going to make a difference. 10 And so as the Valley Air District moves forward, 11 just as this Air Board wants to, we want to have good 12 science. And so we have been able to get this good 13 science through these studies. And in this study domain, 14 it's not just the San Joaquin Valley, but also Bay Area, 15 Sacramento. The study domain begins out in the Pacific 16 and ends at the Nevada border. 17 So we really have done a great job of getting 18 that scientific information that we need to base our 19 regulatory regime on. 20 CHAIRPERSON SAWYER: Ms. D'Adamo. 21 BOARD MEMBER D'ADAMO: Yes, a question and a 22 comment. 23 First of all, just in follow-up to Supervisor 24 Patrick. I think that also we've come a long way with our 25 neighbors in the Bay Area and Sacramento. I do know years PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 53 1 ago there was such concern about transport. And it still 2 continues to be a concern, especially, as indicated by 3 staff, in the northern portion of the valley where 4 sometimes episodes can cause a violation. But we've 5 really come a long way in discussions with the neighboring 6 air districts and a coordinating committee that was headed 7 up by Lynn Terry. 8 The comment -- or the question. These slides 9 aren't numbered, but it's page 10. So I'm assuming it 10 might be slide 20, "Control Approach - PM2.5." 11 I'm a little confused by this. And maybe if you 12 could either repeat the information or just hone in on the 13 ammonia reduction, that the percent reduced is not 14 anywhere near as much as NOx, and what goes in 15 to -- basically what type of activity are we talking about 16 in these two different comparisons? 17 PARTICULATE MATTER ANALYSIS SECTION MANAGER 18 MAGLIANO: What we did is we take the air quality model, 19 and then we can evaluate how effective reducing one 20 pollutant over another might be. And so in this case we 21 did two different model runs. In one we reduced just the 22 ammonia emissions by 50 percent and saw how much ammonia 23 nitrate would decrease. 24 And so you can see from this, when we reduced 25 just ammonia by 50 percent, ammonium nitrate, which is an PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 54 1 end product, only decreased just a little bit, by 5 2 percent. 3 And then we did the opposite scenario where we 4 then restored the ammonia to their full emissions and then 5 just reduced the NOx emissions by 50 percent. And there 6 we saw that we would see a substantial reduction in 7 ammonium nitrate. Which then leads us to conclude that if 8 you're going to look at what the optimal pollutant to 9 control would be to ultimately reduce ammonium nitrate, 10 NOx would be much more effective than in controlling 11 ammonia. 12 BOARD MEMBER D'ADAMO: And I think I know where 13 NOx comes from, the various sources, but not as much 14 ammonia. 15 PARTICULATE MATTER ANALYSIS SECTION MANAGER 16 MAGLIANO: Ammonia tends to be primarily from things such 17 as livestock, animal operations. You also see some from 18 fertilizer. A little bit sometimes from actually the 19 three UA catalysts on automobiles, but primarily from 20 animal operations in the valley. 21 BOARD MEMBER D'ADAMO: Okay. Thank you. 22 CHAIRPERSON SAWYER: Barbara. 23 BOARD MEMBER RIORDAN: Thank you, Mr. Chairman. 24 Are there any other questions for staff at this 25 time? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 55 1 I have just a brief one. And, that is -- and I'm 2 not sure. Maybe it's directed to Lynn Terry. As you 3 progress, are you still seeking funding? Is this 4 something that's an ongoing -- 5 DEPUTY EXECUTIVE OFFICER TERRY: What a great 6 question. 7 (Laughter.) 8 DEPUTY EXECUTIVE OFFICER TERRY: We are actually 9 concluding the program. We've -- this year we expect to 10 get our last increment of funding to complete the last of 11 the studies that have been prioritized and are waiting to 12 be funded. So we had our last trip this year, 2006, and 13 we celebrated our success. And now we have a few years of 14 completing the existing contracts, funding the remainder 15 and then going through all that data and making good use 16 of it in the SIP process. 17 BOARD MEMBER RIORDAN: And then a follow-along 18 question on that. Obviously the congressmen and the 19 senators are key to your success in getting the funding 20 that was necessary. 21 Do you kind of keep them briefed and 22 update -- you know, giving them an update periodically? 23 DEPUTY EXECUTIVE OFFICER TERRY: Yes, we do. And 24 certainly, as the valley is transitioning to dealing with 25 the new eight-hour ozone standard and the new PM2.5 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 56 1 standard -- at yesterday's valley symposium there was a 2 discussion of the California Partnership for the San 3 Joaquin Valley and the desire to move forward to obtain 4 funding to reduce air pollution. You know, we feel like 5 we've got solid grounding now on the science, and it's 6 time to really tackle addressing the remaining fleets in 7 the valley, we need to accelerate turnover. We'll be 8 doing a lot of regulations as part of SIP implementation. 9 But now the sort of -- the transition is to, can we 10 develop some additional incentive funds for the valley to 11 support that effort. 12 BOARD MEMBER RIORDAN: Very good. Thank you, Ms. 13 Terry. 14 Any other questions or comments for staff? 15 Okay. There are four people who have signed up 16 to speak on this particular item. 17 How are you doing, Mr. Chairman? 18 CHAIRPERSON SAWYER: Well, I hope I can resume. 19 I can assure you it's not the air quality, 20 but just a cold that I'm -- 21 (Laughter.) 22 BOARD MEMBER RIORDAN: We know it's not the air 23 quality, Mr. Chairman. We know that. 24 It's so clean here. 25 CHAIRPERSON SAWYER: Thank you very much for PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 57 1 stepping in. And you may have to again. 2 I also want to make a comment. I think these two 3 studies are a prime example of the value of good science 4 leading to good regulation. 5 Please continue. 6 BOARD MEMBER RIORDAN: I will. And you're right, 7 good science leads to good regulation. 8 I think then it would be appropriate -- and why 9 don't you wait to make your final comments. And I'll call 10 on the following: Seyed Sadredin -- 11 BOARD MEMBER PATRICK: Sadredin. 12 BOARD MEMBER RIORDAN: Would you come forward. 13 -- Cathy Reheis-Boyd, Les Clark, and Manual 14 Cunha, if you all would -- you're going to, I know, be 15 speaking. And whomever wishes to begin. 16 DEPUTY EXECUTIVE OFFICER TERRY: Actually I've 17 got to grab my microphone. You know me. 18 (Laughter.) 19 DEPUTY EXECUTIVE OFFICER TERRY: We've brought 20 together some of the key members of the Policy Committee 21 to honor Barbara. We're not going to let her get away 22 with only two plaques today. And so each of them would 23 like to say a few words. 24 But we did, using the logo of the study, have 25 another plaque for her collection made. And our staff I PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 58 1 thought did a great job of replicating those lovely 2 mountains in the backdrop, that we'll be able to see even 3 better when the air gets clean. 4 BOARD MEMBER PATRICK: That's gorgeous. Thank 5 you. 6 MR. SADREDIN: Thank you, Madam Chair, members of 7 the Board. Seyed Sadredin, Executive Director of the San 8 Joaquin Valley Air Pollution Control District. 9 I want to thank you for being here in the valley. 10 And I want to thank the chairman for his great keynote 11 address yesterday at our symposium. And I want to thank 12 him and Ms. Witherspoon for their participation yesterday 13 at our symposium. I think their presence and input really 14 made yesterday's event a great event. 15 Now, with respect to the study agency and the 16 work of the -- and these two studies that we've been 17 talking about. I think that the exercise that we've been 18 going through over the last 10 to 15 years serves as a 19 great model for a public-private partnership, 20 environmental and business community working together. 21 Because of the work of the study, we lead the world, we 22 lead the nation for sure, in terms of understanding of 23 ozone and particulate formation and all the difficult 24 details that are involved in controlling those pollutants. 25 And none of that work could have really been done without PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 59 1 Barbara Patrick's leadership and support and keeping us on 2 track and making sure we do it effectively and 3 efficiently. So I want to thank her for that. 4 I'm also here on behalf of the district staff and 5 our board to thank her for representing the valley and the 6 State of California on this Board. We are quite proud of 7 her efforts on this Board and we will miss her. 8 And I was listening to Lynn and Catherine, and I 9 was beginning to feel sorry for them because they're 10 losing Barbara. But then I thought about myself and our 11 agency. I'm losing her and five other board members next 12 month. And we will have our own farewell ceremony and 13 more will be said and done with respect to that. But I 14 will miss you personally and professionally. You are 15 someone that was a great mentor to me and someone that I 16 could always count on, and we will miss you. 17 BOARD MEMBER PATRICK: Thank you. 18 MR. CUNHA: Barbara, would you please come down 19 here. I don't know if that's proper, Mr. Chairman, if we 20 can ask a Board member to come down here. 21 CHAIRPERSON SAWYER: Certainly. 22 MR. CUNHA: Okay. I don't want to break any laws 23 or get in trouble. 24 (Laughter.) 25 BOARD MEMBER PATRICK: It's my chambers. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 60 1 (Laughter.) 2 MR. CUNHA: First thing is is that, yeah, we 3 spent on the particulate matter -- some of the staff 4 remember 27,500,000 and not one penny more. And we made 5 sure that the researchers stayed in Holiday Inns and 6 Western Hotels and not Hyatt Regencys when they were doing 7 research work. 8 We made sure that they got the job done and 9 returned the data to the staff on time. If not, we 10 wouldn't give them all their money. So we were a pretty 11 rough group of folks, policy people. 12 But I think the greatest part of this whole thing 13 is having Barbara with us and Lynn Terry and other ARB 14 staff that have gone to DC. And I think the greatest 15 memory I will ever have is when we were in DC in I think 16 it was February and it was like 10 inches, 12 inches of 17 snow, it was cold, 30 degrees below 0. We were trying to 18 walk to a place. And Les Clark comes up on to this poor 19 individual sitting on this -- sleeping on this grate, 20 these -- they call them, you know, people that -- homeless 21 people. Anyway, he saw these gloves laying on the side by 22 this guy, and Les's hands were freezing, he went over 23 there and stole the guys gloves so that Les can protect is 24 own hands. And I'll never forget that trip. 25 (Laughter.) PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 61 1 MR. CUNHA: But it was quite enjoyable to raise 2 the monies that we did raise. But I think the greatest 3 part is yesterday to see the staff from the San Joaquin 4 Valley and the Air Resources Board and EPA there, as the 5 partnership of this whole thing, is the data. As you 6 said, Barbara, absolutely, the research, with -- Barbara 7 Patrick worked hard with us to make sure that we did the 8 right research and we spent the money, what we needed to 9 know, and to develop our plans, for not just the San 10 Joaquin Valley, but for the Bay Area and for Edwards Air 11 Force Base. I mean to get the military involved in giving 12 5.5 million. How do I know these numbers? Because we've 13 had a lot of discussion with staff. 14 And it was great to have that partnership. And 15 when you asked the question, "Is this it?" -- Lynn Terry, 16 "Is this it?" We're over there going, "This is it. 17 Stop." 18 But I think after yesterday's presentation at the 19 San Joaquin Valley, you can see that the request of us now 20 taking the data and going back to DC and getting incentive 21 monies all across the board for all types of businesses 22 and communities to help clean up the air faster, rather 23 than trying to put it all on business or schools or et 24 cetera, we're going to do this. 25 And just to give you an announcement. The USDA PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 62 1 Agriculture Air Board last week met in DC, which is 2 chaired by the Secretary of Agriculture. I asked him a 3 question. I happened to have the first opportunity to ask 4 the Secretary a question. It was: "I need 300 million 5 from you in the farm bill. But here's the catch, Mr. 6 Secretary. I want it for every year for seven years, 7 because that's the life of a farm bill." So he said, 8 "Fine. Write the language and get it to me and I'll put 9 that in the farm bill for agriculture." 10 So Agriculture now has stepped up with the USDA 11 Task Force for 300 million a year for funding to help 12 farmers across the U.S. to deal with air quality. And we 13 know that California will get a -- we hope, a good chunk 14 of change. 15 So, anyway -- but, again, Barbara, on behalf from 16 us and -- Cathy, Les, Seyed, Lynn Terry, myself, we would 17 like to present you with some flowers, first thing. 18 BOARD MEMBER PATRICK: Oh, my goodness. Oh, they 19 are gorgeous. 20 Thank you so much. 21 MR. CUNHA: And I'd put them in the box to make 22 sure they had plenty of water and they would last. I did 23 not want them to die or anything. 24 And, secondly, we'd like to present you -- and 25 two signed copies from one of our valley's greatest PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 63 1 authors, David Masumoto, who writes for the L.A. Times -- 2 the very first book signed to you, "Epitaph of a Peach." 3 And his last book called "Four Seasons," talking about 4 what goes on in agriculture and things. But being that 5 you were a former teacher, I thought this would be 6 something great. And we personally as authors signed it 7 somewhere in here, I think all of us. Now, We didn't have 8 anything to do with these books. But I'd like to present 9 you with this from all of us here. 10 BOARD MEMBER PATRICK: Thank you so much. 11 MR. CUNHA: And thank you so much for all of the 12 help and encouragement. And like Seyed said, your wisdom 13 in our valley with our air district, sometimes we never 14 agreed, sometimes we worked hard to get to where we needed 15 to get to. But you're a great lady and we appreciate it 16 very, very much. And thank you very, very much. 17 (Applause.) 18 MS. REHEIS-BOYD: Cathy Reheis, Western States 19 Petroleum Association. 20 Barbara, we have been down many roads together. 21 And I just wanted to say on behalf not only of all of us 22 and my organization and myself personally, you have been 23 just a trooper for us. And really you've had the vision, 24 you've had the leadership. And we've all been there just 25 lucky to be a part of that with you. I cannot believe we PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 64 1 have raised $66 million together. And those trips to DC, 2 although we dreaded them, I can tell you -- I don't care 3 if Lynn Terry says this is the last one. She has told me 4 it's the last one for five years. 5 (Laughter.) 6 MS. REHEIS-BOYD: So I am not convinced that that 7 is the case. And I have all confidence we will be heading 8 back to DC again. We may have to contract with you to 9 come with us. 10 But, again, just thank you so much. 11 I'd like to say also on behalf of all of us, we 12 are making a $500 donation to the Kern County Museum, 13 which houses the black oil experience -- or black gold oil 14 experience and also many agricultural displays. And we 15 will be planting a tree in Barbara's name, and we'll have 16 a plaque there that will represent everything you've done 17 for this county, for the San Joaquin Valley, for the 18 state, and that will be there forever. So it will be a 19 remembrance of all of the good you've done. And I'm told 20 it's a Texas Oak, which has good roots, it's strong, it's 21 visionary, it reaches for the sky. And that's how we feel 22 about you. 23 Thank you, Barbara. 24 (Applause.) 25 MR. CLARK: Mr. Chairman, thank you. Board PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 65 1 members. I appreciate being here. 2 I didn't really take the guys gloves. That's 3 a -- I took his shoes. 4 (Laughter.) 5 MR. CLARK: No, I'm teasing, in a way. 6 (Laughter.) 7 MR. CLARK: It's been my pleasure to work with 8 Barbara over the years. I remember when we first started 9 in this -- down this road, it was considered a cooperative 10 environmental management, if you will. We've come to 11 hearings and they say, "Well, where's the information? We 12 don't have it. Do you have the information?" So we 13 started together, working together. And it developed -- 14 and a lot of people don't want to hear the word "good 15 science," but that's what this is. And as long as we work 16 together in that vein, I think we're going to be very 17 successful in our many efforts. And, believe me, we have 18 a lot of challenges, as you all know in your monthly 19 meetings. 20 But I too would like to say congratulations, 21 Barbara. I really enjoyed working with you. It's been 22 fun. Not only me, but there's other folks that I 23 represent as far as different committees that we're all 24 on, and they're all saying best wishes to you. Your 25 community has been very fortunate to have your PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 66 1 representation and leadership -- your community in Kern 2 County, on into the San Joaquin Valley and at the state 3 level. 4 Now, we did take you to Washington DC once. 5 Remember that? But we did have fun. We did a lot of good 6 work back there. 7 And you fellow Board members up there, if you 8 ever want to go to DC, come on. We'll take you. 9 (Laughter.) 10 MR. CLARK: Thank you very much. 11 (Applause.) 12 BOARD MEMBER PATRICK: Mr. Chairman and members 13 of the Board, if I could, I'd like to say thank you to 14 this group of people. They have worked tirelessly. They 15 were working long before Barbara Patrick was on the board 16 of supervisors on air quality issues. 17 Now, Manny, did forget one thing. And, that is, 18 what happens in DC stays in DC. 19 (Laughter.) 20 BOARD MEMBER PATRICK: That was our first rule 21 that he forgot completely about. 22 (Laughter.) 23 BOARD MEMBER PATRICK: But I want to thank you 24 very much for the plaque. I want to thank you for the 25 flowers. They're absolutely gorgeous. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 67 1 And you all know what a great reader I am. These 2 will be treasured. David Masumoto is one of my very 3 favorite authors. He's a wonderful voice of this valley. 4 And I can't think of anything I'd like more. 5 And to remember me at the museum is spectacular. 6 Thanks to you for all of your work. 7 (Applause.) 8 CHAIRPERSON SAWYER: Thank you all very much. 9 I'm going to try to complete my comments. 10 I did want to say that many of you may think that 11 45 or $67 million is a lot of money to put into science. 12 But good science is going to be worth every bit of it when 13 we come to laying out the program for cleaning up the air 14 quality of the San Joaquin Valley. We are going to be 15 asking the people of the valley to make investments that 16 are in the billions of dollars to make this cleanup. So 17 directing that kind of an investment, it's very important 18 that we do it carefully and with a good scientific basis. 19 Ms. Witherspoon, are there any other comments 20 from the staff? 21 EXECUTIVE OFFICER WITHERSPOON: Nothing further. 22 CHAIRPERSON SAWYER: Since this is not a 23 regulatory item, it's not necessary to officially close 24 the record. 25 I believe this would be good time to take a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 68 1 ten-minute break to give our court reporter a break. 2 So we will resume in ten minutes. 3 (Thereupon a recess was taken.) 4 CHAIRPERSON SAWYER: The next agenda item is 5 6-11-4, Emergency Amendments to the Board's Existing 6 Regulations for Portable Equipment and Stationary Diesel 7 Engines. 8 At our September and November Board meetings we 9 heard several concerns from the public that they wanted to 10 comply with our diesel control measures, but that they had 11 been caught off guard by changes in the statewide 12 registration program. They did not know what was 13 happening and found themselves in a difficult situation. 14 Others were experiencing problems finding compliant 15 replacement products for their special equipment and there 16 was no provision in the rules to deal with that. 17 The control of diesel emissions is critical and 18 we're committed to achieving that objective. However, the 19 problems expressed are also very real. Upon reflection, 20 the Board felt that we needed to do a better job of 21 informing the affected businesses about changes in our 22 regulations; also, that we should provide one last 23 opportunity to join the statewide registration program and 24 allow diesel engines that were produced in good faith -- 25 purchased in good faith. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 69 1 Staff took these instructions and came up with 2 the emergency amendments that they are proposing today. 3 I'd like to thank them for working so diligently 4 with the businesses involved and with the local air 5 pollution control agencies on developing these changes 6 because I know it was not an easy task. 7 Ms. Witherspoon, would you please introduce this 8 item. 9 EXECUTIVE OFFICER WITHERSPOON: Thank you, Dr. 10 Sawyer. 11 Today's proposed emergency rule-making is the 12 culmination of a joint fast track effort between the 13 affected businesses, the local air districts and ARB 14 staff. These amendments address the hardship that is 15 being borne by people who for various reasons have not yet 16 registered their portable equipment or paid fees on a 17 schedule established in the Statewide Portable Equipment 18 Registration Program. Under the current rule, these 19 owners cannot enter registration program and have to buy 20 replacement equipment to comply with our requirements and 21 with local requirements. As they testified to you 22 previously, that's causing severe economic hardship to the 23 extent that some of the affected companies may go out of 24 business. 25 The proposed amendments are also designed to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 70 1 address shortages of complying equipment. We have heard 2 from some industry representatives that when the standards 3 change to a cleaner tier, this can be shortages of 4 complying engines that last up to a year. The end result 5 is that industry does not have access to complying engines 6 and neither has to shut down, curtail their operations, or 7 operate illegally with the risk of incurring significant 8 fines. 9 Staff has brought you a balanced proposal that 10 allows businesses to continue providing essential 11 services, recognizes the economic investment of those that 12 complied all along with our requirements, and preserves 13 the emission reductions needed to protect public health. 14 If you adopt these amendments today on an 15 emergency basis, they will be effective for 120 days. 16 Before that period expires, staff will return to you with 17 a normal rule-making to make these changes permanent. 18 Kitty Howard of the Stationary Source Division 19 will present staff's proposal this morning. 20 STATIONARY SOURCE DIVISION MANAGER HOWARD: 21 Thank you, Ms. Witherspoon. 22 (Thereupon an overhead presentation was 23 Presented as follows.) 24 STATIONARY SOURCE DIVISION MANAGER HOWARD: 25 Good morning, Dr. Sawyer and members of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 71 1 Board. 2 Today I will provide you with background 3 information on why we were proposing emergency amendments 4 to the regulation for the Statewide Portable Equipment 5 Registration Program and the air toxic control measures 6 for diesel fuel portable equipment and stationary engines. 7 I will also provide a summary of the proposed 8 amendments. 9 Finally, I will also explain our next steps and 10 provide you with the staff's recommendations. 11 --o0o-- 12 STATIONARY SOURCE DIVISION MANAGER HOWARD: The 13 regulation for the Portable Equipment Registration 14 Program, also referred to as PERP, was originally adopted 15 by the Board in March 1997 and has been amended several 16 times. It is a voluntary program that allows owners and 17 operators to operate throughout the state without having 18 to obtain a permit each time they move their portable 19 equipment into a new district. 20 Two separate airborne toxic control measures, 21 also called ATCMs, were adopted by the Board in February 22 2004 to control diesel PM emissions from portable 23 equipment and from stationary engines. In a nut shell, 24 these two measures rely upon increasingly stringent 25 emission standards, or tiers, staged over several years to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 72 1 reduce exposure to diesel emissions in California. 2 A critical component of the ATCMs is to virtually 3 eliminate Tier 0 engines from operation in California. It 4 is important to remember that Tier 0 engines were 5 manufactured before there were any requirements for 6 emission controls. 7 The stationary ATCM has been amended several 8 times, while this is the first time that the amendment -- 9 the first time that amendments have been considered for 10 the portable engine ATCM. 11 --o0o-- 12 STATIONARY SOURCE DIVISION MANAGER HOWARD: As 13 part of the implementation of these three regulations, the 14 ARB staff conducted extensive outreach. For the PERP 15 program in particular, ARB staff mailed brochures about 16 the program to 25,000 contractors licensed by the 17 Contractors State License Board, as well as many brochures 18 to air districts and public works agencies and also public 19 works associations. 20 In addition, ARB staff mailed 1,200 copies of our 21 brochure to the Construction Industry Air Quality 22 Construction Coalition, also known as CIAQC, so that they 23 could help get the word out to their members about the 24 upcoming requirements and deadlines. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 73 1 STATIONARY SOURCE DIVISION MANAGER HOWARD: 2 During both the September 2006 and November 2006 3 Board hearings, you heard comments about the 4 implementation of the PERP regulation, also about its 5 companion regulation -- oh, I'm sorry -- also about its 6 companion regulation, the portable ATCM and the stationary 7 ATCM. 8 You also heard comments about limited 9 availability of engines that comply with the standards. 10 --o0o-- 11 STATIONARY SOURCE DIVISION MANAGER HOWARD: 12 Despite the outreach and noticing efforts that I 13 mentioned previously, some owners and operators of 14 portable equipment stated they were not aware of the 15 requirements to purchase cleaner complying engines and to 16 obtain district permits to operate or registration as 17 required by the PERP regulation. 18 Some owners and operators also stated that the 19 requirements to purchase new complying engines created an 20 economic hardship for them, even to the point of closing 21 down their businesses. 22 We also heard comments from members of industry 23 who incurred significant costs by investing in cleaner 24 equipment since 1997 and have complied with the law. 25 These owners believe that they have not -- believe that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 74 1 they have been placed at an economic disadvantage with 2 those that did not comply. They believe that 3 back-registration fees should be collected from those that 4 now wish to register their engines. 5 And, finally, we received comments that complying 6 engines were not available for some horsepower categories, 7 makes or models, particularly during those times right 8 around where a more stringent tier standard was coming 9 into effect. 10 --o0o-- 11 STATIONARY SOURCE DIVISION MANAGER HOWARD: Based 12 on the comments that we have received to date, ARB staff 13 has found that an emergency exists for some owners and 14 operators of portable and stationary engines affected by 15 the three regulations that we are discussing today. ARB 16 staff believes that unless emergency action is taken, 17 continued operation of some small businesses will be 18 impaired, resulting in the loss of income, closure of 19 small businesses, and corresponding loss of jobs. This 20 would adversely affect the general welfare of the state. 21 ARB staff worked with the California Air 22 Pollution Control Officers Association, CAPCOA, and the 23 affected industry to develop the proposed amendments that 24 are before you today. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 75 1 STATIONARY SOURCE DIVISION MANAGER HOWARD: Our 2 proposed amendments would allow registration in PERP to 3 Tier 1 and tier 2 engines until 2010. However, after 4 January 1st, 2010, only the cleanest tier available will 5 be allowed to register, as is required by the existing 6 portable ATCM. 7 We propose to redefine what constitutes a 8 resident to include those Tier 1 and 2 engines that had 9 been operating in California between March 1st, 2004, and 10 October 1st, 2006. This new definition is to prevent the 11 importation of Tier 1 or Tier 2 engines as a means of 12 circumventing the emergency provisions. It is important 13 to remember that these provisions that we're proposing 14 today are to provide economic relief to businesses that 15 had purchased noncompliant engines in the past. 16 We are not proposing to allow Tier 0 engines to 17 be registered in PERP. However, we are proposing to allow 18 districts to permit at their discretion Tier 0 engines. 19 It is important to remember that Tier 0 engines are 20 uncontrolled and, depending on the horsepower, Tier 0 21 engines emit approximately 65 to 90 percent more NOx than 22 Tier 1 engines and approximately 275 percent more PM than 23 Tier 1 engines. 24 We are proposing a provision that would provide 25 compliance flexibility during those periods where it can PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 76 1 be verified to a district or to the ARB's Executive 2 Officer that complying engines are not available for some 3 horsepower categories, makes, or models. 4 We believe that this provision will provide 5 economic relief, particularly during those times right 6 around when a more stringent tier standard comes into 7 effect. 8 --o0o-- 9 STATIONARY SOURCE DIVISION MANAGER HOWARD: We 10 are proposing a fee schedule for those owners and 11 operators who did not for a variety of reasons register in 12 PERP. We propose to collect back fees. 13 We propose a fee schedule that favors owners and 14 operators that act early. Tier 1 fees will be based on 15 the manufacture date, while Tier 2 fees will be based on 16 the purchase date. If owners or operators of Tier 2 17 engines do not have proof of purchase, their fees will be 18 higher than those that do, depending on the model year. 19 In addition to collecting back fees, we propose 20 to also collect current registration fees that would be 21 due. It is important to note that this proposed fee 22 schedule does not in any way limit the districts -- the 23 local district's ability to assess penalties for 24 noncompliance. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 77 1 STATIONARY SOURCE DIVISION MANAGER HOWARD: This 2 slide provides the range of fees that would be due, 3 depending on when an owner or an operator submits an 4 application. Again, the sooner the owner or operator 5 submits an application, the lower the fees. 6 In each of these categories the range of fees is 7 directly related to the manufacture or purchase date of an 8 engine. We have provided to the Board and to the members 9 of the audience on the back table a summary of more 10 details on the fees that would be due according to the 11 manufacture date or purchase date of the engine. 12 However, on the upcoming slide I will walk you 13 through a sample fee assessment. 14 --o0o-- 15 STATIONARY SOURCE DIVISION MANAGER HOWARD: This 16 slide shows that fees that would be due for two engine 17 examples. 18 The first example is for a Tier 1 engine 19 manufactured in 2003. If an owner or operator applies for 20 registration on or before December 31st, 2007, the fees 21 will be $1,250. If he or she waits until 2008 to 22 register, the fees will be $1,660. And if he or she waits 23 until 2009, the fees will be $2,795. 24 The second example is for a Tier 2 engine 25 manufactured in 2000 but purchased in 2004. If an owner PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 78 1 or operator has proof that he or she purchased the engine 2 in 2004, the fees are lower. If there is no proof, fees 3 are assessed as if the Tier 2 engine was purchased by the 4 owner or operator in the same year that it was 5 manufactured. 6 Just to reiterate, the dollar amounts that you 7 see under each example on the slide reflect in the case of 8 the first set of parentheses the fees for applying for 9 registration on or before December 31st, 2007; the second 10 set of parentheses reflect the fees for registering in 11 2008; and, finally, the third set reflects the fees for 12 registering in 2009. 13 Clearly the examples show that the sooner an 14 owner or operator applies for registration, the lower 15 their fees will be. 16 --o0o-- 17 STATIONARY SOURCE DIVISION MANAGER HOWARD: If 18 the emergency amendments are adopted today, state law 19 allows that they may remain in effect for 120 days after 20 approval by the Office of Administrative Law and filing 21 with the Secretary of State. 22 We intend to return to the Board for regular 23 formal rule-making on any amendments that you might 24 approve today. This would ensure that the provisions of 25 the emergency amendments remain in force after the 120 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 79 1 days expire. 2 We will begin accepting applications immediately 3 for engines that would be subject to the emergency 4 provisions. And once the emergency amendments are filed 5 with the Secretary of State, we will begin issuing 6 registrations for engines that comply with the emergency 7 provisions. 8 As we did in the past, we intend to conduct 9 aggressive outreach about the emergency provisions. In 10 fact, we've already begun working with some industry and 11 air district representatives to get the word out. 12 --o0o-- 13 STATIONARY SOURCE DIVISION MANAGER HOWARD: Staff 14 recommends that the Board direct the ARB's Executive 15 Officer to prepare a finding of emergency. In addition, 16 staff recommends that you adopt the proposed amendments 17 before you today. 18 Thank you. That concludes my presentation. 19 CHAIRPERSON SAWYER: Thank you, Ms. Howard. 20 Madam Ombudsman, would you please describe the 21 public process that occurred while this item was being 22 developed and report any concerns or comments to the Board 23 at this time. 24 OMBUDSMAN QUETIN: Thank you, Dr. Sawyer and 25 members of the Board. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 80 1 As you heard, the proposed amendments to this 2 regulation have been developed with input from the U.S. 3 EPA, the local air districts and agencies, and many 4 stakeholders and interested parties. 5 At the September Board hearing several comments 6 were received from the affected industry that raised 7 concerns regarding the Statewide Portable Equipment 8 Registration Program. To address those concerns, staff 9 had several individual meetings with stakeholders and held 10 a public workshop on November 20th, 2006, in Sacramento. 11 There were 59 attendees and 85 participants on the phone. 12 Consequently, staff was proposing emergency changes to the 13 registration program that were developed through the 14 discussions from the affected industry and districts. 15 In addition, they developed amendments to the 16 airborne toxic control measure for compression ignition 17 engines and airborne toxic control measure for diesel 18 fueled portable engines to reconcile the proposed changes 19 to the registration program. 20 On November 28th, 2006, and November 29th, 2006, 21 the proposed draft regulatory concepts and fees were 22 distributed via ARB's website, the PERP list serve and the 23 diesel risk reduction plan list serve. There are nearly 24 1600 stakeholders on the PERP list serve and 1655 on the 25 diesel risk reduction plan list serve. Although this PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 81 1 proposal does not include Tier 0 engines, staff negotiated 2 with the CAPCOA board and came up with a solution that may 3 resolve most of the remaining industry concerns. 4 Thank you. This concludes my comments. 5 CHAIRPERSON SAWYER: Do any Board members have 6 questions? 7 Ms. Berg. 8 BOARD MEMBER BERG: Thank you. 9 I'd just like some clarification on the fees. 10 What was the original fee registration for the 11 various tiers? 12 PROJECT ASSESSMENT BRANCH CHIEF TOLLSTRUP: Well, 13 the way the fee schedule works in the reg right now, we 14 charge a three-year fee, we collect it up front, and it's 15 good for the three years. That fee is proposed to change 16 when the last amendments to the Board go to OAL and get 17 approved. It will be going up. The fee that we have here 18 before you today covers the fees that we had in the past. 19 And it was a registration fee for staff of the Air 20 Resources Board for registering. And it also included a 21 district inspection fee. It amounted to $105 per year is 22 what it comes up to. And that's what we used for 23 calculating the numbers that you see before you. 24 BOARD MEMBER BERG: Thank you. 25 Also, I'd like to look at the Tier 1 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 82 1 back-registration fee based on manufacturing date. What 2 is the manufacturing date range on the Tier 1's? 3 PROJECT ASSESSMENT BRANCH CHIEF TOLLSTRUP: The 4 manufacture date depends on the horsepower range. The 5 tiers come in based on that. 6 Tier 1 started for the 175 to 750, started back 7 in '96. And then the other tiers come in as well -- or 8 the other horsepower ranges over the years. And, in fact, 9 it's still in effect for the greater-than-750 Tier 1. 10 BOARD MEMBER BERG: How would the fee change if 11 one had a 1996 engine? Would they still pay the 1,250? 12 Is there a multiplier in this thing? I'm a 13 little confused. 14 PROJECT ASSESSMENT BRANCH CHIEF TOLLSTRUP: There 15 is. I don't know if it was explained well. 16 What we did was -- the staff proposal requires 17 that the back fees be paid. In addition to the back fees, 18 we put another 50 percent on top of that. And that was to 19 cover -- it was an equity issue. We've got people that 20 are permitted by the local districts. We've got folks 21 that are registered in our program. And in addition to 22 the, you know, registration permitting costs, there are 23 other costs as well. There's record keeping and reporting 24 that they have to do, arranging for inspections. There's 25 a lot of other things that go on that, you know, are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 83 1 expenses for folks that are in the programs. And we tried 2 to get some of that back through adding the extra 50 3 percent on top. 4 BOARD MEMBER BERG: Well, I am -- I understand 5 and am in favor of a penalty, because they were supposed 6 to have a permit in the first place, even if it wasn't in 7 our program, in the district program. Staff, isn't that 8 correct? I mean that is a correct -- 9 PROJECT ASSESSMENT BRANCH CHIEF TOLLSTRUP: There 10 are penalties for late fees and certainly penalties for 11 noncompliance. 12 BOARD MEMBER BERG: But what I'm confused on in 13 the presentation is: Are the fees listed as a fee amount 14 by year? In other words, if they have bought a 2000 -- an 15 engine in 2000, do they have six years worth of fees to 16 pay? 17 PROJECT ASSESSMENT BRANCH CHIEF TOLLSTRUP: That 18 is correct. 19 BOARD MEMBER BERG: Okay. Even though that 20 engine was manufactured in 1996? 21 PROJECT ASSESSMENT BRANCH CHIEF TOLLSTRUP: Well, 22 depending on whether it's a Tier 1 or a Tier 2. The Tier 23 1, we are going back to the date of manufacture. The Tier 24 2 engines, we are letting them use the date of purchase. 25 And the reason that we did that is because we have PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 84 1 instances where folks have bought Tier 1 engines recently, 2 when Tier 2 or Tier 3 are available. And it just didn't 3 make sense that they would pay a lesser fee for a higher 4 polluting engine than somebody that, you know, bought the 5 Tier 2 engine that was available now. So we went back to 6 the date of manufacture for those -- the Tier 1. But the 7 Tier 2 we will use the date of purchase. 8 BOARD MEMBER BERG: Okay. My problem with that 9 is -- I do think that is a problem for me. I'd rather -- 10 if you have a fee based and have a higher fee for a Tier 1 11 because it's more polluting, I don't have a problem with 12 that. But to have somebody pay for an engine that was not 13 in their possession, I have a problem with that. So if an 14 engine was manufactured in 1996, but they didn't buy it 15 until 2000 or 2001, I don't see where they should have to 16 pay for the registration during the time they did not own 17 the engine. 18 PROJECT ASSESSMENT BRANCH CHIEF TOLLSTRUP: Well, 19 again, part of it, and what staff's proposal was trying to 20 cover, was an instance where somebody went out and bought 21 an engine. They had an option. We had Tier 2's 22 available. In some instances we had Tier 3 available. 23 They chose to buy a dirtier engine. And the one way to 24 get back at that was to -- or try to cover that was to 25 charge based on the date of manufacture. We didn't take PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 85 1 them back to the tier. We took them back to the date of 2 manufacture. 3 BOARD MEMBER BERG: I guess I find it interesting 4 that we feel that they had the ability or that they made a 5 choice to buy a dirtier engine, and yet in our looking at 6 this emergency regulation we're saying, "Gee, the industry 7 didn't know what to do." So how on one hand can they have 8 sat down and said, "Gosh, you know, I'm going to buy this 9 dirtier engine," and then come before us and say, 'We are 10 totally ignorant as to that there's any registration or we 11 should have known anything"? 12 PROJECT ASSESSMENT BRANCH CHIEF TOLLSTRUP: Well, 13 I don't think staff is saying that -- you know, one of the 14 things in looking at this, we've got a mixture of folks 15 out there. We have people that know the regs and choose 16 not to comply. I mean there's certainly that mix out 17 there. We have others that did not know about it. So 18 we've got a mix out there, and we have no way of 19 identifying who those folks are. 20 We tried to strike a balance in using the date of 21 manufacture. The fees, you know, they're not high. If 22 you had to go get a district permit -- remember, the 23 district permit requirements have been in effect or a long 24 time -- are considerably higher than the registration 25 program requirements. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 86 1 So we thought it was a reasonable fee. That way 2 we cover, you know, all instances. We kind of struck, you 3 know, right down the middle, because we have some that 4 knew and some that did not. And that's why we used the 5 date of manufacture. 6 BOARD MEMBER BERG: Okay. Let's see. Do I have 7 anything else? 8 And in our original proposal was Tier 0 engines 9 registered in our program. 10 PROJECT ASSESSMENT BRANCH CHIEF TOLLSTRUP: We 11 allowed -- back at the beginning of the program we did 12 allow Tier 0 engines to be registered in the program. 13 Now, we do have some in our program now. We closed that 14 off in the end of 2005. We no longer allowed Tier 0's in. 15 In the proposal that we have today we would continue not 16 to allow them in the program. We would make them go to 17 the local district. And if the district was willing, give 18 them a permit at the district level. 19 BOARD MEMBER BERG: And in the original fee 20 structure was there also a variation in the fee depending 21 on how dirty the engine was? 22 PROJECT ASSESSMENT BRANCH CHIEF TOLLSTRUP: Under 23 the fee schedule that exists in the rule now, there was no 24 distinction between Tier 0, Tier 1, Tier 2. It was a flat 25 fee for registration. And providing they met the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 87 1 requirements in the reg, we'd issue registrations based on 2 that. 3 BOARD MEMBER BERG: Okay. Thank you for your 4 help. 5 DEPUTY EXECUTIVE OFFICER SCHEIBLE: And if I 6 could provide a little perspective here. 7 When we adopted the program originally in 1997, 8 the vast majority of engines out there were Tier 0 9 uncontrolled engines, and they had -- all had the option 10 of coming into the statewide program. And if they chose 11 that option, they paid our fee, and they could move around 12 the state without getting district permits. 13 But anyone who acquired a new engine was 14 required -- if they wanted to come into the statewide 15 program, they could not go out and buy a used Tier 0 16 engine, bring it in from out of state then register it 17 with us. 18 So that's the dilemma that we have now with the 19 Tier 0's. Most of them have been out there for many 20 years. If they had the option originally of registering 21 and have avoided registering with us, and presumably with 22 the district, for an extended length of time, to the 23 extent that people have brought in Tier 0 engines 24 recently, they could not have come to us and ever gotten 25 a -- you know, registered them at the time they acquired PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 88 1 them, because the requirement was if it's 2004 and the new 2 engine is a Tier 1 or a Tier 2, that's what you have to 3 bring us. And we simply cannot sort through the instances 4 of those people who didn't know about the program, 5 acquired an engine in good faith and just went about their 6 business versus those who knew about the program, decided 7 that they didn't want to come into it because their 8 business choice was to buy an engine that they couldn't 9 register. 10 BOARD MEMBER BERG: And I understand that. 11 I guess as a business person -- if I have to pay 12 a fee based on the fact of a tier of an engine, so a Tier 13 1 being dirtier and therefore the fee is more, I can 14 understand that. It's hard for me to understand as a 15 business person, if that engine was manufactured in 1996 16 and I didn't buy it until 2000 or 2001, you know -- paying 17 those back years would grate me. Just letting you know. 18 EXECUTIVE OFFICER WITHERSPOON: One other comment 19 about the balancing exercise that went on, is the 20 emissions impact of Tier 0 engines and where in the state 21 that impact is the most severe. And so we went with, 22 instead of a statewide minimum that they could all come 23 in, to instead let the districts decide at their 24 discretion if in their region the air quality could 25 sustain the continued operation of these very dirty PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 89 1 engines. And so it is our expectation that in the South 2 Coast and in the San Joaquin they will likely not allow 3 permitting of Tier 0 engines because of the severity of 4 the air quality problems. There might be a few special 5 instances where they're extraordinarily expensive, they 6 were quite large, they're in specialty equipment where 7 they work out a variance. But generally speaking, those 8 districts want those engines out of their emission 9 inventories. Whereas up in the northern Sacramento Valley 10 they don't have as severe an air quality problem, they're 11 quite happy to permit those engines. 12 And so if you're faced with non-registration at 13 the state level and then selective permitting in the 14 districts, you do have markets into which you can sell 15 those engines and not have to take them all the way beyond 16 state borders for them to be used in California. 17 So although it seems onerous that we're closing 18 the door to Tier 0 registration, there are other options 19 out there. 20 BOARD MEMBER BERG: And I think you did strike a 21 good balance on that, and I applaud the flexibility for 22 the districts. I think that was the right move to make. 23 Thank you, Mr. Chairman. 24 CHAIRPERSON SAWYER: I will now call the first 25 three witnesses who have signed up: Carol Coy, Michael PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 90 1 Lewis, and Jim Jacobs. And we will be applying the 2 three-minute limit. 3 Ms. Coy. 4 MS. COY: Good morning, Chairman Sawyer and Board 5 members. My name is Carol Coy, and I'm the South Coast 6 Air Quality Management District Deputy Executive Officer 7 that's responsible for engineering and compliance. That 8 means the engineers that permit this equipment and the 9 inspectors that enforce compliance in the field all report 10 in my group. 11 We believe that over half of the ARB 12 PERP-registered equipment is located in the South Coast 13 District, and that's currently 7 to 8,000 engines. 14 Although the South Coast District believes that the 15 current ATCM and PERP regulations as adopted by your Board 16 earlier this year and now pending OAL approval are 17 preferable to the reopening of -- to the reopening 18 proposal here, we understand the heavy pressure that ARB 19 is under to back off engine registration deadlines. 20 Under the circumstances, we believe the staff 21 proposal is appropriate. And I'm here this morning to 22 urge your support. 23 In conjunction with the pending rule, the South 24 Coast District is ramping up our field enforcement efforts 25 on portable equipment. We were fully prepared to deal PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 91 1 with the PERP and permitting hardship issues on a 2 case-by-case compliance order basis, in which we would 3 have expedited change-out of Tier 0 violating engines with 4 attention to the individual circumstances of the specific 5 owner or operator at hand. 6 We've already assisted in repowering a number of 7 large engines. Allowing carte blanche statewide Tier 0 8 engine registration, as will be required by some industry 9 representatives this morning, is completely unacceptable 10 to the South Coast District, as these engines emit on 11 average, as you heard Ms. Howard this morning, well over 12 twice the NOx of Tier 1 engines. 13 To give you an idea of the magnitude of the 14 potential of this, in a ten-hour day a 600 horsepower 15 average Tier 0 engine emits about 100 pounds of excess NOx 16 emissions. That means 20 of these engines is already a 17 ton of NOx in that ten-hour day. And most of these 18 engines are actually dirtier than those old average 19 emission factors from EPA, and many of them operate well 20 in excess of ten hours a day. 21 During the recent public workshops and the rule 22 revision discussions, ARB staff has compromised on the 23 reopening and further compromised on penalties and fees. 24 South Coast actually supports these decisions. The staff 25 proposal before you allows individual district discretion PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 92 1 on permitting Tier 0 equipment, and we support that 2 approach as well. 3 Please assist the South Coast District in 4 attaining our challenging air quality standards and 5 meeting our air quality management plan goals. Support 6 the equitable proposal that's been put forward by your 7 staff this morning. 8 Thank you very much. 9 CHAIRPERSON SAWYER: Thank you. 10 Mr. Lewis. 11 MR. LEWIS: Good morning. My name is Mike Lewis. 12 I'm the Senior Vice President of the Construction Industry 13 Air Quality Coalition, and I represent the four 14 associations that are the primary members of our 15 organization, which is the Southern California Contractors 16 Association, the Engineering Contractors, the Associated 17 General Contractors, and the Building Industry 18 Association. 19 We've tried to organize our presentations for you 20 this morning. There are about a dozen of us from 21 respective industries that want to present our issues to 22 you. So you're going to be hearing this morning from 23 representatives from the tree trimmers and the 24 landscapers; from the crane operators; from the operating 25 engineers union, who happens to own fleets of their own PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 93 1 equipment that they use to train their apprentices to be 2 able to operate the equipment that our members own; from 3 the concrete pumpers and from the rental companies and 4 their associations. 