MEETING BEFORE THE CALIFORNIA AIR RESOURCES BOARD BOARD HEARING ROOM 2020 L STREET SACRAMENTO, CALIFORNIA THURSDAY, JANUARY 29, 1998 9:30 A.M. Vicki L. Medeiros, C.S.R. License No. 7871 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 ii MEMBERS PRESENT John D. Dunlap, III, Chairman Joseph C. Calhoun William F. Friedman, M.D. Lynne T. Edgerton Jack C. Parnell Barbara Patrick Sally Rakow Barbara Riordan Ron Roberts James W. Silva Staff: Michael Kenny, Executive Director Tom Cackette, Chief Deputy Executive Officer Mike Scheible, Deputy Executive Officer Kathleen Walsh, General Counsel Jim Schoning, Ombudsman Pat Hutchens, Clerk of the Board PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iii I N D E X --o0o-- Page Proceedings 1 Call to Order 1 Pledge of Allegiance 1 Roll Call 1 Opening remarks by Chairman Dunlap 1 AGENDA ITEMS: 98-1-4 Public Meeting to Consider Research Proposals Introductory remarks by Chairman Dunlap 4 Staff Presentation: Mike Kenny 4 Manjit Ahuja 5 98-1-2 Public Meeting to Consider Funding Criteria for the Rice Straw Demonstration Introductory remarks by Chairman Dunlap 16 Staff Presentation: Mike Kenny 19 Lesha Hrynchuk 21 Public Comment: J.P. Cativiela 36 Joe Carrancho 37 98-1-1 Public Hearing to Consider Amendments to the California Clean Air Act Nonvehicular Source Fee Regulations Introductory remarks by Chairman Dunlap 46 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iv I N D E X (Continued) Page Staff Presentation: Mike Kenny 47 Cheryl Taylor 50 98-1-3 Public Meeting to Consider the Approval of the South Coast Air Quality Management District's 1997 Air Quality Management Plan as a Triennial Update under the California Clean Air Act Introductory remarks by Chairman Dunlap 66 Staff Presentation: Mike Kenny 67 Jim Nyarady 68 Public Comment: Elaine Chang 95 Bob Houston 101 Tim Carmichael 104 Open Session to Provide an Opportunity for Members of the Public to Address the Board on Subject Matters within the Jurisdiction of the Board 137 Frank C. Alegre 137 Adjournment 143 Certificate of Reporter 144 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 1 1 P R O C E E D I N G S 2 --o0o-- 3 CHAIRMAN DUNLAP: Will the January meeting of the 4 Air Resources Board please come to order. 5 With that, I would like to have our Executive 6 Officer, Mike Kenny, lead us in the Pledge of Allegiance. 7 (Thereupon, all present recited the 8 Pledge of Allegiance.) 9 CHAIRMAN DUNLAP: Thank you, Mike. 10 Will the Clerk of the Board call the roll. 11 MS. HUTCHENS: Calhoun. 12 BOARD MEMBER CALHOUN: Here. 13 MS. HUTCHENS: DeSaulnier. 14 BOARD MEMBER DeSAULNIER: Here. 15 MS. HUTCHENS: Edgerton. 16 BOARD MEMBER EDGERTON: Here. 17 MS. HUTCHENS: Friedman. 18 BOARD MEMBER FRIEDMAN: Here. 19 MS. HUTCHENS: Parnell. 20 BOARD MEMBER PARNELL: Here. 21 MS. HUTCHENS: Patrick. 22 BOARD MEMBER PATRICK: Here. 23 MS. HUTCHENS: Rakow. 24 BOARD MEMBER RAKOW: Here. 25 MS. HUTCHENS: Riordan. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 2 1 BOARD MEMBER RIORDAN: Here. 2 MS. HUTCHENS: Roberts. 3 BOARD MEMBER ROBERTS: Here. 4 MS. HUTCHENS: Silva. 5 Chairman Dunlap. 6 CHAIRMAN DUNLAP: Here. 7 Very good, thank you. 8 I believe Supervisor Silva is missing with a prior 9 engagement, that is the only one that is not present. 10 Well, good morning. Happy 1998. 11 Before we proceed with today's items, I would like 12 to take a minute to remember a past Air Resources Board 13 Member and Chairman, Charles Conrad. 14 Mr. Conrad died on January 15, in Thousand Oaks at 15 the age of 88. He was a nine term veteran of the State 16 Assembly. 17 He served as Speaker Pro Tem and the Minority 18 Floor Leader before being named to the Air Resources Board in 19 1974 by then Governor Ronald Reagan. 20 As Chairman of our Board, he set up procedures for 21 testing fuel additives, established the guidelines for vapor 22 recovery programs and service stations and maintained add-on 23 anti-smog systems for certain models of older cars. 24 Mr. Conrad was also elected Chairman of the 25 Governing Board of the Council of State Governments in 1981, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 3 1 then State Attorney General, George Deukmejian, appointed Mr. 2 Conrad to the Fair Political Practices Commission where he 3 served for four years. 4 It was the movie industry that originally brought 5 Mr. Conrad to California from Philadelphia in the 1930's. 6 He was an actor, and I am told he was seen on 7 television as a judge in the old Perry Mason series. He was 8 a widower, and he is survived by his sister, Mrs. Ernest 9 George and a nephew. 10 I want you to be aware of that. He seemed like a 11 fine man. 12 I had not had the opportunity to meet him, but Joe 13 Irvin, the Board's Communication Director, had a chance to 14 talk to him a few months ago and corresponded with him and he 15 was quite active and wrote a lot of letters to the editor in 16 the local papers and expressed strong opinions about a whole 17 variety of things. 18 So, I wanted to acknowledge that. I should ask 19 Dr. Holmes, maybe Joe Calhoun, did you know Chairman Conrad? 20 DR. HOLMES: Well, I met him a few times when he 21 was Chairman, and he was a grand old gentleman. 22 BOARD MEMBER CALHOUN: Yes, I did. 23 He had left the Board about the time I came in. 24 CHAIRMAN DUNLAP: We are sorry to learn of his 25 passing. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 4 1 Why don't we get into the Agenda today. 2 There has been a bit of a shift. We moved Research 3 up earlier on the Agenda relative to, we think it could be 4 done fairly quickly and the timing should work out to our 5 advantage for getting through the Agenda as quickly as we 6 can. 7 As you may have noticed, the Research Resolutions 8 and the Board book are presented in a new format. The change 9 was made in order to assist the Board and the public to 10 better understand the critical aspects of the Research 11 Projects we fund. 12 Dr. Friedman, I know, has had some opinions about 13 that format, and I have expressed one or two. 14 I think it is more user friendly for our Board. 15 I want to send my appreciation to you, Dr. Holmes, 16 and your team for making those changes. So, Mike, I'll have 17 you introduce the item, but first, I failed to mention that 18 if anyone wishes to testify before our Board today to please 19 see our Clerk to the Board, Ms. Hutchens, who is over here to 20 the left, and provide her, if you have written testimony, 21 some 20 copies, if you would so that each Member of the Board 22 and the Executive team can have them, and if you wish to 23 testify orally, see her as well, and she will sign you up. 24 Mr. Kenny, do you have anything to add? 25 MR. KENNY: Thank you, Mr. Chairman, and Members of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 5 1 the Board. Our goal in revising the Resolution is to provide 2 you, Mr. Chairman and the Board Members, with a clearer 3 description of the work that will be performed and the costs 4 associated with that effort. 5 With that, I will turn over to Mr. Manjit Ahuja, 6 who will spend a few moments describing the changes that we 7 have made. 8 MR. AHUJA: Thank you, Mr. Kenny. Good morning, 9 Chairman Dunlap and Members of the Board. 10 Before you consider today's Research Resolutions, 11 we wanted to describe the changes we have made to their 12 format. 13 We decided to change the format of the Research 14 Resolution package in order to better explain the cost and 15 potential benefits of each proposal that we recommend to you 16 for funding. 17 We also wanted this new package to clarify the 18 significance to the Board for each proposal. 19 Our decision to re-work the reformat of the 20 Resolution package is part of our development of a new budget 21 form for bidders. 22 As you know, all our bidders are required to submit 23 a detailed, completed budget form along with each proposal. 24 Using that form, we prepare the budget summary page 25 as included in your Resolution package. We worked very PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 6 1 closely with Dr. Friedman as we developed this new form for 2 our bidders. 3 Each budget detail page in the new form calls for 4 cost justification. Previously, cost justification was not 5 as clearly displayed in the budget package. 6 We wanted to be sure that the new budget form would 7 contain clear instructions for our bidders. Therefore, we 8 gave a draft to several previous contractors and asked for 9 their input. 10 Specifically, we wanted their opinions and 11 suggestions regarding our proposed cost justification. 12 They provided us with useful comments that helped 13 us develop the new budget form. The most important change 14 made to our budget form is the inclusion of cost 15 justification for each line item. 16 These are required for all budget categories that 17 you see in the budget summary pages of the Resolution 18 package. 19 This slide shows the cost justification statement 20 that appears on the labor charges page for the new budget 21 form. 22 Note that it asks the bidder to describe why each 23 individual is needed, why the proposed level of effort is 24 necessary and why their specified labor rate is reasonable 25 and competitive. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 7 1 We have already received several proposals from 2 some bidders that contain completed budget forms according to 3 this format. 4 So far, we are pleased with the information we have 5 been receiving. 6 Using the information obtained from these forms, we 7 have decided to develop an improved Resolution package, which 8 I will describe next. 9 The Resolution package for the proposed Research 10 Projects include three sections. First, the Resolution 11 itself, second, a summary of the project, and third, the 12 budget summary. 13 We have not changed the format of the Resolution 14 itself. Also, we have not changed the format for the last 15 section of the budget summary. 16 However, we have changed the project summary 17 section of the Resolution package. We have expanded the 18 description that we previously included as the summary 19 section. 20 The summary section has been replaced with eight 21 subsections, as shown in the next few slides. On this slide, 22 note that we have added a section entitled "Significance to 23 the Board and Co-Funding." 