MEETING BEFORE THE CALIFORNIA AIR RESOURCES BOARD HEARING ROOM CALIFORNIA AIR RESOURCES BOARD 2020 L STREET SACRAMENTO, CALIFORNIA THURSDAY, JULY 27, 1995 9:30 A.M. Nadine J. Parks Shorthand Reporter PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 ii MEMBERS PRESENT John D. Dunlap, III, Chairman Eugene A. Boston, M.D. Joseph C. Calhoun Lynne T. Edgerton M. Patricia Hilligoss John S. Lagarias Barbara Riordan James W. Silva Doug Vagim Staff: Jim Boyd, Executive Officer Tom Cackette, Chief Deputy Executive Officer Mike Scheible, Deputy Executive officer Mike Kenny, Chief Counsel Bob Cross, Assistant Division Chief, Mobile Source Division Susan Huscroft, Chief, On Road Control Regulation Branch, MSD Bill Lovelace, Manager, Regulatory Strategy Section, MSD Rose Castro, Manager, Aftermarket Parts Section, MSD Jim Ryden, Staff Counsel, Office of Legal Affairs Renee Kemena, Staff, Regulatory Strategy Section, MSD Peter Venturini, Chief, Stationary Source Division Don Ames, Assistant Chief, SSD Bob Fletcher, Chief, Emissions Assessment Branch, SSD Genevieve Shiroma, Chief, Air Quality Measures Branch, SSD Patricia Hutchens, Board Secretary, EO Wendy Grandchamp, Secretary, EO Bill Valdez, Administrative Services Division iii I N D E X PAGE Proceedings 1 Call to Order and Pledge of Allegiance 1 Roll Call 1, 2 Chairman's Remarks re McDonald's Tray Liners 2 Further Remarks on Subject by Mr. Boyd 2 Clark Brink External Affairs 3 Questions/Comments 6 Further Announcements by Chairman Dunlap 7 (Direction to Staff) 8 Continued Announcements by Chairman Dunlap 8 AGENDA ITEMS: 95-8-1 Public Hearing to Consider Adoption of Amendments too Certification Procedures for all On-Road Motor Vehicle Retrofits, and to Consider Adoption of Optional Retrofit Emission Standards for Heavy-Duty Engines and Vehicles Introductory Remarks by Chairman Dunlap 9 Staff Presentation: Jim Boyd Executive Officer 10 Renee Kemena Staff, Regulatory Strategy Section, MSD 14 Questions/Comments 29 iv INDEX, continued. . . PAGE AGENDA ITEMS: 95-8-1 PUBLIC COMMENTS: Greg Vlasek California Natural Gas Vehicle Coalition 35 Questions/Comments 38 John Freel WSPA 44 Questions/Comments 47 Lauren Dunlap Southern California Gas Company 50 Questions/Comments 52 Stephanie Williams CTA 53 Questions/Comments 55 Donel Olson Vinyard Engine Systems, Inc. 62 Questions/Comments 64 Paul Wuebben SCAQMD 69 Questions/Comments 72 Scott Crawford Antelope Valley Bus, Inc. 74 Questions/Comments 77 Written comments entered into record by Bill Lovelace 77 Questions/Comments 78 Official Closing of Record to Await Notice of Availability of 15-day Comment Period 78 v INDEX, continued. . . PAGE AGENDA ITEMS: 95-8-1 Ex Parte Communications 82 Questions/Comments 82 (Direction to Staff) 85 Questions/Comments 85 Modification of Resolution 95-39 86, 87 Motion by Boston to Approve Resolution 95-39, as amended 87 Roll Call Vote 87, 88 95-8-2 Public Meeting to Consider an Update on California's Air Toxic's Program Introductory Remarks by Chairman Dunlap 88 Staff Presentation: Jim Boyd Executive Officer 89 Bob Fletcher Chief Emissions Assessment Branch 92 Closing Remarks by Mr. Boyd 121 Questions/Comments 122 Adjournment 124 Certificate of Reporter 125 1 1 P R O C E E D I N G S 2 --o0o-- 3 CHAIRMAN DUNLAP: We'll call this, the July 4 meeting of California Air Resources Board, to order. 5 I've asked that, beginning this month, that we 6 begin with the Pledge of Allegiance, and I'd like to ask 7 Supervisor Silva to please lead us in the pledge. Jim? 8 SUPERVISOR SILVA: It is an honor to lead 9 Americans in the Pledge of Allegiance to the flag that 10 represents the greatest country that the world has ever 11 known. 12 (Thereupon, the Pledge of Allegiance to 13 the Flag was led by Supervisor Silva.) 14 CHAIRMAN DUNLAP: Thank you, Supervisor. 15 I'd like to ask the Board Secretary to please call 16 the roll. 17 MS. HUTCHENS: Boston? 18 DR. BOSTON: Here. 19 MS. HUTCHENS: Calhoun? 20 MR. CALHOUN: Here. 21 MS. HUTCHENS: Edgerton? 22 MS. EDGERTON: Here. 23 MS. HUTCHENS: Hilligoss? 24 MAYOR HILLIGOSS: Here. 25 MS. HUTCHENS: Lagarias? 2 1 MR. LAGARIAS: Here. 2 MS. HUTCHENS: Parnell? 3 Riordan? 4 SUPERVISOR RIORDAN: Here. 5 MS. HUTCHENS: Roberts? 6 Silva? 7 SUPERVISOR SILVA: Here. 8 MS. HUTCHENS: Vagim? 9 SUPERVISOR VAGIM: Here. 10 MS. HUTCHENS: Chairman Dunlap. 11 CHAIRMAN DUNLAP: Here. 12 Thank you. Before we begin today's meeting, I'd 13 like to cover a few items, and start off by saying that I'm 14 pleased to see the McDonald's tray liners that are at each 15 Board member's place. 16 Mr. Boyd, I'd like for you to give some background 17 on this project and maybe ask staff to say a few words. 18 MR. BOYD: Thank you, Mr. Chairman. Good morning, 19 Board members. Good morning to members of the audience. I, 20 too, am pleased to see the McDonald's tray liners. 21 Something that we don't get an opportunity to bring to the 22 Board's attention very often is the long-term effort and 23 investment we've made in education, and we've had a project 24 going for years with the Department of Education to put air 25 pollution education in the curriculum of the schools in 3 1 California. And that's reached a very pleasant climax. 2 This, too, represents our efforts to reach out and 3 find ways to educate folks because, as I've said before, the 4 future lies in the hands of the youth, I think, and more 5 than anything else. 6 So, we are very pleased with the public/private 7 partnership that we've been able to have in this particular 8 arena, and I'm very pleased with the work of our Office of 9 External Affairs. Both Bill Lockett and Clark Brink played 10 a major role in getting this done, and I'm very happy, as 11 always, with the work of our graphic artists, Eric Decetis 12 and Greg Spencer in our Administrative Division, whose 13 artwork you can recognize here. 14 I'll ask Clark Brink to say a couple words about 15 the project that led to the creation of these tray liners. 16 Clark? 17 MR. BRINK: Good morning. 18 Thank you, Mr. Boyd, Chairman Dunlap, and members 19 of the Board, for this opportunity to briefly summarize the 20 Air Resources Board/McDonald's air quality education 21 project. 22 This partnership has been developing ARB 23 established initial contact with McDonald's Corporation, 24 based in Oak Brook, Illinois, since the spring of 1993. 25 As you may be aware, McDonald's is the world's 4 1 largest fast-food provider, with stores in nearly 60 2 countries worldwide. It's the second most-recognized brand 3 in the world and continues to grow. They're opening a new 4 store somewhere in the world every eight and a half hours, 5 365 days a year. 6 ARB, likewise, is recognized as the world leader 7 and visionary in our quest for attaining and maintaining 8 healthful air quality for all Californians. Hence, a 9 partnership between us potentially appeared to be a natural 10 fit -- two world leaders working together to promote a 11 common goal: the health of their clients and our 12 constituents. 13 Identifying common ground, establishing and 14 building on mutual trust, developing and refining essential 15 message and theme, and planning our initial project proved 16 to be mutually challenging. The fact that this work was 17 done primarily at the regional level, with California as the 18 focal point, underscored and highlighted the uniqueness of 19 our partnership, since most projects of this scope by 20 McDonald's at their headquarters in Illinois. 21 You have before the first product of our joint 22 efforts. This tray liner will be distributed statewide 23 beginning mid-August, a total distribution of over 4.5 24 million will be distributed. That represents, in other 25 terms, almost 14 percent of the State's population, or one 5 1 out of seven Californians. 2 Additionally, our clean air message is being 3 shared with the public in the middle of the statewide ozone 4 season. 5 We believe that this represents the single largest 6 public outreach distribution in the 25-year history of the 7 Air Resources Board. The primary theme of this two-sided 8 tray liner revolves around the importance of air quality to 9 our individual health. 10 Furthermore, it offers suggestions on actions 11 individuals can take to improve air quality. The reverse 12 side of the tray liner has several fun word games for 13 children and adults alike. 14 McDonald's contribution consisted of them paying 15 for the printing and distribution of this multicolored 16 project. And, as Mr. Boyd just referenced, the Air 17 Resources Board was responsible for developing the concept, 18 the design, and the artwork. 19 As you can see, the Air Resources Board/McDonald's 20 air quality project represents the promise and mutual value 21 of public/private partnerships. We believe that this is 22 only one example of many successful future partnerships, and 23 we are working diligently to establish and expand upon such 24 alliances. 25 The development of such relationships can at times 6 1 be challenging, but yields significant dividends. We invite 2 you to look for the tray liner locally, and welcome your 3 suggestions and recommendations on how best to foster 4 similar outreach efforts. 5 CHAIRMAN DUNLAP: Thank you, Mr. Brink. 6 Appreciate this fine effort. I must say that I think I'm 7 the first Board member to finish the word game there. 8 (Laughter.) 9 SUPERVISOR RIORDAN: You got them all? 10 CHAIRMAN DUNLAP: I got them all, it appears, yes. 11 (Laughter.) 12 MR. BRINK: That's reassuring. 13 (Laughter.) 14 CHAIRMAN DUNLAP: Thank you. Any questions of the 15 External Affairs Office? 16 MR. LAGARIAS: Mr. Chairman? 17 CHAIRMAN DUNLAP: Sure, Mr. Lagarias. 18 MR. LAGARIAS: Clark, I think that's a very fine 19 presentation. I notice that it's printed on recycled paper. 20 The footnote says 75 percent post-consumer content. I 21 understand that. But it says 25 percent preconsumer 22 content. What's "preconsumer"? 23 MR. BRINK: Preconsumer content would be trimmings 24 off of virgin paper that they recycle into the paper process 25 itself. 7 1 MR. LAGARIAS: Okay. Thank you. 2 CHAIRMAN DUNLAP: Very good. Thanks very much. 3 One other item I'd like to draw the Board's 4 attention is behind us to the left. It's a little exhibit 5 outlining the fact that our Public Information Office has 6 been working with the Bureau of Automotive Repair, BAR, on 7 its public awareness campaign for Smog Check II, the new I&M 8 program that is an important part of our SIP. You may have 9 already heard the radio spots that started in Sacramento, 10 L.A., San Diego, Fresno, and Bakersfield this week. These 11 posters, the ones on the wall there, will cover 350 12 billboards in those same cities, and will also appear in 13 newspaper ads and in inserts. 14 The campaign will run through mid-November, and 15 ARB will continue to work with the Bureau on more clean air 16 messages. And Jerry Martin has been the point person on 17 that effort. I'd encourage you to walk over there at a 18 break and take a look at the material. 19 Also -- and the last item for me -- I'd also like 20 to update everyone on the series of zero-emission vehicle 21 forums that the staff is currently holding. The last forum 22 was held two weeks ago in El Monte and focused on electric 23 vehicle infrastructure. 24 I'm particularly pleased to note that a number of 25 public citizens are taking advantage of these forums to 8 1 provide information to the staff. Although I wasn't able to 2 attend the infrastructure forum, I am told that over 200 3 people attended and over 40 speakers were heard. A great 4 deal of progress has been made to address EV infrastructure. 5 But, as we heard at the forum, there's still much more to 6 do. 7 One of the highest priorities identified at the 8 forum was the need to provide training to emergency response 9 personnel on how to handle EV-related accidents or 10 incidents. Our staff has already initiated contact with the 11 State Fire Marshal's Office and the California Energy 12 Commission to ensure that adequate training will be 13 available. 14 I will direct the staff to continue to work with 15 these agencies to ensure that public safety remains a high 16 priority and a top consideration for us as we develop this 17 program. 18 I'd also like to commend the staff for the fine 19 job they are doing in organizing these forums, the series of 20 forums. A workshop a month is a pretty tough schedule to 21 keep up, and the staff has really risen to the occasion. 22 The next forum will be held on August 9th and will 23 focus on a staff proposal to establish new performance-based 24 standards that will provide a mechanism for extremely low- 25 emitting vehicles to receive credit towards the zero- 9 1 emission requirement. 2 If anyone is interested in obtaining a copy of the 3 staff proposal, they are available on the table outside the 4 hearing room. 5 Very good. Thank you for your attention on those 6 items. 7 That brings us to the first agenda item, 95-8-1. 8 I would like to remind those in the audience, if you'd like 9 to testify or comment, please see the Board Secretary off to 10 the left. 11 If you'd like to provide written testimony, we 12 would like to have 20 copies. 13 This first item is a public hearing to consider 14 adoption of amendments to the certification procedures for 15 all on-road motor vehicle retrofits, and to consider 16 adoption of optional retrofit emission standards for heavy- 17 duty engines and vehicles. 18 In May, 1992, this Board adopted more stringent 19 retrofit certification procedures, because surveillance 20 testing found problems with excessive emissions under the 21 earlier procedures. Implementation of the new procedures 22 began with the 1994 model year and did not go as smoothly as 23 expected. 24 For our consideration today, staff is proposing 25 regulatory changes to facilitate this certification process. 10 1 A separate but associated item is the development of mobile 2 source credit programs. 3 In February of '93, the Board the mobile source 4 emission reduction credits guidelines to be used by 5 districts in developing mobile source credit programs. 6 Then, later in '93, in November, the Board approved 7 additions to the guidelines that would allow emission 8 reduction credits to be granted for retrofitting existing 9 heavy-duty vehicles to low-emission configurations. 10 Today, staff is also proposing regulatory changes 11 necessary to implement the additional guidelines as modified 12 and approved by the Board in November. 13 At this point, I'd like to ask Mr. Boyd to please 14 introduce the item and begin the staff's presentation. 15 Jim? 16 MR. BOYD: Thank you, Mr. Chairman. Well, as 17 indicated, today we will present proposals to implement 18 retrofit credit guidelines and to, as we see it, facilitate 19 certification of retrofit kits under the procedures that, as 20 indicated, have already been passed and are currently being 21 phased in. 22 Retrofitting vehicles either to use alternative 23 fuels or to add emission control devices can, most 24 certainly, decrease emissions. If the emissions are lower 25 than required by federal or State law, the extra reduction 11 1 indeed can be eligible for credit programs. 2 However, there is the potential for retrofits to 3 increase emissions even beyond the original emission 4 standards of the vehicle in question. And that's been a 5 concern of ours for a large number of years. 6 The ARB surveillance testing has found some 7 problems with excessive emissions from vehicle retrofits. 8 This is why the durability testing and warranty requirements 9 that are being phased in now as part of our retrofit 10 procedures are so very, very important to the future success 11 of the program. 12 The phase-in of these new procedures has not 13 proven easy. However it has provided a learning experience 14 both for the manufacturers, as they have striven to develop 15 kits that will last the lifetime of the vehicle, and for 16 your staff as we work to look and define the critical 17 elements of the durability testing, and work to facilitate 18 and to streamline and speed up the process. 19 We are proposing amendments which will extend the 20 phase-in of the new procedures by one year, allow more time 21 for the manufacturers to complete durability testing, and 22 allow installers the use of an alternate inspection schedule 23 for high-volume conversions, such as fleet conversions. 24 Some of the proposed changes will also be 25 reflected in the earlier alternate fuel or retrofit 12 1 procedures that I mentioned are being phased in now to 2 provide continuity and consistency in the program. 3 We're also presenting a proposed alternate 4 durability test plan. Under this proposed test plan, 5 retrofits can be certified based on manufacturer derived 6 deterioration factors and complete durability in use after 7 certification. 8 This proposal should encourage vehicle retrofits 9 and hopefully make a wider range of kits available to the 10 public. 11 In addition to the changes to facilitate 12 durability testing and certification, we are proposing 13 changes to the mobile source emission reduction credit 14 procedures that the Board has established. 15 The creation and use of credit programs provide 16 voluntary and flexible ways for industry to meet emission 17 requirements and attain our mutual air quality goals in the 18 State. 19 The retrofit credit guidelines approved by the 20 Board in November of 1993 provide direction to the local air 21 pollution and air quality management districts in making 22 their credit calculations in their enforcement activities 23 and credit life determination for purposes of generating 24 emission reduction credits by retrofitting existing vehicles 25 to low-emission configurations. 13 1 The first proposal needed to implement the 2 retrofit credit guidelines is the adoption of new optional 3 retrofit emission standards. The standards will be used to 4 determine how much mobile source emission reduction credits 5 heavy-duty retrofits should get at all. 6 The proposed standards are very similar to the 7 heavy-duty bus credit standards adopted by your Board in 8 July of 1993, and also are similar to the optional low- 9 emission standards for new heavy-duty engines that the Board 10 adopted here last month. 11 Also, we are proposing amendments to the 12 California certification and installation procedures for 13 alternate fuel retrofit systems for motor vehicles certified 14 for 1994 and subsequent model years. The amendments 15 proposed will establish procedures so that systems designed 16 to retrofit heavy-duty engines to low-emission 17 configurations could be certified to standards that will 18 generate emission reduction credits. 19 Heavy-duty vehicle retrofits could also provide 20 emission reductions needed under the State Implementation 21 Plan, or SIP. Alternate fuel conversions of heavy-duty 22 vehicles could be part of the low-emission technology called 23 for in the SIP. And retrofits of older heavy-duty vehicles 24 could provide reductions from the existing fleets. And, 25 quite frankly, I think you know we're depending very heavily 14 1 on this happening in some parts of the State to a very large 2 extent, particularly in the Sacramento and Los Angeles 3 areas. 4 Finally, the staff will propose some changes to 5 the 1993 and earlier model year retrofit procedures which, 6 as I indicated earlier, are being phased out. The changes 7 are proposed to provide consistency with the 1994 8 procedures. With that, I would now like to introduce the 9 staff of the Mobile Source Division who will make the 10 detailed presentation. 11 I would like to call on Ms. Renee Kemena. Ms. 12 Kemena, if you would, please. 13 MS. KEMENA: Thank you, Mr. Boyd. 14 Mr. Chairman, members of the Board, this 15 presentation covers staff's proposed amendments too the 16 retrofit certification procedures and proposed credit 17 standards for heavy-duty vehicles. 