MEETING BEFORE THE CALIFORNIA AIR RESOURCES BOARD BOARD HEARING ROOM 2020 L STREET SACRAMENTO, CALIFORNIA THURSDAY, FEBRUARY 25, 1999 9:30 A.M. JAMES F. PETERS, CSR, RPR CERTIFIED SHORTHAND REPORTER LICENSE NUMBER 10063 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 ii APPEARANCES MEMBERS PRESENT Dr. Allan C. Lloyd, Chairperson Mr. Joseph C. Calhoun Mr. Mark DeSaulnier Mr. John Dunlap, III Ms. Lynne T. Edgerton Dr. William Friedman Ms. Sally Rakow Ms. Barbara Riordan Mr. Ron Roberts STAFF Mr. Michael Kenny, Executive Director Mr. Tom Cackette, Chief Deputy Executive Officer Ms. Pat Hutchens, Board Secretary Mr. Mike Scheible, Deputy Executive Officer Mr. Jim Schoning, Ombudsman Ms. Kathleen Walsh, General Counsel Ms. Lynne Terry PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iii INDEX Page Proceedings 1 Call to Order 1 Opening remarks by Chairperson Lloyd 2 Agenda Items: 99-2-1 Public Meeting to Consider the Carl Moyer Memorial Air Quality Standards Attainment Program; Incentives for Lower Emission Heavy-Duty Engines (The Carl Moyer Program Guidelines) Introductory Remarks by Chairperson Lloyd 13 Staff Presentation: Mike Kenny 14 Renee Kemena 15 Jim Schoning 29 Nancy Steele 29 Public Comment: Norma Glover 50 Doug Allard 54 Susan Brown 56 Howard Levin 61 Ed Ehlers 62 Ed Gerber 69 Greg Vlasek 75 Cecile Martine 80 Bill West 83 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iv INDEX CONTINUED Page Janet Hathaway 84 99-2-2 Public Meeting to Consider the Approval of Santa Barbara County Air Pollution Control District's 1998 Clean Air Plan as a Revision to California's State Implementation Plan(SIP) and as Triennial Plan Update Under the California Clean Air Act Introductory remarks by Chairperson Lloyd 92 Staff Presentation: Mike Kenny 92 Ron Nunes 93 Public Comment: Doug Allard 109 99-2-3 Public Meeting to Consider Research Proposals Introductory remarks by Chairperson Lloyd 120 Staff Presentation: John Holmes, Ph.D. 120 Helene Margolis 121 Public Comment: Dr. Rita Boggs, Ph.D. 131 Closing Comments By Chairperson Lloyd 139 Reporter's Certificate 141 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 1 1 PROCEEDINGS 2 CHAIRPERSON LLOYD: The February meeting of the 3 California Air Resources Board will now come to order. I 4 would like to ask fellow Board Member, John Dunlap, to lead 5 us in the Pledge of Allegiance. Please rise. 6 (Thereupon the Pledge of Allegiance was 7 recited in unison.) 8 CHAIRPERSON LLOYD: Will the clerk of the Board 9 please call the roll. 10 SECRETARY HUTCHENS: Calhoun. 11 BOARD MEMBER CALHOUN: Here. 12 SECRETARY HUTCHENS: DeSaulnier. 13 Dunlap. 14 BOARD MEMBER DUNLAP: Here. 15 SECRETARY HUTCHENS: Edgerton. 16 BOARD MEMBER EDGERTON: Here. 17 SECRETARY HUTCHENS: Friedman. 18 BOARD MEMBER FRIEDMAN: Here. 19 SECRETARY HUTCHENS: Patrick. 20 Rakow. 21 BOARD MEMBER RAKOW: Here. 22 SECRETARY HUTCHENS: Riordan. 23 BOARD MEMBER RIORDAN: Here. 24 SECRETARY HUTCHENS: Roberts. 25 BOARD MEMBER ROBERTS: Here. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 2 1 SECRETARY HUTCHENS: Chairman Lloyd. 2 CHAIRPERSON LLOYD: Here. 3 Before we start, I'd thought it would be appropriate 4 to -- my first board meeting to give some opening comments 5 and let you know who I am and what I want to do. 6 Good morning, this is indeed somewhat intimidating 7 to be here at my first board meeting and see the two 8 immediate past chairs sitting here as voting members of the 9 Board. 10 (Laughter.) 11 CHAIRPERSON LLOYD: However, knowing both of them 12 and one maybe a little bit better than the other, if I lose 13 my way, I'm sure that John and Barbara will quickly set me 14 straight. 15 BOARD MEMBER RIORDAN: Happily. 16 CHAIRPERSON LLOYD: For those of you who don't know 17 who I am, my name is Alan Lloyd. I'm deeply honored that 18 Governor Davis has appointed me to Chair the Air Resources 19 Board. I don't know if anything can truly prepare someone to 20 head this internationally respected Board. But for me, the 21 position is a culmination of many years of work in the air 22 quality field. 23 A little bit about my background, if you don't 24 know. One of my colleagues on the Board asked me this 25 morning and was implying that I was Scottish and I being -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 3 1 that's very close. 2 I'm a native of Wales, resident of the U.S. since 3 1969. All but four of those years have been in California. 4 When I left three years ago to Nevada, I really, honestly 5 didn't expect to be back in California. But with my 6 appointment to the Board by the Governor, I was truly 7 surprised but also delighted. I realized, having left 8 California into Nevada, what I was leaving, the tremendous 9 respect for the people of California and also both the 10 agencies and also the industry people that I'd met in all 11 segments of society, so it's really a pleasure to be back. 12 I'm married with two boys. An atmospheric chemist 13 by training, but increasingly involved with clean 14 technologies, alternative fuels and renewable energy. I 15 worked for many happy years at the South Coast AQMD to 16 develop public/private partnerships to identify and 17 demonstrate advanced technologies. 18 I worked closely with the Air Resources Board, with 19 the California Energy Commission and federal agencies. And 20 I'm a firm believer that we can have continued economic 21 growth and still protect the air for all the people of 22 California. And also having sat through three days of 23 hearings on the MTBE issue, I'm a firm believer that we also 24 have to coordinate with other agencies within CalEPA to make 25 sure that we protect the true environment. People of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 4 1 California are entitled to clean air and clean water. 2 I think it's highly symbolic that I'm sitting here 3 today as Governor Davis' appointee with all of you who have 4 been serving on the Board for some time. Anything I can hope 5 to accomplish as Chairman will be built upon the 6 accomplishment of past boards. 7 So as my first act as Chairman, I would like to 8 acknowledge, not only my immediate predecessors John Dunlap 9 and Barbara Riordan, but all of you on the Board and also the 10 excellent staff at the Air Resources Board. It's truly an 11 honor. I've watched for many years. I've taken part in the 12 Research Screening Committee under Dr. Holmes and I can -- I 13 have the utmost respect for all the staff. And, again, I 14 would particularly like to compliment this Board for your 15 efforts, particularly later last year, which have made my 16 efforts and my initiation period so much better. 17 Your recent accomplishments, particularly those of 18 the last nine months, represent a benchmark in the 19 advancement of air quality. In particular, your actions on 20 LEV-II, marine engines and diesel emissions captured the 21 attention of the air quality community throughout the world. 22 One of my most important challenges as Chairman is 23 to ensure that the ARB implements these programs 24 effectively. You have handed me the ball and I will do 25 everything I can to protect the air quality for all the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 5 1 people of California, working also with all the stakeholders, 2 the environmental groups, the business community, academia 3 communities and the general public. 4 I think you'll find from my experience at South 5 Coast, I tried to do that and I'm committed to continue that 6 here. I don't want any ideas left on the table. I want 7 people to be able to bring those forward and I think it's 8 very important. 9 I'd also like to say, as I've traveled around the 10 world, they look at California and the accomplishments of 11 this board with tremendous awe. And it's still the leader. 12 I think everyone at ARB feels a tremendous sense of 13 excitement over the technological progress we have seen in 14 the last several years. 15 Electric vehicles are in automotive showrooms and 16 major automotive makers are seriously committed to marketing 17 hybrid and fuel cell vehicles within the next five years. 18 I just look back in the last decade and I see the 19 tremendous progress that has been made thanks to your 20 pioneering regulations and also working with industry 21 increasingly in a more cooperative way. 22 I can't tell you how delighted, given what I've been 23 working on the last few years, and just as an aside, I will 24 say I gave up an all expenses paid trip to Tokyo, business 25 class, this week -- I should be there yesterday -- to one of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 6 1 the energy agencies in Tokyo to talk about the programs in 2 the US. I was also going to Fudan University tomorrow 3 afternoon to give a talk on fuel cells with Dr. Hung Mei. 4 So on the other hand, when the Governor asked me 5 could I serve, and given the pressing issues of MTBE, there 6 wasn't a question. Well, there was a question in my mind, 7 but it wasn't appropriate for me to raise that issue. 8 (Laughter.) 9 CHAIRPERSON LLOYD: With the imminent arrival of the 10 next millenium, I think it's highly appropriate to recognize 11 that we've reached the point where we can seriously talk 12 about the use of zero and near zero emission technologies not 13 only in motor vehicles but in virtually all areas of industry 14 and commerce. And again, we've seen that happening with the 15 transportation side, both in vehicles and in buses. We can 16 see it happening on the power generation side. We've seen it 17 happening in some of the cleaner fuels and also in the 18 consumer products area. 19 One of my priorities as Chairman will be to 20 cultivate a mind set and an attitude throughout government 21 and industry in California that zero and near zero emission 22 technologies can be put to use now or in the immediate future 23 to help us meet our air quality goals. 24 This approach recognizes the continuing global 25 environmental challenges and creates opportunities to unleash PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 7 1 even more of the immense technical and scientific resources 2 resident in all segments of society in California. We can 3 save money in the long run and have continued economic 4 growth. 5 The basic technologies for alternative fuels and 6 renewable clean energy are here today. And I just refer some 7 of you to the, if you hadn't seen it, the Time Magazine and 8 look at some of the five heroes for the planet and you'll see 9 some of the leaders in these zero and near zero emission 10 technologies in there. 11 Before we can expect industry to make investment in 12 these areas, government must lead by example. We must take a 13 total systems approach. If and when ARB establishes new air 14 quality standards based on the use of zero and near zero 15 emission technologies, we will have to work with our sister 16 agencies, such as the California Energy Commission, to ensure 17 that the infrastructure needed to support the use of these 18 technologies is in place. 19 I think it's important there that industry go ahead 20 and take the risk, that we try to minimize the chicken and 21 egg approach. It's a critical issue. So I want to take a 22 systematic approach in working also with the US EPA at the 23 regional/national level DUE, DOT and other federal agencies. 24 It's the one thing I hope that we can leverage the limited 25 dollars we have here at the State and federal level to make PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 8 1 the whole much greater than the parts. 2 It's almost like a tremendous technology jigsaw 3 puzzle. It may seem somewhat chaotic right now but once we 4 put most of the pieces in place, the big picture will become 5 evident. 6 To put together this puzzle, we must continue to 7 strive for excellence in science and technology. This has 8 always been one of California's  greatest strengths and we'll 9 need to continue. We'll have to draw on the enormous 10 resources of our state, ranging from the highly capable staff 11 of the Air Resources Board and other agencies within the 12 State and other agencies and to our peers in academia and 13 also the private sector. 14 Let me specifically say a word about the ARB staff. 15 While Chief Scientist at the South Coast Area Quality 16 Management District, which I also came to respect the 17 district staff immensely and enjoyed my experience very much, 18 I interacted with the Executive Office and the research 19 staff. Specifically, I worked with Tom Cackette, Mike 20 Scheible and also, at that time, Jim Boyd and just a little 21 with Mike Kenny. I also served on the Research Advisory 22 Committee and worked with Dr. Holmes and, again, his fine 23 staff. John, as one researcher to another, I'm looking 24 forward very much to working with you again. 25 A word also about Mike Kenny. In the short time PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 9 1 I've been here, I've been enormously impressed and excited. 2 And I've heard a number of people coming up on the outside 3 and expressing how great Mike is. In my brief time, I would 4 concur with that completely. So I look forward to an 5 increasingly close working relationship with Mike to advance, 6 and I think it's a really exciting time. 7 We'll also need to promote the training of the 8 younger generation in the technologies of the future. In 9 accordance with Governor Davis' commitment to improving 10 education, and one in which I wrote in my application, I 11 would like ARB to play an active role in helping our young 12 people acquire a better understanding of the technologies 13 that will provide them with a cleaner future. 14 As I look around some of the country, we have one of 15 the premier academics on fuel cells and that person is not 16 actually teaching a course in fuel cells. We need, as we 17 face some of the issues with smog check, and I'm sympathetic 18 to people who are working at their jobs. However, we've got 19 a new generation of vehicles. We need to educate the people, 20 the mechanics, so they understand what's going on, give them 21 opportunities. So these are opportunities of looking at the 22 positive rather than the negative. 23 So in that way, we will continue to provide a 24 cleaner environment. And if we learn nothing about 25 inspection and maintenance, we should, in fact, look ahead PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 10 1 and make sure that people are prepared for that. 2 Lastly, our ability to build support for these 3 technologies hinges on whether we communicate effectively 4 with local and regional agencies, industry and California's 5 communities. As Chairman, I'm making a commitment to 6 personally visit with each of the California's 35 local air 7 districts, that's presuming I get confirmed, otherwise -- 8 (Laughter.) 9 CHAIRPERSON LLOYD: -- as well as the principal 10 industries that are active within the State. And I feel very 11 strongly about that. I need to go to them. It's only in 12 that way can you get a feeling of their problems. Similarly, 13 I want to go to the major industries, which are the drivers 14 for the economy and the leaders to give us the technologies 15 we need. 16 I want all of our stakeholders to feel comfortable 17 with our clean air strategies. At the same time, ARB will 18 have to understand the needs of local districts and industry 19 to ensure their strategies are successful. I also want to 20 continue to work with the environmental community. I feel 21 very strongly about the mission to protect the environment. 22 They have played, and I hope will continue to play, a pivotal 23 role in advancing air quality improvement in the state, by 24 never wavering from their insistence that air quality 25 regulators and state legislators protect public health as PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 11 1 required by the law. So I appreciate and look forward to 2 working with the whole spectrum of the environmental 3 community. 4 Two years ago all of us in the air quality 5 profession felt considerable satisfaction with California 6 when California enjoyed its best air quality since air 7 pollution control efforts began in the 1940s. There was only 8 one smog alert in the South Coast air basin, and no violation 9 of the federal standard, ozone standard, in the Bay Area. 10 These accomplishments once seemed unattainable. And 11 if you think where we've come from from the days of Professor 12 Hagenschmidt, our understanding of that and our control 13 efforts, and we thought they were unattainable. But they 14 were achieved with steady application of science -- and these 15 accomplishments, once unattainable, but they were achieved 16 with steady application of science and technology with a 17 little help from El Nino. 18 My goal during the time I will be here is I hope 19 that we can continue that progress so we can attain these 20 standards without the help of El Nino. 21 Thank you very much and we'll go on. 22 (Applause.) 23 CHAIRPERSON LLOYD: I'm sorry, mistake number one, I 24 hadn't finished. 25 (Laughter.) PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 12 1 CHAIRPERSON LLOYD: Clearly, this agency work is not 2 done, but ARB has helped California make tremendous progress 3 to date. Past boards along with past advances in science and 4 technology enabled us to climb a very tall ladder. I believe 5 that the systematic use of zero and near zero technologies 6 will enable us to reach the next wrung in the ladder, a wrung 7 where the clean air years like 1997 are the norm and are 8 achieved regardless of whether we have El Nino. You see, I 9 remembered the thought but -- 10 (Laughter.) 11 CHAIRPERSON LLOYD: I will do everything I can as 12 Chairman to see that we arrive at that destination. 13 Thank you very much. It is a pleasure to be here. 14 I look forward to working for the Governor and also with 15 Secretary Hickox and everyone at ARB and all of our 16 stakeholders. 17 Now, thank you. 18 (Applause.) 19 BOARD MEMBER EDGERTON: Mr. Chairman. 20 CHAIRPERSON LLOYD: Yes. 21 BOARD MEMBER EDGERTON: Can I make a comment? 22 CHAIRPERSON LLOYD: Yes, please. 23 BOARD MEMBER EDGERTON: One of the staff members 24 pointed out to me that it was very interesting that we'd come 25 full circle, that the first Chairman of the Air Board was a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 13 1 scientist and one of our -- I guess our office in El Monte is 2 named for him -- and that we've come full circle and now we 3 have another atmospheric chemist leading the Board. That's 4 an interesting point of history. 5 Governor Davis, in choosing Dr. Lloyd to Chair the 6 Air Board, ferreted out one of the world's most thoughtful, 7 balanced leaders in air quality today. I have no question 8 but that California's leadership is assured for his term. 9 Welcome. 10 CHAIRPERSON LLOYD: Thank you very much, Lynne. 11 Again, I look forward to working with you. 12 Our first item, agenda item, is 99-2-1. I would 13 like to remind those of you in the audience who would like to 14 present testimony to the Board on any of today's agenda items 15 to please sign up with the Clerk of the Board. If you have a 16 written statement, please give 20 copies to the clerk. 17 Again, the first item is a public meeting to 18 consider the Carl Moyer Memorial Air Quality Standards 19 Attainment Program; incentives for lower emission heavy-duty 20 engines. Presented to us today are the guidelines for the 21 Carl Moyer Program, a program that will provide grants for 22 lower emission heavy-duty engines. ARB is responsible for 23 establishing and overseeing the program, which will be 24 implemented locally by Air Pollution Control and Air Quality 25 Management Districts. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 14 1 Our budget provides $25 million for this important 2 program, which will reduce emissions of oxides of nitrogen 3 and diesel particulate matter. 4 At this point, I would like to ask Mr. Kenny to 5 introduce the item and begin the staff presentation. 6 EXECUTIVE OFFICER KENNY: Thank you, Chairman Lloyd 7 and Members of the Board. Today staff is proposing 8 guidelines for the Carl Moyer Memorial Air Quality Standards 9 Attainment Program. 10 The program is named after the late Dr. Carl Moyer 11 in recognition of his work in the air quality field and his 12 efforts to obtain funding for this program. Carl worked 13 closely with staff and is deeply missed. The Carl Moyer 14 Program will provide grants for the incremental costs of 15 cleaner heavy-duty engines. The proposed guidelines are 16 designed to ensure that the program will achieve real 17 quantifiable reductions of emissions of oxides of nitrogen. 18 The program will also significantly reduce emissions of 19 diesel particulate matter. 20 NOx emisson reductions under the Carl Moyer Program 21 will help California achieve the commitments under State 22 Implementation Plan Measure M4. This measure calls for 23 incentives to reduce emissions from heavy-duty vehicles. The 24 guidelines establish the basic structure of the Carl Moyer 25 Program by specifying how a district must administer a local PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 15 1 program. The guidelines also set detailed criteria for a 2 variety of projects in several source categories. 3 In addition, the guidelines give a tentative 4 allocation of funding among districts that we expect will 5 apply to administer this program. Source categories included 6 in the guidelines are on-road heavy-duty vehicles, off-road 7 equipment, marine vessels, locomotives and stationary 8 agricultural pump engines. 9 Staff has also committed to develop project 10 requirements for fork-lifts and airport ground support 11 equipment. Other projects could be approved on a 12 case-by-case basis. 13 This is a new program and will be the largest grant 14 program administered by the Air Resources Board. Some 15 aspects of the program are similar to current district grant 16 programs that are funded by motor vehicle registration fees. 17 In developing these guidelines, staff has worked closely with 18 districts to ensure that the Carl Moyer Program complements 19 district programs. Staff has also worked with potential 20 project proponents to address their concerns. 21 Renee Kemena of the Mobile Source Control Division 22 will now make the staff presentation. 23 Renee. 24 (Thereupon an overhead presentation was 25 presented as follows.) PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 16 1 MS. KEMENA: Thank you, Mr. Kenny. Good morning, 2 Chairman Lloyd and Members of the Board. My presentation 3 today describes the proposed guidelines for the Carl Moyer 4 Program, which is an incentive program for vehicles and 5 equipment with reduced emissions. The program is named in 6 memory of the late Dr. Carl Moyer in recognition for his work 7 in the air quality field and his efforts to bring about this 8 program. 9 --o0o-- 10 MS. KEMENA: Today I will describe the general 11 program requirements, district responsibilities for 12 implementing the program locally, project criteria, issues 13 and finally the conclusions and recommendations. 14 --o0o-- 15 MS. KEMENA: The 1994 State Implementation Plan or 16 SIP called for incentives and other market-based measures to 17 reduce in-use emissions. SIP Measure M4, in particular, 18 called for incentives to reduce emissions from heavy-duty 19 vehicles. Measure M4 has not been fully implemented because 20 funding was needed. 21 Last year through the budget process, the 22 Legislature authorized $25 million in funding for this 23 incentive program. There were two bills that would have 24 established the requirements for this program, Senate Bill 25 1857 and Assembly Bill 1368. Both bills were vetoed due, in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 17 1 part, to issues with the proposed infrastructure funding. 2 However, many of the criteria in the legislation 3 were valid and today's proposal contains similar 4 requirements. 