24 The three subsections shown on this slide all 25 contain information that we did not previously include in the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 8 1 Resolution package. 2 In conclusion, we hope your new package more 3 clearly explains the costs and potential benefits of our 4 recommended Research Proposals. 5 Thank you for giving me the opportunity to describe 6 the changes we have made in the Resolution package. I will 7 be happy to answer any questions that you may have. 8 CHAIRMAN DUNLAP: Thank you for the presentation. 9 Dr. Friedman, do you have anything that you would 10 like to add? 11 BOARD MEMBER FRIEDMAN: No. 12 I just want to commend Manjit and Bob for being 13 very responsive to making the forms much simpler and much 14 more comprehensible to the Board to particularly short 15 questions, like what is the significance to the Board, are 16 going to help us a lot. 17 In addition, I think that you made a major step 18 forward in having accountability with respect to budget 19 justifications, and it will also make review after the fact 20 much more accurate. 21 So, I think you guys did a terrific job, and I'm 22 really thankful. 23 CHAIRMAN DUNLAP: Thank you, Bill. 24 I appreciate you kind of shepherding this through 25 the process for us as far as looking at it and making sure PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 9 1 that it reflected what ought to be our priorities. 2 Okay. Now, have all of the Board Members had an 3 opportunity to look at the Research Proposals before us 4 today? 5 Are there any additional concerns or questions that 6 you might have of staff? 7 BOARD MEMBER CALHOUN: Yes. I have a couple of 8 questions. 9 On 213, 214, I notice in the first paragraph, the 10 last sentence, since this particular Research Project 11 pertains to the emission testing of low-emitting utility 12 engines, and that is scheduled to be an item before the Board 13 I believe in March, and I notice the last sentence states 14 that the staff will propose some adjustments to the standards 15 to reflect the latest information. 16 Is this something that the staff is prepared to 17 share with the Board at this time, or is it something that 18 you would rather do at a later date? 19 MR. CACKETTE: We are bringing a regulatory 20 proposal to the Board at the end of March dealing with 21 utility engines, and we will be proposing some revisions to 22 the standards, so called second tier of standards, and this 23 project is designed to compliment that in assuring that we 24 have a full understanding of emission characteristics of the 25 engines that we believe will comply with those Tier II PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 10 1 standards, so it has been prepared with that in mind. 2 BOARD MEMBER CALHOUN: You still did not answer the 3 question. 4 I said, are you prepared to share with us the 5 proposed standards that you will? 6 You said there will be changes, and staff will 7 propose some adjustments in the standards to reflect the 8 latest information, and my question was, are you prepared at 9 this time, and maybe you aren't, maybe it is something you 10 want to think about or share with us at a later date, the 11 adjustments that you propose. 12 MR. CACKETTE: The Board item has gone to OAL and 13 the public here, a week from Friday for the public to view. 14 It is still going through a few final changes, but 15 in essence, we are proposing no changes to the level of 16 standards for the hand-held equipment, and we are proposing a 17 relaxation of the exhaust emissions standard for the 18 four-stroke engines, which are typically put into lawnmowers. 19 BOARD MEMBER CALHOUN: For four-stroke or 20 two-stroke? 21 MR. CACKETTE: The four-stroke. 22 These are the standards that were adopted in 1990, 23 they came in two phases, the first phase was implemented in 24 1995 and lawnmowers and weedwhips and things that you buy 25 today in California have reduced emissions, and there is a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 11 1 second phase of standards that the Board adopted in 1990, but 2 because it was such a long development time for those 3 standards they weren't to go into effect until 1999. 4 We did a review, and it was brought to the Board 5 here in 1996, I think it was, to look at the progress, and 6 staff expressed some concerns, and the industry expressed 7 concerns about the viability of the standards and we spent 8 the last two years looking at what technologies are emerging, 9 and there have been a lot of changes since we talked to the 10 Board in 1996, and we are preparing to suggest the changes 11 that I just described to the Board at that time. 12 This is basically a contract to test those new 13 technologies that have emerged. Some are actually 14 commercial, but we want to make sure that we understand, for 15 inventory purposes and other things like that, exactly what 16 their emission rates are for the one's that are still in the 17 two-stroke category, make sure we understand their 18 particulate emissions, because there is not much information 19 on particulate events, of course, a heightened concern would 20 be with the PM 2.5 ambient standards that have been adopted. 21 BOARD MEMBER CALHOUN: I don't have any problem 22 with the proposal, and it is a good study. 23 MR. CACKETTE: I do not mean to be coy, but there 24 are changes before the package goes out, and I did not want 25 to jump the gun here. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 12 1 I will be glad to discuss with any of you privately 2 what we are saying, what the situation is, and one week from 3 now the package will be out. 4 CHAIRMAN DUNLAP: As a matter of fact, Mike and I 5 were just talking about that this morning, there is some 6 ongoing technical discussions, as well as staff's working to 7 try to find the right approach. 8 I'm pleased that the dialogue is going on as it is, 9 and I'm just anxious for you guys to button it up and get it 10 going, so, I appreciate that, Tom. 11 BOARD MEMBER EDGERTON: I just want to make this 12 comment, that I don't recall ever having received so much 13 mail on one subject as I have on this, opposition to the 14 implementation of the two-stroke engine standards. 15 I am sure that is part of the reason why 16 Mr. Calhoun is asking, and I noticed a number of the other 17 Board Members, if not everybody, sort of stiffened up and 18 started listening very carefully, because there is tremendous 19 interest in that. 20 I want to know what I can say to some people before 21 we get to the hearing, and there may be nothing to say yet. 22 CHAIRMAN DUNLAP: Well, I might paraphrase what 23 Tom said, it is in the works, you know, staff is working on 24 it. 25 I know that Jim Schoning has been tracking it as PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 13 1 well. I don't ever want to ever encourage communication out 2 of the public's view, but I think you could probably call Jim 3 and he can tell you kind of what is going on generally. 4 MR. CACKETTE: I would also like to make a comment 5 that on the hand-hand-held's side, where it is traditionally 6 the two-stroke engines, now that is where the letter writing 7 campaign is about, it is not about the lawnmower side. 8 On that side, we have pretty much concluded what 9 the package will have in it, which is a no change in the 10 standard and a one year delay in implementation to the year 11 2000. 12 The part I was hedging on had to do with the 13 four-stroke where there are still a whole bunch of issues 14 that we are trying to resolve at the last second here before 15 the package goes public. 16 Staff is not planning to make any changes on the 17 side that is generating the letter writing campaign at the 18 moment other than the one year delay. 19 BOARD MEMBER EDGERTON: I have a question relative 20 to tremendous political importance down in Los Angeles with 21 respect to the noise blowers; are you all involved in that, 22 and one thought I had was that I would be very interested to 23 have a demonstration here, where we go forward to consider 24 some of this, because, a friend of mine told me a couple of 25 days ago that you can just go to Home Depot and you can get a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 14 1 two-stroke blower for X dollars and you can get an electric 2 blower that is rechargeable for just a few dollars more and 3 that the noise issue is taken care of and that the other 4 pollution issues are also taken care of, and if it is, Home 5 Depot's solution, it is pretty out there, isn't it, so, as 6 most of you have probably read, and many of you may not have, 7 I will just say so, that it was a three day fast down there 8 in Los Angeles. 9 CHAIRMAN DUNLAP: On the City Hall steps. 10 BOARD MEMBER EDGERTON: So, we don't want to have a 11 situation where we have people fasting at the ARB door, 12 depending on where it is, just to make that comment. 13 CHAIRMAN DUNLAP: We are talking about a research 14 item to pin some things down, so that we might make a more 15 informed decision. 16 I encourage you that if you have questions about 17 the research project to ask them. 18 MR. CACKETTE: We do plan on having a demonstration 19 of some of the equipment here on the morning of the Board 20 meeting. 21 Also, to tell you that when you considered this 22 item in 1990 there was probably more testimony on the noise 23 of the leafblowers than there was on the emissions standards 24 that we were trying to impose, so that the issues are very 25 intertwined. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 15 1 MR. KENNY: Just to add to that, we don't have 2 authority with regard to the noise. Our authority is limited 3 to the emissions. 4 BOARD MEMBER RAKOW: Is that an individual city, 5 the authority? 6 I noticed an article in the paper that the city of 7 Palo Alto, and some place else, are considering banning them 8 completely because of the noise. 