1 MEETING 2 BEFORE THE 3 CALIFORNIA AIR RESOURCES BOARD 4 5 6 7 8 9 10 BOARD HEARING ROOM 11 2020 L STREET 12 SACRAMENTO, CALIFORNIA 13 14 15 16 17 18 19 THURSDAY, OCTOBER 22, 1998 20 9:30 A.M. 21 22 23 24 Janet H. Nicol Certified Shorthand Reporter 25 License Number 9764 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 ii 1 APPEARANCES 2 MEMBERS PRESENT: 3 John D. Dunlap, III, Chairman Mark J. DeSaulnier 4 William F. Friedman Lynne T. Edgerton 5 Jack C. Parnell Barbara Patrick 6 Sally Rakow Barbara Riordan 7 8 STAFF: 9 Michael Kenny, Executive Director Tom Cackette, Chief Deputy Executive Officer 10 Robert Jenne, Staff Counsel Mike Scheible, Deputy Executive Officer 11 Jim Schoning, Ombudsman 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iii 1 INDEX PAGE 2 Proceedings 1 3 Call to Order 1 4 Pledge of Allegiance 1 5 Roll Call 1 6 Opening Remarks by Chairman Dunlap 2 7 AGENDA ITEMS: 8 98-10-1 Public Meeting to consider Amendments to the 3 Air Toxics Hot Spots Fee Regulation for Fiscal 9 Year 1998-99 10 Introductory Remarks by Chairman Dunlap 3 11 Staff Presentation Mike Kenny 4 12 Richard Bode 5 Jim Schoning 21 13 Public Comments 14 Christopher Walker 24 15 Questions/Comments 25 16 98-10-2 Public Meeting to Consider the Approval 31 of California's Off-Road Large Spark-Ignited 17 Engine Emissions Inventory 18 Introductory Remarks by Chairman Dunlap 31 19 Staff Presentation Mike Kenny 32 20 Mark Carlock 33 21 Public Comments Ev Ashworthy 36 22 Questions/Comments 41 23 (continued) 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iv 1 INDEX (continued) 2 PAGE 3 98-10-3 Public Meeting to consider Adoption of 44 Emission Standards and Test Procedures for 4 New 2001 and Later Off-Road Large Spark- Ignited Engines 5 Introductory Remarks by Chairman Dunlap 44 6 Staff Presentation 7 Tom Cackette 44 Tom Chang 45 8 Public Comments 9 Jed Mandel 67 Gary Cross 73 10 Christopher Wright 79 Mort Smith 81 11 Bruce Bertelson 82 Bill Guerry 93 12 Brad Garner 95 13 Questions/Comments 97 14 98-10-4 Public Meeting to consider Approval of a 106 Revision to the California State 15 Implementation Plan for Carbon Monoxide 16 Introductory Remarks by Chairman Dunlap 106 17 Staff Presentation Mike Kenny 107 18 Dennis Wade 108 19 Questions/Comments 111 20 Open Session to Provide an Opportunity for Members 115 of the Public to Address the Board 21 Adjournment 115 22 Certificate of Reporter 116 23 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 1 1 P R O C E E D I N G S 2 CHAIRMAN DUNLAP: If I can get people to take 3 their seats we'll get started. 4 The October meeting of the California Air 5 Resources Board will now come to order. 6 Would the audience please rise as Board Member 7 Riordan leads us in the pledge of allegiance. 8 (Pledge of Allegiance recited.) 9 CHAIRMAN DUNLAP: Could I ask the clerk of the 10 Board to please call the roll. 11 MS. SHELBY: Calhoun. 12 (No response.) 13 MS. SHELBY: DeSaulnier. 14 SUPERVISOR DeSAULNIER: Here. 15 MS. SHELBY: Edgerton. 16 MS. EDGERTON: Here. 17 MS. SHELBY: Friedman. 18 DR. FRIEDMAN: Here. 19 MS. SHELBY: Parnell. 20 (No response.) 21 MS. SHELBY: Patrick. 22 SUPERVISOR PATRICK: Here. 23 MS. SHELBY: Rakow. 24 MRS. RAKOW: Here. 25 MS. SHELBY: Riordan. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 2 1 MRS. RIORDAN: Here. 2 MS. SHELBY: Roberts. 3 (No response.) 4 MS. SHELBY: Silva. 5 (No response.) 6 MS. SHELBY: Dunlap. 7 CHAIRMAN DUNLAP: Here. 8 Thank you. 9 We're aware of a couple of our Board members' 10 absences. I guess you call them, if we were school 11 teachers, which some of my colleagues are or have been, 12 they're excused absences. 13 Mr. Parnell is in transit, should be joining us 14 within the next half hour or so. 15 One or two of them I know are ill, and one of them 16 is out of the state. 17 Okay. We'll get into the agenda. Those of you 18 who are here to sit through the whole agenda today, it's my 19 belief that the meeting will go relatively quickly and 20 probably be done before we see 1:00. We'll work straight 21 through. We will not break for lunch. 22 I'd like to also remind the audience that if they 23 would like to present testimony to the Board in any of 24 today's items to please sign up with the clerk over here to 25 my left. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 3 1 If you have written statements, if you can provide 2 us with 20 copies we'd be grateful, so we can make sure that 3 the entire Board and the staff, key staff, have copies of 4 it. 5 First item on the agenda today is 98-11-1, public 6 hearing to consider amendments to the air toxics hot spot 7 fee regulation for fiscal year 1998-99. 8 The Air Toxics Hot Spots Information and 9 Assessment Act of 1987 requires California industries to 10 compile emission inventories for toxic substances discharged 11 from the facilities, to notify the public of potentially 12 significant health risks resulting from these emissions, and 13 to reduce emissions so as to abate the most significant 14 risks. 15 The act also charges the air pollution control 16 districts, the Office of Environmental Health Hazard 17 Assessment, OEHHA, and the Air Resources Board with 18 implementing the program. 19 The law requires that the costs incurred by the 20 state and local districts to implement and maintain the Hot 21 Spots Program be recovered by assessing fees on facilities 22 subject to the program. 23 State fee regulation is designed to generate the 24 revenue to cover the state's cost. 25 The proposed fee regulation before us today also PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 4 1 provides authorization for the collection of fees to support 2 local efforts for six districts which have requested the ARB 3 to adopt their fee schedules. 4 At this point I'd like to ask Mr. Kenny to 5 introduce the item and begin the staff's presentation. 6 Good morning, Mike. 7 MR. KENNY: Good morning. Thank you, 8 Mr. Chairman, members of the Board. 9 For fiscal year '98-99, the ARB plans to further 10 reduce the state portion of the program fees while 11 continuing to focus the program on higher risk facilities. 12 We are at the point in this program where we can 13 say much has been accomplished. The program is focused on 14 those facilities that have the highest risks, while 15 facilities that have little or no risk are exempt. 16 Facilities that could potentially become high risk are still 17 tracked by the program. 18 As in past years, the staff has looked at the 19 program needs and reevaluated where we should devote our 20 efforts. 21 During the development of the hot spots fee 22 regulation, the staff has attempted to balance the fiscal 23 requirements of the state and district programs and to 24 reduce the burden on the regulated community. 25 The staff has worked closely with interested PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 5 1 members of the public, the regulated community, the air 2 pollution control districts and the Office of Environmental 3 Health Hazard Assessment to develop these proposed 4 amendments. 5 The proposed amendments continue to use the method 6 for allocating fees among the districts that was used last 7 year, that is basing fees on facilities' health impacts. 8 Fees for the larger facilities have been frozen at 9 fiscal year '97-98 levels. 10 Fee exemptions continue for those facilities which 11 pose little or no health impacts. 12 The proposed amendments increase the fees of 13 industry-wide sources, that is the numerous and small 14 sources, such as dry cleaners and gasoline stations, from 25 15 to 35 dollars. 16 This fiscal year the number of larger facilities 17 in the program are reduced by about another 130 facilities, 18 leaving approximately 675 facilities in the program. 19 We are continuing to reduce the state cost to 20 administer the program. 21 With that introduction, I'll ask Mr. Richard Bode 22 to present the proposed amendments to the regulations. 23 Mr. Bode. 24 MR. BODE: Thank you, Mr. Kenny. 25 Good morning, Mr. Chairman, members of the Board. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 6 1 We're here today to present the staff's 2 recommendations for amending the air toxics hot spot fee 3 regulation for fiscal year 1998-99. 4 As you recall, we come here before you each year 5 to present amendments to this regulation to incorporate the 6 most current program data. The fee regulation is to be 7 reviewed annually. As was said, the purpose of the fee 8 regulation is to recover the state's cost to implement the 9 Hot Spots Program. 10 Our agenda today will be to give you a very quick 11 overview of the Hot Spots Program and the purpose of the fee 12 regulation and then to get right to the proposed amendments, 13 and finally I want to discuss some of the Board's directives 14 made at last year's fee regulation hearing and the staff's 15 follow-up activities. 16 With that, I'll get right to the background of Hot 17 Spots Program. 18 In September 1987 the Legislature enacted AB 2588, 19 the Air Toxics Hot Spots Information and Assessment Act. 20 This act required the state to implement the Hot Spots 21 Program, which is a fee-supported, community right-to-know 22 program. 23 In the act, the Legislature set forth the goals of 24 the program. Those goals are to inventory the nature and 25 extent of air toxics emissions from stationary sources, to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 7 1 identify those facilities which pose significant health 2 risks, to notify the public of which facilities are 3 significant health risks, to reduce the risks in those 4 high-risk facilities to below the significance level, and 5 finally to provide information for the prioritization of 6 toxic air contaminants. 7 In the course of the program and working towards 8 these goals, the Hot Spots Program has resulted in a number 9 of benefits in the State of California. As a result of 10 information gathered from the program, California is one of 11 the few states to have a comprehensive statewide air toxics 12 emissions inventory. In addition, we are able to provide 13 the public with air toxics emissions data and risk 14 assessment data. 15 Under this program, facilities, both large and 16 small, have evaluated the quantities of their air toxics 17 emissions and the health impacts from those emissions. 18 As a result, many of the facilities, after 19 determining their emissions and risk impacts, have 20 voluntarily reduced the air toxics emissions. 21 Other facilities, in an effort to avoid public 22 notification requirements, have also reduced their air 23 toxics emissions. 24 In the process, the Hot Spots Program has resulted 25 in substantial air toxics emission reductions and reduced PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 8 1 public health risks. 2 As was stated previously, the purpose of the fee 3 regulations is to recover the state's program costs to 4 implement the Hot Spots Program, and those costs are 5 recovered through fees assessed against facilities subject 6 to the program. 7 The regulation itself operates to allocate the 8 state's costs, both for the Air Resources Board and the 9 Office of Environmental Health Hazard Assessment, or OEHHA, 10 among the 35 air districts, and require those districts to 11 collect fees to recover the allocations. 12 The fee regulation also adopts fee schedules for 13 districts that requested the Air Resources Board to do so 14 for them. This year we'll be adopting for six districts. 15 The other 29 districts must adopt their own fee 16 regulations for the purposes of recovering both their 17 district costs and the state costs. 18 With that brief introduction, I'll now present 19 staff's recommendations for amending the fee regulation. 20 First, we're proposing to use the same method to 21 allocate the state's costs to the districts as was used last 22 year. This method allocates fees on facilities within each 23 district, based on their public health risk, that is their 24 health risk assessment results from prioritization scores. 25 Prioritization scores are numerical values PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 9 1 calculated by the district based on air toxics emissions and 2 potency of the toxicity of those compounds. 3 They represent simplified preliminary risk 4 assessments and determine which facilities must go on more 5 complete formal risk assessments. 6 The method itself assesses facilities with high 7 risks and scores the highest fees. 8 Intermediate risks facilities are assessed low 9 fees. 10 And facilities with low scores and risks are 11 exempted from state program fees entirely. 12 The benefit of this method is that it places a 13 higher burden of fees on those facilities with the greatest 14 public health impact. 15 I'd like also to point out that with this fee 16 regulation, 88 percent of large facilities who had paid hot 17 spot fees back in fiscal year 1993-1994, which was the peak 18 of the program, are now exempt due to demonstrated low risk, 19 and pay no state fee whatsoever. 20 We also during this year considered other methods 21 for allocating state costs to the districts, besides using 22 our proposed method. In fact, at the November 1997 fee 23 regulation hearing, the Board directed the staff to 24 investigate alternative methods. 25 One method we looked at was to base district share PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 10 1 of state costs on their percentage of the state population. 2 While the method sounds fair, in practice we found that it 3 actually worked out to be an unworkable allocation to the 4 districts. 5 As an example, one of the smaller districts who 6 had rather small population and an even smaller industrial 7 base, ended up with only two small businesses that were 8 still subject to program fees. Their district's allocation 9 of state costs was approximately $5,000, which meant these 10 two facilities would have had to pay $2500 each, as opposed 11 to our method they would have paid merely $35. 12 What we found out was that every district has 13 different numbers of facilities, different types of 14 facilities and they exempt them at different rates. So 15 using a population-based method to allocate fees would have 16 resulted in similar facilities in different districts paying 17 vastly different fee amounts. 18 A second alternative that we evaluated was to 19 freeze the districts' allocation and state costs at last 20 year's level. Again, we found that this resulted in an 21 unworkable and inequitable allocation of state costs. Last 22 year's fee allocation levels were based on facilities' 23 program status last year. In the meantime, approximately 16 24 percent of large facilities have reduced their risk and are 25 now exempt from state fees. What would have happened is the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 11 1 remaining facilities in districts would have had to make up 2 the difference and paid a higher fee, because those other 3 facilities had dropped out. 4 This alternative had been earlier recommended to 5 us by the California Air Pollution Control Officers' 6 Association. However, after discussions with CAPCOA, they 7 now support our proposed method and have submitted a letter 8 in support. 9 Next we're proposing to freeze the fees for large 10 facilities at the same level as last year. These large 11 facilities have historically been assessed the highest fees 12 and paid the majority of program costs. 13 This year, because we're dedicating fewer program 14 resources to these facilities, and we recognize the need to 15 minimize the negative economic impact of the fees 16 themselves, we feel justified in freezing the fees for these 17 large facilities. 18 Our next proposal deals with the fees for 19 industry-wide facilities. Because of the increased 20 resources needed to evaluate industry-wide facilities, we're 21 proposing to increase the state fees for these facilities by 22 $10, from a $25 fee to a $35 fee. 23 Industry-wide facilities are generally small 24 businesses for whom the districts complete all their program 25 requirements. They include gas stations, dry cleaners, auto PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 12 1 body shops and printers. 2 The district staff complete the toxics emissions 3 inventory and the health risk assessments for industry-wide 4 facilities, and this is in contrast to the large facilities 5 which must complete their own emissions inventories and risk 6 health assessments or hire a consultant to do so for them. 7 The districts and the state staff do quite a bit 8 of work on behalf of these industry-wide facilities in order 9 to complete their evaluations. 10 CAPCOA, with the assistance of ARB and OEHHA 11 staff, has developed industry-wide risk assessment 12 guidelines for auto body shops and gas stations and is 13 currently working on guidelines for dry cleaners. These 14 guidelines contain emissions inventory and risk assessment 15 data and procedures and allow the districts to quickly 16 evaluate these types of facilities. Once evaluated, and if 17 determined to be low risk, these facilities would no longer 18 pay fees. 19 In addition, the Air Resources Board does work by 20 taking the air toxics emissions data from these 21 industry-wide and adding them to our data systems so this 22 information can be made available to the public. 23 The proposed increased industry-wide fees was 24 discussed at our many outreach meetings and conference 25 calls. It has the support of a number of different industry PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 13 1 groups in the districts. 2 However, one association, the Metal Finishing 3 Association of Southern California, which represents both 4 the larger facilities and the industry-wide facilities, has 5 suggested the proposed increase is not enough. They've 6 suggested that an increase to the fee of $80 would be more 7 reasonable and it would actually help reduce the fee 8 burden on the larger facilities. They have submitted a 9 letter regarding their position, which I can comment on 10 later. 11 On the other side of the issue, at one of our 12 conference calls we heard from the operator of a gasoline 13 service station. While he acknowledged that the fee 14 increase was small, he also informed us of the additional 15 fees paid by gas station operators. 16 We spent a great deal of time evaluating what 17 would be the appropriate fee for these industry-wide 18 facilities. We concluded that considering the resources, 19 both the state and the districts are investing in evaluating 20 industry-wide facilities, and our goal of not to cause any 21 additional economic burden to the small businesses, that the 22 $10 fee increase was the most appropriate. 