5 --o0o-- 6 MS. KEMENA: The purpose of the program is to 7 achieve near-term NOx emission reductions from heavy-duty 8 engines. The Carl Moyer Program will provide grants for the 9 incremental cost of cleaner engines. The program is 10 primarily an ozone attainment strategy and focuses on getting 11 reductions in NOx. We expect that the Carl Moyer Program 12 will achieve significant reductions in diesel particulate 13 matter as well. 14 The Moyer Program with the current level of funding 15 will help us meet part of our Measure M4 commitments. 16 Continuous funding would help us meet our M4 commitments for 17 some years and exceed it in others. 18 --o0o-- 19 MS. KEMENA: This slide shows the division of 20 responsibility for implementing the program. The ARB is 21 responsible for developing the program guidelines and 22 overseeing implementation. The districts that choose to 23 participate will implement the program locally. The 24 districts will select projects and issue grants according to 25 ARB's guidelines. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 18 1 Districts will be providing match funding with $1 of 2 district funding to every $2 of State Carl Moyer Program 3 funds. Staff expects that most districts will use motor 4 vehicle registration fee funds as match funding. Districts 5 will report annually on the projects they fund. 6 --o0o-- 7 MS. KEMENA: These are the major program deadlines. 8 Districts that wish to administer a local program must submit 9 an application by April 2nd, 1999. The application is their 10 request for funds and their commitment to run the program 11 according to the guidelines and to provide matching funds. 12 ARB will evaluate district applications and distribute funds 13 to the districts by June 30th of 1999. 14 We are looking to the districts to get those funds 15 obligated under contract within one year. It is critical 16 that the program be implemented quickly both because the 17 funds must be spent within two years and because we want to 18 demonstrate the viability of the program and the need for 19 continued funding. 20 After one year, ARB staff will evaluate district 21 progress. If a district has not obligated all the funds 22 under contract, ARB will consider the need to reallocate the 23 funds to other districts. 24 --o0o-- 25 MR. KEMENA: The project categories included in the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 19 1 guidelines are heavy-duty vehicles over 14,000 pounds gross 2 vehicle weight rating, off-road equipment over 50 horse 3 power, locomotives, marine vessels and stationary 4 agricultural pumps. 5 --o0o-- 6 MS. KEMENA: Staff has not yet developed project 7 criteria for fork-lifts and airport ground support equipment, 8 but we have committed to doing so after this board hearing. 9 Staff is asking the Board to delegate authority to the 10 Executive Officer to approve the fork-lift and ground support 11 equipment criteria when they are developed. 12 To build flexibility into the program, staff is also 13 asking the Board to delegate authority to the Executive 14 Officer to approve other projects on a case-by-case basis and 15 to make other updates to the guidelines as necessary. 16 --o0o-- 17 MS. KEMENA: That covers many of the program 18 basics. Now, I will describe district responsibilities for 19 implementing the program. 20 --o0o-- 21 MS. KEMENA: The projects that districts select must 22 significantly reduce NOx, must be cost-effective and must not 23 be required by any regulation or agreement. The proposed 24 guidelines emphasize certified technology wherever possible. 25 Engines must be certified or tested to reduce NOx by about 30 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 20 1 percent. 2 --o0o-- 3 MS. KEMENA: We expect that most projects that 4 districts fund will also reduce particulate matter and 5 districts are free to consider reductions in particulate 6 matter as additional criteria for selecting projects. 7 The projects must be cost-effective. The program 8 will fund up to $12,000 per ton of NOx reduced. And finally 9 the projects must not be required by federal, State or local 10 regulations or by any MOU or other binding agreement. We 11 want to ensure that taxpayer dollars pay for real new 12 benefits for clean air. 13 --o0o-- 14 MS. KEMENA: The next slide. 15 Thank you. 16 Staff has tried to build flexibility into the 17 program wherever possible to make it easier for districts to 18 implement the program. One way we have done that is by 19 calculating match funding on an overall program basis rather 20 than project by project. This allows districts to fund 21 marine and locomotive projects with Carl Moyer Program funds, 22 since they could not use motor vehicle registration fee 23 funds. 24 Calculating match funds on an overall program basis 25 also gives the Bay Area Air Quality Management District PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 21 1 flexibility in funding the program. There are special 2 restrictions on motor vehicle fee monies in the Bay Area. 3 They can only be used for public agency projects. 4 --o0o-- 5 MS. KEMENA: This slide shows what may qualify as 6 district match funding. Infrastructure funding for a 7 qualified project counts as district match funding. 8 Although, Carl Moyer Program funds cannot be used for 9 infrastructure, staff recognizes that infrastructure is an 10 important component of projects, such as alternative fuel 11 trucks and buses. Therefore, staff proposes that district 12 funds for infrastructure count toward their match funding 13 requirement. District administrative costs also count for up 14 to 15 percent of the required matching funds. 15 And finally, district projects funded since July 1st 16 of 1998 may qualify as part of the required matching funds. 17 Districts can submit projects they have already funded as 18 part of their application and ARB will determine if those 19 projects qualify as match funding. 20 --o0o-- 21 MS. KEMENA: As I said before, the districts will be 22 issuing project grants. Now, I will cover the criteria that 23 districts must use to determine which projects are eligible. 24 --o0o-- 25 MS. KEMENA: For most projects categories there are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 22 1 three basic types of projects. They are new purchases of 2 vehicles and equipment. There are also repowers, which means 3 replacing an older engine with a newer engine in the same 4 vehicle or equipment chassis. And finally retrofits, which 5 is converting an older engine to a cleaner configuration. 6 --o0o-- 7 MS. KEMENA: For all projects, the NOx emissions 8 benefits are calculated based on pre- and post-project NOx 9 levels and an activity level, such as annual miles traveled, 10 fuel consumption or hours of operation with only activity in 11 California counting toward the emission benefits. 12 --o0o-- 13 MS. KEMENA: Cost-effectiveness is calculated on a 14 project-by-project basis. The cost-effectiveness calculation 15 includes the State Carl Moyer Program funds plus funds under 16 the district's budget authority. Staff is proposing a minor 17 change to the guidelines to broaden the definition of the 18 funds under the district's control. 19 Moyer Program plus district funds should not count 20 for more than $12,000 per ton of NOx reduced. Infrastructure 21 funding is not included in the cost-effectiveness 22 calculation. Outside funding, such as private company 23 funding, is also not included in the cost-effectiveness 24 calculation. Thus, outside funding could be used to fund 25 projects that would not otherwise meet the cost-effectiveness PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 23 1 criteria. 2 --o0o-- 3 MS. KEMENA: Now, we get to the heart of the Carl 4 Moyer Program, putting cleaner vehicles and equipment to work 5 in California. This part of the presentation includes 6 pictures of the types of projects that this $25 million could 7 help fund, like this LNG truck and CNG bus. 8 This slide lists the project criteria for heavy-duty 9 vehicles. New vehicles must be certified to an ARB optional 10 lower emission NOx standard, which at present only includes 11 cleaner alternative fuel vehicles. 12 Vehicle retrofits and repower projects must use 13 engines certified 25 percent or more below baseline NOx 14 levels. Truck retrofits and repowers could be diesel or 15 alternative fuel. For transit and school buses, however, 16 staff proposes that Carl Moyer Program funds not be used to 17 pay for diesel engines. This is consistent with the Board 18 policy to move toward cleaner alternative fuel transit and 19 school buses and thereby reduce toxic air contaminant 20 emissions of diesel fine particulate matter. 21 --o0o-- 22 MS. KEMENA: These are the project criteria for 23 off-road equipment, which are similar to the on-road 24 criteria. We encourage districts to fund cleaner alternative 25 fuel off-road equipment. However, we expect that the most PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 24 1 common off-road equipment projects will be diesel to diesel 2 repowers. 3 --o0o-- 4 MS. KEMENA: These are the criteria for locomotive 5 projects. There are no current model year emission standards 6 for locomotives. National standards will go into effect 7 beginning in the year 2000 and will apply to new engines and 8 all 1973 and later engines at time of remanufacture. 9 Pre-1973 engines must test at least 30 percent below 10 uncontrolled baseline levels. Locomotives subject to the 11 national standards must reduce emissions beyond those 12 required levels. 13 --o0o-- 14 MS. KEMENA: For marine vessels we propose that NOx 15 emissions must be tested at least 30 percent below 16 uncontrolled baseline levels. The projects must go beyond 17 international or federal requirements and must not be 18 required by any MOU or other agreement. 19 Staff is proposing a special provision for port 20 authorities, that they be allowed to put up match funding in 21 lieu of the district. That special provision is a concession 22 to port authorities recognizing that the vetoed legislation 23 would have allowed port authorities to administer their own 24 program at the ports. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 25 1 MS. KEMENA: These are the criteria for agricultural 2 pump projects. Ninety percent of agricultural pumps are 3 electric. However, reducing emissions from the remaining ten 4 percent powered by internal combustion engines can be 5 cost-effective. As shown on this slide, there are a number 6 of different options for replacing internal combustion 7 engines with cleaner internal combustion engines, both diesel 8 or alternative fuel or with an electric motor. 9 --o0o-- 10 MS. KEMENA: Staff is committed to developing 11 criteria for fork-lifts. Currently, about 45 percent of 12 ride-on fork-lifts are electric. The project criteria for 13 fork-lifts will target the replacement of internal combustion 14 engine fork-lifts with electric models. Staff will consider 15 the need for criteria, such as funding only projects that 16 require the installation of a charger, as well as a need for 17 caps on the amount of incentive money per project. 18 --o0o-- 19 MS. KEMENA: Staff will also develop criteria for 20 airport ground support equipment projects. Projects like 21 this electric cargo tug could be included. The US EPA is 22 currently in the process of negotiating a Memorandum of 23 Understanding that will include five airports in the South 24 Coast air basin, LAX, Ontario, Orange County, Burbank and 25 Long Beach. The purpose of the MOU is to fulfill US EPA's PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 26 1 obligations under SIP measure M15 by reducing emissions from 2 ground support equipment at those airports. Since those 3 airports will be covered under the MOU, they would not be 4 eligible for incentives under the Carl Moyer Program. 5 --o0o-- 6 MS. KEMENA: Support for the Carl Moyer Program has 7 been very strong, with the general recognition that the 8 program is needed to meet California's clean air 9 commitments. However, given the magnitude of the program and 10 the number of project categories included, it is not 11 surprising that a number of issues have been raised. 12 --o0o-- 13 MR. KEMENA: The issues include the funding 14 allocation, particulate matter emission reductions, as well 15 as bus repowers and transit bus incremental cost. 16 --o0o-- 17 MS. KEMENA: The first issue is the allocation of 18 funding among the districts. The proposed allocation is 19 shown in this table. The distribution to nonattainment 20 districts is based on the district's population and the 21 Measure M4 commitments in the district SIP. Measure M4, 22 again, is the near-term SIP Measure that calls for incentives 23 for cleaner heavy-duty vehicles. 24 There simply is not enough funding available to 25 satisfy district demands. Hopefully, efforts to get PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 27 1 continuing funding for the program will be successful. 2 --o0o-- 3 MS. KEMENA: Another issue is particulate matter 4 emission reductions. Controlling particulate matter 5 emissions is a high priority for the ARB. The fine 6 particulate component of diesel exhaust was recently 7 identified as a toxic air contaminant and a number of working 8 groups led by ARB are looking at ways to reduce those 9 emissions. 10 Staff expects that Carl Moyer Program projects will 11 significantly reduce NOx and PM. Alternative fuel trucks and 12 buses, newer diesel engines, electric equipment, all those 13 types of projects will reduce diesel particulate emissions. 14 Many districts plan on funding projects on a 15 first-come first-served basis. Requiring specific numbers of 16 projects that also reduce PM would unnecessarily complicate 17 the program and could discourage project applicants. 18 --o0o-- 19 MS. KEMENA: Some districts have requested that 20 repowering transit and school buses with diesel engines be 21 eligible for funding under the program. However, this is not 22 consistent with the Board's policy to move toward cleaner 23 alternative fuel transit and school buses. 24 The second bus issue relates to the incremental cost 25 of transit buses. Typically, about 80 percent of transit bus PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 28 1 costs are paid for with federal funds. The guidelines 2 propose to cover only that portion of the incremental costs 3 not covered through federal funds. Transit agencies argue 4 that if they do not receive the full incremental cost, it 5 will limit the number of buses they can buy. 6 Staff proposes to pay a larger share of incremental 7 costs on a case-by-case basis. The transit agency would have 8 to demonstrate that they need a greater share of the 9 incremental cost to buy all the alternative fuel buses they 10 intend to purchase. 11 --o0o-- 12 MS. KEMENA: That brings us to the conclusion and 13 recommendations. 14 --o0o-- 15 MS. KEMENA: The Carl Moyer Program will achieve 16 cost-effective reductions of NOx and particulate matter. The 17 program will help us meet SIP Measure M4 and other clean air 18 goals. ARB staff will work with districts to ensure quick 19 successful implementation of the program. 20 And finally, continued funding for the program is 21 needed to achieve the maximum benefit from incentive measures 22 and to help California meet its clean air commitments under 23 the SIP. 24 --o0o-- 25 MS. KEMENA: Staff recommends that the Board PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 29 1 approve the proposed funding allocation and approve the 2 program and project requirements in the guidelines. Staff 3 asks the Board to delegate authority to the Executive Officer 4 to approve other projects on a case-by-case basis, to approve 5 fork-lift and ground support equipment criteria and to 6 approve other updates to the guidelines as necessary. 7 Finally, staff asks the Board to support efforts to 8 identify continuing funding for the program. 9 That concludes my presentation. 10 CHAIRPERSON LLOYD: Thank you very much indeed. Mr. 11 Ombudsman, would you please address the process prior to 12 today by which this item came before us and share any 13 concerns or other comments you may have with the Board at 14 this time. 15 OMBUDSMAN SCHONING: Yes, Mr. Chairman. Thank you. 16 As you know, we typically comment only on the process by 17 which formal regulatory items come before you. And this 18 technically is not a regulatory item. Nonetheless, given the 19 importance of the subject and the relatively short timeframe 20 that was available for the development of the program, we 21 thought it appropriate to offer comments on that process 22 today at this case. 23 And Dr. Nancy Steele, who is Deputy Ombudsman for 24 Southern California will present those remarks. 25 CHAIRPERSON LLOYD: Thank you. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 30 1 DEPUTY OMBUDSMAN STEELE: Thank you, Mr. Chairman 2 and Members of the Board. The Carl Moyer Program was 3 developed with public input obtained through workshops held 4 in 1998 and seven meetings of an ad hoc implementation 5 committee. 6 This program, however, builds on an additional four 7 years of meetings between many stakeholders involved with 8 heavy-duty vehicle issues. Those participating in the 9 discussions included representatives from the California 10 Trucking Association, heavy-duty engine manufacturers, fleet 11 operators, fuel providers, local air districts including 12 South Coast, Sacramento, and San Joaquin Valley, 13 environmental organizations, the US EPA, the US Department of 14 Energy, California Energy Commission and Air Resources Board 15 staff. 16 In 1996 and '97 this group focused on developing 17 legislation to create a financial incentive program, as you 18 have heard, to reduce emissions from heavy-duty engines in 19 vehicles. While that legislation was vetoed by the Governor 20 in September of 1998, the bills provided a model for the 21 development of these guidelines and thus ARB benefitted from 22 participation in those stakeholder discussions. 23 In early 1998 ARB formed a new separate working 24 group to focus on development and implementation of this 25 program. Most of the members of this working group are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 31 1 representatives of California air and energy agencies plus 2 representatives of US EPA and a few others. At least 16 of 3 the 35 local air districts participated in the implementation 4 group. This group met seven times in the last 11 months. 5 ARB staff held two public workshops in 1998, on 6 November 12th in El Monte and on December 8th in Sacramento. 7 Almost 3,000 individuals were invited to both workshops and 8 the notices were posted on our website. Eighty-two persons 9 signed in at the November workshop and 59 signed in at the 10 December workshop. There are too many participating in those 11 workshops to list them all for you. 12 But in summary, those attending included 13 representatives of the local air districts, engine 14 manufacturers, fuel providers, the Ports of Long Beach, Los 15 Angeles and Oakland, the cities of Santa Monica, Glendale and 16 Pasadena and other public and private operators of heavy-duty 17 fleets, environmental organizations, consultants, the 18 California Trucking Association, and the California Energy 19 Commission, many of the same people who had participated in 20 that earlier working group. 21 In addition to those meetings, there were, as you 22 would expect, conference calls, one-on-one telephone calls 23 and over 30 Email messages to the implementation group 24 members. Our website has the Carl Moyer Program highlighted 25 on its front page with all notices and supporting documents PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 32 1 available for downloading. 2 The Ombudsman's office therefore finds that staff 3 conducted a thorough public outreach process involving 4 interested stakeholders and providing adequate means for 5 public input in the development of the program before you 6 today. 7 Thank you. 8 CHAIRPERSON LLOYD: Thank you very much. Before I 9 take questions from fellow Board Members, I'd just like to 10 offer a personal comment on this program. I had the pleasure 11 of working with Dr. Moyer over many years and particularly 12 closely on AB 234. I think I'd also like to congratulate the 13 people who put this program together in his honor. I think 14 he's a tremendous loss as a resource to California, but this 15 is a great tribute, and I'm sure that the funds which will be 16 utilized for this program will be used wisely to clean up the 17 air for which Carl fought so long and hard and dedicated, and 18 also characterizing a way in which you looked at working with 19 the marketplace to get clean air. So I can think of nothing 20 finer and I just hope this program is extended. 21 Questions from the Board? 22 Mr. Calhoun. 23 BOARD MEMBER CALHOUN: I'd like for you to refer to 24 the table that you showed for the funding. And the given 25 amount for each district is shown. And at the bottom it PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 33 1 shows administration, two percent. And the question is, for 2 the local districts, is there any allocation made for 3 administration at all? 4 ON-ROAD CONTROLS BRANCH CHIEF KITOWSKI: Local 5 districts, instead of needing to put up a full dollar for 6 every two dollars that they are given, can put up, basically, 7 85 cents and count 15 cents toward -- or 15 percent towards 8 administrative fees. So there isn't any of the cash, 9 basically. They're not given any money for administration 10 but they can count administrative costs towards their match. 11 CHAIRPERSON LLOYD: Yes, I think Mr. Roberts had a 12 question. 13 BOARD MEMBER ROBERTS: If you have a follow-up, stay 14 with that, John. 15 BOARD MEMBER DUNLAP: I do. So are you saying that 16 working with these formulas, Jack, that they can -- that 15 17 percent of the 25 million can go for admin? Is that what -- 18 ON-ROAD CONTROLS BRANCH CHIEF KITOWSKI: No, I'm 19 saying that 15 percent of the match that a district would be 20 required to put up can go towards admin. So if a district 21 gets $2 million of Moyer funds, they would be required, 22 normally, to put up a million. In this case, they would then 23 only be required to put up 850,000 and they can count 150,000 24 of their admin -- of that cost. 25 BOARD MEMBER DUNLAP: Of their money? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 34 1 Of their money? 2 If I may do a follow-up, the ratio here, just 3 looking at the lump that South Coast gets, and we're all very 4 familiar about the air quality challenge down there, so I'm 5 not questioning that, but the, you know, was it population 6 driven, was it motor vehicle registration driven, what 7 generally was the criteria? Maybe, Tom, you or Mike can 8 address that? 9 EXECUTIVE OFFICER KENNY: The criteria that we tried 10 to use for the formula was really a two-factored criteria. 11 One was population, because of the fact we were trying to 12 address those areas of the state in which the greatest air 13 quality impacts existed. 14 The second criteria was one in which we were looking 15 for programs that already existed in the State at the local 16 level that were designed to achieve these kinds of emission 17 reductions. If the program was in place, there was clearly a 18 benefit, we thought, that existed to that, because -- 19 BOARD MEMBER DUNLAP: They could operationalize 20 those resources. 21 EXECUTIVE OFFICER KENNY: They could operationalize 22 real quickly and what we're trying to do is basically get 23 this money, essentially, out into the population quickly. 24 BOARD MEMBER DUNLAP: Right. Okay, and that logic 25 seems sound to me. The only concern that I have, there are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 35 1 some other areas, and I'll pick on Ron for a minute in San 2 Diego, that have really been striving to be active in this 3 area. And, you know, there may be an opportunity for them to 4 get up to speed, if you will, pretty quickly and really have 5 a program that they can operationalize too. And I'm not 6 trying to slight any other air districts that are doing great 7 things. 