18 Vehicle retrofits typically convert a vehicle that 19 operates on conventional fuel to operation on an alternative 20 fuel, such as natural gas, propane, ethanol, methanol, or 21 alcohol/gasoline blends. 22 The changes proposed today have two main purposes: 23 to streamline certification of vehicle retrofit systems and 24 to allow mobile source emission reduction credits for heavy- 25 duty vehicle retrofits. 15 1 Before I get further into the presentation, I 2 wanted to note that there have been some changes to the 3 staff's proposal since the release of the staff report. A 4 document showing those additional proposed is available 5 outside the room and has been distributed to Board members. 6 This slide shows the outline of today's 7 presentation. I will begin with some background on 8 retrofits and recent history of the retrofit regulations. 9 The rest of the presentation is divided into two parts. The 10 first part includes the changes proposed to streamline 11 certification for retrofit in all vehicle classes. 12 Kit manufacturers and installers have some 13 concerns with recently implemented certification procedures. 14 I will describe the work that has been done to address those 15 concerns and the regulatory changes under consideration 16 today to streamline certification. 17 The second part of the presentation covers 18 proposed changes related to mobile source emission reduction 19 credits. The credit-related changes include the proposed 20 credit standards for heavy-duty vehicles and other credit- 21 related changes to the certification procedures. 22 I will finish with the staff's conclusions and 23 recommendation for Board action. 24 The background section will define retrofits and 25 go into some recent history related to the regulation of 16 1 retrofits. Back in 1989, the ARB staff conducted in-use 2 testing of vehicle retrofits. This testing showed some 3 problems with the durability and the installation of some 4 retrofit systems which led to excessive emissions. 5 Because of those problems, the Board adopted new 6 retrofit certification procedures in 1992 for phase-in 7 beginning in 1994. 8 As a separate item in 1993, the Board approved 9 guidelines for the generation of mobile source emission 10 reduction credits from vehicle retrofits. At that time, the 11 Board directed staff to make some regulatory changes needed 12 to implement portions of the guidelines. 13 Those credit-related changes are part of today's 14 proposal. 15 Last year, 1994, was the first year for the 16 implementation of those new retrofit certification 17 procedures. Now more detail on each of those events will be 18 provided. 19 The problems with the 1993 and earlier retrofit 20 certification procedures, as shown through in-use testing, 21 were excessive emissions from some vehicles, no required 22 durability testing, and improper installation of some 23 retrofit systems. 24 The 1994 procedures were adopted by the Board in 25 its effort to solve those problems. The retrofit 17 1 certification procedures for 1994 and later model year 2 vehicles required durability testing and manufacturer and 3 installer warranties. These requirements help ensure 4 against excessive emissions from vehicle retrofits. 5 Other requirements under the 1994 retrofit 6 certification procedures include certification of systems by 7 engine family and in-use compliance testing. The proposal 8 that staff is presenting today retains all these important 9 provisions to protect air quality while streamlining the 10 certification process. 11 So, there are currently three sets of retrofit 12 procedures for certification -- the 1994 and later model 13 year retrofit procedures, the 1993 and earlier procedures 14 for LPG and natural gas retrofits, and the 1993 and earlier 15 procedures for alcohol/gasoline retrofits. 16 Those are the three retrofits certification 17 procedures that would be affected by the staff's proposed 18 changes. The 1994 procedures, as the arrow shows, are the 19 main procedures of interest. 20 The industry averaged about three to four-thousand 21 retrofits per year in the past few years. The number of 22 retrofits per year dropped to about 1500 in 1994, due in 23 part to difficulties certifying retrofit systems. I'll 24 discuss that difficulty further in the presentation. 25 These last few slides have provided some 18 1 background up to the phase-in of the 1994 procedures. 2 Manufacturers' and installers' concerns with the 3 implementation of the new procedures led the staff to bring 4 these proposal to you today. 5 These proposed changes will do much to streamline 6 certification. 7 This is the phase-in schedule for the 1994 8 procedures. Kit manufacturers must complete durability 9 testing to certify at least 15 percent of their 1994 model 10 year retrofit kits under the 19194 procedures. The 11 remaining 85 percent of their 1994 model year kits can be 12 certified under the 1993 and earlier procedures. 13 For 1995 and 1996 model year vehicle kits, the 14 percentages that have to be certified under the new 15 procedures is currently at 55 percent and then 100 percent, 16 respectively. 17 The phase-in of the 1994 retrofit certification 18 procedures did not go as smoothly as either ARB or the 19 industry expected. In fact, manufacturers were unable to 20 complete kit design and durability testing to certify 15 21 percent of their kits under the new procedures by the end of 22 1994. 23 Kit manufacturers and installers expressed 24 concerns that the expense and time to complete the new 25 testing would limit the range of kits available. They also 19 1 expressed concerns with scheduling installation inspections 2 at the Bureau of Automotive Repair, or BAR, referee 3 stations. 4 This initial phase-in has been a learning process 5 for everyone. The ARB staff has worked with manufacturers 6 and installers to resolve implementation issues. The staff 7 has continued a dialogue with the retrofit industry to 8 determine which characteristics are vital to demonstrating 9 kit performance and how to streamline the certification 10 process. 11 The ARB staff has already instituted a number of 12 administrative changes to the retrofit certification 13 process. Those changes have been primarily technical 14 clarification and streamlining of the requirements. 15 Significant administrative changes have already 16 been discussed at meetings and are being instituted. The 17 administrative changes are not part of this proposal today. 18 Today's proposal includes regulatory changes for 19 streamlining certification. 20 Specifics on the administrative changes being 21 instituted and the proposed regulatory changes under 22 consideration today will be presented next. 23 This slide shows the administrative changes that 24 are being instituted. The first is more liberal use of what 25 are called carry-over and carry-across. Durability test 20 1 data from one model year can be used and carried over to 2 subsequent model year vehicles. The data can also be 3 carried across to other similar engine families; allowing 4 more liberal use of carry-over and carry-across should make 5 kits available for more engines. 6 The second administrative changes relates to 7 deterioration factors, or DFs. DFs are factors that account 8 for changes in emissions as vehicles age. The 9 administrative change allows qualified use of conventional 10 fuel deterioration factors for alternative fuel retrofits/ 11 Allowing conventional fuel factors to be used in 12 specific cases for alternative fuel retrofit kits should 13 decrease the cost of durability testing. 14 The regulatory changes proposed to streamline 15 certification include an alternate durability test plan, 16 alternate installation inspection, and extending the phase- 17 in of the 1994 procedures. 18 Under the proposed alternate test plan, the 19 retrofit kit manufacturer would submit proposed 20 deterioration factors. The retrofit system would be 21 certified. Durability testing to validate the proposed DFs 22 would be completed after certification. Thus, vehicle 23 retrofits could be sold before durability testing was 24 complete. 25 In-use testing and confirmatory testing would be 21 1 used to verify a manufacturer's DFs. Retrofit kit 2 manufacturers are responsible for recalling and fixing the 3 kits if there are any problems. 4 Manufacturers would sell their retrofit kits, but 5 must later prove the emissions durability of their systems, 6 or to quote a past President, "Trust, but verify." 7 By allowing manufacturers to certify and sell 8 their retrofitted vehicles before completing durability 9 testing, the alternate test plan would provide manufactures 10 a quicker return on investment. 11 In addition, purchasers of vehicles of vehicle 12 retrofits generally want retrofits of new vehicles. The 13 alternate test plan would allow manufacturers to sell more 14 current vehicle retrofits. The alternate test plan should 15 greatly facilitate certification and encourage more 16 retrofits. 17 The staff believes that the recall requirements 18 would provide deterrence for most retrofit kit manufacturers 19 to prevent any significant emissions increase. The staff 20 further believes that the potential for air quality benefits 21 from low-emission retrofits outweighs the potential risk. 22 There are three changes from the staff's original 23 proposal as released in the staff report. First, the 24 alternate test plan was originally proposed for heavy-duty 25 vehicles and the heavy- or medium-duty vehicles that were 22 1 originally certified on an engine dynamometer. 2 Based on discussions with industry, staff extended 3 the alternate test plan proposal to include light-duty 4 vehicles and all medium-duty vehicles. Thus, the staff is 5 proposing the alternate durability test plan for all vehicle 6 classes. 7 Second, in discussions with industry, the staff 8 stated that manufacturers would need to validate 9 deterioration factors within two years. This change would 10 make the two-year requirement explicitly part of the staff 11 proposal. 12 And, finally, in December, the Board approved a 13 change to the 1994 retrofit procedures related to on-board 14 diagnostic monitoring, or OBD. That change was approved by 15 the Office of Administrative Law on June 8th, 1995. The new 16 retrofit procedures have been updated to include that 17 language. 18 Retrofit kit installers expressed concern about 19 scheduling installation inspections, particularly for high- 20 volume retrofits, such as fleet conversions. The ARB staff 21 has worked with the installers to develop a proposed 22 alternate installation inspection provision. 23 Under this provision, the installer would only 24 need to have the first ten vehicles and every tenth vehicle 25 thereafter inspected. 23 1 The proposed alternate installation inspection 2 would be used for high-volume conversions, such as fleet 3 conversions. It would apply to installations of a single 4 retrofit kit on vehicles of similar make and model. The 5 alternate installation inspection should alleviate concerns 6 about potential problems scheduling inspections for high- 7 volume conversions. 8 However, as the BAR requested, retrofits would 9 still need to be taken to a BAR referee station sometime 10 after release to the customer. In most cases, the staff 11 anticipates that retrofitted vehicles would be taken to a 12 BAR referee station for the first smog check. 13 The proposed change to the phase-in schedule would 14 add a year to the phase-in of the 1994 retrofit 15 certification procedures. In 1996, the manufacturers would 16 be required to certify 55 percent of their retrofit kits 17 under the new procedures. 18 So this gives the manufacturers until the 1997 19 model year before 100 percent of their kits must comply with 20 the new procedures. 21 This slide shows several minor proposed changes 22 related to the streamlining certification. The notes in 23 parentheses to which classes of vehicles the changes would 24 apply. 25 The proposed changes include requiring kit 24 1 manufacturers to provide name and address information about 2 their facilities, exempting OEMs from submitting duplicative 3 data for specific types of engine upgrades, removing the 4 reference to the eight-mode chassis dynamometer test, 5 because the Society of Automotive Engineers did not develop 6 such a test, and updating a carry-over/carry-across test 7 reference. 8 The alternate installation inspection and the 9 extension of the phase-in of the 1994 procedures would both 10 need to be reflected in the 1993 and earlier retrofit 11 certification procedures. 12 Those were the only proposed changes to the 1993 13 and earlier procedures. The second half of the presentation 14 covers all the items related to mobile source credits. This 15 part of the presentation will start with the heavy-duty 16 credit standards, and then cover changes to the retrofit 17 certification procedures that relate to credits. 18 The low-emission vehicle standards are the 19 existing credit standards for light- and medium-duty 20 vehicles. Light- and medium-duty vehicle retrofits can be 21 certified to an LEV standard and receive emission reduction 22 credit. 23 Last month, this Board adopted optional standards 24 for new heavy-duty vehicles. The standards that the staff 25 is proposing today for heavy-duty vehicle retrofits are 25 1 identical to those the Board approved in 1993 as part of the 2 mobile source credit guidelines. 3 The proposed standards are also similar to credit 4 standards for new heavy-duty vehicles. 5 Retrofits must be certified to credit standards to 6 make the emission reductions legally enforceable and more 7 readily quantifiable. Emission reductions from vehicle 8 retrofits can be used for mobile source credit programs and 9 for reductions needed under the State Implementation Plan, 10 or SIP. 11 The SIP calls for a national 2 gram per brake 12 horsepower hour NOx standard in 2004. On July 11th, 1995, 13 heavy-duty engine manufacturers, the U.S. EPA, and the ARB 14 signed a statement of principles agreeing to set a national 15 new engine standard comparable to what's called for in the 16 SIP. 17 For the alternative reductions, the Board directed 18 staff to pursue other means of achieving reductions. 19 Retrofits of older heavy-duty vehicles could reduce 20 emissions from the existing fleet and contribute to the 21 needed alternative reductions. 22 Heavy-duty vehicles converted to alternative fuels 23 could introduce low-emission technology into the fleet. 24 Retrofit technology is available now that may be able to 25 meet a NOx emissions level as low as 2 grams per brake 26 1 horsepower hour for the life of the vehicle. 2 The SIP also calls for alternative reductions to 3 substitute for a California only NOx standard in 2002. An 4 early California only standard would put California 5 companies at a competitive disadvantage in the trucking 6 industry; therefore, the Board directed staff to pursue 7 alternate reductions. 8 Retrofits could contribute to those alternate 9 reductions. In addition, the Sacramento Metropolitan Air 10 Quality Management District included reductions from heavy- 11 duty vehicle retrofits as part of their district plan SIP 12 submittal. 13 This slide characterizes the proposed credit 14 standards. It shows the pollutants for which you could 15 receive credits. It shows that the first credit standard is 16 at least 25 percent below the ceiling standard, which is 17 usually the engine's original certification standard. This 18 slide also describes additional credit standards. 19 The proposed credit standards are best illustrated 20 with an example. This slide shows the NOx credit standards 21 for a 1987 model year heavy-duty diesel engine. The credit 22 standards are specific to the applicable ceiling standard of 23 6 grams per brake horsepower hour. And the first credit 24 standard is 4.5 grams per brake horsepower hour, which is 25 25 percent below the ceiling standard. 27 1 Alternate credit standards decrease from that 2 level to 0.0 in half-gram increments. 3 The proposed changes would define ceiling 4 standards for those cases where the original certification 5 level is missing or is not appropriate. Those cases are 6 listed here. 7 In addition to setting the heavy-duty credit 8 standards and defining ceiling standards for some cases, 9 there are a few other credit-related changes. These are 10 proposed modifications to the retrofit certification 11 procedures that the Board directed the staff to make when 12 the Board approved the retrofit credit guidelines. 13 The first change would be that all retrofits for 14 credit, including 1993 and earlier vehicle retrofits for 15 credit, would need to use the 1994 certification procedures. 16 The retrofit procedures would be expanded to apply 17 to conventional fuel retrofits for credit in addition to 18 alternative fuel retrofits. This change would allow 19 aftermarket controls, if certified as part of a retrofit 20 system, to be eligible for credits. 21 The next change would allow light- and medium-duty 22 vehicles to certify to Tier 1 standards. Currently, the 23 1994 procedures allow certification only to low-emission 24 standards. 25 And the last change would apply to dual fuel 28 1 vehicles retrofitted for credit. This change would make it 2 explicit that these vehicles have to certify to a standard 3 no more than one tier above the standard they certify to 4 when operating on clean fuel. 5 That concludes the proposed changes to streamline 6 certification and the proposed credit-related changes. 7 The proposed changes should streamline the 8 certification process, decreasing both the cost and the time 9 it takes to complete certification. The changes should make 10 a wider range of kits available soon. 11 The proposed retains the provisions of the 1994 12 procedures that were added to protect air quality -- the 13 durability testing, warranties, and in-use testing. Thus, 14 the procedures would continue to ensure the protection of 15 air quality through in-use testing and recall provisions. 16 The proposed changes should encourage low-emission 17 retrofits and also help with emission reductions needed 18 under the SIP. The proposed changes would allow heavy-duty 19 vehicle retrofits to generate mobile source emission 20 reduction credits and facilitate credit generation from 21 other vehicle retrofits. 22 In conclusion the staff recommends that the Board 23 adopt the proposed credit standards for heavy-duty vehicle 24 retrofits, the proposed amendments to the 1994 and 25 subsequent model year certification procedures, the proposed 29 1 amendments to the 1993 and earlier model year retrofit 2 certification procedures, and the related reference changes. 3 At this time, the staff will be happy to answer 4 any questions that you have. 5 CHAIRMAN DUNLAP: Okay. Thank you. 6 Mr. Boyd, do you have anything to add? 7 MR. BOYD: No, Mr. Chairman. 8 CHAIRMAN DUNLAP: Okay. Any of my colleagues on 9 the Board have any questions for staff at this point? 10 MR. CALHOUN: Yes, Mr. Chairman. 11 CHAIRMAN DUNLAP: Yes, Mr. Calhoun. 12 MR. CALHOUN: One of the slides that the staff 13 showed, in effect, said that you'd apply for certification 14 and complete the certification -- all the certification 15 requirements after the certification had been granted. And 16 the staff has had a policy in effect for many years which, 17 in effect, allowed manufacturers to apply for certification 18 whenever there was some difficulty, but the certification 19 was conditional. 20 And I'm just trying to understand what's your 21 rationale for not imposing a conditional certification in 22 this case? 23 MR. CROSS: The proposal, as staff has put it 24 together, retains all of the enforcement provisions that are 25 in place and that have historically been in place. In other 30 1 words, should the manufacturer fail to complete the 2 durability demonstration, for example, or not -- not 3 demonstrate that the system was as clean as the initial 4 certification application showed that it was, the staff 5 would have the authority to recall the systems or to 6 essentially stop the sale of the systems at the time at 7 which that was determined. 