23 Next we're proposing to reduce the state's program 24 costs for fiscal year 1998-99. As a consequence of our 25 proposal to freeze large facility fees at last year's level, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 14 1 we collect $35 from industry-wide, the state will recover 2 $1.27 million for this fiscal year. The 1.27 million 3 represents an $80,000, or six percent, reduction from last 4 year's program costs of 1.35 million. 5 In addition, the 1.35 million level of last year 6 represented our program maintenance level. So we will be 7 operating at $80,000 below what we have identified 8 previously as our program maintenance level, and as a result 9 there will be a number of program activities which we will 10 not pursue this year. 11 As you know, the state also has been working over 12 the last several years to rapidly reduce our program costs. 13 Since fiscal year 1993-94 the program costs have been 14 reduced by over 76 percent, from 5.2 million to 1.27 15 million. 16 Also, I'd finally like to point out that this fee 17 regulation does not include a five percent adjustment or 18 contingency factor, which has historically been a part of 19 every proposed fee regulation. This contingency money is 20 used for unforeseen business closures and the inability of 21 districts to collect fees. Historically, these fee 22 collection patterns indicate that these shortfalls may be up 23 to $70,000. If these additional losses do occur, the Air 24 Resources Board and OEHHA would need to reevaluate their 25 resources and possibly make further program reductions. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 15 1 Next we're proposing to revise Appendix A of the 2 fee regulation. Appendix A is the list of districts' toxic 3 lists, reports and surveys which affect facility 4 applicability in the program. 5 Lastly, we're proposing to adopt fee schedules for 6 the six districts listed on the screen. 7 Let me quickly review -- 8 CHAIRMAN DUNLAP: Could you go back to that slide. 9 I just wanted to look at it. You went pretty quick over 10 that one. 11 MR. BODE: We're adopting for Antelope Valley, 12 Great Basin, Imperial, Lassen, Mojave Desert and Santa 13 Barbara. 14 Not adopting for South Coast this year. 15 CHAIRMAN DUNLAP: All right. 16 MR. BODE: The proposals we're making today are 17 we're proposing to use the same fee allocation method as 18 last year. Those allocations for the districts are listed 19 in your Board book on page 52, Table 1 on page 52, and also 20 Table 1 in the fee regulations itself. 21 We're proposing to keep the large facility fees at 22 the same level as last year. 23 We're proposing to increase industry-wide fees by 24 $10, from $25 to $35. 25 We're proposing to reduce the state's budget in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 16 1 cost to 1.27 million. 2 We're proposing to revise Appendix A and we're 3 proposing to adopt the six districts. 4 Before I conclude my presentation, I'd like to 5 briefly review the staff's activities in responding to the 6 Board's directives from last year's fee regulation hearing. 7 On November 13th the Board -- of 1997, at the 8 Board hearing the Board directed the staff to address a 9 number of issues that were raised. 10 First, the Board directed staff to contact 11 districts, encourage them to improve where necessary the 12 communications with the facilities subject to the program. 13 On January 28th, 1998, the executive officer sent 14 a letter to all air pollution control officers reminding 15 them of the importance of good communication at their 16 facilities. Copy of that letter is included in your 17 package. 18 The Board also directed staff to contact CAPCOA 19 and request that it review and revise its 1990 20 prioritization guidelines for the purpose of creating a 21 method that would be applied consistently statewide. 22 On January 28th the executive officer sent a 23 letter to the president of CAPCOA making such a request. 24 CAPCOA has since formed a subcommittee, which is currently 25 in the process of reviewing and revising the 1990 CAPCOA PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 17 1 prioritization guidelines. That executive officer letter is 2 also in your package. 3 The Board also directed staff to provide districts 4 with technical assistance in implementing the program, also 5 with an eye on helping them reduce the program fees. 6 Towards that end, in February 1998 OEHHA and the 7 Air Resources Board held a two-day public workshop with 8 district staff to discuss the Hot Spots Program and provide 9 them with the technical tools to implement the program. 10 We also reviewed districts' programs and 11 determined if any of their programs would have resulted in a 12 inequitable allocation of state costs and a fiscal burden on 13 their facilities. 14 Staff identified one district in particular and 15 provided comments to the district regarding the 16 implementation. The districts revised their implementation 17 and have lowered their state share of program costs. 18 Finally, the Board directed the staff to review 19 alternative methods of allocating the state costs to the 20 districts. As discussed previously, those alternatives were 21 evaluated and we concluded that they would have resulted in 22 inequitable allocations of state costs. 23 That concludes my presentation. 24 We recommend that the Board adopt the staff's 25 proposal for amending the fee regulations for fiscal year PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 18 1 1998-99. 2 We also did receive six comment letters on our 3 proposal, and I can either summarize those now -- 4 Okay. To begin with, we had two letters, one from 5 Mr. Michael Kussow, the president of CAPCOA, and the other 6 from Mr. Richard Smith, the assistant director of the San 7 Diego County Air Pollution Control District. 8 Both expressed support for the staff's proposed 9 amendments and commended the staff for the work in 10 developing the amendments. 11 They also expressed concern about the long-term 12 funding of the program and the need to seek out legislative 13 changes for alternative funding mechanisms, and they both 14 also asked for the ARB's assistance in efforts to change the 15 program funding. 16 Mr. Smith also made two additional comments, one 17 about the flexibility and how program requirements are met. 18 CHAIRMAN DUNLAP: Back to the first comment, 19 they're looking for us to help them with legislation? 20 MR. BODE: That's right. 21 CHAIRMAN DUNLAP: Well, I think I'll ask staff, 22 Mr. Oglesby is in here. 23 Bob, if you would, I know you're putting together 24 legislative ideas for the next year for the new 25 administration, if you would follow up with these gentlemen PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 19 1 who wrote to us and put this in the hopper and see if we can 2 develop something. 3 Thank you. 4 MR. BODE: Mr. Smith also commented on the 5 flexibility of how the program requirements are met, 6 specifically the calculation of prioritization scores. 7 And also coming out of the Board directive from 8 last year, CAPCOA is working, as we said, on revising those 9 1990 prioritization guidelines so that they are applied more 10 consistently statewide. 11 He also suggested, Mr. Smith suggested, that we 12 consider the population-based method in allocating state 13 costs, and as I said we have looked at that and found it to 14 be unworkable. 15 We received a letter from Mr. Jeff Sickenger from 16 Western States Petroleum Association. He also supports the 17 staff's proposal saying that it achieves a reasonable and 18 equitable fee distribution among the remaining facilities. 19 And Mr. Sickenger also brought up the idea of long-term 20 program funding, the need for alternative funding. He also 21 brought up CAPCOA's efforts and would like to see the ARB 22 assist CAPCOA in those efforts. 23 CHAIRMAN DUNLAP: Okay. Good. 24 I'd ask Mr. Oglesby if you can communicate with 25 them as well. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 20 1 MR. BODE: We received two letters from the Metal 2 Finishing Association of Southern California, one from 3 Mr. Daniel Cunningham and the other Ms. Carol Foss 4 McCracken. They expressed their concerns. Again, they felt 5 that the fiscal burden of hot spot fees was heavy in their 6 larger facilities. They also mentioned that they thought 7 the increase in industry-wide should go much higher, up to 8 $80, and reduce the fiscal burden on their larger 9 facilities. 10 In addition, Ms. McCracken did commend the staff 11 for its effort to reduce the program budget and its efforts 12 to develop a statewide comprehensive inventory. 13 And as we discussed during our presentation, we 14 thought the $10 fee was the most appropriate. 15 Finally, we received from Mr. Ken Corbin, who is 16 the air pollution control officer from Feather River, and he 17 made a request stating that he thought three of his 18 facilities were due an exemption from fees. Staff is 19 actually currently reviewing that situation. We need some 20 follow-up documentation and if it's worthwhile we'll have 21 the fee waiver later on. 22 CHAIRMAN DUNLAP: Very good. Does that conclude 23 it? 24 MR. BODE: That's it. I've completed my 25 presentation. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 21 1 CHAIRMAN DUNLAP: Mr. Schoning, as our ombudsman, 2 would you please address the process prior to today by which 3 this item came before us and share any concerns or issues 4 that you see. 5 MR. SCHONING: Good morning, Mr. Chairman. Thank 6 you, and I shall. 7 The item before you has become an annual item for 8 the Board and the development of it began in February of the 9 current year and has continued until today. 10 Staff developed the amendments to the fee 11 regulation with the assistance of two formal groups, the Air 12 Toxics Hot Spots Fee Regulation Committee, which is an 13 all-government group, and includes representatives from all 14 35 local air districts, the Air Resources Board and the 15 Office of Environmental and Health Hazard Assessment. 16 This committee met either in person or by 17 conference call eight times since February to develop and 18 discuss this proposed regulation. 19 Staff also worked closely with the Hot Spot Fee 20 Industries and Environmental Stakeholders Group, 21 approximately 70 industry and environmental representatives. 22 Staff invited the group to review and comment on the 23 development of the regulation through a number of 24 teleconferences between May and September of this year. And 25 staff also conducted numerous one-on-one meetings and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 22 1 smaller teleconferences with interested members of this 2 group. 3 The item was workshopped four times between July 4 and September of this year, twice here in Sacramento on the 5 21st of July and the 23rd of September, and twice in El 6 Monte on July the 23rd and September 24th. 7 More than 8,000 individuals were invited to 8 participate in each of these workshops. And the opportunity 9 for public input into the regulation was provided during 10 each of them. 11 On September 4, staff mailed out copies of the 12 staff report to more than 1400 individuals representing the 13 public, environmental groups, government agencies and 14 industry, including service station industry, automotive 15 painting and repair, dry cleaning, refining, chemical 16 manufacturers and aerospace industries. 17 Staff report was also published on the Web on the 18 4th of September. 19 Finally, notices of this hearing were sent to 20 approximately 6500 individuals on September 4, 1998. 21 We believe the staff did a fine job of reaching 22 out to all appropriate stakeholders and affected parties and 23 involving them in an inclusive, deliberative and meaningful 24 public process. 25 Finally, Mr. Chairman, members, while we normally PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 23 1 focus our comments on the process by which items come to 2 you, we'd like to have our voice on this item to what seems 3 to be a growing chorus of voices suggesting that an 4 alternative means of funding this process in the future 5 needs to be found. Such a revision, as you indicate, 6 Mr. Chairman, would require modification by the Legislature, 7 and it seems to us that that would be appropriate. 8 CHAIRMAN DUNLAP: Okay. Very good. Thank you, 9 Jim. 10 And I think, you know, as a Board we don't like 11 bringing a fee issue back every year. I know you struggle 12 with it. We certainly know that this program, because of 13 the reporting requirements required and the actions 14 attendant to that, we've seen a reduction in people that 15 need to report and take action, which has been good. And as 16 a result, you try to support a program with less people in 17 it and with less money available. So we understand the 18 dilemma. 19 So I would ask, as I have a moment ago, the staff 20 to work closely with those folks that have chosen to be 21 leaders in this movement and see if we can get a piece of 22 legislation moving next year and get the local air district 23 support and industry, et cetera, to move this forward. 24 All right. We have no witnesses. Is that right? 25 Mr. Kenny, do you have any final points? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 24 1 MR. JENNE: Mr. Chairman, I believe staff has one 2 additional comment on the resolution. 3 MR. LIVINGSTON: Aron Livingston, staff counsel. 4 I believe you've heard a couple times about trying 5 to find a legislative improvement to getting state fees for 6 this purpose, so I would recommend that you direct staff as 7 part of the wrap-up to pursue that strategy. 8 CHAIRMAN DUNLAP: We'll do that. Counselor, you 9 can, if I missed that, you pipe right up like you just did. 10 We have one witness. Is that correct? 11 This is Christopher Walker, who is a legislative 12 advocate with Mossman, Gunther, Knox and Elliot. 13 MR. WALKER: Good morning, Mr. Chairman, members 14 of the Board. I'm here today to represent the California 15 Service Station Automotive Repair Association. 16 We have worked with staff on the hot spots fee 17 regulation. We do support the $10 increase, however we're 18 very concerned about the trend. Just three years ago we 19 were paying zero fees and then we were paying $250,000 a 20 year, now we're paying $300,000 a year. The shrinking pool 21 of candidates due to the success of the program is 22 increasing the fees on the shrinking pool of candidates. 23 We're very concerned and do pledge our support and 24 cooperation in working towards a legislative solution. 25 CHAIRMAN DUNLAP: Good. And I think that's a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 25 1 reasonable approach. We'll sign you up to be in the little 2 group there, Chris. 3 What I'm going to ask you to do, Mike, is take 4 just a minute and talk -- one of the things, and I know many 5 of my colleagues here are elected officials and when you 6 talk about a percentage increase in fees it's something that 7 makes you nervous, justifiably. 8 Can you just summarize for us why you think it 9 makes sense for us to go along with this one and then I 10 think what we'll do is open it for the Board to discuss it 11 and see if we can get a quick resolution here. 12 MR. KENNY: What we were trying to do was 13 essentially avoid percentage increases in fees, and so the 14 goal here was to take advantage of the maximum resources we 15 have available to us, also take advantage of some of the 16 technology improvements that have happened over time and 17 that's why you heard the staff talk about some program 18 reductions on the ARB staff's point. What we're going to do 19 there really is utilize computer technology to a greater 20 extent and have essentially electronic data entry as opposed 21 to individual persons entering the data. 22 What we end up is essentially a fee program which 23 continues to provide coverage for the largest facilities, 24 those with the greatest risk, and at the same time does 25 increase the fees, although by a small amount, on those PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 26 1 small facilities that actually also have the potential for 2 creating some substantial risk. 3 CHAIRMAN DUNLAP: Those small facilities would be 4 like? 5 MR. KENNY: Dry cleaners, gas stations, those are 6 the kinds of things we're looking at. Those are also the 7 kinds of things that are the most work intensive, because of 8 the obvious volume associated with them. 9 So we've tried to keep the fees at a small level 10 while being fairly equitable in terms of how we're 11 approaching a program, both the coverage for the very large 12 facilities and then providing at least some funding base 13 that is required to make sure that we have coverage for that 14 large volume of smaller facilities. 15 CHAIRMAN DUNLAP: For those reasons you think it's 16 okay to go along with this slight -- 17 MR. KENNY: I think there is an increase here, 18 obviously, for the smaller facilities, but on kind of a 19 bigger picture what we have really is an overall reduction 20 in funding that is available to the Air Resources Board for 21 the program. So there is a fee increase at the lower level 22 for the smaller facilities, but it is an incremental fee 23 increase of a very small nature. And at the larger -- from 24 the larger viewpoint, the overall amount of dollars that 25 will be coming to the Air Resources Board is less. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 27 1 CHAIRMAN DUNLAP: I also notice, Mr. Schoning is 2 talking about the outreach and workshops and the volume of 3 the 8,000 notices, et cetera. We really reached out to 4 people to get them in here to talk about their concerns, and 5 I think what we're seeing is a relatively small amount of 6 active participation at this hearing relative to the volume 7 of letters and one witness. So I think people understand 8 the goals and objectives and have some sympathy for the 9 staff proposal. 10 Okay. Any further questions we need to have of 11 staff? I did not mean to steal all of them. I just knew 12 some of you were tightfisted with fees and I wanted to make 13 sure you had an opportunity to hear from Mike. 14 All right. If there are no questions then, what I 15 guess we'll do is we'll talk about disclosing any ex parte 16 communications. 17 And find my little script here. 18 Since all testimony and written submissions and 19 staff comments for this item have been entered in the record 20 and the Board has not granted an extension of the comment 21 period, I'm officially closing the record on this portion of 22 agenda Item 98-11-1. 