8 But, Mike, do you think there's room in this 9 framework where a local area like San Diego, for example, 10 can, you know, benefit like South Coast for example? 11 EXECUTIVE OFFICER KENNY: In the existing 12 formulation that we have right here, I think, basically, what 13 we tried to do is use those two criteria, the population and 14 the existing M4 Programs. And so that's how we, basically, 15 did the allocation for these funds. What we are hoping, 16 though, is that there will be future funds that will be 17 basically provided by the Legislature, at which point, you 18 know, the existence of M4 Programs in the future could then 19 be taken into account. 20 But what we really tried to do here was essentially 21 use the money as quickly as we could in this fiscal year 22 because that is our obligation under the statutes and under 23 the budgetary constraints that we have, so that, in fact, we 24 could get the money out there. And, you know, obviously some 25 districts would probably have preferred to have gotten more PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 36 1 money than we actually were able to provide under this 2 criteria. 3 BOARD MEMBER DUNLAP: And I guess a final point is, 4 you think over time, though, if there's money that's 5 appropriated in addition to this over time, that it will 6 level out based upon the criteria that staff would apply to 7 it? 8 EXECUTIVE OFFICER KENNY: Well, I think, basically, 9 if we can get more money from the Legislature on this, you 10 know, the criteria that we're looking at right now, 11 population and M4, would probably help a district like San 12 Diego, because they would then have potentially an M4 program 13 in the future. And so as we look at that, that would be of 14 some benefit. 15 CHAIRPERSON LLOYD: Supervisor Roberts. 16 BOARD MEMBER ROBERTS: Thank you, Mr. Chairman. 17 They are anticipating what my comments are going to be 18 because they know I always look to see what the proportions 19 look like, but in all honesty, even though this is 20 significantly less than we were anticipating, I don't feel 21 that I want to make an issue of that. We're comfortable with 22 that part of the program. 23 I do have a concern, though, that I want to express, 24 and it was contained in your slide with the heading transit 25 and school bus issue and it's a transit issue. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 37 1 And I'm very uncomfortable with the way that the 2 cost-sharing would be for the purchase of new buses. In San 3 Diego we have two, basically, two major transit districts. 4 One of those districts is very very committed to having an 5 all natural gas fleet. And, in fact, we're something between 6 30 and 40 percent today, based on the formulas that we had 7 been using. 8 Under your plan -- the federal government on buses 9 provides about 80 percent of the funding, and under the 10 suggestions, as I understand it, that we would be looking at 11 the differential, that remaining 20 percent, and you would 12 fund, you know, you would allow 20 percent of that. We 13 actually have been funding 50 percent of that differential. 14 And what we are finding is that one of those major 15 districts is committed to a program and even at that level 16 funding the other district has yet to make any commitments 17 with respect to going to a natural gas fleet. 18 I am extremely concerned that, even at the existing 19 level of funding, that we're not going to make the progress 20 that I would like to see, and you're reducing that 21 significantly. Except we're going to go through some ritual 22 that is not clear to me with the possibility of coming out 23 with something greater. I think this part of the program, in 24 my mind, and this is as a member of a transit district, also, 25 I think is flawed and I think in San Diego I can tell you PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 38 1 it's going to hurt us significantly in terms of making 2 progress to an all natural gas fleet. So I'd like -- that 3 part of it, I'd like to see some discussion because I'd like 4 to see that modified. 5 We are not letting the transit districts off without 6 having some of their own resources. And I don't have -- we 7 don't have to get there, but we are going now from a 50 8 percent where we match 50 percent of the differential, down 9 to what would be a 20 percent match on the differential. And 10 I think that's the wrong direction to go in what I think is 11 one of the most significant changes we can make as the Air 12 Board. 13 So I think we need to talk about this. And I'll sit 14 here uncomfortable perhaps until after the public testimony 15 and give staff a chance to think about that. 16 CHAIRPERSON LLOYD: Does staff want to respond now? 17 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: I could 18 respond to part of that just to make sure that we're talking 19 on the same issue here. We would pay 100 percent of the 20 increment that the feds don't pay under this program for the 21 bus. So the bus -- they'd get -- 80 percent of the 22 incremental costs would come from the Federal Transit 23 Administration. And then under a proposal made under this 24 program, the other 20 percent cost for the bus would be paid 25 for by Carl Moyer funds. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 39 1 So what the issue became was that the alternate fuel 2 buses cost more money than the other buses. And so it turns 3 out that the Federal Transit Administration puts an absolute 4 monetary cap on how much each district funding, federal 5 funding, it gets. So under the scenario one of the concerns 6 was we could pay 100 percent for alternative fuel buses 7 between the federal monies and the Moyer monies, but you 8 couldn't buy as many buses as if you bought diesel, because 9 you'd hit this upper absolute dollar cap that apparently is 10 imposed by the feds. 11 And so what we were saying in this proposal is that 12 if a district actually gets to that point where 100 percent 13 of the cost of the buses are being paid but they're not able 14 to buy as many buses because of this federal cap, that we 15 would then, on a case-by-case basis, approve greater 16 incremental funding. In other words, give them more money 17 that could pay for them to get the same number of alt fuel 18 buses as diesel buses without exceeding the federal cap. So 19 they get an extra chunk of money and they would qualify under 20 this program. 21 The costs that would not be covered under the Moyer 22 dollars would be things like if they need infrastructure 23 improvements, if there's training and operational costs, 24 those are going to have to be dealt with in some other way. 25 And, of course, one of the ways to deal with that is through PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 40 1 2766 monies or other sources of monies that are available. 2 So I didn't want to paint the picture that this is 3 an absolutely free situation. But I think from the bus 4 standpoint, what we're proposing would make proposals for alt 5 fuel transit buses pretty viable. 6 BOARD MEMBER ROBERTS: Mr. Cackette, maybe our air 7 pollution control district people aren't understanding, but 8 that's -- as they're going over this, they're not -- they 9 have a distinctly different view of this. 10 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Let me 11 check and make sure I'm right with this. 12 ON-ROAD CONTROLS BRANCH CHIEF KITOWSKI: Tom, your 13 view is correct, but this is -- our policy has evolved over 14 the last months, so it is possible that maybe we haven't 15 communicated that fully to them. Several things have been 16 moving very fast on this program and maybe that point didn't 17 get communicated. We were trying to be responsive to the 18 transit agency. 19 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: That's why 20 this concept of having a case-by-case situation when they hit 21 their federal funding limitation is something that we added 22 recently to try to address that. 23 BOARD MEMBER ROBERTS: So you're saying you could 24 actually go up to 100 percent, but because of the added cost 25 of those buses, you might have fewer, so now you're saying PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 41 1 there's actually money for that where -- 2 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: They could 3 have bought 20 buses and because these are more expensive 4 with alt fuels, they could only buy 18 buses. And before 5 they hit their federal cap, then they could make a proposal 6 to buy the extra two buses under Moyer funds. 7 BOARD MEMBER ROBERTS: My concern is then that we 8 were going to be held to 20 percent of the differential. 9 Somehow we've gotten through that. That's not a part of this 10 currently then. 11 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yeah, I 12 think what we've proposed will take care of that situation, 13 so that there would be no penalty to the bus company that 14 wants to do the alt fuels. Again, though, recognizing they 15 do have other costs that are not covered under this program, 16 but for the actual buses they have the option. 17 BOARD MEMBER ROBERTS: No, I understand that and I'm 18 talking for the acquisition of the buses. I'll sit here 19 quietly and go back through this. 20 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: We have 21 someone here from the California Transit Association, that 22 might be able to elaborate on that. 23 BOARD MEMBER ROBERTS: I noticed that and that's why 24 I'm going to sit quietly and see if they're in agreement with 25 you in terms of where we are today. And it may be that maybe PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 42 1 we're a couple of weeks behind and this thing has evolved. 2 CHAIRPERSON LLOYD: Thank you. Any other? 3 Yes, Ms. Edgerton. 4 BOARD MEMBER EDGERTON: Hello. Do you have -- can 5 you give us some examples of how many buses you think that 6 might allow San Diego to get, for example? Was the example 7 that you gave, the 20 and the 18, probably realistic? 8 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: I just 9 picked out those numbers to illustrate what the difference 10 might be. But, you know, it depends on how many they 11 propose. I don't know what -- we didn't really know or fully 12 understand about this federal cap and how it applied to every 13 district. So we don't know how many buses -- I don't think 14 we have an accounting of how many buses every district could 15 buy in the maximum and then for how many they might be 16 penalized if we didn't have this additional provision. 17 But, in any case, the bottom line is that with this 18 extra provision, assuming there's enough money available 19 under the Moyer fund, there would -- they shouldn't suffer 20 any penalty. 21 BOARD MEMBER EDGERTON: Well, following up on that, 22 it might be useful to get in the record a discussion, if Jack 23 or if you all have -- if some of the staff can say, for 24 example, you think in this district this is how it might 25 work. Since it's a new program, it's going into effect right PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 43 1 away, using some of the average cost of the natural gas bus 2 and using some figures, just so it would be in the record for 3 the district, so they wouldn't have to call you up and find 4 the right person every time, they can look at the 5 transcripts. 6 ON-ROAD CONTROLS BRANCH CHIEF KITOWSKI: I 7 understand that. Staff in private -- in meetings that we've 8 held, we tend to get in trouble when we do that. Because if 9 we calculate it based on an assumption that they're going to 10 spend half their funds on transit buses, then people who have 11 other very good qualifying projects say well, you should make 12 the calculation that they spend half the funds on -- 13 BOARD MEMBER EDGERTON: Locomotives. 14 ON-ROAD CONTROLS BRANCH CHIEF KITOWSKI: -- 15 construction equipment and pretty soon we need pages and 16 pages of examples of every possible project that could get 17 funded. 18 Roughly, if they spent, and I'm going to throw a 19 number out there, if they spend half the funds on transit 20 buses, 20 buses is about right. I think that number comes 21 out to that ballpark. 22 BOARD MEMBER ROBERTS: My guess was if we -- 23 ON-ROAD CONTROLS BRANCH CHIEF KITOWSKI: That's at 24 the -- I'm sorry. 25 BOARD MEMBER ROBERTS: My guess was if we took the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 44 1 whole thing and spent it on the buses, we were going to end 2 up with 20. 3 ON-ROAD CONTROLS BRANCH CHIEF KITOWSKI: That's at 4 full incremental cost. 5 BOARD MEMBER ROBERTS: That's what I'm looking at. 6 BOARD MEMBER EDGERTON: Thank you. And I know these 7 funds need to be spent within the next couple of years in 8 order to get some near-term emissions benefits. But because 9 it's a new program, I wanted to ask whether you could clarify 10 for me any fuzziness that there might be with respect to such 11 demonstration -- having demonstration projects, what we would 12 think of as a demonstration project, be in this money, for 13 example fuel cell buses. If a district wanted to have a fuel 14 cell bus or a fuel cell fork-lift or, as was mentioned to me 15 by an aerospace company yesterday, an interest in having a 16 fuel cell locomotive running in the Alameda corridor, is 17 there any reason why they could not participate? 18 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: The key 19 issue for, at least, for the trucks and off-road equipment 20 that you described, is that the engine be certified to one of 21 the low-emission standards the Board has adopted. And in the 22 case of a hydrogen fuel cell, it's a zero emitting vehicle, 23 it would be pretty easy to do the certification. 24 In the case of some combustion engine, there might 25 be some barrier for a manufacturer wanting to certify it if PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 45 1 they were only going to do a demonstration project. The 2 certification involves testing and it costs money to do that. 3 So it probably would depend on the type of technology. In 4 general, you know, these projects are not oriented at 5 demonstration, particularly in the area -- and what the sort 6 of the self-limiting criteria are is that they're commercial 7 technologies in many of these areas in the marketplace right 8 now. So if you look at trucks and you look at buses and you 9 look at off-road equipment, those projects are going to look 10 more cost-effective and are going to be more of interest to 11 more proponents, I believe. 12 But when you get into the more limited areas of tug 13 boats, locomotives and things like that, I think that's where 14 the monies are likely to be spent on something that's a 15 little closer to the demonstration, because there's not 16 off-the-shelf technology, but people are willing to try to 17 put together partnerships to make cost-effective products out 18 of it. I mean we know they're looking at tug boats. We know 19 there's, at least, one locomotive project that will be coming 20 under this program. 21 BOARD MEMBER EDGERTON: And so, for example -- 22 actually, probably out of all of those, perhaps, if there 23 were one fuel cell -- there's -- anyway, you've answered the 24 questions. There's nothing to preclude, based on this 25 question that I got in the last couple of days that I want to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 46 1 be able to answer -- be sure that I answer it correctly, 2 there's nothing to preclude that company working in a 3 partnership, going to the district, getting it approved, and 4 if they had it on the road within two years, obligated within 5 one year and on the road within two years, and if it was 6 certified by the truck manufacturer, there's nothing to 7 preclude them from getting that. 8 Thank you. 9 Bob. 10 CHAIRPERSON LLOYD: Mr. Cross. 11 BOARD MEMBER EDGERTON: Cost would be big. 12 MOBILE SOURCE CONTROL DIVISION CHIEF CROSS: The 13 cost-effectiveness criteria would also apply. In other 14 words, the $12,000. So in creating a partnership you would 15 come up to the $12,000 limit and then probably other 16 investors -- if you were going to do a demonstration project, 17 you'd probably exceed that with the first one. So you'd have 18 to bring other investors on board to do it. But that doesn't 19 preclude it, it just makes it -- 20 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yeah, and 21 we've structured it so that other investors who want to come 22 in on here, their money doesn't count towards the 23 cost-effectiveness calculation. So it does, you know, it 24 helps allow someone who wants to come in and say I'll put up 25 $1 million and then we'll fund with government funds a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 47 1 certain portion. It lets that demonstration program compete 2 more on an even level. 3 But my point was that, you're going to have a 4 significant flood of projects that come in using 5 off-the-shelf technology that are proven cost-effective. And 6 obviously, the districts are going to probably go for those 7 first. So there's some bias or favoritism towards those kind 8 of proven projects. But it doesn't exclude what you're 9 talking about. 10 BOARD MEMBER EDGERTON: Thank you very much for 11 clarifying that on the record for interested parties. 12 Thank you. 13 CHAIRPERSON LLOYD: Yes, Ms. Rakow. 14 BOARD MEMBER RAKOW: Yes. It was mentioned that 15 some districts already have incentive programs in operation. 16 And is there any mechanism in this program that will, I don't 17 want to accuse any particular district, but would keep 18 districts from just moving these dollars around, using these 19 dollars in place of the dollars they're already putting in 20 their incentive program so that there really wouldn't be a 21 net gain? 22 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Well, I 23 think we've tried to structure this so that there is a net 24 gain. That's why some of the points may raise eyebrows like 25 we don't want to fund things at the five L.A. airports PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 48 1 because those are going to occur under a SIP obligation, 2 those reductions. So we don't want to get involved in that. 3 But, in general, the concept here is to take this 4 $4 fee that you pay on every time you register your car, 5 which is, in general, called 2766 fees. Although it varies 6 in the Bay Area and other areas, there's different bills that 7 authorized it. 8 But that money is in place now. All the major 9 districts are using it to fund projects. And what happens is 10 that money can't -- is the major source of match funds for 11 the Moyer money. So, yes, that money, which would have gone 12 to buy an alt fuel bus or a re-engine of a piece of 13 construction equipment, for example, will be used in a 14 similar way, except that it's got twice as much money from 15 the State now to help match it. 16 So since those were not required programs, those 17 were above and beyond -- they were incentive or voluntary 18 programs, it's correct that they have been combined into one 19 larger program, but I don't think that there's really a 20 double counting or a loss of overall benefit. 21 What we're really doing is just taking the best of 22 the two programs, lumping them together and trying to do 23 more. 24 BOARD MEMBER DeSAULNIER: Mr. Chairman. 25 CHAIRPERSON LLOYD: Yes, Mr. DeSaulnier. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 49 1 BOARD MEMBER DeSAULNIER: Will you forgive us for 2 being so talky. Under Mr. Dunlap, we were inhibited to talk 3 this much. 4 (Laughter.) 5 BOARD MEMBER DUNLAP: That's true maybe. 6 CHAIRPERSON LLOYD: Maybe the same amount of time, 7 but it was allocated differently. 8 (Laughter.) 9 BOARD MEMBER DeSAULNIER: No, he definitely 10 inhibited us. Mr. Kenny, I wanted just a comment from you on 11 the Bay Area's objections, specifically the administrative 12 costs. It's my understanding that both you and our APCO have 13 come to an agreement, basically, where there'll be staff 14 support that's acceptable to the Bay Area? 15 EXECUTIVE OFFICER KENNY: That's correct, Mr. 16 DeSaulnier. The problem that existed in the Bay Area is one 17 that was statutorially driven. The statutes for the Bay Area 18 use of their motor vehicle funds are essentially fairly 19 limited. And as a result of that, they had some difficulty 20 in terms of providing sort of the matches for this program. 21 We have -- actually, I talked with Ellen in the last 22 couple of days and we have worked out a process by which we 23 will provide a fair amount of assistance to make sure that, 24 in fact, they can take advantage of the program. 25 BOARD MEMBER DeSAULNIER: I just want to tell you PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 50 1 that I appreciate you working with Ellen and that's been 2 resolved. 3 And I'll leave John alone for the next couple hours. 4 (Laughter.) 5 CHAIRPERSON LLOYD: Are there any more questions of 6 Board Members? 7 If that's the case, then we'll move into the public 8 testimony period. We'd now like to call the first witness 9 who is signed up to testify before the Board on this item. 10 So if Norma Glover, Vice Chair of the South Coast Air Quality 11 Management District would come forward, please. 12 And, again, Vice Chairman Glover, I would like to, 13 again, reiterate our thanks for hosting the MTBE hearing at 14 the district last Friday and all the help that you gave and 15 the staff gave. 16 So thank you. 17 MS. GLOVER: Is this the proper one to speak to? 18 It's a real honor for me, Dr. Lloyd, to be here at your first 19 meeting. It's the first time I've ever testified here. 20 You know Dr. Carl Moyer was a real person and this 21 was brought to my attention this morning when I was having 22 breakfast. I stayed at the Abigail House. And the room that 23 I stayed in was the Solarium Room. And the proprietor had 24 seen some things on my table concerning Carl Moyer. And she 25 pointed out to me that Carl Moyer always stayed at the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 51 1 Abigail House and always stayed in the same room I did, the 2 Solarium Room, and that he drove a very unusual car. 3 (Laughter.) 4 MS. GLOVER: Good morning, Chairman Lloyd and 5 Members of the Board. I am Norma Glover, Vice Chair of the 6 South Coast Air Quality Management District and a Council 7 Member from Newport Beach, California. 8 I am here today with some prepared remarks to speak 9 on behalf of the district on the proposed Carl Moyer Air 10 Quality Standards Attainment Program. Although the air 11 quality in the South Coast basin has improved dramatically in 12 the past ten years, our basin still, unfortunately, holds the 13 distinction of having the worst air quality in the nation. 14 Heavy-duty vehicles and equipment are a significant 15 cause of our region's air quality problem and present an area 16 where large emissions reductions can be achieved. 17 We agree with the ARB staff on the proposed 18 allocation in the amount of 11.2 million, why wouldn't we, to 19 the South Coast District from the Carl Moyer fund. 20 (Laughter.) 21 CHAIRPERSON LLOYD: Is that also in your written 22 testimony? 23 (Laughter.) 24 MS. GLOVER: No. I have to be -- I have to say what 25 I feel is appropriate today. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 52 1 (Laughter.) 2 MS. GLOVER: We feel that this allocation is a fair 3 and appropriate distribution, based not only on vehicle 4 numbers, but more importantly on population exposure to 5 harmful diesel exhaust and other air pollutants. 6 The Air Board considers diesel exhaust among our 7 most significant health threats to our 15 million residents. 8 We would also note that the ongoing USC Childrens Health 9 Study by your Board is showing the strong likelihood of 10 long-term health impacts of air pollution in our basin. 