5 We appreciate the effort that the staff has made 6 to try and craft a solution to this problem. And I'm not 7 going to remind you that six months ago when you adopted 8 these changes we told you they weren't going to work and 9 they were going to be a problem. 10 But there are four things that I think are an 11 issue for us specifically today: 12 One is the Tier 0 equipment and the need to get 13 that equipment into the program, and the hardship that's 14 going to be created on small businesses in particular if 15 that's not allowed. 16 Secondly is the fees and making sure that we get 17 a fee structure that is an incentive to come into the 18 program and not a detriment. 19 Thirdly, the need for some flexibility. Some of 20 the equipment that these industries use is extremely 21 unique and it has to move across state lines to do the job 22 that it does. And we're going to need to retain some of 23 that flexibility. 24 And fourth is an effective outreach program. 25 Many of the people who own this equipment are not PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 94 1 required to be contractors or to have contractors 2 licenses. And that was the primary group of folks that 3 were targeted initially for outreach in this program. And 4 I think what we've discovered is there are an awful lot of 5 people who own this equipment who fall outside that 6 category, and we need a better effort to reach them. 7 Let me talk for just a moment about the Tier 0, 8 because I think that's the most critical issue. This 9 equipment is already operating in California. It's 10 already in the emissions assumptions that people have been 11 making. It was intended to be allowed to operate until 12 2010. We've now said to one group of people, because they 13 didn't know about this program and didn't get into it, 14 that their equipment can't be operated and therefore they 15 should now go to a district in hopes to get a permit. And 16 I would ask you the question: If I can get a permit to 17 operate in Placer County, what's the difference between 18 that and getting in the statewide program? Which was 19 designed to capture all of this portable equipment so that 20 we could monitor it, manage it, track it and ultimately 21 achieve the replacement of that equipment that you had 22 intended to get originally. 23 This program's been in place for ten years. We 24 haven't found an enormous amount of this equipment out 25 there through an enforcement effort. Frankly, it's come PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 95 1 in, in large measure, by people registering new equipment 2 and by those older pieces, finding out about it through 3 one means or another, or coming in under your -- when we 4 reopened the program. You recall, we reopened it a while 5 back with an amnesty. And you got thousands of pieces of 6 equipment that came in during that period. We're not 7 suggesting an amnesty this time around, but certainly 8 you've gotten more equipment into the program when you've 9 provided an opportunity than not. 10 CHAIRPERSON SAWYER: I need to ask you to 11 conclude please. 12 MR. LEWIS: Yes. Let me just put it in its 13 context. There are 25,000 pieces of equipment in the 14 program now. We believe there are 25,000 that aren't in 15 the program; 50 to 60 percent of that is Tier 0. You 16 can't just cast it aside and tell them to go get a permit 17 somewhere else. If you want to get rid of it by 2010, you 18 have to know where it is. And if you don't know where it 19 is, you're never going to know if it's gone. So you've 20 got to get it -- the only way to manage that is to get it 21 into the program so that you can effectively get it 22 replaced and out of the system. 23 Thank you. 24 CHAIRPERSON SAWYER: Thank you. 25 BOARD MEMBER BERG: Mr. Chairman, I just have one PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 96 1 question. 2 CHAIRPERSON SAWYER: Yes, Ms. Berg. 3 BOARD MEMBER BERG: Staff, I just want to make 4 sure that I understand, is that this equipment was 5 supposed to be registered at a district level irregardless 6 of the state ATCM. 7 DEPUTY EXECUTIVE OFFICER SCHEIBLE: For the vast 8 majority of equipment they had the choice at the time we 9 adopted the portable equipment program to come into the 10 state program. And that relieved them of any 11 responsibility to register with the districts. Most of 12 the districts, the larger districts, the urban districts 13 where the equipment is, have had permit requirements for 14 this equipment for -- that predated our program. There 15 are some rural districts that do not require permits of 16 portable equipment. And so in those areas the equipment 17 could operate legally. But that's a very small percentage 18 of the equipment in the state. 19 BOARD MEMBER BERG: Okay. Then, Mr. Lewis, why 20 don't these people have local air district permits? 21 MR. LEWIS: Well, presently you can't get a 22 permit from them. 23 BOARD MEMBER BERG: No, I mean in the past, sir. 24 MR. LEWIS: In the past? 25 BOARD MEMBER BERG: Yeah. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 97 1 MR. LEWIS: I mean many of these people just 2 simply don't know that they're supposed to have a permit. 3 I mean this portable small -- by and large, small portable 4 equipment, and they weren't aware that they needed a 5 permit at all. 6 BOARD MEMBER BERG: Do they know they pay taxes? 7 MR. LEWIS: I'm sure they do. I mean they 8 register their cars. You know, they register their 9 trucks. They register everything else. I mean -- I think 10 you're going to hear from others who would tell you, "My 11 truck's registered. Why do I need a permit?" "Well, the 12 engine that you use to perform the duty that the truck 13 takes it to the site to do also needs a permit." 14 BOARD MEMBER BERG: So the Association doesn't 15 help in disseminating information for how to help one to 16 keep in compliance? 17 MR. LEWIS: We do. But you have to understand 18 that less than 20 percent of the contractors in the state 19 belong to an association. Most of these are mom and pop 20 operations who, you know, don't spend their evenings 21 surfing the ARB website to find out what they're supposed 22 to be doing. 23 BOARD MEMBER BERG: I'll even agree. I never was 24 on it before either. 25 (Laughter.) PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 98 1 MR. LEWIS: Thank you for making my point. 2 BOARD MEMBER BERG: You're welcome. 3 Thank you, sir. 4 CHAIRPERSON SAWYER: Mr. Jacobs. Then we'll have 5 Phil Vermeulen, William Davis, and Alvan Mangalindan. 6 MR. JACOBS: Good morning, Mr. Chairman and 7 members of the Board. 8 Under the proposed amendment, I wanted to talk 9 about the nonresident -- the amendment is not open for 10 nonresident engines. In the crane industry, a major part 11 of it is buying used equipment. I want to use a job for 12 an example that's coming up this March. One of the Bay 13 Area refineries is doing a clean fuels upgrade. And 14 there's a crane company that's going to be doing the job 15 that has purchased a used piece of equipment. It's not a 16 resident. It's coming from out of state. If they weren't 17 allowed to do this, it probably would have added 2 or $3 18 million dollars in cost and a couple years before they 19 could get a piece of equipment on that job to do it. 20 Cranes aren't something that you can go down to the crane 21 store and buy. To buy one today you might take delivery 22 of it in '08, probably '09, especially the larger ones. 23 It's just not something you can go out and get. 24 So just using that refinery project as an 25 example, the proposed nonresident, no way. Issue is going PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 99 1 to be a major problem for the crane industry, construction 2 and in general, not being able to purchase used equipment. 3 It's taken that away from them. It's something that 4 happens regularly. A contractor gets done with something 5 in Texas, they put it up for sale, somebody in California 6 buys it, uses it on a job, maybe keeps it, or puts it up 7 for sale also. 8 Just something to look at. Thank you for your 9 time. 10 CHAIRPERSON SAWYER: Thank you very much. 11 BOARD MEMBER RIORDAN: Mr. Chairman, let me ask 12 staff about the issue -- Mr. Jacobs, don't leave -- the 13 issue that he raised. 14 Would they not have the opportunity, let's say, 15 to bring the crane in and then go to the district for some 16 relief or working with that district? 17 PROJECT ASSESSMENT BRANCH CHIEF TOLLSTRUP: The 18 way that the portable ATCM is drafted right now the 19 districts operate under the same principles that we do. 20 And they would not, unless it was a new engine, be able to 21 permit that piece of equipment. 22 EXECUTIVE OFFICER WITHERSPOON: Well, but they 23 would have the opportunity of granting a variance if the 24 facts -- no? 25 DEPUTY EXECUTIVE OFFICER SCHEIBLE: It's not a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 100 1 new engine unless it's an engine that meets the current 2 tier. So an engine could be four years old if that tier 3 is the current emission standard. This was a fundamental 4 aspect of the portable equipment program. 5 The emission reductions come -- are very 6 substantial. Statewide emissions are about 50 tons a day 7 of NOx. Emission reductions come from two elements of the 8 program. One is the phaseout of all the resident Tier 9 1 -- Tier 0 engines by 2010. And the second is the 10 requirement that as new pieces of portable equipment come 11 in to California or someone acquires a piece they didn't 12 own before, they are required under the program to buy the 13 best available, the lowest emitting engine. 14 So what the witness is asking for is I think a 15 change of that fundamental principle, which if you want us 16 to consider, I would hope it would be not today under an 17 emergency basis, but when we bring back the regulation. 18 But we will lose substantial emission reductions if we 19 change that principle. 20 BOARD MEMBER RIORDAN: I recognize that for a lot 21 of pieces of equipment, in fact, the vast majority of what 22 you've just said. But I am also thinking of -- just using 23 this example of a, quote, crane. That may be used for 24 this one single project that would be completed by 2010. 25 I'm trying to think if there isn't a way -- I agree, we PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 101 1 don't need to do it right now. But thinking through that, 2 that there might be some relief even to the point of, you 3 know, almost a contractual relationship saying, "This will 4 be used for this particular urgent project," and otherwise 5 it goes out or gets repowered if it's -- you know, if 6 repowering is an opportunity. I don't know. 7 But we need to think about that. And I don't 8 think it should be for any little piece of equipment, 9 but -- and I done know-how big this crane is, but 10 some -- I do believe that we might find some exceptions 11 for these very unique things that -- not necessarily 12 should they go beyond 2010. I'm not suggesting that. But 13 I'm just saying in this little period. 14 And the other thing, Mr. Jacobs, that I wanted to 15 say, on the list here it says you're representing the 16 operating engineers. 17 MR. JACOBS: Yeah, Operating Engineers Local 18 Union No. 3. 19 BOARD MEMBER RIORDAN: Okay. But even in a 20 bigger spectrum, I've great respect for your organization 21 and feel that you could be a great conduit to help us as 22 you are training your people -- and I think you do a lot 23 of training throughout California -- really talking to 24 them about air quality and why we are, you know, doing 25 what we're doing in terms of requiring better engines. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 102 1 And that it actually is not only for public health for all 2 of California, but for those operators, because they're 3 the ones that are closest to some of those big pieces of 4 equipment. And if that could be somehow folded in to your 5 training process, I think that would be a really big step 6 in helping people to understand why we do what we do. 7 MR. JACOBS: I completely agree with what you're 8 are saying. And we are. 9 BOARD MEMBER RIORDAN: Good. 10 MR. JACOBS: But in regards to the crane 11 industry, that upstairs engine that powers that crane, Ms. 12 Berg brought up the point, don't they register them? 13 That upstairs engine doesn't do anything but 14 power that crane. Nobody ever thought about it. It 15 doesn't propel that machine down the highway. It doesn't 16 do anything but run the crane. 17 And it's -- yeah, the education process is 18 coming. We are in -- and actively doing that. 19 BOARD MEMBER RIORDAN: I just wanted to share 20 that with you. So thank you. 21 MR. JACOBS: And you brought something else up 22 into the equation too -- repower. 23 Repowering a crane is not -- I shouldn't say 24 never, but rarely going to be an option. Cranes have 25 specific load charts. They're built by a manufacturer PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 103 1 with a load chart, with a specific engine. That engine's 2 weight is considered into the equation. You can't just 3 swap a motor out without complete manufacturer approval. 4 Otherwise you're in violation. So that repower issue, 5 while though it may be an option at times, on the upstairs 6 engine of a crane, if it has anything do with a load 7 chart, it's probably not going to be an option. 8 BOARD MEMBER RIORDAN: Thank you. 9 EXECUTIVE OFFICER WITHERSPOON: Mrs. Riordan, one 10 additional comment. This issue goes far beyond the nature 11 of ARB regulations. Because we are on the cusp of a green 12 contracting movement in California, we expect there to be 13 legislation in this coming session requiring green 14 construction equipment for all the projects funded through 15 the new bonds. 16 Yesterday at the San Joaquin Valley symposium, 17 the district talked about their own exploration of a green 18 contracting rule that either they would impose or urge the 19 cities and counties in the valley to impose. And so it is 20 something that everyone's going to have to consider. They 21 certainly have the authority to establish specs and bids 22 and say, "We only want green equipment." And at a minimum 23 that would move it around the state to the dirtiest air 24 areas. But it's possible that they might ask for 25 equipment that doesn't exist. And what would the recourse PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 104 1 be if there simply isn't enough of it to build the 2 highways, you know, do the refinery modifications, 3 whatever else is going on? And so we'll all have to be 4 very aware of the stock of construction equipment 5 available to us as people are weighing those public policy 6 decisions. 7 BOARD MEMBER RIORDAN: Thank you, Ms. 8 Witherspoon. 9 Thank you, Mr. Jacobs. 10 MR. JACOBS: Thank you for your time. 11 CHAIRPERSON SAWYER: Thank you. 12 Mr. Vermeulen. 13 MR. VERMEULEN: Good morning, Mr. Chair, members. 14 My name's Phil Vermeulen. I'm a legislative advocate in 15 Sacramento, represent over 20,000 contractors. 16 My message today is simply I applaud you for 17 looking at this matter, the PERP. It's a very important 18 issue for the industry. But I want to tell you that the 19 program right now has been an abject failure. 20 I've heard numbers that the outreach was 25,000 21 contractors. There are over 300,000 contractors in 22 California. The ARB has not done the job of reaching out 23 to the industry. And now we're coming back with a program 24 that is doomed to failure again. You can adopt what you 25 have here today; and I absolutely guarantee you the vast PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 105 1 majority of the contractors in the state are going to go 2 on with business as usual. Or do we take a step back and 3 figure out a program that actually registers these 4 contractors and gets this equipment off the streets as 5 quick as possible? The way it's going now, you're doomed 6 to failure. I'm telling you right now these contractors 7 are not going to listen, they're not going to do it. 8 They're just going to move on. 9 In the ethereal world this program may work. In 10 the real world it ain't. We're on the cusp right now of 11 all this bond measure coming out. We've got to work as a 12 partnership to figure out a program that's going to 13 saturate the industry and get going. Right now the fees 14 are onerous. We don't have Tier 0 that's going to be 15 recognized in this program except on a 16 district-by-district basis. That's not going to work. We 17 need to do some kind of a state program. My pledge to you 18 is to work with you to try to come up with something. 19 When there was a mention that there was outreach 20 to 25,000 contractors, there had been no outreach 21 whatsoever up until that point when I had talked to the 22 staff and said, "Let me work with you through the License 23 Board." My offer has been there time and time again. I 24 want to make this program a success. But what you adopt 25 today -- if you adopt what you have here today, it's going PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 106 1 to be business as usual. You have not reached out to the 2 vast majority of the contractors and the program's doomed. 3 That's my message. 4 My challenge to you is I'm willing to work with 5 you to help and bring my colleagues in on this thing. But 6 right now it ain't workin'. 7 Thank you. 8 CHAIRPERSON SAWYER: Thank you. 9 Mr. Davis. 10 MR. DAVIS: Good morning. And before I start, 11 Supervisor Patrick, our industry wants to thank you for 12 your ten years of service as well. I look at your dais 13 now and I'm reminded of a line from Henry The Fifth about 14 "We few, we happy few, we band of brothers," and sisters 15 also. Hope you soon get some partners to work with you up 16 here. It's not a job that I would willingly accept and I 17 think it's probably thankless for all of you. But we do 18 appreciate your service. 19 Dr. Sawyer and members of the Board. We also 20 thank you for the opportunity to continue our discussion 21 on an item that's of critical importance for the entire 22 California construction industry, the reopening of your 23 Portable Engine Registration Program. 24 We want to commend your staff, particularly Mike 25 Tollstrup, Kitty Howard, and Wayne Sobieralski, for their PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 107 1 efforts in developing this emergency regulation to at 2 least partially accomplish the goal of perfecting the 3 PERP. But as good as their intentions have been, there 4 are some items that still remain. 5 When we last had an opportunity to discuss this 6 issue with you at your September 28th meeting, there were 7 a few contractors present, large and small, to plead the 8 case that they would have registered under the PERP if 9 they'd known about the program. I think you might recall 10 that we did develop some information for you from the 11 Census Bureau that said there were at least 260,000 12 contractors in the state in the year 2002. We think that 13 number's grown. I don't know if Phil's number's right, 14 but we think that number has grown. And the outreach 15 program was well intentioned, but ineffective. 16 As you can see today when you look at this 17 audience, there are many more voices present to be heard 18 and to add to the effort. 19 The issues on the PERP remain and, that is, that 20 it should be opened on a permanent basis to all owners of 21 all portable equipment. The staff position to keep the 22 statewide program closed to Tier 0 engines, an engine 23 class that makes up nearly two-thirds of the construction 24 fleet, is nonsensical. 25 The intent of the program is to clean PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 108 1 California's air. How can this be accomplished if ARB and 2 the local districts don't even know about two out of every 3 three pieces of equipment in the state? 4 When the staff modified its original proposal on 5 fees for those who were previously unaware of the program, 6 they had retained a punitive attitude to potential 7 registrants, penalty fees that range from 50 to 100 to 200 8 percent, depending on when someone registers their 9 equipment. 10 They spoke today about equity, that this penalty 11 program was to establish equity. And it would be equity 12 if J.T. Thomas with Nabors Well Digging Service got his 13 money back out of those penalties. But that's not where 14 those penalties are going to go. They're going to go to 15 the local districts and even to the ARB itself. There's 16 no equity involved in that. It's simply punishment. And 17 it's punishment for a group of people who are essentially 18 at the end of the line in this process. 19 The proposal to charge fees for Tier 1 engines 20 based on the date of manufacture of the equipment rather 21 than the date the equipment was actually purchased and put 22 in use is unfair. There are Tier 1 engines that are being 23 sold in this state today. There were Tier 0 engines being 24 sold in this state as recently as 18 months ago. And they 25 were sold legally. You know, your provisions PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 109 1 notwithstanding, the exchange of this merchandise was 2 allowed by the EPA because they gave the manufacturers the 3 opportunity to use up their inventories of out-of-tier 4 engines. Now that they shipped them to California is 5 unfortunate for all of us, but it's not the responsibility 6 of the people who bought the equipment. You know, they 7 were not told by the people who were selling it to them, 8 "Oh, by the way, this isn't legal. But buy it anyway." 9 That was never on the discussion. 10 Now, finally, the proposal to allow the 11 registration of Tier 0 engines only through the discretion 12 of local air districts is a violation of the legislative 13 intent of this program. This program was set up by the 14 Legislature. It was set up to provide a comprehensive 15 approach for the construction industry rather than having 16 to deal with the Byzantine web of regulations and fees 17 from 37 local air districts. 18 We already know that some of these districts will 19 refuse to allow this equipment, with a misguided zeal to 20 improve their performance numbers. Failing to register 21 Tier 0 engines will not result in cleaner air. It will 22 only make it more difficult for your agency and the local 23 districts to reach their ultimate goal. 24 My name's Bill Davis. I work with the Mobile 25 Crane Operators Group, the Engineering Utility Contractors PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 110 1 Association, the Southern California Contractors 2 Association, and the American Concrete Pumping 3 Association. 4 Thank you. 5 CHAIRPERSON SAWYER: Thank you. 6 MR. DAVIS: Any questions? 7 BOARD MEMBER BERG: I just have one. 8 I'm still a little bit baffled as to why so many 9 people are not aware of their local district requirements. 10 MR. DAVIS: I'm glad you asked that question. 11 In my work with the Southern California 12 Contractors Association, we sent out notices five times in 13 six weeks at the end of last year notifying them about the 14 closing of the portable engine registration program. 15 Many, many, many of our contractors registered, and other 16 equipment owners. There are other people that own 17 equipment besides contractors in California. 18 However, our association has 300 members. There 19 are something in the order of -- if there's 260,000 20 contractors in the state, there's probably a hundred 21 thousand contractors in southern California. And our 22 voice reaches our members and out into the union 23 construction industry, but it doesn't reach all of them. 24 We found out this week that the ARB can 25 communicate on a broad basis, when it wants to, on air PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 111 1 quality issues. They were the major contributor to the 2 Union of Concerned Scientists report that splashed all 3 over newspapers in the state. And so we know that that 4 can be done. We just would like for them to do it in a 5 constructive way with our industry. 6 BOARD MEMBER BERG: I guess I still can't 7 reconciliate why those members living in the South Coast 8 Air Quality District didn't know about a permit from South 9 Coast, not for the ARB. 10 MR. DAVIS: South Coast has done just as poorly 11 at reaching out to the industry as the Air Resources 12 Board. In fact, the only contact most of the people in 13 the construction industry have with the South Coast is 14 when somebody shows up on a jobsite and starts writing 15 tickets. There's no communications effort into our 16 industry from that agency. 17 BOARD MEMBER BERG: And what responsibility does 18 a business owner have to know how to run his business 19 within the compliance of both the regulatory and business 20 owners? 21 MR. DAVIS: We all have responsibilities in that 22 regard. However, I work on the presumption of innocence 23 with regard to this issue. People in our industry are -- 24 and especially the very small contractors, one person or 25 two people or maybe even ten, their full-time everyday job PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 112 1 from before dawn till after dark is putting projects up, 2 either homes or roads or sewers or that kind of thing. 3 They don't have time. And I agree with you that they have 4 a responsibility. And they're starting to get notified by 5 another division of the state about the requirements of 6 the Portable Engine Registration Program, because when 7 they go and get the license that they know they have to 8 have to haul that thing behind their pickup truck, in the 9 last few months the DMV has been handing them a notice 10 about the PERP. But that hadn't happened before. There 11 was just -- it was just a vast sea of ignorance. 12 BOARD MEMBER BERG: Thank you. 13 MR. DAVIS: Any other questions? 14 Thank you. 15 CHAIRPERSON SAWYER: Mr. Mangalindan. And then 16 we'll have Seth Hammond, Mike Konle, and Richard Battaini. 17 MR. MANGALINDAN: Good morning. My name is Alvan 18 Mangalindan. I'm with the Crane Owners Association, an 19 employer association based out of northern California. 20 Our membership consists of 12 crane rental companies, with 21 fleets that range from small to large-size fleets. 22 First off, as a representative of our association 23 I'd like to thank the Board for their efforts in reopening 24 this registration period. We're appreciative of the 25 initiative taken regarding this emergency amendment. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 113 1 However, our members do have some concerns that they would 2 like addressed in this proposal. 3 Among these concerns is the exclusion of Tier 0 4 engines from the proposed amendment. As you know, the 5 upper engine on dual-engine cranes is considered a 6 portable engine that is subject to PERP. And 7 unfortunately under this amendment, only Tier 1 and Tier 2 8 engines would qualify for registration, which would 9 exclude Tier 0 engines. Many of our members' cranes 10 currently utilize Tier 0 engines. And by not allowing 11 them to register this equipment under PERP, these cranes 12 would be forced out of operation. And as has already been 13 touched upon under the portable ATCM, such equipment is 14 allowed continued operation until 2010. So therefore our 15 position is that registration of this Tier 0 equipment 16 should be allowed and therefore continued operation until 17 that scheduled phaseout date. 18 And as far as the proposed option regarding 19 registration at the local district level, we feel that 20 such an option would be too inefficient and overly 21 burdensome to our members. 22 And the other concern we have is the inability to 23 register and purchase nonresident equipment. As we 24 understand it, only Tier 1 and Tier 2 engines that can 25 demonstrate through some sort of documentation residency PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 114 1 status between -- in California between 2004 and 2006 2 would qualify for registration. We feel that that 3 requirement is too restrictive. It would adversely affect 4 our members by essentially barring equipment from 5 registration that would otherwise qualify if not for this 6 residency requirement. 7 As a necessary business practice, our members -- 8 our industry relies on the ability to purchase used 9 equipment to supplement their existing fleets. This 10 regulation would essentially limit their -- limit the 11 number of cranes that would be eligible for purchase, and 12 it would essentially force our members to buy brand new 13 high-tiered equipment right now. This is an outcome 14 that's not economically feasible for most of our members 15 and, as a result, would force them out of business. 16 And it is our position that this residency 17 requirement be removed from the proposal. 18 And in conclusion, we ask that some reasonable 19 latitude be afforded to our members to enable them to 20 remain in business and to continue generating resources 21 that will ultimately allow them to achieve compliance. 22 Thank you. 23 CHAIRPERSON SAWYER: Thank you. 24 Ms. Berg. 25 BOARD MEMBER BERG: I have a question of staff. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 115 1 In the existing proposal now, is there residency 2 definition? So people that are currently registered in 3 the program, can they go and buy equipment that is Tier 1 4 or Tier 2 and use it until 2010? 5 PROJECT ASSESSMENT BRANCH CHIEF TOLLSTRUP: In 6 the amendments that the Board approved in 2005 -- and 7 those are the ones that are pending over at OAL -- there 8 are no residency requirements in there. That has long 9 since passed. We require that, you know, folks that come 10 in have to have the current tiered engines. 11 We brought the residency required back for the 12 emergency amendments because we believed that it was the 13 Board's direction back in September that we deal with the 14 engines that are out there and operating now. The folks 15 that got caught by the reg, say they didn't know anything 16 about it, these are the folks that have been in 17 California, can show us they've been operating; and not 18 opening it up to engines out of state that had never been 19 here and allowing that extra pollution to come in. So we 20 put the residency back in to limit that, make sure we only 21 get those engines that are here in the state. And we 22 picked a wide enough window, 18 months, where they -- you 23 know, most people -- the majority of people can show us 24 and it will allow them to get into the program. But, 25 again, it was limited to those that are here. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 116 1 BOARD MEMBER BERG: Okay. But I just want to 2 make sure that this emergency regulation, the people that 3 come in under this emergency regulation for future 4 equipment, that everybody has the same playing field. 5 PROJECT ASSESSMENT BRANCH CHIEF TOLLSTRUP: 6 Everything will be -- I mean the emergency just 7 takes care of the folks that are here now. And if they 8 can meet the criteria, they get in. Everybody else new 9 coming in, same criteria coming on into the program. And 10 then starting in 2010 it's the same for everybody. No 11 changes after that. 12 BOARD MEMBER BERG: So our last speaker was 13 really asking us again to look at one of the base concepts 14 of the overall regulation, which is to allow less than 15 best technology to be purchased up till 2010; and right 16 now everybody has to follow that rule anyway? 17 DEPUTY EXECUTIVE OFFICER SCHEIBLE: That's 18 correct. And if you extend it, it would be less than best 19 technology even beyond then, because after 2010 you could 20 buy a Tier 1 if we allowed used engines in when Tiers 3 21 and 4 were available. And we would be sacrificing I think 22 the bulk of the emission reductions in the program if we 23 said that was a principle we wanted to apply. 24 BOARD MEMBER BERG: I appreciate the time just 25 because I'm just trying to keep straight in my mind what PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 117 1 is the emergency part of this regulation versus what are 2 we maybe discussing about the existing rule that we would 3 like to change because it -- for whatever reason. 4 Thank you. 5 CHAIRPERSON SAWYER: Mr. Hammond. 6 MR. HAMMOND: Hello, members of the Board. My 7 name is Seth Hammond. I'm from Specialty Crane and 8 Rigging. Started my company in Santa Barbara 22 years 9 ago. Currently the President of the Southern California 10 Crane Operators Group, which was commonly referred to as 11 MCOG. 12 Less than 20 percent of my equipment I've been 13 able to buy new. My whole business in 22 years has been 14 founded over buying good used equipment. I've raised my 15 children. The last crane I bought used cost twice as much 16 as my house. And houses, as you know, In Santa Barbara 17 are kind of expensive. So we're talking about some very 18 expensive pieces of equipment. 19 I'd like to buy a used crane right now that the 20 estimated used cost is $1.8 million. So we're talking 21 about real serious money. 22 So I really -- my need and my request, that you 23 take some latitude on this nonregistered, less-than-Tier-3 24 equipment. First of all, Tier 3 equipment right now is 25 hardly available in any of the equipment that we buy. The PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 118 1 majority of our mobile cranes that we're all buying are 2 coming from Europe. So the technology for mobile cranes 3 is really developed in Europe. And the manufacturers are 4 limited to about three or four good manufacturers 5 worldwide. And the need for that equipment to be able to 6 do the things that we knew with these three -- with these 7 bonds and all the things that people want to do in the 8 State of California, we need to take some special 9 consideration for the cranes. 10 I can't speak for anybody else because I'm a 11 crane guy. And if you want to talk about cranes, I'll 12 talk about them all day long. 13 (Laughter.) 14 MR. HAMMOND: But I figure we're a pretty rare 15 breed, and most of the things that we do are good. So 16 being able to not buy used -- non -- used equipment that's 17 nonresident right now is my big issue. I need to be able 18 to buy used equipment to grow my business and to continue 19 to service my customers. 20 Twenty years ago there was no cranes in Santa 21 Barbara. And now we have 17 of them in Santa Barbara. 22 And we work up and down at Vandenberg and we work in Los 23 Angeles, we work across all the different districts. So 24 having a permit in one district really wouldn't help 25 because we work across district lines, because they're PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 119 1 mobile cranes. We're asked at a moment's notice to drive 2 from here to Bakersfield. We were in Bakersfield here two 3 weeks ago putting up a cell site on a hotel and we came 4 from Santa Barbara. And that call didn't come in until 5 late in the afternoon the day before we left. 6 So we really need to be able to move across 7 districts. We can't just get by with registering in one 8 district. And we also need to be able to buy used 9 equipment to bring -- to keep competitive and to bring our 10 fleets up so -- because eventually we'll retire our Tier 0 11 cranes if we can buy used equipment. But if we can't buy 12 used equipment, that means we've got to buy new equipment. 13 And that's really going to have a bad impact on what we're 14 trying to accomplish. 15 Thank you so much. 16 CHAIRPERSON SAWYER: Thank you. 17 BOARD MEMBER BERG: Could I just ask you one 18 question? 19 How can we -- where are we missing the boat in 20 our outreach on information that you don't have the 21 information you need in order to be in compliance from a 22 permit perspective? 23 MR. HAMMOND: Are you asking me personally? 24 BOARD MEMBER BERG: Yes, sir. 25 MR. HAMMOND: You know, I'm pretty up on it PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 120 1 because I dig it and I like it and I pay attention to it. 2 I can't speak for everybody. But the majority of the 3 crane groups in the southern California region have got 4 their cranes registered. But we still have some Tier 0 5 engines. There's a few of them that have not been 6 registered because of problems with the agencies. But 7 most of the Southern California Group is knowledgeable 8 about the need to be registered and is registered. 9 BOARD MEMBER BERG: So a lot of your equipment is 10 registered? 11 MR. HAMMOND: All of my equipment is registered. 12 BOARD MEMBER BERG: So your issue today really is 13 about the residency? 14 MR. HAMMOND: Residency and also the Tier 0 15 engine on some of the members of our association that have 16 had trouble getting their permits approved by the 17 district. 18 BOARD MEMBER BERG: Thank you very much for your 19 information. 20 CHAIRPERSON SAWYER: Mr. Konle. 21 MR. KONLE: Yes, my name is Mike Konle. I'm the 22 President of Champion Crane. I have one of the biggest 23 problem cranes in the town, because I've tried to register 24 with AQMD and they've rejected it since the crane was 25 brand new. The engine was manufactured prior to 1997, '96 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 121 1 area. And the crane was sold to me in '97. So AQMD says, 2 "Well, the engine needs to have this certain number that 3 says what tier it is." And the manufacturer said, "Well, 4 the engine was manufactured prior to it," because when 5 they build the cranes, they order the engine years in 6 advance and they put them in stock and they put the 7 engines in as they build them. 8 Because this engine landed right on the cusp of 9 when it had to be a tier and when it didn't have to be a 10 tier, I've been rejected for seven years of applying for 11 any sort of permit. They won't give it to me. 12 And this crane is $1.3 million not counting the 13 support equipment, which is three times the value of my 14 house. And now I'm being told that I can't use the crane 15 in California, and in the year 2010 I have to take a $1.3 16 million piece of equipment, which its useful life is 30 17 years, it's going to be 10-years old, and get it out of 18 California. And I'm a small business. I work hard. 19 As far as the notification goes, I received 20 notification from the Southern California Contractors 21 Association on Wednesday, December 21st, 2005, notifying 22 me that the program was going to close December 31st, 10 23 days ahead of notification. 24 So the notifications that you are getting out are 25 not getting out to us. I would like to comply. I don't PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 122 1 mind complying. I need to be notified of that in a 2 reasonable amount of time that I can get my registration 3 done. 4 I have eight cranes that are involved in being 5 taken out of my fleet in 2010 out of 30 cranes. 6 To give you some numbers, two of my largest 7 cranes, talking about the emissions, the 180-ton crane, 8 which is the one I can't get permitted, the total number 9 of hours in nine and three-quarters hears is 6,571 10 hours -- total hours on that piece of equipment, which 11 equals 1.85 hours per day. So it's not a gross polluter. 12 The crane business is a totally separate business than 13 trucks going down the road. We lift a piece of equipment 14 up, we'll hold it up, shut the engine off, and hold on to 15 the piece for a whole day or more. 16 My other piece of equipment has 5,304 hours on it 17 in six and a quarter years, totaling 2.33 hours per day. 18 The crane industry is a different animal than any other 19 industry. 20 As far as changing the engines out in these 21 cranes, OSHA says you can't change it out unless we get 22 approval from the manufacturer of that piece of equipment. 23 And the manufacturer of that piece of equipment -- and 24 we've given you documentation to that -- will not allow us 25 to change that motor because of the load chart, which a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 123 1 few of the other people have testified to. 2 We have a whole different game with cranes. A 3 tractor or a piece of scraper equipment does not involve 4 OSHA standards as far as lifting personnel or lifting 5 equipment. We are different. 6 CHAIRPERSON SAWYER: I must ask you to conclude. 7 Perhaps you have. 8 MR. KONLE: I have. 9 CHAIRPERSON SAWYER: Yes, Ms. D'Adamo. 10 BOARD MEMBER D'ADAMO: I think some legitimate 11 issues are being raised here, or maybe I'm just becoming 12 aware of them for the first time on the crane industry. 13 I'm just wondering if staff has a response, perhaps if not 14 through the emergency reg -- 15 EXECUTIVE OFFICER WITHERSPOON: I think before we 16 come back to you in March with the final reg package -- I 17 mean this is for relief for the kinds of folks that came 18 and talked to you at prior Board meetings with less 19 extreme circumstances. But the whole crane issue is a 20 unique thing. And Mr. Scheible and I were just chatting 21 about whether our cost effectiveness calculations looked 22 at sub-categories of engines where replacement was high, 23 usage was low. Because when we did the Public Agency 24 Fleet Rule we did look at the instance that we have very 25 low volume use in some cases. And we stretched the limits PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 124 1 of cost effectiveness. And I think we need to go back and 2 look at this crane issue in more depth, because it was 3 probably lumped in with all the other engine categories 4 and averaged across. And so we masked perhaps the impact 5 on this subset of the portable equipment. And we 6 certainly want to understand it better. 7 I'm not prepared to say they're right, we should 8 change the underlying rule. But we need to do more 9 analysis and figure it out, and also the kinds of 10 questions that Ms. Riordan was asking earlier of: Are we 11 going to have enough cranes in California to do what 12 California needs to do, whether it's putting up a cellular 13 tower or building for -- you know, whatever they're being 14 applied to do? So we need to look at that and report back 15 to you on cranes. 16 BOARD MEMBER D'ADAMO: I think that's 17 appropriate. But in the meantime though, this ten-day 18 notice, what sort of penalty -- 19 PROJECT ASSESSMENT BRANCH CHIEF TOLLSTRUP: Well, 20 can I address this? 21 Staff has actually been meeting with the crane 22 folks quite some time now. And we understand and we 23 recognize, you know, the unique characteristics of the 24 cranes. And we've been trying to verify some of the 25 concerns that they've raised, and we're continuing to work PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 125 1 with them. We've asked for additional information. So we 2 are working with them and we will continue to work with 3 them. And we have been for some time now. It's been 4 well -- I mean it was before the last time we went to the 5 Board. So it was before 2005 we've met with the crane 6 folks. So we're still going through this evolution of 7 working with them, trying to get additional data to verify 8 where the problems are, what we need to do, if anything, 9 to fix it. We're just not there yet. And we'll continue 10 to work with them. 11 BOARD MEMBER RIORDAN: Mr. Chairman, if I might? 12 CHAIRPERSON SAWYER: Yes. 13 BOARD MEMBER RIORDAN: I want to encourage staff 14 to do just that, and particularly also -- the last speaker 15 reminded me of the work cycle of a crane. You know, I 16 recognize that probably in this whole spectrum of cranes 17 there's probably a whole different set of work cycles. 18 But I think that is a factor as well. And I don't know 19 how we figure that out, because every job is going to be 20 different. But there must be some sense that staff can 21 derive from talking to some of these operators, people who 22 operate more than one crane, to get a sense of the work 23 cycle of their particular jobs. Because, you know, I 24 don't have a sense of a building versus a bridge versus 25 this or that or whatever, but we can get it from them. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 126 1 And I think that would be helpful. 2 MR. KONLE: One thing -- last comment. In your 3 proposal you're allowing Tier 0 engines to be -- in 4 lattice-boom cranes to 2020. The difference between a 5 lattice-boom crane and a hydraulic crane is just the boom. 6 The engine is the same. 7 Why is there an extra ten years on a lattice-boom 8 crane, which -- the cranes will live for 30 years because 9 they get such low usage? 10 PROJECT ASSESSMENT BRANCH CHIEF TOLLSTRUP: If I 11 may add to this one. And this goes back to the meetings 12 that we have been having with these folks. Back when we 13 did the ATCM they did approach us on the lattice-boom 14 cranes. That was the sole issue at the time. And we 15 addressed it in the reg. We put a provision in there 16 recognizing the issue, delaying the compliance period for 17 that particular engine. The reason that there isn't 18 anything else in there, because we didn't have any other 19 issues at the time. It was what was brought before us. 20 Since then they've come back. We're continuing 21 to work with them and trying to identify what the specific 22 issues are. But we kind of need to pin it down. We tried 23 to before and we'll continue to work with them on these 24 issues and see where we can get some resolve here. 25 CHAIRPERSON SAWYER: Ms. Berg. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 127 1 BOARD MEMBER BERG: I also would like to 2 encourage the industry to continue to work closely with 3 staff. But then I ask staff in the meantime while we're 4 working these things out: What is the solution for 5 companies like our speaker, who have legitimately tried to 6 register equipment and has been unsuccessful and now fall 7 outside of our window? Now, what do they do? 8 PROJECT ASSESSMENT BRANCH CHIEF TOLLSTRUP: And 9 this is just speaking of the cranes, because -- 10 BOARD MEMBER BERG: It's just the cranes. I 11 agree with you. I've been pretty hard on these guys. 12 So -- 13 PROJECT ASSESSMENT BRANCH CHIEF TOLLSTRUP: But, 14 again, I'm kind of emphasizing that we have worked with 15 them for a while, so they have been -- 16 BOARD MEMBER BERG: I heard you. 17 PROJECT ASSESSMENT BRANCH CHIEF TOLLSTRUP: -- 18 they've been working -- I mean they've been aware of the 19 requirements. They had an opportunity to register, and a 20 lot of them chose not to. 21 We want to continue to work this them, and we've 22 provided them this opportunity again with the Tier 1 and 23 Tier 2. We got the issue of the Tier 0 because we're not 24 proposing to let them in. But a lot of these can register 25 with the local district until we get the issue revolved. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 128 1 And, again, we continue to work with them and try 2 to figure out where the particular problem is, where can 3 they not replace these engines, where can they not meet 4 2010 requirements. And that's kind of where the rub is 5 right now. We're trying to figure out where those issues 6 are and, you know, get documentation that we can verify. 7 EXECUTIVE OFFICER WITHERSPOON: And, Mrs. Berg, 8 as Carol Coy testified from the South Coast District, for 9 any single company that comes to the district for a 10 permit, they will look at the exact facts facing that 11 company, the exact replacement issues, the cost and the 12 rest of it, and work out a tailored solution for them, or 13 not if they're not convinced that there isn't a reasonable 14 path out to a change-out of the engines. 15 And I assume Seyed Sadredin, who was here earlier 16 in the audience, would have made similar testimony of how 17 the San Joaquin Valley will handle it. 18 And those are the two areas that are most 19 concerned about the perpetuation of Tier 0 engines. 20 MR. KONLE: My crane company's in the middle of 21 about seven districts for me to travel around. Because 22 the equipment's portable, one day, like Seth said, we're 23 in Bakersfield, the next day we're in Santa Barbara, the 24 next day we're in San Diego. To register in all these 25 groups, we don't have enough time. The customer doesn't PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 129 1 say, "Oh, in two weeks we're going to send you to San 2 Diego." They call the night before, and they've got an 3 emergency and they want a crane down there right now. 4 And to register for the state, I'd like to do 5 that, if I was notified soon enough. And I was notified 6 two days ago that AQMD is not going to allow my crane any 7 way, shape or form to be registered. 8 BOARD MEMBER BERG: Okay. Thank you. 9 STATIONARY SOURCE DIVISION CHIEF FLETCHER: This 10 is Bob Fletcher. I'd just like to make one comment, that 11 we do recognize the issue with the cranes. But many of 12 these cranes are already registered. And what -- there is 13 provisions in the emergency regulation that will allow 14 much of the equipment that has not been registered yet to 15 register. So that, you know, they may have a number of 16 Tier 1 and Tier 2 engines in their cranes that, for 17 whatever reason, they didn't register either in the 18 amnesty period or previously. 19 So what we are doing now may deal with 75 to 80 20 percent of some people's problems. I mean if they have 30 21 cranes and a couple of them are registered, some of them 22 are Tier 0's, but the bulk are Tier 1 and Tier 2 that 23 haven't been registered, if they take advantage of the 24 program and come in now and register that equipment, then 25 a lot of their issues we will deal with. But we recognize PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 130 1 that cranes are still a unique situation. And as Mike 2 mentioned, we've been trying to identify and get 3 information on duty cycles and on -- just giving us enough 4 information to be able to base a good decision. And we 5 don't have that data yet. 6 BOARD MEMBER BERG: Well, I certainly think if 7 OSHA has some very specific rules about replacements and 8 things like that, we could also include that data, because 9 certainly that would be the overriding agency. 10 STATIONARY SOURCE DIVISION CHIEF FLETCHER: It is 11 and it isn't. They do have requirements that say you 12 cannot repower an engine unless it meets -- the 13 manufacturer says it's okay. And so we recognize there's 14 that OSHA link. What we don't have yet is enough 15 information from the manufacturers that say: What is that 16 cost to repower it, does it make sense? And if the cost 17 is, you know, two-thirds the cost of the crane itself to 18 replace a $30,000 engine, obviously we need to figure out 19 how to deal with it. And that's the kind of data we've 20 been trying to come across. 21 BOARD MEMBER BERG: Thank you. 22 CHAIRPERSON SAWYER: Mr. Battaini. And then we 23 will have Dick Stuart, Mike Cusack, and Gloria Cordle. 24 MR. BATTAINI: Good morning. My name is Richard 25 Battaini. I'm co-owner of Sheedy Drayage Company in San PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 131 1 Francisco, another crane company. We've been -- we're a 2 family-owned company, been in business since 1925. 3 We operate a fleet of 30 cranes, 19 of which have 4 Tier 0 engines, 9 or 10 of which will be directly affected 5 by PERP. And it's our -- the two crane engines, the ones 6 that are the biggest revenue producers for us. 7 By disallowing the registration of the Tier 0 8 engines, it's going to seriously, seriously undermine the 9 ability to run our company. We've been in -- like I said, 10 we've been in business since 1925. We've been through 11 good times and bad times. But this last one might not 12 be -- might be just the one that puts us over. 13 To answer a question of Supervisor Berg's, I've 14 been in the office at Sheedy since '77. We've never been 15 asked to register a crane with any air quality district. 16 The Bay Area Air Quality Control Board has never 17 approached us. So before this PERP came up, we never even 18 knew we had to register. We found out about PERP and 19 about the crane registration about ten days before the 20 amnesty period ended, which gave us absolutely no time to 21 register these cranes. We just didn't have any -- and 22 we're a licensed -- we have a contracting license. We're 23 a licensed general contractor. We hold an A license and 24 we were never notified. 25 So it doesn't seem fair that the people who were PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 132 1 lucky enough to be notified can register, have Tier 0 2 engines that they are working in the State of California 3 right now, that they were able to register in the State of 4 California, and we can't by -- it wasn't by our own 5 omission. I think it was because ARB was remiss in 6 getting out this information to the companies. 