8 So, essentially, the difference between the way it 9 has been done, if you will, which is to have an executive 10 order be given to the manufacturer, which has a list of 11 conditions, which says if you don't -- don't do certain 12 things, your certification is revoked. 13 And what the staff is proposing here is that this 14 executive order would be, quote, "unconditional," in the 15 sense that it would give the staff more flexibility to 16 determine how it would do enforcement, if it's necessary, 17 rather than predetermining at the time the executive order 18 is issued. 19 MR. CALHOUN: If a conditional certification were 20 granted, would that impose any additional requirements at 21 this time on the manufacturers at all? 22 MR. CROSS: Not that I can see. It would change-- 23 essentially, it would determine what the consequences are, 24 if you will, should the manufacturer fail to complete or 25 inadequately -- fail to complete its demonstration or not 31 1 demonstrate compliance. 2 MR. CALHOUN: So, I assume that the staff is 3 fairly comfortable with proceeding along these lines? 4 MR. CROSS: Well, the lines that we're proposing 5 to proceed along, as I said, are not to condition the 6 executive order, because it's more flexible at the point 7 where you'd have to make your enforcement decisions. That's 8 the proposal as it stands now. 9 MR. CALHOUN: Would you have that same confidence 10 if the OEM manufacturer came in in 19-- -- a year from now 11 and asks for a conditional certification? 12 Maybe I know the answer to that. But anyway, you 13 go ahead and tell me. 14 MR. CROSS: Why do you have to do these things to 15 me? 16 (Laughter.) 17 MR. CROSS: Excuse me. The historical way of 18 doing business with large-volume manufacturers has been to 19 use conditional executive orders as a means of -- how can I 20 say it -- making them fearful of the consequences of not 21 complying with the certification requirements. 22 But they do also tie the staff's hands in terms of 23 what happens when you get to the point where the 24 manufacturer fails. So, historically, conditional EOs have 25 been used for large-volume manufacturers. 32 1 We would like to continue to use them for large- 2 volume manufacturers. I think for the -- some of the 3 smaller manufacturers, which we're dealing with here, we're 4 a little concerned that predetermining the consequences may 5 tie our hands in terms of what we can and can't do when -- 6 if and when we come to an enforcement type of situation. 7 MR. CALHOUN: Okay. That satisfies the concern. 8 I guess I'd like to have the various companies that are 9 going to testify sort of address the same question. What do 10 they see as the downside to having a conditional 11 certification. 12 CHAIRMAN DUNLAP: Thank you. Supervisor Silva. 13 SUPERVISOR SILVA: Yes. A followup to that. 14 What's the history of revoking a manufacturer's permit or 15 certificate if they are out of compliance? 16 MR. CROSS: It's extremely unusual. I'm not aware 17 of any that I can recall. Normally, there are remedies 18 which occur. In other words, they will fix the problem 19 which causes the noncompliance in some way. 20 In other words, rather than revoke the 21 certification, what's typically done is that the 22 manufacturer would develop a, quote, "fix," and recall the 23 noncomplying vehicles and fix them, and then implement from 24 that time on the fix in all the production. 25 So, you -- so the revoking of certification is 33 1 essentially the threat that one uses to induce them to fix 2 the noncompliance problem. 3 SUPERVISOR SILVA: So, the regulations are 4 enforced; it's just that they're not out of compliance. 5 They stick to it pretty tight. 6 MR. CROSS: Yeah, the regulations are enforced. 7 It's just -- it's almost a semantic issue on this in terms 8 of -- if you give a conditional executive order, you 9 essentially tell them what they have to do in their actual 10 certification document and what happens if they fail to do 11 it. 12 And so, it's sort of saying, we're giving you the 13 certification, but you haven't finished what you needed to 14 do to complete the certification process. And if you fail 15 to do it, then here are the consequences. 16 The unconditional situation that we're proposing 17 has the same authority -- in other words, the executive 18 order that we're issuing conditionally, we're putting in a 19 bunch of our authority in writing. In the unconditioned 20 one, we have the same authority, but we have more 21 flexibility on how we implement it, because we haven't said, 22 you know, you have to do this, and this, and this, and we'll 23 do this and this if you don't do it. 24 SUPERVISOR SILVA: I'd really like to see, you 25 know, this agency cut through the red tape, which they have 34 1 a very good history on. And I don't believe in a lot of 2 rules and regulations, but I do feel the ones that are on 3 the books should be enforced. 4 And what you're saying is that they are. 5 MR. CROSS: They're pretty tight. 6 SUPERVISOR SILVA: Okay. 7 MR. CROSS: They are. It's essentially how much 8 flexibility you put into the system. And, as you take 9 flexibility out, you can -- you know, it puts more pressure 10 on the industry which you're asking to comply, but it also 11 puts more pressure on us in terms of how you deal with an 12 enforcement situation should it arise and require some -- 13 some discretionary decisions. 14 In other words, you get borderline cases. And 15 sometimes, in those cases, you really want to have some 16 legal room rather than having a hammer absolutely fall at 17 the moment the executive order says it's supposed to. 18 SUPERVISOR SILVA: Well, the way I understand it 19 is, we are fair, and I think that's the way it should be. 20 MR. CROSS: We try. 21 SUPERVISOR SILVA: Okay. Thank you. 22 CHAIRMAN DUNLAP: Why don't we -- at this point, 23 I'll ask my colleagues to hold off. We'll invite the 24 witnesses to come forward. We have seven. Greg Vlasek from 25 the California Natural Gas Vehicle Coalition. I'll ask Greg 35 1 to come forward. John Freel will be next, from WSPA; and 2 then my favorite, Lauren Dunlap will be here, I guess. 3 Let's see, hello Lauren. 4 Mr. Vlasek. 5 MR. VLASEK: Good morning, Chairman Dunlap and 6 members of the Board. I'm Greg Vlasek, Executive Director 7 of California Natural Gas Vehicle Coalition here in 8 Sacramento. 9 The proposed amendments to the retrofit 10 certification regulations for these gaseous fuel retrofit 11 systems represent the culmination of 18 months of fact- 12 finding, vehicle testing, and close cooperation between the 13 retrofit manufacturers, the conversion industry that's based 14 here in California, and the Air Resources Board staff. 15 I'm very pleased to be here today speaking 16 strongly in support of these regulatory changes, and to 17 thank the staff for their diligent, extraordinarily diligent 18 and cooperative efforts in bringing these regulations before 19 you today. 20 The conversion industry has come a long way since 21 the spring of 1992 when the 1994 and later model year 22 retrofit regulations were adopted. Today, gaseous fuel 23 retrofit technology is, in most respects, equal to OEM 24 technology. 25 The open-loop, carbureted systems that created the 36 1 initial cause for concern by ARB about retrofit emissions 2 and durability have given way to closed loop, electronically 3 controlled fuel-injected technologies, a far greater 4 reliability and potential for long-term emissions benefits. 5 Effecting this change was, I believe, the 6 underlying goal of the changes to the regulations that were 7 approved in 1992. 8 What the amendments propose today will do is 9 recognize the needs and constraints of the retrofit 10 manufacturing and vehicle conversion industries for what 11 they are, technically competent, small volume manufacturers. 12 Because it produces thousands and not millions of 13 units, the industry lacks the sophisticated in-house 14 emissions laboratories and mileage accumulation test tracks 15 that OEMs use, and has far fewer sales over which to spread 16 certification costs. 17 There are three key areas in which the amendments 18 will reduce the cost of the certification process 19 substantially without appreciably increasing the risk to air 20 quality benefits that the 1992 regulation was designed to 21 ensure. 22 First, discretionary employment of assigned DFs 23 and emissions data carry-across are widely accepted 24 practices for OEM certification. We believe it is 25 reasonable to extend these practices to small volume 37 1 retrofit certification as well. 2 The alternative test plan provision of the 3 amendments will allow this, but only when it is technically 4 warranted. 5 Second, the provision to reduce the number of BAR 6 inspections required for identical fleet vehicle conversions 7 is needed and welcome. It will save time and money, but 8 only for those installers who demonstrate competency with 9 specified conversion systems. 10 Although many early start-up problems with the BAR 11 inspection program have been resolved, the requirement that 12 every single conversion be driven to a BAR referee station 13 for inspection is unnecessary and burdensome for the 14 conversion industry, which is operating on slim margins 15 today. 16 Finally, the amendments allow for additional time 17 for manufacturers to complete full durability testing of 18 engine families for which it is required. We think this is 19 very important to the retrofit manufacturers, because they 20 require additional time to basically reverse engineer their 21 products based on the OEM technology. 22 This process is becoming more complicated with 23 more sophisticated OEM controls, and therefore more time- 24 consuming. So, they need a longer leadtime not only to 25 design the system; they also need a longer time in which to 38 1 prove the durability -- again, because they don't have the 2 opportunity to do duplicative testing concurrently on 3 several vehicles on a high-speed test track, and they don't 4 have the sophisticated laboratory facilities to enable more 5 rapid testing that the OEMs have. 6 Under the new regulations, manufacturers will have 7 more latitude to market their conversion systems sooner and 8 for a greater variety of vehicles. However, they will still 9 need to prove their products and choose their markets 10 carefully, because with the greater market opportunity that 11 the new certification procedure affords, there comes a 12 substantially greater responsibility and liability for in- 13 use performance. 14 Nothing in the proposed changes weakens the 15 warranty, in-use compliance, or recall provisions for these 16 vehicles. 17 In conclusion, let me again thank the staff for 18 their continuing cooperation and assistance in enabling this 19 industry to make contributions to California's air quality 20 and economy that this industry definitely wants to make. 21 And I'll be happy to take any questions with that. 22 CHAIRMAN DUNLAP: Any questions of Mr. Vlasek? 23 MR. CALHOUN: Yes. Mr. Vlasek, would you care to 24 respond to the question I asked the staff earlier about the 25 impact of imposing any conditional certification on a member 39 1 of your coalition? 2 MR. VLASEK: Well, I don't see that there is a 3 significant difference in the downside risk, frankly. There 4 is a risk. There's always a risk when you allow somebody 5 some latitude upfront. But this is not -- what these 6 procedures do is not roll back the regulations to what we 7 had prior to 1994. There's still a substantial mount of 8 engineering analysis that has to be done. Again, these are 9 closed-loop systems that do monitor for catalyst 10 temperature, fuel management, oxygen concentration, and 11 these are not unsophisticated technologies. 12 So, I think the risk to the people of California 13 in terms of possibly increasing emissions is far, far less 14 than it was when this originally came up in 1992. And you 15 do have the -- as staff stated, you do have the enforcement 16 options there. 17 I think, if I could make a comparison relative to 18 a scrappage program where you're basically allowing a 19 certain increment of emissions reductions or emission 20 inventory from a system, you have -- once that's allotted 21 and the vehicle is scrapped, you have no say or control at 22 all as to whether that is actually achieved. 23 There's nothing you can do after the fact to 24 enforce that reduction. So, on a scale of risk to the 25 public, I think these retrofit regulations are more like the 40 1 OEM-type situation on that scale than towards the more 2 speculative type of measures, such as scrappage, frankly. 3 CHAIRMAN DUNLAP: Is that it? Ms. Edgerton. 4 MS. EDGERTON: I wanted to follow up a little on 5 the time for the durability testing. As a practical matter, 6 how long do you find it takes to do the durability testing. 7 You did comment, and you did address the issue of 8 why it takes longer now, but how long, as a practical 9 matter, do most of them take? 10 MR. VLASEK: The experience we've had, with the 11 limited year and a half of experience with these 12 regulations, has been that the manufacturers first have to 13 get their hands on the vehicle for which they intend to 14 offer their retrofit system for. 15 And then from there, they begin the reverse 16 engineering process, and the calibration, and everything 17 that they need to do to make sure that the system will 18 maintain appropriate emissions levels and also perform well 19 on the vehicle. 20 That sets them into the model year, well into the 21 spring of the model year in some cases, when that -- when 22 they can have their test plan ready to take to the staff. 23 Then they have a situation where they need to 24 confirm the -- to do their confirmatory durability testing. 25 What takes an OEM a minimum of four or five months to do on 41 1 a test track with multiple vehicles going around the track; 2 and if something happens to one of those vehicles 3 mechanically that's totally unrelated to the emission 4 controls system, they have another backup vehicle ready to 5 go. 6 Well, that's a very expensive process, something 7 on the order of 150, $250,000 per vehicle that's going 8 through that process. These are small -- again, small 9 manufacturers that really can't afford that kind of testing. 10 So, if they have a failure, or some kind of 11 problem with the vehicle while it's in the durability 12 demonstration mode, they have to pretty much start from 13 scratch. 14 And that's why the industry needs the additional 15 latitude of the longer period of time going into the second 16 model year after the -- for the year -- for the 17 certification that's being sought. 18 MS. EDGERTON: Well, that's helpful, but let's say 19 that they've got a vehicle -- when would they get it, in 20 November? You're saying they would get the model year -- 21 the new vehicle, takes a while for them to get that. So, 22 when -- let's just walk through it. 23 If they get it in November, or they get it in -- 24 when's the earliest they could get it, October? 25 MR. VLASEK: Yeah. Approximately that, and then 42 1 it depends on the model, too. Some models are released 2 later in the year. 3 MS. EDGERTON: So, if you get it in October, 4 you're saying, if I understand you, it might be April before 5 they'd be able to analyze it and figure out what they need 6 to do even to retrofit it? 7 MR. VLASEK: That has been the initial experience. 8 Then again, this is very initial experience with trying to 9 work through these new -- the regulations as they stand 10 today. 11 MS. EDGERTON: And then, after that, if they try 12 to -- 13 MR. VLASEK: After that, they could conceivably, 14 doing a rigorous hundred thousand mile durability cycle, 15 they could conceivably achieve that or accomplish that 16 within -- I mean maybe a six-month period. But, you know, 17 if there's any problems or hitches with anything 18 mechanically or anything related to the test plan that's 19 been submitted to ARB, then there's, you know, some period 20 of time that those things have to be resolved. And it's, 21 you know, a series of complications and revisions, or 22 changes, or additional -- having to start over again, which 23 is the case that one manufacturer had for their 1994 24 certification, it can extend into two years. 25 That's the reason I think they're -- we've -- that 43 1 it's been crafted the way that it has. 2 MS. EDGERTON: But I guess the -- 3 MR. VLASEK: (Interjecting) It may not take two 4 years, but it could take more than a year. So, I think a 5 two-year -- a two-year extension is reasonable. 6 MS. EDGERTON: But one thing I wanted to know is, 7 by that time, do the converters still want to be converting 8 that model? 9 MR. VLASEK: It depends. Some -- again, it 10 depends on the model. Because some engine families change 11 dramatically from year to year and some don't. Some stay 12 very much the same. 13 MS. EDGERTON: Okay. Thank you. 14 MR. VLASEK: Some vehicles have almost no changes 15 for that period of time. 16 CHAIRMAN DUNLAP: Do you have anything else? Mr. 17 Calhoun? 18 MR. CALHOUN: One last comment, Greg. I don't 19 want to let you get away without commenting on the remark 20 you made regarding scrappage. I don't agree with you there. 21 And I want you to know that. 22 But scrappage is the subject of another hearing, 23 so we can move on. 24 (Laughter.) 25 CHAIRMAN DUNLAP: Duly noted, Mr. Calhoun. Thank 44 1 you, Greg, for your time. 2 MR. VLASEK: I believe there -- I know for a fact 3 there are several manufacturers in the audience. I don't 4 know whether or not they're planning to testify. But if you 5 have further technical questions or some clarification that 6 you don't feel that I've been able to provide -- and that 7 may very well be -- I think there are a couple of resources 8 ut there you could search for. 9 CHAIRMAN DUNLAP: Okay. Thank you. 10 Mr. Freel from WSPA? Lauren Dunlap and Stephanie 11 Williams. 12 Good morning. 13 MR. FREEL: Good morning, Chairman Dunlap, members 14 of the Board. 15 My name is John Freel. I'm am employee of 16 Chevron, but I'm commenting on behalf of the Western States 17 Petroleum Association, or WSPA, today. 18 WSPA would like to comment on three different 19 aspects of today's proposals. We would like to comment on 20 the method of calculating credits when heavy-duty engines 21 are retrofitted to tighter emission standards. 22 We'd also like to comment on some of the changes 23 to the procedures for certifying alternative fuel retrofit 24 kits. And, finally, we wish to comment on the treatment of 25 certain bi-fuel retrofits. 45 1 First, WSPA supports the proposed method of 2 calculating emission reduction credits for heavy-duty 3 retrofits. The staff proposal should ensure that heavy-duty 4 engines conversion to tighter emission standards will give 5 the expected emission benefits. 6 The proposal is fuel neutral, and it gives equal 7 credit for equal emissions reductions. This will give 8 individual fleet operators flexibility to generate credits 9 using whatever technology is most cost-effective for them. 10 We believe it will also encourage innovation in 11 reducing emissions from the existing heavy-duty fleet. 12 WSPA is pleased to endorse the proposed standards 13 for heavy-duty retrofits, and the proposed basis for 14 calculating emission reduction credits. 15 Turning to the proposed changes in the procedures 16 for certification of alternative fuel kits, WSPA recognizes 17 that the existing procedure for certifying these kits needs 18 to be made more usable. 