11 The preliminary results of this study suggest that 12 the breathing capacity is reduced up to five percent among 13 girls growing up in the most polluted part of the basin. In 14 addition, asthmatic children are affected more severely. 15 These findings confirm the need for the infusion of funds to 16 spur implementation of clean technologies that will improve 17 the air quality and protect our children and others. 18 We also commit to use the Carl Moyer funds 19 efficiently and effectively and are poised to implement the 20 Carl Moyer Program immediately. Our technology advancement 21 office has a solid track record of successful projects to 22 develop and help commercialize clean alternative fuels and 23 technologies. Our staff also administers an air quality 24 investment program that has been active in promoting clean 25 fuel alternatives. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 53 1 A Request For Proposal to solicit Carl Moyer Program 2 projects in the South Coast is scheduled to come before our 3 board in April. This RFP will not only seek on-road 4 applications but will also emphasize off-road applications, 5 such as construction equipment, marine vessels and 6 locomotives. This latter component has been included because 7 off-road vehicles contribute significantly to the overall NOx 8 emission inventory in our basin. 9 We will also place a priority on the use of clean 10 alternative fuels in all applications. Our staff is in the 11 process of scheduling a number of workshops and meetings with 12 different sections including both users and suppliers to 13 explain the Carl Moyer Program and the opportunity it 14 presents. Our goal is to realize the emissions reduction 15 benefit at the earliest possible date. 16 To further facilitate program implementation, an 17 advisory group has been formed to provide stakeholders input 18 to South Coast staff and the governing board. ARB staff 19 actively participates in this working group and we appreciate 20 their input. This group will continue to advise the South 21 Coast District throughout the RFP process and the award of 22 contracts. 23 We also agree with your staff that a continuing 24 program is important in order to reduce the adverse air 25 quality and health impacts of diesel exhaust over the long PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 54 1 term. We will fully support ARB's efforts to secure new 2 funding for the program. 3 In addition to funding the purchase of low emission 4 vehicles and equipment, it is vital to support the 5 development of adequate fueling infrastructure. We would 6 like to see a more flexible program in the future that would 7 allow funding for the infrastructure in order to remove that 8 barrier from the potential market for cleaner fuels. 9 In conclusion, we support ARB's recent allocation 10 proposal and your efforts in making the Carl Moyer Program a 11 multi-year mechanism for achieving effective emissions 12 reduction from heavy-duty engines. 13 The Carl Moyer Program will allow our air district 14 to expand the introduction of low emission heavy-duty engines 15 in the South Coast Air Quality Management District and meet 16 our State Implementation Plan commitments. We urge your 17 Board to approve the program before you today. 18 And I would like to say, Mr. Chairman, that I was 19 extremely pleased to hear in your opening remarks that you 20 have a real commitment to a total system approach. 21 Thank you very much. 22 CHAIRPERSON LLOYD: Thank you. 23 The next witness is Mr. Doug Allard, Air Pollution 24 Control Officer, Santa Barbara County Air Pollution Control 25 District. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 55 1 MR. ALLARD: Mr. Chairman, Members of the Board, 2 thank you very much. I stayed at a hotel on the outskirts of 3 Sacramento today. I'm quite sure Carl Moyer never stayed 4 there nor anyone even remotely connected with air pollution 5 control. 6 (Laughter.) 7 MR. ALLARD: It was not served by transit. Even the 8 taxi drivers had difficulty finding it. 9 Nonetheless, I think it's appropriate that this item 10 comes before your Board at Dr. Lloyd's first meeting. It 11 promotes the kind of thing, I think, that Dr. Lloyd advocated 12 for during his tenure at South Coast. 13 My card, my speaker card, indicates support. I just 14 wanted to clarify that. I wholeheartedly support the Carl 15 Moyer Program. It does not refer to the funding allocation. 16 As your staff indicated earlier, there's not enough money to 17 go around. And so that puts us into the, probably, large 18 category of disappointed losers. The original allocation was 19 much greater for Santa Barbara County and you probably 20 received a letter from a local Senator on that topic. 21 But some of the aspects of Santa Barbara County's 22 Program that initially were considered in that allocation, I 23 hope, can be considered in the allocation of unspent funds or 24 in the allocation of future funds that come into the Carl 25 Moyer Program. I know there are a lot of districts that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 56 1 would like to have more money. 2 But I think really my main message here is to step 3 back from a broader, bigger picture view. I think your staff 4 was put in, sort of, a no-win situation because there wasn't 5 enough money to go around. They had to come up with the best 6 allocation that they could. 7 But I would suggest, in terms of future funding for 8 programs like this, if, hopefully, we can get continued 9 funding, that you direct your staff to consider more 10 partnership programs. This last round promoted, what I 11 consider, some unhealthy competition among districts for the 12 funds. And as the President of the California Air Pollution 13 Control Officers Association that concerns me. 14 So I would ask that in the future your staff promote 15 more partnerships among districts in order to use this 16 funding, particularly corridor projects. In Santa Barbara we 17 have the 101 corridor. There's the I-5 corridor. And there 18 are other corridors particularly in the Bay Area. So I would 19 just ask that your Board consider that for future funding. 20 Thank you. 21 CHAIRPERSON LLOYD: Thank you very much. 22 The next speaker is Susan Brown with the California 23 Energy Commission. 24 MS. BROWN: Good morning. Mr. Chairman, Members of 25 the Board, it is my great pleasure to be here this morning PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 57 1 representing the California Energy Commission. We are 2 pleased to speak in support of the Board's efforts to 3 implement this important environmental initiative. 4 I might add, over the past several months our staff 5 has worked hand-in-hand with the staff of the Air Resources 6 Board and the districts and we have been active in, as 7 technical advisors, in the development of these guidelines. 8 We also serve on the advisory committee to the South Coast 9 Air Quality Management District for the Carl Moyer Program. 10 While the Board focuses on near-term attainment of 11 air quality standards, the Energy Commission continues to be 12 mindful of the need to look at the long-term strategy to 13 improve both energy efficiency and vehicle fuel economy. 14 We are stressing the use of clean alternative fuels 15 and improvements in vehicle engine efficiency through a very 16 targeted research and development program. What we have 17 offered the Board is our considerable staff expertise and 18 experience, which has been developed over the last two 19 decades in addressing important fueling infrastructure 20 issues. 21 We also support the use of district funds for 22 infrastructure as part of the local match requirement. Also, 23 in -- we are pleased to see the provision in the proposed 24 guidelines, which encourages local transit and school 25 districts to use these Moyer funds to match the considerable PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 58 1 federal funds now available under the Federal Transportation 2 Equity Act for the 21st century called T21 for the purchase 3 of clean fuel buses. 4 In fact, the Commission in December of 1998 has 5 directed its staff to work with the Board and the districts 6 on a plan for the conversion of California school bus and 7 public transit bus fleet to clean alternative fuels. 8 Under our school bus demonstration program, which is 9 established under legislative directive in 1988, we have 10 already converted over 800 diesel-powered buses, roughly a 11 third of those to clean alternative fuels. During 1999 we 12 are planning to add another 50 compressed natural gas buses 13 to California's school bus fleet. Unfortunately, there is 14 not a similar program currently in place to address the 15 transit district bus issue, but rather through the use of 16 Carl Moyer funds and the considerable funding that we believe 17 will be made available in the President's budget for fiscal 18 year 2000. We think that will go a long way to begin to 19 address this issue. 20 I might also add that the school bus demonstration 21 program, which the Energy Commission has long supported, 22 requires that school buses that we purchase have 23 progressively low levels of particulates and are required to 24 meet California's air quality standards often two years 25 before they become effective. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 59 1 So the Commission continues to support your program 2 in a number of ways. We are providing state and federal 3 funds for the ad hoc truck working group, a diverse group of 4 stakeholders, many of them are, I believe, here in this room, 5 through the Commission's technical consultant. 6 During the current year, we are also providing a 7 limited bit of State funding, which we redirected for 8 advanced engine technology and infrastructure support, 9 because we believe that the emissions benefits of the 10 continuing shift to cleaner, heavy-duty engines can only be 11 realized through advanced technology. 12 For example, we are recently providing funding for 13 two advanced technology projects, one involving long-haul 14 trucks and the other waste haulers. These projects are 15 fueled by liquefied natural gas. And we believe that more 16 funding is needed for advanced technology if the spirit and 17 the intent of the Carl Moyer Program is to be realized. 18 In May or June of this year, we plan to announce the 19 availability of about a half a million dollars in State funds 20 for up to five fueling stations to support early introduction 21 of liquefied natural gas. We believe that through technology 22 advancement and investment in such things as small scale 23 liquefaction technology, that LNG and clean fuels such as 24 LNG, can begin to approach cost parody with diesel. 25 ///// PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 60 1 And we're aggressively pursuing that option with the State's 2 natural gas utilities. 3 We've also released a proposal for about 575,000 for 4 a heavy-duty demonstration program, which is designed to 5 complement the Moyer Program. Again, we view an important 6 need to continue to develop advanced engine technology, 7 particularly for natural gas engines, so that the energy 8 efficiency and emissions performance, particularly for gas 9 engines, can continue to improve. 10 And lastly, we are supporting with State and federal 11 funds the establishment of the Interstate Clean 12 Transportation Corridor. The ICTC is working to site CNG and 13 LNG fueling stations at strategic locations along Interstate 14 80 and Interstate 5. 15 So the Commission is very supportive of this 16 program. We continue, through our efforts to complement and 17 support your efforts, to introduce low-emission vehicles into 18 the California market. We would like to commend the Board 19 staff for its collaborative approach in the development of 20 these guidelines and we would urge the Board's timely 21 adoption of the program. 22 Again, we stand ready to assist the Board and the 23 districts so that this program can be a roaring success in 24 the first year. 25 Thank you so much. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 61 1 And I would be happy to answer any questions. 2 CHAIRPERSON LLOYD: Are there any questions? 3 Thank you very much. And I particularly look 4 forward to working with the Commission, the Energy 5 Commission, on an infrastructure, which is a key to our 6 getting a lot of these programs under way. So we look 7 forward to that. 8 MS. BROWN: Thank you very much. 9 CHAIRPERSON LLOYD: The next witness is Howard Levin 10 with Sempra Energy in San Diego. 11 MR. LEVIN: Good morning, Dr. Lloyd, Board Members. 12 Thank for having me. 13 As you said, my name is Howard Levin. I'm the 14 Policy Manager for Environment and Safety at Sempra Energy in 15 San Diego. And first, I'd like to say that the Board and 16 staff are to be commended for creating this comprehensive 17 incentive program for heavy-duty diesel engines. I know that 18 Dr. Moyer would be proud also. I also, like many of you, had 19 the opportunity to work with him a number of years ago. 20 This program will help California meet the required 21 NOx reductions in the SIP both through stationary and mobile 22 applications, both of which I'm glad to say Sempra Energy is 23 supportive of. 24 In our written comments and in discussions with 25 staff, we encourage you to add specific guidelines for using PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 62 1 natural gas powered stationary agricultural engines in place 2 of diesel. There already are specific guidelines for 3 electric motors, diesel engine replacement and diesel engine 4 retrofits. And our comments included some proposed natural 5 gas guidelines. We've been discussing these with staff and I 6 think they're receptive to continuing to work with us to fine 7 tune those guidelines and include them in the overall Carl 8 Moyer guidelines. 9 By doing so, it will enable agricultural users to 10 easily consider all clean fuel alternatives as they look at 11 engine replacements or retrofits. 12 I thank you for your consideration. Sempra Energy 13 strongly supports the program guidelines and we'll be glad to 14 work with staff if they need any additional information 15 regarding natural gas agricultural engine guidelines. 16 Thank you. 17 CHAIRPERSON LLOYD: Thank you very much. The next 18 is Mr. Ed Ehlers with the Association of California 19 Loggers. 20 MR. EHLERS: Mr. Chairman, Members of the Board, I'm 21 Ed Ehlers, the Executive Director of Associated California 22 Loggers. We're a trade association of family-owned logging 23 and log trucking businesses in California. Most of our 24 members operate small businesses where the owner works with 25 his crew in the woods every day. We log most of the timber PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 63 1 that's logged in California. And you might know that 2 California is the number three timber producer in California 3 -- or in the nation, in spite of the political turmoil that 4 exists in our business. 5 I have two concerns or two suggestions, perhaps, in 6 terms of guidelines today. One deals with allocation and the 7 other with timing. 8 The allocation question I'd like to raise and 9 suggest that there be a guideline to reserve at least some of 10 the funds for rural applicants from small businesses, like 11 our loggers or like farmers for instance. 12 I look at the allocation of $4.4 million to the San 13 Joaquin Valley District and think of the number of 14 communities and school districts and whatnot down there, you 15 could spend that in 30 minutes and hit ten percent of them 16 that are on the wish list. 17 And I guess the allocation request is predicated on 18 the desire to see if there's an audience among the 19 agricultural and logging community and people like us who 20 might respond to this, if we could try it in stages, so to 21 speak. And it might be worth setting aside some money out of 22 that 4.4 million and out of the million dollars that's 23 allocated to the rest of the rural districts throughout 24 California, maybe put it on a longer time span so that we can 25 see if there's an audience. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 64 1 We've written several times about this and attracted 2 a little bit of interest. I know it would be helpful to our 3 members in upgrading their equipment to cleaner burning 4 stuff. So I guess from that standpoint, I would ask that a 5 modest amount in rural districts be set aside to try and 6 attract and see if there's an audience there, kind of a 7 demonstration, if you would. 8 The other thing, too, I'd like to speak to is the 9 timing. At this point in the year, our people have done the 10 work that they're going to do this year. They work on their 11 equipment over the winter when it's too wet to work. They're 12 not focused on getting back to work. 13 I think there needs to be a guideline that these 14 rural districts will not -- or the Board will not reallocate 15 the money until a later date. For instance, I think the 16 September 30 report that's now called for in the timetable is 17 probably premature, in terms of telling whether we're going 18 to be having any audience for this. And I would suggest that 19 in the rural districts that deadline or that report be 20 delayed until the end of the year and that would give them 21 and those of us with businesses like this an opportunity to 22 see what the audience is and bring it forward. And then 23 those funds would probably be built -- or be used over the 24 '99, 2000 winter period to the extent that they're going to 25 be used. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 65 1 I appreciate your consideration of allocating 2 something for small businesses in rural areas and allocating 3 some additional time before any reallocation so that we can 4 see if there's an audience out there. 5 CHAIRPERSON LLOYD: Can I just ask staff to respond 6 to that. 7 EXECUTIVE OFFICER KENNY: Yes, with regard to 8 essentially having money available for the, sort of, rural 9 districts, we have set aside $1 million. That would be 10 available to smaller districts to use for different types of 11 programs. And so that money is available and could be, 12 essentially, pursued through any of the rural districts. 13 With regard to the, sort of, the funding monies, 14 what we're trying to do there, is we're trying to make sure 15 that, in fact, that we have the monies essentially allocated 16 out and then have them encumbered, so that, in fact, we don't 17 have budgetary constraints. 18 To the extent that those things are taken care of, 19 we're actually willing to be as flexible as we can possibly 20 be. 21 CHAIRPERSON LLOYD: Thank you. 22 MR. EHLERS: Well, obviously the school districts 23 will get nearly all of -- the school buses and transit buses 24 will get virtually everything in that kind of a time and 25 allocation scenario. And that may well be the way the world PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 66 1 is, but we wanted to request some consideration. 2 CHAIRPERSON LLOYD: No, I think you have a good 3 point. And, hopefully, if this program is reauthorized and 4 there's more money, maybe that can be taken into account in 5 the next round. 6 MR. EHLERS: Thank you. 7 BOARD MEMBER EDGERTON: Mr. Chairman. 8 CHAIRPERSON LLOYD: Yes, Ms. Edgerton. 9 BOARD MEMBER EDGERTON: Yes, I'd like to ask the 10 staff to give some sort of comment with respect to this. I'm 11 sure you've seen the letter from Jack O'Connell about Santa 12 Barbara's allocation and their concern that they did not have 13 the opportunity to comment and discuss with you the staff 14 recommendation. I guess the concern that I have is, I 15 personally am comfortable with the allocations, per se, 16 because I think they're -- I think the criteria that you used 17 are justifiable and excellent. 18 On the other hand, I'm concerned that there could be 19 some kind of backlash, some sort of feeling that it was -- 20 that there wasn't a fairness there. For example, we just 21 heard from a speaker who's concerned that they aren't 22 competing and that may undercut the success of the program. 23 What are your thoughts on that and I'm sure you considered 24 these points? 25 EXECUTIVE OFFICER KENNY: Yes. Our ultimate goal PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 67 1 here has really been the success of the program. And one of 2 the key elements of this has been to sort of put together 3 these guidelines really under extraordinarily short 4 timeframes. I mean the legislation was just -- the budget, 5 basically, was just passed. We had, basically, the money 6 available to us. We didn't know about it until, essentially, 7 late in the year because of the delay in terms of the 8 process. 9 We did have to get essentially these guidelines out 10 quickly so that, in fact, we could have the money encumbered 11 before the end of this fiscal year. We did have a process in 12 which we were trying to work with the different districts and 13 the different stakeholders so that, in fact, they would have 14 the opportunity to have an understanding as to what we were 15 trying to do and have input into it. 16 We did try different kinds of allocation schemes as 17 a way of providing the money to the districts. What we 18 ultimately settled upon was kind of the simplest scheme, 19 which was essentially population and M4 Program, because we 20 thought that was the one that would provide the greatest 21 level of success. 22 There were, however, earlier approaches that were 23 more complicated. And under some of those earlier 24 approaches, some districts got more money than this ultimate 25 allocation scheme that we put together and some districts got PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 68 1 less money. Santa Barbara was one of the districts that 2 under an earlier approach essentially received $800,000. But 3 districts like the South Coast, under those kinds of 4 approaches, also received only about $9 million. And there 5 seemed to be sort of -- and the San Joaquin Valley also 6 received less. 7 There seemed, ultimately, to be sort of a need to 8 make sure that, in fact, what we were doing with the program 9 was providing the money where the greatest need was. And 10 when we tried to figure out how to come up with an approach 11 that would really direct the money where the greatest  need 12 was and provide for the greatest level of success, population 13 was a factor that really had to be very significantly 14 considered. 15 And then, at the same time, what we were really 16 trying to do with the money was, essentially, achieve 17 emission reductions under M4 of the SIP. And so those two 18 criteria ended up being the key ones. The result was is what 19 you see with regard to Santa Barbara and I know Santa Barbara 20 has some concerns about that. 21 As we go forward, if we, essentially, do achieve 22 additional monies in the future, programs can basically 23 probably achieve more money in the future as a result of 24 probably having M4 Programs in place. But, I mean, there 25 clearly were, as Doug said, some winners and some losers PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 69 1 under this allocation methodology. 2 So that was what we tried to do. We think it's a 3 fair one. We think it basically gives us the best chance of 4 actually implementing the program successfully. And that's 5 what we tried to do. 6 BOARD MEMBER EDGERTON: How severe is the -- I was 7 concerned when he raised the CAPCOA issue. How much 8 discomfort did you hear? 9 EXECUTIVE OFFICER KENNY: We didn't see a lot of 10 infighting, but obviously, you know, people are competing 11 against one another for allocations and so there was some. I 12 think the suggestion that was made by Doug to essentially 13 provide for some kind of a multi-district corridor approach 14 is one that actually has some merit. And we ought to look at 15 that and see if we can take advantage of that for the future, 16 because I think it would be one that would allow for these 17 different corridors to be sort of focused upon in more of a 18 kind of a regional approach as opposed to a district 19 approach. 