7 Also on what you brought up about the Tier 1 8 registration back fees, I agree that -- I don't see any 9 reason why we should have to pay back fees on something 10 that we purchased six or eight years after it was 11 manufactured. I just don't -- I don't see the logic 12 behind that at all or the reasoning behind that at all. 13 But I mean this is a big issue for companies like 14 Sheedy. And we've been around a long time. We have 150 15 employees and we treat them all pretty well. And I hate 16 to see it go away. 17 Thank you. 18 CHAIRPERSON SAWYER: Thank you. 19 Mr. Stuart. 20 MR. STUART: Good morning. I'm Dick Stewart. 21 I'm the Regional Service Manager for Maxim Crane Works. 22 Unlike a lot of the companies that are represented here, 23 we happen to be a nationwide company. 24 And specific to the third issue that was brought 25 up by the first speaker, part of our business plan is to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 133 1 move our assets around the country. We are a 2 coast-to-coast company. And cranes, as you've probably 3 gotten the idea, are pretty specialized equipment. And 4 it's not reasonable, especially for a large company, to 5 make the investment in a size crane that is maybe a 6 thousand ton crane, multiple millions of dollars, where 7 the cost to move that relative to the holding costs to buy 8 many of them is insignificant. So part of our business 9 plan as a large company is to move these assets around. 10 Well, the inability to bring a crane in from 11 outside of this state, that we already own in another part 12 of the country, and involve it in this program because of 13 the nonresident issues limits our ability to bid on 14 certain jobs that require cranes that we don't currently 15 have in the program in the state right now. We want to be 16 compliant. The cranes that we own in this state now are 17 registered. But our issue right now specific to this is 18 the nonresident. 19 That's all I had. 20 CHAIRPERSON SAWYER: Thank you. 21 Mr. Cusack. 22 MR. CUSACK: Thank you very much for allowing me 23 to speak to you today. I'm here representing the American 24 Concrete Pumping Association. I'm a past president of 25 that association. I also manage a concrete pumping PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 134 1 company in California, probably the largest pumping 2 company in California. 3 We like the timeliness of you guys -- of trying 4 to adopt this emergency regulation. But we feel that it's 5 creating undue hardship on small businesses. 6 In the concrete pumping business in California 7 there's probably 7,000 companies that have concrete 8 pumping business -- concrete pumps, and probably 9 three-quarters of those have less than three concrete 10 pumps. And they're trailer-mounted concrete pumps, 11 they're mom and pop organizations. 12 Imposing the registration fees seems to be a 13 little bit unreasonable. CIAQC offered to staff a 14 proposed registration -- I mean a fee and also a penalty 15 that all the associations in the November 20th meeting 16 agreed to, and we thought that they were fair. 17 Imposing registration on Tier 1 engines from date 18 of manufacturing -- these engines are manufactured, and 19 it's paying taxes on something that you didn't own. And I 20 don't know anybody who pays taxes on something they don't 21 own. 22 It was addressed the Tier 0 engine. There's a 23 lot of Tier 0 engines out there. If we're trying to 24 control the Tier 0 engines so we get them out of the state 25 and replaced by 2010, if we don't know where they are and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 135 1 who owns them, we'll never be able to control that. If we 2 do know where they are and who controls them and the 3 individual air resources boards are able to go to those 4 locations and do inspections, make sure they're gone, 5 we'll be able to control the Tier 0 engines. 6 Like I said, I run one of the largest pumping 7 companies in the United States. I found out about the 8 PERP program the same time as these other guys, five days 9 before the end of the year. I stayed until 7 o'clock New 10 Years Eve to get my information in. And I'm registered. 11 I'm good to go. But there's other people and a lot of 12 other small businesses, Amber Parsons is one of them who 13 spoke to you, she is not going to be able to go. This 14 might even put her out of business. That $4,000 for those 15 two trucks right there is about 15 percent of the profit 16 that she made last year, just in registered engines for 17 one time. That's a lot of money. 18 We at the American Concrete Pumping Association 19 have contacted all the manufacturers. They have contacted 20 all their customers. Everybody in our association know 21 about it now. Now that we know about it, we'll work with 22 you on an outreach program. If you can modify this to 23 where it's good for small businesses, it's good for air 24 pollution, it's good for everybody. Trying to -- 25 individual districts, you get in Sacramento, some of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 136 1 people in Sacramento are in seven districts at one time. 2 So it's pretty hard to register in each district, and very 3 costly. 4 So if you have any questions, I'll be more than 5 happy to answer them. 6 CHAIRPERSON SAWYER: Thank you. 7 Ms. Cordle. And then we'll have John McClelland, 8 Gary Rohman, and Lance Ericksen. 9 MS. CORDLE: Good afternoon. I'm Gloria Cordle 10 the California Association of Tree Trimmers and 11 Landscapers. And I also represent the Western Chapter of 12 the International Society of Agriculture and other 13 horticulture industries in this state. 14 Many of the state organizations, at least these 15 organizations, the two largest groups being in California, 16 were not informed and they have over 3,000 members of this 17 registration. 18 We are here to promote information and to assist 19 our members on keeping them informed on business practice, 20 safety issues, legal, insurance programs, and anything to 21 assist their business. We were not informed in order to 22 do that. That was on one of the questions you were asked 23 as far as assisting our companies. 24 Setting the reasonable rates. In California, 25 workers' comp rates were so high a few years ago that it PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 137 1 enhanced illegal business practice in California and 2 businesses to leave to other states. Businesses that have 3 survived the workers' compensation rate increase are just 4 beginning to recover and need to have reasonable rates 5 imposed to get their equipment registered for those who 6 did not have any information on this. 7 For all tiers, including the Tier 0, the impact 8 would be astronomical if this equipment is not able to be 9 registered and is classified illegal. 10 To have it in separate districts and not have it 11 as a statewide impact puts a burden to the business owner 12 when they have to register and the fees imposed on them 13 from the different districts. 14 Business owners work hard to maintain a knowledge 15 on all the requirements needed to be a legal -- to be 16 legal from federal, state, county, district, city, 17 insurance, employment, insurance, business, legal 18 information, and fulfillment as well as any other new laws 19 they need to keep their businesses and maintain a profit. 20 It is important for us to work as a team to 21 assist them and not to impose such penalties as we're 22 trying to impose here. 23 It is important to reopen the registration, allow 24 the various industries to inform their members and 25 companies to have the time and opportunity to get all PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 138 1 their equipment updated, legal, without the additional 2 high registration fee impact. This will allow CARB to 3 expand the registration information, the opportunity to 4 notify them of these registered owners of the current 5 information and the renewal process that would be needed 6 at the time that that comes about. 7 With the opening of the registration of the Tier 8 0 and higher will allow the opportunity to further 9 increase program development, reasonable standards to 10 include procedures of federal, state, district, and local 11 agencies to work more effectively for the well being of 12 air quality and the business owner as a team. I also 13 believe that it will help to -- we need to establish a 14 program to target the illegal -- illegitimate business 15 owners, not to enhance it by making them work underground 16 without registering their equipment, with fees that are 17 imposed so high that it puts their business out of 18 commission. And also it allows them not to have employees 19 and it lowers the employee rate. 20 Establish a program on how best a business owner 21 can be served when equipment is purchased as to what the 22 business owner's requirements are needed such as the DMV 23 registration, insurance, air resource and other 24 requirements needed to operate in California. 25 CHAIRPERSON SAWYER: I must ask you to conclude PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 139 1 please. 2 MS. CORDLE: Most of the companies that I have 3 been in contact with and the membership, they all felt 4 they were registered, those who are not, because they are 5 registered with DMV. They did not know that they had to 6 have a separate registration for this. We need time to 7 get this information for them. We need time to establish 8 and get this -- and get them registered and open up the 9 doors for registration with reasonable fees. 10 Thank you. 11 CHAIRPERSON SAWYER: Thank you. 12 MS. CORDLE: Any questions? 13 CHAIRPERSON SAWYER: Mr. McClelland. 14 MR. McCLELLAND: Thank you, Dr. Sawyer and 15 members of the Board. My name's John McClelland. I'm 16 Vice President for Government Affairs with the American 17 Rental Association. And I would like to say that we 18 really appreciate being able to testify here this morning. 19 And we also very much appreciate the work that staff has 20 done over the last few weeks on this issue. 21 Our association represents about 5,000 members in 22 North America; 282 of them do business in California in 23 547 locations. They rent tools, heavy equipment, and 24 partying event services. We estimate that our fleet in 25 California, the engines that we're talking about here and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 140 1 portable equipment, is about 5,500 units. 2 In general, we support our members in their -- in 3 their compliance with PERP and we find that most of them 4 are doing a fairly good job. Although we do have some 5 members who have told us out of the group that I mentioned 6 that they have had engines that have fallen through the 7 cracks as they've tried to register them into the PERP 8 program and that they are not currently registered. So 9 this would obviously be helpful to them. 10 Therefore we support the reopening of 11 registration for Tier 1 and Tier 2 engines. But we also 12 believe that ARB should allow Tier 0 engines to register, 13 and that registration of these engines could provide a 14 path to actually eliminating them from the California 15 fleet in 2010. 16 Otherwise, these engines will need to be 17 discovered through a costly enforcement program. 18 Specifically if an engine was purchased and compliant 19 under the rest of the rules that are included in this 20 proposal, then there's really been no detriment to air 21 quality. There's just been no registration, which is a 22 problem. But we think that reopening the registration 23 program would really help alleviate that problem and that 24 we should do that without penalty. 25 Reopening registration process without penalty PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 141 1 and imposing these significant penalties is a good idea 2 because we think that there's an economic incentive to 3 folks not having punitive fees to pay, and that getting 4 them into the program by offering them a cost-effective 5 way to do that is the incentive for them to get involved 6 in the program rather than going underground, as some 7 other folks have mentioned. 8 Our proposal has been quite simple up to this 9 point and, that is, just move the Jan 1st, 2006, date to 10 January 1st, 2008, for all engines and let everybody 11 register in the PERP. I think it is very important that 12 we combine that with a significant outreach program, and 13 we stand here today to pledge that our industry will be, 14 as we have in the past, fully engaged in that process. 15 After January 1st, 2008, then, you know, start 16 having penalties because we should be able to get a lot of 17 these folks informed and get them involved in the program. 18 We have no problem with eliminating registration for Tier 19 0 engines even after that date. We don't have very many 20 of them in our fleet that we're aware of at all, in fact. 21 So in closing, we strongly support reopening the 22 registration program. We would like to see the fees 23 reduced and not have punitive fees as an incentive to get 24 other folks involved. And we are strongly supportive of 25 an outreach program and pledge our participation in that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 142 1 program. 2 That concludes my comments. If you have any 3 question, be happy to answer them. 4 CHAIRPERSON SAWYER: Thank you. 5 Mr. Rohman. 6 MR. ROHMAN: Mr. Chairman and members of the 7 Board. My name is Gary Rohman. I am the Chair of the San 8 Joaquin District of the Associated General Contractors. 9 And through my travels throughout California it became 10 apparent to me that a lot of people -- a lot of 11 contractors were unaware of the PERP program, which 12 prompted the AGC, and myself specifically, to begin to do 13 workshops on an informative basis. We've done one in 14 Indian Wells, Los Angeles, San Luis Obispo, Ventura, San 15 Francisco, Monterey, Tulare, Oakland to date. And we have 16 one here on January 12th in Bakersfield. 17 The first question that I have asked at every one 18 of these meetings, that were well attended, at least 50 to 19 100 people at every one of the meetings, was: How many 20 people are aware of the PERP program? I never had any 21 more than five hands raise. 22 Although I believe that CARB did what they 23 believed to be an extensive outreach to get to these 24 people, I don't think that we did -- in reality do a 25 justice to all of these members. Therefore, we're asking PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 143 1 that you at least consider the fact that many of these 2 individuals were unaware at the time. 3 That's all I have. 4 CHAIRPERSON SAWYER: Thank you very much. 5 Ms. Berg. 6 BOARD MEMBER BERG: And thank you for doing that 7 outreach. 8 MR. ROHMAN: Oh, by the way, one other thing. 9 We're committed to continuing to do that all next year. 10 CHAIRPERSON SAWYER: Mr. Ericksen. And then we 11 will have Bob Liebermann, Trina Panaqua, and James Thomas. 12 MR. ERICKSEN: Good morning. My name is Lance 13 Ericksen. I'm the Engineering Manager with the Monterey 14 Bay Unified Air Pollution Control District. 15 I've worked on this PERP regulation and portable 16 diesel ATCM since 2001 and have tracked them. Today is 17 the first day I saw the regulatory language in place 18 and -- or proposed. And I need to make a very simple 19 comment and very focused comment. And that is regarding 20 the proposed amendments to the airborne toxic control 21 measure. 22 Since January 1st, 2006, districts have been 23 precluded by the airborne toxic control measure from 24 permitting engines that are not the current tiered 25 standard, very similar to the state registration program. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 144 1 But that is a restriction on our permitting requirements. 2 The proposed changes are twofold. One is to 3 allow to the ATCM -- well, there's many changes. The ones 4 I focus on are two. One is that it allows engines that 5 are tiered to go into the state program. 6 The second change to the ATCM is it allows 7 engines that are Tier 0, not tiered, to be permitted by 8 the district. It does not allow engines that are tiered 9 but not the current tier to be permitted by the district. 10 I request in a very brief written note that the 11 words be added to this section that they are -- the tiered 12 engines, Tier 1 and Tier 0 engines, be allowed to be 13 permitted by a district or go into a state program. If 14 those words are not added, the engines that we find that 15 are Tier 1's are forced to go into the state program. 16 They no longer have the option of coming in to a state 17 program that they enjoyed. 18 And I can give a number of -- a couple of 19 examples, but I won't go into them. It's basically just a 20 little quirk, a little equity issue, that I feel they 21 should still have the option of getting a district permit. 22 The STATE program has always been voluntary. This change 23 makes it mandatory for those Tier 1 and Tier 2 engines 24 under certain circumstances. 25 CHAIRPERSON SAWYER: Staff comment on that. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 145 1 PROJECT ASSESSMENT BRANCH CHIEF TOLLSTRUP: The 2 proposal that we have in there is what we've worked out 3 with CAPCOA. If the Board directs us, we can consider the 4 proposal from Mr. Ericksen. 5 CHAIRPERSON SAWYER: I guess the question is, is 6 there merit to what he's saying? 7 EXECUTIVE OFFICER WITHERSPOON: Well, the way 8 this -- the majority of districts like it the way staff 9 proposed it. And single districts like Monterey prefer a 10 different approach. 11 MR. ERICKSEN: This does not restrict -- this is 12 the change to the air toxic control measure. It does not 13 restrict the district from imposing any other requirement. 14 And, in fact, they must impose the other requirements on 15 the engines that they permit. A permit coming into a 16 district would have to satisfy new source review, for 17 instance, the applicable new source review requirements. 18 So I'm just asking the changes you made here still gives 19 district flexibility. 20 I've participated in the discussions, and this 21 language was not clear to many of us. 22 CHAIRPERSON SAWYER: Ms. Berg. 23 BOARD MEMBER BERG: Staff's opinion? I mean it 24 doesn't -- 25 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Well, part of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 146 1 what we tried to do with this in our promise was that when 2 we came before the Board previously with the PERP 3 regulation, we had a consensus with the air districts, and 4 we want to maintain that. So that's our only issue here. 5 I don't think it matters. I can't identify how it matters 6 from an emission standpoint whether or not the engine came 7 to us or for some reason stayed with the district. I just 8 don't know what the other districts' positions would be on 9 it. 10 BOARD MEMBER BERG: Then is it possible that as 11 we move down the road, that we could instruct staff to 12 check in with the other air districts, and if everybody is 13 in consensus, that you then would move forward? 14 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Well, we have 15 an emergency reg and we could clearly do that in terms of 16 when we come -- we're going to come back in 120 days and 17 then we could straighten that issue out at that time. 18 BOARD MEMBER BERG: That would be great. 19 BOARD MEMBER RIORDAN: I think that's 20 appropriate. 21 CHAIRPERSON SAWYER: Yes. 22 BOARD MEMBER BERG: Thank you. 23 CHAIRPERSON SAWYER: Mr. Liebermann. 24 MR. LIEBERMANN: Chairman Sawyer, rest of the 25 Board. I'd like to thank you for taking the time to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 147 1 listen to us. By name is Bob Liebermann. I work with a 2 company called Putzmeister. We manufacture concrete 3 pumps, both truck-mounted and trailer-mounted. And the 4 trailer-mounted is what falls in the PERP category 5 substantially. 6 I think despite the efforts that the staff made 7 to notify people, that it was horribly ineffective. It 8 just did not get out. I had machinery sold in California. 9 And I had to switch equipment because the equipment I sold 10 them signed up in August could cot be delivered because it 11 was a Tier 2 engine. It has to be Tier 3 now. Tier 3 is 12 not even available widely because it's not required 13 federally until the first of 2007. It's kind of tough to 14 get with the manufacturers if engines aren't required to 15 build. 16 The Tier 2 I have is -- covers the manufactured 17 in 2004 on a machine we would have called a 2007, because 18 we bought an inventory in Germany, we stock them, we bring 19 them over here. The manufacturer year will not bear too 20 much resemblance to the finalization year -- the assembly 21 year. So these things caught us a little bit. 22 We rent equipment around the country. And if I 23 have a rental pump coming off of duty in Texas and it's 24 not a Tier 3, I can't bring it into California. So the 25 people who need that will be forced to only buy brand new PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 148 1 equipment for their project. 2 The Tier 0's -- you know, the crane gentleman 3 addressed I think quite effectively, he said cranes last 4 30 years. Concrete pumps last 15 and 20. In 2006 all 5 anybody could buy was Tier 0 -- or 2005, let us say. With 6 the life of this type of equipment, are we going to ask 7 customers to get rid of equipment that is Tier 0 and still 8 has half its useful life remaining? 9 Lastly, the gentleman -- I don't remember which 10 one -- says the people pick to buy a dirtier clean engine. 11 I think that's very unrealistic. People who buy used 12 equipment look at the model, the year, the condition, the 13 hours. That doesn't cross their minds. They're not 14 looking at which engine they buy. And the truth is most 15 of the engines are what they came with. It's not a -- 16 doesn't seem to cross their minds. It doesn't work. 17 I would ask that the Board allow us to bring in 18 Tier 0 engines to be registered in this measure if 19 possible because there are a lot of them out there. You 20 know, they have a lot of useful life left. And partly 21 because I think the Air Resources Board did not do a 22 responsible and effective job of communicating these 23 rules. It just didn't get out at all. It was terrible. 24 And as I -- had my customers tell me they first heard 25 about it when someone got a fine, you know. That's not PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 149 1 the way to inform people and work together. You know, 2 we'd like to help. We buy the newest engines we can as 3 they're required. We have to use some existing stocks 4 that we have. 5 And our customers had to -- last a long time, 6 which we're going to be pushing out of the state. 7 That's my only comments. 8 Thank you. 9 CHAIRPERSON SAWYER: Thank you. 10 Ms. Panaqua. 11 MS. PANAQUA: Thank you. You did a very good job 12 pronouncing my name, which is usually slaughtered. 13 I'm here on behalf of Garvey Equipment Company, a 14 certified California small business; Morbark Brush 15 Chippers, which we are an authorized dealer of; and Power 16 Great Lakes out of Illinois that represents Caterpillar 17 and Perkins engines. I've submitted in a confidential 18 form documents around November 23rd to your attention, and 19 this morning two additional documents that would be 20 considered public as it relates to Power Great Lakes 21 notification of Tier 3 engines availability. 22 Tier 3 engines became available to our industry. 23 And we use power packages from anywhere from 35 up to 24 about 250 for the commercial division of Morbark on our 25 brush chippers. We also represent Carlton Stump Grinders. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 150 1 The initial Tier 3 engines were a 205 GM, that 2 went to Detroit for the car industry, and a 213 by 3 Cummins. We are waiting for Tier 3 engines. The first 4 per that notification will be coming out from Caterpillar 5 and Perkins, which is basically the same company, from the 6 UK in late May of 2007. 7 So there is an issue as it relates to the Tier 0 8 engines that are out on the street. And we have a lot of 9 our clients who have those. As to what they do -- and in 10 our industry we can retrofit, for the most part. But 11 retrofit with what? 12 So we have Tier 0 engines on the street that 13 cannot be registered. And like previous speakers, we were 14 not aware of the registration program through the AQMD or 15 PERP. We are aware of the variance tiers because we have 16 to deal with that when we order. And because we are a 17 large chipper dealer, we currently have three brush 18 chippers in our yard for CalTrans that are waiting for 19 inspection. And we have a purchase order for chippers 20 being built for CalTrans back in Michigan where we had to 21 forward ahead of time the Tier 2 engine information so 22 they could register them so that they wouldn't fall into 23 the December 31st, 2006, issue. 24 So the issue is extremely real. And this Board 25 needs to look at the availability issue in conjunction PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 151 1 with what is on the street. And given that our products 2 are far less expensive than the crane industry, I am just 3 astounded that the Board has come to this moment and not 4 taken into consideration the financial impact on the 5 industry as a whole. 6 Thank you. 7 CHAIRPERSON SAWYER: Thank you. 8 Mr. Thomas. 9 MR. THOMAS: Thank you, Mr. Chairman and Board 10 members, for being able to speak this morning. My name is 11 James Thomas with Nabors Well Services. I've talked on 12 this subject quite a bit. 13 Today I'm going to come across as inside the -- 14 or operating inside the PERP regs. 15 Ms. Berg, you mentioned: What is the difference 16 between a 1 and Tier 2, buying old dirty engines, buying 17 new engines, put more polluting engines? The difference 18 is -- between 0, 1, and 2 is cost. And they just 19 escalate, escalate, escalate. And so, like they say, that 20 whenever someone gets ready to buy a new piece of 21 equipment, if they can buy -- they buy it at a used rate, 22 and they can buy it at a reduced rate and less money, they 23 probably are not looking at the emissions that they 24 generate. They are thinking about the cost of the 25 equipment. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 152 1 Let me tell you about inside the PERP reg. 2 Number 1, you heard that Tier 0 and Tier 1 engines were 3 being sold as late as 18 months ago. If you're in the 4 PERP reg, you can't buy those engines. If you're outside 5 the regs, you can. Because we cannot get those 6 registered. 7 You hear about engines outside the state coming 8 in. We move equipment in here as well. And other people 9 within our industry -- and I'm in the petroleum 10 industry -- is constantly moving used pieces of equipment 11 in our inventories into this state. And the first thing 12 we do is we take the old engine out and we put a new one 13 in because it is required by PERP to do that, so that 14 you'll be in regulations. 15 We support the emergency proposed amendments to 16 the PERP regulations and the portable equipment ATCM. We 17 do think that it is fair, that a company would pay all 18 back fees -- or all back registration fees, because 19 they've been able to afford themselves to operate in this 20 state all of this time just like we have. They've just 21 been able to opt out of the purchases. 22 Last thing I'd like to mention is the portable 23 equipment was adopted to reduce NOx. And then at a later 24 date it was changed to reduce PM in the state. And 25 starting in 2000, that reduction plan was built in the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 153 1 portable equipment program, and it happened with Tier 0 2 engines. Because if you're inside the Portable Equipment 3 Registration Program and you have a Tier 0 engine and it 4 went down, you could not permit the equipment. So 5 therefore you had to buy a new engine. And so there has 6 been restrictions placed on companies that are operating 7 inside the regulations. 8 I'd like to take this time to thank CARB staff 9 and CAPCOA staff for working and developing such a complex 10 regulations. And I appreciate your time. 11 CHAIRPERSON SAWYER: Thank you very much. 12 We have one final speaker this morning, Mr. 13 Sadredin. 14 MR. SADREDIN: Good morning, Mr. Chairman, 15 members of the Board. We do support the staff's proposal 16 here. In fact, if you ever do any regulations that say 17 you leave everything up to the district's discretion, we 18 always support that. 19 (Laughter.) 20 MR. SADREDIN: But to the extent that there might 21 be a desire to maintain the whole concept behind this 22 program, which is to have a statewide program and allow 23 these various operators to be able to operate at various 24 districts, I'd like to share with you how we would 25 exercise that discretion. And if you like it, you can PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 154 1 make everyone do it through this regulation, or perhaps 2 encourage people to do it. 3 First of all, before I get to the Tier 0 issue, 4 which is really the contentious matter, with respect to 5 the residency time, I want to strongly urge you to retain 6 that provision. No one right now in this program can 7 bring in new engines to the area -- to the state if they 8 were not already in the program. And we don't want to 9 open the door to that concept. That certainly will not be 10 helpful to our air quality situation in the valley. 11 But with respect to the Tier 0 registration, 12 there is consensus here that the outreach was inadequate. 13 The reason that you have this item before you today to a 14 certain degree admits that that was an issue. And 15 therefore we need to have a way for these sources that do 16 have a good circumstance and good excuse to be able to 17 register. Now, I know the district discretion was 18 intended to deal with that. 19 In our district we think a period of six months 20 to a year would be an adequate extension of the amnesty, 21 if you will, to let these people, now that adequate 22 notification and education. And most of the industries 23 here, hopefully they will participate and do their part to 24 get the word out. And I think in a six month to a year 25 timeframe we should have everybody in the program. And PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 155 1 passed that there should not be any Tier 0's allowed. 2 But even presently in our district, if we do 3 allow the Tier 0's to come in, given the concern with the 4 emissions, we will not let Tier 0's with no control to be 5 registered. 6 And under our program we require them to do a 7 timing engine -- ignition timing retard to reduce the 8 emissions to 7.2 grams per horsepower for turbocharged 9 engines and to about 10 grams per horsepower for naturally 10 aspirated engines. And that brings them very close to a 11 Tier 1 engine emission level. So the consequences of 12 bringing some of these engines that had been resident, had 13 been here already, it's not a new impact on our emissions. 14 We think we can take care of that with some adequate 15 control that they could put on those engines. 16 So that's how we will be implementing that 17 discretion. We will allow some of those tier engines to 18 come in if they can control it to a reasonable degree, and 19 only for a short period of time. 20 They would be subject to paying the back fees and 21 there will also be a penalty, a noncompliance penalty, 22 which will be on a case-by-case, taking into account any 23 mitigating circumstances that might apply if they did not 24 know -- for instance, if they can prove that they were not 25 aware of the regulations. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 156 1 If on the other hand there is a company that has 2 some of their engines registered but they just chose not 3 to register some, obviously that would not be an excuse 4 that they could offer, and we would take that into account 5 on imposing fines on penalties. 6 With that, thank you for the opportunity to 7 comment on this. 8 CHAIRPERSON SAWYER: Thank you very -- 9 MR. SADREDIN: Oh, one last comment. 10 I also support Lance Ericksen's comment regarding 11 that Tier 1, Tier 2 permitting. I think that was an 12 intended consequence of this Tier 0 provision that we were 13 trying to open. I don't think the intent ever was to now 14 take that option away for the districts to permit those 15 engines. And I think I can tell you with a reasonable 16 degree of certainty that CAPCOA would support that change. 17 Thank you. 18 CHAIRPERSON SAWYER: Thank you very much. 19 Okay. We've finished with the public testimony. 20 Let's now take our statements of ex parte. 21 Dr. Gong. 22 BOARD MEMBER GONG: None. 23 CHAIRPERSON SAWYER: Ms. Berg. 24 BOARD MEMBER BERG: Can you come back to me? 25 CHAIRPERSON SAWYER: Yes, certainly. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 157 1 Ms. D'Adamo. 2 BOARD MEMBER D'ADAMO: None. 3 CHAIRPERSON SAWYER: I have none. 4 BOARD MEMBER RIORDAN: I have none. 5 BOARD MEMBER PATRICK: I have none. 6 CHAIRPERSON SAWYER: We're back to you rapidly. 7 BOARD MEMBER BERG: I have none. 8 CHAIRPERSON SAWYER: Oh, okay. None. 9 I would just like to make an observation about 10 this. Of course the objective is to reduce emissions from 11 these categories of engines, and we want to push ahead 12 with that. And the way you do that is to get newer 13 engines in place as rapidly as possible. 14 I believe that it was nine years ago that the 15 PERP regulation was adopted by the Board, long before I 16 was on the Board. And the objective there was to help 17 contractors who were operating in multiple counties or 18 jurisdictions, to simplify the permitting process for 19 them. I believe there had been several extensions of the 20 deadlines in that program. 21 And then after my arrival on the Board the 22 problem of a particular group of small contractors, the 23 concrete pumpers, came to our attention. And we felt that 24 perhaps there was an injustice done to this operating 25 sector. Some may not have known. Some may have known. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 158 1 And we had no way of telling really. And we asked the 2 Board to work out an emergency measure to deal with that 3 particular problem. And I think they've done a wonderful 4 job of doing that, working with both the industry and the 5 air pollution control agencies in the state. Not 6 everybody is happy obviously, but that's the nature of 7 compromises. 8 We have another issue, which I suppose we knew 9 about before, but it certainly came to the forefront, of 10 the crane operators. I would make the obvious observation 11 that these are not mom and pop operations. These are 12 multimillion dollar capital investment organizations. It 13 seems to me there should be a way to work out cleaning up 14 their equipment, that the cost of cleaning it up, unless 15 it's absolutely impossible to make the changes, should be 16 a small fraction of the original cost of the equipment. 17 We certainly do not want to shut down the 18 construction industry in the State of California for a 19 lack of cranes. And I presume that the staff in the 20 period before they bring the permanent changes to us will 21 address this issue. We heard them say that they would do 22 that. 23 So it seems to me that we are in the position now 24 of taking care of our original problem by adopting the 25 emergency regulations, and then having the staff come back PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 159 1 to us with the longer-term issues in the spring. 2 Do I have any comments from -- do other Board 3 members want to make comments? 4 BOARD MEMBER RIORDAN: Mr. Chairman, I would 5 agree with you. I think you have characterized what the 6 Board has done over a period of time very clearly. And to 7 also say that we have between now, if this is passed, and 8 to the point where something is brought back to us in 120 9 days or before, time to work out the one remaining -- 10 seemingly, hopefully one remaining issue of crane 11 operators. 12 And I wanted to ask you about the issue that was 13 raised by the Monterey District and then confirmed by the 14 San Joaquin District. What is your recommendation on 15 that? Is that to be dealt with in 120 days or deal with 16 it today? What is your -- 17 DEPUTY EXECUTIVE OFFICER SCHEIBLE: I would say 18 if we maintain consensus with CAPCOA and make that change, 19 it's fine with staff. So we can probably very quickly 20 obtain that. And if the Executive Officer has the 21 authority to -- when we file the emergency regulation to 22 make that change from the Board, we can do it. 23 CHAIRPERSON SAWYER: That would be done as a 24 15-day change and -- 25 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Well, there's PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 160 1 not a 15-day -- it's a whole different process here 2 because it's an emergency regulation. So it all happens 3 extremely quick. 4 CHAIRPERSON SAWYER: Is the Board agreeable with 5 that procedure? 6 Fine. 7 Are there any other comments from Board members? 8 Ms. Berg. 9 BOARD MEMBER BERG: I am concerned still about 10 the fee situation, and with the original fee starting out 11 at $105. And I'm in full agreement with the penalty. I 12 think a penalty should apply. And I am also in full 13 agreement with that there should be an amount assessed for 14 the recordkeeping and so forth, the operations. I'm just 15 extremely confused on how this all adds up to between 778 16 to $2,353, first of all. And then second of all, I really 17 have a problem with the Tier 1 being not by purchase date. 18 It's fine with me that it's more expensive, because it's 19 dirtier. But I have a problem with it being assessed by 20 manufacture date. 21 DEPUTY EXECUTIVE OFFICER SCHEIBLE: We've talked 22 about that some. And I think the staff was fine if the 23 Board -- obviously fine with whatever the Board directs us 24 to do. 25 (Laughter.) PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 161 1 DEPUTY EXECUTIVE OFFICER SCHEIBLE: But we would 2 be in support if you wanted to say make it the date of 3 purchase so long as the fee paid by Tier 1 is at least the 4 fee paid by Tier 2. 5 BOARD MEMBER BERG: Yes. 6 DEPUTY EXECUTIVE OFFICER SCHEIBLE: And that way 7 if -- they could say, "I bought it in 2001," then the fee 8 would go back -- would be the same as that schedule. 9 CHAIRPERSON SAWYER: Yeah, I think -- my own 10 sense of fairness would be better served by that change as 11 well. 12 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Okay. We can 13 work that out. 14 CHAIRPERSON SAWYER: The rest of the Board is in 15 agreement with that? 16 BOARD MEMBER RIORDAN: That's fine. 17 CHAIRPERSON SAWYER: Okay. Good. 18 Okay. The Board has before it Resolution No. 19 643. 20 Do I have a motion to adopt? 21 BOARD MEMBER BERG: So moved. 22 BOARD MEMBER RIORDAN: I would so move -- or I'll 23 second. 24 CHAIRPERSON SAWYER: It's been moved and 25 seconded. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 162 1 Is there any further discussion? 2 If not, let's take a vote by roll call please. 3 BOARD CLERK ANDREONI: Ms. Berg? 4 BOARD MEMBER BERG: Yes. 5 BOARD CLERK ANDREONI: Ms. D'Adamo? 6 BOARD MEMBER D'ADAMO: Aye. 7 BOARD CLERK ANDREONI: Dr. Gong? 8 BOARD MEMBER GONG: Yes. 9 BOARD CLERK ANDREONI: Supervisor Patrick? 10 BOARD MEMBER PATRICK: Aye. 11 BOARD CLERK ANDREONI: Mrs. Riordan? 12 BOARD MEMBER RIORDAN: Aye. 13 BOARD CLERK ANDREONI: Dr. Sawyer? 14 CHAIRPERSON SAWYER: Yes. 15 BOARD CLERK ANDREONI: Motion passes. 16 CHAIRPERSON SAWYER: Fine. 17 All right. It is now past time for lunch. And 18 we'll take a break, relatively short. My proposal is that 19 we have a 45-minute lunch break and that we resume -- 20 let's take it a 50 minute, we'll resume promptly at 2 21 o'clock. 22 Excuse me. My arithmetic is bad. At 1:30. 23 (Thereupon a lunch break was taken.) 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 163 1 AFTERNOON SESSION 2 CHAIRPERSON SAWYER: The next agenda item is 3 6-8-3, Proposed Amendments to the Airborne Toxic Control 4 Measure for Chrome Plating and Chromic Acid anodizing 5 operations. 6 This measure is a continuation from our September 7 meeting. Staff has prepared a revised proposal based on 8 our direction to them. 9 Ms. Witherspoon, would you please begin staff's 10 presentation. 11 EXECUTIVE OFFICER WITHERSPOON: Thank you, Dr. 12 Sawyer. 13 At the September hearing there was considerable 14 public testimony and Board discussion about the initial 15 staff proposal for strengthening ARB's existing regulation 16 for chrome plating facilities. Some of the witnesses 17 thought it was not protective enough for closest nearby 18 residents. Others had concerns about the costs in 19 relation to the potential risk. And we also had a 20 somewhat confusing dialogue about equivalent control 21 methods and where and when those were allowed. 22 In the end, the Board asked us to come back with 23 a revised proposal after discussing various options with 24 the affected stakeholders. 25 The issues we considered included proximity to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 164 1 sensitive receptors, emission-based limits, the move-in 2 problem, and the process for demonstrating equivalent 3 emission reduction approaches. 4 Today's proposal is based upon the concept that 5 the most health protective systems, HEPA filters or other 6 add-on controls, would be the standard technology for 7 medium and large facilities within one block of sensitive 8 receptors. 9 However, the very smallest sources in that zone 10 could use less expensive chemical fume suppressants. 11 Staff chose 330 feet, or one block, as the most 12 appropriate boundary for addressing near-source risk and 13 for requiring the most stringent controls. 14 Large chrome plating facilities outside that 15 radius are still expected to use HEPA or other add-on 16 controls, though we are providing more flexibility beyond 17 the 330 feet distance. 18 As we've talked about, the Health & Safety Code 19 allows for the use of alternative equivalent methods. 20 Therefore, we have explicitly provided flexibility for 21 operators to demonstrate equivalency to the add-on control 22 requirement. We've consulted with air districts, and will 23 continue to do so, about the information that it's 24 required to demonstrate equivalency. 25 As staff will explain further, this is a two-step PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 165 1 process. The alternative method must provide equal or 2 improved reductions in emissions and the equivalent 3 reduction in public health risk. It also must be equally 4 enforceable. 5 Staff is not proposing a move-in clause that 6 would require more stringent controls if a sensitive 7 receptor moves in next to an existing facility. Instead, 8 we are proposing a focused education effort for land-use 9 planners and local governments about the chrome platers in 10 their jurisdiction. Since we know exactly where all of 11 them are, we don't expect that to be unduly difficult. To 12 deal with the issue of faulty maintenance and fugitive 13 emissions, staff has also committed to conduct periodic 14 spot audits to see whether our housekeeping and 15 maintenance requirements are sufficient to ensure good 16 practices. We intend to ask local air districts to help 17 us with that effort. 18 In summary, the proposed -- revised proposal 19 provides substantial public health protection, recognizes 20 the very low risk levels can be met by small operations 21 with fume suppressants, and preserves reasonable 22 flexibility for chrome platers. 23 The staff presentation will be made by Ms. Shobna 24 Sahni of the Stationary Source Control Division. 25 (Thereupon an overhead presentation was PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 166 1 Presented as follows.) 2 MS. SAHNI: Good afternoon, Dr. Sawyer and 3 members of the Board. 4 Today we have for your consideration a revised 5 proposal to amend the control measure for chromium 6 plating. 7 --o0o-- 8 MS. SAHNI: I will be discussing the topics shown 9 on this slide. 10 --o0o-- 11 MS. SAHNI: As you recall, we originally 12 presented a proposal at the September 28th, 2006, hearing. 13 I'll provide a brief summary of that hearing and the 14 comments that were put forth. 15 --o0o-- 16 MS. SAHNI: This slide has some of the key points 17 from the September hearing. 18 --o0o-- 19 MS. SAHNI: This slide shows and summarizes the 20 staff's September proposal. 21 --o0o-- 22 MS. SAHNI: The next slide shows the industry 23 concerns presented at the September meeting. 24 --o0o-- 25 MS. SAHNI: The following slide shows the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 167 1 environmental community concerns also presented at the 2 September hearing. 3 --o0o-- 4 MS. SAHNI: The South Coast AQMD presented an 5 alternative proposal to that of the staff's. The key 6 provisions are shown on this slide. 7 --o0o-- 8 MS. SAHNI: After considering all testimony, you 9 voted to continue the hearing and provided the direction 10 shown on this slide. 11 --o0o-- 12 MS. SAHNI: You also directed us to work with air 13 districts on the equivalency process and to discuss 14 options with stakeholders. 15 --o0o-- 16 MS. SAHNI: Before I get into the details of the 17 proposed revisions, I'll first provide an overview. 18 --o0o-- 19 MS. SAHNI: Our proposal for new facilities would 20 increase the separation from 500 to a thousand feet. We 21 are also proposing a lower emission rate to be met with 22 add-on controls. 23 --o0o-- 24 MS. SAHNI: Our evaluation has led us to again 25 conclude that the health protective distance necessary to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 168 1 protect sensitive receptors living near plating and 2 anodizing facilities is 330 feet, or about one block. 3 --o0o-- 4 MS. SAHNI: As shown, we are now proposing more 5 flexibility for facilities with no nearby sensitive 6 receptors. However, the largest facilities would still be 7 required to use an add-on air pollution control device. 8 Now that I've given you an overview, I'll provide 9 more detail about the revised proposal. 10 --o0o-- 11 MS. SAHNI: First I'll discuss our proposal for 12 new facilities. We are strengthening our proposal for new 13 facilities, as shown here. The proposal would prohibit 14 operation of new hexavalent chromium in anodizing 15 facilities in any areas zoned residential or mixed use or 16 within a thousand feet of the boundary of any such area. 17 We are also proposing a more stringent emission 18 rate than for existing facilities. 19 Next I'll discuss our proposal for existing 20 facilities. 21 --o0o-- 22 MS. SAHNI: This slide shows the detail of the 23 requirements for facilities very near sensitive receptors. 24 Note that facilities less than or equal to 20,000 25 amp-hours could comply using specific chemical fume PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 169 1 suppressants to reduce emissions. Our analysis shows that 2 using chemical fume suppressants alone, all of these 3 facilities would have estimated cancer risk of less than 4 one per million people exposed. 5 All other facilities within this distance would 6 be required to meet the emission rate using an add-on 7 control device. 8 Upon compliance, facilities with ampere-hours 9 between 20,000 to 200,000 would have estimated cancer risk 10 one per million people exposed or less. 11 Most facilities with more than 200,000 12 ampere-hours would have risk below ten per million people 13 exposed. 14 However, three large facilities with very high 15 throughput could have an estimated cancer risk higher than 16 25 per million people exposed. These facilities would 17 also be required to conduct a health risk analysis that 18 the air district can use to determine if further measures 19 are needed to reduce emissions. 20 --o0o-- 21 MS. SAHNI: The next slide shows the detail of 22 the requirements for facilities beyond 330 feet of a 23 sensitive receptor. You can see we are proposing higher 24 amp-hour thresholds for these facilities. 25 Note that facilities with less than 50,000 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 170 1 ampere-hours could comply using specific chemical fume 2 suppressants to reduce emissions. These facilities would 3 have an estimated cancer risk of less than one per million 4 people exposed. 5 Facilities with amp-hours between 50,000 to 6 500,000 would have estimated cancer risk of one per 7 million people exposed, or less. Note that we have 8 providing flexibility by not proposing a control 9 technology for these facilities. 10 Facilities with more than 500,000 ampere-hours 11 would be required to meet the emission rate with an add-on 12 control devise. After compliance, most facilities with 13 more than 50,000 -- 500,000 ampere-hours would have risks 14 below ten per million people exposed. 15 For facilities with very high throughput, 16 however, could have an estimated cancer risk higher than 17 25 per million people exposed. These facilities would be 18 required to conduct a health risk analysis that the air 19 district would use to determine if further emission 20 reductions would be required. 21 --o0o-- 22 MS. SAHNI: We are proposing that the measurement 23 to determine proximity to sensitive receptors be taken 24 from the plating tank, or stack, to the property line of 25 the sensitive receptor. The measurement is to be taken PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 171 1 once and is to be reported to the district within 30 days 2 of the rule becoming effective. 3 --o0o-- 4 MS. SAHNI: At the Board's direction, we 5 considered a move-in provision. Recall that a move-in 6 situation occurs when a new sensitive receptor is allowed 7 to move in next to an existing chrome plating operation. 8 We believe that the best approach to address this 9 situation is to prevent these situations from occurring. 10 To address this, staff is proposing that the Board approve 11 as part of the resolution that we conduct a focused 12 education effort with both planning agencies and 13 potentially effective chrome plating facilities. We would 14 apprise planning agencies that they have these facilities 15 within their jurisdiction, and would educate them on the 16 significant hazards associated with people living near 17 chrome plating facilities, provide information on 18 available mitigation options, and recommend that the 19 agencies consider requiring new developers to pay for 20 mitigation. 21 We would also notify potentially effective 22 plating and anodizing businesses that they should follow 23 the land-use decision-making process and seek possible 24 mitigation. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 172 1 MS. SAHNI: In September you heard a lot about 2 the equivalency provision in the Health & Safety Code. As 3 you recall, this provision allows a facility to seek 4 approval from their district for complying by an 5 alternative method. 6 Upon further review we found that the process is 7 twofold. A facility must demonstrate equivalent emission 8 and risk reduction. We have consulted with the districts 9 as well as other stakeholders and are proposing regulatory 10 language to implement the process. 11 We've also developed a source test guideline 12 document to assist facilities conduct emissions testing. 13 --o0o-- 14 MS. SAHNI: We are proposing to include language 15 in the ATCM to ensure that all facilities and districts 16 are aware of this option. We are also proposing a new 17 appendix that would provide a list of information to be 18 submitted to the district in order for them to make a 19 determination as to whether the alternative is equivalent 20 and enforceable. 21 The demonstration of an equivalent emission and 22 risk reduction must be done using scientifically sound 23 procedures such as those developed by the Office of 24 Environmental Health Hazard Assessment. This is necessary 25 to ensure the public is equally protected if alternative PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 173 1 methods are approved. 2 We recognize that the Health & Safety Code 3 specifies that the districts have the primary 4 responsibility for approving alternative methods. 5 However, to facilitate the process and to ensure that 6 alternatives can be approved by U.S. EPA in a timely 7 manner, we would commit to working with CAPCOA and U.S. 8 EPA on developing appropriate methodologies. 