19 However, we are concerned that some of the 20 proposed changes could compromise air quality. As has 21 already been noted by one of the Board members, one such 22 change is the inordinately long time allotted to complete 23 durability testing. Under the ARB proposal, the kid 24 manufacturer has until the end of 1997 to finish durability 25 testing on 1996 kits and so on. 46 1 Conceivably, although the preceding speaker felt 2 otherwise -- but conceivably, a kit maker could begin 3 selling a 1996 model year kit in the fall of this year, yet 4 be allotted until December, 1997, to demonstrate durability, 5 some 27 months later. 6 WSPA recommends that the obligation to complete 7 durability testing should be met in the same model year for 8 which the kit is intended. 9 We have the same concern about implementing the 10 proposed phase-in schedule. The phase-in requirements could 11 allow large numbers of retrofits to be certified using the 12 older and less stringent 1993 procedure. Of course, t he 13 kit makers are obliged to certify a significant percent of 14 their kits using the 1994 procedure. But, as in the case of 15 durability, under the ARB proposal, this obligation to 16 certify using the new procedure need not be met until the 17 end of the following calendar year. 18 WSPA recommends that any phase-in requirement to 19 certify under the new 1994 procedure be met strictly within 20 the model year in which the obligation is incurred. 21 Allowing kit makers so much time to meet deferred 22 obligations could also create problems with enforcement. 23 Retrofits should face the same obligations as the 24 original equipment manufacturers with whom they compete. We 25 believe this is especially true of durability. Lack of 47 1 durability was the principal reason the Board strengthened 2 their retrofit procedures in 1992. 3 WSPA recommends that vehicles converted using a 4 kit that fails its durability test must absolutely be 5 recalled, and any benefits associated with uncorrected 6 retrofits should be disallowed. 7 Our final comments concern certain bi-fuel 8 conversions. A Tier 1 gasoline vehicle converted to a bi- 9 fuel TLEV has to meet TLEV standards on the alternative 10 fuel, but need only meet the original Tier 1 standards on 11 gasoline. 12 The conversion, therefore, provides no 13 environmental benefit relative to Tier 1 if it is fueled 14 with gasoline. To the extent that it is fueled with 15 gasoline, it is not a TLEV, and it is an alternative fueled 16 vehicle. 17 WSPA recommends that a bi-fuel TLEV vehicle 18 operated on gasoline not count as a TLEV or as an 19 alternative fuel vehicle in CARB programs. 20 We also recommend that such vehicles not receive 21 full emissions reduction credits or financial incentives. 22 Thank you. 23 CHAIRMAN DUNLAP: Okay. Any questions? 24 MR. CALHOUN: One question. 25 CHAIRMAN DUNLAP: Go ahead. 48 1 MR. CALHOUN: In the written correspondence that 2 we received from WSPA, at least on the second page in the 3 first paragraph, you said, "There is no meaningful 4 enforcement if a kit maker fails to meet the durability 5 standard." 6 Would you like to elaborate on that? 7 Then, following your elaboration, I'd like to have 8 the staff respond to what you have to say. 9 MR. FREEL: It's difficult to respond, Mr. 10 Calhoun, without citing history of what happened in 1994. 11 In that year, as you heard in the staff presentation, no 12 kits -- no kits were certified using the new procedure. 13 There were quite a few kits certified using the old 14 procedure; therefore, the percentage requirement in 1994 for 15 new procedure certified kits, if you will, was not met. 16 And, to my knowledge, there was no enforcement of 17 that provision. And it is this same flexibility in 18 enforcement which we find disappointing in the current 19 proposal. 20 CHAIRMAN DUNLAP: Mr. Cross? You want to talk 21 about the enforcement question? 22 MR. CROSS: There was -- basically, the reason 23 this proposal was before you is to adjust the regulations to 24 reflect the problems that the manufacturers encountered in 25 1994. 49 1 In other words, there were problems with 2 certifying kits in 1994. I think we're all aware of them. 3 There are kits certified now. So, I think the claim that 4 the staff was making that the manufacturers will come on 5 board and do a good job with this has some substantiation. 6 Basically, it was our judgment that with 1994 7 being the first year and with the problems the manufacturers 8 were having, the appropriate thing to do bring the issue to 9 the Board and try and adjust the procedures so that they 10 would accommodate this industry and yet, at the same time, 11 end up with good systems when we're all done. 12 CHAIRMAN DUNLAP: It seems to me that the key 13 element that I'd like you to address is the 27-month window 14 that he spoke of. Is it possible for us to be able to -- 15 first of all, do you agree with that 27-month time period, 16 and is it possible for us to determine that there are 17 problems with these kits through, you know, the process 18 ahead of time? Or is it always going to be the 27-month 19 time period? 20 MS. KEMENA: Well, first of all, I'd like to say 21 that the manufacturers started the process, the 22 certification process for the 1994 model year kits, and the 23 first manufacturer, GFI, just recently certified their first 24 kits under the new procedures in May of this year, which 25 means it took them 18 months. And they were the first 50 1 manufacturer to do that. 2 We have a couple other manufacturers that are 3 about to be certified under the new procedures, but we're 4 coming up on 20 months. 5 CHAIRMAN DUNLAP: 20 months? Okay. 6 MS. KEMENA: So, that's how long it has taken them 7 so far. And next year, they're going to be facing the OBD 8 II requirements and, you know, the whole host of design 9 challenges that -- 10 CHAIRMAN DUNLAP: Right. Right. 11 MS. KEMENA: -- those requirements face. 12 CHAIRMAN DUNLAP: Okay. Thank you. 13 Any other questions for Mr. Freel? 14 Thank you. Lauren Dunlap, followed by Stephanie 15 Williams and Donel Olson. 16 Good morning, Ms. Dunlap. 17 MS. DUNLAP: Good morning, Chairman Dunlap. 18 (Laughter.) 19 MS. DUNLAP: It sounds kind of strange. Members 20 of the Board, Southern California Gas Company appreciates 21 the opportunity to provide some very strong for the 22 California Air Resources Board's proposed amendments to the 23 alternate fuel retrofit certification and installation 24 regulations. The staff proposals reflect significant 25 cooperative effort over the past several months between ARB 51 1 staff, retrofit kit manufacturers and installers, as well as 2 fuel providers, in order to develop amendments that provide 3 much needed flexibility to make natural gas vehicle 4 conversions a viable air quality improvement technology. 5 As you know, the gas company has previously 6 addressed your Board concerning the difficult challenges 7 raised by these existing regulations. These amendments 8 today substantially eliminate those challenges. 9 Accordingly, we are pleased to recognize the 10 efforts of your staff and call for adoption of these 11 amendments. 12 Specific amendments supported by the gas company 13 include the extended phase-in schedule that allows more time 14 for the manufacturers to meet the requirements, the 15 alternate referee inspection schedule provisions, allowance 16 of the derived deterioration factors for all vehicle classes 17 to support certification, followed by validation of these 18 derived factors within two years, and incorporation of a 19 methodology to facilitate emission credit generation for the 20 approved low-emission vehicle conversions. 21 Adoption of these amendments at today's hearing is 22 critical to the success of the natural gas vehicle 23 conversion industry, and provides an opportunity for the ARB 24 to reaffirm its commitment to the successful implementation 25 of low-emission technology to support air quality 52 1 improvement goals. 2 Thank you again for your continued support. 3 CHAIRMAN DUNLAP: Thank you. Ms. Edgerton. 4 MS. EDGERTON: Ms. Dunlap, can you tell me how 5 much -- you may not know this, or you may not even have 6 these figures. But how much of the delay, for example -- or 7 time that was taken to certify the first 1994 kits might 8 have been due to the BAR delays that are now -- I understand 9 BAR had some significant delays, but they're now through 10 their bottleneck and they're able to respond better. 11 MS. DUNLAP: I am new at the gas company, and that 12 was just before my time. Greg, do you have a feel for that? 13 MR. VLASEK: (From the audience) Yeah, early on 14 in the program -- 15 CHAIRMAN DUNLAP: Mr. Vlasek? 16 MR. VLASEK: Yeah. 17 CHAIRMAN DUNLAP: In deference to our court 18 reporter, would you be so kind to come forward to the 19 microphone? 20 Thank you. Then we can hear you fine up here. 21 MR. VLASEK: Early in the program, the delay of 22 getting vehicles inspected was -- in many cases, it was a 23 month and possibly two months -- because of the fact that 24 their training -- the scheduling and training was new to the 25 BAR referee stations. And so, there was just a lot of 53 1 problems in getting that up and running. 2 But it wasn't an extensive delay in the order of 3 four to six months, anything like that. 4 MR. CALHOUN: Has that been resolved now for the 5 most part? 6 MR. VLASEK: For the most part, we understand it's 7 been resolved. I guess it's partially attributable to lower 8 numbers of regular gasoline vehicles having to go through 9 referee stations as a result of changes in the I&M program. 10 I'm not sure what those are, but I understand that's partly 11 why the process is working better now. 12 CHAIRMAN DUNLAP: Yes. Okay. Any other questions 13 for Ms. Dunlap? Okay. Very good. Thank you. 14 Stephanie Williams from CTA, California Trucking 15 Association. Donel Olson from Vinyard Engine Systems, Inc., 16 and then Paul Wuebben from the South Coast District to 17 follow. 18 Good morning. 19 MS. WILLIAMS: Good morning. My name is Stephanie 20 Williams, and I'm employed with the California Trucking 21 Association as manager of research and environmental policy. 22 I'd like to apologize for our addressing you so 23 late on this issue, but we've been working diligently to 24 develop a trucking policy that can work towards the 25 environment and the economy. 54 1 California registered vehicles must be allowed by 2 their own State to compete for freight in California. 3 Without a level playing field for California-based carriers, 4 environmental regulations do not achieve forecasted benefits 5 and will actually have a negative impact on the air and the 6 economy in our State. 7 We've had limited opportunity to review the report 8 and recommendations. However, our preliminary review 9 indicates that the proposed regulations may obstruct work 10 done in our working group with the environmental community 11 and the local air districts. 12 If you'll turn to the last page of the handout I 13 provided, this is a flow chart of our plan for complying 14 with the SIP in the heavy-duty truck area. And retrofit 15 looks like a promising technology. 16 We're meeting with environmentalists, local air 17 districts, and industry, and engine manufacturers and 18 putting together a plan where we can meet the SIP compliance 19 for 2005. 20 And, as you can see, retrofit and repower are our 21 proposals through our subcommittees. What we're asking for 22 today is time to review these retrofit regulations and see 23 how they affect our industry. 24 Our concern today is the way that we're purchasing 25 alternative fuel vehicles as an industry. We have -- we've 55 1 looked at alternative fuels, and currently we're working on 2 some demonstration projects with the South Coast and the 3 Sacramento Air District. 4 And to purchase an alternative fuel engine, we 5 have to modify the engine, which would be looked at as a 6 retrofit. And we're wondering if these engines will then 7 have to be certified again by some process and cause cost- 8 prohibitive methods for complying with the SIP. 9 So, we feel that if this could be delayed and we 10 could meet with the Air Board to discuss these concerns? 11 CHAIRMAN DUNLAP: Ms. Williams, can I interrupt 12 for a moment? 13 Mr. Cross, can you comment on that maybe to give 14 her and us a flavor for that? A likely response, perhaps? 15 MR. LOVELACE: Mr. Chairman, this -- I don't 16 really understand why this would be a problem. What we're 17 saying is, this is how one certifies a retrofit. And the 18 engine manufacturers, the OEMs, the people who build brand 19 new low-emission engines would go through the same thing 20 that they do now. 21 We're having no change there. So, all we are 22 doing with this proposal is saying this is how one certifies 23 a retrofit. And Ms. Williams is addressing heavy-duties in 24 particular. This is how you certify a retrofit. And if 25 it's going to be a low-emission retrofit, these are the 56 1 standards to which you certify them to. 2 Now, I've been a participant on the working group 3 that Stephanie just mentioned, and I really don't see how 4 this could be a hindrance to that effort. 5 CHAIRMAN DUNLAP: Okay. 6 MS. WILLIAMS: What my concern would be -- 7 actually, I can ask them right now. 8 If, for example, in the diesel engine, we purchase 9 an engine that's certified, and the engine -- then you pick 10 your chassis. 11 So, the engine is certified different than the 12 alternative vehicle would have to be certified if I'm 13 reading these regulations correctly. 14 Would you then buy the alternative fueled engine, 15 an LNG heavy-duty engine? Because it can't be put into a 16 traditional chassis, you'd have to modify the chassis, which 17 means you wouldn't have a warranty on the fueling system. 18 So, would they then have to go through the 19 alternative -- let's say I'm Company Z, and I buy 100 LNG 20 heavy-duty diesel vehicles, and I'm attempting to get credit 21 for that, because the cost is much higher than diesel 22 engines. I want some type of emission credit. 23 Could I apply for an emission credit if the 24 fueling system isn't really warrantied or certified; only 25 the engine is? 57 1 MR. LOVELACE: If you are -- are you talking about 2 a brand new engine? 3 MS. WILLIAMS: I'm talking about a brand new 4 engine that I have to modify the chassis to put the engine 5 in, hand-made, and a company -- X-company in Modesto, 6 California may do the modification. Right now, you can't 7 buy an alternative-fueled vehicle commercially. We have to 8 modify. 9 But we want credit for using alternative-fueled 10 vehicles. It's part of, you know, our industry plan. If 11 you look at the chart on the right-hand side, lower NOx 12 vehicle acquisition would include liquid natural gas. 13 MR. LOVELACE: You mean the truck companies will 14 not provide you with a truck equipped with an alternative 15 fuel engine? 16 MS. WILLIAMS: Exactly. 17 MR. LOVELACE: Freightliner won't do it? 18 MS. WILLIAMS: No, they will not. 19 MR. LOVELACE: Peterbilt? 20 MS. WILLIAMS: We tried. We actually had a 21 meeting with all engine manufacturers. It's not available 22 commercially and won't be in the near term. Companies are 23 purchasing the vehicles, modifying themselves, and running 24 on some of the alternative fuels in a precommercialization 25 state. And in the future, it could go in that direction. 58 1 But in the near term, we'd like emission credits 2 for running on alternative fuels. 3 MR. CROSS: For heavy-duty engines, the engine is 4 the certified thing anyway, if you will. In other words, 5 when you -- when a new truck manufacturer wants to make a 6 truck, it buys a certified engine from an engine 7 manufacturer and drops it in whatever chassis which it wants 8 to. 9 And these regulations don't change that at all. 10 And so, there's no -- I don't think there's an issue. In 11 other words, if Mack wants to build a diesel truck, Mack 12 puts Mack's diesel fuel tank on there and hooks it to the 13 certified engine and sells it. 14 And similarly, if Mack wanted to build a natural 15 gas truck, or a propane truck, or whatever else, the engine 16 is the certified device, not the truck. So, Mack could put 17 its propane cylinders or whatever on there and hook that to 18 the engine, and it would be similarly certified. 19 So, I don't think there's an issue here. 20 MS. WILLIAMS: Well, what we have is -- 21 MR. CROSS: And one -- 22 MS. WILLIAMS: Mack providing an engine, and 23 Kenworth provided a chassis, and some Company X providing 24 the fueling system and modifying the chassis to have it run 25 on alternative fuels. 59 1 MR. CROSS: I'm saying that all that's fine as 2 long as -- we have a semantic problem here, because if we're 3 talking about buying an engine from an engine manufacturer 4 which is certified on alternate fuel, there's no problem as 5 I just described. 6 MS. WILLIAMS: Okay. 7 MR. CROSS: If you are buying an engine which is 8 designed for diesel fuel and somebody's putting a conversion 9 system on it to make it an alternate fuel engine, they have 10 to certify it through these procedures. 11 And the engine, not the chassis, but the engine 12 modification -- in other words, adding the stuff onto it to 13 make it run on some alternate fuel has to be certified. 14 But there's -- but that's not a change. That's always been 15 required in California. 16 And, in fact, the proposal which we have today 17 essentially simplifies that process byy making the 18 durability demonstration part of that less onerous. 19 MS. WILLIAMS: Uh-huh. 20 MR. CROSS: So, I don't think that anything that's 21 in this proposal affects the business relationships between 22 the engine manufacturers and the vehicle manufacturers. 23 CHAIRMAN DUNLAP: So, the answer is that they're 24 distinct processes, they're separate. 25 MR. CROSS: Yeah. 60 1 MS. WILLIAMS: We're excluded? 2 MR. CROSS: Well, we haven't affected what's the 3 fundamental -- you know, what has to certify -- has to be 4 certified and what doesn't. 5 CHAIRMAN DUNLAP: Okay. Okay. All right. What I 6 would encourage CTA to do and the staff is to get together. 7 We're two sophisticated organizations. I appreciate the 8 need to communicate. I don't think necessarily this Board 9 policy item is the place to do that. I'd try to improve the 10 communication. And I duly noted your comment about -- an 11 apology about getting to us at this late date. 12 Okay. Is there anything else? 13 MS. WILLIAMS: Yes, on the diesel engines that 14 would be retroed, another part of our plan on the far left- 15 hand side is the retrofit repower portion, and we're looking 16 at coating technologies, updating hardware, and technologies 17 that would bring existing heavy-duty technology to a level 18 beyond the current standard. 19 What would be the process under these regulations 20 for getting credit for that? 21 MR. LOVELACE: There are -- there's a particular 22 section of the regulation that describes obtaining credit 23 for conventional retrofits. And, yes, that can be done. 24 The standards that you saw are the -- are the credit 25 standards, and it's just like any others. 61 1 MS. WILLIAMS: And so, for a small company to go 2 through the durability testing, is there going to be some 3 type of assistance from the ARB to move that along, or -- 4 MR. LOVELACE: Well, one of the things that you 5 mentioned was ceramics, and I happen to know that one, and 6 it's an Engelhardt, and it's not a small company. And I 7 don't think they will have any problem doing t hat. 8 But that, again, that is the -- that burden is on 9 the manufacturer of the retrofit. And it's just like the 10 system here with the alternative fuels that was just being 11 discussed. 12 The manufacturer certifies it, and then the 13 installer of that particular system also has some 14 liabilities regarding durability and correctness. 15 CHAIRMAN DUNLAP: Good. 16 MR. LOVELACE: So, it's no different than 17 otherwise. Yes, you can do that with a diesel engine. 