20 BOARD MEMBER EDGERTON: Thank you. 21 CHAIRPERSON LLOYD: Any more questions from the 22 Board? 23 Our next witness is Ed Gerber from the California 24 Transit Association. 25 MR. GERBER: Mr. Chairman, Members, thank you very PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 70 1 much for the opportunity to testify. I didn't come 2 particularly prepared to comment on Supervisor Roberts' 3 issue, but having reflected on the staff presentation and 4 what I previously read in the document, recognizing this is a 5 dollar-limited program, the flexibility they built in is 6 probably as good as you can do. 7 I hope that Rhonda won't call me later today and say 8 that -- that's his transit manager, that I completely 9 misunderstand this, but I think the 20 bus illustration was 10 perfect, because you've only got a million dollars in match 11 funds for San Diego. You're not going to spend it all on 12 buses I would suspect. And once you get above that, you're 13 out of the ability to match. And, of course, with large 14 fleet replacements, a $50,000 per bus differential, you can 15 spend an awful lot of money in a big hurry. 16 Speaking generally to the program, we are in support 17 of the program. However, there was something in the staff 18 report that we particularly wanted to call to your 19 attention. And at the bottom of page 34, you comment on, 20 "For urban transit and school buses, only new purchases of 21 alternative fuel buses are eligible..." We think that's 22 perfectly appropriate in the context of a discretionary 23 program like this. 24 And then you go on to say that, "This requirement is 25 in keeping with...," your resolution 98-49 to support strong PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 71 1 efforts to replace the transit bus fleets. 2 Again, that resolution we've had a lot of 3 discussions with your staff. It's a public policy statement 4 and we're trying to figure out how it can be achieved. 5 However, this September you have on your rule-making agenda 6 the subject of urban buses. We hope the fact that you 7 adopted Resolution 98-49 won't be part of the rationale for 8 whatever other action you take in September. We hope we will 9 have discussions with you about emissions-based systems and 10 we will come to some conclusion about what the best way is to 11 resolve the issue we're dealing with. 12 In short, we thought using 98-49 as part of the 13 rationale was perfectly appropriate for the Carl Moyer 14 Program. We hope we'll go back to a basic understanding of 15 the issue as we deal with the urban bus problem later this 16 year. 17 Thank you very much. I'd be glad to answer any 18 questions. 19 CHAIRPERSON LLOYD: Thank you. 20 Questions, comments? 21 Thank you very much. 22 Mr. Calhoun. 23 BOARD MEMBER CALHOUN: Sorry. I saw Mr. Cackette 24 smile and I figured he wanted me to ask him this question. 25 (Laughter.) PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 72 1 BOARD MEMBER CALHOUN: Prior to the Board Hearing, 2 we received some correspondence from one of the local 3 districts. And this particular district expressed a concern 4 about not being able to get forms for replacement of 5 diesel-powered buses because the criteria is that no engine 6 bus would be allowed. But yet it's allowed -- you can 7 replace a diesel engine with another diesel engine. And the 8 question that he brought a few moments ago, I think, is very 9 appropriate, because you're going to be dealing with this 10 issue in September. And I'd be interested in your reaction 11 to his suggestion, not to a suggestion, but to his comment. 12 Now, if it's too early to say, you can also say 13 that. 14 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Well, it 15 is too early to give you a complete preview of our thinking 16 as to the September or late this year's board item to deal 17 with emission standards for urban transit buses because we 18 haven't worked through all the policy issues and we haven't 19 had time to yet talk to Mr. Gerber and other stakeholders in 20 great detail on this. 21 But as far as the Moyer Funds and the Board's 22 resolution, I think it does, you know, preview a general 23 approach, which is that urban buses, which affect -- expose a 24 lot of people to pollution because they operate in high 25 density corridors, should receive some special attention for PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 73 1 near zero and zero emissions. 2 And our proposal that we will be developing along 3 those lines, I think, will, at least based on our 4 understanding right now, will be consistent with the Board's 5 resolution and will look towards setting a more stringent 6 standard for -- performance standard, but a more stringent 7 standard, for urban transit buses that, from a technological 8 standpoint, would probably be most easily and perhaps only 9 met with alternative fuels as opposed to diesel fuel. 10 That's where our thinking is right now, but 11 obviously we've got to deal with the economics. We've got to 12 deal with, you know, these detailed questions, like 13 Supervisor Roberts raised about how the funding works and, 14 you know, the last thing in the world we want to do is do 15 something that ends up with fewer buses so that people have 16 to pick up their car and drive it to work instead of taking 17 the bus. So we've got to balance all this out. I don't know 18 if that gets to your -- 19 BOARD MEMBER CALHOUN: Well, I thought one of the 20 criteria that you, at least thought about, was if you have 21 the buses you have sort of a captive fleet. And from an 22 infrastructure point of view, it's easier to do than it would 23 be if you have a diesel engine replacing another diesel 24 engine. 25 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Well, it PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 74 1 is easier if you don't have to deal with the infrastructure, 2 but right now the technology is that diesel engines are 3 technologically constrained to just about what the emission 4 standard is. In other words, you don't -- unlike with cars, 5 you don't have a Super ULEV Diesel around, unless it happens 6 to be powered by natural gas or electricity. 7 So you kind of have one choice from an emissions 8 standpoint. I think the principle here that the Board put in 9 its resolution is that transit buses, perhaps, should have to 10 comply with a higher standard, that means higher, meaning a 11 lower emissions standard, than other similar types of 12 vehicles, because of the way they're used, the people that 13 ride in them, that kind of thing. 14 And right now I think technology limits a diesel 15 from meeting that kind of standard. So both in this program, 16 where we're looking for lower emissions and perhaps in the 17 fall, what we'd be striving for is sort of the forcing to the 18 best technology possible, given that we've got to address the 19 economic issues. 20 But it just didn't allow, really, the Board's 21 resolution and the technology, didn't allow us easily coming 22 to the conclusion that some kind of -- that diesel to diesel 23 repowerings would be a good idea for transit buses. 24 BOARD MEMBER CALHOUN: Thank you. 25 MOBILE SOURCE CONTROL DIVISION CHIEF CROSS: Mr. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 75 1 Chairman. 2 CHAIRPERSON LLOYD: Yes, Mr. Cross. 3 MR. GERBER: Just a comment, because Joe, I think, 4 where you saw that was in the Bay Area's comments. And we've 5 had a historical problem in the Bay Area both from the 6 Transportation Commission, the Metropolitan Transportation 7 Commission, and from the Air District, because we have so 8 many agencies. And, basically, what they're trying to do is 9 keep up with their current maintenance, so I think it's an 10 issue we're going to have to deal with both here and our 11 relationship with the transit operators in the Bay Area. But 12 for myself, I'm currently in the minority at the Air 13 District, but I agree with CARB Staff's recommendations as to 14 this program. 15 CHAIRPERSON LLOYD: Thank you. Next, we have Greg 16 Vlasek, the Executive Director of the California Natural Gas 17 Vehicle Coalition. 18 MR. VLASEK: Good morning, Chairman Lloyd and 19 Members of the Board. I'm Greg Vlasek representing the 20 California Natural Gas Vehicle Coalition this morning. In 21 addition to welcoming Dr. Lloyd to the Board, it's been some 22 time since I testified before you, I wanted to, first of all, 23 take this opportunity to thank the seated Board Members for 24 the recognition of the, not only the benefits, but the 25 viability of natural gas vehicles, particularly in the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 76 1 heavy-duty sector, to meet the SIP and meet the air quality 2 goals of the State of California. 3 I've been in this business for about nine years now 4 working with you and with previous boards. And I think we've 5 seen more progress in terms of the Air Board's policy and 6 responsiveness to our industry in the past 12 months than in 7 the preceding years that I've been involved. So I want to 8 thank you, while I have the opportunity, for that recognition 9 and for the policies that have led to programs like the Carl 10 Moyer Program. 11 Our coalition has grown. In the past 12 months, 12 we've grown from about 22 members to 40 members currently. 13 And we expect to see a continued growth in our coalition and 14 our support within the industry as these policies come into 15 fruition in these programs. I think it's a reflection of 16 natural gas's ability to meet transportation industry fuel 17 demand in various market sectors, particularly heavy-duty. 18 As we have all seen over the past several decades, natural 19 gas has become the fuel of choice for commercial and 20 industrial stationary applications. It's a logical 21 progression of natural gas and its inherent abilities to help 22 clean up the air quality problem. 23 We support the guidelines as presented today. We 24 think that the staff has done a very commendable job of 25 designing a program that is true to Dr. Moyer's vision in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 77 1 providing a successful recipe for NOx reduction from 2 heavy-duty vehicles, despite some restrictions placed on the 3 staff by Governor Wilson's veto of AB 1368 and SB 1857 last 4 year. 5 We share Dr. Moyer's vision that natural gas 6 vehicles have a very important role to play in attaining SIP 7 compliance in California. And I'll repeat, again, we're very 8 delighted in the new policies that have come forth from the 9 ARB in the past number of months. 10 As has been stated before, Dr. Moyer knew very well 11 that this program would not be ultimately successful in 12 fulfilling its role in California air quality attainment, 13 unless it was an ongoing program. I believe that he 14 envisioned a program of at least eight to ten years in length 15 using these kinds of incentives for progressively cleaner 16 technology deployments. 17 He knew that there was a need for continuing 18 incentive funding for technology advancement and for the 19 demonstration of newer and better infrastructure technologies 20 as well. And those are components of this program that we 21 look forward to working with the Board and with the staff on 22 to get into or continuing a program to keep these emissions 23 reductions coming. 24 There's been a couple of discussions related to the 25 infrastructure component, what's the merit of that? What are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 78 1 the -- how can the policy for transit and for school buses be 2 implemented? How can we sort of wed some of these things 3 together using the Moyer Program and similar, either 4 regulatory or incentive, strategies to gain the maximum 5 incentive benefits possible? 6 As I was sitting in the audience listening to these 7 discussions, an example came to mind of a possible nexus of 8 how some of these things could come together and I would like 9 to share that example with you. 10 We know that liquefied natural gas currently is 11 being trucked into California. There's no production 12 facility or no significant production of liquefied natural 13 gas in California. And as a result, the cost of liquefied 14 natural gas is about 45 to 55 cents per LNG gallon, which 15 doesn't make it competitive for public fleets, certainly, 16 because they don't pay any tax on their fuels. It's only 17 very marginally competitive from an economic standpoint for 18 private fleets to use LNG. 19 So aside from the emissions benefits, where really 20 there's not a real big advantage to using natural gas as we 21 thought there would be before the current energy price slump 22 in petroleum. 23 There is a technology, and Susan Brown mentioned it, 24 there is an opportunity to fund some demonstrations of LNG 25 liquefaction technology whereby we could actually create an PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 79 1 LNG liquefaction industry, in the state of California, that 2 would provide the fuel for these heavy-duty vehicles and 3 would -- the Energy Commission's demonstration program that 4 they are funding has a target price of about 30 to 35 cents 5 per LNG gallon, which not only makes it cost-competitive for 6 the private fleets, but begins to make it completely 7 cost-competitive with diesel for use by public fleets as 8 well. 9 So it's possible that this kind of funding of this 10 type of a program and demonstration of this type of a 11 technology in California would not only bring the air quality 12 benefits but would do so at a cost savings, cost savings 13 compared to what's currently being paid for diesel fuel. 14 And I think that's a very exciting opportunity that 15 we certainly plan to explore. And we hope to do so in 16 cooperation with you, with the staff, with the Energy 17 Commission, with the utilities and with private industry who 18 see the direction that this fuel industry is moving and are 19 very excited about the future opportunities. 20 That concludes my remarks. I want to thank you 21 again for your help. 22 CHAIRPERSON LLOYD: Thank you. Any questions? 23 Ms. Edgerton. 24 BOARD MEMBER EDGERTON: Just for the record, who's 25 the company that has got the demonstration project contract PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 80 1 with the CEC? 2 MR. VLASEK: Well, it hasn't -- the CEC is working 3 with SoCal gas -- 4 BOARD MEMBER EDGERTON: Oh, it's not out yet. 5 MR. VLASEK: -- PG&E. There are some other -- 6 actually, several competing technologies to liquefy LNG. And 7 the CEC is going out to bid, I believe, in March with a 8 proposal to partner on one or more of those technologies. 9 BOARD MEMBER EDGERTON: So the RFP is going -- or is 10 it just -- RFP, thank you. 11 CHAIRPERSON LLOYD: Thank you very much. Just to 12 let you know, we have three more speakers. And, again, I 13 guess a few are getting in the takeoff area. Cecile Martin, 14 Bill West and Janet Hathaway. 15 So Cecile Martin from the California Electric 16 Transportation Coalition. 17 MS. MARTIN: Good morning and congratulations to Dr. 18 Lloyd. 19 CHAIRPERSON LLOYD: Thank you. 20 MS. MARTIN: I'm also very pleased to be here on 21 your first meeting. I look forward to working with you in 22 the current years. 23 Is this working? 24 CHAIRPERSON LLOYD: Yes. 25 MS. MARTIN: We're very pleased to see this program PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 81 1 come so far. It's really a credit to its namesake and the 2 hard work of many businesses, organizations and individuals 3 in this room. We think it's an important program. We think 4 the innovations in this program do go a little bit beyond 5 regulation, and, as you said earlier, Dr. Lloyd, Chairman 6 Lloyd, to take a systems approach to advancing technology in 7 fuels. 8 We know that it's critical that the program is very 9 successful and we understand the focus on heavy-duty. But we 10 had some other interests in this program and we worked very 11 closely with staff to try to get them included in this 12 initial program. And we really want to commend staff. We 13 know they worked very hard. They had a tight time line and 14 we asked them to take a very close look at fork-lifts and 15 ground support equipment at airports. And that's kind of a 16 tedious lot of equipment, I think, and not quite as easy as 17 the large vehicles. And so we really want to thank them for 18 their time in accommodating our interests. 19 We think we've made very good progress in the report 20 on fork-lifts. There are about 50,000 fork-lifts statewide. 21 And if they're electric, they offer significant emissions 22 reductions. And they also offer a very cost-effective 23 solution. You know the cost-effective criteria is $12,000 24 per ton. And these fork-lifts are usually from $1,000 to 25 $3,000 per ton cost-effectiveness. So we're quite encouraged PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 82 1 with that. 2 Some classes of electric fork-lifts offer the 3 potential right now to be 100 percent electric. We believe 4 that staff has identified some approaches in their report 5 that would eliminate free ridership, that is people who would 6 be replacing current electric with new electric. We don't 7 want to see that happen either. 8 We'd like to see guidelines that encourage the 9 replacement of internal combustion engine fork-lifts in areas 10 that are not traditionally electric and encourage the 11 development of that market. So we look forward to our 12 continuing work with staff on developing these guidelines 13 following this hearing. 14 Now, we also wanted to note that we had some 15 progress on the ground support equipment at airports. We 16 think that's very important. There are airports out of state 17 that have thousands of pieces of electric equipment and 18 California is really lagging behind. We do understand the 19 Air Resources Board position on the South Coast airports, 20 because they're part of this negotiation with the EPA and 21 with the airports. 22 We believe this has been a fairly slow and 23 inconclusive process so far. We're encouraged that there 24 might be some sort of an MOU in the near term. But we're 25 asking the Board that if substantive progress hasn't been PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 83 1 made in the next several months, can we please take the time 2 to maybe revisit this issue and see if those five airports 3 that are excluded now could eventually be included. We don't 4 want to see them left out if we aren't able to get an MOU in 5 that area. 6 And, in general, we'd like to just say we support 7 the report and we're really thankful for staff's work. 8 CHAIRPERSON LLOYD: Thank you very much. 9 The next speaker is Bill West with the Southern 10 California Edison. 11 MR. WEST: Thank you, Dr. Lloyd. I want to -- my 12 name is Bill West. I'm with Southern California Edison and I 13 want to thank Dr. Lloyd and the other Board Members for the 14 opportunity to speak here. I will keep my comments short. 15 We have been involved, working with the Carl Moyer 16 Program as a company, for the last couple of years. We 17 worked with Carl on the issue of quantifying emission 18 benefits of fork-lifts and ground support equipment. I was a 19 little reluctant to get up here and speak today, but I 20 decided to because I also wanted to commend staff on the 21 excellent job they've done at all levels of staff. 22 We attended all the workshops and we worked closely 23 with staff and they had a horrendous deadline to meet in 24 order to get these guidelines out. And I'm glad to hear the 25 recognition that was given by the Board and the new Board PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 84 1 Chairman to their efforts. It was well deserved. 2 We support the recommendations being made by staff, 3 and particularly we would like to see the work that has been 4 done on the guidelines for the fork-lifts and the ground 5 support equipment moved forward. And we would support 6 allowing the Executive Officer to approve those guidelines 7 when they are completed. 8 We at Edison will work closely with the Air 9 Resources District and the local districts to implement this 10 program because we think there are significant air quality 11 benefits to be achieved from it. 12 Again, thank you for the opportunity to comment and 13 we look forward to this program progressing not only this 14 year, but we support efforts for future funding. 15 Thank you. 16 BOARD MEMBER RIORDAN: Thank you, Mr. West. And let 17 me call, finally, Janet Hathaway as our final speaker on this 18 item. 19 MS. HATHAWAY: Well, the Chairman isn't here, but I 20 wanted to congratulate him on being here. 21 BOARD MEMBER RIORDAN: Know that the microphones are 22 throughout this building and wherever he is he can hear you, 23 I assure you. 24 (Laughter.) 25 MS. HATHAWAY: I'm Janet Hathaway and I just -- I PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 85 1 wanted to say how wonderful it is to look forward to working 2 with you, Chairman Lloyd, and how apt it is that we're 3 talking about the Carl Moyer Program, given the long history 4 that you have working with Carl Moyer. 5 It's a real pleasure to have you here. 6 CHAIRPERSON LLOYD: Thank you. 7 MS. HATHAWAY: I simply wanted to draw attention to 8 a couple of small items. First, that the staff have done 9 just a tremendous job in putting this program together. It 10 is a real challenge, especially when it's such a limited 11 amount of money for such a huge task. And the timelines have 12 to be short because it is critical to have this money spent 13 in this year, so that it can be continued and so that this 14 program's scope in the future would not be compromised by a 15 slow takeoff. 16 Secondly, I just wanted to say that that sort of 17 highlights probably the key issue for us for the future, and 18 that is, that we do need to find a way to make this a 19 long-term multi-year program of a much larger magnitude, both 20 because the problems that are out there in the heavy-duty 21 sector are so vast, and because if we can actually start this 22 program moving rapidly, we can demonstrate, for the whole 23 world not just for this State, but for the country and the 24 whole world how feasible and desirable it is to move to alt 25 fuels in a number of applications. And that, I think, would PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 86 1 be a tremendous thing for California to be the leader on. 2 Thirdly, in order to facilitate that transition to a 3 multi-year much larger type program, it is going to be very 4 important to have the word out on the street about this 5 program this year. And in that regard, it would be very 6 desirable to have the Air Resources Board making the public 7 aware of this, whether by media, by speaking to rotary clubs 8 or to mayors or what have you, just getting the word out is 9 going to be so important to the success and the continuation 10 of this program. 11 There still are a tremendous number of people out 12 there who really don't believe the time has yet come for alt 13 fuels. I've spoken to many elected officials, mayors, who do 14 not really know that this technology is here now and very 15 very good. So I think it's going to be really a big task, 16 but I want to offer to work with you on that task being 17 realized, because having this program really succeed is 18 probably the very best thing that we can do in honor of the 19 tremendous talent and the tremendous spirit of Carl Moyer. 20 So thank you. 21 CHAIRPERSON LLOYD: Also, I want to thank you, 22 Janet, for your undying efforts in the pursuit of clean air. 23 MS. HATHAWAY: Thank you. 24 CHAIRPERSON LLOYD: Any comments or questions? 25 Thank you. That concludes the public testimony on PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 87 1 this board item. 2 For the record, I would like staff to summarize 3 those written comments the Board has received by individuals 4 unable to testify at the hearing. Mr. Kenny, does the staff 5 have further comments? 