23 Written or oral comments received after the 24 comment period has been closed will not be accepted as part 25 of the official record on this agenda item. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 28 1 And, again, ex parte communications, as a reminder 2 to the Board of our policy concerning ex parte 3 communications, while we may communicate off the record with 4 outside persons regarding Board rulemaking, we must disclose 5 the names or contacts and nature of the contents on the 6 record. 7 Do we have anything to disclose on this item? 8 All right. We have before us a resolution. 9 The number, Mike, is what, 98-50? Is that right? 10 MR. KENNY: Yes. 11 MR. JENNE: Mr. Chairman, the resolution before 12 you does not include the direction to staff that 13 Mr. Livingston mentioned, so if the Board wishes we can 14 modify it. 15 CHAIRMAN DUNLAP: What I will ask, the chair would 16 look for a motion to approve the resolution 98-50, but add 17 to it the direction to our staff to pull together a working 18 group of those folks that have expressed interest, we just 19 heard three or four mentioned, and Mr. Walker, who is here 20 somewhere, WSPA, to meet and talk about legislative options 21 with our legislative director, Rob Oglesby. 22 And based upon those discussions, we can decide, 23 Mike, you can help with this, whether or not the 24 administration, the new administration coming in, would 25 sponsor something or this group together would go walk the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 29 1 halls and get it off of themselves. 2 DR. FRIEDMAN: So moved. 3 CHAIRMAN DUNLAP: There's a motion by 4 Dr. Friedman. 5 MRS. RIORDAN: I'll second. 6 CHAIRMAN DUNLAP: Second by Ms. Riordan. 7 Any further discussion? 8 MRS. RIORDAN: Just one comment. I really think 9 that the numbers moving from, say, 1993-94 to today, those 10 are incredible numbers. And while, yes, we've got a funding 11 problem and we're so successful that we need to revise our 12 ways, but that is, I think, a real comment on the success of 13 this program. 14 So I congratulate you. 15 CHAIRMAN DUNLAP: I would agree with that. 16 And I know the staff has really tried to work with 17 the local air districts with this too and educate them and 18 develop some semblance of a consistent program and I know 19 that's a tough thing to do when some districts are smaller, 20 others are very large and sophisticated. 21 So I commend you for that. 22 All right. We have the resolution with the 23 amendment. We'll proceed with the voice vote. 24 All those in favor of resolution 98-50 say aye. 25 (Ayes.) PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 30 1 CHAIRMAN DUNLAP: Any opposed? 2 (No response.) 3 CHAIRMAN DUNLAP: Very good. Motion carries. 4 Thank you. 5 That brings us to the second item. 6 While staff is adjusting their places, I have a 7 brief comment to read. 8 To gauge stakeholder satisfaction with their 9 participation in ARB's regulatory process, staff is 10 implementing a new tool, the Board item development process 11 survey. And we hope you, our stakeholders, those of you in 12 the audience, can provide us with input on how we're doing 13 and on improvements which may be needed in our process. 14 The survey will be mailed to affected stakeholders 15 involved in each regulatory item brought to the Board for 16 consideration. The copy of this survey is available on the 17 ombudsman table outside these chambers. If you wish to fill 18 out one today, please take advantage of that. 19 We will never come to perfect agreement with all 20 of our many diverse stakeholders on the regulatory decisions 21 made by the Board, but we can strive for constant 22 improvement of the process by which these regulatory items 23 are developed. 24 We want to thank you for your input in that area. 25 Also, you know, if you come to the Board over the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 31 1 years, you'll notice over the last two, two and a half 2 years, we've added a new component to our deliberation, and 3 that is we have an ombudsman, Mr. Schoning, and his capable 4 staff are up there with Mike Kenny and the executive staff 5 and they have an opportunity to present to us what they view 6 the process was to bring rulemaking to the Board. And I 7 think that strengthened our outreach capability and I want 8 to commend them and also let you all know we're going to 9 strive to improve our process. 10 Okay. The next item is 98-11-2, public meeting to 11 consider the approval of California's off-road large 12 spark-ignited emissions inventory. 13 In December of '97, the Board approved the 14 emissions inventory for criteria pollutants from on-road, 15 off-road, stationary and area sources. At that time staff 16 committed to return to the Board for approval of an update 17 to the off-road inventory. Staff is fulfilling that 18 commitment today. Large spark-ignited engines are those 19 non-diesel powered equipment which utilize engines greater 20 than 25 horsepower. 21 The proposed revisions to the emissions inventory 22 for large spark-ignited engines employs the most recent data 23 available and approval of this inventory is sought prior to 24 the consideration of the next item, which is regulatory 25 action for this engine class. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 32 1 With that, Mr. Kenny, would you introduce the 2 item, please. 3 MR. KENNY: Yes, and thank you. 4 Chairman Dunlap and members of the Board, the Air 5 Resources Board has for many years been required to 6 inventory emissions from off-road mobile sources. 7 Emissions from off-road mobile sources had 8 increased with respect to their on-road counterparts and 9 have therefore grown in importance with respect to the 10 overall air quality problems of the state. 11 In response to this trend, staff was charged with 12 updating the statistical models which underlie the off-road 13 inventory estimates. 14 An analysis of the large spark-ignited engine 15 inventory is just a portion of this comprehensive update and 16 follows the update to the inventory for small off-road 17 engines below 25 horsepower that were approved by the Board 18 in March of this year. 19 In preparing this update to the inventories, staff 20 has gathered the latest information and corresponded with 21 industry representatives to resolve any areas of 22 disagreement. This was a process which we believe resulted 23 in the most accurate inventory available. 24 I would now like to turn the presentation over to 25 Mr. Mark Carlock of the Mobile Source Control Division, who PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 33 1 will provide you with an overview of the staff's findings 2 and present the staff's recommendation. 3 Mark. 4 MR. CARLOCK: Thank you. Good morning, 5 Mr. Chairman and members of the Board. 6 As stated, we will be presenting to you today 7 staff-proposed revisions to the inventory for large 8 spark-ignited engines. 9 As stated earlier, the large spark-ignited 10 emissions inventory includes those non-diesel powered 11 off-road vehicles and equipment which utilize engines that 12 are greater than or equal to 25 horsepower. 13 Next slide. 14 LSI engines are used in the following off-road 15 categories, agricultural, airport ground support, 16 construction, lawn and garden, light duty commercial, light 17 duty industrial, logging, transport refrigeration units and 18 recreational vehicles. 19 The fleet is dominated by forklifts, generator 20 sets, pumps, welders and commercial turf equipment. 21 About 78 tons per pay of ROG plus NOx is suggested 22 in the proposed changes to the LSI inventory, which is about 23 two-thirds gasoline power, with the remaining third being 24 LPG and CNG. 25 Next slide. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 34 1 By category the LSI inventory is comprised 2 predominantly of light-duty industrial equipment. 3 The inventory for a particular pollutant is the 4 product of its emission factor, the horsepower of the 5 equipment, the load under which the equipment is operated 6 and the activities expressed in usage hours per year. 7 The zero hour emission factors of the estimate of 8 emissions when the equipment is brand new is based upon a 9 limited fleet of test engines, and the deterioration rates 10 or the increase in the emissions of the function of use of 11 the engines is based upon tests of on-road engines of 12 similar horsepower. 13 The majority of the input factors were obtained 14 from Power Systems Resources, which is a industry analysis 15 firm, with the exception of forklifts, which was obtained 16 from the Industrial Trucking Association. 17 Useful life of an engine in a specific application 18 determines the age distribution of the fleet of engines, as 19 well as the deterioration rates. And PSR was used as a 20 source of information for these estimates also. 21 As stated, most of the categories' growth factors 22 are based upon surrogates for growth, including employment 23 and gasoline sales data. 24 Population of construction and agricultural 25 categories were assumed to be constant after 1997 to reflect PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 35 1 the continued dieselization of equipment in these 2 categories. 3 Comments received in response to our mail-out on 4 the proposed changes to the inventory were received from the 5 Engine Manufacturers' Association, the Outdoor Power 6 Equipment Institute, the Equipment Manufacturers' Institute, 7 the Industrial Truck Association, the Bay Area Air Quality 8 Management District, the Ventura Air Pollution Control 9 District, AGCO Corporation, and the Air Transportation 10 Association. 11 Most of the correspondence was requesting 12 clarification on the methodologies used in updating the 13 inventory. 14 Some modification was made by staff to the useful 15 life assumptions of certain engines. 16 The proposed inventory statewide for this category 17 of engines is quite a bit lower than what was assumed in the 18 SIP. The new estimates revised a SIP estimated of 115 tons 19 per day of ROG plus NOx, to about 78 tons per day statewide 20 in 1998. 21 The reductions of the uncontrolled inventory in 22 2010 fall from 166 tons per day, to approximately 93 tons 23 per day. 24 The decrease in the emissions inventory is due to 25 three specific factors. The first is a decrease in the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 36 1 overall population of the equipment in this category, a 2 decrease in the assumed average horsepower of the fleet, and 3 decrease in the average flow. 4 This is actually the end of my presentation. 5 We're recommending that the Board approve the 6 revisions to the large SI inventory and those projections 7 used in both modeling and regulatory processes based on this 8 inventory. 9 CHAIRMAN DUNLAP: Thank you, Mark. 10 Any of the Board members have questions at this 11 point? 12 Okay. We have one witness. 13 Kathy, did I forget you? Not on this item. I do 14 that on occasion. Just checking. 15 I talked about the great role the ombudsman plays 16 and I skip you once in a while. 17 We have one witness that signed up. Let me find 18 it here. 19 Ev Ashworthy from the Air Transport Association, 20 please come forward. 21 This seemed to me, Mr. Ashworthy, to be kind of an 22 easy-going item, and you're going to go and spoil it, it 23 appears. It appears you may have a problem with this, so 24 tell us. 25 MR. ASHWORTHY: It certainly, Mr. Chairman and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 37 1 members of the Board, it's certainly not our intent to spoil 2 anything this morning. 3 We were, as we will discuss in a minute, been 4 actively involved in reductions for ground service equipment 5 in Southern California. We wanted to share with you data 6 which we have provided to staff and we would encourage the 7 Board to direct staff to consider these data as I'll 8 explain. 9 CHAIRMAN DUNLAP: So I don't want to cut you off 10 or anything, you're saying you've submitted to the staff 11 basically better data, you think? 12 MR. ASHWORTHY: We have, based on our discussions 13 this morning, revised our formal written comments and would 14 like you to direct the staff to consider these data which we 15 will -- 16 CHAIRMAN DUNLAP: But the bottom line is, I'm 17 trying to get at the essence of what you want. Forget staff 18 for a minute. 19 The outcome is you have a database or data set 20 that you think is better reflecting your fleet, right? 21 MR. ASHWORTHY: Correct. We are working with ARB 22 and the EPA to inventory ground service equipment in 23 Southern California. 24 CHAIRMAN DUNLAP: So the numbers that they have 25 are off, based basically why? What's different? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 38 1 MR. ASHWORTHY: These data will be available 2 within 60 days. 3 What we're asking is for the Board to direct staff 4 to consider these data which have taken us approximately two 5 years to get to this point. And so we're at somewhat of an 6 interregnum here. We have worked with ARB and with EPA for 7 the past two years to develop a good understanding of 8 service equipment, and we see this process as about one 9 month prior to when we will finalize -- 10 CHAIRMAN DUNLAP: Did we surprise you on this 11 or -- 12 MR. ASHWORTHY: I can't speak directly for the -- 13 CHAIRMAN DUNLAP: I mean by that, is the hearing 14 date, did this get moved up in your mind? 15 MR. ASHWORTHY: I think we've been working on 16 different parallel tasks and we were aware of this later in 17 the game, than we would have liked. And we are working with 18 staff to get our comments in to the process, but I think as 19 I said we're about a month out of phase. 20 CHAIRMAN DUNLAP: Okay. Tom. 21 MR. CACKETTE: We don't have the data, so we 22 haven't been able to include it. 23 CHAIRMAN DUNLAP: Let's say these guys come back 24 in 60 days, let's say we approve this thing today. They 25 come back in 60 days and they present you with a data set PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 39 1 that's just really better, you feel it's better. How do you 2 use it and what's the mechanism that you use it or how do 3 you -- 4 MR. CACKETTE: The Board formally approves the 5 emissions inventory on a triennial basis. In this case 6 we've been bringing pieces of the off-road inventory to you 7 individually as we do regulatory items, because the off-road 8 inventory is -- we didn't know much about it a while ago and 9 we know a lot more now and it's under a transition. So 10 we've been bringing piece by piece to you. 11 We need you to approve the inventory today, 12 because the regulatory item that -- 13 CHAIRMAN DUNLAP: That's attached to it. 14 MR. CACKETTE: Is going to be the next item that 15 you'll consider. 16 But if new data comes in six months, we don't wait 17 to change the model for most uses to every three-year 18 period. We're changing them constantly as new data comes in 19 as we test cars and so forth. 20 CHAIRMAN DUNLAP: I got that. 21 MR. CACKETTE: We can use his data. 22 CHAIRMAN DUNLAP: You can? 23 MR. CACKETTE: Yeah. 24 CHAIRMAN DUNLAP: You don't have to come back to 25 us? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 40 1 MR. CACKETTE: Right. No. The next time we do 2 come back to you it would be reflected -- 3 CHAIRMAN DUNLAP: Reflect -- 4 MR. CACKETTE: -- in there, but that could be up 5 to three years from now. But in the meantime we don't keep 6 the inventory static for three years until we bring it to 7 you. The only relevance, I think, of bringing it to you off 8 that cycle is when we do a regulatory item we want to update 9 it and make sure you approve the inventory as well. 10 CHAIRMAN DUNLAP: But do you have any reluctance, 11 right now give me a feel, what he's going to bring you is 12 going to improve what you have, right? You feel good about 13 that? 14 MR. CACKETTE: We assume so, because it's based on 15 a couple-of-year study. Until we receive the data, we don't 16 really know. 17 CHAIRMAN DUNLAP: Are you comfortable with them 18 looking at it then and embracing it and us taking action 19 today? 20 MR. ASHWORTHY: Good. 21 CHAIRMAN DUNLAP: Is that all right? 22 MR. ASHWORTHY: Correct. 23 CHAIRMAN DUNLAP: What we'll do is at the end 24 we'll come back and I'll direct staff to do some process 25 with you. That way you can leave here and feel like you've PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 41 1 been heard and follow up. 2 MR. ASHWORTHY: We'll then forgo formal 3 description of what we have been doing. 4 CHAIRMAN DUNLAP: What I am hearing, I'm sensing 5 from staff, they want what you want, to make it as accurate 6 as possible. 7 Thank you. You didn't spoil anything. That's 8 good. 9 I didn't let him. That's true. 10 Any other witnesses? 11 Okay. All right. I'm going to close the 12 public testimony there. 13 Is there any written testimony? Mark, Tom, do you 14 have any letters that have come in? Other than this 15 gentleman. 16 Okay. Mr. Kenny, Tom, anything you want to say? 17 MR. CACKETTE: No. I just urge you to go ahead 18 and approve this item so we can proceed with the regulatory 19 item that follows. 20 CHAIRMAN DUNLAP: Hear me out, before anyone makes 21 one yet. The chair would entertain a motion in a second to 22 approve the updated emissions inventory with the amendment 23 or consideration that staff report back to us in writing in 24 90 days, tell us how it went with this gentleman and their 25 study, so that we can ascertain that we improved it or not PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 42 1 or what happened. Okay. 2 And ask you, Mark, to continue to dialogue and 3 meet with this gentleman and those he represents and make 4 sure that we make this inventory as accurate as we can. 5 Okay. That agreeable? 6 So the chair now would entertain a motion to 7 approve the inventory. 8 SUPERVISOR PATRICK: So moved. 9 MRS. RAKOW: Second. 10 CHAIRMAN DUNLAP: Moved by Supervisor Patrick, 11 seconded by Mrs. Rakow. Very good. 12 Any question, discussion we need to have? 13 Okay. With that -- 14 MS. EDGERTON: Mr. Chairman, since we didn't 15 discuss it at all, my understanding from what I've read here 16 in the comments of Mr. Ashworthy is that their data seems to 17 show that the inventory we just adopted significantly 18 underestimates the emissions, so that would make it 19 especially important in order to have an accurate level that 20 it be incorporated as soon as possible, so more measures can 21 be adopted to deal with it, if that's the case. 22 CHAIRMAN DUNLAP: I've heard for so many years 23 that Tom and his people are just so tightfisted they never 24 miss it when they can. 25 So that's news to me, Tom. You must be slipping a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 43 1 little bit here. Let one get away a little bit. 2 MR. CACKETTE: We would point out things that we 3 have missed a few or been a little slow. Things like sport 4 utility vehicles you'll be considering next month we'll get 5 around to that or jet skis that you'll be considering in 6 December. Consider that an advertisement but -- 7 CHAIRMAN DUNLAP: So for the industry that's here, 8 it is possible for these stingy guys to miss one on 9 occasion. 