18 MS. WILLIAMS: Okay. 19 CHAIRMAN DUNLAP: Okay? 20 MS. WILLIAMS: That's all I have. 21 CHAIRMAN DUNLAP: Thank you. 22 MS. WILLIAMS: Thank you. 23 CHAIRMAN DUNLAP: Donel Olson, Vinyard Engine 24 Systems, Inc., followed by Paul Wuebben, South Coast 25 District; Scott Crawford, Antelope Valley Bus, Inc. That's 62 1 all I have. 2 So, we have three concluding speakers. 3 Good morning. 4 MR. OLSON: Good morning, Mr. Chairman, members of 5 the Board. Thank you for allowing me to make some general 6 comments. My name is Don Olson, and my company is Vinyard 7 Engine Systems, Incorporated, headquartered in San Antonio, 8 Texas. 9 Our intellectual group there is out -- primarily 10 the core group is out of Southwest Research Institute, a 11 company you probably know a little better than engine 12 systems. 13 We're a relatively new start-up company, two-years 14 old, that's dedicated to the provision of dedicated 15 conversions of heavy-duty diesel engines. That's our 16 business, and that's the way we started this business. 17 That's the only thing we do in this company. 18 So, we're a user, I guess, of what you've 19 accomplished here. And my real aim this morning is to 20 compliment -- first to support and then compliment your 21 staff on what I think has been a very diligent effort and 22 not too easy sometimes to bring together this procedure that 23 you're looking at at the present time. 24 We're certainly in favor of this. I might mention 25 that we started this company a couple of years ago, 63 1 intending to make some major sales in California. The 2 procedures that existed then and subsequently not jut 3 inhibited, but prohibited us from chasing this market. And 4 we frankly changed our direction considerably as a result of 5 that, and then tried to participate in these changes, which 6 now make it very inducive for us to cater to this market in 7 California. 8 And we have several sales at the present time and 9 others coming on. So, we think this is a valuable procedure 10 to encourage business. And, incidentally, we clean up the 11 air considerably with our retrofits. I'll mention that we 12 use lean-burn, state-of-the-art technology, and so on, and 13 so forth to be sure that emissions are much lower in these 14 retrofits than those that existed before our retrofits. 15 So, all in all, we're very satisfied with the 16 regulations. 17 I would like to make one comment in regards to Mr. 18 Calhoun's question about conditional certification. And in 19 actual fact, I don't see any difference between conditional 20 certification and what exists by these present procedures in 21 terms of the risk that's involved. 22 But there is a business problem, as I see it, 23 because, of course, making sales is always a very difficult 24 task in itself, and any fear that you put into your 25 potential customer inhibits that capture of that sale. 64 1 And, oh, a conditional certification? Wait a 2 minute. You know. And so, it brings up that kind of a 3 question versus no, no, we're certified. It's the same, but 4 we don't have to explain to them that we can be recalled 5 and, incidentally, it's just as bad as if it was 6 conditional, or just as good, depending on your point of 7 view. 8 But it is an inhibiting factor to a small extent, 9 I would say, in making it easier to convince users. So, 10 those are my comments, and I just wanted to again be sure 11 that the staff received the commendation that they deserve 12 for the work they've done on this project. 13 CHAIRMAN DUNLAP: Thank you. Appreciate it. 14 Mr. Calhoun, followed by Ms. Edgerton. 15 MR. CALHOUN: Don, you've been around a long time, 16 a lot longer than I have. 17 MR. OLSON: Oh, I don't know about that. 18 (Laughter.) 19 MR. CALHOUN: And I guess I would agree with you 20 that the requirements are the same if a conditional EO or 21 certificate is issued or if no conditions are attached to 22 it. The requirements are the same. 23 I guess I see a conditional EO as being something 24 that imposes due diligence on the application to follow up 25 on all the requirements. 65 1 I guess the problem I have with it is the ability 2 of our staff to specify the conditions in order to make this 3 happen. But it is a concern, and it's something that we all 4 recognize as a potential problem. And we'll just have -- 5 the Board just has to decide what we want to do about it. 6 I might make one other comment, if I can, about 7 the time for durability testing. This was a very important 8 breakthrough for us. Without being able to use assigned 9 deterioration factors and then prove the durability after 10 certification, we were stymied in making sales, frankly, 11 because we couldn't afford to do all of this work in 12 advance, and then hope we could make sales afterwards. 13 A lot of the durability testing for heavy-duty -- 14 remember, my interest is strictly heavy-duty diesel engine 15 conversions -- requires the use of the customer's vehicles, 16 and these vehicles are often a hundred thousand to $200,000 17 vehicles to begin with. 18 And so, we're basically monitoring in-use testing 19 from our customer's operations, normal operations, rather 20 than doing accelerated testing with these large vehicles. 21 So, we're kind of at the mercy, to some extent, of 22 his schedule. Now, these users put a hundred thousand miles 23 on their over-the-road vehicles quite normally, but that's 24 100,000 miles a year, maybe more, sometimes two or three 25 hundred thousand miles. 66 1 But there's a problem of getting those vehicles in 2 for testing and so on. So, we're kind of at the mercy of 3 our customer in that regard for stretching the schedule, for 4 proving the durability over time. 5 MS. EDGERTON: Mr. Olson, could you tell me what 6 size market you think there is in California for your 7 retrofits of diesels now? 8 MR. OLSON: Well, we think that market is very 9 large here in California. But we're a very small company. 10 We're a small company with very large plans, I might 11 mention. But we see that, quite easily, the market for our 12 business could easily be 20 or 30 percent California-related 13 compared to the rest of the nation. So, it's a large 14 percentage of our market plans, is the California 15 conversions. 16 Now, how many is that in numbers? I don't know. 17 We have aspirations of it being very big. But it may only 18 be a few hundred vehicles. But these are vehicles that use 19 a lot of fuel, you know. 20 An over-the-road vehicle uses as much as 20 to 25 21 times as much fuel as one automobile. So, if I tell you 22 that we're going to do a hundred, that's really 2500 in 23 terms of automobiles, you know. 24 So, we're just devoted to heavy-duty vehicles, but 25 I can't tell you. I'd like it to be a large number, but I 67 1 can't tell you what that number is, because I don't know at 2 the present time. 3 A large percentage of our total business, though. 4 MS. EDGERTON: And what's the cost on average? 5 I'm not trying to get you to give away your price, but 6 what's your average cost for a retrofit? 7 MR. OLSON: Well, you know, these are dedicated 8 conversions. These are not bi-fuel conversions. It means 9 changing the pistons in the engine, removing injection 10 systems and putting spark plugs in, modifying cylinder 11 heads, and adding a complete, full electronic control 12 system. 13 So, it's expensive, but that's only an estimate. 14 (Laughter.) 15 MR. OLSON: We can give you some idea of the 16 actual cost. For example, we've done a series of -- many 17 conversions of a Cummins 6B engine. That's about $8,000 for 18 the engine conversion at the present time. 19 If you want to place an order for a couple of 20 hundred, we could probably do it for 5,000. But it's in 21 that ball park. 22 Now, for larger engines, it might be as much as 23 $30,000 an engine for the conversion. So, these conversions 24 can be very expensive, and we have to prove their cost- 25 effectiveness for the customer, or he's not interested, of 68 1 course. 2 The cost-effectiveness comes from the cheaper 3 fuel, of course. And the more he uses the easier it is to 4 make that calculation. In a typical over-the-road 5 application, return on investment can often be as little as 6 18 months. 7 MS. EDGERTON: Good. And I just had one other 8 question. If your dreams are realized, will you open a 9 California office? 10 MR. OLSON: Well, I live in California. And I 11 have a California -- yes, we have a California -- 12 MS. EDGERTON: You already have a California 13 office. 14 MR. OLSON: Yeah, we have a California office. 15 MS. EDGERTON: Even though you're in San Antone. 16 MR. OLSON: Yes, we intend to expand that. We 17 have a sales operation here now at the present time, and 18 intend to expand our operations here. But our intellectuals 19 are in San Antonio. I want to keep them there until they've 20 proven their points. 21 MS. EDGERTON: So, how many employees do you have 22 in California? 23 MR. OLSON: At the present time, we have like two 24 in California? 25 MS. EDGERTON: Two? 69 1 MR. OLSON: That's a start, isn't it? 2 MS. EDGERTON: The Governor said he'd make the 3 jobs one by one. Thank you. 4 MR. CALHOUN: You should also tell Supervisor 5 Silva that your office is in his district. 6 MR. OLSON: Okay. I'll be seeing you later. 7 CHAIRMAN DUNLAP: Thank you. Appreciate it. 8 All right. Paul Wuebben, South Coast Air 9 District, and Scott Crawford coming up next. 10 Good morning. 11 MR. WUEBBEN: Good morning, Mr. Chairman and 12 members of the Board. 13 I am Paul Wuebben, the clean fuels officer with 14 the South Coast Air Quality Management District. First, 15 we're here and I'm here to certainly compliment the staff on 16 this important rulemaking, and we certainly urge that you 17 adopt it. 18 Just a little background I think would help your 19 perspective: This is a very important augmentation to 20 reinforce rules we've adopted. For example, Rule 1309 was a 21 credit rule which we provided to heavy-duty transit 22 operators. And that is being utilized to some extent. In 23 fact, OEM manufacturers are already using that credit 24 mechanism. Both Detroit Diesel Corporation and Cummins have 25 certified alternative fuel engines, and those are generating 70 1 credits. So, this supplements that in a very, very 2 constructive way. 3 I've also participated and our agency does in the 4 CTA working group. And I think, for Stephanie's benefit and 5 the Board's, I think, from our viewpoint, this really is a 6 constructive step; that it doesn't really detract from 7 anything that that working group and the alternative fuels 8 evolution is going go through. 9 What it does, in effect, is remove some barriers 10 which have existed in the regulatory arena. One thing that 11 I would like to touch on is that we certainly share the 12 important goal of ensuring that high-quality retrofits are 13 actually done, because it's that high quality which is going 14 to sustain the commercialization of that technology. 15 And so, for that reason, we certainly join in 16 supporting, as WSPA does, the fuel neutrality of the credit 17 provisions, and also the extended phase-in -- and especially 18 important, the alternate inspection procedures for high 19 volume. We did realize there was some important problems 20 that MESA, for example, ran into when trying to convert some 21 postal office vehicles. And that was a very large program 22 in the South Coast, and now that's, I think, been smoothed 23 out. 24 There is just one area of concern that I did want 25 to mention, and that follows, of course, on Mr. Calhoun's 71 1 concerns about the unqualified certification question for at 2 least extending the testing period. 3 From our experience in trying to sell credits -- 4 and I've been, in some sense, operating as an arbitrage 5 agent with the MTA trying to sell emission credits to users. 6 We find market confidence extremely important in trying to 7 have a final deal to sell these credits or to provide some 8 effective real world incentive. And users need confidence 9 that the systems that they have are going to be durable, in 10 the sense that they continue operating those vehicles; that 11 they understand the recall provision. 12 And it seems, from my perspective, at least, that 13 there is some need to qualify the certification process. 14 I'm not sure if it's the word, you know, that you want to 15 put on there of "qualified" certification, or perhaps 16 "completed durability testing," or "to be," you know, 17 "completed later," or "pending." 18 But there needs to be some information, I think, 19 provided to the marketplace that there is some degree of 20 difference between a certification that has full testing 21 completed and that which has not had that full testing 22 performed. 23 So, with that -- that minor modification -- I 24 think that this provides, you know, a lot of fairness. It 25 certainly provides some competition between both the OEM 72 1 manufacturers and the retrofit kit producers. The evolution 2 of engine systems coming out of Southwest and several others 3 that are similar have converted vehicles in our South Coast 4 air and throughout California. I think that's a very 5 positive competitive effect. 6 But I think that ensuring an adequacy of quality 7 control is one of your important responsibilities. And so, 8 with that minor suggestion, I think this is an excellent 9 package, and we urge your approval. 10 CHAIRMAN DUNLAP: Thank you. Any questions? 11 SUPERVISOR VAGIM: I have a question, Mr. 12 Chairman. 13 CHAIRMAN DUNLAP: Supervisor Vagim. 14 SUPERVISOR VAGIM: Some months ago -- many months 15 ago, I was called on this issue by someone who was trying to 16 convert a bunch of L. A. City school buses. Whatever 17 happened to that? And would this alleviate that problem 18 that they had? 19 MR. WUEBBEN: This will help alleviate it. I 20 think, as Stephanie noted, there are some continuing issues 21 about getting the chassis manufacturers to fully integrate 22 this kind of technology. But this does help towards that 23 means. 24 The market for these credits is a fairly immature 25 market, in all honesty; it hasn't been around very long. 73 1 This is an early period during which we're going to see an 2 increase in demand for those credits. We're working with 3 those school districts. 4 In fact, you see fairly exciting inquiries in the 5 participation of school districts in those -- in those 6 alternative fuel programs. 7 So, I think this will just help toward that end. 8 SUPERVISOR VAGIM: Thank you. 9 CHAIRMAN DUNLAP: Thank you. Appreciate your 10 time, Mr. Wuebben. 11 Those of you that feel a rumble and some 12 vibration, that is, I guess, some paving work that's being 13 done above us here. So, there's not an attack on the 14 building. 15 SUPERVISOR VAGIM: As long as he doesn't come 16 through this wall. 17 CHAIRMAN DUNLAP: That's right. We're okay. 18 (Laughter.) 19 The last witness we have is Scott Crawford from 20 Antelope Valley Bus Lines. Is there anyone else that wishes 21 to speak? 22 Okay. This will be our concluding witness. Good 23 morning. 24 MR. CRAWFORD: The last one, huh? 25 CHAIRMAN DUNLAP: Yep. 74 1 MR. CRAWFORD: Good morning, Chairman; good 2 morning, Board. 3 Being an end-user and been aggressively trying to 4 obtain emission credits for our endeavors for the last 5 several years, one of the concerns we have as end-users is 6 the durability testing, as allowing certification before 7 durability is proven -- both for the reliability of our 8 equipment that is operating in a revenue service, and the 9 issue that hasn't been brought up yet -- and I may be 10 ignorant in this part -- is that, if all this stuff is for 11 emission credits, and we're certifying for end-users to 12 obtain emission credits by retrofitting and using these 13 technologies, who's going to suffer when it comes to selling 14 those credits, then it's recalled because it's not working 15 right? 16 What liability is the manufacturer of the retrofit 17 kit going to have as far as that's concerned? If the end- 18 user goes ahead and sells them to X Company -- I like that 19 name, that terminology, X Company buys in good faith from 20 the company that's generated these credits through its 21 practices; they go out, they buy them. Then, all of a 22 sudden, at the end of the year, that kit is recalled 23 because, oops, it doesn't work as good as we thought it was, 24 I'm assuming, therefore, the credits would also be pulled 25 because it wasn't true reductions. 75 1 And, so far, that hasn't come up yet. And I think 2 that's a valid point. How can you certify something with 3 the promise to test or prove durability down the road? 4 And, in the past, it's been fine, because it's my 5 impression that CARB certification of a device, basically 6 all it meant was, yeah, it didn't hurt emissions. It didn't 7 increase emissions; so, therefore, yeah, we'll certify it. 8 Go ahead and use it. We're okay. 9 But now we're talking emission credits, and we're 10 talking trading, and we're talking money. And how is that 11 going to come back? If Chevron buys from me credits that I 12 generated by converting buses to alternate fuels, and I buy 13 from X Company, because he can -- we bought his kit to 14 retrofit, and also X Company gets pulled, because I guess 15 that durability didn't work. 16 Now they come back to me, "Well, wait a minute. 17 We got to pull your kits; so, therefore, you don't get your 18 credits." Then, Chevron says, "Well, wait a minute." 19 It's a series of problems that, by trading on 20 emission credits, I think brings this point up, and I 21 haven't heard any response to that yet. 22 CHAIRMAN DUNLAP: We'll get that addressed by 23 staff. Did you have anything else? 24 MR. CRAWFORD: That's probably the biggest thing. 25 Again, I would like to take the opportunity to keep on 76 1 pushing to try to get the repower issue brought to the 2 forefront. 3 I think repowering diesel vehicles with cleaner 4 diesel engines I think is a big issue that still needs to be 5 settled. It hasn't still come up yet. They've worked on 6 some regulation addressing repowers, but again it's 7 basically locking us to alternate fuels. 8 Hopefully, in the future, when we're talking 2 9 gram diesel engines, that's something we want to shoot for 10 to clean up the 10-gram engines that we have on the road and 11 go with the 2 gram engines that are coming up -- hopefully, 12 the sooner the better -- because I haven't heard yet how 13 diesel vehicles could really take advantage of going to an 14 alternate fueled engine. 15 The numbers that we're spouting out about 100,000 16 miles, 200,000 miles, 300,000 miles a year. Those are 17 accurate miles. However, that's an over-the-road vehicle. 18 And you're not going to be running alternate fuels in those 19 type of vehicles. 20 So, I think you're talking a real limited market 21 when you contain a retrofit or repower to alternate fuels. 22 And I'd really like to find out how much -- if every vehicle 23 that could go to an alternate fuel actually went to an 24 alternate fuel, how much percentage of NOx reductions are we 25 really talking? Because we're not talking every -- very 77 1 small percentage, I feel is actually being able to take 2 advantage of alternate fuels in the heavy-duty market. 3 CHAIRMAN DUNLAP: Well, the latter question I'd 4 encourage you to talk to staff about. I don't know if this 5 is the right forum to cover the emissions inventory or the 6 potential. But appreciate your comments. 7 Does the Board have any questions of the witness? 8 If not, I'll ask staff to comment later, in a few minutes, 9 after we go through the written comments on his question 10 about durability and that recall provision. 11 Okay. Thank you. 12 All right. That concludes the public testimony 13 on this Board item. I'd like to have staff at this time 14 take a couple minutes and cover any of the written comments 15 the Board has received by individuals that haven't been able 16 to be here today or haven't testified publicly. 