6 ON-ROAD CONTROLS BRANCH CHIEF KITOWSKI: Yes. Thank 7 you, Chairman Lloyd. We have about five or six comments. 8 The Air Transportation Association and the National 9 Air Transportation Association both commented on the policy 10 of excluding five airports in the South Coast air basin, the 11 issue that was discussed as a result of the Memorandum of 12 Understanding being negotiated with those. They believe that 13 they should still -- they would like to still see incentive 14 money come to them even outside the MOU. And as staff has 15 talked about that, we believe that would be double counting. 16 The Manufacturers of Emission Controls Association 17 was very supportive and also indicated that districts should 18 be implementing programs that also reduce PM in addition to 19 NOx. And as we've also discussed, the districts are able to 20 implement additional criteria and we are encouraging 21 particulate matter to be looked at in the proposals. 22 We've also discussed -- we've already discussed the 23 comment by Senator O'Connell's office as well as the Bay Area 24 AQMD, so I will leave those out. 25 UC Davis Institute of Transportation Studies PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 88 1 commented that the guideline language focuses too narrowly on 2 some specific solutions and that fuel efficiency also could 3 be an important criteria to be considered. The guidelines 4 simply provide examples. There are, as we've said, many 5 other projects that are possible and certainly fuel 6 efficiency, in the future, might be something that the 7 districts want to look at as a criteria. 8 Finally, we have two comments from districts, Mojave 9 Desert and San Joaquin Valley Unified APCD. Generally, 10 supportive. They believe that -- Mojave Desert commented 11 that alternative fuel repower projects done to normal 12 rebuilds should be appropriately compensated and we agree 13 with that comment and are willing to look at the language 14 with the districts to allow that. 15 And the San Joaquin, one of the issues was the cost 16 of the transit buses, which we have already discussed and are 17 supportive of. They also believe that fuel use should be 18 considered in place of EMT and we will take a look at that 19 option. And also that the ARB should develop and maintain an 20 updated list of eligible engines and technologies to assist 21 the districts, which has a lot of validity and we'll take a 22 look at doing that. 23 That concludes the comments. 24 CHAIRPERSON LLOYD: Okay. Thank you very much. 25 Yes, since this is not a regulatory item, it is not necessary PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 89 1 to officially close the record. However, we do have a 2 resolution before the Board for action, so we should take a 3 brief pause there to read the resolution. 4 BOARD MEMBER DUNLAP: Dr. Lloyd, may I ask a 5 question? 6 CHAIRPERSON LLOYD: Yes, Mr. Dunlap. 7 BOARD MEMBER DUNLAP: The thing -- by the way, my 8 read and tracking and having known about this program as it 9 developed and working with the staff during my tenure as 10 chairman and then the time with Mrs. Riordan, I know how 11 quickly this thing has been put together. And I, too, would 12 agree it's a fine effort. It is worthy of support and I am 13 prepared to support it. 14 But there are a couple of points that kind of are 15 lingering with me that I think need to be addressed and I 16 think Mr. Kenny tried to do that as it relates to what the 17 future might hold for some of the other districts. 18 One of the things, and Dr. Lloyd, you'll experience 19 it as time goes on, like I did, is you have to be an arbiter 20 and you certainly have to empathize and sympathize with 21 different views. But the great thing that I learned in my 22 tenure here was that one needs to find a way to bring the 23 whole team along with you. 24 And the thing that concerns me and the lingering 25 point is the allocation dollars. While I have no concern PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 90 1 about the motive for the large share of the dollars going to 2 South Coast for example, because I agree the problem is just 3 so great there that they need resources to address this. But 4 at the same time, I'm troubled that some of the smaller 5 players and the smaller districts of which we have, I don't 6 know how many, Mike, 30 of the 35 are relatively small, need 7 to feel that they're being included and have some resources 8 in which to work so that we can have truly a program that 9 grows statewide. 10 So my only comment, I wanted to just surface that 11 again and indicate that whatever the next phase of this 12 program is, if we can't deal with this now and we probably 13 cannot, because another thing I learned is to be able to 14 count votes. And when Ms. Edgerton and Mark indicate, you 15 know, they're supportive and Ron's not quibbling, there's not 16 enough votes to make a change and I certainly learned that. 17 (Laughter.) 18 BOARD MEMBER DUNLAP: But I would make the point and 19 I think you'd be well-served, Dr. Lloyd, that, as the 20 Legislature or some other source considers extending this 21 program or growing it, that an awful lot of attention be paid 22 to bringing those smaller districts along. Because if you 23 don't, you will have a very good program in South Coast, some 24 decent but modest programs in other urban areas and nothing 25 going on everywhere else. And it's just something that I PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 91 1 feel needs to be said. 2 CHAIRPERSON LLOYD: Well, I think that's a very good 3 point, Mr. Dunlap, and I'll take it to heart. One thing, as 4 you spoke, strikes me it might be useful for staff to take a 5 look at the dollars which actually go to places from other 6 sources coming out of the State, so we've got 27-66, we've 7 got the original Rosenthal Bill. I think some districts 8 certainly have far more overall funding going in and maybe we 9 could use that, the overall sum of money, maybe to provide 10 some guidance for the next phase there. I agree completely. 11 Plus the fact as some of those areas grow, they're going to 12 have problems, so I think it's a very good point. 13 BOARD MEMBER DUNLAP: Thank you. 14 CHAIRPERSON LLOYD: Yes, do you want to make a 15 motion to move it. 16 BOARD MEMBER DUNLAP: I'll move it. 17 BOARD MEMBER RIORDAN: I'll second. 18 CHAIRPERSON LLOYD: All in favor say aye. 19 (Ayes.) 20 CHAIRPERSON LLOYD: Nay. 21 Passed unanimously. 22 Now, we'll move on to agenda Item 2. 23 Again, for people maybe coming into this item, I 24 would like to remind those of you in the audience who would 25 like to present testimony to the Board on this item, if you PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 92 1 have a written statement, please give 20 copies to the Board 2 and sign up also with the clerk of the Board. 3 (Thereupon a discussion occurred off the record.) 4 CHAIRPERSON LLOYD: We'll take a five-minute break 5 until a quarter of, at the clock in the back there. 6 (Thereupon a brief recess was taken.) 7 CHAIRPERSON LLOYD: Thank you. We will proceed with 8 the second item. And, again, for those of you joining us, 9 I'd like to remind the audience who would like to present 10 testimony on this particular item, to please sign up with the 11 clerk of the Board. And if you have written statements to 12 give 20 copies to the Board. 13 This next item is 99-2-2. Public meeting to 14 consider the approval of Santa Barbara County Air Pollution 15 Control District's 1998 Clean Air Plan as a revision to 16 California State Implementation Plan and as a triennial plan 17 update under the California Clean Air Act. 18 This plan serves two purposes. First, it is a 19 revision to California's State Implementation Plan for the 20 one-hour federal ozone standard. Second, it is a triennial 21 plan update as required by the California Clean Air Act. 22 The SIP revision is needed because Santa Barbara did 23 not attain the federal standard by the Clean Air Act deadline 24 of 1996. As a result, the Santa Barbara portion of the 25 California SIP must be revised to demonstrate attainment of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 93 1 the federal one-hour ozone standard by November, 1999. 2 At this point, I would like to ask Mr. Kenny to 3 introduce the item and begin the staff presentation. 4 EXECUTIVE OFFICER KENNY: Thank you, Chairman Lloyd 5 and Members of the Board. 6 EXECUTIVE OFFICER KENNY: Under the Federal Clean 7 Air Act, Santa Barbara had an attainment deadline of November 8 1996 based on its classification as a moderate nonattainment 9 area. Although Santa Barbara temporarily qualified for 10 attainment status in 1993, two violations of the standard 11 occurred between 1994 and 1996. 12 This triggered a reclassification from moderate to 13 serious and extended the attainment deadline to 1999. In 14 response to the reclassification, the district adopted a 15 revised Clean Air Plan, which staff will describe shortly. 16 It's important to recognize that the 1998 plan is by no means 17 a new plan. It's an update, but not a major change in the 18 control strategy of the 1994 plan. 19 The 1998 plan documents the continuing decline in 20 emissions in Santa Barbara as well as the nature of the 21 region's ozone air quality. In terms of the federal one-hour 22 ozone standard, Santa Barbara has been close to attainment 23 for several years. Progress toward achieving the State 24 standard is also being made. 25 Staff's presentation will discuss in more detail the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 94 1 status of Santa Barbara's air quality, its control strategy 2 and how the plan addresses both State and federal planning 3 requirements. 4 I will now ask Mr. Ron Nunes of the Air Quality and 5 Transportation Planning Branch to begin the presentation. 6 Ron. 7 (Thereupon and overhead presentation was 8 presented as follows.) 9 MR. NUNES: Thank you, Mr. Kenny. And good morning, 10 Chairman Lloyd and Members of the Board. For your 11 consideration today, we have the Santa Barbara County Air 12 Pollution Control District's 1998 Clean Air Plan as a 13 revision to California's State Implementation Plan and as a 14 triennial plan revision under the California Clean Air Act. 15 --o0o-- 16 MR. NUNES: In my presentation, I will provide you 17 with some background on Santa Barbara's air quality and on 18 the applicable planning requirements for both the State and 19 Federal Clean Air Acts. Santa Barbara's 1998 Clean Air Plan 20 has been developed to satisfy the planning requirements of 21 both Clean Air Acts. So I will discuss the plan first as a 22 SIP revision and second as a triennial revision under the 23 California Clean Air Act. I will conclude with our 24 recommendations for Board action. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 95 1 MR. NUNES: I will start with some background. 2 --o0o-- 3 MR. NUNES: This slide summarizes Santa Barbara's 4 ozone planning status. First, the Federal Clean Air Act and 5 the 1994 Ozone SIP. The 1990 amendments to the Federal Clean 6 Air Act categorized areas that exceeded the federal ozone 7 standard into four categories ranging from moderate to 8 extreme. 9 In addition, the Federal Clean Air Act sets forth 10 dates by which attainment of the standard is to be reached. 11 Santa Barbara was originally designated as a moderate 12 nonattainment area and given until 1996 to attain the 13 standards. 14 When the 1994 SIP was prepared, Santa Barbara 15 qualified for attainment status because no violations 16 occurred between 1991 and 1993. As a result, the district 17 developed a plan to demonstrate attainment as well as 18 maintenance of the federal ozone standard. 19 Unfortunately, violations of the federal standard in 20 1996 prevented Santa Barbara from being reclassified to 21 attainment. As a result, Santa Barbara was reclassified or 22 bumped by operation of law from moderate to serious in 1997. 23 As a serious nonattainment area, Santa Barbara was given 12 24 months to develop a new attainment plan based on attaining 25 the standard in November, 1999. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 96 1 Now, the California Clean Air Act. Ozone 2 nonattainment air districts must attain the State ambient air 3 quality standards by the earliest practicable date and meet 4 interim progress requirements. One such requirement requires 5 a revision to district plans at least every three years 6 starting in 1994 to correct any deficiencies and to 7 incorporate new data and forecasts. Santa Barbara is a 8 moderate classification under the California Clean Air Act. 9 --o0o-- 10 MR. NUNES: Santa Barbara's ozone air quality 11 progress has been good. Despite Santa Barbara's federal 12 reclassification, the area has been close to achieving the 13 federal one-hour ozone standard for some time. During the 14 1990s the maximum ozone concentration has averaged .14 parts 15 per million down from an average of .17 parts per million in 16 the eighties. 17 While Santa Barbara is projected to attain the 18 federal one-hour standard this year, Santa Barbara will need 19 additional emission reductions in order to attain the State 20 ozone standard. 21 --o0o-- 22 MR. NUNES: This slide shows the number of days that 23 Santa Barbara has exceeded the State and federal standards 24 over the past ten years. The columns in yellow represent the 25 number of days over the State's standard, while the purple PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 97 1 columns represent the days over the federal standard. 2 As you can see, the federal one-hour standard has 3 been exceeded no more than five days per year for the past 4 several years. However, the State standard has been exceeded 5 an average of about 20 days per year during the same period. 6 --o0o-- 7 MR. NUNES: There are two fundamental Federal Clean 8 Air Act planning requirements that are addressed by Santa 9 Barbara's 1998 Clean Air Plan. First is the attainment 10 demonstration. The Federal Clean Air Act requires the 11 demonstration of attainment of the federal ozone standard by 12 November 15th, 1999, based on photochemical modeling or 13 another analytical method determined to be as least as 14 effective. 15 The second is the progress requirement. The Federal 16 Clean Air Act requires the district to submit a plan that 17 provides for at least three percent annual reductions of VOC 18 emissions beginning in 1996. Therefore, a nine percent 19 reduction must be demonstrated for the years spanning 1996 20 through 1999. 21 --o0o-- 22 MR. NUNES: Next, some background on the California 23 Clean Air Act Planning Requirements. The California Clean 24 Air Act requires districts to prepare air quality plans to 25 achieve State standards for ozone, carbon monoxide, sulfur PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 98 1 dioxide and nitrogen dioxide. Santa Barbara County is in 2 attainment for all standards except for ozone. 3 Until the California Clean Air Act -- or under the 4 California Clean Air Act, each district's attainment plan is 5 to achieve a five percent reduction in each nonattainment 6 pollutant or its precursors in order to reach attainment. A 7 district may use a control strategy that achieves less than 8 five percent annual reductions if all feasible measures are 9 included in the plan with an expeditious adoption schedule. 10 No district plan has achieved five percent reduction 11 on an annual basis. The typical reductions are in the 12 three-year range or three percent range. As a result, the 13 all-feasible-measures criterion has been applied. In terms 14 of progress, districts must submit annual progress reports in 15 a triennial revision to ARB. 16 --o0o-- 17 MR. NUNES: Here are the planning milestones. The 18 initial California Clean Air Act plans were prepared in 19 1991. This was a significant undertaking and identified the 20 control strategies that would be implemented to make progress 21 towards meeting the State ambient air quality standards. 22 These plans were also designed to meet the 23 fundamental performance requirement under the California Act 24 to achieve a five percent reduction annually in emissions of 25 each nonattainment pollutant or its precursor. The 1990 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 99 1 amendments to the Federal Clean Air Act were the primary 2 driving force for the 1994 planning cycle, which resulted in 3 the 1994 State Implementation Plan or SIP. 4 While there are some differences in requirements 5 under the State and federal plans, for Santa Barbara the 1991 6 California Clean Air Act plan forms the foundation for the 7 SIP. And with some modifications was integrated with the 8 1994 federal plan. 9 The 1994 planning process was an important 10 undertaking as districts, ARB and other responsible agencies 11 revamped and revised the control strategy to reflect the best 12 data available. The 1994 planning process also identified 13 the measures designed to bring these areas into attainment 14 with the federal standard and ensure progress towards meeting 15 the State ozone standard. 16 The most recent planning milestone was the 17 preparation of the 1997 triennial report and plan revisions. 18 --o0o-- 19 MR. NUNES: The two main triennial planning 20 requirements under the California Clean Air Act are the 21 progress report and the plan review. The plan review is the 22 mechanism for determining if the plan revisions are 23 necessary. 24 The first of these reports was due in 1994 and 25 coincided with the 1994 Ozone SIP. The second report, which PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 100 1 is the subject of this Board item today, was due in 1997, but 2 was delayed in order to incorporate it into the 1998 federal 3 plan. 4 The triennial plan progress reports include 5 information on air quality improvement and the expected and 6 revised emission reductions for each district measure 7 scheduled for adoption in the preceding three-year period. 8 The plan review process provides an opportunity to 9 incorporate new data, take advantage of new technologies and 10 revise the control strategy, if necessary. 11 --o0o-- 12 MR. NUNES: Next, I will discuss our review of the 13 Federal Clean Air Act SIP Revision. 14 --o0o-- 15 MR. NUNES: Staff's review of the SIP revision 16 addresses the following: were the 1994 plan commitments met; 17 was attainment demonstrated; was the progress requirement 18 met; were the other components, such as the emissions 19 inventory, complete? 20 --o0o-- 21 MR. NUNES: For federal attainment purposes, the 22 1994 Clean Air Plan had one rule-making commitment, that was 23 Rule 344, a measure to control emissions from petroleum 24 sumps, pits and well cellars. This rule was adopted in 25 November of 1994. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 101 1 Two additional rules were adopted since 1994. These 2 are Rule 341, control of landfill gas emissions and Rule 359 3 petroleum flares and relief gas oxidizers. Emission 4 reduction benefits from these rules have been accounted for 5 in the district's federal 1998 attainment demonstration and 6 post-96 rated progress plan. 7 --o0o-- 8 MR. NUNES: The 1998 plan includes two proposed 9 control measure commitments. These are Rule 353, control of 10 ROG emissions from adhesives and sealants and Rule 352, 11 residential and commercial space and water heaters. 12 These rules are scheduled for adoption in April 1999 13 with reductions from these measures expected to occur by 14 summer of 1999. These reductions are also included in the 15 district's attainment demonstration. 16 --o0o-- 17 MR. NUNES: The 1998 Clean Air Plan includes three 18 contingency measures. The district is proposing to keep the 19 enhanced vehicle inspection and maintenance program, which 20 was a contingency measure in the 1994 Clean Air Plan. The 21 new contingency measures are Rule 333, control of emissions 22 from reciprocating internal combustion engines or IC engines 23 and measure T22, a mandatory employer trip reduction 24 program. 25 Rule 333 is scheduled for adoption in April, 1999 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 102 1 with anticipated reductions occurring in the year 2001. 2 Measure T22 is a mandatory employer trip reduction 3 program. However, State law prohibits the district from 4 requiring the employer to implement an employer trip 5 reduction program unless the program is expressly required by 6 federal law and the elimination of the program will result in 7 the imposition of federal sanctions. These two conditions 8 would need to be met before the district could implement this 9 contingency measure. 10 --o0o-- 11 MR. NUNES: Santa Barbara's 1999 Attainment 12 Demonstration is an update to the modeling used in the 1994 13 SIP. Emissions inventory inputs were updated in the 14 process. The modeling includes five tons per day of new 15 emission reductions between 1996 and 1999. Most all of these 16 reductions are due to decreasing mobile vehicle emissions. 17 Santa Barbara County's ozone design value is .13 18 parts per million recorded at the Las Flores Canyon Number 1 19 site. The modeling projects an ozone concentration decrease 20 from .13 parts per million to .12 parts per million based on 21 the emissions reductions by this summer's ozone season. 22 --o0o-- 23 MR. NUNES: The Federal Clean Air Act requires 24 serious nonattainment areas to develop plans that will 25 achieve a three percent annual ROG emission reduction from PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 103 1 1996 to 1999, in addition to the three percent annual 2 emission reductions from 1990 through 1996, as required of 3 moderate areas. This translates into a 24 percent reduction 4 from 1990 to 1999. 5 The 24 percent equates to 36 tons per day of 6 reductions over nine years. The projected 1999 emissions 7 reductions of ROG are over 40 tons per day. 8 --o0o-- 9 MR. NUNES: In the 1998 Clean Air Plan, the district 10 updated the 1990 inventory base year used in the 1994 Clean 11 Air Plan to a 1996 base year. The plan also includes the 12 current on-road motor vehicle inventory and some refined 13 model inputs. The district worked with the Santa Barbara 14 County Association of Governments or SBCAG to recalibrate 15 SBCAG's regional transportation model, refine the values used 16 to represent the number of miles traveled by vehicles in the 17 county based on the type of vehicles and to refine the 18 vehicle age distribution for the fleet in Santa Barbara 19 County. 20 --o0o-- 21 MR. NUNES: The responsibility for monitoring air 22 quality in Santa Barbara County is shared between ARB and the 23 district. Monitors operated by ARB and the district are part 24 of the State and local air monitoring system and are located 25 to provide local and regional air quality information. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 104 1 As a result of the County being reclassified from 2 moderate to serious, the district must establish a 3 photochemical assessment monitoring station or PAMS Program. 4 The chief objective of the PAMS Program is to 5 provide an air quality database that will assist the district 6 in tracking and evaluating progress, and if necessary, 7 refining control strategies for attaining the federal ozone 8 standard. 9 For Santa Barbara, the PAMS Program will consist of 10 one new monitoring station designed to collect upper air 11 meteorological measurements using upper air wind profilers 12 and other devices. The district is analyzing a variety of 13 existing historical data to determine the best monitoring 14 location to address the PAMS site objective and will make a 15 recommendation to US EPA for approval. The district has 16 expressed its commitment to establish a PAMS Program with a 17 letter which will be included with the SIP revision. 18 --o0o-- 19 MR. NUNES: Next is our review of the State 1998 20 Clean Air Plan as a triennial revision under the California 21 Clean Air Act. 22 --o0o-- 23 MR. NUNES: Staff's review of the 1998 planned 24 revision was based on three key California Clean Air Act 25 requirements. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 105 1 First, we compared the district's 1994 rule-making 2 commitments with their rule-making actions over the last 3 three-year planning cycle. This includes an assessment of 4 whether the anticipated emission reductions were achieved. 5 We looked for any deficiencies that would need to be 6 corrected and reassess the district's compliance with the all 7 feasible measures criterion. 8 It is also important to mention that feasibility is 9 considered in the context of the current planning cycle. The 10 triennial review requirements reflect the reality of what 11 constitutes feasible is clearly time dependent and will 12 change as technology evolves and the districts' regulatory 13 programs move forward. 14 --o0o-- 15 MR. NUNES: In terms of the 1994 Plan Commitments, 16 the district committed to adopt nine new control measures. 17 Three have been adopted, petroleum flares and relief gas 18 oxidizers was adopted in June 1994. Petroleum sumps, pits 19 and well cellars was adopted in November 1994. And control 20 of landfill gas emissions was adopted in 1995. The plan 21 anticipates almost one ton per day of ROG emissions will be 22 achieved in 1999. 23 Two measures were removed from the plan. Glycol 24 regenerators was removed because the district found that 25 glycol reboilers were already being controlled as a result of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 106 1 air toxics regulations. While the other, cyclic steam 2 injection oil well vents, was removed because the district 3 found very few sources employing tertiary oil recovery 4 methods for which this rule would apply. 5 Two measures were moved to the further study 6 category. Both tail gas incinerators and gas turbines were 7 moved because the district found that most of the existing 8 sources are already controlled. 9 Finally, two measures originally scheduled to be 10 adopted in 1995 and 1996 have been rescheduled for adoption 11 in April, 1999. Rule 352, Residential and Commercial Space 12 and Water Heaters and Rule 333, Stationary IC Engines will 13 provide an estimated emissions benefit of about 1.4 tons per 14 day of NOx in 2005. 15 The net result of the Rule adoptions -- the net 16 result of rule adoptions the district is achieving is about 17 one half of the three tons per day of emission reductions in 18 the 1994 plan. Most of the remaining reductions were 19 attributed to the gas turbines measure. This measure has 20 been moved into the further study measures category, because 21 upon further evaluation, the district found that most 22 turbines within the district are already meeting the low 23 emissions limits. 24 As a result of being a further study measure, the 25 district will need to document its findings. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 107 1 --o0o-- 2 MR. NUNES: Now, the 1998 Plan Commitments. In 3 addition to the two additional -- the two measures scheduled 4 for adoption in 1999, the district is proposing to add an 5 additional measure. The 1998 CAP proposes to adopt a measure 6 to control emissions from adhesives and sealants in addition 7 to the residential and commercial space and water heaters 8 measure and the IC engines measure originally proposed in the 9 1994 Clean Air Plan. 10 The district has also identified 14 stationary 11 source control measures to study further for possible 12 emission reduction potential. Not enough information 13 regarding the size of the inventory for these source 14 categories or the potential emission control technology is 15 currently available to estimate the potential emission 16 reduction benefit. 17 However, the district has committed to reviewing 18 these source categories within the 1998/2000 planning cycle 19 and determine if additional emission reductions are 20 feasible. 21 --o0o-- 22 MR. NUNES: The process for assuring that the all 23 feasible measures criteria is met requires a review of the 24 measures proposed by the district in addition to a review of 25 existing rules. Measures contained in the further study PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 108 1 category need to be evaluated during the current planning 2 cycle of 1998 to 2000 and will, again, need to be reassessed 3 when the next triennial plan revisions are due in 2000. 4 --o0o-- 5 MR. NUNES: Finally, I will conclude with staff's 6 recommendations. 7 --o0o-- 8 MR. NUNES: Staff recommends that the Board approve 9 the Santa Barbara 1998 plan as a revision to the 1994 ozone 10 SIP. Specifically, the control strategy for the federal 11 one-hour ozone standard, the attainment demonstration, the 12 commitment to develop a PAMS Program, the post-96 13 rate-of-progress plan and the conformity emissions budgets 14 for Santa Barbara County. 15 Staff further recommends that the Board direct the 16 Executive Officer to submit the appropriate sections of the 17 1998 Clean Air Plan to the US EPA as a SIP revision as soon 18 as possible. 19 --o0o-- 20 MR. NUNES: Regarding the California Clean Air Act, 21 staff recommends that the Board conditionally approve the 22 1998 Clean Air Plan. Staff believes that the 1998 Clean Air 23 Plan substantially meets the moderate ozone nonattainment 24 area planning requirements and the progress reporting and 25 plan revision requirements of the California Clean Air Act. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 109 1 With regard to the control strategy, the 1998 Clean 2 Air Plan can be considered to include all feasible measures 3 within the timeframe of this plan, 1997 through 1999. Thus 4 we believe the 1998 Clean Air Plan is at least as effective 5 as the 1994 Clean Air Plan control strategy, which it 6 replaced, provided the district complies with the conditions 7 of the proposed approval. 8 The recommendation for conditional approval is based 9 on the need for the district to complete a review of the 10 feasibility of 14 stationary source control measures 11 identified in the 1998 Clean Air Plan under the further study 12 category. Once the district submits a schedule for its 13 feasibility review, completes that review and makes any 14 appropriate rule-making commitments, staff proposes that the 15 condition approval convert to full approval. 16 And that concludes my presentation. 17 CHAIRPERSON LLOYD: Thank you very much. We have 18 one witness signed up, so I'd like to call Doug Allard, Air 19 Pollution Control Officer with Santa Barbara County Air 20 Pollution Control District. 21 MR. ALLARD: Thank you, Mr. Chair. Hello again, 22 Members of the Board. I am the Air Pollution Control Officer 23 for Santa Barbara County. And I'm also the President this 24 year of the California Air Pollution Control Officers 25 Association. So I hope, during the course of the year, I'll PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 110 1 be speaking frequently to your Board in support of your 2 staff's recommendations to continue to improve air quality in 3 California. 4 I'm here to testify in support of the plan and also 5 to thank the ARB staff for their assistance in developing the 6 plan. Particularly, Ron Nunes spent a lot of time in Santa 7 Barbara County at our community advisory council meetings as 8 we debated the contents of the plan. 9 We support the conditional approval that your staff 10 is proposing. And we're happy to commit to the schedule and 11 to evaluate our further study measures that we've 12 identified. 13 We're quite proud of our plan. It's a continuation, 14 I think, of Santa Barbara's successful efforts outlined in 15 previous plans and it does demonstrate attainment of the 16 federal air quality standard by the end of this year. 17 I want to take, though, this opportunity, since I 18 have a microphone here, to highlight some of Santa Barbara 19 County's efforts leading up to this plan. You don't always 20 get to see the local perspective and this is an opportunity 21 to give you that. 22 First of all, we're responsible, primarily, for 23 regulating emissions from stationary sources. And we 24 consider that responsibility very seriously. I think we're 25 unique in the State in terms of the proportion of our PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 111 1 stationary source emissions that come from the oil and gas 2 industry, especially in terms of off-shore oil and gas 3 development. So we've taken particular note of that. In 4 fact, because of that contribution and because of the '69 oil 5 spill in Santa Barbara County, the concern that oil 6 development be done in an environmentally friendly fashion is 7 very important to Santa Barbara County. 8 And because of that, Santa Barbara Board Members and 9 APCD staff took a very active role in Washington D.C. during 10 the reauthorization of the 1990 Clean Air Act, in terms of 11 lobbying for inclusion of a provision that would give local 12 districts authority over oil and gas development in federal 13 off-shore waters. 14 No one really thought that that would survive the 15 final sausage-making that characterizes legislation, but it 16 did. And we secured for EPA the authority to do just that as 17 well as to delegate it to local districts, and they did that. 18 And as a result, we've been able to achieve very significant 19 emission reductions from off-shore oil in Santa Barbara 20 County. 21 We pride ourselves on the stationary source side in 22 very aggressive and fair regulation. As far as the 23 aggressive part, letters of reference from the Western States 24 Petroleum Association are available on request. And I think 25 that they would also agree to the fair part as well. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 112 1 With regard to mobile sources, as you know, we have 2 less authority at the local level. However, Santa Barbara 3 County in the late 1980s established our Innovative 4 Technologies Program. We used seed money, mitigation money, 5 from off-shore oil and gas development to do that. And we 6 used it to issue grants to local organizations, government or 7 private, to introduce innovative technologies into Santa 8 Barbara County not unlike the Moyer Program that you just 9 approved. Through this program, we've issued over $10 10 million in grant funds and that's been leveraged several 11 times with contributions from other organizations. 12 Some of the projects that we funded include a clean 13 air express commuter program, marine vessel repowers, ag 14 booster pump engine replacements, fuel cells, low emission 15 boilers, alternative fuel infrastructure, and alternative 16 fuel vehicles. 17 That program has been recognized with two 18 prestigious awards, one from the President of the United 19 States and his Council on Sustainable Development, and one 20 from the Governor of California, the Economic and 21 Environmental Leadership Award. And so that's kind of why we 22 were a little disappointed that we weren't getting a bigger 23 share, but I'll let go of that. 24 (Laughter.) 25 MR. ALLARD: Our relationship with the COG and our PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 113 1 local transit agencies is probably the best in the State. We 2 work together to channel CMAC and other funds to alternative 3 transportation projects. And our local transit provider, the 4 Metropolitan Transit District, operates electric shuttles and 5 has recently submitted a proposal for T21 funds that would 6 introduce 50 electric transit buses to Santa Barbara County, 7 if it's approved. But there, again, there's more money than 8 -- I mean there's more people than money. 9 I would invite your Board to come to Santa Barbara 10 some time, to take a vacation from your car, leave your car 11 at home, take the train to Santa Barbara to the oceanfront, 12 ride the electric shuttle around Santa Barbara and experience 13 what it's like to come to a beautiful place and not be 14 burdened with your car. 15 All of these efforts have translated into 16 substantial air quality improvement in Santa Barbara County. 17 We're on the verge of attaining the standard and we hope that 18 when the new millenium dawns, we will be the only district in 19 the State to have attained the federal ozone standard in the 20 year 2000 after once having been out of attainment. 21 We currently only violate the federal standard at 22 one site. We're well on our way to attaining the State 23 standard. In 1990, we had 15 ozone monitoring sites out of 24 attainment of the State standard. Now, we only have nine. 25 And this has been accomplished, obviously, not just with PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 114 1 local efforts, but with our State and federal partnership. 2 And so, at this point, I need to add my CAPCOA hat 3 to my Santa Barbara County hat and then take them both off to 4 your Board for the courageous and world leading efforts to 5 control emissions from motor vehicles that has made our 6 progress possible. 7 So we hope you continue those courageous efforts. 8 Santa Barbara County -- not just Santa Barbara County but all 9 air districts are counting on you to do just that. 10 If you have any questions, I'd be happy to answer 11 them? 12 CHAIRPERSON LLOYD: How many buses do you have in 13 Santa Barbara County? 14 MR. ALLARD: How many total buses throughout the 15 County? Dr. Lloyd, I really don't know the answer to that 16 question. 17 But I'll answer a different question. We have nine 18 of these commuter buses, which are kind of unique, 19 subscription commuter buses that we have helped fund 20 ourselves. 21 CHAIRPERSON LLOYD: And those are natural gas? 22 MR. ALLARD: They're being converted to natural gas. 23 We have four that are converted and hopefully with some of 24 the Moyer funds we can increase that number. 25 CHAIRPERSON LLOYD: Thank you. Any comments from PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 115 1 the Board or questions? 2 BOARD MEMBER EDGERTON: Mr. Chairman. 3 CHAIRPERSON LLOYD: Ms. Edgerton. 4 BOARD MEMBER EDGERTON: Yes, actually this is a 5 comment to the Chairman. It seems to me, and perhaps Mr. 6 Allard can help us with this, but it seems to me that maybe 7 we should meet -- we've never met in my term down in Santa 8 Barbara to see how this clean air community -- they've won 9 all these awards, it just seems to me that we should go down 10 there and meet just to see how this works. 11 MR. ALLARD: We'd be happy to host such a meeting, 12 I'm sure. 13 BOARD MEMBER EDGERTON: Thank you. 14 CHAIRPERSON LLOYD: It's my first meeting, I don't 15 know how to answer. I'd refer that to staff. 16 (Laughter.) 17 CHAIRPERSON LLOYD: There may be a trap there. 18 (Laughter.) 19 CHAIRPERSON LLOYD: But I did hear, though, Mr. 20 Dunlap volunteer that if we do go down there, then he could 21 help us with some restaurants, though. 22 (Laughter.) 23 CHAIRPERSON LLOYD: We certainly -- I don't think 24 there'd be any problem from the Board's perspective of 25 meeting there. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 116 1 EXECUTIVE OFFICER KENNY: Actually, Chairman Lloyd, 2 we were looking at, essentially, some board hearings around 3 the state this year. And we were waiting to, sort of, like, 4 sit down and talk with you about some of the locations that 5 would be appropriate for that. So it is appropriate to go 6 out. And, in fact, in past years, we've actually spent a 7 fair amount of the time on the road, but it has been a while 8 since we've done that. 9 CHAIRPERSON LLOYD: But this is the first invitation 10 we have received? 11 EXECUTIVE OFFICER KENNY: And actually, a very nice 12 one. 13 (Laughter.) 14 CHAIRPERSON LLOYD: Thank you very much. 15 MR. ALLARD: Thank you. 16 CHAIRPERSON LLOYD: That concludes the public 17 testimony. And for the record, I would like to ask staff to 18 summarize those written comments the Board has received by 19 individuals unable to testify. 20 LIAISON SECTION MANAGER SAITO: Thank you, Chairman 21 Lloyd. The ARB has received one comment letter from Mr. Marc 22 Chytilo of the Environmental Defense Center located in Santa 23 Barbara. 24 Mr. Chytilo questions why Section 40925 of the 25 California Clean Air Act has not been invoked. This section PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 117 1 requires the ARB to analyze the potential benefits of 2 reclassifying Santa Barbara County from a moderate to a 3 serious nonattainment area. Reclassification would take 4 place if ARB determined that applying the requirements of a 5 serious area would substantially expedite Santa Barbara's 6 ability to attain the State ozone standard. 7 As a serious nonattainment area, the threshold at 8 which new and modifying stationary sources would have to 9 offset its increasing emissions would be lowered from 25 tons 10 per year to ten tons per year. In addition, Best Available 11 Retrofit Technology or BART would need to be applied to all 12 sources instead of only sources emitting more than 250 tons 13 per year. 14 Staff has looked at this issue and was unable to 15 show a substantial benefit to a bump up. The emission 16 reduction benefit of lowering the new source review threshold 17 looked to be minimal given the nature of Santa Barbara's 18 emission inventory. The more significant requirement would 19 be the application of BART. However, Santa Barbara is 20 already subject to the BART requirements under the ARB's 21 Transport Mitigation Regulation. 22 CHAIRPERSON LLOYD: Thank you very much, Mr. Saito. 23 Since this is not a regulatory item, it is not 24 necessary to officially close the record. However, we do 25 have a resolution before the Board for action. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 118 1 The Board -- 2 GENERAL COUNSEL WALSH: Excuse me, Chairman Lloyd. 3 CHAIRPERSON LLOYD: Yes. 4 GENERAL COUNSEL WALSH: There actually are two 5 resolutions before the Board this afternoon. And if I could 6 ask staff to describe the difference between the two. 7 LIAISON SECTION MANAGER SAITO: Yes, Ms. Walsh. The 8 one resolution is for the Federal Clean Air Act requirements, 9 the submittal of the Santa Barbara plan as a SIP revision. 10 GENERAL COUNSEL WALSH: And that's 2a? 11 LIAISON SECTION MANAGER SAITO: And that's 2a, yes. 12 The other resolution is for the California Clean Air Act 13 purposes for the triennial plan revision. 14 GENERAL COUNSEL WALSH: And I would just suggest 15 that you take those up separately. 16 CHAIRPERSON LLOYD: Okay. Well, maybe we look at -- 17 BOARD MEMBER RAKOW: I have a very quick question to 18 staff. 19 CHAIRPERSON LLOYD: Yes, Ms. Rakow. 20 BOARD MEMBER RAKOW: Under the conditions for 21 approval, I understand that the feasibility for the 14 22 further study measures would be the year 2000. Is there any 23 time period when the Santa Barbara District would have to get 24 back to the ARB for their rule-making commitments or is that 25 just sort of open-ended? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 119 1 LIAISON SECTION MANAGER SAITO: We are hopeful that 2 the district will submit a detailed schedule of their 3 evaluation and of those measures in the near future. And 4 that upon completion of each of those reviews, they will 5 notify us of their progress. 6 BOARD MEMBER RAKOW: In the near future, I mean, 7 before the year 2000 or after the year 2000? 8 SENIOR STAFF COUNSEL JENNE: The Resolution provides 9 -- it doesn't have a specific date. It simply requires us to 10 submit a schedule for reviewing the feasibility. 11 BOARD MEMBER RAKOW: That's what I was wondering. 12 SENIOR STAFF COUNSEL JENNE: And then we're supposed 13 to look at that schedule and approve it. 14 BOARD MEMBER RAKOW: Is it a usual practice not to 15 put a specific date in? 16 LIAISON SECTION MANAGER SAITO: Well, we have been 17 informed by the District that within 30 days, we will get 18 this detailed schedule of their commitment. 19 BOARD MEMBER RAKOW: Oh, fine. Thank you. 20 CHAIRPERSON LLOYD: Thank you. Maybe we can have a 21 motion on Resolution 99-2a. 22 BOARD MEMBER CALHOUN: I so move. 23 BOARD MEMBER RAKOW: Second. 24 CHAIRPERSON LLOYD: All in favor say aye? 25 (Ayes.) PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 120 1 CHAIRPERSON LLOYD: Can I call for a motion, also, 2 on Resolution 99-2b. 3 BOARD MEMBER RIORDAN: I move approval, Mr. 4 Chairman. 5 BOARD MEMBER DUNLAP: Second. 6 CHAIRPERSON LLOYD: All in favor say aye? 7 (Ayes.) 8 CHAIRPERSON LLOYD: And that concludes the action. 9 Any opposed? 10 I was assuming I could hear everybody saying it. 11 Thank you. 12 That concludes the action on this agenda item. 13 We now move on to the third agenda item, which deals 14 with -- it's agenda item 99-2-3, deals with research 15 proposals. 16 The next item of business before the Board today are 17 five research proposals. And I'd like to call upon Dr. 18 Holmes of the Research Division who has a short presentation. 19 On this item, I think, Dr. Holmes, you will mention 20 that one of the original items has been taken off. 21 DR. HOLMES: Thank you, Mr. Chairman. Members of 22 the Board, good afternoon. We do want to beg your indulgence 23 because there are two slight deviations from the simple 24 agenda that we normally have. First of all, the proposal 25 number 2417-208, this is a determination of next generation PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 121 1 automotive refinishing coatings, is withdrawn from the agenda 2 because it's currently under protest that's being handled by 3 the Department of General Services. 4 Now, on item number 4 on your board book agenda, 5 Epidemiologic Investigation to Identify Health Effects of 6 Ambient Air Pollutants in California. The Board heard last 7 month a presentation from the principal investigator on an 8 earlier phase of this project. But still I would like to 9 have staff take a few minutes to refresh your memory and give 10 you a little more detail on the proposal for what we call 11 Phase II -- or rather IIIB, the proposal that's before you 12 today. So I've asked Ms. Helene Margolis to give you that 13 brief presentation. 14 (Thereupon an overhead presentation was 15 presented as follows.) 16 MS. MARGOLIS: Thank you, John. And good morning, 17 Chairman Lloyd and Members of the Board. I will take only a 18 few minutes of your time to briefly update you on the 19 children's health study and to summarize the proposal from 20 the University of Southern California. 21 As most of you know, I'm Helene Margolis. I'm an 22 epidemiologist in the Research Division. Those of you who 23 were at the Board heard Dr. Peters' detailed discussion of 24 the project, and this will be substantially shorter. 25 The proposal before you today is for the final phase PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 122 1 of the project and we denote this as Phase IIIB. As you 2 know, the study is the core project of the Long-Term Exposure 3 Health Effects Research Program. The program was initiated 4 to address the need for more information on the effects of 5 long-term exposures. These effects may result from repeated 6 acute responses of short-term high concentration exposures or 7 subclinical changes due to long-term, that's months/years, 8 low to moderate level exposures or a combination of both. 9 --o0o-- 10 MS. MARGOLIS: Most air pollution health effects 11 research has focused on acute affects of short-term 12 exposures. Children were selected to study because of their 13 increased vulnerability. They are growing, and especially in 14 California, they may spend long periods of the day outdoors. 15 In addition, there are fewer potential confounders, such as 16 smoking and occupational exposures. 17 Based on their potential to cause long-term effects, 18 ozone, nitrogen dioxide, particle matter ten microns or less 19 and 2.5 microns or less as well as ambient acids were 20 selected to be included in the study. The acids include 21 nitric, hydrochloric and organic acids. 