9 Most places, like my town, regulate the noise, the 10 hours it can be used. 11 BOARD MEMBER RIORDAN: Just to comment, and I know 12 you want to get back to Research, I think the staff, 13 particularly for Ms. Edgerton and myself and anyone living in 14 southern California, the El Monte staff would be happy to 15 give a demonstration, but it does follow into assisting those 16 who use these, the newer requirements that we may continue to 17 ask for, are actually going to help in the noise area. 18 So, they are significantly, in my opinion, less 19 noisy, so you kind of get two birds with one stone. Now 20 going back to the Research, Mr. Chairman are you, if there 21 are no further questions, would you like to take this as a 22 packet? 23 CHAIRMAN DUNLAP: Yes, as a packet. 24 I would entertain a motion and a second to adopt 25 these seven. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 16 1 BOARD MEMBER RIORDAN: Yes. I have been briefed, 2 and I am very appreciative of what staff is proposing, and I 3 think some of it is going to be very helpful, and I would 4 like to move for approval. 5 BOARD MEMBER FRIEDMAN: Second. 6 CHAIRMAN DUNLAP: Okay. We have a motion and a 7 second. 8 Is there any further discussion? 9 All right. Very good. 10 We will proceed with a voice vote to approve the 11 Research Proposals as outlined, and we will be voting on 12 approving Resolutions 98-4, 98-5, 98-6, 98-7, 98-8, 98-9 and 13 98-10. 14 We will proceed with a voice vote. All those in 15 favor, say aye. 16 Any opposed? 17 Very good. The motion carries. 18 Thank you, Dr. Holmes. 19 All right. We will proceed to the second item, 20 98-1-2, a public meeting to consider funding criteria for the 21 Rice Straw Demonstration Project Fund. 22 This item will be the Board's consideration of a 23 proposed Rice Straw Demonstration Project Fund effort 24 description and invitation for grant requests. 25 This is a proposal from the staff for the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 17 1 implementation of Senate Bill 318, authored last year by 2 Senator Mike Thompson. 3 This Legislation established a grant program to 4 encourage the development of commercial activities which use 5 rice straw as raw material to produce marketable products. 6 Each year since 1992, rice growers in the 7 Sacramento Valley have been required to incrementally reduce 8 the amounts of rice straw that are burned. 9 By 2001, they will be allowed to burn no more than 10 25 percent of the total rice straw produced each year, only 11 to the extent necessary for the management of rice crop 12 diseases. 13 Only 38 percent of the crop planted last year was 14 allowed to be burned, and virtually of the more than 300,000 15 acres of straw not burned will be plowed back into the soil. 16 At the time that the phase-out law was enacted it 17 was hoped that commercial opportunities to use rice straw as 18 a raw material to produce marketable products such as paper 19 and building materials would emerge. 20 Unfortunately, those opportunities have been slow 21 to develop. As a result, the Board has been given a new 22 responsibility, which hopefully will help commercialize 23 several new uses for rice straw, and specifically, this 24 morning's business is adopt a program for administering the 25 grants authored under that new piece of Legislation, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 18 1 SB 318, enabling a bill specifically charged this Board with 2 approving funding criteria, which are proposed in the 3 material before us today. 4 This proposal before us is both an opportunity and 5 a responsibility, nearly $5 million is a great deal of public 6 money, and we must ensure that it is used wisely. 7 The opportunity is to provide incentives and 8 leadership for the development of commercially 9 self-sustaining businesses that now turn what is a waste 10 product into a raw material for production of marketable 11 products. 12 The Board's ICAT program has been extremely 13 successful promoting the development of new technologies to 14 control air pollution, we are all familiar with that, we have 15 had a number of years under our belt now where we have dealt 16 with ICAT. 17 This is similar in that it gives us the opportunity 18 to build on that success, and our objective today should be 19 to give the staff the direction and the guidance that it 20 needs to move forward. 21 On a personal note, we have had an awful lot of 22 interest. I know Jack Parnell in particular is aware of 23 this, from both the breathers in this region and the growers, 24 very interested in complying with the law, but at the same 25 time trying to make some use of this rice straw, so they have PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 19 1 two alternatives. 2 I have appreciated getting to know these growers, 3 and I have appreciated the efforts that the staff has made to 4 work with them, and I mentioned Jim Schoning earlier, he has 5 been very involved with this. 6 I am appreciative of that, and hopefully we can 7 get this thing going and get about the business of helping to 8 nurture alternatives. 9 So, with that lengthy introduction, Mr. Kenny, why 10 don't you take it from there. 11 MR. KENNY: Thank you, Mr. Chairman and Members of 12 the Board. I heartily agree with the Chairman that this 13 program is an opportunity. 14 Rice straw burning in the Sacramento Valley has 15 contributed to smoke and particulate matter air pollution 16 problems, particularly in the fall, for many years. 17 The legislatively mandated phase-out of this 18 practice has created difficulties for about 1500 rice growers 19 in the area, and rice growing is extremely important to the 20 Valley's economy. 21 Rice is the State's thirteenth largest agricultural 22 crop. Senate Bill 318 was enacted in October of last year 23 and we want to be in a position to award grants pursuant to 24 that Bill as soon as possible, and we would like to do that 25 by this May. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 20 1 To do that, we must issue invitations for grant 2 applications in February. Staff has had to move very quickly 3 during the last two months to come up with this proposed 4 program. 5 That has involved consulting with the Department of 6 Food and Agricultural, the Trade and Commerce Agency and the 7 University of California. 8 We have also sought input from experts in the field 9 entrepreneurship and business development. The staff has 10 held two workshops with program stakeholders and engaged many 11 other stakeholders in individual meetings and in telephone 12 conversations. 13 Finally, we have also maintained a web page to 14 interact with the public on this activity on our Internet 15 Website. 16 The staff has designed a program to completely and 17 competitively evaluate all grant requests received. 18 Proposals would be assessed just as any conventional 19 investment opportunity would be by an investor seeking a 20 monetary return. 21 The only difference is that the return we will be 22 seeking is in the establishment of projects that will consume 23 rice straw. 24 The technical feasibility of the activity, the 25 likelihood of a proposal, will result in a self-sustaining PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 21 1 business, and the local support for the project must be 2 carefully reviewed in this evaluation. 3 This program has many similarities for the Board's 4 ICAT program, as the Chairman noted. We use the ICAT program 5 as a starting place for developing this program. 6 The ICAT program is designed to advance air 7 pollution control technologies from concepts towards 8 commercial applications. 9 The Rice Straw Demonstration Project is intended to 10 take technically mature processes and help to establish the 11 first commercial applications of those processes. 12 I would now like the staff to present our proposal. 13 Lesha Hyrnchuk, of our technical support division, served as 14 the lead staff person for this work, and she will make the 15 presentation. 16 Lesha. 17 MS. HRYNCHUK: Good morning, Chairman Dunlap and 18 Members of the Board. We are presenting for your 19 consideration and approval today, the Rice Fund Demonstration 20 Project Fund, the revised program description and proposed 21 invitation for grants. 22 The Legislation which created the Rice Fund 23 Demonstration Project Fund, or the Rice Fund, as it is 24 called, required the Board to adopt the funding criteria at a 25 noticed public hearing. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 22 1 This slide shows the outline of my presentation. I 2 will first present some background information, discuss the 3 requirements of the Rice Fund as specified in the bill which 4 created it, the appropriated funding and goals of the Rice 5 Fund, discuss the proposed funding criteria and the 6 application review process, the proposed schedule of 7 administering the program and how the Rice Fund program was 8 developed and the public outreach efforts that were made. 9 First, a brief background. The 10 Connelly-Areia-Chandler Rice Straw Burning Reduction Act of 11 1991, also known as the Phase-Down Act, mandated the 12 phase-down of rice straw burning in the Sacramento Valley. 13 When the Act was written, it was anticipated that a 14 new market for rice straw would be created, which would 15 provide an alternative to burning rice straw. 16 However, six years into the phase-down 17 approximately 99 percent of the straw not burned continues to 18 be incorporated into the soil. 19 Four months ago I was before you presenting the 20 reports of the Legislature on the progress of the phase-down 21 of rice straw burning. 22 At that time I reported to you that one of the 23 findings of the Advisory Committee on Alternatives to Rice 24 Straw Burning was that only two percent of the straw produced 25 in the year 2000 would find commercial uses. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 23 1 Our recommendation, and the Advisory Committee's 2 recommendation, was to make funding available for rapid 3 development of alternatives to burning. 4 Senate Bill 318, authored by Senator Mike Thompson, 5 created the Rice Straw Demonstration Project Fund to 6 encourage the rapid development of projects which would use 7 rice straw by providing cost sharing grants for project 8 development. 9 The next two slides list the requirements of the 10 Rice Fund as specified in Senate Bill 318. The ARB is to 11 develop the funding criteria in consultation with the 12 University of California, the Trade and Commerce Agency and 13 the Department of Food and Agriculture. 