9 --o0o-- 10 MS. SAHNI: We have identified an additional 11 requirement related to complying through alternative 12 methods. Through discussions with U.S. EPA, we have 13 learned that for continued equivalency with the federal 14 rule, U.S. EPA must also concur that the alternative 15 method is equivalent. While in the past this has been a 16 lengthy process for a facility, U.S. EPA has committed to 17 make their determination within 45 days. 18 --o0o-- 19 MS. SAHNI: As shown on this slide, we are 20 proposing some additional monitoring requirements for 21 facilities with an approved alternative method using 22 in-tank controls only. 23 The next slides list other proposed modifications 24 to the original proposal. Many of these were presented to 25 you at the September hearing. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 174 1 --o0o-- 2 MS. SAHNI: Where feasible, we are proposing that 3 within six months after the rule becomes effective 4 facilities must begin using the specified chemical fume 5 suppressants. While we are not proposing a move-in 6 provision, we are proposing that facilities annually 7 provide to the district the distance to the nearest 8 sensitive receptor as part of their ongoing compliance 9 plan. We believe the districts should be aware of this 10 and could require further reductions if an unsafe 11 situation arises. 12 Through our discussions with U.S. EPA, we have 13 learned that they no longer need to concur on alternatives 14 to a number of provisions in the ATCM. Thus we are 15 proposing to delete them from the concurrence loop when 16 allowed. 17 New definitions including "school under 18 construction" are proposed. We are proposing this so that 19 these planned schools would also be considered sensitive 20 receptor locations. 21 --o0o-- 22 MS. SAHNI: This slide shows some additional 23 modifications. Most of these are to further clarify 24 various provisions in the ATCM. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 175 1 MS. SAHNI: This slide lists additional 2 modifications. 3 --o0o-- 4 MS. SAHNI: I'll next describe the cost of the 5 revised proposal and how it would reduce estimated cancer 6 risk. 7 --o0o-- 8 MS. SAHNI: As this slide shows, the revised 9 proposal was significantly reduced excess cancer risk. 10 About 70 percent of facilities' estimated cancer risk 11 would be reduced to less than one per million people 12 exposed. And about 90 percent of facilities estimated 13 cancer risk would be reduced to less than ten per million 14 people exposed. 15 --o0o-- 16 MS. SAHNI: Overall, this revised proposal would 17 reduce costs somewhat over what we presented to you in 18 September. We estimate this revised proposal cost to be 19 about $13.5 million. This is based on installation of 82 20 add-on control systems. To be conservative, this cost 21 assumes that all facilities with flexibility would install 22 an add-on control. However, costs could be reduced to 23 about $12 million if these facilities comply without 24 add-on control. 25 Costs would be further reduced if other PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 176 1 facilities successfully comply through an alternative. 2 We estimated the cost of the original proposal to 3 be $14.2 million. 4 --o0o-- 5 MS. SAHNI: Annual individual facility costs for 6 most facilities installing add-on controls would be about 7 $46,000 per year for ten years. This proposed revision 8 may have potentially significant impacts on some small 9 operations located near sensitive receptors. 10 --o0o-- 11 MS. SAHNI: I would now like to outline for you 12 the remaining issues. 13 --o0o-- 14 MS. SAHNI: You will hear that some stakeholders 15 continue to believe that a thousand feet should be the 16 distance for requiring the most stringent control to 17 protect sensitive receptors. We have evaluated this 18 carefully and have found that a conservative estimate of 19 near-source risk posed by facilities located near 20 sensitive receptors supports that the lesser distance of 21 330 feet is protective. 22 You will also hear that some stakeholders believe 23 all facilities near sensitive receptors should be required 24 to use add-on controls. We have also evaluated this and 25 believe that for small facilities with low risk the cost PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 177 1 of the control does not justify the additional risk 2 reduction that would be achieved. 3 --o0o-- 4 MS. SAHNI: Some stakeholders believe we should 5 set an emission rate standard only without the requirement 6 to meet the emission rate with add-on controls. We have 7 evaluated the impacts of this near source and have 8 determined that greater cancer risk reduction is achieved 9 if add-on controls are required. However, we are 10 proposing a simple emission rate for some facilities with 11 no nearby sensitive receptors. 12 Also, under the Health & Safety Code, any 13 facility can demonstrate compliance through alternative 14 methods as long as the method results in equivalent or 15 better reduction in emissions and risk. 16 We have also discussed issues related to timely 17 equivalency demonstrations and believe we have a workable 18 solution with U.S. EPA. 19 --o0o-- 20 MS. SAHNI: We have already discussed move-in 21 situations. Recall that we are proposing educational 22 outreach effort to land-use planners and platers with the 23 goal of trying to prevent poor land-use decisions in the 24 future. 25 The high cost of reducing the cancer risk is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 178 1 still a concern for some stakeholders. Industry believes 2 that acceptable risk can be achieved with lesser control 3 than we have proposed for some facilities. We acknowledge 4 that costs are high, but we believe they are necessary to 5 protect people exposed to hexavalent chromium emissions. 6 --o0o-- 7 MS. SAHNI: We recommend that the Board adopt the 8 revised proposal. 9 CHAIRPERSON SAWYER: Thank you very much. 10 Madam Ombudsman, would you provide your statement 11 at this time. 12 OMBUDSMAN QUETIN: Chairman Sawyer and members of 13 the Board. This regulation has been developed with input 14 from the plating and anodizing industry through the Metal 15 Finishing Association of Southern California, the Surface 16 Technology Association, environmental groups and the air 17 districts. 18 Since the September hearing staff has continued 19 to work with the stakeholders to discuss the proposal as 20 well as other options. Dr. Sawyer and I, along with 21 staff, visited a decorative plating business and a hard 22 chromium plating business on November 1st, 2006. 23 Representatives of the industry association also attended. 24 Initially a revised proposal was to be presented 25 to the Board at your November hearing. A Notice of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 179 1 Postponement to November was posted to the web, sent via 2 list serve and U.S. mail. However, the stakeholders 3 requested more time to review the proposal. Consequently, 4 staff asked to continue the hearing to December. A 5 further Notice of Postponement to December was posted to 6 the web, sent via list serve and U.S. mail. 7 Staff had 13 conference calls with air districts, 8 environmental groups, and the industry associations. They 9 also had numerous individual calls with stakeholders. A 10 revised draft of the ATCM was posted on the website on 11 November 2nd, 2006, and was reposted with further 12 revisions based on stakeholder comments on November 30th, 13 2006. Approximately 450 stakeholders and interested 14 parties received the information via the list serve. 15 As you've heard from staff, there are still some 16 outstanding issues. A number of stakeholders will testify 17 and provide you with the specific details regarding their 18 concerns. 19 This concludes my comments. Thank you. 20 CHAIRPERSON SAWYER: Do the Board members have 21 any questions at this time? 22 All right. We'll begin then with the public 23 testimony. 24 The first three speakers will be Brian Bateman, 25 Daniel Cunningham, and Geoffrey Black. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 180 1 Mr. Bateman. 2 MR. BATEMAN: Good afternoon, Dr. Sawyer, members 3 of the Board. My name is Brian Bateman. I'm the Director 4 of Engineering at the Bay Area Air Quality Management 5 District. 6 I spoke at the public hearing on September 27th 7 on this matter. At that time, we recommended that the 8 ATCM proposal be modified to provide some additional 9 flexibility to allow certain chrome plating facilities to 10 achieve emission limits using control technologies that 11 are more cost effective than HEPA filters, if these 12 alternatives could be demonstrated to perform adequately. 13 We believe that the modified staff proposal 14 before you today addresses our concerns. We have ten 15 decorative chrome plating facilities in the Bay Area. 16 Nine of these facilities fall into the category of having 17 throughput levels less than 500,000 amp-hours per year and 18 having a sensitive receptor distance of greater than 330 19 feet. 20 The modified ATCM would allow these facilities to 21 comply by using multiple plating bath additives or other 22 technologies, provided that it could be demonstrated that 23 they can meet the .0015 milligram per amp-hour emission 24 limit. 25 We think that many of these facilities will PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 181 1 choose to go this way, as the costs of complying are 2 lower, the technology looks pretty promising, and the 3 compliance dates for facilities that are in this category 4 is four years down the road. 5 And so we're in support of this proposal. 6 I wanted to conclude by thanking the ARB staff 7 for all their hard work on this. I think they did a good 8 job. 9 Thank you. 10 CHAIRPERSON SAWYER: Thank you very much. 11 Mr. Cunningham. 12 MR. CUNNINGHAM: Thank you, Dr. Sawyer, Board 13 members. 14 (Thereupon an overhead presentation was 15 Presented as follows.) 16 MR. CUNNINGHAM: My name is Dan Cunningham. I'm 17 Executive Director of the Metal Finishing Association of 18 Southern California and the Service Technology Association 19 in northern California. My background in the metal 20 finishing industry goes back 27 years. I graduated from 21 UCLA in 1979 and worked at a hard chrome shop near LAX for 22 12 1/2 years and an anodizing company in Burbank for 23 another 4 1/2 years before I took this position as 24 executive director 11 years ago. 25 Our two associations make up about 225 job shop PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 182 1 metal finishing companies in California, with an average 2 employee size of 25 employees. We are a very proactive 3 and pro-environment small business association. We offer 4 monthly compliance seminars, monthly informational 5 meetings, a monthly newsletter. And we feel that our 6 members are well informed regarding current and proposed 7 environmental health and safety regulations. 8 We are a very small but important industry to the 9 entire manufacturing base in California. We protect metal 10 and other manufactured parts to make them last longer and 11 work better, thus saving natural resources for decades. 12 MFASC and STA have a long history of working with 13 virtually every regulatory agency in California, including 14 CARB, South Coast AQMD, Bay Area AQMD, DTSC and others. 15 We've also worked with the Speaker's office for 16 the last two years on his AB 721 -- his chrome plating 17 bill. We worked on the -- we chaired the steering 18 committee for the EPA's Region 9 -- Partnership for 19 Pollution Prevention. We served and chair the Industry 20 Advisory Council with the L.A. County Sanitation District, 21 and we worked for a year and a half with AQMD on 22 negotiated rule-making for Rule 1469, which is currently 23 the most stringent air reg in the country. 24 For our efforts, we won two clean air awards from 25 South Coast, one in 1992 for a chrome demonstration PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 183 1 project, one in 2003 for our participation in the 2 negotiated rule-making process. 3 We've also won a National Pollution Prevention 4 Week award in 2002 from DTSC. 5 The industry has changed over the last 20 years. 6 The dirty shops are history. Rogue shops like Master 7 Plating we feel should be closed. 8 Next slide. 9 --o0o-- 10 MR. CUNNINGHAM: In September I testified, and we 11 had three requests at that time: Flexibility to meet the 12 emission standard, use of all approved technologies to 13 help meet that standard, and consider risk when you're 14 doing the standard. Those are the only three objections 15 we had at the time to that proposed ATCM. 16 This industry, by staff's as own estimation -- 17 next slide. 18 --o0o-- 19 MR. CUNNINGHAM: -- represents only four pounds 20 of the nearly 300 pounds of chromium 6 emissions in the 21 state. And the proposed ATCM reduces that by 2.2 pounds, 22 leaving only 1.8 pounds left, and with a cost of $14 23 million, which now they're saying 13, but it actually 24 could be more than that. 25 It's critical to note that since 1986 this PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 184 1 industry has reduced chrome emissions by 99.9 plus percent 2 and are willing to comply with even more stringent 3 regulations. All we ask is for the flexibility to meet 4 the target number, be it .0015 per amp-hour or whatever. 5 We feel this approach is health protective for both the 6 community and our workers and will not have a devastating 7 economic impact. 8 CHAIRPERSON SAWYER: I must ask you to conclude 9 please. 10 MR. CUNNINGHAM: Okay. Dr. Sawyer, to your 11 credit, you selected and visited two chrome shops earlier 12 last month in Sacramento and you saw that these were 13 clean, well run facilities, with long-term employees that 14 care about the workers, the neighbors and the environment. 15 And we're not asking not to be regulated, just for reason 16 and flexibility. 17 Thank you. 18 CHAIRPERSON SAWYER: Thank you very much. 19 Mr. Black. And then we will have Ed Appleton. 20 Dennis Becvar, and Frank Grana. 21 MR. BLAKE: My name is Geoffrey Blake. I'm with 22 the Drilube/All Metals Company, which was founded in 1945. 23 We're serving the vital needs of aerospace, military 24 defense, medical industry for the last 60 years. We've 25 been a part of the Common Sense Initiative for the last PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 185 1 ten years. We're actively involved now in the Model Shop 2 Program, which is a program that DTSC has introduced just 3 recently. 4 We serve, as I say, the military, the defense 5 industry, and aerospace. And our major customers would be 6 people like Boeing, Lockheed, Northrop, Bridge Aerospace. 7 We're currently regulated by 23 various agencies, 8 federal, state, and local agencies. And we also are 9 subject to oversight -- constant oversight from people 10 from NASA, Department of Defense, Department of 11 Transportation, and the Federal Aviation Administration, 12 because we are also a certified repair station. 13 The staff report estimated the cost originally at 14 14.2 million and now has lowered it to 13, which was to be 15 borne by about 90 facilities. And the staff report 16 identified that a decline in the average owner's equity, 17 or ROE, would average about 9 percent, 10 percent being 18 the break-off point which would be considered significant. 19 But using the CARB data, the economist from Environomics 20 determined the ROE to be approximately 44 to 60 percent, 21 demonstrating a significant adverse effect on business. 22 The changes in the latest proposed ATCM make 23 economic consequences worse for specific facilities with 24 low risk, those that would be less than one in a million. 25 If adopted as drafted, the proposed ATCM causes PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 186 1 closure of approximately 68 facilities, which would be 2 about 30 percent of the facilities, loss of approximately 3 4,000 jobs directly. And having worked in -- with a 4 community association looking at impacts when companies 5 are lost to a community, for every direct employee that 6 you us lose on payroll, it severe affects about seven 7 other people within the community. So we're talking about 8 30,000 -- approximately 30,000 people being affected. 9 And also you have a ripple effect throughout the 10 manufacturing industry. We serve -- our company alone 11 serves a number of machine shops, metal fabricating shops, 12 foundries, heat treaters, all different types of 13 customers. We put the final finish on other people's 14 products. And they of course would also be affected. 15 The impact on out-of-state competitiveness also 16 can't be overlooked because -- obviously I don't think 17 that any electroplaters are planning to move to 18 California. But there might be other people that would be 19 looking to put a manufacturing facility in California, and 20 they have to look at the feasibility of being able to get 21 competitively priced. 22 CHAIRPERSON SAWYER: I must ask you to conclude 23 please. 24 MR. BLAKE: All right. So I would say that the 25 highest previous CARB-approved ATCM prior to this proposal PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 187 1 was under 20 million -- 18.6 million. And this proposed 2 ATCM will run approximately 154 million per cancer risk 3 avoided. So the -- and all these economic analysis data 4 has been supplied previously at our previous hearing. 5 Thank you. 6 CHAIRPERSON SAWYER: Thank you. 7 Would staff comment on the estimate of a 30 8 percent closure of these facilities. 9 TECHNICAL EVALUATION SECTION MANAGER TAKEMOTO: 10 This is Carla Takemoto. 11 I think at the time that we were writing the 12 staff report and doing the economics impact analysis, we 13 estimated that based on our proposal in September that 14 there could be about 35 business closures resulting from 15 the proposal we had for you in September. I believe that 16 that number would be slightly less now if we were to go 17 back to that very detailed analysis. 18 CHAIRPERSON SAWYER: Or about half the number 19 that we just heard estimated? 20 TECHNICAL EVALUATION SECTION MANAGER TAKEMOTO: 21 That is the analysis that we did for the staff 22 report and that was done using the standard methodologies 23 that are used in any ARB regulatory action. 24 CHAIRPERSON SAWYER: Thank you. 25 MR. BLAKE: But we've added that -- what we did PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 188 1 provide from Environomics does show a significantly higher 2 cost. So if the cost turns out to be three times or four 3 times higher than the estimated cost, obviously there 4 would be far more facilities that would be forced to 5 close. They wouldn't be able to meet it. 6 CHAIRPERSON SAWYER: Thank you. 7 BOARD MEMBER BERG: Mr. Chairman, could I just 8 ask a follow-up question? 9 CHAIRPERSON SAWYER: Please. 10 BOARD MEMBER BERG: On those closures, are they 11 near-source closures? What is the criteria for us to 12 decide on a closure of a facility? 13 TECHNICAL EVALUATION SECTION MANAGER TAKEMOTO: 14 Actually that was just based on the return on 15 owner's equity. And we estimated that for a number of 16 facilities the return on equity could be up to about 40 to 17 43 percent and. Those were the businesses that we felt 18 probably would not make the investment in the add-on 19 controls. 20 BOARD MEMBER BERG: And most of those would fall 21 in the near source, within the 330 feet? Because they 22 have the ability up to 500,000 amp-hours to meet the 23 regulation within a standard -- a performance standard 24 rather than the add-on controls. 25 TECHNICAL EVALUATION SECTION MANAGER TAKEMOTO: PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 189 1 Yes, that's true. And I really am speaking more 2 to the proposal that we had for you in September. The 3 number would be a little less now. But there would be a 4 number of businesses within that 330 feet that probably 5 still would choose to not make the investment in controls. 6 BOARD MEMBER BERG: Thank you. 7 CHAIRPERSON SAWYER: Mr. Appleton. 8 MR. APPLETON: Good afternoon, Dr. Sawyer and 9 Board members. My name is Ed Appleton. I'm Vice 10 President of Metal Finishing Marketers, and also a member 11 of the Metal Finishers Association of Southern California. 12 Our company is a family-run business. And we're 13 located in East Los Angeles and have about 47 employees 14 working for us. 15 I've been in the plating industry for 31 years, 16 with my family roots going back to 1932 where my 17 grandfather had a business in downtown Los Angeles. 18 The Metal Finishers Association is a very 19 proactive organization in addressing environmental issues. 20 This afternoon we will be presenting to the Board our 21 viewpoint to be considered by the Board. And a lot of it 22 we saw in the presentation by the staff. 23 There's five main items that we would like to 24 address. The first three were previously addressed at the 25 September 28th Board meeting: PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 190 1 One regarding flexibility where we will be 2 addressing the language that was added without change to 3 that. Someone else will be addressing that. 4 The use of foam blankets certified, where the 5 result was no change in the language. 6 Number 3 was regarding low risk of small 7 facilities being allowed to use chemical fume suppressants 8 where minimal changes have been made. 9 Since the September 28th Board meeting new 10 measures were added -- a new measure was added concerning 11 the annual distance tracking. And we will be proposing 12 the deletion of this measure. That will be addressed. 13 And then also as far as existing measures, our 14 continued support as an organization in being proactive, 15 in a good housekeeping, record keeping, maintaining clean 16 shops, being responsible business people in the community. 17 And not only is it beneficial to us but it's beneficial to 18 our employees, to our neighbors, and to our environment. 19 And I thank you for your time. 20 CHAIRPERSON SAWYER: Thank you very much. 21 Mr. Becvar. 22 MR. BECVAR: Good afternoon, Dr. Sawyer and 23 members of the Board. I'm Dennis Becvar. I have been 24 involved in source testing and various air monitoring 25 programs for about 30 years. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 191 1 And one of the issues that I was planning on 2 addressing today is the equivalence. The way the ATCM is 3 proposed, the language is leaning towards HEPA filters or 4 add-on equipment. And we have found beginning in the late 5 1990s that fume suppressants and foam blankets are 6 essentially equivalent to the use of a HEPA filter. 7 So back in the late '90s we took a look at four 8 different hard chrome platers. And these are facilities 9 that plate in excess of five million amp-hours per year. 10 So they were fairly good-sized facilities. And the reason 11 we looked at that, it gave us the opportunity to take a 12 look to see if add-on in-tank controls actually work. And 13 in the EPA NESHAP we did have the option of evaluating an 14 equivalency approach. So we went ahead and we put 15 together some test protocols, submitted them to EPA and to 16 the SAQMD and we got approval to do the tests. 17 The results turned out to be very favorable. And 18 they were essentially equivalent to the emissions that you 19 would have with the HEPA filter. So we went ahead then 20 and sent our reports in to EPA, and I think to CARB as 21 well, and to the SAQMD. It took us about four years and 22 several months before we heard back from EPA regarding 23 whether they were going to accept our equivalent approach, 24 that is, using fume suppressants as opposed to using 25 add-on controls such as a HEPA filter. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 192 1 I noticed that in the presentation by staff that 2 they're suggesting that EPA is going to respond back to us 3 within about 45 days if we have other platers that choose 4 to use the in-tank controls. Based on our experience of 5 four years and several months, I think the 45 days is 6 probably a bit optimistic. And time, as you well know, is 7 always of the essence when we're trying to reduce 8 emissions. 9 I'd like to also add that we just recently 10 finished work on another fume suppressant that is coming 11 into the marketplace. And that too is showing equivalence 12 to that of a HEPA filter. And I think CARB has a copy of 13 our report, that they are now in the process of -- staff 14 is in the process of evaluating. 15 So we feel that with the tests that we have done 16 we're confident that fume suppressants and in-tank 17 controls do work. They essentially give us equivalent 18 emission reductions to those of the exhaust systems and 19 HEPA filters. And we feel that there may have to be maybe 20 another approach at taking a look at the in-tank controls, 21 because I don't think the 45 days is going to be 22 sufficient for our industry to be able to get approval and 23 to continue in compliance. We're estimating that we have 24 about 75 to 100 facilities that could be affected by this. 25 Thank you very much. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 193 1 CHAIRPERSON SAWYER: Thank you. Mr. Grana. And 2 then we will have Alan Olick, John Marrs, and Sam Bell. 3 MR. GRANA: Good morning, Dr. Sawyer and Board 4 members. My name is Frank Grana. I'm one of the owners 5 of California Electroplating in Los Angeles. 6 I'm here to just talk about the actual being able 7 to do the in-tank controls and actually have it work. The 8 proposed -- I'm sorry. Hold on one second. 9 The proposed rule for me is actually a step 10 backwards. We ran a source test I believe it was '04. 11 And in that source test we came up with a result of ten 12 times less than what you guys are asking for at .0015. We 13 came up with a result of .00013 milligrams per amp-hour. 14 So for me, what everybody is telling me is that I need to 15 spend a lot of money to do a less better job than I'm 16 doing right now with the in-tank controls that I have in 17 place. 18 So I mean I don't really have a whole lot 19 other -- to say other than, you know, I want to work with 20 the agency. I think -- I did work with the agency when we 21 did the source test. It's something that I have in 22 writing. The source test was submitted in September. 23 It's kind of the proof, you know, that it works and that 24 it's a no brainer to me. As running a facility, I don't 25 have to worry about the HEPA filter being on or it not PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 194 1 being run properly. If I keep my controls in line, I'm 2 going to meet or beat this number that they're looking for 3 me to meet. 4 And that's really all I have to say. Thank you. 5 CHAIRPERSON SAWYER: Thank you very much. 6 Mr. Olick. 7 MR. OLICK: Thank you for the opportunity, Dr. 8 Sawyer and staff and Board members. My name is Alan 9 Olick. I'm the owner of two metal finishing companies in 10 East L.A. I'm very close to Frank Grana's company. We 11 all work together very nicely in the same industry, even 12 though we're competitors. We love each other and love our 13 business. 14 We need to protect our business, our employees, 15 and the environment. I believe we're doing so. My 16 companies, both of which I purchased from other people, 17 started in 1940. I became a metal finisher after being a 18 school teacher in 1969. So I've been plating for several 19 years. I have many, many employees that have been with 20 our companies over 30 years. None of them really have any 21 medical problems. We are environmentalists, and we're 22 being blamed for not being an environmentalist at the same 23 time. 24 Our shops are very clean, neat. We take great 25 care not to spill any chemical outside of a plating tank, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 195 1 on to the ground or in to the air. I believe we're not 2 given credit for what we do that's right. And because a 3 few people have not done what's right, we're being held as 4 their scapegoat and being asked to close our businesses. 5 My company supports over a hundred people. We 6 use several subcontractors. We have several families. We 7 provide health insurance, uniforms, and retirement 8 benefits, all of which will be lost if our companies have 9 to close. We don't want to have to do that. 10 We want to work with all the agencies. We've 11 worked with South Coast Air Quality Management District 12 for years. We thought we had everything working fine. 13 And our foam mist suppressants, foam blanket that goes on 14 top of the wetting agent that we use to control foam 15 -- chrome mist has been ratified to be a very good 16 prohibitive measure for putting anything into the air. 17 And now we're having to testify all over again, saying 18 that they want to take that away from us. 19 We really need to have the Board consider to 20 allow us to use the foam blanket as well as the new 21 suppressants and the wetting agents that we currently use. 22 And we will keep on trying and spend our money on research 23 to improve things. We really don't think that adding 24 expensive HEPA filters, which require lots of maintenance, 25 is a necessary thing for us to have to do. And if we do PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 196 1 have to do it, of course we will. But as you heard from 2 Nick, it's not necessary. 3 And HEPA filters also produce waste themselves 4 that have to be dealt with. And under state law, we're 5 supposed to do waste minimization, not create more waste. 6 So our goal is to keep the solution in the tank 7 and keep the fumes in the tank and keep people healthy and 8 stay in business, for which I thank you for hearing us 9 this afternoon on this important issue. 10 CHAIRPERSON SAWYER: Thank you very much. 11 MR. OLICK: Any questions? 12 CHAIRPERSON SAWYER: Questions from the Board? 13 Mr. Marrs. 14 MR. MARRS: Chairman Sawyer and members of the 15 Board. 16 First of all, I'd like to thank you, Chairman 17 Sawyer, for visiting our facility last month. And I 18 really appreciate you taking the time out to see what 19 industry is about. And that meant a lot to us in the 20 industry. And we appreciated the fact that you took that 21 time to educate yourself about our industry. 22 At the time you visited our facility, I talked to 23 you about risk and some of my concerns about it. I 24 appreciated what you said earlier today about good science 25 leading to good regulation. And I think that is extremely PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 197 1 important in the case at hand here. 2 I believe that staff has done a good job with 3 what resources that they have. However, I think that the 4 actual amount of testing that was done probably was not 5 adequate to describe the current conditions of what 6 actually is as opposed to conditions of rogue shops that 7 were dirty, needed to be shut down, were shut down. Those 8 were compliance issues as opposed to regulations that 9 needed to be improved. And that's a concern that I have. 10 As far as risk also, it seems that regulations 11 are -- and understandably so -- err on the side of being 12 overly conservative. However, I believe that when you put 13 overly conservative risk assessment on top of overly 14 conservative risk assessment, this can actually skew 15 things to become significantly overstated as far as the 16 actual risks that are presented to the public. 17 --o0o-- 18 MR. MARRS: I think that the risk threshold of 19 one cancer in a million exposed is something that is 20 reasonable and that the industry supports. As you can see 21 on this slide here, that the one in a million to begin 22 with assumes an emission rate for 70 years of an exposure 23 at our property line. And that in itself builds in a 24 significant safety factor as long -- and when we start 25 adding other safety factors, we get out of skew several PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 198 1 factors. 2 --o0o-- 3 MR. MARRS: And, lastly, the proposal -- the 4 latest proposal of 20,000 ampere-hours per year represents 5 a one in a million or less modeled risk with fume 6 suppressants, and we appreciate that ability. 7 Also, the 50,000 ampere-hours per year represents 8 a 1 in 4 million or less modeled risk when measured at 330 9 feet or more. We believe that that actual risk is even 10 lower. 11 We do support the provisions that allow for 12 flexibility, the under-500,000 amp-hours per year 13 provision. We would like to see that also for those that 14 are 200,000 ampere-hours and at a closer range, with the 15 flexibility to meet that risk, however they would like to 16 do that. 17 That concludes my presentation. 18 CHAIRPERSON SAWYER: Thank you very much. And I 19 want to thank you for the time you took to show me around 20 your facility and to explain your business. It was very 21 helpful in understanding the problem. 22 MR. MARRS: You're very welcome. And thank you. 23 CHAIRPERSON SAWYER: Dr. Gong. 24 BOARD MEMBER GONG: Mr. Chairman, thank you. 25 I'd like to ask staff about this issue of risk PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 199 1 that was just addressed. Obviously I think we should be 2 conservative about risk taking. Everything is relative. 3 But could you just briefly refresh my mind about how the 4 federal government and state government measures this 5 cancer risk in terms of: is there an accepted or 6 established method of doing this that both the EPA and ARB 7 follows, or OEHHA? 8 TECHNICAL EVALUATION SECTION MANAGER TAKEMOTO: 9 Do you mean in the modeling analyses? 10 BOARD MEMBER GONG: Well, I'd just like to 11 know -- I don't need to go through the scientific 12 notations. But just basically, you must have a given set 13 system for obviously calculating the risk -- cancer risk, 14 et cetera. 15 TECHNICAL EVALUATION SECTION MANAGER TAKEMOTO: 16 Yes, yes. 17 BOARD MEMBER GONG: And it doesn't deviate from 18 any federal or state definitions? 19 TECHNICAL EVALUATION SECTION MANAGER TAKEMOTO: 20 No, no. These are all procedures that are based 21 on the risk assessment guidelines that were developed by 22 the Office of Environmental Health Hazard Assessment. 23 It's standard methodologies that would be used for any 24 type -- similar type of stationary sources. It's standard 25 methodology. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 200 1 BOARD MEMBER GONG: Thank you. 2 CHAIRPERSON SAWYER: Mr. Bell. And then we'll 3 have Bob McBride, Ray Lucas, and Charles Pomeroy. 4 --o0o-- 5 MR. BELL: Dr. Sawyer, Board. My name is Sam 6 Bell. 7 Don't let this appearance fool you. I've been in 8 the metal finishing industry for over 40 years, and I was 9 going bald before I started in the metal finishing 10 industry. 11 (Laughter.) 12 MR. BELL: I'm the vice president and one of the 13 significant owners of Metal Surfaces, Incorporated. We 14 are an engineering electroplating job shop in Bell 15 Gardens, California. We moved to Bell Gardens in 1960, 16 the same year Bell Gardens was founded. 17 Like I say, it's a family operation. It's a job 18 shop. We service all different industries. We do not do 19 the decorative side of the operation. But we do 20 engineering, electoplating. We service product for the 21 aerospace, for the electronics industry, for the connector 22 industry, the medical industry, the automotive industry. 23 I've got parts that are in every GM car that are driving 24 around out there on their electroconnectors under the 25 hood. We're a service organization. We don't know what PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 201 1 we're going to do tomorrow, but we have to keep our doors 2 open for the companies that have relied on us for the last 3 50 years. 4 I was a signatory on 1469, worked with SCAQMD 5 with Air Resources Board sitting on the sidelines. That 6 was accepted. We thought we had done a good job there. 7 But we're back here at the table again. 8 I'm the Chairman of the Industry Advisory Council 9 with L.A. County Sanitation Districts. We try to do our 10 civic duties and work with the agencies whenever we can. 11 My company hires 150 people. We're down 40 12 percent from where we were five years ago. But we do pay 13 medical insurance for about 500 family members. So our 14 industry is significant as far as the association goes. 15 Today -- well I would like -- most of the metal 16 finishers in our association are considered small 17 business. And I want to speak on behalf of the smallest 18 of these metal finishers, the ones that are under $1 19 million in sales. The smallest shops are under $1 million 20 in sales and they generally use the lowest amperage. They 21 have fewer people, lower sales, and don't use as much 22 amperage. And amperage is the primary thing that drives 23 the control on a chrome tank. It's how many bubbles come 24 up that carry the chrome in the air. And that's what the 25 blanket's for, is to arrest those bubbles. Well, these PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 202 1 small facilities don't emit a lot of that. 2 But facilities with less than 200,000 3 ampere-hours a year and greater than 330 feet from the 4 nearest receptor have a modeled risk of one in a million. 5 That modeled risk doesn't really mean there's going to be 6 one in a million cancer cases. The modeling is only a 7 method to rank different facilities, to rank different 8 methodologies. So the one in a million is just a number 9 pulled out of the air that says, okay, if something ranks 10 two in a million, it's just at a different level. So it's 11 a ranking number that you can go and address other 12 contaminants, other toxics. 13 The economic benefit to these small shops is -- 14 since they have small sales, the cost to put in these 15 extra added controls become significant to them. And you 16 talk about the smallest facilities that may be going out 17 of business -- or the facilities that maybe be going out 18 of business, the small guys are top on that list. 19 CHAIRPERSON SAWYER: I must ask you to conclude 20 please. 21 MR. BELL: Okay. What we would like to ask if -- 22 there's a chart up on the wall there that you probably all 23 have in front of you. 24 --o0o-- 25 MR. BELL: The industry proposes the certified PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 203 1 fume suppressants for facilities that are greater than 330 2 feet. And we would like -- the ARB has said at 50,000 3 ampere-hours, they could use -- that they don't have to 4 put out on controls. We would request that that be 5 increased to the 200,000 ampere-hours. As you see for 6 this chart, there's a diagonal line there that is -- that 7 is that cancer risk of one in a million. And if they were 8 allowed to go to the 200,000 -- because of the modeling 9 effects, there's a major conservancy factor of one to -- 10 ten to a hundred times overestimation on what's being 11 presented. And we would just ask that the smaller 12 facilities be allowed to go to 200,000 instead of 50,000. 13 Thank you very much. 14 CHAIRPERSON SAWYER: Thank you. 15 Ms. Berg. 16 BOARD MEMBER BERG: I just have a clarification 17 question for staff. And, that is, if they are -- if a 18 facility is over 330 feet and between 50 and 500,000 19 amp-hours, then they have the ability to choose the method 20 of which they will meet the .0015, including chemical fume 21 suppressants? 22 EXECUTIVE OFFICER WITHERSPOON: That is correct. 23 BOARD MEMBER BERG: Okay. Thank you. 24 CHAIRPERSON SAWYER: Mr. McBride. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 204 1 MR. McBRIDE: Yes, good afternoon. I'm Bob 2 McBride. I'm the President of A.C. Plating here in 3 Bakersfield. We're a small metal finishing shop. And I 4 appreciate the opportunity for you to listen to our 5 concerns. 6 I have basically two points today. But before I 7 get into those two points, I'd like to tell you a little 8 bit about A.C. Plating, just so you get a little history 9 of some of the other finishers. I know you've already 10 heard some. 11 My dad bought the business in 1975. There were 12 five plating shops at that time. Now we're the last one 13 that's left. We've been in business for the 30 years and 14 working with all the agencies in order to try and stay 15 compliant with every rule and issue that comes up. 16 Like Dan was saying earlier, we've gone from 17 basically hardly any compliance at all way back in the 18 '75s, up to today where we're 99.9 percent efficient on 19 all the fume controls that we're pulling in. 20 One of the things I think that you need to see 21 with what we're doing is we've done a good job. We're a 22 clean shop. We work very hard to keep our employees safe. 23 And I work out there everyday. And so it's one of the 24 things that we try to do. 25 I don't want to continue on with that. But I PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 205 1 think you've heard that. And I hope that you understand 2 that we do -- we are trying our best to be a good 3 industry. 4 On the move-in provision, if you glance up there 5 on the board, you'll see that the latest provision 6 proposed with ATCM, remove the requirement of the 7 facility annual measure and potentially change its 8 permitting status based on sensitive receptor when moving 9 closer to the facility. 10 But at the same time the latest revision includes 11 this annual measure of distance to the nearest receptor as 12 part of compliance reports an Appendix 3. The annual 13 measure is not required for any part of the proposed 14 standard. 15 So our industry endorses the original proposed 16 ATCM, then proposes deletion of the Appendix 3 required 17 since moving in the provision is no longer included. 18 The second thing I'd like to make a point on is 19 their record keeping and housekeeping. One of the things 20 that we do is we already are doing a lot of record keeping 21 and housekeeping. However, we will do more, whatever it 22 is that you feel comfortable with, coming in and making 23 sure. I think the visit to the shop is one good way for 24 you to understand that we basically are doing an awful 25 lot. We will do more. We look forward to having somebody PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 206 1 come in and help us. And if you find something that you 2 think we could do better to reduce air emissions, we're 3 all for that. We want to work safely and we want to have 4 everybody help us. 5 That would also be consistent with the new rule 6 of 1469 that they basically developed down in the Los 7 Angeles area. 8 I think one of the other things I'd like to 9 basically say on the tail end is the Barrio Logan. A lot 10 of these rules and regulations are coming out of the air 11 emissions from a rogue facility that was shut down, the 12 way it should have been. A lot of the air emissions are 13 during their cleanup process when all kinds of things are 14 going on. It would be like you trying to take an air 15 emission of a house that's functioning or one that you 16 just tore down, an all the -- and everything's flying 17 around everywhere. 18 So I thank you for the time today. And I hope 19 you allow us to stay in business. 20 CHAIRPERSON SAWYER: Thank you very much. 21 Mr. Lucas. 22 --o0o-- 23 MR. LUCAS: Chairman Sawyer and members of the 24 Board. My name's Ray Lucas. I'm the President of Valley 25 Chrome Plating, Inc., in Clovis, California. We're a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 207 1 truck bumper manufacturer with over 100 employees. 2 My company has also gone beyond compliance by 3 going to zero discharge for waste water discharge. And 4 right now we're working on a program to recover storm 5 water and use it in the process; and, in fact, used over 6 40,000 gallons of rainwater last year back into our 7 processes. 8 I'm also the President of the National 9 Association of Metal Finishers right now. And as part of 10 that association, I can tell you that we stress 11 environmental compliance. 12 And while I will admit to being a chrome plater, 13 I'd like to tell you that one of the things I've never 14 done is stolen anything from a homeless person. 15 (Laughter.) 16 MR. LUCAS: We have an equivalency proposal for 17 you today. Our industry proposes that CARB do one of the 18 following to achieve the goals that we want: 19 Number 1 is to set .0015 milligrams per amp-hour 20 as a threshold and make it technology neutral by 21 eliminating add-on pollution control prescriptions 22 mandating HEPA filters; or include a resolution and 23 adoption of this proposed and amended ATCM, clarifying 24 that local air districts will determine equivalency and 25 directing CARB to review and oversee demonstrations in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 208 1 source tests of technology alternatives within the first 2 12 months of the effective date. 3 The next side. 4 --o0o-- 5 MR. LUCAS: I'd just like to point out a few 6 benefits of technology neutral. Improved methods of 7 control can be instituted and potentially improve upon the 8 add-on control regime. And you can compare Cal 9 Electroplating, which was ten times lower during his 10 testing. And also the cost to comply would be drastically 11 reduced. And it would lower the cost to reduce the 12 economic impact particularly to small businesses. 13 The elimination of the add-on prescription 14 removes the concurrence component from proposed ATCM where 15 the federal component is not triggered. So we wouldn't 16 have to actually wait four years before we could get a 17 ruling on it. 18 That's basically all I have today. Thank you. 19 CHAIRPERSON SAWYER: Thank you very much. 20 Ms. Berg. 21 BOARD MEMBER BERG: I just want to clarify 22 that -- my understanding on the equivalency is that the 23 local air districts would have the ability to determine 24 equivalency and send that information up to CARB, which 25 then would apply to the EPA for an equivalency approval? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 209 1 TECHNICAL EVALUATION SECTION MANAGER TAKEMOTO: 2 Actually, we're not really in the loop on that. 3 It is something that the districts themselves work to 4 submit the package to EPA. We are to be notified. 5 BOARD MEMBER BERG: But we are not in any 6 approval loop? 7 EXECUTIVE OFFICER WITHERSPOON: No. It's our 8 intent that the districts -- and the way the law works -- 9 the districts make the equivalency determination. And to 10 assist everybody in doing that in a consistent fashion 11 we've added Appendix 9 to the proposal and are working 12 with CAPCOA to clarify any place else where source testing 13 requirements and things of that nature need to be 14 addressed. 15 And with respect to, you know, making this call 16 within 12 months, certainly we'll have all of our 17 methodologies sorted out well before then. But the 18 compliance deadlines aren't until three or four years 19 after the rule takes effect. And so I don't think the 20 witness meant to foreclose opportunities for business to 21 make these equivalency demonstrations right ahead of the 22 compliance deadlines. 23 BOARD MEMBER BERG: I think for the large 24 facility though that the effective date is two years. 25 EXECUTIVE OFFICER WITHERSPOON: That's correct. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 210 1 But for a medium it's as long as four. 2 BOARD MEMBER BERG: Yes. And within the two-year 3 period of time -- I believe probably Cal Electrode might 4 be a large facility, is that correct? -- and so would we 5 have things in place? 6 EXECUTIVE OFFICER WITHERSPOON: Absolutely. We 7 will. And then we've already been talking to U.S. EPA. 8 They've made this commitment to drastically reduce their 9 review time. And we're going to try and make sure they 10 understand exactly what's going on and are not troubled by 11 it. So that it can be almost ministerial on their end. 12 But that's our objective. 13 BOARD MEMBER BERG: Thank you. 14 CHAIRPERSON SAWYER: Mr. Pomeroy. And then we'll 15 have Paula Forbis, Francisca Jimenez, and Blanca Romero. 16 --o0o-- 17 MR. POMEROY: Thank you, Dr. Sawyer and the Board 18 members. 19 On behalf of the two metal finishing associations 20 representing most of the metal finishers in the state, I 21 want to talk a little bit about ancient history. 22 Thirty years or so ago chrome plating emissions 23 were uncontrolled. Enforcement of environmental laws was 24 generally lax and California was a dirty state. 25 Well, so where are metal finishers today? Chrome PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 211 1 platers have controlled their emissions by more than 99.9 2 plus percent. Environmental enforcement is strong. 3 California prosecutors are now enforcing environmental 4 laws. There's AB 2588, the Toxic Hot Spots, there to also 5 add to enforcement. 6 We've got California and CARB specifically set to 7 adopt shortly the toughest hexavalent chromium emissions 8 standards for this industry in the entire world. 9 So the metal finishers that are here today can't 10 do anything about ancient history. What you are likely to 11 hear soon from members of the public is concern about acts 12 that occurred a long time ago, or something about rogue 13 shops. While the metal finishers can't change history, 14 they can and do want noncomplying facilities to be shut 15 down. The metal finishers of today are not Master 16 Plating, they are not causing the Barrio Logan scenario. 17 These associations want facts to drive your 18 decision. Specifically the metal finishers want the 19 flexibility to achieve the .0015 emission standard through 20 in-tank controls and not to be mandated HEPA filters for 21 use. 22 How do we get there and prove these facts? The 23 metal finishers need a joint demonstration project for 24 emission control technology where CARB participates in the 25 process. Metal finishers need CARB to see the foam PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 212 1 blankets and how they're used so they can be certified. 2 We want to break down the walls that divide us by 3 providing proof and facts and not rely on modeling or 4 assumptions. The metal finishers want to remain 5 protective and proactive. 6 Okay. As the experts in our field, the metal 7 finishers know in-tank technologies work. Cal 8 Electroplating is a perfect example. The association 9 members are proud of their operations and expertise. We 10 know the shops are clean. And we appreciate the 11 opportunity to show Dr. Sawyer chrome plating in action. 12 If metal finishers are to be judged, it should be 13 on their current actions individually, where risk is 14 controlled not to one in a billion exposure standard if 15 that costs jobs and hurts hard working families, but to a 16 one in a million standard which we believe is an 17 acceptable and rational threshold. 18 Metal finishers are clean and responsible 19 businesses. Throughout this process they have asked for 20 flexibility and fairness based on facts. These 21 associations again ask for these points so they can meet 22 this tough and stringent standard. 23 Thank you. 24 CHAIRPERSON SAWYER: Thank you very much. 25 Ms. Forbis. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 213 1 MS. FORBIS: Good afternoon, Chairman Sawyer and 2 members of the Board. My name's Paula Forbis and I'm here 3 today representing Environmental Health Coalition. I also 4 have with me Francisca Jimenez and Blanca Romero, 5 community organizers and residents from the communities of 6 Barrio Logan and Logan Heights. 7 EHC is still deeply concerned about the rule as 8 proposed to you today, especially the lack of a move-in 9 provision that would protect future residents to the same 10 extent we're talking about protecting existing residents, 11 and especially the provisions that apply to the small 12 sources in this rule. 13 I want to call to your attention that these 14 sources will be allowed to meet the same emission limit as 15 they are under the existing ATCM. That is a .01 emission 16 limit. And that is a limit that is six -- over six times 17 less stringent than the emission limits proposed for the 18 other sources. 19 Yes, the rule is going to limit them to the use 20 of certified fume suppressants. But also recall that 21 Master Plating, as has been discussed many times here, was 22 using one of these same fume suppressants and was found to 23 be in compliance with the rules essentially and causing 24 well over a 25 in a million risk at a distance greater 25 than 330 feet. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 214 1 Now, in the staff report it indicates that these 2 small facilities will be brought down to a level of one 3 cancer per million. But keep in mind that that is at a 4 distance of 60 feet from the facility. They cannot tell 5 you what the risk is going to be closer in to the facility 6 property line. 7 There's also a lot of uncertainty remaining about 8 the contribution of fugitive dust from these facilities 9 and any effectiveness of the proposed housekeeping 10 measures. 