10 We'll call a voice vote. All those in favor say 11 aye. 12 (Ayes.) 13 CHAIRMAN DUNLAP: Any opposed. 14 (No response.) 15 CHAIRMAN DUNLAP: Very good. Thank you. 16 Thank you, Mark. 17 I don't think we need a lot of staff shifting 18 around for this next item. I think some are the same; 19 correct? 20 MR. CACKETTE: We do need a couple of seconds to 21 get the computer set up for the slide presentation. Two 22 minutes. 23 CHAIRMAN DUNLAP: Why don't we take a couple 24 minute break. 25 (Thereupon a short recess was taken.) PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 44 1 CHAIRMAN DUNLAP: If I can get people to take 2 their seats we'll go to the next item. 3 Next item is 98-11-3, a public hearing to consider 4 adoption of emissions standards and test procedures for year 5 2001 and later off-road large spark-ignition engines. 6 The '88 California Clean Air Act directs the ARB 7 to consider emission standards for off-road mobile sources. 8 In 1994 the Board approved the State 9 Implementation Plan, or SIP. The SIP included measure M-11, 10 which calls for the control of hydrocarbon and oxides of 11 nitrogen emissions from off-road large spark-ignited 12 engines. 13 The proposal before the Board today has been 14 developed to implement that specific measure. 15 At this point I'd like to ask Mr. Cackette to 16 introduce the item and begin the staff's presentation. 17 Tom. 18 MR. CACKETTE: Thank you, Mr. Chairman, members of 19 the Board. 20 Staff has worked in conjunction with the US EPA 21 and the industry that makes these engines and equipment to 22 develop a harmonized program that will provide significant 23 control of large off-road spark-ignited engines, which are 24 used in such applications as forklifts, generators, large 25 turf care equipment and other industrial equipment. There PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 45 1 are over 37,000 forklifts and over 15,000 generators 2 currently used in California. 3 Those engines, along with others in this category, 4 currently emit over 69 tons per day of hydrocarbons plus 5 nitrogen oxides, that's the smog-forming emissions, equal to 6 the emissions of slightly less than a million cars on the 7 road today. 8 The staff proposal asks industry to produce 9 engines with the types of emission controls that have been 10 in widespread use on automobiles and light trucks over the 11 years, principally electronic controls and catalytic 12 convertors. 13 I'd now like to turn the presentation over to 14 Mr. Tom Chang of the Mobile Source Division, who will 15 provide you with an overview of the staff's findings and 16 present our recommendations. 17 MR. CHANG: Thank you, Mr. Cackette. 18 Good morning, Chairman Dunlap, members of the 19 Board, ladies and gentlemen. 20 Today staff is proposing for the Board's approval 21 new regulations to reduce exhaust emissions from off-road 22 large spark-ignition engines, 25 horsepower and greater. 23 Gasoline, propane and to a lesser extent 24 compressed natural gas-fueled engines are typically found in 25 this equipment category. Specific examples of this PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 46 1 equipment will be shown later in this presentation. 2 Today's presentation will cover the following 3 areas. 4 I will start with some background information and 5 then I'll cover the proposed emission standards and how they 6 are implemented and how we plan to ensure compliance. 7 Then we will look at the environmental and 8 economic impacts of the proposed regulation and its 9 relationship to the State Implementation Plan, SIP. 10 Finally we will conclude the presentation with a 11 brief summary of staff's proposal. 12 First, a brief discussion of the background for 13 this proposal. 14 The State Implementation Plan, SIP, outlines 15 measures to be taken to complete the state air quality into 16 attainment for ozone. The SIP was approved by the Board in 17 November of 1994. 18 While interested in this presentation, the SIP 19 contains two mobile source measures to address emissions 20 from off-road spark-ignition engines of 25 horsepower or 21 greater. This category is known as the large spark-ignition 22 engine, or LSI, category. 23 Since the Federal Clean Air Act preempts 24 California control of engines used in the agricultural and 25 construction equipment, two SIP measures were required to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 47 1 fully cover the LSI category. Measure M-11 addresses those 2 LSI engines that are not preempted from ARB control. Such 3 non-preemptive engines are the subject of today's proposal. 4 Measure M-12 addresses those LSI engines preempted 5 from ARB's control and which may only be controlled at the 6 federal level by the US EPA. 7 The US EPA plans to begin their formal rulemaking 8 process covering such preemptive engines early next year. 9 The ARB and EPA staff have worked very closely 10 together on the development of today's proposed regulations 11 to ensure a closely harmonized program. 12 Please note that while the initial SIP measures 13 address only LSI engines between 25 to 175 horsepower, 14 staff's proposal also include engines greater than 175 15 horsepower because no other emission regulations addresses 16 these engines and they are similar to the 25 to 175 17 horsepower engines. 18 The SIP sets specific goals for each of these 19 measures. SIP measures M-11 call for emission reduction for 20 the LSI category of 68 percent for combined HC plus NOx 21 relative to the 2010 year control inventory. 22 The M-11 and M-12 measures also call for their 23 implementation through a phased-in approach beginning with 24 the 2000 model year. 25 The majority of the engines used in LSI category PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 48 1 are very similar to those of 1980s on-road automotive 2 engines. 3 For this reason the SIP expects that the transfer 4 in existing automotive engine control technologies will be 5 an effective method for engine manufacturers. 6 This technology transfer also reduces the need for 7 engine manufacturers to develop control technology from 8 scratch. 9 Specifically, automotive emission control 10 technologies would include three-way catalytic convertors, 11 closed-loop control systems and fuel injection systems. 12 The next few slides will show examples of typical 13 LSI engines and equipment to be covered under this proposal. 14 This is a fairly large forklift powered by an 15 automotive base engine. 16 The ground airport equipment are also equipped 17 with automotive type engines. 18 This slide shows an example of commercial turf 19 care equipment powered by LSI engine. 20 This is a slide for special vehicles powered by 21 LSI engines as well. This is a typical industrial engine of 22 more than 25 horsepower which also fall in the LSI category. 23 They are often used to power equipment such as portable 24 generators, compressors and pumps. 25 This is an industrial engine often used to power PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 49 1 such equipment as concrete saws and wood chippers. 2 In the next section of this presentation I will 3 discuss the staff's proposed emissions standards. 4 As mentioned earlier, ARB and US EPA staff and 5 industry representatives worked cooperatively to develop 6 this proposal. In doing so, staff held numerous public 7 workshops and meetings with industry at ARB offices and at 8 the facility of Southwest Research Institute in San Antonio, 9 Texas. 10 Staff also met with several manufacturers on an 11 individual basis. Many of industry's comments are reflected 12 in today's proposal. 13 Continuing this emphasis on cooperation, in the 14 year 2000 staff plan to review the technical feasibility of 15 today's proposed emission standards compliance program and 16 consider possible further emission reduction programs with 17 the US EPA and the industry. 18 The proposal incorporates two sets of emission 19 standards based on engine displacement size. 20 And at this time I will like to point out that the 21 displacement size on the slides is in error. It should read 22 that for the larger engine, the displacement is greater than 23 one liter, and for the smaller engines the displacement 24 should read one liter or less, as shown on this slide, but 25 not in your presentation package. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 50 1 For the larger displacement engine, those greater 2 than one liter in size, the proposed emission control 3 requirement begins with the 2001 model year. This engine 4 size category is almost exclusively made up of 5 automotive-derived engines which are readily adaptable to 6 use existing automotive controls to meet an early start to 7 implementation. 8 The small displacement engine, those of one liter 9 and less in size, are typically used in such applications as 10 large turf care equipment and portable generators. The 11 proposal would implement control of these engines beginning 12 with 2002 model year. These engines essentially are larger 13 scale versions of small off-road engine, or SORE engines 14 category, and would use emission control technology similar 15 to that used by utility engines to meet the SORE 16 regulations. 17 Hence, staff proposes that the smaller LSI 18 category engines be regulated to the standards required of 19 utility engines contained in the SORE regulation previously 20 approved by the Board. 21 A two-tier approach to implementing the standard 22 is proposed. Two tiers to be discussed in the following 23 slides would be used for the larger engines to allow 24 manufacturers additional lead time for engineering and 25 development and to provide the earliest possible start to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 51 1 achieving the desired emission reductions. 2 The proposed Tier 1 emission standard for the 3 larger LSI engine sizes would be phased in over the 2001 to 4 2003 time frame. The numerical values proposed are three 5 grams per brake horsepower hour for the combined hydrocarbon 6 plus NOx, for HC plus NOx standard, and 37 grams per brake 7 horsepower hours for carbon monoxide, or CO, standards. 8 Staff is also proposing that the small volume 9 engine manufacturers be provided additional lead time by not 10 requiring their compliance with Tier 1. Because we 11 anticipate the program to be a national program, a small 12 volume manufacturer is defined as a manufacturer with annual 13 large spark-ignition engine sales of less than 2000 14 nationally. 15 To ease engine manufacturers' compliance burden, 16 staff proposes a three-year phase-in approach to Tier 1. 17 This provides manufacturers with flexibility to redesign the 18 current engines to adopt readily available emission control 19 technology. 20 More specifically, manufacturers would have to 21 show that in the year 2001 model year, 25 percent of their 22 engines certified for sale in California comply with the 23 emission requirements. The remaining 75 percent would not 24 be required to meet the emissions standards that year. The 25 compliance percentage increases to 50 percent and 75 percent PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 52 1 for 2002 and 2003 model year products, respectively. 2 Tier 2 implementation will begin with the 2004 3 model year. The proposed Tier 2 certification standards are 4 numerically the same as the Tier 1 standards of three grams 5 per brake horsepower hour for HC plus NOx and 37 grams for 6 CO. But unlike Tier 1, manufacturers now would be required 7 to demonstrate the durability and in-use compliance of their 8 emission control system. Details concerning flexibility 9 will be provided on the next slide. 10 To address continued manufacturers' concern about 11 adequate engineering and development lead time, staff 12 recently incorporated additional flexibility provisions to 13 Tier 2, as noted in the errata sheets made available to you 14 today. 15 Traditionally an engine manufacturer will certify 16 an engine by demonstrating that the engine will meet the 17 applicable emission standard throughout its entire useful 18 life. As noted previously, the proposed Tier 1 provision 19 forgoes this useful life requirement, but staff proposes 20 that Tier 2 addresses this issue. 21 For certification flexibility, the proposal would 22 require manufacturers to demonstrate emission compliance to 23 the certification standard for only 70 percent of the useful 24 life for model years 2004 through 2006. 25 Beginning with the 2007 model years, durability PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 53 1 must be demonstrated for 100 percent of the useful life. 2 Again, unlike Tier 1, the Tier 2 proposal would 3 require manufacturers to demonstrate in-use compliance. 4 However, again to provide manufacturer flexibility, a 5 three-year easing period is provided for the 2004 through 6 2006 model years. During this time period, engine 7 manufacturers will only be required to show compliance of 8 in-use engines of four grams HC plus NOx and 50 grams CO, 9 instead of the three gram and 37 gram certification 10 standards. 11 It is important to note that this relaxation of 12 the durability demonstration and in-use compliance 13 requirements would result in an extra 1.5 tons per day of HC 14 plus NOx emission in the South Coast air basin in the year 15 2010. 16 As noted previously, the proposal takes a somewhat 17 different approach to the smaller engine category. For 18 those LSI engines of less than -- one liter or less 19 displacement, the proposal calls for a single tier approach 20 to become effective beginning with 2002 model year. 21 The staff proposes that the smaller engines meets 22 the same standards as required of category two engines in 23 the already adopted small off-road engine SORE regulations. 24 These standards are nine grams per brake 25 horsepower hour for HC plus NOx, and 410 grams per brake PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 54 1 horsepower hour for CO. 2 Manufacturers will also be required to demonstrate 3 their engines' emission durability for 1,000 hours. 4 Engines will be expected to meet these 5 certification standards throughout their useful life, though 6 there will be no requirement for the manufacturer to conduct 7 in-use compliance testing. 8 The proposal recognizes the different useful life 9 requirements are appropriate for the two displacement 10 categories. The useful life is defined for the minimum 11 number of operating hours and/or years for which an engine 12 manufacturer has responsibility for emission control 13 compliance. 14 Warranty period is also usually defined as a 15 specific fraction of the useful life. Manufacturers 16 proposed Tier 2 useful life period for the larger engine 17 category of 5,000 hours or seven years, whichever occurs 18 first. 19 These numbers are based on information available 20 to staff indicating that the half-life of these engines are 21 5,000 hours. 22 Please note that since Tier 1 proposal 23 specifically excludes in-use compliance requirements for 24 larger engines, no useful life is set for Tier 1 standards. 25 For the smaller engine size, the proposed useful PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 55 1 life periods are 1,000 hours or two or three years, 2 whichever occurs first. Excuse me, two years, whichever 3 occurs first. 4 These numbers are based on those used already, 5 adopted small off-road engine regulations. 6 Staff proposes adoption of the International 7 Standard Organization ISO 8178, emission test procedure to 8 harmonize the program. 9 One of three specific cycles containing this 10 procedure will be chosen, depending on the engine's intended 11 application and duty cycle. 12 This test procedure was recommended by the 13 technical advisory committee convened by Southwest Research 14 Institute to advise ARB on these matters. 15 The committee membership consists largely of LSI 16 engine and equipment industry representatives. 17 Testing showed that large emissions reduction can 18 be achieved for the LSI engines. 19 In this graph the red shaded bars represent 20 emissions from uncontrolled engines. The blue shaded bars 21 represent emissions from the same engines after appropriate 22 readily available emission control components were 23 installed. 24 These data do not include durability effects. 25 As presented on this chart, significant emission PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 56 1 reduction can be achieved on a variety of engines with 2 existing emission controls. 3 Please note that the proposed standards instead 4 have values easily met by these engines. 5 This chart shows that the proposed HC plus NOx 6 standards are technically feasible, even with deterioration 7 taken into account. 8 The blue shaded bar representing emissions from 9 new emission-controlled engines, without including engine 10 and emission control deterioration. 11 The green shaded bars represent emission as 12 estimated with deterioration accounted for. The 13 deterioration estimates are based on staff's experience with 14 deterioration rates of comparable on-road vehicle engines. 15 Except for one engine, this chart shows that the 16 proposed standards are technically feasible, even over long 17 engine in-use periods. 18 The use of two tiers for the larger engine 19 category will allow the manufacturers of the single 20 noncompliant engine adequate time to develop new strategies 21 or technical modification to meet the proposed standards. 22 Integral part of staff's proposal are the 23 compliance program. 24 The proposed use of engine emission labels will 25 aid ARB after sales enforcement activities. The labels will PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 57 1 be used by ARB to identify properly certified engines. 2 Manufacturers could also use a label for their own inventory 3 purposes. 4 Labels will be permanently attached to the engine. 5 The information that will be required on the engine label 6 would include basic engine specifications, such as spark 7 plug gap with initial timing information and types of 8 emission control systems installed on the engine. 9 Also included will be the engine manufacturer's 10 name and the applicable certification standards. 11 The proposal would establish appropriate emission 12 control component warranty periods. 