14 The Board is to adopt the criteria at a noticed 15 public hearing. This is the reason that we are here today. 16 The Bill specified that the criteria include all of 17 the following, but not be limited to these. Proposed 18 projects shall use significant volumes of rice straw 19 annually. 20 Not more than 50 percent of the cost of each 21 project shall be funded. Public and private support for the 22 proposed projects shall be demonstrated, including local 23 community support from the rice growing community where the 24 project would be located. 25 The grants shall be authorized and allocated during PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 24 1 the 1997-98 and the 1998-99 fiscal years, and the grants may 2 be extended during a period not to exceed three years from 3 the date the grant is awarded. 4 Preference shall be given to projects located 5 within rice growing regions of the Sacramento Valley which 6 may be replicated throughout the region. 7 Projects should demonstrate technical and economic 8 feasibility. We have incorporated these requirements into 9 the funding criteria being presented for your consideration 10 today. 11 Funding for this Program came from Assembly 12 Bill 1571. This Budget Bill appropriated $2.5 million for 13 the Rice Fund for the 1997-98 fiscal year. 14 AB 1571 also specified that these funds shall be 15 reduced by the total amount that other State agencies expend 16 during the 1997-98 fiscal year, as determined by the Director 17 of Finance, for research, development or demonstration 18 projects on alternative uses of rice straw. 19 For this fiscal year the Fund has been reduced 20 $200,000 being spent on rice straw projects by other State 21 agencies. 22 In addition, up to 10 percent of the Fund may be 23 used for administering the Program. As a result, we have a 24 little over $2 million for grant awards this fiscal year. 25 Appropriations for next fiscal year is expected to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 25 1 be a similar amount. The goal of the Rice Fund is to help 2 create a market for rice straw as an alternative to burning. 3 Since Senate Bill 318 also requires the ARB to 4 develop a plan for using 50 percent of rice straws by the 5 year 2000, we have focused on projects close to 6 commercialization, projects which have the potential of 7 becoming self-sustaining within a few years, rather than on 8 projects in the research stage. 9 Straw collection and marketing projects at early 10 stages of development are also encouraged, since this is an 11 area which would benefit future projects even after the Rice 12 Fund Program has ended. 13 We have developed the Rice Fund Program and funding 14 criteria keeping in mind that the goal is to help create a 15 new market for rice straw. 16 We are asking Rice Fund applicants detailed 17 information about their commercialization plan, their 18 finances and about their technology in order to competitively 19 evaluate all projects being proposed. 20 Our goal is to choose those projects with the best 21 chance of succeeding in the marketplace. A bank loan officer 22 evaluates loan applications looking at the applicant's 23 chances of their business succeeding and the loan being 24 repaid. 25 We will evaluate the grant applications in the same PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 26 1 way, only the grant money invested in these projects will be 2 paid back to the community in terms of cleaner air. 3 First, I would like to just list the basic criteria 4 for which the projects will be prescreened. Projects not 5 meeting these four basic criteria will not be further 6 reviewed or considered. 7 First, of course, the projects must use Sacramento 8 Valley rice straw. Secondly, applicants must meet two 9 matching fund requirements. 10 The Rice Fund may only fund a maximum of 50 percent 11 of the total project's costs. This is specified in the 12 Legislation. 13 The applicant must contribute a minimum of 20 14 percent of the total project cost, or an amount equal to what 15 is being requested of the Rice Fund, whichever is less. 16 This requirement is to demonstrate significant 17 personal commitment to the project by the applicant, that the 18 applicant is also taking significant risk in the project. 19 This 20 percent minimum requirement however, may be 20 partially by credits for prior investments and in kind 21 contributions. 22 This could reduce the cash requirement 10 percent 23 of a project cost. Other funding sources would provide the 24 balance of the total project cost. 25 The third basic criterion is that the project must PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 27 1 be technically feasible and not depend on the technologies 2 not yet developed. 3 The fourth basic criterion is a completed 4 application by the specified deadline. 5 In the next several slides we will get to the 6 detailed funding criteria. This slide shows the four 7 categories of funding criteria and the maximum possible 8 scores. 9 The area of technical plan review has a maximum 10 possible score of 200. For this area we specified a minimum 11 qualifying score of 120. 12 Similarly, the area of business plan review also 13 has a maximum possible score of 200 and a minimum qualifying 14 score of 120. 15 The area of program goal satisfaction has a maximum 16 possible score of 200. The area policy assessment has a 17 maximum possible score of 140. 18 Now I will list the detailed criteria and the 19 weighting factors of each. The weighting factors are shown 20 in parentheses. 21 For the technical plan review, these are the four 22 criteria: Viable technology with a weighting factor of 20; 23 reasonable complete project, weighting factor of 10; stage of 24 development, weighting factor of 10; technical competency of 25 the team, weighting factor of 10. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 28 1 For the business plan review, the four criteria 2 are shown: Business merit and commercialization plan, 3 weighting factor of 20; straw supply plan, weighting factor 4 of 10; financial support and credit integrity, weighting 5 factor of 10; business competency of the team, weighting 6 factor of 10. 7 Program goal satisfaction comes from those criteria 8 specified in the Legislation. 9 There are four criteria, and they are: Annual use 10 of rice straw, with a weighting factor of 20; time to 11 self-sustaining operation, weighting factor of 10; project 12 location and replication, weighting factor of 10; local 13 community support, weighting factor of 10. 14 The last criteria category is policy assessment. 15 The two criteria are: Policy assessment, weighting factor of 16 25; environmental effects, weighting factor of 10. 17 The next two slides list the application review 18 process. As previously mentioned, applications will be 19 prescreened for the four basic criteria. 20 The applications will then be evaluated by ARB 21 staff and expert advisors and reviewers from the public and 22 private sectors. 23 These expert advisors and reviewers would have 24 their expertise in the technology area of the individual 25 projects or in business and finance. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 29 1 Outside advisors will be required to sign 2 confidentiality agreements and conflict of interest 3 disclosures. 4 Reviewers will recommend rating numbers for 5 criteria in areas where they are experts. The ARB staff will 6 consolidate these recommendations, assign the rating numbers 7 and complete the score for each application. 8 These advisors and reviewers may interview 9 applicants if additional information or clarification is 10 needed. 11 Applicants may be asked to rescope the proposed 12 project, schedule or the budget. Due to limited resources, 13 all eligible projects will not necessarily be awarded grants, 14 and some projects may be offered grants for smaller amounts 15 than requested. 16 Similar projects may not all be funded. We will 17 consider how each project would fit in the mix of projects 18 being considered. 19 On the basis just described, ARB staff will 20 recommend to the Board the projects with the best potential 21 of meeting the goals of the Rice Fund. 22 We expect to make these recommendations at the May 23 21, 22 Board meeting. The Board will make the final funding 24 determination. 25 This is a schedule of the Rice Fund Program PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 30 1 representing six-month's time. We started out with a public 2 workshop on December second to discuss concepts of the 3 Program and sought suggestions from the public. 4 On January 12, we released to the public the draft 5 document of the Program description and draft proposed 6 invitation for grant requests. 7 Last week on the twenty-second, we held another 8 public workshop to discuss the draft document and to seek 9 comments and suggestions from the public. 10 Today, we propose that the Board adopt the revised 11 document so that next week we may issue the invitation for 12 grant requests. 13 About two weeks later, we will have a workshop for 14 the applicants to take them through the application process 15 and to answer any of their questions. 16 About two weeks after that workshop, or at least 30 17 days after the invitations were issued in early March, the 18 grant requests will be due to the ARB. 19 One month later in early April, applicants will 20 make presentations of their projects to the public. Around 21 that same time period, clarification meetings may be held 22 with some applicants. 23 By the end of May, we plan to make recommendations 24 to the Board on which projects should be funded. This is a 25 very accelerated schedule, but it has been necessary in order PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 31 1 to award grants before the end of the fiscal year. 2 In developing the Rice Fund Program, including the 3 proposed criteria, we consulted and received the assistance 4 of many people. 5 As the law requires, we consulted with the 6 University of California, the Trade and Commerce Agency, and 7 the Department of Food and Agriculture. 