17 MR. LOVELACE: Mr. Chairman, we've received two 18 letters commenting on the proposal, other than by folks that 19 testified today. 20 The first was from MECA, the Manufacturers of 21 Emission Controls Association. They had a two-part letter 22 generally supporting the proposal. And the substantive 23 comment that -- MECA notes that the alternative fuel 24 retrofits for pre-1994 model years have the option of 25 certifying using the new procedures if they are not 78 1 certifying for emission reduction credits. 2 If certifying for credit, they must use the 1994 3 and later procedures. MECA would like to have this option 4 available for conventional fuel retrofits. Well, there are 5 procedures already in place for certifying aftermarket 6 parts, for replacement or add-on devices for conventionally 7 fueled vehicles. 8 These are the procedures that should be used, 9 unless they are being used to certify for emission reduction 10 credits. And they would involve less cost than applying the 11 procedures that we are discussing today. 12 However, if a manufacturer wished to certify an 13 aftermarket part by doing all the things required by the 14 more rigorous 1994 and later retrofit procedure, and for 15 whatever reason they might want to do so, that the data that 16 they obtain from going through those procedures would be 17 more than adequate to certify the devices and aftermarket 18 part. 19 One other -- one other entity commented, GFI 20 Control Systems, Incorporated. They support the proposed 21 amendments and say that it's important that the Board adopt 22 them, quote, "adopt them in all respects as soon as 23 possible." 24 CHAIRMAN DUNLAP: Thank you. Okay. I'd like the 25 staff to succinctly cover that retrofit issue that surfaced 79 1 with the last witness, and then we'll move on. 2 Mr. Lovelace or Mr. Cross? 3 MS. HUSCROFT: For the record, I'm Sue Huscroft. 4 I'll address the issue regarding the concern that Mr. 5 Crawford stated -- if the vehicle should later not meet the 6 standards that they were certified to. This kind of thing 7 would be conducted contractually between the kit 8 manufacturer and the end user. And presumably, in that 9 contract, they would have spelled out the specific 10 liabilities. 11 In regard to the vehicles, that does lie with the 12 kit manufacturer. Should it be discovered that the vehicles 13 don't meet the standards they were certified to, they would 14 be recalled and fixed. 15 So, the first remedy is not to revoke credits. 16 And I think it's true, too, that the local districts would 17 be -- that administer the programs would want to be 18 flexible, as we would we; but what we would do is the kit 19 manufacturer would recall his vehicles and fix them, such 20 that they do meet the emission standards and the reductions 21 are obtained. 22 We also think that this liability is large enough 23 that the manufacturers have every incentive to be confident 24 in their product before putting it out on the street. 25 CHAIRMAN DUNLAP: Okay. 80 1 MS. HUSCROFT: Mr. Lovelace will address the 2 repowering issue. 3 CHAIRMAN DUNLAP: Sure. 4 MR. LOVELACE: Regarding repowering an existing 5 vehicle with a new diesel engine, that really is beyond the 6 scope of this particular hearing. However, we have 7 scheduled for the fall of this year an update to our 8 guidelines for generating emission reduction credits 9 specifically directed at heavy-duty vehicles. And Mr. 10 Crawford's concern will be addressed at that time. 11 CHAIRMAN DUNLAP: Okay. Thank you. 12 Mr. Lagarias. 13 MR. LOVELACE: Mr. Chairman, excuse me. We 14 received just seconds ago, literally, another comment letter 15 from MECA. They are addressing generating credits for pre- 16 1990 gasoline powered light-duty vehicles, and this may be 17 interesting, but it is -- it really does not address the 18 body of today's hearing. 19 CHAIRMAN DUNLAP: Okay. Thank you. 20 Mr. Lagarias. 21 MR. LAGARIAS: I'd like to ask the staff about the 22 comment of Mr. Freel of WSPA, his last comment, a Tier 1 23 gasoline vehicle converted to a bi-fueled vehicle to meet 24 TLEV standards. Are there any emission reduction credits or 25 financial incentives associated with that? 81 1 MR. LOVELACE: I think that we are pretty much on 2 the same track with Mr. Freel, in that the emission 3 reduction credits are granted for those bi-fuel vehicles but 4 only for the mileage, or fuel use, or whatever that is 5 monitored by operation as a TLEV. 6 So, I think that we're really on the same beam. 7 But, again, these are not how credits are developed. These 8 are standards for certification. 9 MR. LAGARIAS: As I recall, that same issue came 10 up when we discussed the TLEV and the conversion to bi- 11 fuels. And that was an issue then. 12 Thank you. 13 CHAIRMAN DUNLAP: Okay. Mr. Boyd, any other staff 14 comments? 15 MR. BOYD: No, Mr. Chairman, no further comments 16 at this time. 17 CHAIRMAN DUNLAP: Okay. I will now close the 18 record on this agenda item; however, the record will be 19 reopened when the 15-day notice of public availability is 20 issued. Written or oral comments received after this 21 hearing date but before the 15-day notice is issued will not 22 be accepted as part of the official record on this agenda 23 item. 24 When the record is reopened for 15-day comment 25 period, the public may submit written comments on the 82 1 proposed changes which would be considered and responded to 2 in the final statement of reasons for the regulation. 3 Any ex parte communication the Board members need 4 to disclose at this time? 5 Ms. Edgerton? 6 MS. EDGERTON: Right before the Board meeting I 7 met with Jim Green and Lauren Dunlap who mentioned their 8 support for this. 9 CHAIRMAN DUNLAP: Okay. All right. Now we will 10 take a moment or two and look at the resolution that is 11 before us. 12 The Board has before it Resolution No. 95-39, 13 which contains the staff recommendations. Do I have a 14 motion and a second to adopt the staff proposal? 15 DR. BOSTON: Mr. Chairman? The last whereas on 16 the first page of the resolution -- 17 CHAIRMAN DUNLAP: Yes. 18 DR. BOSTON: I've read it a couple of times, and 19 it doesn't seem to read properly to me. I'm wondering if 20 someone on the staff could read that last paragraph, 21 particularly the last sentence, where it says, "or to result 22 in the modified vehicle's emissions continuing to comply 23 with existing state or federal standards." 24 There must be a typo there someplace, because it 25 doesn't read correctly. 83 1 CHAIRMAN DUNLAP: Thank you. Mr. Boyd, are you 2 tracking this? Or Mr. Kenny? 3 MR. LAGARIAS: He's not here. 4 MR. BOYD: I'm waiting for staff and counsel to 5 caucus. 6 MR. CALHOUN: Mr. Chairman, may I ask the staff 7 another question? 8 CHAIRMAN DUNLAP: Sure. Mr. Calhoun. 9 MR. CALHOUN: My concern is the burden for 10 following through on the certification or seeing to it that 11 the certification falls upon the staff at this present time. 12 And I guess I would like to ask the staff if they felt 13 comfortable at this time in imposing some conditions or if 14 their preference would be to observe what takes place for 15 about a year, and then come back and make some kind of 16 recommendation as to whether or not conditional 17 certification would be the appropriate thing to do. 18 I don't want to impose some condition on the staff 19 that the staff does not feel that it would be comfortable to 20 handle at this point in time; but, nevertheless, I would 21 like to see that this issue's followed up on. 22 CHAIRMAN DUNLAP: Okay. Mr. Boyd, do you -- 23 MR. BOYD: A quick reaction, and then maybe Mr. 24 Cackette can elaborate. 25 I understand and appreciate in multiple ways what 84 1 Mr. Calhoun is suggesting and his concern. But by the same 2 token, from -- not as many years of experience as Mr. 3 Calhoun has had, but from a lot of years of experience, I 4 also concur with Mr. Olson's concern about perception and 5 reality when it comes to the idea that you have a 6 certificate that's conditioned, when we know that, in 7 reality, a certification is full of conditions versus having 8 a certification that says it's conditioned can convey 9 negative connotations to financiers, or customers, and what 10 have you. 11 And I think what I would like to do is take Mr. 12 Calhoun up on the second half of his offer, which is let us 13 look at this, follow this, and indeed see if remedial action 14 is required -- 15 CHAIRMAN DUNLAP: Okay. 16 MR. BOYD: -- or whether the program works. At 17 least that's my personal reaction. 18 CHAIRMAN DUNLAP: If it's okay with Mr. Calhoun, 19 I'd like to ask staff to examine this in the six to nine 20 month period rather than a full year, if that's okay. Is 21 that agreeable, Mr. Cackette? 22 Does that give us enough time? 23 MR. CACKETTE: I'm not sure that'll give us enough 24 time, because we're going to have to see, you know, the 25 whole process of completing these -- the durability 85 1 demonstrations is a fairly long one. 2 CHAIRMAN DUNLAP: Okay. 3 MR. CACKETTE: So, I think we might need the full 4 year. 5 CHAIRMAN DUNLAP: Well, then, what I'll ask then 6 is we'd like to hear back from staff within a year. And, 7 Mr. Boyd, I'll defer to you whether it's in a memo form to 8 the Board members individually or as an individual Board 9 item, whatever is more appropriate. 10 MR. BOYD: Fine. We'll be glad to. 11 CHAIRMAN DUNLAP: Have we been able to caucus and 12 figure out that last -- I'll ask legal, then, to run through 13 the word changes that we would need to make that read -- 14 MR. RYDEN: We made a minor edit here, and the 15 last phrase will read, "any such vehicle pollution control 16 device, or to result in the modified vehicle's continuing 17 ability to comply with existing state or federal standards." 18 CHAIRMAN DUNLAP: So, strike "emissions"? 19 MR. RYDEN: Strike "emissions" and insert 20 "ability" between "continuing" and the word "to," t-o. 21 CHAIRMAN DUNLAP: Okay. Is that acceptable to Dr. 22 Boston? Of course, he hasn't made a motion yet. 23 DR. BOSTON: I think what you really need to do is 24 change that "continuing" to "failing to comply with the 25 existing state and federal standards." 86 1 The purpose of the paragraph is that there'll be 2 no changes made to the vehicle that will cause the emissions 3 to go down (sic), and this sentence doesn't cover that. It 4 says, "continuing to comply with existing state and federal 5 standards." 6 CHAIRMAN DUNLAP: Dr. Boston, will you read how 7 you think it makes the most sense, and we will incorporate 8 that into your motion that you've yet to make? 9 (Laughter.) 10 DR. BOSTON: I would like to make an editorial 11 change to the last paragraph, the last three sentences so 12 that the last three sentences would then read, ". . .the 13 original design or performance of any such motor vehicle 14 pollution control device or result in the modified vehicle's 15 emissions failing to comply with existing state or federal 16 standards," period. 17 CHAIRMAN DUNLAP: Mr. Kenny. 18 MR. KENNY: May I offer a simpler solution, which 19 may satisfy your need? 20 DR. BOSTON: Sure. 21 MR. KENNY: That would be to just simply take the 22 word -- following the word "device" on the second to the 23 last line -- 24 DR. BOSTON: -- put a period? 25 MR. KENNY: -- take out the words "or" and "to" 87 1 and substitute "must." 2 CHAIRMAN DUNLAP: That seems more efficient. 3 DR. BOSTON: That's fine. Where were you before? 4 CHAIRMAN DUNLAP: Yes. Mr. Boyd, please see to it 5 that Mr. Kenny does not leave the Board room. 6 (Laughter.) 7 CHAIRMAN DUNLAP: Very well. 8 DR. BOSTON: With that modification, I'd like to 9 propose the adoption of Resolution 95-39. 10 SUPERVISOR RIORDAN: I'll second. 11 CHAIRMAN DUNLAP: Very well. We have a motion and 12 a second to approve Resolution No. 95-39, which contains the 13 staff's recommendations and this modification. 14 Is there any discussion that we need to have? 15 All right. I'll ask the Board Secretary to call 16 for a vote on the resolution. 17 MS. HUTCHENS: Boston? 18 DR. BOSTON: Yes. 19 MS. HUTCHENS: Calhoun? 20 MR. CALHOUN: Aye. 21 MS. HUTCHENS: Edgerton? 22 MS. EDGERTON: Aye. 23 MS. HUTCHENS: Hilligoss? 24 MAYOR HILLIGOSS: Aye. 25 MS. HUTCHENS: Lagarias? 88 1 MR. LAGARIAS: Aye. 2 MS. HUTCHENS: Riordan? 3 SUPERVISOR RIORDAN: Aye. 4 MS. HUTCHENS: Silva? 5 SUPERVISOR SILVA: Aye. 6 MS. HUTCHENS: Vagim? 7 SUPERVISOR VAGIM: Aye. 8 MS. HUTCHENS: Chairman Dunlap? 9 CHAIRMAN DUNLAP: Aye. 10 MS. HUTCHENS: Resolution passes 9-0. 11 CHAIRMAN DUNLAP: Very well. Thank you. 12 Thank you, Gene, for your eagle eye. 13 Let's run along to the next item, 95-8-2. I would 14 like to remind those of you in the audience who would like 15 to present testimony to please submit it to the Board 16 Secretary or sign up to comment. 17 This second item is the public meeting to consider 18 an update of California's air toxics program. 19 This is an informational item presenting an 20 overview and update on California's air toxics efforts. 21 Established formally by legislative mandate in 1983, the air 22 toxics program has since become an important cornerstone of 23 this agency's mission to protect the public health. 24 This item was originally scheduled as a prelude 25 for consideration of the annual fee regulation in support of 89 1 the Hot Spots Information and Assessment Act. As there is 2 pending legislation that may affect the hot spots program 3 and the fee regulation, we have cancelled the fee regulation 4 Board item. We will reschedule that item once we know the 5 outcome of the pending legislation. 6 I understand that the staff will briefly discuss 7 the hot spots program today, but only in the context of how 8 it fits into our overall efforts to reduce the public's 9 exposure to air toxics. 10 It's my understanding that staff has about a 30- 11 minute presentation in which they'll cover this program. 12 I'd like to ask Mr. Boyd to introduce this item. 13 (Thereupon, the reporter requested time 14 to replenish her paper.) 15 CHAIRMAN DUNLAP: I'd be happy to take a stretch 16 break for you. Hold on for just a moment, we'll have the 17 court reporter a minute to change the paper. 18 (Thereupon, there was a pause in the 19 proceedings that allowed the court reporter 20 to replenish her paper supply.) 21 CHAIRMAN DUNLAP: Are we all set. Okay. The 22 stretch break is now over. So, we'll ask Mr. Boyd to 23 introduce the item. Jim? 24 MR. BOYD: Thank you, Mr. Chairman. 25 As indicated, in 1983, the Legislature established 90 1 the State's policy that air toxics be controlled to levels 2 which prevent harm to the public's health. At that time, 3 the Legislature gave the Air Resources Board the authority 4 to identify and to control air toxics. 5 In its direction the Legislature recognized that 6 total and undisputed scientific evidence on health effects 7 may not be available. As a result, they established a 8 process that ensures that the best available scientific 9 information be used; that the public have an adequate 10 opportunity to participate in the process, and that the 11 health effects recommendations be reviewed by an independent 12 Scientific Review Panel. 13 In 1987, the Legislature added the Hot Spots 14 Information and Assessment Act, so-called AB 2588, to the 15 overall California air toxics program. These two major 16 programs worked together to provide an integrated approach, 17 reinforced with our staff's technical expertise, to identify 18 substances, evaluate sources, and to reduce the potential 19 risk from air toxics in California. 20 Today, we will present to you a review of 21 California's air toxics program, highlight many of the 22 Board's accomplishments, and discuss the major activities in 23 each program area. 24 As you will see, the activities are diverse and 25 require that the talent and the support of almost -- or 91 1 literally every division of the Air Resources Board be 2 employed to make the program work effectively. The toxics 3 program builds on the years of our efforts to reduce 4 emissions of hydrocarbons and particulate matter to meet the 5 ambient air quality standards for ozone, particulate, and 6 for other criteria pollutants. 7 Actions taken to reduce these pollutants also have 8 resulted in significant reductions in air toxics. However, 9 the air toxics program differs from the criteria pollutant 10 control program, in that we cannot measure our success in 11 terms of achieving an ambient air quality standard. 12 Many air toxics do not have an adverse effect 13 threshold; therefore, we must always balance the degree of 14 risk reduction with a consideration of cost and remaining 15 risk. 16 We measure our success relative to indicators such 17 as individual facility risk reduction and overall control 18 measure effectiveness. The ARB has and continues to work 19 with the agencies and, in particular, with California's 20 local air pollution districts, to make California's programs 21 the nation's first and its foremost air toxics program. 22 We have made significant progress in reducing risk 23 from air toxics in the past 10 years, but we recognize that 24 there is still much that we must do in partnership with 25 California industry before our mission is complete. 92 1 And with that, now I'd like to turn the 2 presentation over to the staff for a comprehensive look at 3 the air toxics program and, as I indicated, its 4 accomplishments and our major ongoing activities. And for 5 that, I'll call upon Mr. Bob Fletcher of the Stationary 6 Source Division to make the presentation. 7 Bob? 8 MR. FLETCHER: Thank you, Mr. Boyd. Good morning, 9 Chairman Dunlap, members of the Board. 10 In the next 45 minutes or so, I will present to 11 you an overview of California's air toxics program. In 12 today's presentation, I want to leave you with the following 13 main points about California's air toxics program. 14 Point 1: California has a comprehensive and fully 15 integrated air toxics program that is based on the best 16 scientific information available. We have prioritized our 17 actions to ensure that we focus on those compounds and 18 activities posing the most significant potential health risk 19 to Californians. 20 We have been effective at reducing the potential 21 risk to the public from both stationary and mobile sources. 22 Our public outreach process has ensured that our efforts 23 have been cost-effective and appropriately balanced between 24 public health protection and economic growth. And, finally, 25 we will provide leadership and guidance to continually 93 1 improve the efficiency of our air toxics program and ensure 2 that our activities are essential to protect public health. 3 With those points in mind, I will now begin our 4 overview. 5 Listed here are the major parts of my 6 presentation. In general, I will provide some background 7 information in each area, and then discuss some of the key 8 accomplishments in our major ongoing activities. 9 Two major legislative initiatives form the basis 10 for the air toxics program. These are Assembly Bill 1807 11 and Assembly Bill 2588. AB 1807 established a process for 12 the identification and control of toxic compounds and set 13 the tone for California's toxics program by formally 14 separating the assessment of risk from the management of 15 risk. In essence, that means that the health effects 16 determinations are made independently of the need for an 17 impacts of reducing the risk. 18 AB 2588, typically referred to as the hot spots 19 program, was designed to make the public aware of individual 20 facilities that may pose a significant health risk. While 21 these programs began as two separate initiatives, they now 22 have evolved into a comprehensive and fully integrated air 23 toxics program involving every division within the ARB as 24 well as other federal, State, and local agencies. 