11 I also want to bring to your attention that the 12 smallest sources are those that are most likely to be 13 located next to people's homes and schools. In the case 14 of Barrio Logan and Logan Heights, these are sources that 15 are located on lots that previously had people's homes on 16 them. 17 They're also the least likely to have 18 sophisticated compliance programs as many of the larger 19 industries do that are here represented today. 20 And, again, this proposal contains an admission 21 limit that is over six times less stringent than those for 22 the larger sources. You know, these small sources can 23 have extreme near-source impacts. And I know that that 24 was an issue that we talked a lot about at the previous 25 hearing in September. Sources like California Plating PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 215 1 that Francisca Jimenez is going to address is -- that 2 source is literally operating inches from the nearest 3 home. And if that's not extreme near source, I don't 4 really know what is. 5 We continue to believe that all sources within a 6 thousand feet of a sensitive receptor should be required 7 to install HEPA filtration or equivalent add-on controls. 8 It's consistent with your land-use guidance. It's 9 consistent for the requirements for new sources. And as 10 was talked about over and over and over again at the 11 hearing in September, HEPA is the best available control 12 technology, period. 13 However, at a minimum, all sources must be 14 required to meet the same emission limit. Given the 15 millions of dollars that ARB has spent monitoring and 16 testing and in rule development and given all that we've 17 learned from Master Plating, given the extreme toxicity of 18 hexavalent chrome, given risks from extreme near sources 19 and given the uncertainties around dust emissions and all 20 of the environmental justice issues surrounding these 21 facilities, why would you adopt a rule with an emission 22 limit for small sources that is no different than what you 23 have on the books today? 24 Now, industry claims they can meet the emission 25 limits with fume suppressants. Today again I reiterate PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 216 1 that we're asking for HEPA controls for sources within a 2 thousand feet. But if you cannot do that, at least 3 require all sources to meet the emission limit by 4 installing controls or demonstrating equivalent emission 5 and risk reductions as the larger sources would be 6 required. In other words meet the .0015 limit by 7 installing controls or demonstrating equivalent emission 8 risk reduction -- emission reduction and risk reduction. 9 The residents that live next to these sources demand and 10 deserve nothing less. 11 Thank you. 12 CHAIRPERSON SAWYER: Thank you very much. 13 Ms. Berg. 14 BOARD MEMBER BERG: Excuse me. 15 Ms. Forbis, I would just like to understand your 16 position. That in the case of Cal Electroplating you 17 would like us to have them change over to HEPA filters 18 even though they have shown that their system has a better 19 control? 20 MS. FORBIS: You know, I don't know anything 21 about California Electroplating. The source that I 22 mentioned was California Plating, which is a different 23 source in the Logan Heights area of San Diego. 24 But what I am saying is that small sources should 25 be required to meet the same emission limit. If they -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 217 1 you know, we would suggest that they do that with add-on 2 controls; or, again, going through the equivalency 3 provision that's there in California law which allows them 4 to show that they can meet that emission limit and also 5 show equivalent risk reduction through an alternative 6 method. That's in California law. We're not debating 7 that. But what I'm saying is that those small sources -- 8 BOARD MEMBER BERG: My second question -- I 9 understand on the small source issue. I was asking you 10 about your comment on HEPA filters, period. And you've 11 answered my question on that. 12 On your move-in provision, are you talking about 13 people or sensitive receptors that choose to move in next 14 to a chrome plating facility or are you talking about a 15 facility locating next to -- 16 MS. FORBIS: Well, certainly a facility locating 17 next to a home is going to be subject to new source review 18 and the provisions surrounding new sources. I'm talking 19 about -- you know, and I think it's a little bit of a 20 misnomer to say people choosing to live next to a chrome 21 plater. I think, you know, in all regality what we're 22 going to see in the event that that happens -- and we 23 don't believe that it should happen. We fought housing 24 projects going in next to industry, right side by side 25 with industry. But in the event that it does happen, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 218 1 often it's low income housing that goes in there. So when 2 you say folks have a choice whether to move in next to a 3 facility or not, it's really kind of exaggerating the 4 choice that they may or may not have. 5 BOARD MEMBER BERG: I'm not sure -- okay. I 6 understand your point. 7 Thank you very much. 8 MS. FORBIS: Thank you. 9 CHAIRPERSON SAWYER: Ms. Jimenez. 10 MS. FORBIS: I'm sorry. I'm going to be 11 translating for Francisca. 12 MS. JIMENEZ: Good afternoon, members of the ARB. 13 My name is Francisca Jimenez and I'm a community organizer 14 for the Environmental Health Coalition. I also am one of 15 the people that lives within a thousand feet of California 16 Plating, a small chrome plater located at 28th Street and 17 Imperial in San Diego. 18 Based on the rules that you're considering today, 19 they don't need to put controls on their operation even 20 though they're located only a few feet from a house. One 21 of the houses is actually less than one foot away. 22 BOARD MEMBER BERG: I'm sorry. Less than what? 23 MS. FORBIS: One foot away. 24 BOARD MEMBER BERG: Thank you. 25 MS. JIMENEZ: In this house lives a person who is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 219 1 on dialysis treatment. 2 There's a park with a basketball court behind the 3 chrome plater. And because it's the only court, it's 4 where the young people congregate. 5 For years I've passed in front of this chrome 6 plater, and the odors that come from it are very strong. 7 My bus stop is one or two yards from their door. 8 We've also had complaints from the people that 9 live close by. And they've been sued over their 10 environmental violations. So for that reason, I urge you 11 today to adopt a regulation that will protect me and my 12 community. 13 California Plating, like other platers of its 14 size, should install control -- needs to install controls 15 for its emissions. The use of fume suppressants won't 16 protect people's health. 17 This chrome plater has demonstrated at numerous 18 times in the last few years that they don't consider 19 environmental regulations to be important. 20 The staff from ARB has said that the risk from 21 this chrome plater would be less than one cancer. But 22 this assumes perfect compliance with the rules. 23 And the risk is calculated at a distance of 60 24 feet from a facility. And within 60 feet from them there 25 are a variety of houses, two or three restaurants and this PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 220 1 basketball court. And so in reality no one can really 2 tell us what the risk will be for these residents. 3 I understand that your major reason for not 4 requiring controls of these facilities is because of the 5 cost to those industries. But I'm here today to urge you 6 to think about it well. Think in terms of the health -- 7 the cost of the health of the residents that live next 8 door. And when you give favorable treatment to these 9 companies, the residents pay with the highest price, which 10 is their health. And this is the greatest treasure that 11 we have as human beings. We are paying with our health 12 and our livelihood. 13 We ask you nothing more and nothing less than the 14 same protection that everyone deserves. You need to 15 require controls or at least the same emission reductions 16 from all the chrome platers including the most small. You 17 have a great responsibility to make the best decisions. 18 And I think that this is the best decision for you to 19 make. 20 Thank you very much for your time. 21 CHAIRPERSON SAWYER: Thank you very much. 22 BOARD MEMBER RIORDAN: I have just one quick 23 question, Mr. Chairman. 24 On the location of this facility that you 25 discussed, I wasn't -- the streets didn't mean anything to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 221 1 me. Is it in Barrio Logan or is it outside of what we 2 would -- 3 MS. FORBIS: Technically it's -- some people call 4 it Barrio Logan and some people call it Logan heights. 5 But it's on the border of Barrio Logan. It's maybe a mile 6 away from where Master Plating used to be. 7 BOARD MEMBER BERG: And, I'm sorry. What was the 8 name of the facility again? 9 MS. FORBIS: California Plating. 10 CHAIRPERSON SAWYER: Ms. D'Adamo. 11 BOARD MEMBER D'ADAMO: Could staff please respond 12 to the contentions made by the witness regarding risk, the 13 60 foot and the risk factors. 14 TECHNICAL EVALUATION SECTION MANAGER TAKEMOTO: 15 Well, it is true that the best air quality models 16 that we can use for a source such as this facility -- the 17 model is not able to predict a concentration nearer than 18 60 feet, such that we can only tell you what the risk is 19 at 60 feet and beyond. What we can tell you with a 20 facility such as this is that probably the risk is higher 21 just because how the emissions are disbursed from the 22 facility. So probably -- I think it would be reasonable 23 to say that at 50 feet, yes, the risk would be somewhat 24 higher than at 60 feet. But we just do not have the tools 25 to allow us to do better. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 222 1 DEPUTY EXECUTIVE OFFICER SCHEIBLE: But I don't 2 think it would be somewhat higher unless for some reason 3 the plume from the tank went right into a adjoining 4 residence. So if it's at one in a million, it's not going 5 to be at 25 in a million once you move a little bit 6 closer. It's still going to be a pretty low level from 7 the tank emissions itself. 8 BOARD MEMBER RIORDAN: Did we not do some 9 measurements on some of the facilities down there at 10 Barrio Logan? Was this one of the test sites? Didn't we 11 go in and do some testing at those sites? 12 I'm looking at anybody. 13 TECHNICAL EVALUATION SECTION MANAGER TAKEMOTO: 14 No, we did not do emissions testing at that 15 facility. 16 BOARD MEMBER RIORDAN: At the other one then, you 17 know, the one that closed? 18 STATIONARY SOURCE DIVISION CHIEF FLETCHER: 19 This is Bob. 20 At Master Plating we actually did not do emission 21 testing off the tank. But we did do monitoring around -- 22 we did ambient air monitoring around the facility. 23 BOARD MEMBER RIORDAN: That's what I thought. 24 STATIONARY SOURCE DIVISION CHIEF FLETCHER: 25 Right. We've done that at several chrome platers. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 223 1 BOARD MEMBER RIORDAN: And that didn't tell us 2 about the footage? 3 STATIONARY SOURCE DIVISION CHIEF FLETCHER: No, 4 it was -- because when you're doing ambient monitoring, 5 you're really looking at trying to capture, you know, kind 6 of the emissions that are coming depending upon what the 7 meteorology is at the time. So if it's -- if the wind is 8 blowing directly into the monitors, you get a higher 9 reading than if it's obviously blowing the other 10 direction. 11 We did try to circle those platers to try to 12 capture. What it told us, and one of the major reasons 13 for the housekeeping is, is that the emissions that we 14 measured were significantly higher than what we would have 15 thought we would have gotten from just the plating 16 operation itself. And that triggered a whole series of 17 events where we went in and we took wipe samples from the 18 inside of the facility to see what the hexavalent chromium 19 concentrations were of the dust within the facility. And 20 then we looked at the facility configuration. It was 21 clear that there was dust -- residual dust that was not 22 associated with the plating operation that was getting out 23 and basically affecting the nearby community. And some of 24 the comments you've heard about the fugitive dust 25 emissions and the need for house cleaning are coming PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 224 1 directly from Master Plating. 2 But we couldn't -- we did try to correlate back 3 the modeling to see, you know, what emission rate it would 4 take. And it just didn't work out very well, which is not 5 particularly unusual in an ambient monitoring study of 6 this time type because you're doing, you know, fairly 7 limited monitoring at the time. 8 BOARD MEMBER RIORDAN: Okay. Thank you very 9 much. 10 CHAIRPERSON SAWYER: Ms. Romero. 11 MS. ROMERO: Hello. My name is Blanca Romero and 12 I'm a community member of Environmental Health Coalition. 13 I also lived with my family for approximately five years 14 in a residence where it was less than one block away from 15 Master Plating, where Master Plating used to be. 16 Working with Environmental Health Coalition I've 17 seen the harmful impacts that industries have on 18 communities. Specifically I've seen -- specifically I've 19 seen the impacts that Master Plating had on the health of 20 the families living next door. 21 We were hoping that the lesson learned with 22 Master Plating would be a lesson that could be for the 23 entire state, in learning that just chrome platings in 24 communities don't mix. They just don't. 25 But here I'm shocked that we're not planning to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 225 1 require control systems for facilities the size of Master 2 Plating as long as they are just over one block away from 3 homes. Myself, living a block away -- less than a block 4 away from Master Plating, I don't think a block is much 5 protection for residents, especially given the poor track 6 records of many of these smaller facilities. 7 This is an issue of environmental justice. What 8 percentage of the facilities that will not be required to 9 install controls are located in communities of color? 10 Just from reviewing the list, it looks like it's a very 11 high number. And for this reason, that communities around 12 the state are concerned about the proposal. 13 I have with me a poster signed by individuals and 14 environmental justice organizations from around the state. 15 And they demand that you protect all residents within 16 1,000 feet of a chrome plater by requiring installations 17 of controls and that you protect also future residents. 18 And here's the poster. 19 So the question -- the question comes down to our 20 health, how much is our health worth, to you and to 21 everyone? We learned a lot with Master Plating. Even 22 though -- we learned that even a very small facility can 23 have terrible impacts on its neighbors. And we really 24 don't know much about the dust that blows out of these 25 facilities as well. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 226 1 And now here we are several years after Master 2 Plating has been shut down, we're arguing about whether or 3 not to require controls for those types of sources, that 4 because they're so small are often located -- they're the 5 ones who are located close to homes and schools. 6 We ask that you put an end to this debate today 7 and to value our health above any supposed costs to 8 businesses. We demand that you require controls or at 9 least equivalent emissions standards for every facility 10 within 1,000 feet of homes or schools regardless of their 11 size. 12 Thank you. 13 CHAIRPERSON SAWYER: Thank you very much. 14 Ms. Berg. 15 BOARD MEMBER BERG: Do you know what the 16 amp-hours for Master Plating was? 17 TECHNICAL EVALUATION SECTION MANAGER TAKEMOTO: 18 It was in the neighborhood of 50,000 amp-hours 19 per year. 20 BOARD MEMBER BERG: So under the current 21 regulation, then they would have add-on controls -- 22 TECHNICAL EVALUATION SECTION MANAGER TAKEMOTO: 23 Yes, they would. 24 BOARD MEMBER BERG: -- because they're within the 25 330 feet. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 227 1 TECHNICAL EVALUATION SECTION MANAGER TAKEMOTO: 2 Yes, yes. 3 BOARD MEMBER BERG: And they're over 20 -- 4 MS. FORBIS: I'm sorry. What she had said was 5 they wouldn't require controls if they were over 330 feet 6 from a house. But, yes, if they -- if that size of a 7 facility was located where Master Plating was located, 8 yes, it would require controls. 9 BOARD MEMBER BERG: Okay. Thank you. 10 EXECUTIVE OFFICER WITHERSPOON: The other big 11 takeaway that we got from the Barrio Logan study is that 12 it doesn't matter what controls you have on if the 13 facility is not properly maintained. So one of the big 14 changes in the regulation is expanded housekeeping 15 requirements and then a commitment for expanded 16 enforcement, both by us and the air districts. 17 So you could go up to the most expensive control 18 possible, but if you didn't have those provisions, you 19 wouldn't be guarantying the health outcome that these 20 folks are seeking. 21 BOARD MEMBER BERG: And I think that's a really 22 good point, that we'll have to step up enforcement and the 23 local districts will have to agree to do that. 24 But I think it's an important point that the 25 Barrio Logan situation under this current rule would PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 228 1 require HEPA filters. And so that is an issue that was 2 brought up by the speaker that is covered within the rule. 3 EXECUTIVE OFFICER WITHERSPOON: The other 4 observation I would make is that if you did raise the 5 control requirement for sources under 20,000 amp-hours, 6 it's tantamount to closing them down. And so you would be 7 treating them as if they all were rogues. Master Plating 8 had other problems besides its poor housekeeping. They'd 9 been in violation for years. And, you know, it was better 10 all the way around to close that facility down. But 11 that's not our conclusion about every small plater in the 12 state. 13 CHAIRPERSON SAWYER: Ms. D'Adamo. 14 BOARD MEMBER D'ADAMO: I have a question 15 regarding the sanction. What sanctions do we have in the 16 event that a facility is poorly maintained? 17 TECHNICAL EVALUATION SECTION MANAGER TAKEMOTO: 18 Under the rule that we're putting in place now, 19 because we do have the housekeeping measures, if during an 20 annual inspection or a more frequent inspection from the 21 air district, they would be able to find the -- if the 22 housekeeping measures were not followed, they didn't have 23 the proper record keeping or you simply look around and 24 you see dust, you know that -- you probably would make the 25 conclusion that they're not doing their housekeeping. And PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 229 1 that would be a violation, and there would be measures 2 necessary to correct that, and there could be fines. 3 SENIOR STAFF COUNSEL JENNE: Under the Health & 4 Safety Code there are several and criminal penalties that 5 can be imposed for violations of up to $10,000 per 6 violation per day. 7 BOARD MEMBER D'ADAMO: How about closure, closing 8 the facility? 9 ACTING GENERAL COUNSEL JENNINGS: There is a 10 provision for injunctive relief under appropriate 11 circumstances. And the injunction could be a prohibition 12 of operation. 13 BOARD MEMBER D'ADAMO: Does the air district 14 have -- how often can they go in? I heard annual or more 15 frequently. 16 TECHNICAL EVALUATION SECTION MANAGER TAKEMOTO: 17 It really is at the district's discretion. I 18 think most air districts will at least annually inspect 19 all of the businesses within their jurisdiction. And 20 sometimes it may be more frequent than that. 21 EXECUTIVE OFFICER WITHERSPOON: In the South 22 Coast they budgeted over the last year for semiannual 23 inspections. And we just met with the district Tuesday, 24 and they are stepping it up to quarterly. And they have 25 most of the chrome facilities in the state. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 230 1 CHAIRPERSON SAWYER: Next we have Jane Williams, 2 Sarah Sharpe, and Jill Whynot. 3 Ms. Williams. 4 MS. WILLIAMS: Chairman Sawyer, members of the 5 Board. Good afternoon. I know it's getting on to being a 6 long day. 7 I wanted to talk to you a little bit about 8 ancient history. She took you into the history in 9 college. 10 And ancient history on this particular topic goes 11 back as far as 1999 when the California Air Resource Board 12 and the Department of Toxic Substances Control actually 13 did a series of inspections of 37 chrome plating 14 facilities. And they found that 90 percent of those 15 facilities violated their air regulations. They found 16 that 93 percent of those facilities violated their storm 17 water permits and that 90 percent of those facilities 18 violated their RCRA regulations. That was in 1999. 19 So the emphasis on the stack controls is 20 important. But as Ms. Witherspoon said, the emphasis 21 really needs to be on both. It needs to be on 22 housekeeping and enforcement as well as stack controls. 23 A further lesson in ancient history is actually 24 last Friday in Orange County. A facility that I would not 25 consider a rogue facility because in 1999 when CARB PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 231 1 inspected it with DTSC, it actually performed very well on 2 that inspection. It was one of the few facilities 3 actually that was in compliance with its air permits. 4 But seven children contracted leukemia at a 5 school across the street from that facility. Nineteen 6 mothers contracted leukemia who lived within a few blocks 7 of that facility. 8 And so a whistle-blower, thanks be to God for 9 him, called the Department of Toxic Substances Control, 10 and a lengthy investigation ensued which was actually 11 settled last Friday. And 24 criminal counts went down to 12 three criminal counts and a fine of $350,000. And I 13 appended just the short notice on this to the letter that 14 I submitted to you. 15 So it's interesting for me to sit and to listen 16 to the good actors in industry come and speak to you. And 17 from my perspective representing communities that live 18 around these facilities, I sure wish they would be talking 19 to their other colleagues. I mean I wish there was a way 20 in which we could get the industry association more 21 resources, that we could get the districts more 22 enforcement resources, that we could get CARB more 23 enforcement resources, and that truly these bad actors 24 would go away. 25 But here's the very sad thing about Markland PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 232 1 Manufacturing. It was given a permit to expand by the 2 South Coast Air Quality Management District in the middle 3 of this criminal investigation. And that really 4 essentially is the problem. Of this list that we finally 5 got -- after four requests I got this list. This is the 6 list of facilities that are essentially going to be not as 7 stringently regulated. And when I look at this list and 8 where these facilities are, I would say that 80 percent of 9 them are in my members' communities. A number of these 10 facilities we have had to have EPA overfile on. One of 11 these facilities was storing hazarding waste in the 12 backward of a day-care center. Two of these facilities 13 are in El Monte where we have members that are very active 14 in the local district on a large smelting facility. And 15 they're very, very concerned about these chrome platers. 16 Another interesting thing is that the facility in 17 Vernon is within a thousand feet of another facility and 18 within 1500 feet of another facility, both chrome platers. 19 And so I'm -- I'm a little bit sympathetic to some of the 20 industry guys that are in here doing the right thing, that 21 they're literally going to be competing with a facility 22 that's down the street from them -- 23 CHAIRPERSON SAWYER: I must ask you to conclude 24 please. 25 MS WILLIAMS: -- that's not going to have to meet PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 233 1 the same stringent regulations. And I think that there 2 are issues of equity and fairness. 3 So thank you for your time today. And I look 4 forward to working with the agency as we move forward on 5 this. Thank you. 6 CHAIRPERSON SAWYER: Thank you very much. 7 Ms. Whynot. 8 Oh, excuse me. Ms. Sharpe. 9 MS. SHARPE: Good afternoon, Mr. Chairman and 10 Board members. My name is Sara Sharpe. I'm with the 11 Coalition for Clean Air. I'm the San Joaquin Valley 12 advocate. I wanted to welcome you to the valley, and I'm 13 glad to see you're here. It's great to have you here. It 14 made it a lot more easy for me to come to a meeting of the 15 ARB. This is my first meeting. 16 I am here speaking on behalf of the Coalition for 17 Clean Air and the American Lung Association of California. 18 And we are both proud members of CVAQC, which is the 19 Central Valley Air Quality Coalition. 20 We appreciate the staff proposal to strengthen 21 chrome plating regulation and strongly support the use of 22 best available control technologies to reduce the health 23 threat from this extremely toxic material. 24 However, we remain concerned that the regulation 25 does not go far enough to clean up chrome plating PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 234 1 equipment in neighborhoods in close proximity to chrome 2 plating facilities. And I should say houses or homes. 3 We strongly support the proposals of the 4 Environmental Health Coalition and other community groups 5 to tease groups to: 6 1. Require HEPA filtration systems or equivalent 7 add-on pollution control devices for all chrome platers 8 located within 1,000 feet of a sensitive receptor; and 9 2. Add a move-in provision to require BACT, for 10 example, HEPA filters, on facilities if sensitive 11 receptors move to a location within 1,000 feet of a chrome 12 plater. 13 We do not have faith that all local planning 14 agencies will uniformly be vigilant about where they're 15 allowing sensitive receptors to be located. We have seen 16 many examples of such negligence here in the San Joaquin. 17 And thank you. That concludes my comments. 18 CHAIRPERSON SAWYER: Thank you very much. 19 Now, Ms. Whynot. 20 MS. WHYNOT: Thank you. Good afternoon, Chairman 21 Sawyer and members of the Board. 22 (Thereupon an overhead presentation was 23 Presented as follows.) 24 MS. WHYNOT: Before I get into my presentation, I 25 wanted to just offer some additional facts about the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 235 1 Markland case, which a previous speaker mentioned. We did 2 issue them a permit to construct. They were increasing 3 particulates, not chrome, but other particulates, less 4 than a pound per day, and they met all of our 5 requirements. 6 There also was a ruling by the judge that clearly 7 stated that there could be no link found between the 8 leukemia cases in the children and this particular 9 facility. The leukemia for children is primarily linked 10 to Benzene and pesticide exposures. And this facility has 11 extremely small Benzene from some combustion. 12 So I just wanted to add that to the facts for the 13 case. I'm not defending the facility. I'm not minimizing 14 the cancer cases there. But I just thought that was 15 important to bring up. 16 Basically we think that there has been 17 significant progress made since the September hearing. 18 And I'm very pleased that the staff from the South Coast 19 is actually in support of the current proposal that you 20 have today. Your staff has done an excellent job taking 21 your direction and trying to balance all the competing 22 interests. And what you have before you today is, by far, 23 the most stringent regulation that chrome platers will be 24 facing anywhere in the world, and it offers significant 25 public health protection. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 236 1 We do have two recommendations though in order to 2 step this up. First, we've offered a paragraph to be 3 added to the resolution. My understanding is that CARB 4 staff thinks this is acceptable. And it basically 5 clarifies that the Health & Safety Code gives the 6 responsibility for evaluating and approving alternatives 7 for equivalency with the local air districts. So we just 8 add that that be clarified and added to the resolution. 9 --o0o-- 10 MS. WHYNOT: Also, we support very strongly that 11 in order to get the flexibility for industry and to give 12 enough time for the process for them to do a source test 13 and get that fully approved, we need to minimize 14 multi-agency review. Because otherwise it's a cumbersome 15 process that, as you heard, took four years for three 16 facilities. And once it was actually submitted to EPA, 17 they acted in 45 days. But it took many months of working 18 with them before that time in order to go through all the 19 steps to make sure that when it was submitted, they could 20 act on it in a timely manner. 21 At that time the NESHAP had a five-year 22 compliance schedule. We now have facilities looking at 23 two and three and four years. So it's very important if 24 you want to give industry the flexibility, we want to work 25 with CARB and EPA to make sure we narrow down where EPA is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 237 1 involved. 2 I also wanted to mention that we have hired new 3 inspectors -- or additional inspectors, and we are making 4 full inspections every quarter now starting in January at 5 facilities. In addition to quarterly inspections, we will 6 have inspectors drop by very frequently just for a quick 7 check to make sure that we're out in the field and that 8 our presence is noted, people will maintain their systems 9 properly. 10 So, in conclusion, we support the revised staff 11 proposal that you have today. We request that you adopt 12 an additional paragraph to clarify responsibility in the 13 resolution. And we're offering our help to work with EPA 14 and ARB to minimize multi-agency review to expedite the 15 equivalency process. 16 Thank you. 17 CHAIRPERSON SAWYER: Thank you very much. 18 Would staff comment upon the proposed change. 19 EXECUTIVE OFFICER WITHERSPOON: We worked out the 20 language with the South Coast District, and it's fine with 21 us. 22 CHAIRPERSON SAWYER: Dr. Gong. 23 BOARD MEMBER GONG: It said on one of the slides 24 about U.S. EPA concurrence, that there was a commitment 25 from U.S. EPA to review within 45 days per the MOA? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 238 1 TECHNICAL EVALUATION SECTION MANAGER TAKEMOTO: 2 Yes. 3 BOARD MEMBER GONG: That's unique, isn't it, 4 then? 5 (Laughter.) 6 TECHNICAL EVALUATION SECTION MANAGER TAKEMOTO: 7 Some would say that it is unique. But in the 8 discussions we have had with staff on this issue, they 9 have been -- they've been very positive and they are 10 committing to the 45-day review. And I think what we need 11 to do is just -- we need to do some work ahead with EPA to 12 make sure we're submitting the information that they need 13 for that review the first time instead of having this 14 lengthy process. 15 CHAIRPERSON SAWYER: Ms. D'Adamo. 16 BOARD MEMBER D'ADAMO: Yes, I'd like to ask Ms. 17 Whynot some questions on enforcement. 18 Earlier Mr. Jennings indicated that injunctive 19 relief could be an appropriate option under certain 20 circumstances. What would those circumstances be for the 21 district? 22 MS. WHYNOT: Do you mind if I ask Carol Coy, 23 who's still here, because she's in charge of that entire 24 division, to answer that question? I think she would 25 provide better information than I could. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 239 1 Thank you. 2 MS. COY: For the record, Carol Coy, Deputy 3 Executive Officer, South Coast. 4 Actually it's beyond just injunctive relief. In 5 addition where we have a facility that is in ongoing 6 noncompliance we also have the ability to go in front of 7 our hearing board through the abatement order process and 8 actually have a ceasing of operations for that type of 9 noncompliance as well. 10 However, we can go into court on cease and desist 11 and injunctive relief if we have ongoing noncompliance, 12 where an inspector has seen a continuing noncompliance 13 problem, we've issued a series of notices of violation, or 14 if we see some substantial and imminent endangerment of 15 public health. And so what we generally find, especially 16 through this very, very rigorous look now at metal plating 17 operations, is that the vast amount of noncompliance that 18 we identify is with record keeping and reporting types of 19 portions of the regulations. Where we have emissions 20 violations with notice of violation where we do not come 21 in -- where we don't see the facility come into 22 compliance, within a very quick amount of time we would 23 proceed to look at either hearing board abatement order 24 relief or go to the courts. So we wouldn't hesitate to do 25 that. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 240 1 We actually have in history very, very few times 2 that we proceed to that type of hammer because facilities 3 are concerned about their liabilities and the ongoing 4 legal liabilities with very, very large penalties at 5 our -- at hand for folks that have willful and negligent 6 emission violations. 7 BOARD MEMBER D'ADAMO: And would it be a 8 factor -- I assume that it would -- that a facility is 9 within a certain number of feet -- or nearby a sensitive 10 receptor? Would that be an additional factor? 11 MS. COY: Absolutely, because in that case you 12 have not only a violation of the ATCM, and our Rule 1469 13 would likely be involved, but also you would have Health & 14 Safety Code 41700, public nuisance violation. And so 15 where we have a public nuisance under district rules or 16 State Health & Safety Code, we have additional hammers. 17 The types of things that we've seen in the past 18 with a facility with emission violations if we've got an 19 ongoing problem, it doesn't continue because we're in the 20 hearing board right away and an abatement order working to 21 solve the problem. 22 BOARD MEMBER D'ADAMO: Thank you. 23 CHAIRPERSON SAWYER: Ms. Berg. 24 BOARD MEMBER BERG: Could I just ask you a 25 follow-up question? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 241 1 MS. COY: Certainly. 2 BOARD MEMBER BERG: Thank you. 3 Since your rule has gone into effect, have you 4 seen increased compliance with the metal finishers and an 5 increase in housekeeping? And are you comfortable that 6 with the inspections that you are doing that we'll have a 7 better handle on this problem? 8 MS. COY: Yes, I believe that the recent increase 9 in inspections in the last two-year basis we've seen much 10 higher compliance rate amongst the metal plating industry 11 across the board. And we've seen that the types of 12 violations that we see have the -- let's say, the severity 13 of a violation has basically been reduced to the point 14 that where we see -- the main problems are where, for 15 example, staff changes at a facility and they do 16 inadequate training of new staff that come on board in the 17 way of record keeping on the actual housekeeping measures 18 that are required to be complied with per the rule. 19 We do, however, have ongoing -- in the field we 20 have ongoing concerns about the fact that rules such as 21 this are very, very -- they require continual source 22 attention. It's very resource intensive. And so if you 23 don't monitor the amperage, if you don't maintain a good 24 blanket across the tank, if you don't maintain it as 25 you're taking in and out the parts themselves, you just PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 242 1 don't maintain the compliance with the rule in general. 2 In addition, we have seen folks that have not had 3 a HEPA filter on. And so when you're able to turn off 4 equipment, we don't believe at South Coast that HEPA is 5 necessarily the answer to everything, for just that 6 reason. And that's why our governing board went ahead and 7 added two full-time-equivalent inspectors, so that we 8 could ramp up our inspections to a full inspection 9 quarterly. And we're not leaving it at that. We're going 10 to do drop-in inspections on an even more frequent basis 11 and target these tanks and see that that clipboard has the 12 amp-hours already on it for the day, that all the record 13 keeping is in place, that the equipment on add-on controls 14 is actually functioning on that day. And so we're going 15 to go in and out on a very -- you know, on a very regular 16 ongoing basis for just that reason, to assure that this 17 kind of very resource intensive attention is being paid by 18 the industry. 19 BOARD MEMBER BERG: Are you comfortable that in 20 the case of Cal Electroplating that we'll be able -- that 21 the system will allow an equivalency and so that a few 22 years down the road that they won't be looking at putting 23 on HEPA filters? 24 MS. COY: I don't believe that that facility -- 25 where is that facility located? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 243 1 EXECUTIVE OFFICER WITHERSPOON: That's a San 2 Diego source. 3 BOARD MEMBER BERG: Oh, I'm sorry. Thank you. 4 Then you could say, yes, you're sure San Diego 5 will do it. 6 (Laughter.) 7 EXECUTIVE OFFICER WITHERSPOON: But the one 8 example we have already of a facility demonstrating 9 equivalence without HEPA is in the South Coast. And so I 10 think if Jill was back up here she would say, yes, that 11 they think -- 12 MS. WHYNOT: I'm shaking yes. 13 MS. COY: No, I can for our facilities. But I'm 14 not familiar with the facility that was in your question. 15 BOARD MEMBER BERG: No. But then I'll just 16 change my question. 17 For the facilities in your area that you feel 18 would want to go for the equivalency, are you comfortable 19 that the process is going to allow for that to be 20 accomplished? 21 MS. COY: Absolutely, without question. We 22 believe firmly that that's the way to go. We believe that 23 they can readily comply through this option and that we 24 can demonstrate excellent compliance with this 25 alternative. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 244 1 BOARD MEMBER BERG: I really thank you for your 2 time and information. 3 MS. COY: You'e very welcome. 4 CHAIRPERSON SAWYER: Dr. Gong. 5 BOARD MEMBER GONG: Similar to that question -- 6 actually it's sort of directed to the staff, but you 7 stimulated me to ask the question. I really commend the 8 South Coast Air Management District for its efforts 9 monitoring and looking at compliance, enforcement, et 10 cetera. 11 And my question is: Is there a similar effort in 12 the other air districts of California, CAPCOA, whatever? 13 I mean I realize the majority are in the South Coast of 14 these platers. But I get the feeling, the impression that 15 they're probably not as into it as much as the South 16 Coast. 17 TECHNICAL EVALUATION SECTION MANAGER TAKEMOTO: I 18 really can't speak for what other districts do. But we 19 certainly -- in conversations we've had with the districts 20 kind of encouraged that these facilities need to be looked 21 after a little bit more carefully. 22 EXECUTIVE OFFICER WITHERSPOON: Dr. Gong, we're 23 also going to invest some of our own enforcement resources 24 and spot inspections. 25 CHAIRPERSON SAWYER: That concludes the public PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 245 1 testimony. 2 Ms. Witherspoon, is there any further comments by 3 the staff? 4 EXECUTIVE OFFICER WITHERSPOON: There's nothing 5 further. 6 CHAIRPERSON SAWYER: I now close the record on 7 this agenda item. However, the record will be reopened 8 when the 15-day notice of public availability is issued. 9 Written or oral comments received after this 10 hearing date but before the 15-day notice is issued will 11 not be accepted as part of the official record on this 12 agenda item. 13 When the record is reopened for a 15-day comment 14 period, the public may submit written comments on the 15 proposed changes, which will be considered and responded 16 to in the final statement of reasons for the regulation. 17 In fulfillment of our policy concerning ex parte 18 communications, are there any communications that Board 19 members need to disclose? And I'll start with Ms. 20 Patrick. 21 BOARD MEMBER PATRICK: None. 22 BOARD MEMBER RIORDAN: I have none. 23 CHAIRPERSON SAWYER: I have two: 24 One dating back to the 25th of September when I 25 spoke with Mr. Pomeroy, Mr. Cunningham and Mr. High on a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 246 1 conference call. They briefed me on what was then the 2 upcoming regulation and issue discussion. I think it was 3 pretty much consistent with what they testified today. 4 On the first of November I visited Sherm's 5 Plating and Chrome Craft, met with Art Holman of Sherm's 6 Plating and John Marrs of Chrome Craft. Mostly they 7 briefed me on how their operations worked and just gave me 8 an opportunity to get some firsthand view of what was 9 going on. 10 Ms. D'Adamo. 11 Ms. Berg. 12 BOARD MEMBER BERG: Yes, on September 13th I met 13 in Los Angeles with Chuck Pomeroy, Dan Cunningham, and 14 Harry Levy. I had multiple conversations also with Chuck 15 Pomeroy through today. And all of the conversations were 16 consistent with their testimony both in September and 17 today. 18 Also, I had a conversation with Barry Wallerstein 19 on the phone on September 15th. 20 CHAIRPERSON SAWYER: Dr. Gong. 21 BOARD MEMBER GONG: Yes, on September 21, had a 22 teleconference call with Paula Forbis and Bahram Fazeli, 23 Communities for a Better Environment. Our discussion as 24 far as I remember reflected their discussion in the 25 question and answer period in September ARB meeting. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 247 1 I also had a meeting with Chuck Pomeroy, Dan 2 Cunningham and Dean High in my office in Los Angeles, 3 again on September 22. Our discussion reflected their 4 discussion at our September ARB meeting. 5 And that will do it. 6 CHAIRPERSON SAWYER: Thank you very much. 7 The Board has before it Resolution No. 625. 8 Do I have a motion? 9 SENIOR STAFF COUNSEL JENNE: Dr. Sawyer, before 10 you vote on the resolution, we'd like to mention that 11 staff has proposed two additional paragraphs to be added 12 to the resolution. You have those paragraphs in front of 13 you, but the audience doesn't know what they are. So if I 14 could read them into the record now. 15 CHAIRPERSON SAWYER: Yes, would you read them 16 into the record please. 17 SENIOR STAFF COUNSEL JENNE: Yes. The first 18 paragraph was the one proposed by South Coast District 19 that we've agreed should be added to the resolution. 20 It reads: "Be it further resolved, that local 21 air districts have the responsibility for approving 22 alternative methods for demonstrating compliance with the 23 ATCM pursuant to Section 93102.4(b)(3) and Appendix 9." 24 And the second paragraph reads: "Be it further 25 resolved, that the Board directs staff to work with the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 248 1 California Air Pollution Control Officers Association to 2 develop appropriate methodologies for evaluating 3 alternative methods of compliance to ensure that the 4 alternative provides equivalent or greater reduction in 5 emissions and risk as provided in the Health & Safety 6 Code." 7 CHAIRPERSON SAWYER: Am I correct to assume from 8 our previous discussion that we're agreeable to both of 9 these? 10 BOARD MEMBER D'ADAMO: Mr. Chairman? 11 CHAIRPERSON SAWYER: Yes. 12 BOARD MEMBER D'ADAMO: I'd like to request a 13 couple of additions to the resolution. 14 On the paragraph on page 6 that references the 15 goal of ensuring that sensitive receptors are not sited 16 near existing chrome plating facilities, I think that it 17 would be -- it would definitely strengthen this. Of 18 course that is the goal. But there may be situations 19 where -- after all, we don't have jurisdiction over local 20 land-use bodies. So I think that it would be helpful to 21 have language in here that specifies that in the event 22 that such a siting is approved, that our Board actually 23 ask for mitigation consistent with the regulation. 24 BOARD MEMBER BERG: I'm not quite sure what that 25 would mean. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 249 1 BOARD MEMBER D'ADAMO: Well, if you've got a 2 facility right now that falls beyond the 330 feet receptor 3 and now it becomes within 330 feet of a sensitive 4 receptor, and if -- according to our regulation, if it 5 were sited there, if it were a new facility, a HEPA filter 6 would be required. I think that we ought to take the 7 position before these local land-use bodies to suggest 8 that mitigation in the citing of the housing development 9 would include -- or, no -- that part of that decision to 10 approve a housing development should also include the 11 requirement that the developer pay for a HEPA filter. 12 EXECUTIVE OFFICER WITHERSPOON: And would we 13 suggest that, Ms. D'Adamo, as a CEQA mitigation at that 14 time? Because it wouldn't be in this regulation. 15 BOARD MEMBER D'ADAMO: Well, what I'm saying is 16 that we ought to take that position in the resolution, 17 that that would be the position of our Board. 18 STATIONARY SOURCE DIVISION CHIEF FLETCHER: 19 Might I suggest that one way to handle that would 20 be, since we're committed to go and identify where the 21 specific platers are located and the land-use agencies 22 that have authority over the area that those platers are 23 located, that in the guidance we could include such 24 recommendations. Is that what you're referring to? 25 BOARD MEMBER D'ADAMO: Yes. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 250 1 STATIONARY SOURCE DIVISION CHIEF FLETCHER: So it 2 would not be on a case by case; it would be a general 3 guidance that goes to the land-use agencies with those 4 platers? 5 BOARD MEMBER D'ADAMO: Okay, yes. That would be 6 fine. 7 And then the other recommendation -- I actually 8 came here today thinking that I was going to push for the 9 thousand feet. And I think that the witnesses did such a 10 good job on both sides really explaining some of the 11 challenges that we have. And the reason I asked so many 12 questions about enforcement is because I think that that 13 is really the key. 14 I have to keep thinking of myself, if I lived 15 next door to one of these facilities and I heard all this 16 information about risk factors not being that significant 17 especially if some of these control technologies are used. 18 And if I had small children there, I would just still be 19 very concerned. And I think these communities -- we 20 really owe it to them to do a better job of enforcement. 21 And I think that the promises are good, but we really need 22 to have a report back on: How are those quarterly 23 enforcements doing? Are they really being -- are we 24 really seeing inspections quarterly? What about the other 25 air districts? And what about -- what if there are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 251 1 violations? Are the air districts actually following up 2 on them? And what can we do to, as Ms. Witherspoon said, 3 provide some additional resources to the local districts? 4 So I think a report back. And I would defer to 5 staff on the appropriate time, you know, within a year or 6 so, so that we could hear back about how these inspections 7 are proceeding and what sort of violations are we seeing, 8 what sort of filings in terms of penalties, injunctive 9 relief, et cetera. 10 CHAIRPERSON SAWYER: Are the other Board members 11 agreeable with what Ms. D'Adamo has proposed, and staff, 12 to incorporating them? 13 STATIONARY SOURCE DIVISION CHIEF FLETCHER: This 14 is Bob again. 15 If I could suggest that maybe 18 months might be 16 more appropriate than one year, because that would give us 17 a pretty good indication to report back on the equivalency 18 issues as well. And I'm not sure we'll be there on a 19 one-year consideration. 20 BOARD MEMBER D'ADAMO: That's fine. 21 CHAIRPERSON SAWYER: Okay. Do I have a motion to 22 approve the resolution? 23 BOARD MEMBER D'ADAMO: So moved. 24 CHAIRPERSON SAWYER: A second? 25 BOARD MEMBER PATRICK: Second. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 252 1 CHAIRPERSON SAWYER: All those in favor please 2 indicate by saying aye. 3 (Ayes.) 4 CHAIRPERSON SAWYER: Opposed? 5 Motion is carried. 6 We'll take a five-minute break at this time for 7 our court reporter. 8 (Thereupon a recess was taken.) 9 CHAIRPERSON SAWYER: The next agenda item is 10 6-11-5, Proposed Amendments to the Air Resources Board 11 Warranty and Recall Regulations for Motor Vehicles. 12 The initial Recall Program was adopted by the 13 Board in 1982. In 1988, as an expansion to the Recall 14 Program, the Board adopted emissions warranty reporting 15 regulations. These regulations have proven to be less 16 effective than the Board anticipated because there is 17 extraordinary burden of proof placed upon our staff to 18 prove that a defective emission control part is causing 19 emission increases, even when that part has failed 20 completely. 21 The proposed regulations turn that burden of 22 proof around and require vehicle manufacturers to take 23 genuine corrective action when the warranty claims for a 24 particular part exceed more than 4 percent on an engine 25 family or test group basis. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 253 1 Ms. Witherspoon, please introduce this item. 2 EXECUTIVE OFFICER WITHERSPOON: Thank you, Dr. 3 Sawyer. 4 As you mentioned, the warranty reporting recall 5 regulations have been in effect for quite some time. 6 Although the current program has resulted in corrective 7 action for more than a million vehicles since the 1990 8 model year, key improvements are needed to strengthen its 9 purpose and to streamline the process. 10 In some cases, the regulations on the books did 11 not result in corrective action when it was clear 12 corrective action was warranted. For example, recently 13 staff negotiated with DaimlerChrysler Corporation for more 14 than three years to correct a serious catalyst defect 15 issue. Although some of the components were repaired, the 16 proper corrective action was provided for only 27 percent 17 of the vehicles. 18 Where a dispute exists, the current regulations 19 require an extensive resource commitment on the state's 20 part, and it can take years to prove the case. The 21 amendments staff are proposing today will remedy this flaw 22 in our regulations and will ensure that other cases with 23 high warranty claims trigger proper corrective action. 24 At the same time, after 18 years of administering 25 the program, staff feels that other streamlining changes PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 254 1 can reduce the reporting burden to the manufacturers, 2 while focusing on the most significant emission component 3 defects. 4 At this point I'll turn the presentation over to 5 Tom Valencia of the Mobile Source Operations Division. 6 (Thereupon an overhead presentation was 7 Presented as follows.) 8 AIR POLLUTION SPECIALIST VALENCIA: Thank you, 9 Ms. Witherspoon. And good afternoon, Dr. Sawyer and 10 members of the Board. 11 Today I will present to you staff's proposal to 12 amend the emission warranty information reporting and 13 recall regulations. If approved by the Board, this 14 proposal will complete the update of our in-use compliance 15 regulations and result in more efficient and effective 16 enforcement of low emission standards and requirements. 17 --o0o-- 18 AIR POLLUTION SPECIALIST VALENCIA: I will begin 19 with a brief background of ARB's in-use vehicle programs 20 and review the current warranty reporting and recall 21 regulations. 22 Next I will discuss the results of two recall 23 cases that caused staff to propose the changes that are 24 before you today. 25 After summarizing the proposed amendments to the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 255 1 warranty reporting and recall regulations, I will outline 2 issues raised by industry and present staff's responses 3 along with recommended 15-day changes. 4 Finally, I will conclude with our recommendation. 