13 The warranty period defined the minimum period for 14 which an engine manufacturer is responsible for repair or 15 replacement of the emission control system components on the 16 certified engine. 17 The warranty would require the manufacturer to 18 repair and/or replace the emission-related parts which 19 failed in the confined warranty period. 20 For the larger engines, the standard warranty 21 period for Tier 1 would be 2000 hours or two years, 22 whichever occurs first. 23 For Tier 2 the warranty period is 2500 hours or 24 three years, rounded from 50 percent proposed useful life 25 period. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 58 1 The standard warranty for smaller engine is two 2 years, which is the same as the SORE regulations. 3 Additionally, for the larger engines, staff 4 proposes a separate high cost part warranty period. The 5 high cost part warranty would require the manufacturer to 6 identify at the time of certification those emission-related 7 components whose anticipated repair costs would exceed $400 8 in 1998 dollars. The high costs part warranty period would 9 be set at 3500 hours or five years, whichever occurs first, 10 which is approximately 70 percent of the engine's useful 11 life. 12 This provision is similar to the previously 13 Board-adopted high cost parts warranty for automobiles. 14 One method of assuring that the engines coming off 15 the production line meet the certification emission 16 standards is through a production line testing program. 17 This program will provide a manufacturer immediate feedback 18 on emission control system quality of the products before 19 potentially faulty engines are sold. 20 Under the proposal, the manufacturers would 21 conduct engine tests and compare the emission results with 22 previously tested engines using the CUM-SUM statistical 23 analysis method. The CUM-SUM method is currently used by 24 the ARB and US EPA in other programs such as a small 25 off-road SORE program. The proposed production line testing PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 59 1 program would impose a minimum test requirement on 2 manufacturers of at least two engines tested per production 3 quarter. 4 For the small volume manufacturer, a cap of one 5 percent of production engines is to be tested. 6 The new engine compliance program would be used to 7 confirm test information from the production line testing 8 program. As proposed, it would require an engine 9 manufacturer to test new engines fresh off the assembly line 10 upon ARB request. 11 This program is similar to US EPA's selective 12 enforcement auto program for heavy-duty engines, which would 13 only be initiated when the possibility of noncompliance 14 activity is found due to a certification or the production 15 line testing activities. 16 A maximum test requirement of five engines per 17 engine family per year is proposed. 18 The most important compliance portion of staff's 19 proposal is the in-use test program. Actual in-use engines 20 will be acquired from the field by the manufacturer and 21 tested by the manufacturer in accordance with appropriate 22 test protocol. 23 Should the test result indicate significant 24 noncompliance problem with an engine family, ARB will have 25 the option to require the manufacturer to recall all PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 60 1 affected engines and correct the fault that resulted from 2 the emission failure. 3 According to the proposal, up to 25 percent of the 4 manufacturer's certified engine families would be tested per 5 year. 6 The ARB would notify the manufacturer as to which 7 engine families will be selected for in-use testing. 8 The engine manufacturer then would have up to 12 9 months to finalize an in-use testing plan and would then be 10 required to complete procurement and testing within 12 11 months. 12 The manufacturers may test four to ten engines per 13 engine family to demonstrate compliance. 14 The in-use test results will provide feedback to 15 both the engine manufacturer and the ARB with valuable 16 emission information for engines and equipment operating in 17 the field. 18 Next I will discuss the projected environmental 19 and economic impacts of the proposed regulations. 20 If adopted, the proposed regulations will provide 21 large overall statewide emission reduction as called for in 22 the 1994 SIP. 23 In this graph the blue shaded bars represent 24 reduction for the year 2010 for the control of non-preempted 25 engines in California of 52.6 tons per day for hydrocarbon PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 61 1 plus NOx, and 67 tons per day for CO. 2 These are the reductions that would result from 3 the proposed regulations. 4 The green shaded bars indicate the additional 5 benefits associated with the national program. These 6 additional reductions due to control of preempted engines in 7 California by an anticipated US EPA rule will lead to the 8 combined total reduction of 61 tons per day for HC plus NOx, 9 and 79.3 tons per day reduction for CO. 10 This proposal will provide significant emission 11 reduction benefits and exceptionally low cost per pound of 12 emission reduction. 13 The blue points on this graph represent the cost 14 effectiveness value of several emission reduction programs 15 approved by the Board in recent years. 16 The red X mark indicates the cost effectiveness 17 estimates for the proposed large spark-ignition engine 18 regulations. Note that the value of about 18 to 23 cents 19 per pound of ozone precursor reduced placed it among the 20 most cost-effective measure over every estimated by the ARB. 21 Since this proposal is being made in response to 22 the SIP, it is important to show how well it will set goals. 23 Earlier today the Board approved a new emission inventory 24 which revised estimates of emissions from engines in the 25 M-11 and M-12 categories. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 62 1 This chart compares this revised inventory with 2 that used in the 1994 SIP. 3 These yellow bars represent emission inventory as 4 presented in the 1994 SIP. 5 The uncontrolled column shows that the SIP 6 estimates that uncontrolled emissions of hydrocarbon plus 7 NOx to be about 105 tons per day, and set a controlled 8 emission target for about 32 tons per day. 9 These red bars indicate the result of the revised 10 inventory. They reflect the same percentage reduction in 11 the HC plus NOx emission that's called for in the SIP and 12 are shown here in yellow bars, but since the emission 13 numbers are lower, they reflect a much smaller reduction in 14 terms of numbers of tons per day reduced. 15 Staff's proposal essentially meets the SIP 16 emission reduction goals in terms of the percentage 17 reduction achieved. The proposed regulation would result in 18 a combined HC plus NOx of 62 percent, whereas the SIP target 19 for M-11/M-12 combined is 68 percent. 20 This represents the worst case scenario based on 21 the possibility that some engines' in-use will meet four 22 grams hydrocarbon plus NOx during in-use compliance testing. 23 Staff is optimistic that the real impact will be 24 67 percent as reported in the staff report. 25 A brief summary of today's presentation as PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 63 1 follows. 2 The large spark-ignition engine regulation as 3 proposed essentially meet the M-11 HC plus NOx goals in 4 highly cost-effective manner. 5 The emission reductions are achievable through the 6 use of existing technology, including available three-way 7 catalytic systems and closed-looped fuel control systems. 8 The emission standards are based on actual test 9 data from ARB-sponsored test program and various engine 10 manufacturers. 11 The proposal, including the proposed amendments, 12 note on the errata sheet and made available today, provide 13 ample flexibility to the engine and equipment manufacturers. 14 As such, such as the phasing of Tier 1 standards, two 15 separate engine categories, and phase-in of in-use 16 compliance standards to minimize economic and business 17 impacts. 18 The compliance provisions are an integral part of 19 this proposal. 20 The projected emission reduction would be verified 21 through production line testing programs, the new engine 22 compliance program and in-use test compliance programs. 23 It should be emphasized that the significant 24 emission reduction to be achieved will be accomplished in 25 extremely cost-effective manner as compared to other PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 64 1 emission reduction programs. 2 Staff recommends that the Board adopt the proposed 3 regulations. 4 This concludes staff's presentation. Staff will 5 be happy to address any questions or comments you may have 6 at this time. 7 CHAIRMAN DUNLAP: Okay. Dr. Friedman has a 8 question and then we'll go to our ombudsman. 9 DR. FRIEDMAN: I have a minor question. Maybe I 10 just misheard something that you said, but when you were 11 talking about useful life about the larger engines, I heard 12 you say that the half-life, you used the term half-life, was 13 5,000 hours for larger engines. So you're defining useful 14 life as half-life, and then later when you talk about again 15 time periods in warranties, you were taking a fraction of 16 half-life, not useful life; correct? 17 MR. CACKETTE: Yes. Half of the useful life, 18 which is a quarter of the life, basically. 19 DR. FRIEDMAN: Explain to me why you use the term 20 useful life as half-life? I mean I use half-life all the 21 time. 22 MR. CACKETTE: It came from tradition that is in 23 the Clean Air Act where they define useful life for 24 passenger cars as 50,000 miles and we all thought it was 100 25 and we now know it's typically like 130 or 50 thousand PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 65 1 miles. 2 But that's where the term came from. It 3 traditionally has meant the half-life of the vehicle. 4 What we've done since the Clean Air Act we've 5 tried to tie it not to 50,000 miles, which is probably a 6 point where no cars have actually died due to wear, but with 7 we now do it at about 50 percent point. So what it means in 8 these cases is about half the engines will have either gone 9 through a rebuild or ended their life at that point in time 10 at 5,000 hours. What we're expecting is that the emissions 11 controls will last at least as long or longer than the 12 engine. 13 DR. FRIEDMAN: Thank you. 14 MR. CACKETTE: And the warranty has typically been 15 half of that number. 16 MR. BOB CROSS: Because the engines are all -- in 17 other words, the point to failure is fairly well clumped 18 around the, quote, half-life point. It's not the half-life 19 you might think. In other words, once the engines start 20 dying it's kind of grouped. It's a fairly narrow 21 distribution so it's really sort of half the engines, but 22 pretty representative of the whole life of the engine. 23 CHAIRMAN DUNLAP: If Joe Calhoun were here today, 24 he'd tell Dr. Friedman that he has half-life, Dr. Friedman 25 has his. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 66 1 DR. FRIEDMAN: It's not like an isotope. 2 CHAIRMAN DUNLAP: All right. Madam Ombudsperson, 3 would you tell us about the process by which this item came 4 to us today. 5 MS. MEAD: Thank you. My name is Kathleen Mead. 6 Mr. Chairman and Board members, in developing this 7 proposal, staff worked with all the affected stakeholders 8 for over a year. The stakeholders included engine 9 manufacturers, equipment manufacturers, trade associations 10 and emission control manufacturers and developers, fuel 11 systems suppliers and those who you will hear from today. 12 Staff held over 100 meetings and telephone calls 13 in order to provide advance notice of concepts and to 14 provide industry opportunity for input. 15 A workshop was held on May 15th of this year and 16 was attended by 36 industry and trade association 17 representatives. 18 In writing the rules, staff also considered the 19 needs of small volume manufacturers, crafting a proposal 20 that allows them additional time to meet regulations. 21 During the past 45-day public comment period 22 leading up to today's hearing, staff has continued to meet 23 and respond to industry input. 24 As you will hear and as you have heard in staff's 25 presentation, they have responded with some changes to the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 67 1 proposal in order to reach accommodations with some of the 2 affected industries. 3 In conclusion, the ombudsman's office finds that 4 staff has conducted an extensive outreach program and has 5 worked to ensure complete and full participation by all 6 affected and interested parties: 7 CHAIRMAN DUNLAP: Thank you. All right. 8 Do any of the Board members have any questions 9 before we get into our half dozen or so witnesses? 10 All right. Then I'll go ahead and call the 11 witness list. I'd ask those of you who have signed up to 12 move in the front row or so. 13 Jed Mandel from EMA, Christopher Wright of Arctic 14 Cat Inc., Mort Smith from Polaris, Bruce Bertelson from 15 Manufacturers of Emission Controls Association, Bill Guerry 16 from OPEI, Gary Cross from Industrial Truck Association, and 17 Brad Garner from Impco Technologies Inc. 18 Jed, hello, good morning. 19 MR. MANDEL: Good morning. Nice to see you all 20 again. 21 I'm Jed Mandel here today on behalf of the Engine 22 Manufacturers' Association. 23 EMA represents the manufacturers of large 24 spark-ignited engines covered by today's proposal. 25 In addition, I've been authorized to tell you that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 68 1 three other associations whose members are affected by this 2 rule, the Equipment Manufacturers' Institute, the Industrial 3 Truck Association and the Outdoor Power Equipment Institute, 4 support EMA's comments. 5 I believe you may hear from at least one of those 6 groups independently in a moment. 7 There are two distinct groups of LSI engines and 8 two distinct groups of LSI engine manufacturers. Large LSI 9 engines, those bigger than one liter, are used in a wide 10 variety of commerical-industrial applications, including 11 lift trucks, airport ground maintenance equipment, pumps, 12 compressors and many others. 13 Small LSI engines, those one liter or less, are 14 used in consumer lawn and garden equipment, such as large 15 riding or garden tractors, and in small commercial turf care 16 equipment such as might be used to maintain golf courses. 17 Generally speaking, there is little or no overlap 18 between the manufacturers that produce larger LSI engines 19 and those that produce smaller LSI engines. Those 20 manufacturers in those markets do not compete with one 21 another. 22 EMA and its large and small LSI engine 23 manufacturers have been diligently working with staff on the 24 proposed LSI rule. This rule has had a relatively 25 accelerated development schedule. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 69 1 In addition, the staff and industry also have been 2 working closely with US EPA. EPA has indicated that it will 3 propose rules for LSI engines in 1999, and is under court 4 ordered schedule to do so. 5 It is the intent of all involved that ARB and EPA 6 rules fully harmonize with each other. 7 The staff has done an excellent job of trying to 8 make that happen. 9 We expect EPA to do their part. 10 In the unusually short time period in which this 11 rule has been developed, we believe we've had a very 12 positive working relationship with the staff. Indeed, even 13 since the publication of the mail-out and proposed 14 regulations, we've continued to work on rulemaking issues, 15 and the staff has taken the time to understand and attempt 16 to address our concerns without compromising the air quality 17 goals associated with this rule, which are of such 18 importance to California. 19 The staff has proposed modest change to the large 20 LSI engine regulatory program that we think will make the 21 goals of the rule achievable. We support those 22 recommendations. 23 The proposed changes in the Tier 1 implementation 24 schedule, the engine family definition, the production line 25 test program, the warranty period, the means of establishing PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 70 1 the deterioration factor and the in-use emission limits for 2 Tier 2 are critically important changes. 3 In addition, ARB and EPA must work together to 4 assure that the Tier 2 in-use test program is identical both 5 in California and federally. 6 Because there are still many uncertainties 7 concerning the feasibility of the Tier 2 program and the 8 degree to which EPA ultimately will harmonize with ARB, it 9 is also critically important that the Board conduct a 10 technology review in 2001 that includes an opportunity for 11 manufacturers, as well as the staff, to express their views 12 on the feasibility of the Tier 2 standards. 13 I do want to note that just this morning I heard 14 for the first time that staff is now recommending the 15 technology review occur in the year 2000. It was 2001 in 16 the mail-out. And my understanding of that is because of 17 this Board's prior directive that tech reviews were all of 18 the non-road categories occur, I think, as I recollect, 19 every two years, and the schedule probably puts that in 20 2000. 21 I want to express to you my concern that having 22 this tech review for this category in 2000 is probably 23 premature. The Tier 1 rule starts in 2001. Manufacturers 24 will have the kind of meaningful data that you all will find 25 important in the 2001 time frame. If because of the staff's PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 71 1 legitimate concern they don't want to do tech reviews with 2 the Board every year, I would ask you to consider having 3 this particular category have a tech review perhaps in 2002, 4 rather than pull it forward one year, to push it back one 5 year. 6 CHAIRMAN DUNLAP: Staff? 7 MR. KENNY: Sounds fine. 8 CHAIRMAN DUNLAP: Okay, Jed, you got one. 9 MR. MANDEL: We got more than one. Staff has been 10 very very helpful in working with us. 11 With respect to small LSI engines, it has become 12 clear in the course of our discussions with staff that the 13 products and applications that would utilize LSI engines one 14 liter or less are much more like the products and 15 application using engines covered by the less than 25 16 horsepower small engine rule, than like lift trucks and 17 airport ground maintenance equipment. 18 As such, it is essential that engines one liter or 19 less not be regulated in such a way as to cause both the 20 engines and the equipment to use them to be priced out of 21 the market. 