25 It is interesting to note that many of the 94 1 principles embodied in these legislative initiatives found 2 their way into the Federal Clean Air Act amendments of 1990, 3 which now mandate a nationwide air toxics program. I'll 4 talk a little bit more about the federal program later in my 5 presentation. 6 The major program elements of California's air 7 toxics program are much like the gears of a machine. They 8 must be synchronized and work together to get the job done. 9 The major gears of our air toxics program include the three 10 key elements shown on this slide. 11 The first key program element is that of compound 12 identification. This element provides the foundation for 13 California's air toxics program and has two important 14 objectives: One, identify the compounds likely to pose the 15 most significant risk; and, two, develop health risk 16 guidance values by compound, which allow risk managers to 17 quantify the potential health risk associated with these 18 compounds. 19 To meet these objectives, we have developed a 20 prioritization scheme which focuses on those compounds most 21 significant to California. We have selected the compounds 22 using certain criteria, such as the risk of harm to public 23 health, emissions, exposure, and use of the compound. 24 The Office of Environmental Health Hazard 25 Assessment and the Scientific Review Panel are instrumental 95 1 in our efforts to identify toxic compounds. OEHHA, a sister 2 agency in Cal-EPA, is the State's experts on health risk 3 assessment. As such, we rely heavily on them to assist us 4 in our toxics program. 5 The Scientific Review Panel independently reviews 6 the identification reports and the scientific information on 7 which they are based. This review assures that the best 8 scientific data are used. 9 Appointments to the SRP are made by the Secretary 10 for Environmental Protection and the Legislature. The SRP 11 consists of nine internationally recognized experts with 12 experience in a variety of scientific and medical fields. 13 Shown here is our formal identification process 14 established by 1807. A very important part of this process 15 is public outreach. This includes open public workshops, 16 presentations at industry association meetings, and 17 extensive personal contacts with individuals interested in 18 our proposed actions. 19 The final and most important step in this process 20 is your decision to formally identify a compound as a toxic 21 air contaminant. 22 In 1992, the Legislature amended the AB 1807 23 program by requiring the Board to identify all 189 federal 24 hazardous air pollutants listed as part of the Federal Clean 25 Air Act amendments of 1990. This action was taken to 96 1 facilitate the integration of state and federal air toxics 2 programs. 3 The amendments also require OEHHA to develop 4 health risk guidance values for these compounds and a 5 streamline process that still includes outreach and review 6 by the Scientific Review Panel. 7 Our accomplishments in this area include the 8 development of 20 formal identification or risk assessment 9 reports for compounds which the Board has identified as 10 toxic air contaminants, and the listing of all 189 federal 11 hazardous air pollutants in April of 1993. 12 The Board maintains a list of substances for 13 further evaluation other than those identified as toxic air 14 contaminants, which may present a potential risk to the 15 public. 16 As we obtain information on these substances, we 17 will enter them into the formal identification process. We 18 currently have two such compounds in the process -- listed 19 here. 20 We expect to bring inorganic lead to the Board 21 next spring, followed by diesel exhaust in late 1996. 22 OEHHA is developing health risk guidance values 23 for the identified federal hazardous air pollutants. They 24 expect to develop values for about 20 compounds each year. 25 In September, we will release for public review 97 1 and comment a summary report on air toxics. This report 2 addresses over 200 compounds and compiles readily available 3 data on each compounds, such as sources, and emissions, and 4 health effects. 5 It will help us to set priorities for developing 6 health risk guidance values and will serve as a handy 7 reference for districts, industry, and the public when 8 questions arise regarding the status of a compound in 9 California. 10 From compound identification, I would like to now 11 move on to a discussion of the second major element of our 12 program, that of technical support. 13 There are four key activities that are necessary 14 to support the identification and risk reduction elements. 15 These activities are listed on this slide. I will discuss 16 each activity in the following slides. 17 The ambient air monitoring data we collect is used 18 to support the identification process by establishing 19 ambient levels, establishing ambient exposure so that we can 20 estimate the level of potential risk, and helping us to 21 determine control priorities. 22 The Monitoring and Laboratory Division now 23 operates a statewide monitoring network consisting of 20 24 monitoring sites throughout the State measuring over 50 25 pounds. 98 1 In developing the network, the MLD staff have had 2 to develop numerous procedures to sample and analyze for the 3 compounds of interest. Our network is complemented with 4 sites operated by the districts. Both the South Coast and 5 the Bay Area Districts have additional toxics monitoring 6 sites which help to characterize the potential risk form air 7 toxics. 8 The work necessary to keep the network operating 9 is a large part of the ongoing activities. This includes 10 the collection of ambient data, developing new methods and 11 techniques as we focus on different compounds, and providing 12 support to us in our efforts to integrate the federal air 13 toxics program with our existing program. 14 Another important support activity is our 15 stationary source emission monitoring efforts also performed 16 by the Monitoring and Laboratory Division. By emissions 17 monitoring, I'm referring to source tests where a team of 18 engineers and technicians travel to a source site and set up 19 the sampling equipment needed to monitor the emissions 20 directly from that facility. 21 These data are used to support our risk reduction 22 efforts by providing us the detailed information we need to 23 accurately assess the emissions from that source. Examples 24 of some of the facility types for which the Monitoring and 25 Lab Division have performed source tests are waste wood fire 99 1 boilers and dry cleaning facilities. 2 When we tested the waste wood fire boilers, we 3 realized that they were not a significant source of dioxins, 4 while our dry cleaning source test helped us to establish 5 the appropriate level of control for these sources. 6 Another important use of this information is the 7 evaluation of alternative and potentially more effective 8 control technologies. 9 In this program, we have developed and adopted 10 over 20 test methods which can detect more than 80 11 compounds. In addition, the MLD staff review about 40 to 60 12 source test protocols each year. A test protocol outlines 13 the source test sampling and analytical procedures that a 14 facility operator proposes to use. 15 This proactive work helps ensure that tests re 16 conducted in accordance with accepted procedures and that 17 collected data will be valid. 18 Each year, the MDL staff also conducts 10 to 15 19 source tests to support the program. We use these results 20 to help us understand the operational characteristics of a 21 source and establish the need and appropriate degree of 22 control. 23 Listed here are a few of the major activities that 24 are currently underway. For example, we are evaluating the 25 efficiency of a new ethylene oxide recovery system for 100 1 hospital sterilizers. This new system recovers both the 2 ethylene oxide and the CFC that is used as a carrier gas for 3 the ethylene oxide. 4 Previously, the CFC was exhausted to the 5 atmosphere. As you know, CFC is an ozone depleter. In this 6 analysis, we are working with the districts and the industry 7 to ensure that the new system is effective. 8 Our third technical support activity is the 9 development and maintenance of an air toxics emissions 10 inventory. An emissions inventory is a database of 11 information on individual facility emissions. This work is 12 performed by the technical support division. Our air toxics 13 emissions inventory was expanded by the hot spots 14 legislation. 15 Facilities are required to prepare and implement 16 an emissions inventory plan and submit that data to the 17 districts. The districts review the data and then, once 18 approved, forward it to the ARB for entry into the statewide 19 emissions inventory system. 20 As shown on this slide, the emissions inventory 21 data are used to identify significant sources and evaluate 22 their health risk, to help us to prioritize our risk 23 reduction actions, and track potentially significant 24 sources, to support our efforts to implement the Federal 25 Clean Air Act, and provide the public information on air 101 1 toxics. 2 The air toxics emissions inventory currently 3 contains data from about 7,000 sources. In 1994, the Board 4 streamlined the reporting requirements by requiring only a 5 simple two-page form for most industry emission inventory 6 updates. This action reduced reporting costs by 70 to 90 7 percent. 8 The Technical Support Division has developed user 9 friendly software for electronic submittal of inventory 10 updates. This software should further reduce the cost to 11 industry and help the local districts by simplifying the 12 update process. 13 One further accomplishment is the technical 14 guidance document which provides California facility 15 operators with information on how to calculate air toxics 16 emissions from a number of different types of sources. 17 We are now in the process of integrating the 18 criteria and toxic air pollutant inventories. This will 19 allow the staff to evaluate the total air pollution and 20 health impacts from stationary sources and should simplify 21 the reporting requirements for districts and facility 22 operators. 23 We are also developing validated emission factors 24 based on the information collected to support the emissions 25 inventory. These emission factors will allow industry to 102 1 estimate the emissions from a facility instead of having to 2 go through source testing. 3 In addition, we are using the data in the 4 inventory to develop screening level emission factors which 5 can be used to quickly evaluate potential emissions from a 6 facility. 7 The final technical support activity I would like 8 to discuss is in the area of health risk assessments. In 9 this activity, OEHHA is the agency that provides the bulk of 10 the technical expertise. Our role is one of coordination 11 and liaison with the districts and others. 12 The data generated in health risk assessments are 13 used to identify substances as toxics, help us to determine 14 which sources are of concern, and provide information to 15 help us determine the appropriate control levels for new and 16 modified sources. 17 As I mentioned in the identification 18 accomplishments, we have conducted 20 formal risk 19 assessments. Each of these risk assessments has taken on 20 average between two and four years to complete. Part of the 21 reason for the time needed to complete these risk 22 assessments is the extensive public participation and peer 23 review elements in our process. 24 To assist industry, the ARB, OEHHA, and the 25 California Air Pollution Control Officers Association have 103 1 together developed risk assessment guidelines. These 2 guidelines have been widely used and have promoted statewide 3 consistency. 4 The ARB has also developed risk assessment 5 software, which is available at a cost of less than $20 for 6 use with these guidelines. This software allows the user to 7 quickly perform a screening level risk assessment. 8 In 1992, the Hot Spots Act was amended and 9 requires OEHHA to revise and adopt risk assessment 10 guidelines. These revisions are designed to better 11 characterize the risk from a facility by providing more 12 information about the uncertainty of the analysis and the 13 variability of the data that are used in the risk 14 assessment. 15 OEHHA is using a workgroup of interested people to 16 assist them in developing these guidelines, and they expect 17 to complete them within the next year. 18 We are also working with CAPCOA and OEHHA to 19 develop risk assessment procedures for the specific source 20 categories shown on this slide. 21 These industrywide risk assessment procedures will 22 provide the districts with methodologies to conduct a risk 23 assessment based on simple inputs about an individual 24 facility. These procedures will minimize the collective 25 efforts required to characterize the risk from source 104 1 categories where there are hundreds of facilities, and will 2 reduce the costs of the hot spots program for these types of 3 facilities. 4 The final major program element is that of risk 5 reduction. The identification and technical support 6 elements set the stage for this risk management activity. 7 The ambient risk from air toxics are contributed 8 by both stationary and mobile sources, and consequently must 9 be reduced from both. 10 The first part of this discussion will focus on 11 stationary source risk reduction activities. With 12 stationary sources, there are three primary risk reduction 13 activities -- the development of airborne toxic control 14 measures which reduce the risk from a whole category of 15 sources, such as dry cleaners or chrome plating operations; 16 the reduction of risk from certain individual facilities 17 identified through the hot spots program; and the reduction 18 of risk prior to the construction of a new or modified 19 source of toxics. 20 AB 1807 established a formal process for the 21 development of an airborne toxic control measure. After the 22 formal identification of a toxic, we develop a needs report 23 which evaluates the source categories emitting the listed 24 compound, reviews the technology available for reducing the 25 emissions, examines the costs, and appraises the risk 105 1 remaining after the controls are in place. 2 A toxic control measure may be part of this 3 report. By law, the Board must require the use of the best 4 available control technology for those compounds which have 5 no thresholds, which are typical carcinogens. For those 6 compounds which have a threshold level, typically 7 noncarcinogens, the Board must require that the sources 8 reduce emissions sufficiently so that the source will not 9 result in or contribute to ambient levels in excess of that 10 level. 11 Shown here is the formal process established in 12 the law for development of an ATCM. Again, as in the 13 identification process, public participation is the key 14 element. On average, our control measures have taken 15 between two and four years to develop and present to the 16 Board for consideration. 17 Over the years, we have adopted eight control 18 measures affecting the sources shown here. Also shown on 19 this slide is a picture of an award presented to the Board 20 for its work in the development of the chrome plating ATCM. 21 When we developed that control measure, the level of 22 reductions required were considered technology forcing. The 23 ARB worked with the Metal Finishing Association and the 24 districts on a joint demonstration project to determine if 25 the required level of control could be achieved. 106 1 Our control levels were verified, and the South 2 Coast Air Quality Management District Board acknowledged our 3 efforts and the efforts of the Metal Finishing Association 4 with awards. 5 Shown here are some of the risk reduction benefits 6 achieved by our ATCMs. We have achieved at least a 90 7 percent reduction in all of our stationary source control 8 measures and, as you can see here, up to 100 percent in some 9 categories, with a commensurate reduction in risk. 10 These measures generally affect source categories 11 which reflect the largest emitter of the identified toxic. 12 For example, our needs analysis for hexavalent chromium, a 13 known human carcinogen, showed that chrome plating 14 operations accounted for about 30 percent of all hexavalent 15 chromium emissions, and cooling towers accounted for about 16 another 65 percent. 17 Taken together and considering the efficiency of 18 our control measures, we believe we have reduced statewide 19 emissions of hexavalent chromium by over 95 percent. 20 Similarly, we have reduced statewide emissions of ethylene 21 oxide by about 90 percent and perchloroethylene by about 50 22 percent. 23 These control measures affect over 7,000 sources 24 in the State. Many of these control measures address source 25 categories which are typically found in residential 107 1 neighborhoods, such as gas stations, hospitals, and chrome 2 plating facilities. 3 Consequently, we are not only reducing emissions, 4 we are reducing the public's exposure to these compounds. 5 The Compliance Division recently audited nine 6 districts efforts to implement four of the ATCMs. Out of 7 the 165 separate inspections, only five violations of the 8 ATCMs were found, representing a compliance rate of over 95 9 percent. 10 Thus, it appears that the benefits of the ATCMs 11 are, in practice, being achieved. 12 Our efforts in ATCM development continue to find 13 source categories which need further evaluation. Currently, 14 we are evaluating methylene chloride use in the furniture 15 stripping industry and chlorinated solvent use in degreasing 16 operations. 17 We also have several other ongoing activities at 18 this time related to stationary sources. The ATCM for dry 19 cleaning requires that all operators take a certified 20 environmental training class. Consequently, we are 21 developing an environmental training program. The training 22 program is designed to help facility operators comply with 23 multimedia regulations affecting the industry and enhance 24 their operation and maintenance practice. 25 We are also engaged in a coatings demonstration 108 1 project, which is a joint industry/ARB project to determine 2 if toxic metals from paints can be removed. We are 3 evaluating specifications for perchloroethylene wastewater 4 evaporators. 5 And finally, I'd like to just mention the traffic 6 paints MOU we have with Caltrans. The bright yellow paint 7 we all see contains both lead and hexavalent chromium. As 8 we drive over the stripes, the paint wears, causing lead and 9 hexavalent chromium to be released into the air. 10 We have entered into a formal MOU with Caltrans to 11 test reformulated paints that do not contain lead and 12 hexavalent and to begin using these paints, pending the 13 successful completion of these tests. 14 I'd like to now turn to the risk reduction efforts 15 which are focused on the individual facility which may 16 present a particularly high risk. 17 The Hot Spots Act requires individual facilities 18 to evaluate their emissions and take actions, if necessary, 19 to reduce their risk. The risk levels which require action 20 are determined by the districts. The law allows each 21 district to establish the levels for prioritizing a facility 22 and determining if a facility must conduct a risk 23 assessment, notify the public, and prepare and implement a 24 risk reduction audit and plan. 25 Risk reductions are achieved through voluntary 109 1 reductions and facility actions if they are required to 2 prepare and implement a risk reduction audit and plan. 3 Some facilities have voluntarily reduced their 4 emissions using the knowledge they gained after conducting a 5 full risk assessment. This kind of in-depth analysis of 6 their processes and their emissions led them to make changes 7 or substitute compounds which reduced emissions and lowered 8 their risk. 9 As examples, in San Diego, Caspian, Incorporated, 10 an aerospace contractor, substituted a water based coating 11 in one of their processes and reduced perchloroethylene 12 emissions by almost 90 percent. And Dow Chemical in Mayor 13 Hilligoss' district reduced carbon tetrachloride use by over 14 90 percent by applying the best available control 15 technology. 