8 Representatives of the three agencies are here 9 today and have assured us that they find the funding criteria 10 acceptable and are available to answer any questions that you 11 may have. 12 Steve Sherfer is here representing the Department 13 of Food and Agriculture, Pamela Aden is representing the 14 Trade and Commerce Agency, Dr. Charles Schoderquist of the 15 University of California. 16 We also consulted with experts in the private 17 sector in finance and business fields. We consulted 18 extensively and received assistance of ARB staff in the 19 Technical Support Division, staff of the Board's ICAT Program 20 in the Research Division, staff in the Finance and Grants 21 Management areas of the Administrative Services Division, the 22 Office of Legal Affairs answered our many legal questions, 23 and the Office of the Ombudsman assisted us in making 24 contacts of the University of California and in the finance 25 area in the private sector. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 32 1 This document is the result of a collaborative 2 effort of many people who gave their time freely, responded 3 very quickly and often on very short notice. 4 The Bill creating this Program was enacted in 5 October, and here we are just three months later with the 6 Program developed and in place. 7 We have also made extensive efforts to reach out to 8 all stakeholders, including prospective Rice Fund applicants, 9 the rice industry, environmental community, other State and 10 local agencies and Legislative staff. 11 We held two public workshops and many individual 12 meetings and telephone conversations. We have developed a 13 mailing list of over 250 people interested in the Rice Fund. 14 We have created an internet Website to share 15 information about the Rice Fund where we have posted all 16 workshop and meeting notices, agendas and handouts. 17 All information about the Rice Fund is made 18 available on this site, and E-mail alerts are sent out 19 notifying people that new information has been posted there. 20 This E-mailing list has grown to over 80 people 21 interested in the Rice Fund. People have also been using the 22 Rice Fund E-mail address to send their comments and questions 23 about the Rice Find. 24 In today's cyber age, outreach to the public has 25 been made more extensive and efficient. Stakeholders have PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 33 1 been very positive about this Program and have offered 2 constructive suggestions. 3 We have made changes to the draft document to 4 reflect comments received, including those at last week's 5 public workshop. 6 We made two changes to the funding criteria. The 7 environmental effects criterion was given its own category to 8 give more weighting to projects which would have a better 9 impact on the environment. 10 The policy assessment criterion was revised to 11 consider how proposed projects would fit in with the existing 12 farming systems and with the goals, objectives and policies 13 of the local communities. 14 Changes were also made for clarification, such as 15 the addition of a fourth example that was added to clarify 16 the matching funds requirement. 17 Additional revisions were made to further 18 streamline the process for applicants and award recipients. 19 Many additional nonsubstantive changes were also 20 made. The revised version shows the changes with the 21 deletions noted as strikeouts and the additions noted by 22 shading. 23 We are asking the Board to consider for adoption 24 this revised program description and proposed invitation for 25 grant requests and to direct the staff to issue the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 34 1 invitations. 2 Since we started a little early, I would like to 3 check if Dr. Schoderquist has arrived yet. I would like to 4 introduce Dr. Charles Schoderquist, Regent of the University 5 of California, and President of the Technology Development 6 Center. 7 He also teaches Entrepreneurship, Science and 8 Technology Management. Dr. Schoderquist interjected the 9 business sense that we lacked and convinced us of the need 10 for flexibility and specifying the information we were asking 11 of prospective applicants. 12 Dr. Schoderquist. 13 CHAIRMAN DUNLAP: Good morning. 14 DR. SCHODERQUIST: Good morning. I was told we 15 were going to start a little later, so I am glad that I made 16 it. 17 Those are very nice words, thank you very much. 18 The University has participated, of course, with ARB and the 19 rice industry forever on all sorts of issues, so I don't 20 think any of this is new to us. 21 Coincidentally, I got my Ph.D. in agricultural 22 chemistry at UC Davis slogging around in rice fields working 23 on pesticide problems since 1969, so I have a little bit of 24 knowledge of what is going on. 25 We participated as requested in the law in the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 35 1 drafting these documents that you are looking at, and they 2 are a good set of documents, and I am really pleased to be 3 able to help you move forward in any way that I can in my 4 private company, or with the University, and would entertain 5 any general questions about it if you would like. 6 I think I am just here to introduce myself as I 7 did. 8 CHAIRMAN DUNLAP: We appreciate that. Thank you 9 for coming, and we appreciate the expertise that you bring to 10 this effort and helping us get it on the right track. 11 Anyone have any questions? 12 Dr. Friedman. 13 BOARD MEMBER FRIEDMAN: I am curious, first of 14 all, this is a terrific job that you have done, the approach 15 is sound and the evaluation process really has, it is strong 16 and was curious, beyond these monies, what does the Board 17 have in its research portfolio with respect to other aspects 18 of science and rice straw? 19 How much money, in addition to the money provided 20 by this Bill, do we have out for research in rice straw? 21 MR. SCHEIBLE: At this time our research budget is 22 not able to support to a great extent such a specialized 23 effort. 24 We are looking into the impacts of smoke on health 25 as a current item in this year, in terms of looking for PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 36 1 alternatives, or this type of legislation was really 2 something that was necessary for us to be able to get into 3 the area. 4 What we do mostly is we follow the efforts of 5 others in this area. 6 CHAIRMAN DUNLAP: Does that do it for you, Bill? 7 Okay. Thank you. 8 Anything else, Mr. Kenny, that you would like to 9 add? 10 MR. KENNY: Nothing from me. 11 CHAIRMAN DUNLAP: All right. Since this is a 12 regulatory item, it is not necessary to close the record, but 13 we have a Resolution before us. 14 Before we do that it is my understanding that we 15 have two witnesses that wish to stand up and speak in 16 support. 17 Joe Carrancho is one, and J.P. Cativiela. Well, if 18 either of you are here, you are welcome to come up and speak. 19 The meeting is running smoothly, and we are in 20 pretty good moods, so nobody needs to be intimidated about 21 coming forward, so just check in with the Clerk over here, 22 and we will get you going. 23 MR. CATIVIELA: Thank you, Chairman Dunlap. 24 We are here today, J.P. Cativiela with the 25 California Rice Industry Association, we are here today to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 37 1 support the staff recommendation. 2 Staff has done an excellent job in drafting the 3 criteria that we believe will work well towards meeting the 4 ultimate goal of the Program, which is to come up with some 5 ways to actually use up the straw that are commercially 6 viable in a short time. 7 We support that, and as we have said before, we 8 stand ready and eager to assist you in evaluating these 9 proposals to make sure that they, in fact, meet those goals. 10 Thank you. 11 CHAIRMAN DUNLAP: Okay. Very good. I appreciate 12 that. 13 Any questions of the witness before he gets away 14 from us? 15 All right. Thank you. 16 Joe, good morning, good to see you. 17 MR. CARRANCHO: I have been in this since 18 inception. Thank God, we are finally here. 19 The only thing that I can say about it is that 20 there isn't enough money, but I want to commend the staff, 21 especially you, for all of the work that you have done. 22 I think that they reached out to all of us. This 23 is something that is really needed, and as a member of Rice 24 Producers of California, we stand ready to assist you in any 25 way that we can. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 38 1 We encourage you to use the farmers, since we are 2 the one's that are in need of getting this straw off of our 3 fields. 4 Thank you. 5 CHAIRMAN DUNLAP: Thank you, Joe, and thank you for 6 coming this distance to get here. We know you drive a long 7 ways every time you show up. 8 Any other witnesses? 9 Hello. Good morning, we will let you introduce 10 yourself. 11 MS. ADEN: My name is Pamela Aden, I am the 12 Assistant Economic Secretary for Economic Development at the 13 California Trade and Commerce Agency. 14 Thank you for letting me speak this morning. I 15 just wanted to report that the Trade and Commerce Agency has 16 been actively involved in developing the proposed criteria 17 before you today, and we have worked very cooperatively with 18 the Food and Agriculture staff, the Air Resources Board and 19 the University of California on this. 20 Our Agency strongly supports this criteria as 21 submitted to the Board. In closing, I would just like to say 22 that I would like to commend the staff of the Air Resources 23 Board for developing such a strong document in such a 24 compressed time frame. 25 Thank you. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 39 1 CHAIRMAN DUNLAP: We appreciate your coming, and 2 we know that you actively track the work of many regulatory 3 boards, and we generally get a letter and sometimes they are 4 not quite as complimentary for reasons that are yours, but we 5 do appreciate your showing up, I do want to acknowledge that. 6 Thank you. 7 Any questions of the witness who has left us, or 8 staff? 9 All right. Yes. 10 Is there another witness who would like to speak? 11 Steve Sherfer, Department of Food and Agriculture. 12 MR. SHERFER: I would just like to echo the 13 comments of the other cooperating agencies. 