5 --o0o-- 6 AIR POLLUTION SPECIALIST VALENCIA: The ARB 7 relies on three different programs to ensure that vehicles 8 or engines comply with emissions standards and test 9 procedures in customer use. Since each of these programs 10 can lead to a recall of vehicles with defective emission 11 control systems, they are sometimes called recall 12 programs. 13 The first program, operational since 1983, 14 involves emission testing of test groups, sometimes called 15 engine families of similar vehicles. Historically the ARB 16 has performed the testing. But more recently vehicle 17 manufacturers have also been required to test their own 18 vehicles. A similar program for heavy-duty diesel engines 19 was recently adopted by the Board, and testing will begin 20 soon. So far, 78 families have been recalled because 21 testing showed emission standards were being exceeded. 22 The second program assures that the on-board 23 diagnostic system has been properly designed and functions 24 by identifying defective or warn components in use. This 25 program focuses on the early years of the vehicle's life PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 256 1 and has resulted in 28 recalls to improve the 2 functionality of OBD systems. 3 The third program is the subject of today's 4 proposal. It is called the Emission Warranty Information 5 Reporting and Recall Program, and its purpose is to 6 utilize manufacturer warranty records to identify emission 7 control components that are failing in use. If the 8 failure rate is too high, corrective action is required. 9 This program has resulted in over 178 recalls or 10 other corrective actions since it began in 1990. It 11 applies to cars, trucks, and motorcycles. 12 --o0o-- 13 AIR POLLUTION SPECIALIST VALENCIA: I'd like to 14 explain how the current program works. 15 Manufacturers are required to track the number of 16 warranty claims for each emission control device. When a 17 part exceeds a 1 percent defect rate, the manufacturer 18 notifies the ARB. This is an early heads-up that a 19 problem may be developing. 20 The manufacturer continues to track warranty 21 claims. And if the defect rate exceeds 4 percent, an 22 assessment report must be prepared. A major purpose of 23 this report is to determine the actual defect rate. This 24 allows the manufacturer to screen out warranty claims for 25 parts that were not defective and to assess the likelihood PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 257 1 that failures will continue to increase. 2 Once a valid claim rate exceeds 4 percent, the 3 process of corrective action begins. This usually results 4 in a recall to replace the defective part with a better 5 one. However, in two recent situations a different 6 outcome has occurred. 7 In the first situation involving a defective OBD 8 monitor a manufacturer challenged ARB's order to recall a 9 large number of vehicles. An administrative law judge 10 ruled that ARB must demonstrate that vehicles subject to 11 the recall would exceed emissions standards on average. 12 ARB could not do this because the defect was an OBD 13 monitor, not the emission control device itself. The 14 vehicles were not recalled. 15 More recently another vehicle manufacturer 16 challenged a recall of defective catalysts on the same 17 principle. In this case the testing burden on ARB was so 18 great that it could not provide a demonstration that the 19 vehicles in each of the 30 test groups would exceed an 20 emissions standard on average. 21 We'll explore the implications of these two cases 22 in greater detail in the next two slides. 23 --o0o-- 24 AIR POLLUTION SPECIALIST VALENCIA: The Toyota 25 case involved more than 300,000 vehicles with a faulty OBD PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 258 1 detection system. Extensive testing by ARB staff showed 2 that the monitor was not capable of reliably detecting 3 evaporative leaks. 4 The ARB ordered the recall of these vehicles. 5 And Toyota challenged the recall order through the public 6 hearing process. 7 An administrative law judge ruled that Toyota did 8 not need to take corrective action because ARB did not 9 prove an emission standard exceedance with the defective 10 OBD system. 11 As a result of the judge's decision, in 2003 the 12 Board adopted amendments to the OBD regulations to allow 13 the recall of defective OBD systems without the need to 14 prove an emissions exceedance. 15 --o0o-- 16 AIR POLLUTION SPECIALIST VALENCIA: In this case, 17 catalytic converters used on Dodge and Jeep trucks were 18 failing. The catalysts would crack and rattle, 19 mechanically erode, and in some cases break apart and be 20 expelled through the tailpipe. Testing showed that the 21 emissions of the vehicles with defective catalysts could 22 exceed three times the HC and NOx standard. The OBD 23 system would not detect the complete failure of the 24 catalysts. A hundred fifty thousand California certified 25 vehicles were involved. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 259 1 In negotiating the corrective action for these 2 vehicles, DaimlerChrysler argued that in the absence of a 3 demonstration that the failures were prevalent enough to 4 cause an engine family to exceed the emissions standard on 5 average, a recall was not required. 6 In light of the judge's ruling in the Toyota 7 case, staff's alternative was to test many vehicles in 8 each engine family to demonstrate that each family 9 exceeded an emissions standard on average. 10 --o0o-- 11 AIR POLLUTION SPECIALIST VALENCIA: The amount of 12 testing would have tied up ARB's lap for up to a year and 13 not changed the fact that the catalysts had been shown to 14 be defective. As a result, ARB agreed with 15 DaimlerChrysler to recall only those models in which the 16 catalyst's failure was pervasive. 17 Only 27 percent of effective vehicles were 18 recalled. 19 Staff believes more manufacturers will challenge 20 recalls based on the outcome of this case. This is 21 especially likely when the number of vehicles affected and 22 the cost of the recall is large, as was in this case. 23 To avoid similar outcomes in the future, staff is 24 proposing to revise the warranty information reporting and 25 recall regulation, to remove the requirement to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 260 1 demonstrate an emission exceedance, and rely solely on a 2 validated warranty repair rate to determine if a systemic 3 defect exists and a recall or other corrective action is 4 appropriate. 5 --o0o-- 6 AIR POLLUTION SPECIALIST VALENCIA: To address 7 the limitations of the current regulation illustrated in 8 the cases just mentioned and to streamline the process, 9 staff is proposing changes to the program. 10 The valid 4 percent defect rate would be retained 11 as the basis for pursuing corrective action, eliminating 12 the need to demonstrate an exceedance of an emission 13 standard. Legally a high defect rate would be considered 14 a violation of certification test procedures, which 15 include a demonstration of durability. 16 The amendments just discussed will increase the 17 effectiveness of the warranty recall program. The staff 18 also has taken the opportunity to propose two revisions 19 that would reduce the cost to manufacturers. 20 The first proposed revision would formally add 21 extended warranties to the list of possible corrective 22 actions. 23 Staff is proposing that an extended warranty 24 rather than a recall is the appropriate and less costly 25 remedy for most defective components. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 261 1 --o0o-- 2 AIR POLLUTION SPECIALIST VALENCIA: This is now 3 possible because OBD is effective in identifying failed or 4 deteriorating emission control components. In those 5 situations where the expected failure rate during the 6 vehicle's life is much less than 100 percent, the use of 7 OBD can be effective and reduce the cost to the 8 manufacturer of corrective action. 9 The extended warranty assures that the 10 manufacturer of the defective part, not the car owner, 11 pays for the repair. 12 Finally, staff is proposing to greatly reduce 13 reporting requirements. The early action report is 14 delayed until a 4 percent warranty rate is obtained. The 15 assessment report is delayed from 4 percent reported 16 warranty claims until 10 percent. Reporting intervals 17 will be increased from quarterly to annually. Initial 18 reporting will be reduced by about two-thirds. 19 The revisions would go into effect with the 2010 20 model year. 21 --o0o-- 22 AIR POLLUTION SPECIALIST VALENCIA: Staff 23 believes its proposal will increase the number of 24 corrective actions for clearly defective components and 25 appropriate corrective action will be implemented on a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 262 1 timely basis. This will help ensure that the emission 2 benefits of California's low emission standards are more 3 fully realized. 4 The staff expects that more durable parts will be 5 installed on California's certified vehicles in an effort 6 by manufacturers to avoid corrective action. 7 We expect fewer recalls for industry because 8 extended warranties will become the primary action for 9 component repair and only address those components that 10 actually fail in customer use. Recall will be retained as 11 the appropriate remedy for defects involving 12 after-treatment devices, non-OBD equipped vehicles or 13 engines or nonfunctioning OBD systems. 14 --o0o-- 15 AIR POLLUTION SPECIALIST VALENCIA: In both 16 recall and extended warranty cases the executive officer 17 retains the discretion to implement appropriate corrective 18 action for special or unique circumstances. 19 --o0o-- 20 AIR POLLUTION SPECIALIST VALENCIA: In an effort 21 to quantify the potential impact of the staff's proposal 22 on industry, staff used recent warranty data to assess 23 what corrective actions would have occurred had the 24 proposed revisions been in place for the past six years. 25 Of the 35 lite-duty manufacturers that certify in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 263 1 California, 13 would have no vehicles that reach a defect 2 level requiring corrective action. 3 In contrast, 7 manufacturers would be responsible 4 for 60 percent of the corrective actions required under 5 the proposal. Clearly, these manufacturers have some 6 quality control issues to address before the 2010 model 7 year. 8 Overall, 86 extended warranty actions and only 5 9 recalls would have occurred under the revised regulations. 10 --o0o-- 11 AIR POLLUTION SPECIALIST VALENCIA: The staff 12 expects the reporting costs to industry to be reduced by 13 about two-thirds. It is expected that the cost of 14 corrective action may be reduced since extended warranties 15 address only those components that actually fail, while 16 recall requires the replacement of defective component on 17 every vehicle. 18 But in the end corrective action costs are 19 dependent on the manufacturers' quality control practices 20 and the reliability of emission control components they 21 install on their vehicles or engines. 22 --o0o-- 23 AIR POLLUTION SPECIALIST VALENCIA: During the 24 public process several issues have been raised by 25 stakeholders regarding staff's proposal. Manufacturers PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 264 1 have argued that ARB cannot order a recall without 2 demonstrating an emission standard exceedance. 3 Staff's response is that Health & Safety Code 4 Section 43105 clearly authorizes ARB to order a recall or 5 other corrective action for violations of its emission 6 standards or test procedures. And the latter includes 7 durability requirements for emission control components. 8 --o0o-- 9 AIR POLLUTION SPECIALIST VALENCIA: The Engine 10 Manufacturers Association requested that staff better 11 define emission related component parts and defects and 12 the process for screening of those parts during the 13 warranty claims evaluation. 14 To address this issue staff proposes 15-day 15 changes that provide clarity for infant mortality, early 16 corrective action conducted by the manufacturers, and 17 invalid claims and how they are screened in the reporting 18 process. 19 --o0o-- 20 AIR POLLUTION SPECIALIST VALENCIA: The industry 21 also believes that emission component defects should not 22 be counted as valid failures if the defect cannot be tied 23 to an emissions impact. 24 Staff has carefully considered this issue and has 25 proposed 15-day changes that defines the process to remove PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 265 1 emission component failures during the screening process 2 providing manufacturers can factually demonstrate that a 3 given emission component defect has no conceivable impact 4 on emissions. 5 --o0o-- 6 AIR POLLUTION SPECIALIST VALENCIA: The Alliance 7 of Automobile Manufacturers has argued that ARB cannot 8 order an extended warranty or extended warranties beyond 9 the useful life. 10 Staff's response is that Health and Safety Code 11 Section 43105 authorizes ARB to order corrective action 12 and does not limit it to recall or the extent of the 13 action. Staff also believes that if a defective component 14 is not replaced through a recall, it is essential that the 15 alternative extended warranty action helps assure that 16 most defective parts are replaced and lasts for the 17 vehicle's life. But as a practical matter, it will be 18 limited to 150,000 miles. 19 --o0o-- 20 AIR POLLUTION SPECIALIST VALENCIA: In addition 21 to the changes just outlined that respond to many of 22 industry's major issues, other recommendations were 23 identified through the public process. Additional changes 24 include: 25 Limiting HEV propulsion battery pack warranties PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 266 1 to 10 years or 150,000 miles and limiting light heavy-duty 2 vehicle warranties to 150,000 miles. 3 Staff also identified several other clarifying 4 and nonsubstantive changes to both the regulations and 5 test procedures. 6 --o0o-- 7 AIR POLLUTION SPECIALIST VALENCIA: In summary, 8 staff recommends that the Board approve the amendments 9 with the 15-day changes proposed today. Staff is 10 confident your approval of the revisions will result in a 11 more effective and less costly recall program that will 12 reduce vehicle emissions. 13 Thank you. This concludes my presentation. 14 CHAIRPERSON SAWYER: Thank you very much. 15 Madam Ombudsman, would you provide your statement 16 please. 17 OMBUDSMAN QUETIN: Yes, I would. Because it's 18 late, I'm going to give you the Reader's Digest version. 19 Chairman Sawyer and members of the Board, this 20 regulation has been developed with input from a wide 21 variety of members of the automobile industry. 22 The regulatory process to amend this regulation 23 began in December 2005. Staff held one public workshop on 24 May 2nd, 2006. In addition, they had nine individual 25 meetings and seven teleconferences with stakeholders. On PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 267 1 average, 25 stakeholders and interested parties attended 2 or participated in the meetings, teleconferences and 3 workshops. Some of the smaller one-on-one meetings had 4 less than 10 attendees. 5 The staff report was released on October 20th, 6 2006, via regular mail, electronic mail, and posted on 7 ARB's web page. There are more than 1500 stakeholders on 8 the mailing list and nearly 4500 on the list serve. Staff 9 has identified outstanding issues. A number of speakers 10 will testify and provide additional details regarding 11 their concerns. 12 This concludes my comments. Thank you. 13 CHAIRPERSON SAWYER: Do Board members have 14 questions at this time? 15 Well, as you might suspect, I do. 16 The warranty information which the manufacturers 17 provide to us is confidential; is that correct? 18 AIR POLLUTION SPECIALIST VALENCIA: Yes. 19 CHAIRPERSON SAWYER: And therefore it doesn't 20 appear in any of our reports anywhere. And therefore I 21 assume that your six year retrospective study is also 22 not -- is that available? 23 AIR POLLUTION SPECIALIST VALENCIA: It's 24 confidential. 25 CHAIRPERSON SAWYER: Also. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 268 1 AIR POLLUTION SPECIALIST VALENCIA: Yeah, the 2 data is confidential. 3 CHAIRPERSON SAWYER: Okay. But perhaps I could 4 ask some questions about it just the same. 5 In that study, what percent of the vehicles would 6 have been subject to an extended warranty? 7 AIR POLLUTION SPECIALIST VALENCIA: Well, it was 8 the 86 out of 91 vehicles. 9 CHAIRPERSON SAWYER: Eighty-six -- 10 AIR POLLUTION SPECIALIST VALENCIA: Oh, how 11 many -- 12 CHAIRPERSON SAWYER: Of the total vehicle fleet, 13 let's put it that -- that's what I wanted, the total 14 number of vehicles. 15 AIR POLLUTION SPECIALIST VALENCIA: Oh, how many 16 vehicles. I believe it was a million vehicles over six 17 years. It was a million vehicles over six years. 18 CHAIRPERSON SAWYER: And what percent of those 19 would have actually -- over the 120,000 mile period would 20 have actually gone under warranty for repair? 21 AIR POLLUTION SPECIALIST VALENCIA: On extended 22 warranty? 23 CHAIRPERSON SAWYER: Yes. 24 AIR POLLUTION SPECIALIST VALENCIA: It would have 25 been about 9 -- over 900,000. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 269 1 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: This is 2 all if the proposed rules would have been in place over 3 the last six years, not -- because under the current rules 4 most of it resulted in recalls, and only a few extended 5 warranties where we just chose to negotiate that. Under 6 the new proposed rules, 85 out of the 91 cases, had these 7 rules applied over the last six years, would have resulted 8 in extended warranties instead of recalls. 9 And then -- but the other factor is that the 10 number of actions under -- had the proposed rules been in 11 place over the last six years, the number of total actions 12 would have been much higher. It would have been 91 13 versus -- 14 MOBILE SOURCE OPERATIONS DIVISION CHIEF HEBERT: 15 On the current reg it's 32 length of actions. 16 With the new regs in place it would be 91 with a lot more 17 extended warranties. 18 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: So 19 what's effectively changed is under the proposed rules, 20 assuming that nothing changes in the auto industry, we 21 would have three times as many corrective actions. But 22 the vast majority of them would be extended warranties 23 instead of recalls. Where under the old current rules, 24 there would have been a third of the actions and most of 25 them would have been recalls. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 270 1 CHAIRPERSON SAWYER: But unsuccessful recalls in 2 some cases -- 3 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Well, 4 those were all recalls to some degree. The question is in 5 the Chrysler case is -- it was a recall, but not many of 6 the vehicles were actually recalled. We thought many more 7 should have been, but we were not in a legal position to 8 demand that. And that's what these rule changes would 9 fix. 10 CHAIRPERSON SAWYER: Okay. Let's move head with 11 the witnesses. 12 The first three will be Steven Douglas, Dave 13 Patterson, and Sara Rudy. 14 Mr. Douglas. 15 (Thereupon an overhead presentation was 16 Presented as follows.) 17 MR. DOUGLAS: Good morning, Chairman, members of 18 the Board. I'm Steven Douglas with the Alliance of 19 Automobile Manufacturers. 20 --o0o-- 21 MR. DOUGLAS: The Alliance is a trade association 22 representing the nine car and light truck manufacturers 23 listed. They represent about 80 percent of the new 24 vehicle sales in California. 25 We have several concerns with the proposed PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 271 1 regulation. And owing to your three-minute rule, we've 2 divided the presentation into five parts. 3 --o0o-- 4 MR. DOUGLAS: While we oppose the regulations as 5 they're written, we support the goals that ARB staff sets 6 out to achieve here, namely: 7 A fair system that allows ARB and manufacturers 8 to identify and track emission-related defects, 9 That provides for a prompt and appropriate 10 remedial action, 11 But assures environmental benefits that are 12 commensurate with the cost, 13 That provides clarity and certainty both for the 14 manufacturers and ARB, and 15 Finally, one that ensures due process for all 16 parties. 17 So it's really a good news/bad news situation. 18 The good news is we can resolve -- we can address each of 19 these three aspects listed on the slide that staff 20 believes needs improvement. And the bad news is it's just 21 not with these regulations as they're currently written. 22 --o0o-- 23 MR. DOUGLAS: In reviewing the proposed 24 regulation, we've identified four issues that need to be 25 addressed. First is the emissions impact, the extended PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 272 1 warranty, compliance statement, and due process. 2 One other issue that's not related to the 3 regulatory language itself is the cost of this regulation 4 to the regulated parties. Now, the staff asserts that 5 this regulation will have absolutely no cost. Well, if 6 this were true, I doubt I'd be standing here today. 7 Manufacturers have addressed the cost of the 8 regulation in their written comments. However, even on 9 its surface it seems absurd to contend that a regulation 10 that increases extended warranties by 300 to 500 percent 11 and extends warranties beyond the useful life of the 12 vehicle will have absolutely no cost. 13 --o0o-- 14 MR. DOUGLAS: I just want to wrap up my portion 15 by summarizing what the others will recommend today. 16 We request that the Board direct the staff to 17 first address the proof of violation and emissions impact. 18 Some additional work is needed by both staff and industry 19 on this. However, there is clearly a reasonable path that 20 satisfies both parties. 21 2. Eliminate the extended warranty provisions. 22 This new requirement is simply not needed. ARB has more 23 than enough authority to negotiate extended warranties or 24 any other remedial actions today. 25 Third, eliminate the compliance statements in the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 273 1 test procedures, which require manufacturers to predict 2 the future at the time of certification and does not 3 address any of the three aspects that the staff believes 4 need improvement. 5 And, finally, provide manufacturers with due 6 process. In any case where there's remedial action is 7 ordered, manufacturers should have an opportunity for a 8 public hearing and should be allowed to present 9 appropriate evidence. 10 Finally, the staff has proposed, as they said, 11 11 conceptual changes on Tuesday night. These changes, they 12 may be good, they may be bad. But honestly we simply 13 don't know. We haven't had a time -- we haven't had an 14 opportunity to really review them. And without regulatory 15 language that would implement these, it's very -- it's 16 almost impossible to determine how they impact the 17 industry or how they will be implemented. 18 Thank you. I'd take any questions that you have 19 now. 20 CHAIRPERSON SAWYER: Are there any members that 21 have questions? 22 Thank you very much. 23 Oh. 24 BOARD MEMBER RIORDAN: My assumption is that -- 25 excuse me. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 274 1 Mr. Douglas, my assumption is that those who 2 follow you are going to amplify on the points you made. 3 MR. DOUGLAS: Yes, that's correct. 4 BOARD MEMBER RIORDAN: Okay. Thank you. 5 MR. DOUGLAS: Thank you. 6 CHAIRPERSON SAWYER: Mr. Patterson. 7 MR. PATTERSON: Good afternoon, Chairman Sawyer, 8 members of the Board. My name is David Patterson. I'm 9 with Mitsubishi Motors Research and Development of 10 America. 11 To continue the presentation, this table 12 summarizes ARB and industry's issues side by side. We are 13 confident that we can develop a regulation that satisfies 14 all these issues. 15 --o0o-- 16 MR. PATTERSON: As you can see from the table 17 above, the emission standards have always been a factor 18 when considering an ordered recall. In fact, the only 19 time the ARB has considered ignoring the emissions 20 standards was in 1988. However, at the time the Board 21 rejected the proposal; and after subsequent discussions, 22 staff recommended, and the Board approved, the existing 23 regulations. 24 Ignoring the emission standards would lead to 25 very expensive recalls in illogical situations. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 275 1 --o0o-- 2 MR. PATTERSON: The chart shows two hypothetical 3 vehicles: Vehicle A and Vehicle B. Emissions from 4 Vehicle A are slightly below the standard but has no 5 defects. Vehicle B emits 50 percent of the standard but 6 also a defect. Ignoring the emission standards leads to a 7 very logical situation, where Vehicle B is recalled even 8 though its emissions are well below the standard and, in 9 fact, well below the emissions of other vehicles on the 10 roads that would not be recalled. 11 One of staff's three stated reasons for revising 12 the regulation is the need for a consistent and quick 13 resolution of whether a violation has occurred. As we 14 have said up front, this can be addressed without ignoring 15 emissions standards. 16 --o0o-- 17 MR. PATTERSON: Vehicle emission standards are 18 the fundamental performance-based evaluation method for 19 the compliance with mobile source regulations. Under the 20 existing warranty reporting regulations staff must 21 consider these three factors. 22 Staff finds it difficult to prove all three of 23 these elements, especially whether the fleet average will 24 exceed the emission standard over a useful life. We 25 believe this is the core of ARB's concerns. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 276 1 Staff's April proposal addressed this concern by 2 eliminating the evaluation of the fleet average and 3 accumulative emissions over the vehicle's useful life. 4 Consequently their evaluation became a straightforward 5 measurement of emissions' increase due to the defect. 6 Generally the emissions measurement would include 7 installing a defective part on a statistically significant 8 number of vehicles, measuring their emissions, comparing 9 the measured emissions to the standard, and if the vehicle 10 exceeds the emissions standard, then remedial action would 11 be appropriate. 12 This is just one way that the number one reason 13 for revising these regulations, the proof of violation, 14 could be addressed without undue burden on industry. Our 15 recommendation is for you to direct staff to work with 16 industry to develop the regulatory changes that address 17 both ARB and industry's concerns. 18 Any questions? 19 CHAIRPERSON SAWYER: Thank you very much. 20 Ms. Rudy. And then we'll have Tony Martino, Alan 21 Prescott, and Denny Kahler. 22 MS. RUDY: Good afternoon, Mr. Chairman, members 23 of the Board. My name is Sara Rudy. I'm from Ford Motor 24 Company. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 277 1 MS. RUDY: Going back to the list of issues, Dave 2 kindly addressed the first one and suggested a solution 3 that could solve both the industry's and CARB's concerns. 4 I want to address the second one: What 5 corrective actions are appropriate? And industry's 6 concerned over the extended warranty provisions in the 7 proposed regulations. 8 --o0o-- 9 MS. RUDY: We have three concerns with the 10 extended warranties: 11 One is that the way we read the statute, the Air 12 Resources Board does not have authority to order extended 13 warranties. But I'm not a lawyer. I don't want to 14 discuss that here. We've addressed that in our written 15 comments and I encourage staff and the Board to review 16 those comments. 17 The second issue is that it's not necessary for 18 the regulations to specify ordered extended warranties 19 because there's flexibility in the regulations to 20 negotiate those extended warranties, in lieu of recalls. 21 And this is often times the best solution for many of 22 these problems. It's less expensive, less burdensome for 23 the manufacturers, for the Air Resources Board and for the 24 consumer. And as a matter of fact, as the staff report 25 indicates, this has been successfully negotiated 80 times PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 278 1 over a two-year period. 2 And the final and very important issue is that 3 the proposal extends warranty beyond the useful life. 4 This a big concern for the industry. 5 --o0o-- 6 MS. RUDY: And I'll try explain this on this 7 curve. This is called a back tub curve, and it's used by 8 reliability experts to kind of show the normal failure 9 rates of any product, whether it be computers or 10 refrigerators or vehicles or emission control components. 11 So over to the left, when a product is first 12 introduced, there's some infant mortality issues as the 13 product breaks in. Then there's a stable low failure 14 rate. And then finally, over to the right, you see an 15 increase as the product reaches the end of its useful life 16 and it wears out. 17 The industry's concern is shown in that red hatch 18 area. And this is a concern, because the proposed 19 regulations require manufacturers to replace components 20 that have absolutely no manufacturing or design defects. 21 They're just at the end of their life. They're wearing 22 out. 23 --o0o-- 24 MS. RUDY: So in conclusion my recommendation is 25 for the ordered extended warranty recall -- I mean -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 279 1 sorry -- the ordered extended warranty provisions to be 2 removed from the regulation, but acknowledge that there is 3 flexibility to negotiate a voluntary extended warranty or 4 other remedial actions. Do what makes sense. If it's not 5 recall, let's do what makes sense, and let's not have one 6 size fits all. 7 That concludes my comments. And I would take any 8 questions. 9 CHAIRPERSON SAWYER: Useful life is defined as 10 120,000 miles for an American automobile or -- 11 MS. RUDY: Yes, 12 years or 120,000 miles. 12 CHAIRPERSON SAWYER: And where does that come 13 from? 14 MS. RUDY: That's by regulation. 15 CHAIRPERSON SAWYER: Okay. And what's the 16 average lifetime of a car in California in miles? 17 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Well, I 18 think it's longer than that, like 150,000 at least. 19 And it's not just the average. The fact is that 20 there's -- even if you're starting to tail off, cars that 21 get, you know, replaced by wreckage and move out of state 22 and things like that, you still have a lot of cars on the 23 road. And of course we have cars 200, 250,000 miles on 24 the road here in California. 25 BOARD MEMBER RIORDAN: Mr. Chairman, I'm not sure PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 280 1 I understood the response to your question. And that when 2 you said "by regulation," regulation by whom is the useful 3 life defined? 4 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yeah, 5 we define it in the regulations that effect the durability 6 demonstration for the vehicle when it's first -- prior to 7 its first sale. But they have to prove that it's durable 8 for that lifetime. 9 BOARD MEMBER RIORDAN: Okay. So we've sort of -- 10 that's ours? 11 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Right. 12 BOARD MEMBER RIORDAN: Okay. 13 CHAIRPERSON SAWYER: Ms. Berg. 14 BOARD MEMBER BERG: I'm not sure -- I just want 15 to make sure that I understand how the extended 16 warranty -- if the current warranty is 12 years or 120,000 17 miles, if a part is going to go bad, it would most likely 18 go bad in the first period of time? 19 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Are you 20 asking -- 21 BOARD MEMBER BERG: So within a first couple of 22 years or -- 23 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Well, 24 no, I think there is a -- what the curve shows is there's 25 this effect called infantile -- or infant mortality, which PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 281 1 is very early on in a part's life there can be a case 2 where there's a lot of failures. And then things do kind 3 of level off. And of course towards the end of the 4 vehicle's life on average the parts are going to start 5 failing at a higher rate, until eventually the vehicle 6 just is broken down and scrapped. So that's what her 7 curve was suggesting. 8 And she's suggesting that on cars that there's a 9 substantial increase in the parts failure between our 10 definition of useful life, which is 100 to 120,000 miles, 11 and 150,000 miles, which is where we would extend the 12 warranty to for those parts that have already exhibited 13 earlier in their life a substantial defect. We're only 14 going to be dealing with parts that within their warranty 15 period, which is only three years or maybe as much as 16 seven years for some parts on most cars, only in that 17 period if you have too many failures do you even get 18 caught up in this situation. So -- 19 BOARD MEMBER BERG: So there isn't a very 20 likelihood that you have a part failing at 100,000 miles 21 and you're going to extend it to 150? 22 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Well, 23 we wouldn't even be collecting information on a majority 24 of the cars at 100,000 miles. The reporting stops when 25 the warranty ends up. And I -- I don't mean to make this PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 282 1 too complicated, but we have two groups of cars in 2 California. We have these super clean cars. They already 3 have 150,000 mile warranty on them. So by early in the 4 next decade, half the cars sold in California will come 5 with a manufacturer warranty out the gate on every single 6 part for 150,000 miles. So this issue is not even 7 relevant to those half of the vehicles. 8 The other half have the shorter warranty, which 9 ranges from three years, 50,000 miles, or seven years and 10 70,000 miles. For those vehicles the reporting ends some 11 time in that warranty period. So if you had two percent 12 failures at, let's say, 70,000 miles, and then the parts 13 started breaking later on, that's not reported. It's not 14 part of this program at all. It doesn't trigger any 15 liability out of this recall program. 16 So, you know, I think the response to the point 17 is that, yes, if you build a car that has parts that are 18 designed for 100,000 miles or 120,000 miles and they're 19 built so a lot of them start failing towards the end of 20 the life, even though you know as a manufacturer these 21 cars are going to last 150 or 200,000 miles, then I guess 22 this is what will happen. And the effect of this 23 regulation will be to cause a more durable -- may cause a 24 more durable part to be designed starting in 2010 to avoid 25 exactly what's shown on her chart, that red hashed area of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 283 1 the chart. And it's clearly feasible since they're 2 already building cars that have 150,000 miles warranty on 3 them right now. And there'll be many, many more of those 4 built in 2010 to 2015 timeframe. So that's one possible 5 outcome of this. 6 BOARD MEMBER BERG: And when the regulation takes 7 effect, it takes effect on all cars currently on the road? 8 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: No, 9 only prospectively. So it would be 2010 and newer 10 vehicles. 11 BOARD MEMBER BERG: Thank you. 12 CHAIRPERSON SAWYER: Mr. Martino. 13 MR. MARTINO: Yes. My name's Antonio Martino. 14 I'm with General Motors. 15 Did I shut it off? Uh-oh. 16 Did I screw it up? 17 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Didn't 18 want to hear you. 19 MR. MARTINO: Sorry about that. 20 Again, My name's Antonio Martino, and I'm here to 21 talk -- continue the subject. 22 The final ARB issue is reporting. We support the 23 elimination of unnecessary reporting requirements and 24 would encourage ARB staff to regularly look at the 25 reporting requirements, determine if some can be PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 284 1 eliminated or consolidated. 2 Now, to summarize what's happened so far. We 3 are -- to summarize where we are with the ARB issues and 4 the first two industry issues, additional work is needed 5 to address the proof of violations and the emissions 6 impact issues. But as we discussed, these are issues that 7 we can resolve. The mandatory extended warranty should be 8 eliminated since the ARB already has the bargaining power 9 it needs to extend warranty. But we don't believe that 10 the warranty beyond useful life is reasonable. 11 Now, we would like to look at the final two 12 industry issues, the first being the compliance statement. 13 --o0o-- 14 MR. MARTINO: The regulations require 15 manufacturers to demonstrate that the emission control 16 devices will not exceed a valid failure rate of 4 percent 17 or 50 vehicles over the useful life of the vehicle. The 18 staff report expands upon this by stating, quote, 19 "Manufacturers must present data proving that 20 emission-related components will not fail in in-use rates 21 higher than the warranty reporting threshold [of 50 22 vehicles or 4 percent]." 23 Neither the Alliance or the ARB staff is aware of 24 any data that at the time of certification can prove the 25 future. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 285 1 The staff report and the regulatory changes 2 require manufacturers to predict the future -- I'm sorry. 3 Let me read that again. The staff report and the 4 regulatory changes either require manufacturers to predict 5 the future or if, as staff has explained, no data is 6 required, which is a legal charade, which could jeopardize 7 a manufacturer's certification after the fact. In either 8 case, this change is entirely unnecessary to address the 9 three aspects of the regulations that ARB staff believes 10 need to be improved. 11 We urge the Board to delete this provision. 12 Thank you. 13 CHAIRPERSON SAWYER: Mr. Prescott. 14 MR. PRESCOTT: Thank you, Mr. Chairman, members 15 of the Board. My name is Alan Prescott of Ford Motor 16 Company. And I'm here to discuss the issue of due process 17 and the similarly related issue of the 15-day changes. 18 --o0o-- 19 MR. PRESCOTT: First, with regard to due process. 20 The proposed regulation would prohibit public hearings for 21 any remedial action except recall. Furthermore, the 22 proposed regulation would limit the evidence available to 23 present to only that information submitted during the 24 emission warranty reporting or any information that the 25 executive officer requires the manufacturer to produce. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 286 1 This is not only unnecessary; it infringes on the 2 manufacturer's rights and conflicts with both the 3 legislative intent of Health & Safety Code, Chapter 43105, 4 and the due process clause of both the Federal and 5 California Constitution. 6 Section 43105 of the Health & Safety Code states 7 that manufacturers should have the opportunity to have an 8 administrative hearing such that they may present their 9 objections. 10 The due process clause says it prevents the 11 taking of property without the procedural guarantees 12 necessary to prevent agency abuse of discretion. 13 The property taken through a mandatory extended 14 warranty is no less significant than that for a mandatory 15 recall. And although judicial review is certainly an 16 option, the U.S. Supreme Court has said that judicial 17 review after the fact has not cured the arbitrary abuse of 18 discretion. The broader the discretion, the greater the 19 need for thoughtful administrative review. 20 Staff proposes less informed and limited 21 administrative review for convenience. However, 22 convenience cannot outweigh due present. 23 --o0o-- 24 MR. PRESCOTT: Furthermore, I would like to 25 discuss briefly the 15-day noticed changes. The 15-day PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 287 1 notice was published on the evening of December 5th and 2 provides only unclear concepts and, at best, vagaries, and 3 appears to introduce new conflicts that were not found in 4 the original proposal. 5 Further, there is no full regulatory text 6 available at this time for either the Board or 7 manufacturers to discuss, certainly to provide thorough 8 comments for the Board to hear and review. 9 For these reasons and the reasons that my 10 colleagues have already presented, I ask that the Board 11 reject this proposed regulation and the changes at this 12 time because they're premature. And I ask that the Board 13 direct staff to work with affected parties, who are eager 14 to work with staff, to meet the staff's stated objectives 15 while preserving fairness and due process. 16 Thank you very much. Can I answer any questions? 17 CHAIRPERSON SAWYER: Thank you. 18 Ms. Berg. 19 BOARD MEMBER BERG: Over the past few years how 20 many times has your company requested a public hearing or 21 to go through the due process? 22 MR. PRESCOTT: May I consult? 23 I don't believe we've ever requested an 24 administrative hearing. We've never had to because the 25 Board has shown the flexibility to consider all PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 288 1 information available, which they're binding not only 2 manufacturers but themselves in this case, unless they 3 request more. 4 BOARD MEMBER BERG: And staff's response? 5 I have heard from several people that they are 6 concerned that the regulation does take the flexibility 7 out of this process, both for ARB and certainly, they 8 feel, for the manufacturers. 9 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Let me 10 just comment briefly on it. Then I'd ask Legal to comment 11 in a little bit more detail. 12 But I don't think it takes flexibility out of 13 this. You know, what's sort of amazing by all the 14 testimony is that -- we have really taken the program that 15 results in an onerous, expensive, no-one-likes-it, 16 everyone-hates-it recall program, because recall is such 17 a -- you know, it affects the customer, it questions the 18 durability of the manufacturers' cars, it costs a lot of 19 money, and it ends up fixing a lot of parts that may never 20 break -- we've taken that program and turned it into an 21 extended warranty program that should reduce the costs. 22 And, you know, I'm still amazed why manufacturers don't 23 think this is a Christmas present rather than the kind of 24 response that you're getting. 25 But specifically to the due process issue, the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 289 1 due process is still there for a recall. And that's in 2 statute. It's not been -- not been changed in any way. 3 It's just that if we don't use the recall process, and go 4 with the extended warranty process, then that isn't -- 5 we're not required to have a public hearing on that, just 6 like we wouldn't have a public hearing on any other aspect 7 of whether the manufacturer got an EO or not, an executive 8 order to sell their car. If we didn't like their 9 application of certification, they would -- you know, our 10 staff would be able to say, "I'm sorry. You can't sell 11 that car in California." And that -- you know, that 12 doesn't need a hearing because it never happens. 13 Everything gets worked out. It's only on this recall that 14 the statute chose to give specific appeal rights to the 15 Board on recall. And we're not changing that at all. 16 And, in fact, I guess if they don't like the -- I'm not 17 sure if this is correct, but I think if they don't like 18 the extended warranty, I guess they could say, no, we 19 would just order the recall and they could have their 20 hearing. 21 BOARD MEMBER BERG: Would that be acceptable? 22 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: That 23 would be the status quo. 24 MR. PRESCOTT: No, Ms. Berg. This is certainly 25 not a gift to manufacturers. Manufacturers have the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 290 1 opportunity today to present data showing what the 2 emissions effect of the component failure happens to be. 3 Therefore, in cases where there is no need for any 4 remedial action, that's an option. Staff has bound 5 manufacturers to take remedial action where there is no 6 air quality improvement whatsoever. 7 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: But 8 that doesn't have anything to do with whether you have a 9 hearing or not, because the issue underlying that is 10 whether or not we have to demonstrate an exceedance of 11 emission standards in order to take any kind of corrective 12 action. And what the rules change is, they remove that 13 provision and they base the remedial action just on the 14 fact that a systemic defect in a part exists because 15 they're getting way too many valid warranty claims on it. 16 So it's not -- oops. Excuse me. 17 It sounds like a wild animal. 18 (Laughter.) 19 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: And so 20 I think, you know, that's really what the situation is. 21 What the gentleman, Mr. Prescott's asking is to be able 22 to -- he wants the hearing in order to argue what the 23 emission impact is. And that's a totally separate issue 24 in the regulations, is that we're trying to decouple the 25 emission impact from simple defects. And it's based on PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 291 1 the premise that we don't think that we should have cars 2 that are running around with a lot of broken parts on 3 them. Because if they have any impact on emissions, 4 that's going to increase overall emissions regardless of 5 whether they're in that yellow or red bar. And it's 6 something that the manufacturer was required to 7 demonstrate would not occur at the time of certification. 8 So they build a product, it's supposed to be durable for 9 the useful life of the vehicle, and it turns out by 10 warranty claims that it's breaking too often. 11 And it's just like looking at Consumer Reports. 12 You know, you go in there and you see some manufacturers 13 have very low failure rates and some of them have very 14 high failure rates. And what we're saying is those with 15 high failure rates ought to fix it because it has an 16 impact on emissions. 17 BOARD MEMBER BERG: And when they fix that 18 though, because it is part of an engine system, they would 19 replace it with this same part, just presumably working? 20 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: No, 21 they would replace it with an improved part. They would 22 have to show that the reason for the defect has been 23 eliminated in the replacement part. 24 BOARD MEMBER BERG: And then the reason for 25 extending the warranty would be -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 292 1 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Well, 2 the extended warranty -- 3 BOARD MEMBER BERG: -- the new part? 4 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yeah, 5 what happens right now under the recall is if a part 6 starts failing -- in all likelihood, a hundred percent of 7 them will never fail. You know, you buy a washing machine 8 or something and you may have a lot of them have water 9 repair problems, but many of them have no repair problems. 10 So under a recall right now, every single car gets a new 11 part put on it, even those that would ultimately never 12 fail. And that's all triggered because too many of them 13 started to fail at a relatively young age. 14 So we think that the extended warranty is a much 15 smarter way of doing this. And the way we can make sure 16 it happens is to have the OBD system be the trigger. So 17 when people -- when the OBD light comes on, for many 18 components we'd say, okay, then that part has to be 19 replaced with a better part. 20 And the reason that we extend the warranty out to 21 150,000 miles is because what we're doing is acknowledging 22 that there's a defective part in this engine family, this 23 group of engine families, and we think people should have 24 some protection against that part failing for the life of 25 the vehicle. We've chosen the life to be the longest PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 293 1 period of warranty that we have, which is up to 150,000 2 miles. 3 So all it's doing is providing an incentive for 4 the person to go ahead and get that part replaced when 5 their "check engine" light comes on. 6 And in the end I think in almost every case far 7 fewer parts will be replaced per defective part because 8 we'll really be focusing only on the ones that actually 9 break. So if you had a million cars with a bad oxygen 10 sensor on them, in a recall they're going to find a 11 million cars and they're going to bring them all back in 12 and put a million new improved parts in them. 13 And under the extended warranty you might argue 14 that probably no more than half of them would fail. And 15 they will -- so they only have to replace a half a million 16 parts, and they only have to do it over an extended period 17 of probably six or eight years. So it's a much more 18 efficient, lower cost, and it doesn't have that onerous 19 aspect of getting that dreaded letter in the mail that 20 your car's defective and you've got to bring it in and 21 have it fixed. It just, you know, waits until something 22 fails and the light tells you, and you get it fixed then 23 or you get it fixed during your next repair period. 24 BOARD MEMBER BERG: And then on this extended 25 warranty of five -- the most parts are five to seven PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 294 1 years -- 2 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: -- for 3 the warranty, right. 4 BOARD MEMBER BERG: -- for the warranty, then why 5 wouldn't we go out to the 120,000 miles, which is what we 6 consider to be the useful life? 7 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Well, 8 if I was a consumer and my -- ARB found out that my car 9 had a systemic defect in it at three years old, it's 10 exceeded, you know, for the 4 percent threshold, for 11 example, I might -- first of all I might want to think 12 that the ARB would force replacement of all those parts. 13 That's kind of what the current program does. 14 But I think that in this case, if we don't have 15 that, if we try to have this more streamlined, more 16 efficient program, then as a consumer at least I would be 17 a little bit upset if I knew there was a defective part 18 there and at 112,000 miles, beyond the useful life in that 19 case, that part fails and I get stuck having to repair it. 20 And from an air quality standpoint we're 21 concerned because, you know, people start not repairing 22 parts when the cars get old. And if it's covered under 23 warranty and free, they're more likely to get the part 24 replaced. 25 So it's a combination of those features. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 295 1 BOARD MEMBER BERG: Well, maybe I didn't 2 understand you. But I understood the last answer to my 3 question to be that if it failed at 112,000 miles, that it 4 wouldn't even fall under this reporting, that it would 5 have to fail within the warranty period of five to seven 6 years. 7 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: No, I 8 see the disconnect. The disconnect is that you only get a 9 recall or an extended warranty if your part has broken at 10 an excessive rate during the warranty period, which, 11 depending on the part, is three or seven years and 70,000 12 miles. So once you go beyond that period, there will be 13 no mandated recalls or extended warranties for parts. 14 However, if the part does fail prior -- within 15 the warranty period, that three or seven year period, and 16 then we identify it as having high failures, then you get 17 the extended warranty, and anybody that owns that car gets 18 that part replaced -- just that part replaced for free for 19 150,000 miles. 20 But if they start -- if they exceed 4 percent, 21 for example, at a hundred thousand miles, there's no 22 penalty on the manufacturer to do anything to that part. 23 It's only if they exceed that fairly high failure rate 24 right off the bat in this early warranty period. The 25 distinction being the warranty period is shorter than the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 296 1 useful life. That's just the way it is in statute except 2 for the super clean cars. 3 BOARD MEMBER BERG: I do have a question for you. 4 When you look at failure rate percentages, is a 4 5 percent failure rate excessive? 6 MR. PRESCOTT: Well, Madam Board Member, I'm an 7 attorney, so I'm not the first person who looks at these 8 things. 