22 We believe that regulating small LSI engines to 23 the emission limits applicable to the less than 25 24 horsepower Class 2 engines and enforcing those standards 25 according to the same compliance program, save for an PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 72 1 extension in the useful life period to 1,000 hours, makes 2 good regulatory sense. And it has an immeasurable impact 3 on air quality. 4 And accordingly we support the staff's 5 recommendation. 6 Finally, there are a number of technical comments 7 and corrections which we have submitted to the staff and we 8 have provided to the Board's secretary as part of EMA's 9 comments. We urge the Board to direct the staff to continue 10 to work with us on these technical corrections which we 11 believe have no impact on emissions, but significant impact 12 on costs. 13 The proposed LSI rule with the modifications 14 presented today by staff will be challenging and will 15 provide more air quality benefits than originally assigned 16 to this category in the SIP. In other words, this category 17 will contribute significantly to reducing the black box and 18 will do more than originally anticipated in helping this 19 Board have an important -- leave an important legacy in 20 helping California meet its Clean Air goals. 21 As always, if you have any questions, I'd be 22 pleased to answer them. 23 CHAIRMAN DUNLAP: Thank you. As it relates to the 24 directing staff to continue to work with industry on 25 technical corrections, Tom, do you see any problem with PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 73 1 that? 2 MR. CACKETTE: No. 3 CHAIRMAN DUNLAP: I think my colleagues will be 4 okay. We'll direct now for you to continue to do that. I 5 think that's an easy thing to do. You want to do it. It 6 would be in your interest to do that. So maybe when we get 7 to the resolution phase, we'll ask our legal counsel there, 8 who looks to be reflecting deeply, if he'd remember that and 9 make sure we'll cover that. We'll do that. 10 Thank you. 11 Any questions? 12 MR. MANDEL: Mr. Chairman, it may be appropriate, 13 if it doesn't interfere with the schedule, if Gary Cross, 14 from the Industrial Truck Association, comments next. I 15 believe he's going to be supportive of our testimony. 16 CHAIRMAN DUNLAP: Will the other witnesses yield 17 to Mr. Cross? Anybody object? 18 All right. Go ahead. 19 MR. MANDEL: Thank you very much. Appreciate your 20 time. 21 CHAIRMAN DUNLAP: This was done very congressional 22 like. 23 MR. GARY CROSS: I do appreciate it. Good 24 morning. I'm Gary Cross from Dunaway and Cross in 25 Washington, D.C., here today on behalf of the Industrial PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 74 1 Truck Association. 2 I do want to support Jed's comments very strongly. 3 We do favor this proposal, but I want to tell you 4 about some of the concerns we have, so that you don't think 5 this is going to be a cake walk. We do see some significant 6 challenges, both for Tier 1 And Tier 2. 7 And some of those, I think, are unique to the 8 position that the Industrial Truck Association members find 9 themselves in. 10 We are the manufacturers of industrial trucks, 11 more commonly known as forklift trucks, and so we are 12 significant users of the over one liter spark-ignited LSI 13 engines. That in of itself gives us the challenge to 14 incorporate these newly designed engines into our fairly 15 specialized equipment applications, and so that's always a 16 challenge for manufacturing groups in our position, but in 17 this particular proceeding we have another challenge that is 18 really new to us. 19 Because of the way we purchase, obtain and dress 20 out spark-ignited engines, it appears that a number of our 21 members who normally would just be equipment manufacturers 22 would have those obligations, may gain the status of engine 23 manufacturer under the reg. 24 Because we may, in many cases, be the party that 25 puts the engine in final form and makes changes to it that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 75 1 affect its emissions, and as we understand the regulations, 2 that would place us in the status of engine manufacturer. 3 That in turn may require us in many cases to go 4 out and procure the test equipment, to train personnel to 5 understand the certification process, which can be a very 6 detailed, complicated process. 7 CHAIRMAN DUNLAP: But what would you have us do 8 about that? 9 MR. GARY CROSS: Offer as much possible sympathy 10 as possible, as we struggle. 11 CHAIRMAN DUNLAP: I know I speak for the Board, 12 you have that. 13 MR. GARY CROSS: To work with the certification 14 staff. 15 CHAIRMAN DUNLAP: I mean, are you asking for us to 16 change it? 17 MR. GARY CROSS: I guess the only concrete 18 suggestion I have, and it's the only place where I may 19 differ with Jed, goes to the timing of the tech review. We 20 have some sort of Tier 1 tech review issues, and this is one 21 of them. 22 CHAIRMAN DUNLAP: So you'd like it to go sooner? 23 MR. GARY CROSS: Yeah. I guess what I'd really 24 like is to have one in 2000 to see how we're doing in the 25 certification process. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 76 1 But also we have serious concerns, as I'm going to 2 describe briefly, about the feasibility of Tier 2. So I 3 don't want to say that in 2000 we're ready to discuss all of 4 the 2004 issues. 5 CHAIRMAN DUNLAP: If I can just coach you a little 6 bit. 7 MR. GARY CROSS: Sure. 8 CHAIRMAN DUNLAP: We're an action-oriented Board. 9 If you make reasonable requests of us, we're willing to like 10 get on it right now. Okay. If you take us somewhere, tell 11 us what you want us to do with it so we can consider it. 12 MR. GARY CROSS: I guess I would request that 13 there actually be a technical review -- 14 CHAIRMAN DUNLAP: Is there a way for you to 15 bifurcate that, can you sit down and give us a list of check 16 this out in 2000, don't check this until 2002? 17 MR. GARY CROSS: Yes. Absolutely. 18 CHAIRMAN DUNLAP: If you can do that, I think we'd 19 be willing to consider that. Staff is telling us that is 20 something that they're okay with. 21 You have a homework assignment here when you're 22 done to get back to us before the end of the hearing. 23 MR. GARY CROSS: Absolutely. Thank you. 24 The second peculiar position that the forklift 25 manufacturers find themselves in has to do with federal PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 77 1 preemption. 2 We had believed until quite recently that our 3 spark-ignited engines over 50 horsepower used in forklifts 4 were preempt and therefore would not be subject to any 5 regulatory obligations until 2004 with the initiation of the 6 EPA program. 7 Staff recently took a different position. 8 And we have been trying to engage the staff in a 9 discussion of the basis for the new position and whether or 10 not there might be some error in their new understanding or 11 some compromise, and we have been unable for various reasons 12 to even engage in that discussion. 13 I don't think it's going to be resolved today, but 14 we would like to have an opportunity to discuss with the 15 staff, as we did when the original preemption agreement was 16 entered into, the basis for our belief that there are 17 preempt spark-ignited forklift engines. 18 Like I say, it's been a question of not being able 19 to really have the dialogue that we thought should be 20 necessary to do that. It's an important issue to us because 21 it translates directly into the number of engine families 22 that we have to deal with in Tier 1. 23 CHAIRMAN DUNLAP: Okay. 24 MR. KENNY: We're always happy to talk. We'll be 25 happy to engage in a dialogue. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 78 1 MR. GARY CROSS: Thank you. 2 Lastly, and I know everybody would like to 3 conclude this, so I will not go on. I do have a written 4 statement, by the way, which I think goes into a little more 5 detail on these points. 6 We do think the staff has worked very hard under a 7 fairly short time frame. They have been responsive as much 8 as they could possibly be. 9 But having said that, we don't feel complete 10 confidence that sufficient data has been collected to say 11 that particularly the Tier 1 in-use standards are going to 12 be technologically feasible. There is work currently 13 underway by Southwest Research and there's also some very 14 important work that we have shared with the staff underway 15 by some of our member companies that will go directly to 16 whether the useful life requirement under Tier 2 is going to 17 be feasible. 18 I raise that just to emphasize Jed's point that we 19 really feel that there needs to be a very candid and 20 wide-ranging technology review to see how that test data 21 will affect us. 22 CHAIRMAN DUNLAP: It's the desire, I think, of the 23 staff and the Board to make sure that happens. You know, we 24 like pushing, you know that, but at the same time we need to 25 be realistic about what can be done and by what time. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 79 1 The idea of this review, and we'll work with you 2 to hear what you have to say later about how we can split it 3 up to where you can get what you think is important examined 4 early, and the other elements later and we'll consider that. 5 I think we want the same thing is I guess is my point. 6 MR. GARY CROSS: Good. Thank you. 7 And that concludes my presentation. 8 CHAIRMAN DUNLAP: Any questions of the witness? 9 All right. We'll go back to Christopher Wright 10 from Arctic Cat, and then Mort Smith right after that. 11 Mr. Wright, we have some testimony here with some 12 slides, I believe. 13 MR. WRIGHT: Yes. I think I'm going to withdraw 14 part of that. 15 But first I'd like to start by thanking the staff 16 for working with us and harmonizing their program with our 17 product. 18 Our company makes all-terrain vehicles which would 19 have been covered by the LSI rule. We came here today to 20 ask that the definition of the ATV, which is contained in 21 Title 13, Chapter 9, Article 3 of the off-highway vehicle 22 rule, be amended by removing the 600-pound weight limit. By 23 doing so, it allows for all of our ATVs to be classified as 24 ATVs and regulated as such. 25 CHAIRMAN DUNLAP: Okay. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 80 1 MR. WRIGHT: We have recently, staff has recently 2 agreed with us that this change should be made, so due to 3 that fact there's no need to continue. 4 CHAIRMAN DUNLAP: Let me, Tom, could you briefly 5 summarize the accommodation that seems to be acceptable so 6 the Board can get their arms around it for me? 7 MR. CACKETTE: Mr. Chairman, yes. 8 These larger ATVs are what you more commonly think 9 as more recreational four-wheel off-road vehicles that you 10 can ride around off-road. 11 In the very largest category of those, they tend 12 to do more work-oriented things, be more commercial. For 13 example, the kind of the lawn, big lawn care, park care, 14 clean-up type things at golf courses, things like that that 15 I think you've seen before. 16 When we did the off-road and specialty vehicle 17 regulations, we left those larger ones in a commercial 18 category rather than in the more recreational or utility 19 type category. We kept them in there, because as our 20 initial proposal for the smallest of these LSI engines came 21 forward we had proposed a much more stringent standard and 22 those engines would have been controlled to a higher degree 23 than if they were left as a recreational vehicle. 24 In going through the feasibility, the emission 25 reductions, the costs, et cetera, the staff proposed a more PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 81 1 lax standard for this smaller part of the LSI category. 2 It now puts these ATV vehicles at a position where 3 the emission reductions they'll achieve as a small LSI, the 4 item that we're talking about today, or as an ATV under the 5 recreational specialty vehicle regs, will be about the same. 6 So if they want, because of that change in the 7 staff position, it doesn't really matter. 8 CHAIRMAN DUNLAP: So it's a category preference. 9 MR. CACKETTE: Yeah. If they'd feel more 10 comfortable being treated like their brethren of the smaller 11 ATVs, that would be fine with us. 12 CHAIRMAN DUNLAP: And that's agreeable and we can 13 have the resolution at the right time reflect that. 14 Counselor, we'll look to you to make sure that 15 happens. 16 MR. WRIGHT: Thank you. 17 CHAIRMAN DUNLAP: Thank you. I'm familiar with 18 your product, by the way, and I know what you're all about. 19 So, good. 20 Polaris, Mr. Smith. 21 And I think I have your comments here. No 22 pictures, though. Arctic Cat had pictures. 23 MR. SMITH: Similarly to Arctic we prepared 24 testimony based on the proposal written, as written, and -- 25 CHAIRMAN DUNLAP: Does this take care of it for PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 82 1 you? 2 MR. SMITH: Yes. 3 CHAIRMAN DUNLAP: Is there anything else? 4 MR. SMITH: No. 5 CHAIRMAN DUNLAP: Very good. Thank you. 6 Brevity is a virtue, even without pictures. 7 Mr. Bertelson, Mr. Guerry and then Mr. Gardner. 8 Hello, Bruce. Come all the way out to visit with 9 us on this item? 10 MR. BERTELSON: It's always nice to come to 11 California. No complaints. 12 Good morning. And for the record, I'm Bruce 13 Bertelson, executive director of Manufacturers' Emission 14 Controls Association. 15 I'd like to also take the opportunity to 16 compliment the staff on the outstanding job they've done. 17 They've always been very open to discussing lots of issues 18 and we certainly appreciate the opportunity as well. 19 We generally support the proposed regulations. In 20 fact, we supported the regulations as they originally 21 appeared in the staff report. The proposal is clearly 22 technologically feasible and cost effective. 23 We do have some concerns with the staff's most 24 recent recommendation for relaxing the standards for those 25 engines under one liter. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 83 1 We also recognize that the Board considers a lot 2 of factors in making these decisions, but from a purely 3 technological point of view we do not believe that the 4 relaxation is necessary. 5 This is a, I think, a rulemaking as you heard from 6 other folks who have testified, and we would certainly 7 concur and perhaps go a little bit further in saying that 8 this is one instance where the technology is clearly 9 available, catalyst technology has been used on this 10 category of engines, large spark-ignited engines, for over 11 30 years. In fact, it was really where the catalytic 12 convertor first was introduced and paved the way for 13 automotive catalysts. 14 So I think it's a very easy application. We think 15 it's also a technology that in this application would be 16 extremely durable. So for those engines that last beyond 17 the half-life, I think you could have some confidence that 18 as long as the engine is running the technology will be 19 working as well. 20 We do have a couple of suggestions that I would 21 add, particularly if the Board follows the recommendations 22 of the staff with regard to the smaller SI engines. 23 And the first builds on a proposal that we made 24 back at the Board's consideration of the small engine 25 rulemaking in, I believe, in March. And that is that we PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 84 1 would encourage the Board at a subsequent rulemaking to look 2 at the possibility of adopting reduced emission hydrocarbon 3 plus NOx standards for both categories, not only for the 4 smaller SI engines, but also those over one liter. 5 And we would also recommend that the Board direct 6 the staff to study the issue and come back with some 7 recommendations on ways in which to encourage the 8 manufacturer sale and use of engines that are below the 9 mandated standard and also standards of engines that meet 10 the standards ahead of schedule. 11 CHAIRMAN DUNLAP: So provide some kind of credit 12 scheme, Bruce? 13 MR. BERTELSON: Well, it doesn't necessarily have 14 to be a credit scheme. That's certainly one option. 15 There's always some controversy with emission credits 16 tradings. 17 But if there's an opportunity and a program that 18 promotes the availability of equipment that is below the 19 levels mandated, we continue to believe that there is a 20 market out there, that people are interested in buying clean 21 engines. 22 If I'm a fleet operator, and I have the 23 opportunity of buying equipment equipped with engines that 24 are exceedingly -- that are well below the required emission 25 levels, for a lot of reasons I may be attracted to doing PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 85 1 that. 2 Local air quality districts who are interested in 3 encouraging the use of clean equipment, this is an 4 opportunity for them to encourage folks to purchase 5 equipment that are emitting below the mandated levels. 6 So our philosophy is that if the engines are 7 built, they will come. 8 But the way to get that started is to establish 9 some optional reduced emission standards as the Board has 10 done with the urban bus program. 11 And then also work with the environmental 12 community, the local air quality districts, to develop 13 programs to promote the sale of these cleaner engines. We 14 think it's an important additional component that will very 15 nicely complement the extraordinary efforts the Board has 16 made in establishing mandatory standards. 17 And we think it's particularly true in the case of 18 the engines that are one liter or less, because we do 19 believe that there is an opportunity for substantial 20 emission reductions below what the staff has most recently 21 recommended for that category. 22 I think that will conclude my remarks. 23 Again, I'd like to commend the Board for its 24 continuing efforts and compliment the staff for their work 25 on this rulemaking. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 86 1 CHAIRMAN DUNLAP: Thank you, Bruce. I appreciate 2 that. 3 Any questions of the witness? 4 All right. Relative to that certification issue, 5 Tom, do you want to -- pre-certification, early 6 introduction, do you have any ideas on how we can 7 operationalize what seems to be a reasonable idea? 8 MR. CACKETTE: I think it's a good idea. And 9 we've done this for other categories, just been a fairly 10 common comment recently. And so I think we can do something 11 as part of the 15-day changes to put some optional standards 12 in and a labeling requirement or something that would let 13 people advertise that they've got a cleaner-than-required 14 engine and that might help in the marketplace. 