14 ARB staff has done just a yeoman's job on this task 15 given the timeframes, and Lesha, especially, has just been so 16 wonderful to work with in all of this, keeping us informed 17 every step of the way, assuring that it's a collaborative 18 process, and the work she did really to turn this around so 19 quickly, she deserves a special thank you, I believe. 20 Also, just the way industry has been brought into 21 this, we are especially sensitive to that, of course, and I 22 think this Program is really one of the focal points that can 23 bring all of the stakeholders together and that is so 24 critically important. 25 So, I wish you every success, and Food and Ag PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 40 1 stands ready to help you move this process along. 2 CHAIRMAN DUNLAP: Good. Well, thank you. 3 I know it maybe wasn't outlined perhaps as clearly 4 in our presentation, or the staff presentation, that you did 5 a fine job. 6 You are truly a partner with us in this effort. 7 We appreciate that, and we had very high level 8 participation, A.J. Yates, the Undersecretary, has been very 9 active, and on occasion, I think, he has even shown up here 10 on this issue, hasn't he, Mike? 11 MR. SHERFER: Yes. 12 Actually, he would have been here today. He had a 13 personal tragedy in his extended family yesterday, and so he 14 needed to take care of that. 15 CHAIRMAN DUNLAP: Okay. Well, give him our 16 regards. 17 Thank you. 18 Jack, I'm kind of looking to you because you are 19 our ag expert, is there anything that you want to say? 20 BOARD MEMBER PARNELL: Only to say that I want to 21 compliment the staff for all of the work that they did. 22 They did a yeoman's job it has been said, but I 23 echo everything that has been said to turn this very 24 sensitive issue around, and the timeframes that they had to 25 work within is really a record, I think, for a government PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 41 1 agency, so for that we are very thankful. 2 I attended most of the workshops, and I can attest 3 that they heard from everyone in the rice industry, everyone 4 who would like to be in the rice industry, everyone who 5 thought that someday they could possibly be in the rice 6 industry, and they were very attentive of all of that 7 dialogue. 8 I will say that I hope, as the process moves 9 forward, that you keep an eye on the key goals of the 10 Legislation, and that is for some technology to be funded 11 that has a reasonable likelihood of using substantial amounts 12 of rice straw. 13 As you look at the grading of all of those 14 criteria, one could conclude, unless you are careful, that 15 might be lost as just a part of all of it. 16 I understand what you went through, and this is not 17 a criticism, but just a caution on the record that as the 18 reviewers look at projects as they come in, and I think the 19 success or failure of what we are about to embark upon is 20 going to be largely committed to a group of reviewers, and 21 those are yet to be selected. 22 So, I commend you for a grand job and I think this 23 is destined for success, and the rice industry, I know, is 24 very appreciative of your efforts. 25 CHAIRMAN DUNLAP: Any other comments or questions PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 42 1 from the Board? 2 BOARD MEMBER RAKOW: Will the same team of 3 reviewers and advisors be the one's that will carry forth 4 through the whole year, and so it would be the same people 5 looking at all applicants? 6 MS. HRYNCHUK: In the business area, yes, we 7 believe that they would be able to advise us across all of 8 the applications. 9 However, in the technology area, we will look for 10 experts in the technology area of the particular project. 11 BOARD MEMBER RAKOW: But it would be the same 12 people who have the expertise in technology that would look 13 at all of the applicants in any given year. 14 MS. HRYNCHUK: In some cases, yes. In other cases 15 we will have advisors that would only look at those projects 16 for instance, that deal with paper and pulping, creating rice 17 straw pulp. 18 CHAIRMAN DUNLAP: I think I know where Ms. Rakow is 19 going, she is concerned that some consistent criteria be 20 applied. 21 BOARD MEMBER RAKOW: Some consistent view from 22 individual advisors. 23 CHAIRMAN DUNLAP: If I might bring up something 24 that Mr. Parnell exposed me to on this issue, he, some months 25 ago acquainted me with some entrepreneurs and scientists that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 43 1 looked at the potential likelihood of rice straw being used 2 as a feed supplement for livestock, and there is a certain 3 set of, there is some expertise that one would have in that 4 area that might not be relevant to the paper area, but as far 5 as the economic viability, they will have the same folks, but 6 they will actively go out and seek people with expertise, for 7 example, in that area as I cited, or any other. 8 So, I am comfortable with that. Not to pick on 9 Jack for that great example, but there are a lot of 10 interesting things for the diverse avenues that one might be 11 able to proceed on to find a productive use for this. 12 BOARD MEMBER RAKOW: That makes sense. I guess 13 that the element I was looking at is that one particular 14 score might be weighted more heavily because that one advisor 15 or reviewer has more expertise than another equally good 16 project. 17 I don't how you figure all of that out. 18 BOARD MEMBER FRIEDMAN: Well, there really is a way 19 to do that, with dissimilar study groups, evaluate grant 20 proposals, there is a way to, if you will, normalize the 21 differences between evaluation groups and the research 22 division how to do that, and if indeed one review group is 23 much tougher than another, and therefore, all applications in 24 that category suffer, there really does need to be an 25 appropriate adjustment. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 44 1 I would just ask that it be looked at very 2 carefully and employed. As you know, both NFS and the NIH do 3 that routinely on their grant requests. 4 MS. HRYNCHUK: The ICAT people here did advise us 5 of that problem, potential problem, that someone, as in 6 school, teacher is an easy grader and another on is a harder 7 grader. 8 Basically, we were advised that we should have the 9 people actually determining the scores be responsible for 10 scoring all the applications in that technology area. 11 However, we will to bring in individual experts 12 that may only have the expertise in the one particular 13 technology area, and they will then advise the other. 14 BOARD MEMBER RAKOW: Thank you. 15 CHAIRMAN DUNLAP: Okay. Very good. 16 If there are no other comments, the Chair would 17 entertain a motion of support on 98-2. 18 BOARD MEMBER PARNELL: So moved. 19 CHAIRMAN DUNLAP: There is a motion by Parnell and 20 a second by Dr. Friedman to move this item. 21 Any other discussion that needs to occur? 22 We will proceed with a voice vote. 23 All those in favor, say aye. 24 Any opposed? 25 The motion carries unanimously. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 45 1 Staff, thank you for being flexible. I know that I 2 took this item also out of order, and I want to encourage Mr. 3 Kenny that if that happens again he is welcome to correct the 4 Chair. 5 BOARD MEMBER PARNELL: I failed to mention at the 6 onset of this meeting that I wanted to personally comment on 7 Supervisor Roberts acumen in bringing to Los Angeles one of 8 the great Super Bowls that have ever been held and regardless 9 of the outcome, I think he was totally involved, I mean in 10 San Diego. 11 BOARD MEMBER ROBERTS: It was San Diego. 12 BOARD MEMBER PARNELL: I really appreciate the fact 13 that you personally involved yourself in making sure this was 14 a great, spectacular event. 15 BOARD MEMBER RIORDAN: Especially the last two 16 minutes. 17 BOARD MEMBER ROBERTS: We counseled John Elway all 18 the way down to the last few minutes, and I would have to 19 tell you on a little TV show that I do regularly in 20 San Diego, about three weeks before the Super Bowl, when 21 there were still four teams, that only one person predicted 22 the right winner, and I was glad to be that person. 23 It was successful in every respect. 24 CHAIRMAN DUNLAP: That is great. Those in the 25 audience who don't know it, Supervisor Roberts is a great PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 46 1 professional sports enthusiast and we have appreciated 2 getting to know him. 3 Up here, Ron, our team is the 49ers, because they 4 have a practice facility not too far from Sacramento, which 5 they are moving actually the other direction, I am told. 6 All right. Let's go to the next item, 7 98-1-1, a public hearing to consider amendments to the 8 California Clean Air Act to Non-Vehicular Source Regulations. 9 It appears, Mike, that I have scared staff, they 10 didn't want to come up because they thought that I would be 11 calling the other item or something. 12 MR. KENNY: We just thought that we would wait and 13 see where you were going. 14 CHAIRMAN DUNLAP: This, as I said, is a public 15 hearing to consider amendments to the California Clean Air 16 Act Nonvehicular Source Regs. 17 This item is a proposal to authorize continuation 18 of the California Clean Air fee, a regulation for 19 nonvehicular sources. 20 This Program requires the State's largest 21 stationary source to fund some of the cost of implementing 22 the nonvehicular source related provisions of the California 23 Clean Air Act. 24 This Fee Program authorizes the Board to collect up 25 to $3 million in fees. Fees were collected under the Program PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 47 1 for the last eight years. 2 The Act, which authorizes these fees contained a 3 sunset provision which ended collection of these fees after 4 this 1996-97 fiscal year. 5 Last October, the Governor signed AB 1583, which 6 reinstated and extended the authority to assess fees through 7 June 30, 1991. 8 The sunset provision remained, it was just 9 extended. The funds from these fees have been used to 10 support a variety of important ARB activities, such as ozone 11 transport studies, the development of air quality indicators, 12 the development of improved air quality models, expanded 13 monitoring, improved inventories and technical assistance to 14 local air districts. 