16 Public notification is also an incentive for a 17 company to reduce their emissions when they want to maintain 18 good neighbor relations. Under the law, facilities must 19 prepare and implement a risk reduction audit and plan if the 20 district has found them to pose a significant risk. 21 The ARB is required to assist industries comprised 22 of smaller business in complying with the risk reduction 23 audit and plan provisions. In addition, the ARB must 24 prepare self-conducted checklists for use by these 25 facilities. 110 1 We have several risk reduction guidelines under 2 development, and I will discuss these a little more in a 3 moment. 4 The ARB and CAPCOA have produced two documents, in 5 addition to the risk assessment guidelines I mentioned 6 previously, to assist local districts with this program. 7 These two documents, the prioritization guidelines and the 8 notification guidelines were developed to help provide 9 consistency in implementing the Hot Spots Act. We have also 10 supported the districts in implementing these guidelines. 11 For example, in Supervisor Vagim's district, we 12 served on a special committee and participated in their 13 public workshops to develop the district's notification 14 requirements. In addition, we assisted the district staff 15 by participating in a public meeting for the facility that 16 was required to notify the public that they may pose a 17 significant risk. 18 One additional and very important accomplishment 19 of the hot spots program that I would like to highlight once 20 more is the voluntary reduction of toxics emissions by 21 industry. 22 The Hot Spots Act has provided facility operators 23 with information on emissions and their risk that they may 24 never have been aware of. Many operators have used this 25 knowledge to take action to reduce their facility risk. A 111 1 limited survey of only 21 facilities in 1992 showed 2 voluntary reductions of close to 2 million pounds. 3 We currently have seven risk reduction guidelines 4 under development. Six are industry specific and one is a 5 general guideline. As I mentioned above, these guidelines 6 are being developed to assist industry in complying with the 7 requirements of the Hot Spots Act. 8 We have enlisted industry's help in the 9 development of these documents and have standing workgroups 10 with representatives from industry, other State agencies, 11 and local districts. 12 We are also developing a software program that 13 will link all phases of the Hot Spots Act. This software 14 will link the inventory with three independent modules that 15 perform facility prioritization, air dispersion modeling, 16 and risk assessment. 17 It will allow the districts and industry to 18 electronically submit information and efficiently complete 19 these tasks. 20 We are continually evaluating ways to reduce the 21 fees associated with the Hot Spots program. Two years ago, 22 we presented to you our five-year plan for reducing fees. 23 We are planning to expedite the implementation of that plan. 24 Overall, we expect to propose a 75 percent reduction of fees 25 by 1998 over the program peak in 1993. We will be working 112 1 closely with interested individuals as we further refine 2 this proposal. 3 We have covered risk reduction activities from 4 existing sources. Now, I'd like to move on to how we handle 5 new and modified sources, otherwise known as new source 6 review. 7 The major districts in California have either a 8 new source review rule or a policy. Requiring a risk 9 demonstration from a new or modified source keeps this 10 program fully integrated by looking at technology options 11 prior to the time a source is constructed. 12 The rules or policies require significant new and 13 modified sources to install the best available control 14 technology and evaluate the risk remaining after the 15 technology is installed. 16 Additional mitigation may be required if a 17 significant residual risk remains. 18 In order to promote consistency in permitting 19 decisions for these new and modified sources among the 20 districts, the Board approved risk management guidelines in 21 July of 1993. These guidelines are used by the districts as 22 a framework for developing or modifying toxics new source 23 review rules. 24 Continued development and evaluation of NSR rules 25 in consideration of the Federal Clean Air Act requirements 113 1 will be the focus of our ongoing activities in this area. 2 I'd like to now move on to our actions to reduce the risk 3 from mobile sources. Our ambient monitoring data suggests 4 that about half of the ambient risk is due to mobile 5 sources. 6 Mobile sources differ from stationary sources, in 7 that they do not emit significant quantities of a wide 8 variety of toxic compounds. Reports identify the compound 9 shown on this slide as the major contributors to the risk 10 from motor vehicles. 11 Benzene and 1,3,-Butadiene are both hydrocarbons. 12 Therefore, any action taken to reduce hydrocarbons in 13 general will also reduce these toxic compounds. 14 The ARB has been taking action to reduce 15 hydrocarbons from motor vehicles since the 1970s. We have 16 reduced hydrocarbon emissions from on-road motor vehicles by 17 over 80 percent, when growth is not considered. These 18 reductions have provided significant reductions in toxics as 19 well. 20 More recently, however, we have become focused on 21 toxics as well as criteria when we develop controls for 22 motor vehicles. Recent examples are our low-emission 23 vehicle and reformulated fuel regulations. We know that 24 these regulations provide significant toxic benefits. 25 Shown here is a sample of some of the emission 114 1 standards for mobile sources implemented over the past 10 2 years or so that have provided reductions in toxics 3 emissions of benzene, 1,3-Butadiene, and formaldehyde. 4 Our Mobile Source Division has not only developed 5 emission standards, but have developed several other 6 regulatory strategies as well. The inspection and 7 maintenance measures, on-board diagnostics, and evaporative 8 standards based on new test procedures also reduce toxics. 9 The accomplishment and risk reduction from motor 10 vehicles is impressive. The documented toxics reductions 11 from just the reformulated gasoline regulations alone are 12 expected to reduce the potential risk from motor vehicles by 13 30 to 40 percent beginning in the year 1996. 14 Our major ongoing activities in this area are 15 related to implementing the State Implementation Plan. We 16 expect to achieve an additional 80 percent reduction in all 17 motor vehicle emissions by the year 2010 on measures that 18 are on the books or will be adopted in the next few years. 19 I think I've covered about all the stationary and 20 mobile source risk reduction activities. Now, I'd like to 21 turn to some other aspects of the toxics program. 22 Over the years, the toxics program has achieved 23 accomplishments in areas other than the identification of 24 compounds, risk reduction, or the technical support of these 25 two elements. 115 1 Some of these activities are required in our 2 legislative mandates, such as pesticide monitoring and 3 indoor air exposure assessment, while others have been 4 associated with the program due to the nature of their 5 emissions -- for example, landfills and hazardous waste 6 sites. 7 I'd like to take a few minutes talking about some 8 of these activities, and then turn to my attention to the 9 biggest "other," our work to integrate our air toxics 10 program with the Federal Clean Air Act requirements. 11 The Research Division conducts the indoor exposure 12 assessments in support of the identification of toxic air 13 contaminants. To encourage reduced exposures to indoor air 14 pollution, the Research Division has published two guideline 15 documents. 16 These documents, entitled "Reducing Indoor Air 17 Pollution" and "Combustion Pollutants in the Home," provide 18 guidance on ways to reduce exposure to toxic air pollutants 19 in the home. They are continuing their work to assess the 20 impact that indoor air pollutants have on health. to this 21 end, they have funded several studies to help improve the 22 exposure assessments and work closely with other agencies, 23 such as Cal-OSHA, in seeking ways to reduce the risks from 24 indoor air pollution. 25 Another activity the ARB participates in is an 116 1 assessment of potential exposures to air toxics from 2 pesticide applications. The ARB does not regulate 3 pesticides in their pesticidal form, but assists the 4 Department of Pesticide Regulation by monitoring at their 5 request. 6 To date, we have monitored for 24 pesticides for 7 DPR. 8 Landfills are a source of toxic emissions. In 9 1986, legislation was passed which required all active and 10 some inactive landfills to be tested. The results show that 11 the landfills produce toxic gases, the most significant 12 being benzene and vinyl chloride. 13 The ARB approved a suggested control measure for 14 landfill gas recovery systems in 1990, which has set the 15 foundation for district rule development to reduce the 16 emissions from landfills. 17 The ARB works with the Department of Toxic 18 Substances Control to evaluate the air toxics exposure 19 impacts from site cleanups and hazardous waste, storage, 20 treatment, and disposal facilities. 21 We want too help to ensure that cleaning up one 22 part of our environment doesn't cause more of a problem 23 elsewhere. 24 I think I ought to spend a minute here on our 25 biggest "other." Title III of the Federal Clean Air Act 117 1 amendments of 1990 set forth a nationwide program for the 2 control of air toxics. 3 This program will affect many California 4 businesses. Some of the major provisions of this program 5 require the United States Environmental Protection Agency to 6 establish emission standards for 174 different categories of 7 sources, develop a new source review program for major 8 stationary sources, and establish a program to prevent 9 accidental releases of highly toxic, flammable, or explosive 10 compounds. 11 Congress recognized that some states had existing 12 effective air toxics programs. As such, they included 13 provisions in the amendments that allow states to submit 14 alternative rules or programs to the U.S. EPA for approval. 15 Upon approval, these rules or programs completely 16 replace the federal requirements; thus, greatly simplifying 17 implementation of the program in California. 18 We have two general objectives in addressing the 19 new federal requirements. First, we are working to ensure 20 that there is a smooth interface between the federal air 21 toxics program and California's existing air toxics program. 22 This is important to ensure that the new 23 requirements are practical and necessary to protect public 24 health, do not duplicate or conflict with current State or 25 district regulations, and provide needed operating 118 1 flexibility to California businesses. 2 We also intend to work closely with the local 3 districts to seek approval for rules and programs to replace 4 the federal rules where appropriate. 5 One of our major accomplishments to date is the 6 submittal of the first application in the nation for 7 approval for an alternative State rule to the U.S. EPA. One 8 of the first standards that the U.S. EPA promulgated was for 9 dry cleaning. The Board adopted an ATCM for dry cleaning at 10 about the same time. This is a precedent-setting 11 application and that, upon approval, we will be able to 12 implement and enforce California's dry cleaning ATCM in lieu 13 of the federal standard. 14 Our ATCM provides better public health protection 15 with less burdensome recordkeeping and reporting 16 requirements. In the process of developing this submittal, 17 we have identified a number of issues associated with the 18 process of requesting approval. 19 Based in large part on our experience with the dry 20 cleaning application, Chairman Dunlap has written the U.S. 21 EPA and outlined a number of areas where additional 22 flexibility is needed to ensure that there is a smooth 23 interface with California's existing program. The response 24 to that letter was very positive, and the U.S. EPA committed 25 to us that they would review their recordkeeping and 119 1 reporting requirements and the approval criteria for State 2 programs. 3 Some of our ongoing activities relative to the 4 Federal Clean Air Act are listed on this slide. Of 5 particular note is our role as co-lead in an effort to work 6 with the U.S. EPA to evaluate their criteria for approval of 7 State rules and programs. We think that much greater 8 flexibilities are needed; again, to ensure that there is a 9 smooth interface. 10 Our outreach efforts in this area will be 11 particularly important and include the recently completed 12 series of eight workshops on implementing the Federal Clean 13 Air Act in California. These workshops, done in cooperation 14 with U.S. EPA Region IX, CAPCOA, and industry, were attended 15 by a total of over 750 people. The workshops provided an 16 excellent for both educating the industry, districts, and 17 others on the requirements of the federal program and 18 assisting us in identifying areas where we should focus our 19 efforts. 20 In general, open communication is critical to make 21 the program work. Our public outreach efforts are designed 22 to provide a forum for the open discussion of issues, 23 assist industry and the public in understanding our program, 24 and assisting us to better understand the issues. 25 As necessary, we have also provided our documents 120 1 in other languages. Shown on this slide is the staff report 2 for dry cleaning done in Korean to assist the large number 3 of Korean dry cleaners in understanding the proposed 4 requirements. 5 Shown here are a few of the over 100 technical and 6 informational documents we have produced as part of the 7 Board's public outreach efforts. These include the 8 Compliance Divisions compliance assistance manuals and our 9 air toxics updates and brochures. 10 That pretty much brings me back to the first 11 series of slides and I think -- fortunately for me -- to the 12 end of the presentation, since I'm losing my voice here. 13 But I hope we have given you a flavor for California's 14 comprehensive air toxics program that is fully integrated 15 with other programs at the ARB and with other State and 16 federal programs as well. 17 In the program, we have prioritized our efforts on 18 those compounds and activities that have the potential to 19 pose the most significant risk. We have been effective at 20 reducing the risk from both stationary and mobile sources, 21 and we have made extensive use of public outreach programs 22 to ensure that we appropriately balancing public health 23 protection and economic growth. 24 We believe we still have much to accomplish and we 25 are committed to ensure that our ongoing activities are 121 1 absolutely essential to public health protection. We will 2 continue to search for the most cost-effective solutions to 3 the problems we encounter and provide the help and guidance 4 to those affected our program. 5 And we want to avoid duplication of effort at all 6 costs and are committed to work effectively and to smoothly 7 integrate the Federal Clean Air Act requirements. 8 To maintain the success we have achieved, we must 9 continue to work cooperatively with other government 10 agencies, the scientific community, and the public to ensure 11 our resources are focused where they will provide the 12 greatest benefits to public health protection at the least 13 cost to the affected industries. 14 On the counter behind you, we have provided some 15 of the documents we developed over the years, and hope 16 you'll have a chance to peruse through there. 17 Thank you for your patience. That does conclude 18 my presentation. 19 CHAIRMAN DUNLAP: Thank you, Mr. Fletcher. 20 Appreciate that. 21 Mr. Boyd, do you have anything to add? 22 MR. BOYD: Just a quick concluding remark, Mr. 23 Chairman. Hopefully the Board members have seen that their 24 air toxics program has had a large number of accomplishments 25 in the ten years that it's been in existence. We're proud 122 1 of the Air Resources Board's past history and past work. 2 And, as you've seen, we're committed to ensuring 3 that California's air toxics program continues to be 4 responsive to the needs of Californians. We are continuing 5 to work in the partnerships that we've set up in the past 6 and in future partnerships with the affected parties, and to 7 develop what we think are common sense solutions which, from 8 our perspective, adequately balances the need to protect the 9 public health of Californians with the need to sustain and 10 promote economic growth in our State. 11 And hopefully, you've seen from the successes 12 we've had of late with the U.S. EPA, we're beginning to 13 convince them of that need as well. 14 Thank you. 15 CHAIRMAN DUNLAP: Okay. Any questions? 16 Supervisor Vagim. 17 SUPERVISOR VAGIM: With the ability to shift from 18 the State to the federal program, does that differ quite a 19 bit from the Title V? Are we getting closer to sufficiency 20 and the dreaded word equivalency? 21 MR. BOYD: The simple answer is, yes. 22 SUPERVISOR VAGIM: I'll accept the simple answer. 23 CHAIRMAN DUNLAP: Though it's against our nature 24 at times to do that. Any other questions of staff? 25 Okay. Thank you for a fine presentation. I've 123 1 had an opportunity to deal with the staff in this program 2 several times since my appointment, and they've always been 3 forthright. It's a complex program. It requires a lot of 4 coordination. I certainly understand that and appreciate 5 your efforts. And I think it's appropriate, Mr. Boyd, to 6 have updates from time to time. And we'd certainly welcome 7 that at the Board level. 8 MR. BOYD: Thank you. We'd be glad to do it more 9 often. 10 CHAIRMAN DUNLAP: Okay. We have no written 11 comments to report? Nobody's signed up to comment on this 12 from the audience? Is that correct? 13 All right. Any other further comments you have, 14 Mr. Boyd, that the Board would need to hear about it at this 15 time? 16 MR. BOYD: Not on this item, Mr. Chairman. The 17 only comment I would make regarding the future is to remind 18 the Board members we have no August Board meeting. The next 19 time we will see you in a Board meeting setting is in this 20 room September 28th and 29th, where we have a fairly healthy 21 agenda. 22 CHAIRMAN DUNLAP: Okay. All right. I don't need 23 to close this item off, because it's a nonregulatory item. 24 Is there any other further business that anyone on 25 the Board has that we'd want to cover? 124 1 If not, we will conclude our meeting for today. 2 This meeting now stands adjourned. 3 (Thereupon, the meeting was adjourned 4 at 12:20 p.m.) 5 --o0o-- 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 125 CERTIFICATE OF SHORTHAND REPORTER I, Nadine J. Parks, a shorthand reporter of the State of California, do hereby certify that I am a disinterested person herein; that the foregoing meeting was reported by me in shorthand writing, and thereafter transcribed into typewriting. I further certify that I am not of counsel or attorney for any of the parties to said meeting, nor am I interested in the outcome of said meeting. IN WITNESS WHEREOF, I have hereunto set my hand this 6th day of August, 1995. Nadine J. Parks Shorthand Reporter