15 CHAIRMAN DUNLAP: I'm open to that. The labeling 16 issue I want you to come back to. I don't want to get into 17 another labeling discussion. I've had a few of those, none 18 of them have been satisfying, actually. 19 MR. CACKETTE: Probably be more like a hang tab, 20 would be my guess, something like you'd see at the -- 21 CHAIRMAN DUNLAP: By the way, I'm for consumers 22 having information, et cetera, but I just don't want to do 23 it in a 15-day change, something that's going to bring a lot 24 of people out of the woodwork that have a problem. What 25 we're trying to do is do a good thing and make it PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 87 1 incentivize or recognize progress. 2 MR. CACKETTE: I have to appreciate that because 3 we did similar to that on the small utility lawn and garden 4 stuff and it was -- it's been rather lengthy trying to deal 5 with it. It's not that people aren't cooperative, but it 6 always turns out to be a little more complicated than it 7 appears. 8 CHAIRMAN DUNLAP: Any time government tries to put 9 a message on a consumer product, there's always a 10 discussion. I've learned to respect that. 11 Bruce, good suggestion. 12 MR. BERTELSON: Thank you, Mr. Chairman. 13 Just one other comment, I'm sorry. 14 There was some discussion about technology reviews 15 in the material that we have included in our presentation 16 today. We support the idea of technology reviews. 17 If there is a technology review in 2000, I think 18 it would be appropriate for the staff to not only look at 19 some of the certification issues, but to take a look at 20 where the technology is, because frankly we think it's going 21 to be very exciting and it will be an exciting story in 22 2000, doesn't necessarily mean at that point they'll change 23 the regulations, but as long as there's a review, it would 24 be a good idea to take a look at how much progress is being 25 made with the technology. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 88 1 And we are also very supportive of the technology 2 review in 2002, because we believe very strongly that in 3 2002 the evidence will be overwhelming that significantly 4 tighter standards could be applied to the smaller, less than 5 one liter spark-ignited engines. 6 And also maybe there's some additional things that 7 could be done with the large ones. We look forward to that 8 review as well. 9 Thank you very much. 10 CHAIRMAN DUNLAP: Thank you. 11 Ms. Edgerton, you had a question? 12 MS. EDGERTON: Yes. I wanted to ask the question 13 with respect to the staff's reason for making the 14 regulations more lax. I know we're supposed to adopt those, 15 adopt regulations if they're technologically feasible and 16 economically feasible, and so with Mr. Bertelson's wonderful 17 input, as usual, he's indicated that it's more than 18 feasible, the technology, the technology is all there. So I 19 can only assume that the reason for the change was economic 20 feasibility, but I'd like to hear what it was. 21 MR. CACKETTE: Well, there were two, I wouldn't 22 say significant, but there were two changes that affected 23 emission reductions that staff proposed in the addendum that 24 was handed out this morning. 25 One affects the small, I keep using LSI because it PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 89 1 becomes small large engines, which doesn't make much sense, 2 the small LSI engines, and the other one affects the large 3 LSI engines. 4 Is it both you want to discuss or just the one 5 about the small ones? 6 MS. EDGERTON: It was the small that you brought 7 up. 8 MR. BERTELSON: We were talking about the smaller 9 one. And we don't object to the changes that have been 10 suggested for the larger category. 11 MR. CACKETTE: The smaller one we had proposed an 12 emission standard of five for the small engines, the smaller 13 LSI engines. And in discussions with the industry we came 14 up with, they were not comfortable with that. They were 15 uncomfortable with the use of catalysts on it. They were 16 uncomfortable with being exposed to some of the durability 17 requirements. 18 And where that stems from is that in this category 19 of under one gram we think we have been looking at the 20 engines as being basically car-like, but relatively small 21 engines. 22 And what they were saying is that there is a 23 market and a growing market for lawn and garden engines that 24 have grown to go over the 25 horsepower category that 25 distinguishes lawn and garden from this rule. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 90 1 So some of the lawn and garden type engines that 2 go into like lawn tractors were being upscaled, made a 3 little bit bigger and going into some slightly heavier 4 equipment that would fall under the small portion of this 5 rulemaking. 6 The significance of that is that car engines are 7 durable, have a proven history of emission controls with 8 catalysts, electronic controls, for example, last a long 9 time. 10 Lawn and garden engines are fairly antiquated 11 designs. They are not as durable. They're designed for 12 lawnmowers and things like that. And that technology, which 13 is typically an air-cooled engine, expanded into this 14 category, did not have as much chance of reaching a longer 15 durability periods and possibly because of the way they wear 16 would be less effective if they use catalysts. In other 17 words, they burn oil, the cylinders distort and let oil and 18 hydrocarbons get through, things like that that make it more 19 difficult for them to meet the kind of standard that a car 20 engine could meet. 21 Of course, the big difference is that the car 22 engines cost several thousand dollars, and these cost 500 23 type dollars. So it's clearly designed to be a cheaper 24 product. 25 And so it was looking at that emerging upscale PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 91 1 lawn and garden engines that fall into this small category, 2 small LSI category, that we decided that it would be 3 appropriate to give them the same kind of standard that we 4 gave to the lawn and garden equipment, which is a nine gram 5 standard. And so that was the change that the staff 6 proposed. 7 And the effect is that the vehicles would have to 8 use catalytic converters to meet the five that we started 9 off with, and they will not have to use catalytic converters 10 to meet the nine which, I think Mr. Bertelson is pointing 11 out is that he thinks that especially by the year 2000 or so 12 it will be pretty well demonstrated that these engines could 13 use catalytic converters. 14 And the staff's viewpoint and listening to the 15 industry, that's a little more uncertain at this time. 16 And the other factor, I mean, to be honest with 17 you, the other factor is that there aren't very many engines 18 in this category, and so the difference here we were talking 19 about a couple tenths of a ton per day at the current 20 projected level of equipment and emissions. And to that 21 extent it became a little bit more of a pragmatic issue of 22 do we -- how hard do we want to push on this area given the 23 relatively small emission impact. 24 CHAIRMAN DUNLAP: Mrs. Rakow. 25 MRS. RAKOW: Is it my understanding that there are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 92 1 just one thousand of these units in California? 2 MR. CACKETTE: No. I think the thousand is the 3 ATV ones we were talking about. There are other engines in 4 this category. 5 And maybe what's important about the technology 6 review is there's one of the things that wasn't clear to us 7 is that some people are saying these upsize and upscaled 8 lawn and garden engines would fall into this category are a 9 small number today. Other people -- and they might be a 10 small number in the future. 11 Other people were saying this is a growth area. 12 Just like we buy bigger cars, we want bigger lawn and garden 13 tractors that are going to move into this category and they 14 might be then used for more and more things. 15 So perhaps one of the things in the review we can 16 evaluate whether or not this category stayed small or is it 17 starting to grow and lots of products out there for 18 different applications. 19 If that's the case, and they're out there because 20 they're cheap, but they also have high emissions, then we 21 might want to revisit this in the review and decide if 22 there's a more significant impact. 23 CHAIRMAN DUNLAP: Okay. Two more witnesses. 24 Anything else from Mr. Bertelson? 25 Very good. Thank you. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 93 1 MR. BERTELSON: Thank you very much. 2 CHAIRMAN DUNLAP: Bill Guerry and Brad Garner. 3 MR. GUERRY: Good morning, Mr. Chairman. My name 4 is Bill Guerry. I'm outside counsel for the Outdoor Power 5 Equipment Institute. 6 As Mr. Mandel stated previously in his comments, 7 the comments made by EMA are supported by OPI and I would 8 like to transfer my time for Jed to make a brief additional 9 comment in regards to the prior discussion. 10 CHAIRMAN DUNLAP: So you'll yield to Jed. 11 Where is Jed? 12 Get up here, Jed. 13 MR. MANDEL: Mr. Chairman, just following up on 14 your comment as sort of the been there, done that. I'm a 15 little concerned about the direction that staff may be given 16 in terms of the 15-day notice in response to what I thought 17 was actually a pretty good idea that we should share with 18 the Board. But as I understood the idea, it was that there 19 should be some subsequent rulemaking to address the benefits 20 of having a different level of standards that would provide 21 an incentive for others to eventually address, and I heard 22 Tom suggest that we'll do it in the 15-day notice, and then 23 I heard labeling. 24 And having been there, done that, I am very 25 nervous about that, and I would much prefer to address on PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 94 1 the merits Bruce's concept and see what we could do with it, 2 and eventually come back, have the staff come back to the 3 Board with a actual proposal, rather than try and address in 4 a 15-day notice where it's a new concept. 5 CHAIRMAN DUNLAP: I'm not looking to complicate 6 this, Tom. I know your motive is to provide some kind of 7 incentive and what not. But I would agree with Jed. 8 Bruce, feel free to come forward. 9 All good ideas must be -- 10 MR. BERTELSON: Our suggestion was not to try to 11 tackle it in the next 15 days. We think it's something that 12 needs some additional time. 13 CHAIRMAN DUNLAP: Okay. Tom, channel those 14 suggestions into some process. 15 MR. CACKETTE: We'll certainly follow that. 16 Maybe just comment that since we're doing 17 something similar to this on the small engines, I was hoping 18 we would learn from it, but if our people we need to agree 19 with think it's going to take more time, then I guess it 20 will. 21 Should notice that 15 days doesn't mean that we 22 need to complete that in 15 days. What it means is before 23 we go out to codifying, seek comments on the changes made 24 today, we would try to add something in. That could take 25 longer. But if they're saying separate rulemaking, I guess PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 95 1 that means we will invest the resources to do that. 2 CHAIRMAN DUNLAP: Why don't we do this. What 3 we'll do is I'll have Tom meet with you all after this and 4 we'll see what's feasible. I'll have him give a report back 5 to the Board and if we get the feeling there's some 6 consensus, Jed, we may try this, but we're not going to move 7 ahead and do something that people are going to have a 8 problem with. We're not going to do that. We're going to 9 make sure that we see some consensus before we do a 15-day 10 thing. Does that work? 11 Okay. We have one more witness, Brad Garner, 12 Impco. 13 MR. GARNER: Mr. Chairman, Board members, ladies 14 and gentlemen. 15 Impco Technologies is located in Cerritos, 16 California. We're a industry leader in the design, 17 development and manufacture, distribution of alternative 18 fuel systems, primarily used in internal combustion engines 19 in all markets, one horsepower to 5,000. 20 Our products are used to fuel large portion of the 21 large engines, we talked the larger engine versus smaller 22 engine in the category. 23 Impco has over 40 years' experience developing 24 fuel systems. Our work includes demonstration in the 25 automotive on-road category of ULEV capability and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 96 1 100,000-mile durability. 2 The migration of what we've learned over the past 3 14 years in the automotive industry and the migration that 4 clean air technologies developed for the on-road category 5 into the off-road category is both practical and feasible. 6 Our testing to date utilizing this technology in 7 larger spark-ignited engines suggest that the processed 2001 8 emissions regulation can be met. 9 I'd like to also state that our testing in the 10 past in the smaller category would suggest that staff has 11 made a good move on seeing a different emission number. 12 There is technological hurdles that really have to be 13 addressed there of smaller air-cooled type engines and 14 larger, and really needs to deal with two different 15 categories here. 16 Looking towards the proposed Tier 2 emission 17 regulation for 2004, we're not aware of an accurate method 18 or a known way to convert the 100,000 miles durability or 19 experience of what we know of durability with this 20 technology into the industrial off-road type vehicles. 21 There's challenges that we need the time to meet, 22 particularly given the differing uses and duty cycles found 23 in the off-road category. 24 So we appreciate and support the CARB staff 25 position put forward that we need to look at the 2004 issue. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 97 1 And we're doing our part to develop a database and I know 2 others in industry are. We encourage the Board to keep that 3 in the back of your thoughts that, come 2004, these 4 technology reviews we're talking about are very critical. 5 In closing, I'd like to commend both CARB and EPA 6 for working together, and with the European agencies, I 7 might add, to really look towards a harmonized approach to 8 regulation making. 9 We've had 14 years' experience as a manufacturer 10 of record and we can truly appreciate now that we don't have 11 five and six different regulations and different test 12 protocols to meet, and the financial and logistical 13 synergies will really benefit the off-road categories as we 14 move forward here. 15 CHAIRMAN DUNLAP: Thank you. 16 I'm also aware, become recently aware, of some of 17 the exciting things your company is working on and we're 18 going to get some time with you, I guess, to hear about 19 them. 20 Thanks. 21 MR. GARNER: Thank you. 22 CHAIRMAN DUNLAP: That should conclude the witness 23 list. 24 Is there anyone else that we missed that wishes to 25 testify? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 98 1 We will now conclude the public testimony on this 2 item. 3 Staff want to take a moment and summarize the 4 written comments we received from folks that have not 5 testified today? 6 MS. LOURENCO: There are a couple of comments. 7 JC DeLaney and his consulting firm and the 8 California Motorcycle Dealers' Association raised the ATV 9 issue which was resolved today. 10 NACCO Materials Handling Group submitted comments. 11 And again their issues were covered by Gary Cross today. 12 The only other written comment was by a company 13 called Westerbeke. They are a small volume manufacturer out 14 of Massachusetts. They make engines, generators and that 15 sort of thing. They had three issues. Primarily they were 16 concerned about testing burden on such a small company. 17 And one of the changes we made today was to cap 18 production line test at one percent, which should help them. 19 The second item was their concern about the in-use 20 testing provision. There is a provision that the executive 21 officer can provide for alternate means of showing 22 compliance with those regulations, so they will have that 23 available to them. 24 And their third comment was one on labeling. 25 Since they do not have to meet any of our requirements in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 99 1 2004, they were concerned about people perceiving that their 2 engines were not legal for sale in California because they 3 don't have a label. I think that's something that we can 4 work with them on and certainly confirm that they are in 5 compliance and legal for sale. 6 CHAIRMAN DUNLAP: They're from Massachusetts? 7 MS. LOURENCO: They're from Massachusetts. 8 CHAIRMAN DUNLAP: That's it for the written 9 comments? 10 MS. LOURENCO: That's it. 11 CHAIRMAN DUNLAP: Mr. Kenny, anything else you or 12 Tom want to add? 13 MR. KENNY: Nothing further. 14 CHAIRMAN DUNLAP: We'll now close the record on 15 this item. 16 However, the record will be reopened when the 17 15-day notice of public availability is issued. Written or 18 oral comments received after this hearing date, but before 19 the 15-day notice is issued, will not be accepted as part of 20 the official record on this agenda item. 21 When the record is reopened for 15-day comment 22 period, the public may submit written comments on the 23 proposed changes which will be considered and responded to 24 in the final statement of reasons for the regulation. 25 Also on ex parte, is there anything that we need PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 100 1 to report? 2 MRS. RAKOW: Yes. 3 CHAIRMAN DUNLAP: Yes, Mrs. Rakow. 4 MRS. RAKOW: I had a meeting yesterday, October 5 21st, with John Liskey, the Outdoor Power Equipment 6 Institute; William Guerry Jr. and Timothy Flanigan. The 7 discussion centered on their satisfactory resolution of 8 their issues from their meetings with the staff. 9 CHAIRMAN DUNLAP: Very good. Thank you. 10 Mr. Parnell? 11 Anybody? 12 I have a few. 13 On the 6th I had a meeting -- 6th of October, had 14 a meeting with Bob Wyman, who is an attorney. 15 Also with Tim Flanigan and others. 16 Mr. Guerry, perhaps Mr. Liskey. I believe that's 17 right. 18 On the 13th I met with Jed Mandel, of October. 19 And Bob Johansen of the EMA. 20 And then this morning I had a three-minute 21 conversation with Mr. Flanigan and his colleagues before the 22 meeting. 23 Again, along the same lines as you, Mrs. Rakow. 24 All right. If there's nothing else in ex parte, 25 we have before us a resolution, revised resolution. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 101 1 Ask legal counsel to remind the chair of two 2 items. 