15 The fruits of the work have played an important 16 role in development of the 1994 Ozone Attainment Plans, and I 17 believe these fees have been put to good use. 18 I know that I personally have put staff through the 19 paces to explain their use to me. With that, I would like to 20 have you, Mr. Kenny, introduce the item and also provide us 21 any anecdotal comments as the presentation concludes. 22 MR. KENNY: Thank you. These fees have been used 23 to fund projects that have greatly improved our understanding 24 of California's air pollution problems. 25 We are aware of numerous instances where work PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 48 1 funded by these fees as a result in the development of more 2 cost effective attainment strategies, which in turn reduce 3 the cost of emission controls to California industries. 4 I believe that these cost reductions far outweigh 5 the cost of the fees that were collected during the life of 6 the Program. 7 In addition, this fee regulation has provided an 8 incentive for business itself to reduce its emissions. 9 Over the life of the Program, emissions subject 10 to this fee have decreased by about 80,000 tons per year of 11 NOx and 15,000 tons per year of ROD. 12 Because of these emission reductions the numbers of 13 large facilities subject to the fee regulation have dropped 14 from 116 when the program began to just 60 this year. 15 Although the Clean Air Act fees are not solely 16 responsible for these emission reductions, they were one of a 17 number of factors that did contribute to substantial 18 reductions in emissions from stationary sources during the 19 last eight years. 20 As the Chairman has indicated, the fees may not 21 exceed $3 million per year, and they have remained at this 22 level for many years. 23 By law the fees are collected from large sources 24 located in places where the State ambient air quality 25 standards are violated and which emitted at least 500 tons PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 49 1 per year of specific pollutants. 2 The 60 sources impacted by the fee proposal you 3 will consider today emit about 130,000 tons of pollutants per 4 year at present. 5 The proposal before you today is similar to 6 regulations previously adopted by the Board for this fee 7 program. 8 It does, however, differ in two ways. First, the 9 regulation covers the Fee Program for both fiscal years 10 1997-98 and 1998-99 and for future years if a fee authority 11 is extended again. 12 Second, the proposed regulation contains the 13 formula used for calculating a fee amount rather than 14 specifying the dollar amount itself to be collected by each 15 district. 16 This structural change is being proposed to 17 streamline the process and prevent the need to bring this 18 item back to the Board in April. 19 The staff presentation will discuss details of the 20 proposed Clean Air Act Fee Regulation including emission 21 inventories used to calculate the fees. 22 The staff will also discuss the methods used to 23 compute the fees. At this time, I would like to call upon 24 Sheryl Taylor, of the Technical Support Division, to give the 25 staff presentation for this item. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 50 1 Sheryl. 2 MS. TAYLOR: Good morning, Chairman Dunlap, Members 3 of the Board. My name is Sheryl Taylor. I am an Air 4 Resources Engineer in the Technical Support Division. 5 The proposed regulation amendments that I will 6 describe today are to secure the funding needed to help 7 implement the provisions of the California Clean Air Act 8 relating to nonvehicular sources. 9 I will now outline my presentation for you. I will 10 provide an overview of the proposal. 11 Next I will explain the process we used in 12 developing the regulations and discuss the method used to 13 calculate the fee rate. I will finish up by describing the 14 economic impacts of the proposed regulations on business. 15 In the California Clean Air Act, the Legislature 16 imposed a number of requirements on the Board and the 17 districts. 18 In order to fund a portion of the work related to 19 nonvehicular sources, the Act authorized the Board to collect 20 fees up to $3 million per year from facilities which meet 21 certain criteria. 22 I will discuss these criteria later in my 23 presentation. The Fee Program was originally established in 24 1989 and provided funding for each of eight years through 25 1997. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 51 1 This Fee Program was scheduled to sunset under the 2 California Clean Air Act. Then the Legislature passed 3 Assembly Bill 1583, which was signed by the Governor in 4 October of 1997. 5 This Bill extended the Fee Program for two 6 additional years through the end of fiscal year 1998-99. 7 Next, I will cover the major provisions of the 8 California Clean Air Act Fee Regulations. Facilities subject 9 to the regulations are those located in a district which is 10 designated as being nonattainment for State ambient air 11 quality standards. 12 The designations used are those in place as of 13 July 1, for the year for which the fees are being collected. 14 A facility is subject to the fees if it emitted 500 15 or more tons per year of a nonattainment pollutant or 16 precursor. 17 The most recent emission data are used in the fee 18 calculation. For this fiscal year, emission data from 19 calendar year 1995 are used. 20 The fees collected under this Program only cover a 21 portion of ARB's cost of implementing the Nonvehicular Source 22 Program elements as described in the Act. 23 The maximum amount that can be collected is $3 24 million per year. The regulations also provide for the 25 recovery of district administrative costs related to the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 52 1 assessment and collection of fees. 2 The ARB was directed by the Legislature in Assembly 3 Bill 1583 to give priority to several activities. These 4 activities are to identify air quality related indicators 5 that may be used to measure or estimate progress in the 6 attainment of State ambient air quality standards, to 7 establish a uniform methodology for assessing population 8 exposure to air pollution, to update and approve the emission 9 inventory, including emissions that cause or contribute to 10 the nonattainment of ambient air quality standards, to 11 identify, assess and establish mitigation requirements for 12 the effects of interbasin transport of air pollutants and to 13 update the ARB's guidance to districts on ranking control 14 measures for nonvehicular sources based on the cost 15 effectiveness of those measures in reducing air pollution. 16 These activities have been part of ARB's program 17 for many years. The results from these programs have proven 18 to be a good investment, because they played an important 19 role in the development of the 1994 Ozone Nonattainment Plans 20 and will continue to play a vital role in future air quality 21 planning. 22 These studies provided information which has 23 improved our understanding of the factors that influence the 24 formation and transport of ozone in California. 25 This improved science allowed the development of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 53 1 more cost effective emission control plans. I described 2 earlier the major provisions of the fee regulations. 3 Now I would like to cover how the proposed 4 regulations are different from the fee regulations adopted in 5 the last eight years. 6 These changes are being proposed to streamline the 7 fee approval and collection process. 8 First, the proposed regulations would adopt the 9 process for calculating the emission fee rather than adopting 10 the actual fee rate as has been done for the last eight 11 years. 12 The proposed regulations specify dates for 13 emissions reporting and verification, facility notification 14 and the formula for calculating the dollar per ton fee rate. 15 It is the same formula that has been used for the 16 last eight years. We believe this process will allow us more 17 flexibility, because the prior regulation locked in the fee 18 rate and made it difficult to accommodate last minute 19 corrections to facility emission rates. 20 Second, by adopting a formula for calculating the 21 fees rather than a fee rate, it is possible for this fee 22 regulation to cover more than one fiscal year. 23 We are proposing that this regulation would cover 24 both of the fiscal years which are included in Assembly 25 Bill 1583. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 54 1 This will eliminate the need for the Board to 2 revisit this fee regulation for the next fiscal year this 3 coming spring. 4 The language in the proposed regulation is 5 structured so that the regulation could be applied to 6 subsequent future years if Legislation further extends this 7 Fee Program beyond the end of fiscal year 1998-99. 8 Mr. Schoning will discuss the public process 9 involved in the development of the proposed regulation in 10 more detail later. 11 Therefore, I will just cover the highlights of the 12 process. Once we became aware of Assembly Bill 1583, we 13 began keeping districts apprised of the status of the 14 Legislation. 15 After the Governor signed the Legislation last 16 October, we formally notified all districts and asked them to 17 review the emissions data from potentially affected 18 facilities. 19 We also began the process of notifying all affected 20 facilities and inform them about the Fee Program, the 21 consultation meeting and the Board hearing. 22 Because of the short time frame for developing the 23 regulation, we took the extra step of personally telephoning 24 each facility to ensure that they were informed about the 25 proposed regulation. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 55 1 At a public consultation meeting in December, we 2 provided information about the proposed regulation. The two 3 facility representatives attending expressed concerns with 4 some of the provisions of Assembly Bill 1583, but not with 5 the proposed regulations themselves. 6 The Board material, which includes the hearing 7 notice, staff report and proposed regulation, was sent to all 8 affected districts and facilities on December 12. 