9 But let me say with response to this statement 10 before and to answer your question: Manufacturers are 11 certainly not proud of high failure rates. And in those 12 cases manufacturers have many opportunities to remedy 13 those through other mechanisms, their own warranty, 14 extension of warranty voluntarily, or some kind of other 15 owner notification program. But manufacturers don't 16 believe it's the duty of an air resources board to mandate 17 consumer protection. And we feel that that's what they're 18 doing. 19 With regard to 4 percent, I guess -- I don't 20 think I have the authorization of my manufacturer or any 21 other to make that determination because I'm not the 22 person who does. 23 MR. DOUGLAS: I'm sorry. Could you repeat the 24 question? 25 BOARD MEMBER BERG: I was just wondering in the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 297 1 workings -- I mean within the industry, if 4 percent 2 failure rate was an excessive amount. 3 MR. DOUGLAS: I think the 4 percent came from the 4 Air Resources Board back in 1988. 5 BOARD MEMBER BERG: I understand. I'm just 6 asking you: From an industry perspective, is 4 percent an 7 excessive amount? 8 MR. DOUGLAS: You know, I can't answer that. 9 BOARD MEMBER BERG: As long as it's not our car, 10 I guess not, huh? 11 EXECUTIVE OFFICER WITHERSPOON: I think if it 12 were brakes, the auto industry would say it's excessive. 13 And when it's emission controls, they think that it's not. 14 And there's a value difference being applied to when it's 15 serious enough to go to full corrective action. And we 16 think that as long as the risk exists that it's going to 17 fail and emissions are going to be adversely affected, 18 that we're responsible for getting it corrected, either 19 immediately with a recall or over the vehicle's life 20 through extended warranty. 21 BOARD MEMBER BERG: And the issue here really 22 boils down to the fact that we have the ability right now 23 today to order a recall based on proving emission loss. 24 EXECUTIVE OFFICER WITHERSPOON: Right. And the 25 burden is too high on staff to make that proof in the way PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 298 1 that it's been structured in our regulations to date. And 2 so we are seeking to change that so it's easier to move 3 into corrective action when we think it's warranted? 4 BOARD MEMBER BERG: So we could just keep the 5 recall and change the burden of proof and then negotiate 6 the extended warranty. Would that be more acceptable? 7 MR. DOUGLAS: Yes. 8 MR. PRESCOTT: My colleagues are saying yes. 9 Let me say, regarding the 4 percent and where it 10 comes from, is there's never been 4 percent written in 11 stone anywhere. And in response to the question you asked 12 before about would I consider that high, every case is 13 individual. Up until this point 4 percent -- although 4 14 percent has been irrebuttable -- it's been a rebuttable 15 presumption within the regulation that has a number of 16 factors for the Air Resources Board to consider, among 17 them the emissions effect, but also with regard to -- not 18 just that a vehicle failed, but where did that vehicle 19 fail? Was it based on a particular time of manufacture or 20 a particular plant or some other way to isolate down what 21 was necessary and appropriate without providing an 22 unwarranted burden? The staff is now proposing to 23 eliminate a rebuttal presumption and make it irrebuttable 24 for the sole reason of convenience and that they have an 25 additional burden placed on them. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 299 1 BOARD MEMBER BERG: Well, my perception -- and I 2 could be mistaken about this -- is that we seem to be 3 boxed into a corner, because of the amount of time and 4 being able to locate the engines and to do the testing to 5 come up with the emissions. And so there has to be 6 something -- it feels to me that we've had a few bad 7 incidences within the industry. And with all types of 8 things, and things swing very far to another side and some 9 time we, you know, come back to the middle, and it just 10 seems to me that -- you guys are all very bright -- we 11 should be able to work this out. 12 MR. PRESCOTT: I think we can too, and that's why 13 I think it is premature to vote on this at this point. 14 BOARD MEMBER BERG: Well, how long have we been 15 working on it already? 16 MR. PRESCOTT: Well, on the current regulation 17 proposed by staff, we've been working on it for about 45 18 days, because this is dramatically different than what was 19 proposed in the MSOP issued in April. 20 And I will say manufacturers are interested to 21 work on this. Manufacturers -- different manufacturers 22 have different perspectives. But we all believe we bear 23 some burden in providing information about what the 24 emissions impact is of a vehicle as well as the screening 25 of those warranty claims. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 300 1 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: If I 2 could just add one thing about the comment of this is 3 really just being done as a matter of convenience because 4 we can't test enough cars. I suppose that is one 5 interpretation. But if you remember the statistics that 6 the staff gave, that over the past six years we had 32 7 corrective actions under the current rules, then we would 8 have had 91 corrective actions under the proposed rules. 9 And the difference there is largely manufacturers arguing 10 that the emission increase that occurred from the failed 11 part was not enough to cause the group of vehicles on 12 average to fail. 13 And so every time one of these fails, 14 there's -- we'll now be able to show that on average all 15 the cars end up exceeding the emission standard. That 16 means we have to show how many parts are going to fail. 17 We have to -- they were saying, well, this is projection 18 in the future. We have to project into the future, which 19 is very hard to do. All of these things. And yet you 20 know in the end that if there's a defective part and that 21 to the extent it's on more than 4 percent of the vehicles, 22 it is causing excessive emissions. Whether it causes the 23 average car to fail or not is not really relevant to the 24 fact that there are more emissions. 25 BOARD MEMBER BERG: And the defective part is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 301 1 specifically there for air quality purposes? 2 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: That's 3 right. It's an emission control part. 4 EXECUTIVE OFFICER WITHERSPOON: I would say that 5 even more bluntly than Mr. Cackette. We've learned 6 through these enforcement cases that our recall authority 7 is relatively toothless. And that is not what the 8 Legislature intended. It is not what this Board intended. 9 And it means that our ability to enforce the standards and 10 other requirements that you have established is severely 11 limited and we need to correct that situation. 12 BOARD MEMBER BERG: Thank you. 13 CHAIRPERSON SAWYER: Mrs. Patrick. 14 Oh, excuse me. 15 Mrs. Riordan. 16 BOARD MEMBER RIORDAN: I want to go back to the 17 issue of due process and just have our staff put on the 18 record a response to Mr. Prescott. 19 Mr. Prescott, I didn't realize you were an 20 attorney. So I think it's appropriate that we have an 21 attorney respond to your issue about due process. 22 SENIOR STAFF COUNSEL OLIVER: Thank you, Ms. 23 Riordan. This is Kirk Oliver, ARB Counsel. 24 And we're looking at Health & Safety Code Section 25 43105. And it states: "If a manufacturer contests the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 302 1 necessity for or the scope of a recall of vehicles or 2 engines ordered pursuant to this section and so advises 3 the State Board, the State Board shall not require such 4 recall until it first affords the manufacturer the 5 opportunity at a public hearing to present evidence in 6 support of the manufacturer's objections." 7 You will note that that does not provide a 8 similar ability to request a hearing in the event that 9 other types of corrective action are ordered by the Air 10 Resources Board. And that's the authority that we're 11 relying on to support the proposal that you have before 12 you today. 13 BOARD MEMBER RIORDAN: Just in general terms, 14 they would always have the opportunity to at least 15 approach the chief executive officer, am I correct? 16 SENIOR STAFF COUNSEL OLIVER: Yes, Mrs. Riordan. 17 In the entire history of the recall program to date, it's 18 18 years, I believe that only one or two of the cases went 19 to the stage of an ordered recall, went through the formal 20 process. All of these other cases that you've heard of, 21 that we've detailed in a staff report, including the 3,000 22 and some odd reports per year that we get of parts failing 23 at over the 4 percent level, those all get addressed 24 across a bargaining table between the Air Resources Board 25 staff and the representatives of the auto manufacturers. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 303 1 Unfortunately it's been our experience under the 2 current standard that usually these negotiations result in 3 no corrective action, even though we've seen these high 4 failure rates of these emission control parts. And the 5 reason why these negotiations are resolved so unfavorably 6 is because the auto industry representatives sit across 7 the table and tell us that we cannot take any action here 8 because we can't prove the emission standards case. 9 So we went back and looked at the statute and 10 examined its language to see if there was any other way 11 other than emission standards which would authorize us to 12 order a recall. And, indeed, the same Health & Safety 13 Code section that I just read a passage of to you also 14 authorizes us to order recalls or other corrective action 15 for violations of ARB's test procedures. 16 One of those test procedures has to do with the 17 durability of the vehicles; that manufacturers actually 18 do, contrary to what you've heard so far today, have to 19 come to us when they certify a vehicle with us and they 20 have to predict its future emissions performance over 21 these time periods that you've heard so much about today. 22 So they're well used to doing that kind of thing and 23 they're very adept at doing it. 24 We would add another portion to that 25 demonstration that says that, "yes, the promises that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 304 1 you're making to us and that you're making to the drivers 2 of the cars and you're making to the public at large in 3 California are actually worth the paper that they're 4 written on," that we're holding them to their words, and 5 that the parts that they're having us certify under their 6 representation that they will perform and limit the 7 emissions to the stringent standards that we've adopted 8 will do that into the future. And that's all this 9 proposal is premised on. 10 BOARD MEMBER RIORDAN: Thank you. 11 MR. PRESCOTT: My I respond to that? 12 CHAIRPERSON SAWYER: Yes. 13 MR. PRESCOTT: First, with regard to the burden 14 of testing. I would like to point out that under the 15 current regulation the burden to provide information is to 16 the satisfaction of the executive officer. The executive 17 officer does not have to be satisfied with the information 18 the manufacturer provides. There clearly is a burden 19 placed on the manufacturer to provide this to that 20 satisfaction. So to call the burden entirely on the 21 staff -- or on the executive officer rather than on the 22 manufacturer is simply a mischaracterization. 23 The other thing I would like to point out is, the 24 Alliance and Ford Motor Company do not believe that the 25 Air Resources Board has authority under Section 43105 of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 305 1 the Health & Safety Code to order any remedy other than a 2 recall. They can negotiate other remedies and enter 3 voluntary agreements for them. But they cannot order any 4 other remedy save a recall. And that's why -- that's why 5 the Legislature wrote in that an administrative hearing 6 was available for a recall. To think otherwise would be 7 to assume that the Legislature only thought due process 8 was necessary for a recall and not for any other reason 9 that would take property of a manufacturer without 10 guarantying that their liberty would be preserved. 11 If you'd like, we can discuss further -- I don't 12 want to take up too much of your time, but we can discuss 13 further why we feel that the test procedures are 14 inappropriate for use in lieu of emission standards. But 15 those comments are quite long. I encourage you to read 16 them. But I can give you a few points if you would like. 17 BOARD MEMBER RIORDAN: I'm comfortable with 18 what's been said. Thank you. 19 MR. PRESCOTT: Thank you. 20 CHAIRPERSON SAWYER: Thank you very much. 21 I assume that we're going to be sued if we pass 22 this. 23 (Laughter.) 24 CHAIRPERSON SAWYER: And that counsel believes 25 that we have a reasonable basis for fighting it? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 306 1 SENIOR STAFF COUNSEL OLIVER: Yes, your 2 assumption is correct, Chairman. Both of them. 3 (Laughter.) 4 CHAIRPERSON SAWYER: Thank you very much, Mr. 5 Prescott. 6 MR. PRESCOTT: Thank you for your time. 7 CHAIRPERSON SAWYER: Mr. Kahler. And then we'll 8 have John Cabaniss, Jed Mandel, and Marty Keller. 9 MR. KAHLER: Thank you, Mr. Chairman and members 10 of the Board. A little bit of a different spin on this 11 from the after-market repairs. My name is Denny Kahler. 12 I've been a mechanical shop owner in California for over 13 30 years. I've served as Chairman of the Board of the 14 Automotive Services Association, ASA, which is the largest 15 independent automotive repair association in the United 16 States. I currently serve on ASA's Executive Committee in 17 the role of past chairman. I'm here today representing 18 ASA. 19 Independent repair facilities maintain 20 approximately 75 percent of the vehicles out of warranty. 21 As warranties are extended or expanded, these repairs are 22 removed from the independent repair facilities. Our 23 members are very concerned that this regulatory proposal 24 will increase the number of repairs removed from the 25 independent shops and then being sent to new car PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 307 1 dealerships. 2 The California Air Resources Board staff report 3 identified specific aspects that needed to be improved in 4 the existing warranty information reporting and recall 5 regulations and emission test procedures. I would like to 6 reference corrective action in the staff's report. 7 ARB staff stated, depending on the type of 8 defective emission control component and whether or not 9 OBD is able to defect the problem, corrective action would 10 either be the recall of all affected vehicles or extension 11 of the emission warranty for that specific component. As 12 you are aware, ASA opposed previous warranty extensions 13 including those -- the Low Emission Vehicle II program and 14 extended emission warranties from three years, 50,000 15 miles, to 15 years, 150,000. 16 While ASA supports clean car programs, we believe 17 they can exist and prosper in states without expanding or 18 extended warranties at the expense of the small 19 businesses, the independent repair facilities. 20 Clean car programs have followed in Oregon, 21 Washington, Maine, Vermont, Massachusetts, Rhode Island, 22 Connecticut, New York, and New Jersey. We anticipate this 23 will also occur in Pennsylvania. 24 Despite the importance of the corrective action 25 proposal, ASA is concerned about the staff evaluation of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 308 1 the potential impacts on our businesses. The staff report 2 states: "The proposed amendments should have minimal 3 impact on the independent service and repair industry and 4 after-market parts manufacturers since the proposal deals 5 with relatively new vehicles and engines that are still 6 within their certified useful life period." 7 ASA believes that any extension or expansion of 8 the vehicle warranty status will negatively impact the 9 independent repair in the State of California. Customers 10 in independent repair shops generally will not repair more 11 than one or two items at the independent shop, and then 12 they will take it back to the dealer for warranty repairs. 13 With this expanded warranty staff proposal, 14 independent repairers will lose a large number of 15 customers, having a significant impact on their 16 businesses. 17 There was a formal economic analysis as to the 18 economic impact this proposed regulatory change will have 19 on independent repairers conducted by ARB. I was unable 20 to determine from the public staff report whether specific 21 economic analysis was available for review. 22 During the Washington State debate over clean car 23 legislation, policy makers considered requiring that 24 independent repairers may also be allowed to qualify for 25 these warranty repairs. Eventually the super warranty PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 309 1 provisions were disposed of in the final draft 2 deliberations. 3 If ARB moves forward with this major policy 4 change, ASA requests that independent repairers be allowed 5 to perform those warranty repairs. Otherwise the State of 6 California will clearly have instigated a process that 7 will remove -- 8 CHAIRPERSON SAWYER: I must ask that you conclude 9 please. 10 MR. KAHLER: Thank you. 11 -- customers from our independent repair shops to 12 the dealerships. 13 Please do not take this particular policy debate 14 lightly. Your decision whether to move forward with an 15 expansion of the vehicle warranties will largely impact a 16 number of California small businesses. 17 Thank you. 18 CHAIRPERSON SAWYER: Thank you. 19 Mr. Cabaniss. 20 MR. CABANISS: Good afternoon, or is it evening? 21 Well, whatever. 22 Good afternoon, Mr. Chairman and Board members. 23 I'm John Cabaniss. I'm representing the Association of 24 International Automobile Manufacturers. Our member 25 companies represent about 50 percent of sales here in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 310 1 California. Obviously there's some overlap with the 2 Alliance. 3 We agree generally with and independently came to 4 the same conclusions basically as the Alliance with regard 5 to many of their points. 6 We certainly agree that CARB certainly should 7 look at their programs periodically and update them, 8 streamline them. And we believe this is a case that is 9 ripe for review, and we're glad to work with ARB staff to 10 come to agreement over some of these provisions. But many 11 of them, as has already been stated, we disagree with. 12 The biggest concern -- one of the biggest 13 concerns, I should say, from our member companies is in 14 this certification issue and the concern that we have 15 about facing road blocks in certification. That's a major 16 problem. We need -- we have to be able to have a 17 predictable orderly process for selling vehicles in the 18 market. And we too are baffled by the way in which we 19 would be able to document meeting the requirements that 20 are placed in certification and are concerned that we 21 would run into road blocks that would cause problems with 22 the shutting down assembly lines or failure to deliver 23 vehicles to dealers. 24 We are also concerned about this emission 25 standards issue. Today manufacturers are required to meet PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 311 1 standards in the 120,000 mile useful life period. And if 2 we -- and once that's shown, then executive order is 3 granted and we're allowed to sell vehicles. 4 But recognizing the variability of production 5 vehicles, manufacturers target certification levels well 6 below the standard, with a -- and that's in order to 7 assure fleet-wide compliance and avoid problems -- 8 liability problems with recalls. This margin is often 9 referred to as headroom. And I'm sure you've probably 10 heard that term before. 11 But under this particular regulation, that 12 concept is being changed to some degree at least where 13 corrective actions would be required whenever a part shows 14 an emissions increase even if emission standards are not 15 exceeded. 16 This is not appropriate. Failure to meet 17 emission standards has always been, and should remain, the 18 determining factor for corrective actions. Not doing so 19 is tantamount to tightening emission standards, and the 20 proposal seems to be trying to force manufacturers to 21 achieve certification emission levels in use. 22 This would have the perverse effect of removing 23 the incentive for manufacturers to value headroom. And 24 that is just not good for air quality. 25 We believe also, as the Alliance folks have PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 312 1 already stated, that extended warranties should be 2 maintained as an option but not required. 3 CHAIRPERSON SAWYER: Would you please conclude. 4 MR. CABANISS: Yes. 5 And while we haven't delved into the legal 6 details as much as those -- as they have, we do agree with 7 their assessment of potential legal problems. 8 As an aside, if you'd grant me, Mr. Chairman, I 9 would just like to personally thank Supervisor Patrick for 10 her ten years of service. And in particular -- my wife is 11 a kindergarten teacher, and she's looking at retiring this 12 year herself. And I have to agree with Dr. Sawyer's 13 assessment earlier. From many of the stories she's told 14 me, it certainly sounds like herding cats is a good 15 definition. And that has served you well here. And, 16 again, thank you for your service. 17 BOARD MEMBER PATRICK: Thank you. And I would 18 suggest she might want to run for office when she wants to 19 retire. 20 (Laughter.) 21 MR. CABANISS: I was thinking that as well. She 22 would make a good -- of course we don't live in 23 California, but maybe we should relocate. 24 (Laughter.) 25 BOARD MEMBER PATRICK: They elect kindergarten PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 313 1 teachers all over the country, sir. 2 MR. CABANISS: You're correct. 3 Thank you again. 4 CHAIRPERSON SAWYER: Thank you, John. 5 Mr. Mandel. 6 MR. MANDEL: Good afternoon. Nice to see 7 everyone. I'm Jed Mandel. I'm President of the Engine 8 Manufacturers Association. 9 The heavy-duty engine industry has substantial 10 concerns about today's proposal, concerns that we think 11 can and should be addressed. 12 The proposed changes before you today are based 13 substantially on light-duty passenger car focus, history 14 and experience. Heavy-duty commercial issues simply have 15 not been at play, either in the background leading up to 16 the proposed changes or, unfortunately, in any meaningful 17 discussion on what changes might be necessary or 18 appropriate to the program as it applies to heavy-duty 19 engines. 20 The reasons that dialogue have not happened are 21 set forth in our written comments. It has not been 22 because of our lack of interest or effort. 23 I note that today's changes to the status quo 24 would disharmonize ARB's treatment of heavy-duty engines 25 from that of EPA. Together we have worked hard to assure PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 314 1 that there is a 50-state program applicable to the 2 heavy-duty on-highway industry. Indeed we have embraced 3 and implemented enormous stretch goals in order to assure 4 that such harmonization takes place. 5 ARB shouldn't cavalierly abandon a 50-state 6 program simply because it hasn't had the time or can't 7 take the time now to consider all the ramifications of 8 this program as it applies to heavy duty. 9 Nevertheless, in the past few days and weeks we 10 have had some discussions with staff. We have outlined 11 specific concerns and problems and impact to heavy-duty 12 engine industry. While we haven't yet worked out specific 13 language or regulatory fixes, we are optimistic that such 14 language and necessary changes could be made, and the 15 overall program would be improved if more time were 16 available. 17 We urge the Board to direct the staff to work 18 with us to address our concerns. The clarifications and 19 changes that we are seeking will improve the program and 20 make it more workable and cost effective. We seek a few 21 things. I'm going to try to summarize them very quickly. 22 We seek clarification of certain terms -- of 23 certain defined terms and the addition of definitions for 24 certain undefined terms. 25 We seek modification of the new certification PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 315 1 demonstration obligation. 2 We seek the addition of clear and specific 3 criteria under which manufacturers can screen out warranty 4 claims to get below the 4 percent threshold when they get 5 to the 10 percent threshold -- if they should get to the 6 10 percent threshold. 7 We seek recognition and consideration that in the 8 year 2010 heavy-duty engine manufacturers will for the 9 first time be faced with implementing new NOx 10 after-treatment technologies and new OBD requirements. 11 We seek modifications to the light and medium 12 heavy, heavy-duty extended warranty periods. 13 We seek a fair opportunity for corrective action 14 public hearings with full due process. 15 And we seek notification -- modifications to the 16 notification of owners language set forth in Section 17 2172.3. 18 In addition, there are numerous technical 19 drafting issues that also should be addressed. We urge 20 the Board to direct the staff to work with us on those 21 issues as well. 22 We think that today's action should be deferred 23 to provide time to address the unique aspects of the 24 heavy-duty industry which simply have not been the focus. 25 However, to the degree that there will be a 15-day notice PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 316 1 period, rather than taking the additional time that we're 2 requesting, I would ask that that 15-day notice be 3 officially a 30-day period to make sure that we do have 4 the time to respond to the staff. 5 Obviously I would be pleased to take any 6 questions that you might have. 7 CHAIRPERSON SAWYER: Are there questions? 8 Thank you very much. 9 BOARD MEMBER RIORDAN: Yeah, Mr. Chairman. 10 Let me just ask staff. Any problems with this 11 30-day request? 12 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: No, not 13 at all. Just so it would be clear on the process, we have 14 provided this Appendix B, that I think you have, which has 15 11 or 10 different areas where we've tried to come up with 16 accommodations for both the Alliance and the Engine 17 Manufacturers. And we didn't provide detailed language on 18 it. We provided a concept. And what we will do with this 19 concept is we will draft up -- none of these do we think 20 really go to the core policy issues that the Board's 21 deciding. We would draft up language, we would share the 22 language with them and discuss it ahead of time. Then it 23 would go into the 15-day, which will make 30-day period 24 for public comments so everybody gets a shot at it. But I 25 think there's, you know, two -- at least two steps to deal PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 317 1 with the language here before the regs would go final. 2 BOARD MEMBER RIORDAN: And, Mr. Mandel, do you 3 have this that's before us? 4 MR. MANDEL: I have it as of this afternoon. 5 And just very briefly, Mr. Riordan. We obviously 6 support the staff's direction and we appreciate their 7 intent in trying to address our concerns. What becomes 8 somewhat insidious about the process, from a process 9 perspective and from a fairness perspective, is that only 10 in the last couple of weeks have we even had the 11 opportunity to talk and focus on heavy-duty issues, and 12 really only in the last couple of days, late Monday night 13 and then really with new changes this afternoon have we 14 seen the staff's intent to address in concept some of our 15 issues. 16 What's problematic about this is that with a 17 couple of months' deferral, which no adverse impact to the 18 overall program, we would have the opportunity to work 19 with staff on these issues and have the Board essentially 20 approve it and have us have the opportunity to come back 21 before you and explain to you if we have concerns that we 22 haven't been able to work out with staff. The problem 23 with doing it solely through a 30-day notice process is it 24 becomes the staff's unilateral decision essentially as to 25 whether these issues had been worked out or not worked PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 318 1 out. And it really I think is not the intent of the 2 Legislature or should be your own intent to abrogate your 3 responsibilities in the opportunity for good public open 4 exchange. 5 So we would prefer to take the additional time to 6 do it. I don't think at the end of the day it all defers 7 the ultimate implementation of a revised program, but it 8 just makes for a fair and open process. 9 BOARD MEMBER RIORDAN: Thank you. 10 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: We're 11 certainly not trying to take any decision authorities away 12 from the Board. But I would just point out that these 13 items are, you know, largely technical. They're, for 14 example, how do you screen out a warranty part -- 15 warranted part for which you paid a claim on that turns 16 out that there was nothing wrong with it? The mechanic 17 replaced the part and it wasn't the problem. And, you 18 know, that's not the kind of stuff that I think would make 19 any difference on the policy issues that the Board's 20 considering. 21 And this issue, for example, that's brought up 22 over and over again about this statement that you have to 23 make during certification. I admit we -- in our initial 24 staff report we said provide additional data. But we 25 heard such an outcry over that and some very reasonable PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 319 1 concerns expressed, that we've got language that now 2 clearly states you don't have to provide new data; you 3 just have to make a statement that you believe that the 4 vehicles you produce are same as the certification vehicle 5 for which you got approval from ARB to start off with and 6 there would be no systemic defects. That's all it is. 7 So it's there to provide the legal tie so that 8 this program works. But there's nothing else required. 9 And we've been telling both the industries that for months 10 that that was our intent. 11 BOARD MEMBER RIORDAN: Well, I think the Board 12 pretty well understands both sides of the coin. And so I 13 appreciate your comments, and thank you. 14 MR. MANDEL: Thank you, Ms. Riordan. And, 15 again -- but I want to just add, exactly what Tom says is 16 the problem. And I've had a chance to work with Mr. 17 Cackette for probably close to 25 years. And I absolutely 18 believe that it is his intent to do exactly what he said 19 in the best interests. But these become important policy 20 issues even if they're technical issues. And when we get 21 to see it with a day or two before the hearing, or really, 22 as a practical matter today, an hour or two, the 23 resolution that you're about to adopt hasn't even been out 24 in the back of the room for us to look at and comment on, 25 it deprives us of process, the opportunity to appear PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 320 1 before you, who are the decision makers, to express 2 whatever concerns we might have, by taking these issues, 3 which are now just characterized as technical corrections, 4 and leaving them essentially unilaterally to the staff. 5 And more and more the Board has fallen into, "we'll just 6 cover it through a 15-day notice," without the real issues 7 being framed up before you. And I just don't think it's 8 the right way to proceed, on a much broader scale than 9 just this particular rule, although this one is clearly a 10 good example of that. 11 CHAIRPERSON SAWYER: Thank you. 12 MR. MANDEL: Thank you. 13 Mr. Keller. Then we'll have Nikki Ayers, Norman 14 Plotkin, and Aaron Lowe. 15 MR. KELLER: Thank you, Mr. Chairman. I'm Marty 16 Keller. I'm the Executive Director of the California 17 Automotive Business Coalition. And we'd like to shift 18 this conversation back to the angle that Mr. Kahler raised 19 earlier with respect to the potential impact on the 20 automotive after-market. 21 Roughly two-thirds of our members are independent 22 providers, mom and pop shop owners. And You'll be hearing 23 from a couple of them directly after me about the impact 24 of shifting the business in the after-market more and more 25 to the dealers and away from the independents. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 321 1 If you have a network of 20,000 plus dealers 2 currently who are providing a major important service to 3 consumers and consumers are going to be directed by the 4 result of these kinds of policies more into the network 5 dealership, which is not only smaller in total numbers in 6 lane capacity, but it also reduces competitiveness, I 7 think that the -- our concerns, our members' concerns 8 revolve around the demonstration, whether it's been 9 demonstrated, that the proposal will actually achieve what 10 it says it will do; and, secondly, whether there's been 11 adequate consideration of the competitiveness factors, in 12 particular in light of SB 1146, which was passed several 13 years ago which recognized the value to consumers of a 14 robust and competitive automotive after-market. 15 So we request that you ask staff to reconsider 16 the issue with respect to the impact on the after-market 17 and the impact on consumers of restricting business away 18 from the independents and more toward the dealers. 19 Thank you. 20 CHAIRPERSON SAWYER: Thank you very much. 21 Nikki Ayers. 22 MS. AYERS: Thank you for allowing me to speak 23 today. 24 My name is Nikki Ayers and my husband and I own 25 Ayers Automotive Repairs in Santa Barbara, California. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 322 1 We've been in business 27 years. I employ 12 people. 2 Currently I have five ASE master technicians on staff, two 3 ASE certified technicians, two ASE certified service 4 advisors, and three backup staff members. We're also a 5 smog check station in the basic area. We service and 6 repair over 300 vehicles a month. 7 And with that, I'd like to give you a little 8 breakdown of what we do. We have -- 65 percent of our 9 workload performs maintenance services, 25 percent 10 driveability issues, and the balance are major breakdowns. 11 Of those 300 vehicles, 13 percent are older than 15 years, 12 69.5 percent are 5 to 14 years old, and 17.5 percent are 13 4.9 years or newer. And our annual revenues are about 1.5 14 million per year. 15 I just hope that you understand that this is 16 going to have a major impact on my business. And I don't 17 know, many years ago when the state had centralized smog 18 testing, one of the main issues was people going back and 19 forth between the repair facility and the dealer in order 20 to get the cars repaired. And the current proposal now is 21 going to start that ping-pong effect again, where people 22 won't want to come back to my business because I'm an 23 independent repairer, and I cannot do the warranty repairs 24 that are prescribed under the new proposal. 25 One of the issues that is in the staff letter PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 323 1 states that -- the potential impact on other businesses, 2 the reports states, "The proposed amendment should have 3 minimal impact on the independent service and repair 4 industry and after-market parts manufacturers since the 5 proposal deals with relatively new vehicles and engines 6 that are still within the useful life period." I think 7 even according to my own statistics from my own shop, the 8 suggestion that the independent repair shop only works on 9 vehicles which are passed their useful life are false. 10 Also, in the Rand report that was done for CARB, 11 the prediction is on the -- in the maximum scenario for 12 the PZEV vehicles, we're looking at a 6.9 percent decrease 13 in revenue over the next 14 years. 14 I guess my biggest concern still is the fact that 15 I'm going to lose customers because they're going to be 16 directed to go to the dealer just because their "check 17 engine" light comes on. And just because the "check 18 engine" light comes on doesn't necessarily mean that 19 that's a warranty repair. That won't allow us to have the 20 opportunity to continue to check over the car and do the 21 maintenance services, because when a customer takes their 22 car into the dealership -- 23 CHAIRPERSON SAWYER: I must ask you to conclude 24 please. 25 MS. AYERS: Okay. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 324 1 -- more than likely will want them to do the 2 repairs there. 3 I have a suggestion of a couple of alternatives. 4 One is a program that the BAR should be able to put 5 together a program that independent repairers can do 6 warranty repair, maybe consider going back to an annual 7 smog inspection, better -- 8 CHAIRPERSON SAWYER: I must repeat my request. 9 MS. AYERS: Okay. I'm sorry. 10 Thank you. 11 CHAIRPERSON SAWYER: Thank you very much. 12 Mr. Plotkin. 13 MR. PLOTKIN: Good afternoon, Chairman Sawyer, 14 Honorable Board members. My name's Norman Plotkin. I 15 represent the California Automotive Wholesalers 16 Association. 17 There was some discussion earlier about the legal 18 authority and the statutes that underlied this change. 19 I'll tell you that my reading of the plain language of the 20 statute is unambiguous. Section 43205 of the Health & 21 Safety Code specifically articulates a three-year, 22 50,000-mile warranty or seven-year, 70,000-mile warranty 23 for these parts. 24 Now, the Legislature in fact passes thousands of 25 bills and it directs you to do all kinds of things. And PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 325 1 usually they leave the promulgation to you. But sometimes 2 they specifically enumerate what it is -- the legislative 3 intent is. And in this regard it's three years, 50,000 4 miles; seven years, 70,000 miles. 5 That, in addition to the fact that staff has 6 indicated to you by their own admission that the useful 7 life of these parts is 12 years or 120,000 miles. So the 8 proposal today proposes to exceed the statutory authority 9 for these extended warranties and the useful life of the 10 part itself. So there's a little disconnect in my mind 11 there. 12 The next issue is that staff by fiat deems that 13 there's no economic impact on the after-market. And 14 this -- you know, there are certain things we've come to 15 count on from the Air Resources Board as you make changes 16 to regulations to reduce air pollution, which usually 17 means that we have retool, adjust and adapt and get in 18 line. 19 So the things that we rely on are that 20 you -- that you pay heed to the requirement that you 21 understand the economic impact of your changes and that 22 there be science -- good science underlying the changes 23 that you propose. 24 There are two studies that I can think of, Rand 25 Corporation Penway Research, that pegged the economic PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 326 1 impact on the automotive after-market as much as $8 2 billion through the year 2020. 3 Now, staff has either chosen to ignore that or 4 disregard it. But they didn't even give us the courtesy 5 of attempting to refute it. So it's beyond me how CARB 6 staff has determined that there's no recognition of the 7 economic impact on the after-market. 8 And, finally, if you ignore the lack of a 9 statutory authority and if you ignore the economic impact, 10 there is no empirical evidence to support this change to 11 increase the durability of parts. And I implore you -- I 12 beseech you that if -- each time I come here to lament the 13 changes that you are contemplating to reduce emissions, we 14 must be able to rely on your contemplation of the economic 15 impact and that there's sound science underlying the 16 changes that you are going to make us -- that you've heard 17 will affect the mom and pop shops out there who repair the 18 cars, your cars, my car, and keep, you know, a significant 19 portion of the vehicles on the road. 20 CHAIRPERSON SAWYER: Would you please conclude 21 your remarks. 22 MR. PLOTKIN: So in light of those three major 23 concerns I would ask that -- you know, I would suggest to 24 you that this is not right. There's more work to do. I 25 think we could find some common ground. The after-market PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 327 1 would like to be able to participate in the warranty 2 repairs. And we're happy to explore the alternatives. 3 Thank you. 4 CHAIRPERSON SAWYER: Thank you. 5 Ms. Berg. 6 BOARD MEMBER BERG: Doesn't the automobile 7 manufacturers determine who can do warranty work and who 8 can't? Is that correct? 9 MR. DOUGLAS: I think that's partially true. I 10 think it's also in many cases state law. Franchise law 11 governs what operations are done between -- or the 12 interaction between dealerships and manufacturers. And 13 that's as far from my area of specialty as you can get. 14 BOARD MEMBER BERG: Thank you very much. 15 Our regulation doesn't specifically say they have 16 to go to the dealership? 17 EXECUTIVE OFFICER WITHERSPOON: No, it does not. 18 BOARD MEMBER BERG: Okay. And then the second 19 question I had on -- could you comment on the economic 20 impact. 21 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yeah, 22 I'd be glad too. 23 This issue of longer warranties came up in front 24 of the Board many years ago. And you asked us -- you did 25 extend warranties on the PZEV, the very super clean cars, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 328 1 and the industry was concerned about that. You asked us 2 to go out and do a study. We hired Rand Corporation. 3 They did a study. They showed that, yes, there would be a 4 small impact on the industry due to some of the repairs 5 being directed to the dealership, which is in a practical 6 state where you have to get those repairs done right now. 7 But that was a -- to put it into context, that loss of 8 business was only a small fraction of the growth in 9 business that would be occurring over the timeframe 10 anyway, because more people in California, more 11 businesses, more cars, things like that. 12 If you shift to what we're doing today -- so 13 that's -- you know, to some extent that's a 14 water-under-the-bridge issue that was dealt with some time 15 ago. 16 If you look at what's happening today, you've 17 got, you know, 25 million cars out there that seek some 18 kind of repair in any one year. Under this regulation 19 there'd be roughly 150,000 more that would have to seek 20 repair from a dealer for this extended warranty, or for a 21 recall as a matter of fact. But it would only be for one 22 part on that car. So your car's got 30 or 40 parts. And 23 it's not the whole thing that has the extended warranty. 24 It's just the part that broke. So when you do a 25 percentage on that, I think it ends up being a very, very PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 329 1 small fraction of a change in business, which according to 2 our calculations before was relatively small to start off 3 with. So that's why we concluded that it was a minimal or 4 de minimis impact on the industry. Emotionally I 5 understand the -- you know, the issues are different than 6 it was five or ten years ago. They are concerned about 7 losing business. But we think in this specific instance 8 it's a very, very small impact. 9 CHAIRPERSON SAWYER: Aaron Lowe. And then we'll 10 have Bob Klingenberg, Kingsley Macomber, Ann Gallon, and 11 Dean Saito. 12 MR. LOWE: Thank you. Aaron Lowe, and I'm with 13 the Automotive After-market Industry Association. And we 14 represent manufacturers, distributors, retailers and our 15 repair shops around the country and in California. 16 I take issue, first of all, with the whole 17 concept of extending the warranties. The Board is hanging 18 their whole hat on this regulation, on extending the 19 warranties to 15 years, 150,000 miles. And yet there's 20 really no evidence to show that the warranties do: 21 1. Extend durability. Which the Rand study that 22 was discussed could find no connection between warranty 23 extension and improving durability. And they looked 24 really hard to find that kind of evidence. There is no 25 empirical evidence. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 330 1 2. When we asked the staff what their experience 2 has been with the emissions warranties that they've 3 extended in the past, their response to us was, "Well, we 4 really don't know." And our question was whether those 5 cars are actually getting their parts replaced. Do 6 consumers get -- take advantage of that warranty? Are the 7 cars actually replaced? 8 So in a sense the regulation that was being put 9 in place right now, they have really no idea whether that 10 information is -- whether that warranty is really going to 11 get those cars repaired, or in fact whether it's really 12 going to improve durability. 13 So our concern is, not only is it going to hurt 14 our business, but are we doing what's really best for what 15 CARB is really intending to do? 16 I would also take issue -- they say that only 17 maybe a hundred fifty thousand cars might increase -- or 18 might come under the warranty. I understand from before 19 they mentioned the term 900,000 cars that would have been 20 now included under an extended warranty. So I'm kind of 21 unclear where the difference is. 22 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Let me 23 just tell you. The difference was that for six years -- 24 it was a million cars for six years. That's 150,000 cars 25 per year, roughly. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 331 1 MR. LOWE: Per year. I see. Thank you. 2 And my other question was, while it is -- or this 3 isn't a question. It's a statement. The OBD light -- it 4 is for only one part. But as somebody mentioned earlier, 5 if the OBD light comes on, that car owner doesn't know 6 whether that part's covered by the warranty or not covered 7 by the warranty. They feel they have to go back to the 8 dealer. Because they're going to get a letter saying that 9 that part is covered by the extended warranty -- or we 10 assume they will. 11 So we don't understand why everybody thinks that 12 that one part is not going to cause problems for the 13 independent after-market. 14 In summary, we would really -- we really would 15 like to see this whole issue reexamined. We'd like to see 16 the extended warranty taken out. We think that the 17 statute is clear, that it says warranty, seven years, 18 70,000 miles for high priced parts; three years, 50,000 19 miles for all the other parts. And for recall for 20 systematic problems. We were talking about systematic 21 issues here. That's what the Legislature said in their 22 bill. We don't understand how they can interpret any 23 differently. 24 Thank you. And I'm available to answer any 25 questions. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 332 1 CHAIRPERSON SAWYER: Thank you. 2 Mr. Klingenberg. 3 MR. KLINGENBERG: Dr. Sawyer and Board, I want to 4 thank you for putting up and sitting with us all day long 5 here. 6 I'm Bob Klingenberg. I'm the President for the 7 Automotive Service Council of California. We're the 8 oldest and largest independent garage owners association 9 in California, with 1500 members, which basically 10 disseminate information out to about 38,000 ARDs, or 11 Registered Repair Facilities, here in California. 12 I also am an independent garage owner right here 13 in Bakersfield. I've been doing it for 17 years. Prior 14 to that I was a service manager for 15 years. So I've 15 been on both sides of the fence. 16 The independent garages I feel are a lot more 17 capable of fixing cars. Right now the dealers here in 18 town, you call up with a car over five to seven years old, 19 they will not take it into their facility for repair. 20 They will not work on older cars. I have three cars at my 21 shop right now today in their 90s that -- two of them are 22 in for water pumps. The dealers wouldn't do a water pump. 23 And so having the dealers wanting to fix cars 10, 24 15 years down the road from now is just kind of an elusive 25 pipe dream. We're a -- my shop is a certified smog repair PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 333 1 station, have been for about 30 years. We are a Gold 2 Shield smog station. We're a consumers citizens repair 3 program. None of the dealers I know are in the consumers 4 citizens repair program. They do not want to get involved 5 in long-term emission repairs. We have to fix them. The 6 Bureau of Automotive Repair regulates what we do. 7 The staff here said they didn't have a lot of 8 data on some of the stuff. Every car we smog, if it 9 fails, we have to type in what part failed, how much that 10 part was, how much labor to do it. All that data is 11 available if they would get it. 12 Going to a longer warranty is going to 13 drastically cut into my business. Probably 30 percent of 14 my repairs are smog repairs. And if you take 10 percent 15 minimal, that's a big chunk out of my paycheck. And I 16 know that most people don't want to lose 10 percent on 17 their paycheck just because things wear out. Things will 18 eventually wear out. Light bulbs, shoe strings, they all 19 wear out. How long you going to guaranty it? Normal 20 life, 250 -- or 120,000 miles? That's good. A hundred 21 fifty, that's kind of a pipe dream. We have to be 22 realistic. And the small business owners like us, like 23 say there's 38,000 independent repair garages in 24 California, probably effectively 150 to 200,000 employees 25 that will phase out, lose their jobs, go under. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 334 1 And so -- and then also just one last thing real 2 quickly here. They say anything over 4 percent they're 3 going to repair. What about the large masses of cars 4 running around that are in that 3 1/2 percent range? And 5 they go and go and go and go. And so they come to me, I 6 fix them, they pay me. When the -- give us over the 4 7 percent. What about all those 3 1/2 percent people that 8 are paying money, are they going to get money back? 9 That's just -- you know, there's just a lot of different 10 angle dangles on this that really need to be looked at a 11 little bit harder. 12 That's all I have. Thank you very much. 13 CHAIRPERSON SAWYER: Thank you very much. 14 Kingsley Macomber. 15 MR. MACOMBER: Good afternoon, Dr. Sawyer and 16 members of the Board. My names is Kingsley Macomber. I'm 17 legal counsel with Sierra Research. I have some remarks 18 I'd like to present on behalf of the Motorcycle Industry 19 Council. These are abbreviated remarks because I have a 20 longer statement that will not fit within your timeframe. 21 So I'm going to submit that for the record after I finish 22 my summary remarks here. 23 First, there's just one housekeeping item. 24 During the rule development process, MIC -- said off-road 25 motorcycles and ATVs should be exempted from this PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 335 1 rule-making. They were contacted by staff prior to the 2 Board meeting and were told that they would be taken out 3 of the rule-making. We don't see any indication in the 4 15-day changes that that's going to happen. I assume 5 that's just an oversight and that will happen; is that 6 correct? 7 MOBILE SOURCE OPERATIONS DIVISION CHIEF HEBERT: 8 That's correct. 9 MR. MACOMBER: Okay. Thank you very much. 10 Secondly, the staff proposal would revise the 11 test procedure for motorcycles to require manufacturers 12 to, quote, demonstrate at the time of certification that 13 all emission control devices will not exceed a failure 14 rate of 4 percent or 50 vehicles over the useful life of 15 the vehicle. 16 Unfortunately this change was not presented at 17 the May 2nd workshop, and MIC has not had an opportunity 18 to discuss it with staff. 19 As proposed, it has one obvious flaw, which is 20 that the required demonstration is not feasible. This may 21 have been changed in the 15-day comments. It's hard to 22 tell because they're just presented conceptually to 23 something called the statement of compliance. If that's 24 the case, we still have the same problem, because the 25 person that has to make the statement still has no known PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 336 1 methodology for supporting making that statement. 