3 MR. JENNE: Mr. Chairman, as you stated earlier, 4 there are a number of changes that have been proposed in the 5 resolution you have, so what I'm going to do is ask staff to 6 go through those changes and list them, basically the 7 testimony and what we've said earlier. 8 CHAIRMAN DUNLAP: Very good. 9 MR. LIVINGSTON: Aron Livingston again, staff 10 counsel. 11 As you heard earlier, staff's recommending that 12 the resolution be modified to incorporate technical 13 corrections identified by EMA, corrections that are not 14 currently incorporated in the Attachment G to the 15 resolution. 16 These modifications may include EMA's suggestion 17 that ARB staff conduct an additional technological review in 18 2002 instead of 2000, which is earlier stated in the 19 resolution. 20 However, you also heard some testimony regarding 21 having some components of that tech review occur in 2000. 22 And I believe you've asked staff to work with 23 industry to consider bringing some of those components back 24 in 2000, but I think you might want to provide some further 25 direction. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 102 1 Regarding, having been there with Jed on trying to 2 figure out what the Board said about labeling and that 3 optional standards, I think you wanted the staff to report 4 back to the Board after reaching consensus with industry on 5 whether to include optional standards and labeling and/or 6 hang tag indicating meeting those standards in the 15-day 7 changes. 8 CHAIRMAN DUNLAP: Right. If that, if there is 9 consensus, the Board will find a way to get back to the 10 Board. You'll find a way, the legal means to communicate 11 that to the Board. But I'm not going to, I'm going to tell 12 everybody, I'm not inclined to make any changes that's going 13 to blow up this arrangement that seems to be harmonized. 14 And that's a commitment that I'm sure my colleagues would 15 support. 16 MR. KENNY: I just want to make sure I understand, 17 which is that we will talk with essentially Bruce Bertelson 18 and with Jed with regard to this issue and if in fact we 19 could reach an arrangement in which there was a level of 20 comfort, then we would go forward and propose a 15-day 21 change. 22 CHAIRMAN DUNLAP: You have to come back to the 23 Board to communicate that. 24 MR. KENNY: That's correct. 25 In the event we are unable to do that, then what PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 103 1 we would do is basically proceed with some kind of a 2 additional process, come back to the Board. 3 CHAIRMAN DUNLAP: Staff doesn't need a lecture 4 from me about underground administrative regs and all that 5 stuff. I don't want any part of that. And I know the Board 6 doesn't either. 7 So if this is a consensus thing, people can say 8 they love this idea and it makes sense and it can work, 9 we'll consider that. But if we don't have the consensus, 10 we're not doing it. Okay. 11 Anybody in the audience that testified have a 12 concern about that? 13 It's okay if you do, come up here and I'll listen 14 to you and make sure we don't get it wrong. 15 Counselor, anything else? 16 MR. LIVINGSTON: No, Mr. Chairman. 17 CHAIRMAN DUNLAP: As it relates to this technology 18 review, we had some say we need to move it up, move it back. 19 One of the witnesses I gave some homework to. 20 MR. KENNY: I believe you gave some homework to 21 Mr. Cross to identify those things that he thought were 22 appropriate to be reviewed in the year 2000. 23 CHAIRMAN DUNLAP: The staff want to try? 24 Tom, can you try to tell us what you think works 25 relative to the technology review? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 104 1 MR. CACKETTE: Well, I think what makes most sense 2 is we'll just do a review aimed at 2000 and another one in 3 2002, and the issues that there is information about that we 4 can report back to the Board, we will in 2000, and the rest 5 we'll -- 6 CHAIRMAN DUNLAP: Do we need to segment it 7 specifically, Tom? 8 MR. CACKETTE: I don't think so. Let's figure out 9 what we learn in the next year and a half and we'll bring it 10 back based on that. 11 CHAIRMAN DUNLAP: Does that seem to be agreeable? 12 MR. GARY CROSS: It is from the Industrial Truck 13 Association. 14 CHAIRMAN DUNLAP: Just a head nod if it is. If it 15 isn't, let me know. 16 MR. MANDEL: Mr. Chairman, some concern that -- 17 the concern I expressed was that in 2000 we really weren't 18 going to have anything on Tier 2. If we go through a whole 19 exercise, we gear up the staff, industry and perhaps the 20 Board prematurely. So I was wondering whether we bifurcate 21 this between Tier 1, Tier 1 kind of issues in 2000, and 22 defer the Tier 2 review until we have data -- 23 MR. GARY CROSS: We are agreeable with that. Ours 24 are really Tier 1 issues that we'd like to discuss. 25 CHAIRMAN DUNLAP: Tom, are you agreeable to that? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 105 1 Board agreeable with that? 2 We'll deal with Tier 1 early, Tier 2 later. 2000 3 and 2002. 4 MR. CACKETTE: The only thing I would add is that 5 I would hope that you not restrict us to not address new 6 information, something that comes up. 7 CHAIRMAN DUNLAP: Do that, but I think Jed's 8 concern is you do a whole-scale look and you don't have much 9 there, and if you're not seeing things, you don't need to go 10 into great detail. 11 Okay. I think we caught it. 12 Counselor, is that your take? 13 Okay. We have before us a revised resolution that 14 does not have those things that we just discussed that need 15 to be added, and we can indicate through our motion that's 16 the direction we want staff to follow. 17 The chair would entertain a motion to move on 18 revised resolution with those changes. Is there a motion? 19 MRS. RIORDAN: I would so move, Mr. Chairman. 20 CHAIRMAN DUNLAP: Mrs. Riordan. 21 MR. PARNELL: Second. 22 CHAIRMAN DUNLAP: Second by Mr. Parnell. 23 MRS. RIORDAN: And add the bifurcation of Tier 1 24 and Tier 2, but to acknowledge any new information that 25 might be. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 106 1 CHAIRMAN DUNLAP: Very good. That amendment is 2 acceptable? 3 MR. PARNELL: Yes. 4 CHAIRMAN DUNLAP: We'll proceed with a voice vote. 5 All those in favor of the revised resolution, 98-51, say 6 aye. 7 (Ayes.) 8 CHAIRMAN DUNLAP: Any opposed? 9 (No response.) 10 CHAIRMAN DUNLAP: Very good. Motion carries. 11 Thank you. I want to acknowledge industry 12 advocates. It always pleases the Board when folks get 13 together and can come here and say nice things about the 14 process, but the bottom line is it needs to work. And I 15 feel good about the people that have testified today and the 16 comments we received that they want this to be successful, 17 so I commend everybody involved. 18 Thank you. 19 Ms. Terry, on the last item. 20 MR. WADE: Ms. Terry is not here, but -- 21 (Pause in proceedings.) 22 CHAIRMAN DUNLAP: What I'm going to do is 23 acknowledge the enthusiasm I see in the audience, and 24 grateful for positive enthusiastic response to our actions, 25 but I'm going to ask you to move it out. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 107 1 Jed, take your crowd outside. 2 The next item is 98-11-4, a public hearing to 3 consider a revision to the California State Implementation 4 Plan for carbon monoxide. 5 Over the years ARB's emissions control programs 6 for motor vehicles and fuels have enjoyed success, great 7 success. This success is reflected in the dramatic 8 improvement in ambient carbon monoxide levels. 9 Earlier this year the US EPA recognized this fact 10 by redesignating ten areas in California to attainment for 11 the federal CO standard. 12 On August of this year, the Board adopted 13 amendments to the California reformulated gasoline 14 regulations which removed the mandatory wintertime oxygenate 15 requirement in these ten CO areas. 16 Today we will consider an amendment to the carbon 17 monoxide SIP which updates the maintenance demonstration to 18 show that the standard will continue to be maintained 19 without the need for wintertime oxygenated fuels. 20 So with that, I'd like to ask Mr. Kenny to 21 introduce the brief, very brief, item, which we're about to 22 hear. 23 MR. KENNY: Thank you, Mr. Chair. 24 Federal Clean Air Act requires that a maintenance 25 demonstration show that the federal standards for CO PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 108 1 continues to be met for at least ten years after 2 redesignation in order to achieve attainment by the US EPA. 3 Staff has prepared a revision to the State 4 Implementation Plan which shows that emission levels will 5 continue to remain well below the 1995 attainment level. 6 In terms of process, we were recommending that the 7 Board hear the staff presentation and public testimony on 8 this item today, but postpone taking any final action until 9 the November 19th Board meeting. This is necessary to 10 ensure that the SIP revision is publicly available for at 11 least 30 days in order to comply with US EPA regulations. 12 I'll now ask Mr. Dennis Wade to begin the 13 presentation. 14 MR. WADE: Thank you, Mr. Kenny. 15 Good morning, Chairman Dunlap, members of the 16 Board. 17 In 1991 ten areas in California were designated 18 nonattainment for the federal eight-hour carbon monoxide 19 standard of nine parts per million. 20 In 1995 ARB's motor vehicle control programs 21 improved air quality sufficiently enough for the air 22 monitoring network to document attainment of the national 23 standard for CO. 24 On April 26th, 1996, the Board approved a 25 redesignation request and maintenance plan for these ten PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 109 1 areas and the plan was submitted to the US EPA. 2 EPA proposed approval of the plan by direct final 3 rule on March 31st. The approval became effective on June 4 1st, 1998. 5 On August 27th, 1998, the Board took action to 6 rescind the wintertime oxygenate requirement in gasoline. 7 This action affected the ten federal planning 8 areas that are covered in the current State Implementation 9 Plan for carbon monoxide. 10 The reductions were not necessary to maintain the 11 standard, and the maintenance demonstration in the SIP must 12 be revised to reflect the new emission inventory. 13 Shown here are the ten federal planning areas for 14 carbon monoxide. The Board's action to rescind the 15 wintertime oxygenate requirement is effective on approval by 16 the Office of Administrative Law, except in the Lake Tahoe 17 and Fresno areas. The recission is effective in 2001 in 18 these areas. 19 As required by the federal Clean Air Act, the 20 maintenance demonstration in the 1996 plan shows emission 21 levels remaining well below the 1995 attainment year cap. 22 These emission estimates shown on page three of 23 the staff report incorporate the effects of the wintertime 24 oxygenate requirement in gasoline, as well as several of the 25 CO contingency measures. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 110 1 There are four contingency measures included in 2 the emission estimates in the maintenance demonstration, 3 California cleaner burning gas, off-highway recreational 4 vehicles, lawn and garden equipment, Tier 2, and 5 low-emission vehicles and clean fuels. 6 Additional measures not included are enhancement 7 to basic inspection and maintenance, enhanced inspection and 8 maintenance, and on-board diagnostics tools. 9 By not including all the extra emission reductions 10 in the maintenance demonstration, we can avoid revising the 11 SIP with each change of the emission inventory, as long as 12 the emissions are below the 1995 attainment year cap. 13 As mentioned previously, the maintenance 14 demonstration in the current planning incorporates the 15 effects of oxygenates in the wintertime gasoline. The 16 emission estimates for motor vehicles in the revised 17 maintenance demonstration have been increased by 18 approximately nine percent to remove the effects of 19 wintertime oxygenates. These emission increases have been 20 applied to all areas for all years. 21 The maintenance demonstration continues to show 22 that emission levels remain below the 1995 attainment year 23 cap. 24 Shown here and on the next slide are the 25 percentage reductions beyond the 1995 attainment year cap PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 111 1 without wintertime oxygenates. 2 These are reductions for the San Joaquin Valley in 3 2005 from 1995 attainment levels without wintertime 4 oxygenates. 5 US EPA regulations require that revision to the 6 SIP be available for public review 30 days before adoption. 7 Staff recommends that the Board not take action on 8 the item until the November 19th, 1998, Board hearing. 9 Staff is also recommending that CO levels continue 10 to be monitored and reassess the need for wintertime 11 oxygenates or other emission reduction strategies in the 12 event violations occur. 13 With that, I will conclude my presentation and we 14 will be happy to answer any questions you may have. 15 CHAIRMAN DUNLAP: Thank you very much. 16 Do any of the Board members have questions? 17 Yes, Ms. Edgerton. 18 MS. EDGERTON: I just wanted to ask you to put it 19 on the record that this again indicates that we don't need 20 that MTBE in our gas to achieve clean air. 21 CHAIRMAN DUNLAP: Where were you, Lynne, when we 22 had 200 people in the room? 23 MS. EDGERTON: I know it. We weren't talking 24 about this subject. 25 CHAIRMAN DUNLAP: Just kidding. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 112 1 MS. EDGERTON: This goes on the Internet. 2 CHAIRMAN DUNLAP: Not that this small audience 3 isn't important to us. It is. 4 MS. EDGERTON: Let the record reflect there are 5 two individuals in the -- stalwart individuals, in the 6 audience. 7 What's the answer? What's the answer? Yes, yes? 8 MR. KENNY: The answer is we do not need it. 9 MRS. RAKOW: We do not need it. 10 MS. EDGERTON: Are we going to need ethanol? 11 MR. KENNY: Our difficulty is less basically the 12 oxygenate itself as opposed to basically the volume that the 13 oxygenate represents. What we need to do is make sure that 14 in fact we can meet the supply with the demand. And if you 15 basically were to remove all the ten percent of the volume 16 that's represented by MTBE right now we would have another 17 supply problem. So what we need is the manufacturers to 18 essentially increase the ability to provide supply. It does 19 not have to be the MTBE. It does not even have to be 20 ethanol. It could be basically made up with other base 21 product, essentially, but the supply is not there. 22 MS. EDGERTON: Something nontoxic? 23 MR. SCHEIBLE: It's gasoline, so you have to pick 24 your substance. I mean it's not toxicity per se of the 25 ether, such as MTBE, that poses a problem. The problem is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 113 1 the mobility in water. And they're more mobile than the 2 hydrocarbon component of gasoline, therefore when you have a 3 leak of gasoline and you've got ether it in, it poses a 4 greater risk to groundwater resources than just the leak of 5 gasoline. 6 CHAIRMAN DUNLAP: And we have been active in 7 Washington. 8 MS. EDGERTON: I know. 9 CHAIRMAN DUNLAP: To make sure that options are 10 made available. 11 What I'd like to do, I know the Board is 12 interested in the subject, and I know that some of us are 13 going to be able to gather to have lunch, and I think we can 14 talk about that rather than on this item. I'd like to put 15 this item to bed. And then over lunch I think we can work 16 Mike Kenny over to come up with solutions, and Mike 17 Scheible, I'll help you with that. 18 Any other questions? 19 MRS. RAKOW: You're invited for lunch. 20 MR. KENNY: I think we're going to withdraw our -- 21 CHAIRMAN DUNLAP: You're hooked in. 22 All right. Any other questions of staff? 23 Okay. Very good. 24 We have no witnesses, so we'll conclude the public 25 testimony. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 114 1 Do we have written comments? Dean? 2 MR. SAITO: No. 3 CHAIRMAN DUNLAP: Very good. 4 Mr. Kenny, I think you know -- 5 MR. KENNY: I think what we're really needing to 6 do here is essentially leave this open and then what will 7 happen is on November 19th it will be on the agenda again 8 and the Board can act at that time. 9 CHAIRMAN DUNLAP: We'll wait. As Mike stated, 10 final action of this item must be postponed until after the 11 19th of November in order to meet the federal requirements 12 that all SIP revisions must be available for public comment 13 for at least 30 days. 14 The record will therefore remain open for public 15 comment until the November 19th hearing. 16 At the November 19th hearing the Board would hear 17 public testimony, if there is any, and consider resolution 18 of adopting amendments of the carbon monoxide SIP. 19 So do I have a motion and a second to postpone 20 action on this item until the November 19th meeting? 21 SUPERVISOR PATRICK: So moved. 22 MRS. RAKOW: Second. 23 CHAIRMAN DUNLAP: Moved by Supervisor Patrick and 24 a second by Mrs. Rakow. 25 Very good. We will then have a voice vote. All PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 115 1 those in favor say aye. 2 (Ayes.) 3 CHAIRMAN DUNLAP: Any opposed. 4 (No response.) 5 CHAIRMAN DUNLAP: Very good. Motion carries. 6 Okay. The last item today is open comment period. 7 One of the things our Board is trying to do is provide an 8 opportunity for the public to directly address the Board on 9 items of interest to them, perhaps items that do not appear 10 on today's agenda. 11 We're asking that each person limit their 12 testimony to five minutes or so. 13 Is there anyone here today that wishes to speak? 14 All right. Very good. We'll dispense with that. 15 Are there any other items of business the Board 16 needs to consider? 17 If not, we'll adjourn the October meeting of the 18 California Air Resources Board. 19 (Thereupon the meeting was adjourned 20 at 12:10 p.m.) 21 22 23 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 116 1 CERTIFICATE OF SHORTHAND REPORTER 2 3 I, JANET H. NICOL, a Certified Shorthand Reporter 4 of the State of California, do hereby certify that I am a 5 disinterested person herein; that I reported the foregoing 6 meeting in shorthand writing; that I thereafter caused my 7 shorthand writing to be transcribed into typewriting. 8 I further certify that I am not of counsel or 9 attorney for any of the parties to said meeting, or in any 10 way interested in the outcome of said meeting. 11 IN WITNESS WHEREOF, I have hereunto set my hand 12 this 29th day of October 1998. 13 14 15 16 Janet H. Nicol 17 Certified Shorthand Reporter License Number 9764 18 19 20 21 22 23 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345