22 The objectives of the project are to: one, determine 23 whether long-term exposure to air pollution affects children 24 causing a decreased rate of lung growth or smaller lung 25 capacity or increased occurrence of acute respiratory PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 123 1 illness; as well as to determine the severity, duration and 2 frequency of these effects; and to determine which pollutants 3 at what concentrations cause any observed effects. 4 --o0o-- 5 MS. MARGOLIS: The children in the study have been 6 recruited from across 12 communities including Lompoc, 7 Atascadero and Santa Maria in the north, our clean air 8 communities; Alpine in San Diego County in the south; and in 9 between in the South Coast region Long Beach, San Dimas, 10 Lancaster, Mira Loma, Riverside, Lake Elsinore, Upland and 11 Lake Arrowhead. 12 The communities were selected to ensure a range of 13 high and low exposures for each of the pollutants being 14 studied including the ozone particle matter nitrogen dioxide 15 and acids, as I mentioned earlier. 16 --o0o-- 17 MS. MARGOLIS: This slide provides an overview of 18 the study design. From its inception, the project was 19 designed to include three phases. The first phase was 20 dedicated to protocol refinement. The second was a two-year 21 cross-sectional study which began in 1993. This phase 22 provided a snapshot of the health status of the children in 23 the different communities and a comparison of the health 24 status of children in the 4th versus 7th versus 10th grades. 25 The third phase is a longitudinal study. In this PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 124 1 phase, the children recruited in Phase II plus an additional 2 1800 4th graders are being followed through their high school 3 graduation. And this phase is the most powerful in terms of 4 its ability to answer the questions regarding long-term air 5 pollution exposure health effects. 6 The children recruited from 10th grade graduated a 7 few years ago and the children recruited from 7th grade 8 graduated from high school last June. During the next two 9 years, children recruited as 4th graders will continue to be 10 followed. 11 For administrative purposes and to provide a 12 checkpoint for review by the ARB's Research Screening 13 Committee, Phase III was divided into two project periods 14 denoted as the Phase IIIA and Phase IIIB. As I mentioned 15 earlier, the proposal for Phase IIIB is before you today. 16 --o0o-- 17 MS. MARGOLIS: I'm just going to briefly summarize 18 or highlight some of the early results from the study. Based 19 on 1993 data, which were used in the Phase II cross-sectional 20 analyses, the investigators observed that ozone is 21 associated with reduced lung function among asthmatic girls 22 and in boys who spent more time outdoors. And that PM 10 and 23 nitrogen dioxide are associated with lower lung function in 24 non-asthmatic girls and with bronchitic symptoms in 25 asthmatics. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 125 1 Surprisingly, early Phase III results, which utilize 2 data from 1993 through 1996, did not support the ozone 3 effects observed earlier. However, it would be very 4 premature to dismiss what we had seen with respect to ozone. 5 The analyses did indicate PM 10 and O2 and acids are 6 associated with lower lung function. 7 The reason we would not want to dismiss the ozone 8 effect is that based on previous research in animals and some 9 clinical studies, longer term exposures to ozone can cause 10 permanent structural changes in the airways and lungs. It is 11 possible that the effects of the other pollutants mask the 12 ozone affect. 13 Therefore, during Phase IIIB, a major focus will be 14 to further refine our understanding of the contributions the 15 different pollutants make to the observed adverse health 16 effects and physiologic changes. 17 --o0o-- 18 MS MARGOLIS: The technical and cost proposals for 19 Phase IIIB were submitted to and approved by the Research 20 Screening Committee this past January 22nd. 21 --o0o-- 22 MS. MARGOLIS: The proposal includes the plan to 23 continue following the health of the 4th graders that we had 24 recruited in 1993 and then the next wave of 4th graders 25 recruited in 1995. This follow-up includes annual lung PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 126 1 function tests and medical history updates. Follow-up of 2 acute respiratory illnesses, which had been done by 3 contacting parents of children who had been reported as 4 absent from school, will be somewhat modified. This is 5 necessary because some teenagers have threatened to leave the 6 study if we called their parents about absences. This is a 7 case of science redesigning itself to fit behavior. 8 For those of you who are not familiar with this 9 photo, which I've used before, it shows a young man 10 performing his lung function test while being coached by a 11 technician. And one of the extraordinary things is that 12 you'd think after all these, the children would have lost 13 interest and instead it's quite the opposite. They're 14 recognizing, as they mature and understand the implications 15 with respect to their health, they're showing even more 16 interest in the study. 17 --o0o-- 18 MS. MARGOLIS: As important as the health 19 assessments are to the success of this project, so is 20 obtaining high quality, time-resolved data for the air 21 pollutants being studied. This includes continuation of 22 ambient air quality measurements made at the 12 site ambient 23 air quality monitoring network, which was established 24 specifically for this project. 25 During Phase II, oversight of the network was PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 127 1 transferred from a USC subcontractor to ARB Research Division 2 staff. Staff will continue to manage the network with 3 cooperation and assistance of local air quality management 4 districts and contractors. 5 In addition to the ambient measurements, USC in 6 collaboration with their subcontractor Sonoma Technology 7 Incorporated, will continue to develop state-of-the-science 8 computer models to estimate true exposure to each of the 9 pollutants for each child in the study. This is in 10 consideration of exposures that are modified by indoor and 11 outdoor characteristics and also by personal measurements. 12 A special effort in Phase IIIB will be made to 13 account for proximity to roadways and traffic density, which 14 may, in part, account for the strong effects we're seeing 15 from nitrogen dioxide and particles. 16 --o0o-- 17 MS. MARGOLIS: In addition to the health and 18 exposure assessment work, the proposal includes continuation 19 of quality assurance activities and the all important 20 statistical analysis and health effects evaluation efforts. 21 The proposal also includes preparation of the ARB 22 final report at the end of year four as well as manuscripts 23 for scientific journals. These will be generated throughout 24 the four-year project period. 25 Continuing into Phase IIIB, peer review will be PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 128 1 provided by the USC External Advisory Group, which includes 2 seven prominent scientists and physicians. 3 --o0o-- 4 MS. MARGOLIS: With respect to the budget for Phase 5 IIIB, in addition to the USC contract amount of $6,015,941 6 specified in the proposal, there are expenses incurred in the 7 operation of the project's air quality monitoring network. 8 These expenses are approximately $250,000 per year including 9 contracts with the local air quality districts and a 10 contractor to perform field operations. 11 In addition to overseeing the network, ARB Research 12 Division staff compiled quality assurance and provide the air 13 quality data to USC. This has resulted in an annual savings 14 to ARB of approximately $500,000 per year. 15 While discussing the budget, I would like to 16 acknowledge the US EPA Health Effects Research Laboratory in 17 North Carolina and the South Coast Air Quality Management 18 District's contribution of funds to this project during Phase 19 II and Phase IIIA and the in-kind support from the ARB's 20 Monitoring and Laboratory Division and the local air quality 21 management districts including San Luis Obispo, San Diego, 22 Mojave and the South Coast District. This support will 23 continue during Phase IIIB. Staff will also continue to seek 24 co-funding for this project. 25 On that note, I would like to thank you for your PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 129 1 attention and I'd be happy to answer any questions that you 2 may have. 3 CHAIRPERSON LLOYD: How much money is being provided 4 by EPA and by the South Coast AQMD for Phase IIIB? 5 MS. MARGOLIS: None at this point. None has been 6 specified yet. 7 CHAIRPERSON LLOYD: I thought you said they were 8 going -- 9 MS. MARGOLIS: That was during the in-kind; support 10 from the South Coast will continue. The funding allocation 11 was for Phase II and IIIA. And one of our first stops on the 12 road will be to South Coast. And I did visit North Carolina 13 not too long ago and told them that we, hopefully, will be 14 continuing the project. 15 CHAIRPERSON LLOYD: I know it's not quite related, 16 but having gone out -- just gone out of here with $11 17 million, it might be good to go down and pay a visit and see 18 if they're a bit more receptive. 19 (Laughter.) 20 CHAIRPERSON LLOYD: I've got a second to it. 21 Anyway, I was in on the first of this program when I was a 22 member of the Research Committee and I'm delighted to see 23 some results there. But, again, I would hope that the other 24 people who benefit from this will support both in-kind and 25 with some dollars at the EPA level, you know, the pioneering PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 130 1 work that you're doing. 2 DR. HOLMES: We've talked with EPA, Mr. Chairman. 3 Their funding situation right now is such that the bulk of 4 the money in health effects research is going out through 5 grants mostly to academic institutions. Now, we are nothing, 6 if not, persistent though, and we'll keep looking for EPA 7 money so we can back out some of the State's money here. 8 CHAIRPERSON LLOYD: Well, I think it's, you know, 9 Dr. Holmes, I think you initiated a letter that will be 10 signed by Secretary Hickox and also Secretary Nichols urging 11 EPA to give major funding to Southern California. And I 12 think it's perfectly appropriate that we also make our case 13 that they should be getting some funds to us to support 14 programs such as this. 15 DR. HOLMES: I think that's certainly a reasonable 16 thing to ask of them, but I'm not sure -- we certainly -- we 17 feel fairly sure that the UCLA proposal that you alluded to 18 will be funded. We're also working to get one of EPA's 19 so-called super sites for PM studies in the Los Angeles 20 area. 21 All of these will be coordinated. And together I 22 think they'll add up to something more than -- the sum of the 23 parts will be more than -- will be greater than one might 24 expect otherwise. So it's -- and we also are following up on 25 Ms. Rakow's suggestion to talk with other State agencies to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 131 1 see if they would be willing to contribute some support for 2 this kind of study. 3 CHAIRPERSON LLOYD: Okay. Any questions, comments 4 from the Board? 5 Ms. Rakow, do you have a comment? 6 BOARD MEMBER RAKOW: No. I don't need to follow-up 7 Dr. Holmes on that, because I think it's natural for the 8 Health Agency. 9 CHAIRPERSON LLOYD: Good. Any other comments? 10 No questions. 11 We do have one, I think, one witness signed up 12 today -- actually, two witnesses signed up today to speak on 13 this and to provide some quantified written testimony. The 14 first one is Dr. Rita Boggs with American Research and 15 Testing Incorporated recognizing, as I understand, she's 16 going to speak on an item that was being withdrawn. So I 17 would like to turn this over to General Counsel Walsh. 18 GENERAL COUNSEL WALSH: Thank you. Yeah, just a 19 clarifying statement as Dr. Boggs comes up. Dr. Boggs has, 20 in fact, filed a protest with the Department of General 21 Services regarding the proposed awarding of this contract. 22 And as Dr. Holmes indicated earlier, based on that protest, 23 this item has been pulled from the agenda today and is not 24 among the proposals that are before you this afternoon. 25 That matter will be held in abeyance pending the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 132 1 resolution of the protest action at the Department of General 2 Services. And just to clarify, I understand her comments go 3 to that proposal, that this proposal is actually not before 4 you today. 5 CHAIRPERSON LLOYD: Again, I understand that, but on 6 the other hand, since Dr. Boggs has come, if she would like 7 to say something, I think, I'll give you the opportunity. 8 DR. BOGGS: I would, obviously, from my presence. 9 Dr. Lloyd and Members of the Board, I'd like to join in 10 welcoming you, Dr. Lloyd. 11 I did come today, even though I know this has been 12 put aside. First of all, we protested the award of this 13 contract on February 5th. And this past Friday, I went and 14 looked at the agenda for today's meeting and was quite 15 startled to see that this issue was on the agenda for today. 16 And I called General Services and spoke to the attorney who's 17 been assigned to the protest. 18 And she indicated that I should call the contract 19 officer, which I did. And I asked why it was on the agenda 20 when it was under protest and the response was that we think 21 we'll win. And I have to say to you that I was very startled 22 by that. I had to accept it as the position of the Board. I 23 didn't acknowledge it as a personal response, but simply as 24 this is the way the Board looked at it. Now, perhaps you 25 understand my reason for being here today. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 133 1 I wanted to give you a little idea as to why the 2 nature of the protest -- I'm not going into detail on it and 3 I understand it's not your thing to make a judgment on it, 4 but at least -- because I think that where it is gives you 5 some idea of some changes that need to be made. 6 The basis of it is that we recognize that there were 7 standards existing within the RFPs, but our concern is 8 whether they are being -- whether compliance with those 9 standards is being established. For example, in one other 10 protest, there is a testing lab which is identified as a 11 subcontractor by the prime contractor. Within the RFP, it 12 indicates that there should be a cost proposal for every 13 subcontractor. There isn't any in that proposal for the 14 proposed awardee. 15 There's supposed to be a list of equipment to be 16 used. There is no list. The list of tests proposed by the 17 prime doesn't coordinate with the list of tests supposedly 18 doable by the subcontractor. 19 So you get some idea of my concern here that somehow 20 the standards have been established, but we don't seem to be 21 verifying that those standards are being complied with. And 22 there needs to be some changes made in this regard. 23 This particular contract has been let out several 24 times. And the first time through, we attended the meeting 25 of the Research Screening Committee up here in Sacramento. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 134 1 And I found that day that the members of the Research 2 Screening Committee were very much peopled with expertise in 3 mobile sources. As we get more and more into the consumer 4 product evaluations, it seems to me we need expertise in that 5 area as well. I don't believe they're transferable. 6 I've spoken to Dr. Holmes and I made it clear to him 7 that even though I have -- well, 35 years of experience in 8 research and such, that I don't consider myself an expert in 9 mobile sources. We are involved in coatings and such, 10 consumer products. So I really -- I think you have made some 11 transition in that regard, Dr. Lloyd, yourself, but most of 12 us don't. And somehow we seem to have to take that into 13 consideration in the composition of the Research Screening 14 Committee. 15 I don't really know how to do that. Dr. Holmes 16 tells me that by statute that's established as a Committee of 17 nine. There has to be some way of changing that to 18 accommodate the different kinds of expertise that are going 19 to be required. And I urge you to take a look at that. 20 The previous time through on this contract, the 21 prime was going to use Dupont as its testing laboratory for 22 coatings. It seems to me there has to be in addition some 23 concern about conflict of interest. Currently, my 24 understanding is that the only limitation in that regard is 25 that no current employee of the Air Resources Board can be PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 135 1 involved in these things. However, it seems to me a little 2 odd to expect that coatings companies are going to submit 3 their experimental or newly marketed coatings to Dupont for 4 evaluation. 5 In fact, they assure me they won't. And so 6 therefore, the citizens of California are the losers because 7 those contracts, as I indicated in my written communication 8 to you, are doomed to failure. So somehow we've got to look 9 in a little more detail at about how these proposals are 10 being evaluated. 11 Thank you. 12 CHAIRPERSON LLOYD: Thank you. I'd just like to 13 make a couple of comments. Maybe the other Board Members 14 would want to as well, recognizing that this is before 15 General Services. But in the general context, having served 16 on the Research Screening Committee with Dr. Holmes, I can 17 assure you that staff does everything it can to do a thorough 18 evaluation on that part of it. 19 And I also understand your other comment, however, 20 which I would like to work with Mr. Kenny on to look at this, 21 that as we look at different research priorities, which is -- 22 which are identified in the Board each year, it may be 23 appropriate to go back and look at the expertise on there to 24 support Dr. Holmes and his staff. 25 So I think that part -- your point is very well PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 136 1 taken. 2 DR. BOGGS: Yeah, I don't question the seriousness 3 with which the Research Division does its work. I do think 4 they try to do it very seriously, but I do think there has to 5 be some accommodation made, as you're indicating, for the 6 different types of expertise. 7 CHAIRPERSON LLOYD: We will take that to heart. Any 8 other comments? 9 Thank you for coming. 10 DR. HOLMES: Mr. Chairman. 11 CHAIRPERSON LLOYD: Yes. 12 DR. HOLMES: I would like to say one thing, if I 13 may. The first statement that Dr. Boggs made was one that 14 I've heard before and I found very disturbing, that one of my 15 staff apparently was either rude or arrogant or -- and it 16 certainly did not give a good representation of the Research 17 Division or ARB in this telephone interchange. 18 I've apologized to Dr. Boggs privately and I'd like 19 to say publicly that I'm very sorry that you felt that you 20 were not well treated by my staff and I would -- 21 DR. BOGGS: I don't think it's even a matter of 22 feeling that way. I think I was mistreated period. But 23 there -- going further with that even, the -- we came here to 24 Sacramento to the first meeting of the Research Screening 25 Committee. The second time it was out -- the meeting of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 137 1 Research Screening Committee apparently was down in the Los 2 Angeles area. We were never notified of that until the end 3 of the day when it was over. 4 CHAIRPERSON LLOYD: Well, I think, again, processes 5 can also be improved and we take that to heart. And I say I 6 would like to work with Mr. Kenny on that. 7 And I would also like to say just -- I've been in 8 the private sector and one of the frustrations I've had 9 periodically in this is, less with this agency than many 10 others, and that is that you spend a lot of time and effort 11 writing proposals and you may spend ten or twenty thousand 12 dollars and then you're never quite sure what's happening in 13 the process. 14 But I say, typically, this Board and the Research 15 Division does an excellent job. But I would like to thank 16 Dr. Holmes for his frankness and for his public apology 17 there. I thank you. 18 DR. BOGGS: I thank him also publicly. 19 CHAIRPERSON LLOYD: With that, have all the Board 20 Members had an opportunity to review the five proposals 21 before us. 22 SECRETARY HUTCHENS: Excuse me, you have one more 23 witness. 24 CHAIRPERSON LLOYD: Thank you. Thank you. Thank 25 you. We have the next witness, Paul Knepprath from the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 138 1 American Lung Association. 2 (Thereupon a short discussion was held 3 off the record.) 4 BOARD MEMBER RIORDAN: So you were right. You're 5 doing very well, Dr. Lloyd. 6 CHAIRPERSON LLOYD: I don't take credit for that. 7 Back to where we started. Have all the Members reviewed the 8 research proposals? 9 Is the Board prepared to vote on the resolution? 10 Do we have a motion and a second to adopt the 11 proposals? 12 BOARD MEMBER DUNLAP: So moved. 13 BOARD MEMBER RAKOW: Second. 14 CHAIRPERSON LLOYD: All in favor say aye? 15 (Ayes.) 16 CHAIRPERSON LLOYD: Nay. 17 Motion passed. 18 By the way, one thing, I think, I'll have to work 19 with Mr. Kenny on, too, to define the definition of brief. 20 When we're talking about brief comments, I guess, we have 21 to -- any way, we have no one signed up for the public 22 comment period. 23 But during this period, no formal board action may 24 be taken. We will provide an opportunity for members of the 25 public to directly address the Board on items of interest PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 139 1 that do not appear on today's agenda. We are asking that 2 each witness limit his or her testimony to topics that are 3 within the subject matter jurisdiction of the Board. 4 To ensure that everyone has a chance to speak, we're 5 also asking that each witness limit his or her testimony to 6 no more than five minutes. I guess there is no one here. 7 It appears that no one has signed up to speak to the 8 Board during the open comment period. If there's anyone in 9 the audience who would like to speak to the Board, please 10 come forward to the podium and state your name for the record 11 and please identify the subject. 12 I guess there's no one else there. 13 John wants to make a comment. 14 BOARD MEMBER DUNLAP: Dr. Lloyd, if I may. I'd like 15 to congratulate you on a fine meeting. For your first 16 meeting, you did very well. And I just wanted to note it and 17 acknowledge it. And we're all so happy that a man of your 18 caliber has been appointed to the Chair of this Board. I 19 think you'll be a terrific Chairman. 20 CHAIRPERSON LLOYD: Thank you very much indeed, 21 John, for your kind comments. I've got a lot to learn from 22 you and Mrs. Riordan, because I need to line up and go 23 through quickly. I thought this was going to be shorter. 24 Thank you for your kind comments. It's been a 25 pleasure and I look forward to working with you all. And PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 140 1 thank you, Mr. Kenny and his staff. 2 With that, the Board meeting, the Air Resources 3 Board Meeting, will adjourn. 4 (Thereupon the Air Resources Board Meeting 5 was adjourned at 1:00 p.m.) 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 141 1 CERTIFICATE OF REPORTER 2 I, JAMES F. PETERS, a Certified Shorthand Reporter 3 of the State of California, and Registered Professional 4 Reporter, do hereby certify: 5 That I am a disinterested person herein; that the 6 foregoing Air Resources Board meeting was reported in 7 shorthand by me, James F. Peters, a Certified Shorthand 8 Reporter of the State of California, and thereafter 9 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 5th day of March, 1999. 15 16 17 18 19 20 21 22 23 JAMES F. PETERS, CSR, RPR 24 Certified Shorthand Reporter 25 License No. 10063 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345