2 Thirdly, as explained in MIC's main comments, 3 there is a Section 2171 in Article 5, which deals 4 explicitly with motorcycles which do not have OBD systems 5 and also with vehicles that have deficiencies with their 6 OBD systems. This is mixing apples and oranges. We need 7 a separate section for motorcycles. We requested a 8 separate section for motorcycles during the workshop. One 9 was not provided. So we have provided one in our 10 testimony, and we would like to have that given serious 11 consideration. 12 There's one special problem for motorcycles. 13 Unfortunately this is not a Christmas present for 14 motorcycles, because their useful life and their warranty 15 period is the same, and the extended warranty concept in 16 the regulation for motorcycles is the same. So there 17 can't be any extended warranties in lieu of recall. Thus 18 recall is essentially the only remedy for motorcycles. 19 Now, we think that that's unfair differential treatment 20 and we ask that that be addressed and remedied. 21 Fourthly -- I won't go into detail on this. We 22 think that the public hearing requirements are unfair and 23 do not comply with legal requirements for due process, 24 particularly the applicable constitutional requirements 25 despite what's in the Health & Safety Code. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 337 1 CHAIRPERSON SAWYER: I must ask you to conclude. 2 MR. MACOMBER: Okay. Our final overriding issue 3 is the purposeful exclusion of any provisions allowing 4 recall or other corrective action to be avoided where a 5 component exceeds the thresholds, but does not cause a 6 vehicle to exceed the applicable emission standards. MIC 7 does not believe that CARB has the authority to adopt such 8 a strict liability provision for the reasons explained in 9 our comments. 10 My final suggestion is: This is not ready for 11 adoption by the Board. I believe that much can be gained 12 if this was put back into the workshop process, but where 13 we can see what the actual wording of the 15-day changes 14 are going to be and discuss this further with the ARB 15 staff. 16 CHAIRPERSON SAWYER: Thank you very much. 17 Ms. Gallon. 18 MS. GALLON: Dr. Sawyer and Board. My name is 19 Ann Gallon. I'm here representing the Sierra Club and 20 also the local Kern Kaweah Chapter. And the longer I sit 21 here, the more my anxiety level goes up because I'm having 22 my car smogged tomorrow. It's reaching the end of that 23 bathtub. 24 The Sierra supports the staff proposal. It's a 25 good one. Consumers are entitled to be certain that the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 338 1 emissions control equipment on our cars will work for many 2 years. The breathing public also has a right to expect 3 proper emission control on all vehicles. 4 And also we are asking for a strengthening 5 amendment with regard to heavy-duty vehicles to ensure 6 that manufacturers take corrective action to remedy 7 emission control failures for the full life of these 8 vehicles. 9 And that's my comments. Thank you. 10 CHAIRPERSON SAWYER: Thank you very much. 11 Mr. Saito. 12 MR. SAITO: Thank you, Chairman Sawyer and 13 members of the Board. For the record, my name is Dean 14 Saito, and I'm Manager of the Mobile Source Strategies 15 Unit with the South Coast Air Quality Management District. 16 I'm here today to support staff's proposed 17 amendments to strengthen the recall program via extended 18 warranties. We believe that the amendments will improve 19 the level of proof necessary to trigger a manufacturer's 20 action to correct emissions control equipment failures, 21 and also to clarify the type of corrective actions that 22 ARB can impose on manufactures and simplify emission 23 defect reporting requirements. 24 As the Board is aware, recent studies which have 25 looked at in-use emissions from heavy-duty diesel trucks PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 339 1 have shown that the in-use emissions are higher than what 2 was originally thought of. 3 In-use emissions are critical to a region's 4 attaining healthful air quality. And so we believe it's 5 very important that in-use emissions for not only 6 light-duty but also heavy-duty be considered, and we 7 believe that this proposed amendment would help ensure 8 some kind of check on in-use emissions. 9 I would also mention, as I heard the testimony 10 today about the smog check program, I believe this program 11 would also help ensure that the reductions from the smog 12 check program are indeed achieved. Recent studies have 13 shown that the repairs for smog check may not be lasting 14 two years, may indeed -- 40 percent of those repairs may 15 be lasting less than a year. So I believe this program 16 would also help ensure that the reductions from the smog 17 check program are indeed being attained. 18 I believe that the South Coast staff believes 19 that the robust emissions defect and subsequent reporting 20 requirements are essential elements of an effective 21 vehicle emission control program with regard to providing 22 CARB the ability to ensure that emission reductions 23 demonstrated as part of the vehicle certification process 24 actually do occur in use. 25 In conclusion, we urge the Board to adopt staff's PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 340 1 recommendation as proposed. 2 Thank you. 3 CHAIRPERSON SAWYER: Thank you very much. 4 That concludes the public testimony. 5 I'd like to at this point make my own assessment 6 of what we've heard today. I think what staff has 7 proposed is probably the right policy approach. It 8 addresses important defects in the recall program, as it's 9 not working as was intended at the present time. 10 On the other hand, I'm not convinced that the 11 15-day process is the right way to address the issues 12 which have been raised today, including the 11 proposed 13 changes which have just been presented. 14 Also, the next 30 days is probably not the 15 optimum time for the staff to be working on this and 16 working with the industry. I would think it would be much 17 better if the staff came back to us after they've had the 18 opportunity to work -- 19 EXECUTIVE OFFICER WITHERSPOON: Well, you may 20 still want us to come back to you. But just to clarify, 21 the 30 days is from when we have actual regulatory 22 language. It would be well after Christmas. It's not 23 something -- It's not 30 days from today. We go through a 24 process to refine our concepts as we presented in 25 Attachment B. Then we draft language. Then we give 30 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 341 1 days and then finalize the regulation. So it would be in 2 the spring that that occurred. 3 But the real question is whether the Board wants 4 to see this regulation again and thinks that the kinds of 5 issues you heard today are of the policy order or, as 6 staff described, we think they're mostly in the technical 7 category. And that's totally your call whether you want 8 us to bring it back or not. 9 CHAIRPERSON SAWYER: Well, I'd hear from my other 10 Board members. I know we were given data -- confidential 11 data from General Motors which has quite different 12 conclusions about the cost effectiveness of the program. 13 Which we really haven't had a chance to study those or 14 discuss them. 15 Mrs. Berg. 16 BOARD MEMBER BERG: I am really in favor of 17 coming up with a regulation that has the accountability 18 and the teeth. So I want to go on record for that. 19 Now, my question -- and I do have -- I think I -- 20 I do have a problem with 150,000 miles. I think that's 21 over even our defined useful service life, which would be 22 120. And if you have a part that is three to seven years, 23 even going out to 70,000 miles to 120,000 miles is a 24 windfall for the consumer. So that would be one issue 25 that I would bring up if we were voting on this tonight. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 342 1 And then I do have questions on the 2 certification, because on one hand I've heard from both 3 sides of the ability to look into the future and to be 4 able to certify the unknown. And so I'm a little confused 5 on that. 6 I want to be able to vote for a regulation that 7 has the teeth in it. And if that means we should go back 8 and bring in the recall but drop the emissions requirement 9 and that would be more favorable to the industry and allow 10 you to negotiate the extended warranties, I would be in 11 favor of that. But I'm in favor of the extended 12 warranties as well. I just -- I'm not in favor of the 13 150,000 miles. I think that swings the pendulum too far 14 to the other side, it seems to me. 15 So those would be my concerns. I am absolutely 16 in favor of your suggestion on being able to give staff 17 and industry, whether it's within the 30 day timeframe. 18 But I'd have to get some more information before I really 19 have the ability to vote yes or no tonight. 20 CHAIRPERSON SAWYER: I really want us to have a 21 regulation that's going to stand up when we get sued. I'm 22 worried about that right now. 23 BOARD MEMBER RIORDAN: Mr. Chairman, I would 24 concur with you. I really believe the staff is on the 25 right track. I don't have a problem with the concept, but PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 343 1 sometimes just the refinements that maybe would come with 2 some additional time could be very helpful in the long run 3 and particularly, as you say, Mr. Chairman, if we're 4 challenged. 5 I do want to be very comfortable -- while I think 6 the issue of due process may be a red herring that is 7 raised, I certainly do not want to lose a case because I 8 didn't provide due process. And I want to be very 9 comfortable that we have a system that allows for people 10 to have some appeal. Now I'm not -- I don't know that it 11 should be a formal public hearing, but maybe there's 12 something in between. But I think we can, you know, gain 13 in a delay. And I rarely say that because that means we 14 would hear again what is before us today. 15 But the onus is on those who have raised some of 16 these issues to really work with our staff to really come 17 to some agreements in the overall process. And I 18 recognize none of us will be totally happy on either side. 19 But I think a great deal of good would come from an 20 extension. 21 But I do believe in where the staff is going. 22 But I would like to give the time for perhaps some 23 revision and/or better definitions to come from that time. 24 I would like to say also, Mr. Chairman, when we 25 set it for a hearing if it is to be held off for another PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 344 1 meeting, I would recommend that it not come on a day when 2 we are kind of jammed with a heavy agenda, but that we 3 can, you know, give it time. And I say to those who are 4 presenters, I will expect from you the same consideration 5 of really getting right to the point of what it is your 6 issues are. And of course if everything has been worked 7 out, I want to hear the compliments to that too. 8 (Laughter.) 9 BOARD MEMBER RIORDAN: Thank you, Mr. Chairman. 10 CHAIRPERSON SAWYER: Ms. D'Adamo. 11 BOARD MEMBER D'ADAMO: Well, I just want to go on 12 record that I'd be comfortable moving forward today. But 13 I can see that the majority of the Board would rather have 14 more time, and of course I support that. But just want to 15 go on record saying that, and to let the industry know, 16 please do what you can to work it out. I'm supportive of 17 what staff has proposed. 18 CHAIRPERSON SAWYER: Dr. Gong. 19 BOARD MEMBER GONG: Similarly, I like the concept 20 that has been proposed by the staff. I see that there's 21 some rough edges here and there, and that's been pointed 22 out here and there and by my fellow Board members. 23 So I think at this point let's schedule it as the 24 first item at a future meeting. 25 EXECUTIVE OFFICER WITHERSPOON: Okey-dokey. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 345 1 BOARD MEMBER BERG: Mr. Chairman? 2 CHAIRPERSON SAWYER: Ms. Berg. 3 BOARD MEMBER BERG: I do want to go on record 4 with the industry that I am in favor of the way the staff 5 is going. And I put the onus on you to be able to meet 6 with staff and work out your issues. But I do not want 7 staff to leave here today feeling that, you know, they've 8 overshot or totally missed the mark. Not the case. 9 BOARD MEMBER RIORDAN: And I would concur. 10 CHAIRPERSON SAWYER: And procedurally what do we 11 need to do now, Tom, to put this over to a future meeting? 12 ACTING GENERAL COUNSEL JENNINGS: Yeah, I think 13 it would make sense for the Board to have a motion, either 14 to put it off to a specific meeting or within a range of 15 period where we could bring it back when we're ready. 16 EXECUTIVE OFFICER WITHERSPOON: I would just say 17 to continue it to a hearing within the next six months, 18 and we'll look at the timeframe we need. 19 CHAIRPERSON SAWYER: Do I have such a motion from 20 a Board member, or do you want to discuss that? 21 BOARD MEMBER BERG: So moved. 22 BOARD MEMBER RIORDAN: Second. 23 CHAIRPERSON SAWYER: It's been moved and 24 seconded. 25 Is there any discussion of this? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 346 1 All right. I guess we're ready to vote on it. 2 All those in favor? 3 (Ayes.) 4 CHAIRPERSON SAWYER: Opposed? 5 No. I want to thank everybody who's spent their 6 time, especially the staff. We like what you're headed 7 to. We want to make sure that it's rock solid. And we 8 appreciate the industry people who came here and expressed 9 their opinions. And we look forward to having you work 10 with our staff to get the details worked out. We may not 11 expect you to agree on the policy issues -- on the major 12 policy issues, but we do want to get the details. 13 Our court reporter fortunately wants a break. So 14 the rest of us will take a five-minute break. 15 (Thereupon a recess was taken.) 16 CHAIRPERSON SAWYER: Because the next two agenda 17 items, 6-11-6 and 6-11-7, are closely related to one 18 another, we will consider them together and combine the 19 public testimony. However, when we get to the vote, there 20 are two separate resolutions for the Board's 21 consideration. 22 These proposals deal with vehicle scrappage and 23 vehicle repair. Taken together, they significantly span 24 the opportunities for incentive programs in those arenas. 25 The first agenda item is regulatory. It proposes PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 347 1 revisions to the Air Resources Board Voluntary Accelerated 2 Vehicle Retirement Regulation. 3 The second agenda item is Carl Moyer Program 4 Guidelines Updates that conform to the first action and, 5 in addition, address vehicle repair. 6 Ms. Witherspoon, will you please introduce this 7 item and begin the staff presentation. 8 EXECUTIVE OFFICER WITHERSPOON: Yes. Thank you, 9 Dr. Sawyer. 10 With the legislative expansion of the Carl Moyer 11 Program and more money available, there's renewed interest 12 in the role of vehicle retirement and repair as part of 13 our clean air strategy. There's also a very strong 14 interest in finding the highest emitting vehicles so these 15 programs can deliver the greatest possible mission 16 reductions. The use of remote sensing devices is one way 17 of doing that. 18 Staff has brought you regulatory and guideline 19 changes to update our methodologies for counting vehicle 20 scrappage credits and new guidelines for calculating the 21 benefits associated with voluntary vehicle repair. 22 The staff presentation on these items will be 23 made by Andy Panson. 24 (Thereupon an overhead presentation was 25 Presented as follows.) PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 348 1 AIR POLLUTION SPECIALIST PANSON: Thank you, Ms. 2 Witherspoon. 3 Good evening, Chairman Sawyer and members of the 4 Board. 5 We're proposing today revisions to the voluntary 6 accelerated vehicle retirement, or car scrap, regulation 7 and associated updates to the Carl Moyer guidelines for 8 light-duty vehicles. Use of incentives to reduce 9 emissions from the existing fleet is an important part of 10 California's clean air strategy. And our proposals today 11 are intended to expand these opportunities. 12 I will start my presentation with a background on 13 car scrapping, the Moyer Program, and remote sensing. I 14 will then present an overview of staff's proposed changes 15 to the car scrap program and follow that with our proposed 16 guidelines for a new voluntary vehicle retirement/vehicle 17 repair program. Finally I'll present staff's 18 recommendations. 19 --o0o-- 20 AIR POLLUTION SPECIALIST PANSON: Legislation 21 enacted in 2004 allowed light-duty vehicle projects into 22 the Moyer Program for the first time and expanded program 23 funding. 24 For light-duty sector there are two project 25 types: Car scrap and vehicle repair. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 349 1 In conjunction with these expanded funding 2 opportunities, there's been interest in incorporating use 3 of remote sensing to identify vehicles for these programs. 4 --o0o-- 5 AIR POLLUTION SPECIALIST PANSON: Let me first 6 provide some background on car scrap. 7 These programs provide financial incentives to 8 encourage vehicle owners to voluntarily retire older, more 9 polluting vehicles earlier than they would have otherwise, 10 thereby reducing emissions. Retiring even well maintained 11 older vehicles provides emission benefits because the 12 newer vehicles that replace have gotten so much cleaner. 13 Scrap programs have operated in California since 14 the early 1990s, and in 1998 ARB adopted a regulation to 15 establish a uniform framework for scrap programs as 16 directed by state law. Scrap programs are administered by 17 air districts, with oversight from ARB. 18 Emission credits generated by scrapping vehicles 19 can be retired for a clean air benefit or used by 20 businesses as an alternative compliance mechanism if 21 allowed under district rules. 22 --o0o-- 23 AIR POLLUTION SPECIALIST PANSON: Now for some 24 background on remote sensing, or RSD. 25 Remote sensing refers to measuring the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 350 1 concentrations of air pollutants in vehicle exhaust from 2 the roadside using infrared or ultraviolet spectroscopy. 3 The devices essentially shoot a beam of light through the 4 vehicle's exhaust to take a split second measurement of 5 air pollutants in the exhaust stream. Video equipment is 6 typically used to record a photo of the license plates so 7 that the vehicle owner can be contacted later. 8 --o0o-- 9 AIR POLLUTION SPECIALIST PANSON: Studies have 10 shown that RSD can be an effective tool in identifying 11 high emitting vehicles. So there's been interest in using 12 RSD to identify candidates for voluntary scrap or repair. 13 However, these snapshot measurements may not 14 directly correlate to total emissions over a full driving 15 cycle. And for that reason we will propose using RSD as a 16 screening tool to qualify vehicles for scrap or repair, 17 but not to estimate emission benefits. 18 --o0o-- 19 AIR POLLUTION SPECIALIST PANSON: ARB has taken a 20 two-step process to fully bring light-duty vehicle 21 projects into the Moyer Program. Last November, the Board 22 adopted revisions to the Moyer guidelines which added 23 conventional car scrap programs following the existing 24 regulation. This action also provided for a unique 25 remote-sensing-based scrap and repair program to be run in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 351 1 the South Coast as a first step to bringing remote sensing 2 into the car scrap program. 3 At that time we deferred consideration of vehicle 4 repair guidelines so more analysis could be done. 5 Also at the November 2005 hearing the Board 6 directed staff to return with a proposal to update the 7 scrap regulation to integrate remote sensing. 8 These two issues are the focus of today's 9 proposals. 10 --o0o-- 11 AIR POLLUTION SPECIALIST PANSON: Now I'll 12 present our proposed changes to car scrap. 13 --o0o-- 14 AIR POLLUTION SPECIALIST PANSON: We are 15 proposing a broad framework for scrap programs that would 16 identify high emitting vehicles and retire them for extra 17 emission reduction credit. 18 We would not prescribe one specific technology. 19 We would allow remote sensing or any other credible 20 approach, such as high emitter profiles. This would 21 provide flexibility in designing programs that make sense 22 locally. The need for flexibility was consistently 23 expressed by many stakeholders at our workshops. 24 Any district that intends to administer a high 25 emitter scrap program would be required to submit a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 352 1 project plan describing how the program would run and 2 demonstrating that it's technically sound. The plan would 3 need to be approved by ARB's executive officer before the 4 program starts. 5 These high emitter programs would be an optional 6 enhancement to the regulation. The existing conventional 7 scrap programs would continue to be allowed. 8 --o0o-- 9 AIR POLLUTION SPECIALIST PANSON: I also want to 10 highlight a number of other changes we are proposing to 11 the scrap regulation. 12 Under the existing regulation vehicles are 13 required to be registered for at least 120 days prior to 14 retirement. This registration requirement is in place to 15 ensure that only vehicles actually being used are accepted 16 into scrap programs. We are proposing to change the 17 registration requirement 120 days to 24 months, to be 18 consistent with the enabling legislation. 19 We are also proposing to delete two sections of 20 the regulation which are no longer applicable, as well as 21 reorganize some of the regulatory language to improve 22 clarity. 23 --o0o-- 24 AIR POLLUTION SPECIALIST PANSON: The existing 25 regulation does not require that a vehicle's emissions be PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 353 1 measured when it is scrapped. So it is assumed to have 2 the average emissions of its model year. This approach 3 does not work when high emitting vehicles are targeted for 4 scrap, so we need a new calculation approach in these 5 cases. 6 First we propose that high emitter profiles or 7 RSD be used as screening tools, meaning we would still 8 require a confirmatory smog check to verify the vehicle 9 was a high emitter and establish its emissions. 10 The emission benefits calculation accounts for 11 the smog check program. These high emitting vehicles 12 would presumably have been repaired at their next smog 13 check in order to stay on the road. So the credit given 14 is higher up until the vehicle's next biennial smog check 15 date and lower afterward. 16 We assume vehicles are on average one year away 17 from their next smog check and we assume a three-year 18 overall project life. 19 --o0o-- 20 AIR POLLUTION SPECIALIST PANSON: As these 21 programs are still evolving, we are setting up program 22 guidelines to allow flexibility for districts to discover 23 what works and what is cost effective, while at the same 24 time maintaining the checks and balances and credibility 25 needed for the Moyer program. This slide lists some of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 354 1 those elements of flexibility that we built into the 2 guidance. 3 --o0o-- 4 AIR POLLUTION SPECIALIST PANSON: Now I'd like to 5 present our proposal for voluntary vehicle repair 6 programs. 7 --o0o-- 8 AIR POLLUTION SPECIALIST PANSON: Unlike car 9 scrap, there's not a regulatory provision for repair 10 programs. So our proposal would only apply to the Moyer 11 guidelines. 12 While repair program are new for ARB and the 13 Moyer Program, the Bureau of Automotive Repair runs a 14 successful repair assistance program as part of smog 15 check. And we've based many of our proposed requirements 16 on BAR's program. 17 We followed four guiding principles in developing 18 our proposal: 19 First, we must not pay for repairs that would 20 happen anyway, because this would not provide new surplus 21 emission reductions. 22 Second, we must not discourage routine vehicle 23 maintenance. 24 Third, we want repair programs to be run with 25 systematic diagnosis and repair protocols to ensure that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 355 1 money is spent efficiently and repairs are long lasting. 2 Finally, we are aiming to strike a balance 3 between providing flexibility in program design and the 4 need to ensure real emission reductions. 5 The next several slides summarize our proposals. 6 --o0o-- 7 AIR POLLUTION SPECIALIST PANSON: We are 8 proposing vehicle eligibility requirements which ensure 9 emission reductions are surplus. A vehicle must be 10 outside its smog check window, be registered for at least 11 24 months, and be driven to the repair location under its 12 own power to participate. These mirror the eligibility 13 requirements in the scrap regulation. 14 The vehicle would also need to be identified 15 through an RSD or high emitter profile program. 16 We would not allow walk-ins because we don't want 17 to create a disincentive for keeping up with routine 18 maintenance. 19 Each vehicle brought in and -- identified and 20 brought in would be given a smog check before it is 21 repaired to establish its pre-repair emissions. 22 The vehicle would need to fail the smog check in 23 order to participate. 24 --o0o-- 25 AIR POLLUTION SPECIALIST PANSON: We are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 356 1 proposing the following requirements for repairs: 2 Only emission-related repairs would be fundable. 3 And systematic diagnosis and repair protocols 4 must be established up front and followed. 5 The repairs must bring emissions below the smog 6 check cutpoints. We don't want to fund partial repairs 7 that may be short lived. 8 For repairs involving a catalyst replacement, we 9 would require that the replacement catalyst be OBD II 10 compliant. ARB staff has done research and found that 11 non-OBD II compliant catalysts have inferior durability. 12 And, therefore, ARB staff is currently working on a 13 regulation which would ban these noncompliant catalysts. 14 Staff is proposing a minor wording change to this 15 requirement from the published version of our proposal. 16 That change would more precisely define what we mean by 17 OBD II compliant catalyst. 18 Since I am mentioning wording changes, we also 19 made a second minor wording change from the published 20 proposal to clarify administrative requirements. 21 --o0o-- 22 AIR POLLUTION SPECIALIST PANSON: Emission 23 reductions would be calculated based on the difference 24 between a pre-repair and post-repair smog check test. And 25 we propose a credit life of one year, which is the average PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 357 1 time until a vehicle's next smog check, at which point the 2 repairs would have been required. 3 As with car scrap, the guidelines also provide 4 flexibility in program design. And any unique elements of 5 a program could be reflected in the emission calculations 6 with ARB approval. 7 We are proposing that a project plan be submitted 8 for approval by ARB's executive officer which parallels 9 our proposal for high emitter scrap programs. 10 --o0o-- 11 AIR POLLUTION SPECIALIST PANSON: In conclusion, 12 staff has worked with districts and other stakeholders 13 over the last year to develop these proposals. We have 14 tried to provide as much flexibility as possible to design 15 programs that address local issues, while at the same time 16 ensuring programs will produce real emission reductions 17 and meet the core principles of the Moyer Program. 18 These proposed modifications would expand 19 opportunities to reduce emissions from light-duty vehicles 20 through incentive programs, and we recommend that you 21 approve the proposed revisions. 22 Thank you. 23 CHAIRPERSON SAWYER: Madam Ombudsman, please 24 describe the public participation process and report any 25 concerns to the Board that you may have. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 358 1 OMBUDSMAN QUETIN: Thank you. 2 Chairman Sawyer and members of the Board. The 3 proposals before you are a collaborative effort between 4 ARB staff, air districts staff, business advocacy groups, 5 environmental groups, and local, state, and federal 6 agencies. 7 In developing the proposed amendments to 8 regulations and revisions in the light-duty vehicles 9 chapter of the Carl Moyer Program guidelines, staff held 10 three public workshops. Two of the workshops were also 11 webcast. The workshops were held on March 20th, June 29th 12 and August 31st, 2006, in Sacramento. Nearly 100 13 stakeholders attended in-person or participated via the 14 web. 15 Over a dozen additional meetings and 16 teleconferences were held with individual stakeholders and 17 interested parties. Staff also held three incentive 18 program implementation meetings, where attendees 19 represented more than 30 air districts. 20 Additionally, there were meetings and 21 teleconferences with the staff of air districts that are 22 currently operating vehicle retirement and/or repair 23 programs or are interested in developing them. 24 The staff report and hearing notice were released 25 and posted to the ARB's web page on October 20th, 2006. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 359 1 Staff mailed the notice of public hearing to more 2 than 150 interested parties. Another 2,000 individuals 3 were advised through ARB's electronic list serve. 4 And I have no concerns. And this concludes my 5 comments. 6 CHAIRPERSON SAWYER: Thank you very much. 7 Do Board members have any questions on this item? 8 No. 9 We have two witnesses, Dean Saito and Carl Nord. 10 Mr. Saito. 11 MR. SAITO: Thank you, Chairman Sawyer and 12 members of the Board. For the record, my name is Dean 13 Saito, and I'm Manager of the Mobile Source Strategies 14 Unit at the South Coast AQMD. 15 I'm here today to support staff's recommendation 16 being proposed today. I would also like to acknowledge 17 ARB staff's willingness to offer flexibility in 18 preliminarily approving our $4 million pilot study to 19 identify high emitting vehicles for purposes of either 20 repair or scrappage. 21 In our detailed comments to the Clerk or the 22 Board, we've attached some issues that we believe will be 23 addressed by the data collected from our pilot study. And 24 we believe that we can work with ARB staff in addressing 25 these issues once our pilot study is completed and the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 360 1 data is analyzed. 2 So in conclusion, we support staff's proposal and 3 stand committed to work with ARB staff in addressing these 4 issues as a result of our pilot study. 5 Thank you. 6 CHAIRPERSON SAWYER: Thank you very much. 7 Mr. Nord. 8 MR. NORD: Thank you, Mr. Chairman, members of 9 the Board. My name is Carl Nord. I'm Vice President of 10 Environmental Systems Products. And I'm here to speak 11 completely in support of the staff's recommendations on 12 these two issues. 13 ESP manufactures the RSD equipment and provides 14 RSD services. We have a history of over 25 million 15 records in various cities, states and countries. 16 RSD is an effective improvement tool for fleet 17 characterization and on-road analysis of emissions. We 18 believe that this is an absolutely perfect application for 19 RSD. Studies by ESP and others show that it is a 20 cost-effective device when used with this type of program 21 within the Carl Moyer guidelines. 22 We participated with the ARB staff in developing 23 these recommendations, and I commend them. Certainly my 24 entire career has been in the regulatory process. And 25 it's never easy to get consensus. And I think they've PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 361 1 done a good job of getting it and getting to a program 2 that should help California in reaching its air quality 3 goals. 4 Thank you very much. 5 CHAIRPERSON SAWYER: Thank you very much. 6 Does staff have any further comments? 7 I now close the record on both of these items. 8 However, for the voluntary accelerated Vehicle Retirement 9 Regulation, the record will be reopened when the 15-day 10 notice of public availability is issued. 11 Written or oral comments received after this 12 hearing date but before the 15-day notice is issued will 13 not be accepted as part of the official record on this 14 agenda item. 15 ACTING GENERAL COUNSEL JENNINGS: Dr. Sawyer? 16 Yes. 17 ACTING GENERAL COUNSEL JENNINGS: I think there 18 was a mistake in the materials that have been put 19 together. There is no 15-day changes on this rule-making. 20 CHAIRPERSON SAWYER: Oh, okay. 21 AIR POLLUTION SPECIALIST PANSON: Right. 22 CHAIRPERSON SAWYER: We'll just skip that then. 23 In which case we will go to the ex parte 24 reporting. Is there any? 25 No, no, no, no. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 362 1 The Board has before it two resolutions, 645 and 2 646. Now these are really a package, and I think we can 3 vote on them both at once. Is that right? 4 ACTING GENERAL COUNSEL JENNINGS: That's correct. 5 CHAIRPERSON SAWYER: Do I have a motion? 6 BOARD MEMBER RIORDAN: I move approval of both 7 resolutions. 8 BOARD MEMBER D'ADAMO: Second. 9 CHAIRPERSON SAWYER: And a second. 10 Is there any further discussion? 11 All those in favor please indicate by saying aye. 12 (Ayes.) 13 CHAIRPERSON SAWYER: Opposed? 14 Motion is carried. 15 BOARD MEMBER RIORDAN: The staff -- it pays to be 16 after a big, long controversial item to just get it right 17 the first time. 18 CHAIRPERSON SAWYER: Well, I want to thank the 19 staff and the members of the audience who are seeing us 20 through this very long day. 21 I guess I knew that we had one of these coming 22 before the end of my first year as Chair. 23 Agenda item 6-11-8. 24 With the passage of the Transportation and Air 25 Quality Bond on November 7th, $200 million will be made PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 363 1 available for the replacement and retrofit of high 2 polluting school buses. In accordance with the budget 3 bill, with the passage of the bond $25 million originally 4 allocated for the replacement of older school buses has 5 been redirected for grants to public agencies to purchase 6 low polluting construction equipment. 7 This was really a win-win for clean air. Not 8 only does the bond provide more funding for clean school 9 buses, but we also get $25 million to clean up 10 construction equipment. 11 Off-road construction equipment is a significant 12 contributor of toxic diesel particulate and the NOx that 13 forms smog and fine particles in the atmosphere. 14 Construction equipment is both durable and expensive. The 15 construction equipment fleet is old, with a large 16 population of uncontrolled engines. 17 Today's staff will provide a report on how they 18 plan to allocate the 25 million to public agencies for the 19 purchase of low-polluting construction equipment. 20 I understand the staff will also provide some 21 information regarding the $200 million allocated to school 22 buses. 23 Ms. Witherspoon. 24 EXECUTIVE OFFICER WITHERSPOON: Thank you, Dr. 25 Sawyer. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 364 1 The staff really hit the ground running on this 2 one. After the election on November 7th, staff announced 3 on November 8th that we would have a workshop on November 4 30th to obtain public input on the allocation of the 5 redirected funds. The staff's report today incorporates 6 the comments we received at last week's workshop. 7 The reason for our haste is that we have just six 8 short months to encumber these funds. All of the money 9 needs to be committed by June 30th of next year. 10 These funds are a part of a larger effort across 11 the State to clean up construction equipment. Earlier 12 today we talked about green contracting. Next year staff 13 will be bringing you a regulation for in-use off-road 14 equipment which will apply to private fleets. This 25 15 million will assist public agencies -- excuse me -- public 16 and private fleets. This 25 million will assist public 17 agencies in cleaning up their fleets in advance of that 18 rule, relieving some of the financial burden. Public 19 fleets should be leading the way, and the funds allow us 20 to do exactly that. 21 In November, the South Coast AQMD released a 22 request for proposal for 12 million in Carl Moyer funds 23 solely for the repower or retrofit of old construction 24 equipment. And that solicitation was oversubscribed in 25 one day. So clearly there is a large need out there. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 365 1 Other districts use Carl Moyer funds to clean up 2 construction equipment. And some, like Sacramento, have 3 also used construction mitigation fees to augment the 4 Moyer funds. 5 The final presentation of the day will be made by 6 Johanna Levine of the Mobile Source Control Division. 7 (Thereupon an overhead presentation was 8 Presented as follows.) 9 AIR POLLUTION SPECIALIST LEVINE: Thank you, Ms. 10 Witherspoon. 11 Good evening, Chairman Sawyer and members of the 12 Board. 13 In light of the late hour we have an abbreviated 14 report on ARB's plans for allocating $25 million for the 15 purpose of low-emission construction equipment for public 16 fleets. I will start with the brief explanation of why 17 this funding exists. 18 In the 2006-2007 budget bill, the Legislature 19 allocated $25 million for the replacement of older school 20 buses. The budget bill contains language that redirected 21 these funds as grants to public agencies for the purchase 22 of low-polluting construction equipment if Proposition 1B, 23 the Transportation and Air Quality Bond, was approved. 24 On November 7th proposition 1B was approved, 25 providing $200 million for the replacement and retrofit of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 366 1 school buses. 2 The $25 million in the budget bill is now a 3 one-time allocation available for public agency 4 construction fleets. These funds give ARB the opportunity 5 to assist public agencies in taking a leadership role in 6 cleaning up their fleets in advance of the upcoming 7 off-road in-use fleet rule, while also providing early 8 emission reductions. 9 --o0o-- 10 AIR POLLUTION SPECIALIST LEVINE: As I mentioned 11 previously, Proposition 1B provides $200 million to 12 replace old school buses and retrofit existing buses. The 13 $200 million in school bus funds will be available after 14 they are appropriated by the Legislature, which will 15 reconvene for the 2007-2008 session in January. We 16 estimate these funds could replace the last of the 17 pre-1977 buses and about 1,000 of the remaining 18 high-emitting pre-1987 public school bus fleet. 19 This a good time to point out the success we've 20 already achieved in replacing the oldest, highest 21 polluting buses in California's public school bus fleet. 22 When the Low Emissions School Bus Program began in 2000, 23 we estimated that about 1,900 pre-1977 school buses were 24 still in service. Today, through state and local efforts, 25 less than 100 remain in our public schools. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 367 1 I will now discuss our plan for allocating the 2 $25 million for public agency construction fleets. 3 --o0o-- 4 AIR POLLUTION SPECIALIST LEVINE: In developing 5 this program, we focused on two main goals: To fund the 6 cleanest available cost-effective equipment, and to ensure 7 that the equipment we fund remains in the fleet long term. 8 We want to ensure that the upcoming off-road fleet rule 9 does not make the technology we fund obsolete. 10 Due to the quick timeline and because this is 11 one-time funding, we are relying heavily on definitions 12 and project types from existing programs and regulations, 13 such as the Carl Moyer Program and ARB's fleet rules. 14 --o0o-- 15 AIR POLLUTION SPECIALIST LEVINE: We are 16 proposing that three project types would be eligible for 17 grants: Replacement with the cleanest equipment, repowers 18 with the cleanest engines, and Level 3 retrofits that 19 achieve an 85 percent reduction in particulate matter. 20 There have been very few retrofits available for 21 off-road equipment. However, in mid-November ARB verified 22 a Level 3 retrofit that has been used extensively in 23 Europe and works in almost all off-road applications. We 24 are excited that this retrofit will be available to 25 participants in this program. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 368 1 In addition, I want to note that equipment 2 replacement has not been eligible for incentive funds in 3 the past. However, we are hoping to use this program to 4 better understand equipment replacement projects for 5 possible inclusion in future ARB incentive programs. 6 Projects will be selected through our 7 request-for-proposal process and scored competitively 8 based primarily on cost effectiveness calculated using 9 methodologies described in the 2005 Carl Moyer Program 10 guidelines and the ozone and fine particulate matter 11 nonattainment status of the area where the equipment is 12 located. Projects using Tier 3 engines, the cleanest 13 engines available, would receive priority. 14 At least half the funds will be spent in 15 environmental justice areas and 10 percent, or $2.5 16 million will be set aside for agencies in low-population 17 counties, using the definition of low-population county 18 established in the public fleet rule. 19 In addition, funding will be limited to a maximum 20 of $500,000 for a public agency in a low population county 21 and $1 million for all other public agencies. 22 --o0o-- 23 AIR POLLUTION SPECIALIST LEVINE: This slide 24 shows our timeline. 25 We held a public workshop last Thursday. One of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 369 1 biggest concerns we heard was the rapid timeframe for 2 applications. Because the funds must be granted by June 3 30th, we must move quickly. But we are committed to 4 provide any needed assistance to public agency applicants. 5 We are excited about the opportunity these funds 6 provide to ARB and California's public agencies. We 7 estimate that once all the projects are completed in 2008, 8 they will reduce 1,000 tons of NOx emissions and 80 tons 9 of toxic diesel particulate matter, providing cleaner and 10 more healthful air for California. 11 Thank you. And we'd be happy to answer any 12 questions. 13 CHAIRPERSON SAWYER: Do Board members have any 14 questions? 15 Ms. Berg. 16 BOARD MEMBER BERG: No, other than to say 17 congratulations, and what an exciting time. I mean we've 18 always been faced with the problems. And now we actually 19 have some cash to do something about it. So 20 congratulations. 21 EXECUTIVE OFFICER WITHERSPOON: There's a billion 22 more coming. 23 CHAIRPERSON SAWYER: I have no requests from 24 witnesses. 25 Does staff have any further comments? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 370 1 EXECUTIVE OFFICER WITHERSPOON: Nothing further. 2 And this is just an informational item too, so there's no 3 resolution either. 4 CHAIRPERSON SAWYER: Okay. We have a question. 5 Ms. D'Adamo. 6 BOARD MEMBER D'ADAMO: What happens when we get 7 the one billion? Will that be informational as well? 8 EXECUTIVE OFFICER WITHERSPOON: Of course not. 9 BOARD MEMBER D'ADAMO: I think there'll be more 10 people here when that one comes up. 11 EXECUTIVE OFFICER WITHERSPOON: They'll be 12 implementing legislation on that one and it will come to 13 us in pieces, and then we'll have quite extensive hearings 14 on that one billion. 15 BOARD MEMBER D'ADAMO: Thanks. 16 CHAIRPERSON SAWYER: This one will come back to 17 us when the money is awarded, is that -- 18 EXECUTIVE OFFICER WITHERSPOON: We weren't 19 planning to because the time is so tight and there's not a 20 lot of choices here to be made. And we're following 21 guidelines you, the Board, established previously for the 22 kind of eligible projects, you know, out of Carl Moyer. 23 And so it's not like the alternative fuel money where we 24 needed to look and grade the various kinds of projects we 25 received. And we asked you to set some goals for us. We PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 371 1 put out our RFPs, and we're bringing those back. But it 2 would be our intent to simply issue this money provided 3 the qualifying projects come in. And you've already 4 regulated public agencies. You've already told them what 5 they're supposed to do. 6 It's just like Carl Moyer. 7 CHAIRPERSON SAWYER: Okay. I suppose we'd like 8 to have it reported some time. 9 EXECUTIVE OFFICER WITHERSPOON: Sure. 10 CHAIRPERSON SAWYER: Good. 11 Thank you very much. 12 BOARD MEMBER BERG: Or at least a thank you note. 13 (Laughter.) 14 CHAIRPERSON SAWYER: This is the time at which we 15 will accept comments from Board members on any item they'd 16 like to bring to their colleagues' attentions. 17 No, there are none? 18 We do have some requests from the public to 19 speak. And I thank the three members of the public who 20 have endured a very long day perhaps to get to this point. 21 First is Lucy Clark, to be followed by Renee 22 Nelson and Arthur Unger. 23 Okay. She was not able to keep up with our 24 schedule. And we understand that. 25 Renee Nelson. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 372 1 MS. NELSON: Well, it is evening. Good evening. 2 My name is Renee Nelson. I am a local resident here in 3 Bakersfield, and I am with a group that I call Clean Water 4 and Air Matter. 5 And I want to first thank you all for being here. 6 It's exciting for me and -- especially to your staff. 7 What a great staff you have. They are professional, 8 they're courteous, they're kind and they're good spirited. 9 And it was really neat to see that. 10 You have heard a lot about our air quality in 11 this valley today. And I appreciate that as well, so it 12 is pertinent to you what I will bring to you. 13 We have a proposal in the CEQA process currently 14 that involves off-road vehicles. These are motorcycles, 15 not cranes and other construction equipment. You get to 16 regulate off-road vehicles. But unfortunately at this 17 point in time you only regulate the engines. And that's 18 fine and well. But these vehicles create another larger 19 hazard for us currently and, that is, the dust. 20 I don't know what to do with this gap. I've 21 spoken to Mr. Sadredin. I left him a note today. And I'm 22 hoping that between the agencies we can come to a 23 solution. 24 This project is inappropriate in a polluted air 25 basin because it brings in tons, about 2,000 tons of dust PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 373 1 upwind from Bakersfield by about nine miles in Arvin, as 2 Dr. Sawyer learned, our little hot spot of never going to 3 be in compliance. But we will be because we will 4 eliminate sources like this that are detrimental. 5 Not only does it bring dust, but in this part of 6 the valley we have another issue that comes with the dust, 7 and that's Valley Fever, which is an infectious disease. 8 Again, not quite in your jurisdiction, but an air 9 pollutant because it transmits through the air. 10 I'm hoping that the state will come together as 11 I've seen miraculously in the last few years, and 12 especially with this agency in working with the other 13 agencies, and understand that the Health Department and 14 the Air Quality Resources Board do need to work together, 15 and we need to find solutions. And if recreation is a 16 critical issue, then it needs to be clean and everything 17 needs to be mitigated on-site, as we're trying to do with 18 all the vehicles. 19 I thank you again for being here and for your 20 time. 21 CHAIRPERSON SAWYER: Yes. 22 BOARD MEMBER D'ADAMO: Well, I'm just thinking of 23 the conversation management plans that agriculture has had 24 to adopt. And I know that's a Title 5 issue and all that. 25 But is there something similar that could be worked out PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 374 1 with municipalities through the local air district? 2 EXECUTIVE OFFICER WITHERSPOON: Well, I'm still 3 not sure what the project is, whether it's an off-road 4 motorcycle park or a racing course or what it is. 5 MS. NELSON: It's a state off-road vehicle park. 6 And it would encompass 11,000 acres as it stands right 7 now. Not all rideable however. So the State would take 8 over jurisdiction on it. 9 EXECUTIVE OFFICER WITHERSPOON: We'd have to Look 10 into it. 11 MS. NELSON: Thank you. 12 CHAIRPERSON SAWYER: Mr. Unger. 13 MR. UNGER: Good evening. 14 About the Bakersfield State Vehicular Recreation 15 Area, it's going to have a huge impact on our PM10. There 16 will be lots of fireplaces up there to patrol. I don't 17 know how tightly they'll be patrolled. And I appreciate 18 your staff's attention to that. I think the sooner you 19 act, the sooner it will leave this air basin. 20 I have two other issues. 21 Oh, and by the way, I'm from the Kern Kaweah 22 Chapter of the Sierra Club. 23 The first issue is that I enjoyed the discussion 24 of how much of our problem comes from the Bay Area that 25 you made so many hours ago. The only quantitative news on PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 375 1 that that I know of came from a study when Supervisor 2 Larwood was on the board. And all I can recall is 7 3 percent of Bakersfield came from the Bay. And I would 4 like to have on your website something quantitative and 5 maybe more authoritative than that one study with 6 references, because there are people here who cling to 7 that notion that it's imported. And I'd like to have the 8 black and white. 9 The third one is: Thank you for your Indirect 10 Source Rule. Gordon Nipp of our chapter, with the aid of 11 his lawyer, Babak Naficy, negotiated with 25 developers. 12 They all agreed to give us some money for the sprawl and 13 air pollution that they were causing. And so far we've 14 collected $620,000. We bought half of four low-emission 15 school buses. I don't think they've been delivered yet, 16 but I think we paid for them. And we bought a huge gadget 17 that grinds green waste for the City of Bakersfield. 18 And, again, thank you for -- I don't know how 19 many hours now. Thanks. 20 CHAIRPERSON SAWYER: Thank you very much. 21 It's the participation of the local citizens that 22 really convinces me that we need to get out of 23 Sacramento -- welcome back. 24 BOARD MEMBER PATRICK: She's back. 25 Have I missed the Board member comment period? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 376 1 I did. 2 CHAIRPERSON SAWYER: I tell you what. We will 3 reopen it. 4 BOARD MEMBER PATRICK: I just want to thank you 5 very much for coming to Bakersfield. It meant a lot to me 6 and a lot to the community. And we appreciate you all so 7 very much. 8 And this extraordinary ARB staff. We are blessed 9 beyond measure to have people like all of you and people 10 like our wonderful staff, all -- goodness knows how many 11 of them -- thousand plus working on behalf of the people 12 of the State of California. 13 Thank you very much. It's been great. 14 CHAIRPERSON SAWYER: Thank you, Barbara. 15 (Applause.) 16 BOARD MEMBER PATRICK: But you missed the 17 Christmas parade. That was the highlight of the whole 18 day. 19 CHAIRPERSON SAWYER: Do I have a motion to 20 adjourn? 21 BOARD MEMBER BERG: So moved. 22 CHAIRPERSON SAWYER: Second? 23 BOARD MEMBER PATRICK: Oh, yes. 24 CHAIRPERSON SAWYER: We are all in agreement, 25 yes? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 377 1 We're adjourned. 2 Thanks, staff, so much for being so patient. 3 (Thereupon the Air Resources Board meeting 4 adjourned at 6:30 p.m.) 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 378 1 CERTIFICATE OF REPORTER 2 I, JAMES F. PETERS, a Certified Shorthand 3 Reporter of the State of California, and Registered 4 Professional Reporter, do hereby certify: 5 That I am a disinterested person herein; that the 6 foregoing California Air Resources Board meeting was 7 reported in shorthand by me, James F. Peters, a Certified 8 Shorthand Reporter of the State of California, and 9 thereafter transcribed into typewriting. 10 I further certify that I am not of counsel or 11 attorney for any of the parties to said meeting nor in any 12 way interested in the outcome of said meeting. 13 IN WITNESS WHEREOF, I have hereunto set my hand 14 this 19th day of December, 2006. 15 16 17 18 19 20 21 22 JAMES F. PETERS, CSR, RPR 23 Certified Shorthand Reporter 24 License No. 10063 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345