9 The fee rate calculated pursuant to this regulation 10 is based on collecting $3 million per year. A generic 11 formula, which will be discussed in more detail, is used to 12 calculate the fee rate. 13 The fee rate is $23.95 per ton based on the 14 emission information received as of December 12, when the 15 staff report was published. 16 I will now discuss how the formula is used to 17 calculate the fee rate. First, we determine that the Board 18 needs to collect the full $3 million to continue the tasks 19 specified by the California Clean Air Act. 20 This value is shown as R in the formula on the 21 slide. Second, an adjustment is added to cover possible 22 undercollections that result from things like bankruptcies 23 and unanticipated closings of businesses. 24 This adjustment, which will not exceed three 25 percent, or $90,000, is shown as A in the formula. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 56 1 In previous years this adjustment was 10 percent, 2 but past experience indicates that a smaller reserve will be 3 adequate. 4 Third, if more than $3 million was collected in a 5 fiscal year, this excess was covered over and subtracted from 6 the adjusted $3 million. 7 This value is shown as C in the formula. There is 8 no carryover fund for this year because no adjustment was 9 included in the fee calculation last year. 10 We did this at the time because we thought that 11 fiscal year 1996-97 was going to be the last year of this fee 12 program. 13 However, there could be some carryover in the next 14 fiscal year. Finally, the fee rate and dollars per ton is 15 calculated by taking this total adjusted revenue contained in 16 the numerator of the equation and dividing it by the total 17 emissions subject to the fee regulation. 18 The total emissions are represented by E in the 19 equation. The fee to be paid by each facility is calculated 20 by multiplying the fee rate by the emissions subject to the 21 fee regulation from that facility. 22 Attachment E of the staff report lists the 23 emissions and estimated fees for each of the 60 facilities 24 subject to the proposed regulation. 25 The cost of the proposed fees to affected PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 57 1 businesses vary depending on how much they emit. The fee for 2 an individual company emitting close to the 500 ton per year 3 threshold would be around $1,500. 4 The fee for one very large corporation operating at 5 several locations around the State would be around $500,000. 6 The Administrative Procedures Act requires that 7 agencies determine the economic impact of regulations on 8 businesses. 9 Based on the staff's methodology for evaluating 10 economic impacts, we believe that adoption of these 11 regulations will not have a significant impact on the 12 profitability of California businesses. 13 This is because the affected companies are among 14 the largest in the State, both in size and financial 15 strength. 16 Also, we believe that adoption of the regulations 17 will not significantly impact, or the ability of California 18 businesses to compete with businesses in other states, will 19 not affect the creation or elimination of jobs within 20 California and will not impose a noticeable impact on the 21 creation, elimination or expansion of businesses in 22 California. 23 This slide provides a history of the Fee Program 24 for the last eight years as well as related information for 25 this fiscal year. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 58 1 You can see that the number of the facilities in 2 the Program have dropped from 116 in the first year of the 3 Program to 69 last year, and down to 60 for this year. 4 The emissions subject to the regulation this year 5 are about half of what they were in the highest year and have 6 generally been decreasing yearly since the Program began. 7 As a result, the fee rate has been increasing since 8 the inception of regulation. There is a particularly large 9 increase between last year and this year. 10 This slide shows the reasons for the increase in 11 the fee rate between this year and last year. First, there 12 were large emission reductions due to updated emission 13 estimates for power plants and refineries. 14 Second, a number of facilities reduced their 15 emissions below the 500 ton per year threshold and dropped 16 out of the Program. 17 Third, there are no carryover funds from last year. 18 And fourth, because all reserve funds were used to 19 reduce the fees for fiscal year 1996-97, a new reserve needs 20 to be established for funds collected this year. 21 Also, some emission reductions are reported as a 22 result of refined emission estimation methods. We have 23 received two written comments on this item. 24 The first letter is from North American Chemical 25 Company. This company expressed concern about the likelihood PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 59 1 that it would be invoiced for the fees for both fiscal years 2 1997-98 and 1998-99 within the same business year. 3 We have discussed this with both the district and 4 the facility and have worked out a solution that we believe 5 is acceptable to all parties. 6 The second letter is from the Mojave Desert Air 7 Quality Management District. The district has requested that 8 emissions be reduced for one of their facilities. 9 They have subsequently notified us that emissions 10 from a second facility should be increased. Because of these 11 changes the current fee rate is now decreased to $23.80 per 12 ton. 13 Mojave district's staff has told us that there may 14 be more emission changes in the near future. The changes 15 should not significantly affect the current fee rate. 16 This does not present any problems because the 17 regulation expressly allows for emission changes after 18 today's Board hearing without any changes to the regulation. 19 This concludes my presentation. I will be glad to 20 answer any questions that you may have. 21 CHAIRMAN DUNLAP: Any questions of staff at this 22 juncture? 23 We have one witness, and we need to hear from Mr. 24 Schoning. 25 BOARD MEMBER CALHOUN: Staff mentioned the fact PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 60 1 that they received a letter from North American Chemical 2 Company about the possibility of having to pay fees in a 3 given fiscal year. 4 You said you worked out a solution with the local 5 districts and the Company; would you care to share those 6 solutions with us? 7 MR. AGID: The regulation says that if a facility 8 is late in paying a fee that the district could impose a late 9 penalty, and we expressed to the district staff that we would 10 find it acceptable for that facility to be late with its fee 11 payment for the second year of this Program, and they said 12 that was fine, and we talked to the facility, and they are 13 communicating with each other, and there will not be a 14 penalty for that facility for a late fee. 15 CHAIRMAN DUNLAP: All right. Why don't we hear 16 from you, Mr. Ombudsman. 17 MR. SCHONING: Thank you, Mr. Chairman and Members 18 of the Board. As you have already heard, stakeholder 19 outreach on this item was carried out by staff in two 20 specific phases. 21 First, with the anticipation of the possible 22 extension of the Clean Air Act Fee, an outreach effort was 23 made and began to notify air districts and to verify their 24 source emission inventories. 25 And second, a comprehensive effort was made to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 61 1 reach out to stakeholders, districts and affected industries 2 in the actual fee registration development, review and 3 comment period. 4 During the emission inventory verification phase, 5 which began last July of 1997, all affected air districts 6 were notified about the regulation development and about the 7 need for the most accurate emission inventories. 8 Ongoing discussions occurred between ARB and the 9 districts both in writing and by telephone throughout the 10 development of the draft regulation, which was published in 11 December of 1997. 12 At that time, the draft fee regulation was placed 13 on the ARB web page. All affected facilities, as you saw, 14 some 60 total, were notified of the regulation by mail and 15 contacted by ARB staff by telephone. 16 All air districts, as well as a number of industry 17 associations, including the California Council for 18 Environmental and Economic Balance and the Western States 19 Petroleum Association, were also notified. 20 Over a 100 groups and individuals were invited to 21 make comments at a December 10 workshop held here in 22 Sacramento. 23 Three individuals, as you heard, participated in 24 this workshop. One represented a large glass manufacturing 25 plant in San Joaquin Valley, and another represented a large PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 62 1 concrete plant in Monterey and a staff member from the San 2 Luis Obispo County Air District. 3 Although there were, as staff has indicated, there 4 were some concerns regarding the statutory application of the 5 fee only to large sources, they were very supportive of 6 staff's outreach efforts and the clarity of the actual 7 regulations before you. 8 Finally, the final draft report was sent to all 9 affected districts and facilities 45 days prior to today's 10 Board hearing. 11 Overall, in our judgment, the staff has done an 12 excellent job of involving stakeholders in the development of 13 this regulation and responding to their views about the basis 14 of the Clean Air Act fees and how those fees should be 15 collected. 16 CHAIRMAN DUNLAP: Thank you, Jim. Good. 17 Any questions of Jim, before we hear from our sole 18 witness? 19 Okay. Mr. Frank Alegre, from Alegre Trucking. 20 We will have open comment period and I will line 21 you up there, sir. I know it is confusing, you are not the 22 first one that has happened to. 23 Anyone else in the audience that wishes to comment 24 or testify on this item? 25 Very good. We have had the written submissions PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 63 1 summarized already. 2 Mr. Kenny, anything else that you want to add? 3 MR. KENNY: Nothing to add. 4 CHAIRMAN DUNLAP: Okay. Since all testimony, 5 written submissions and staff comments for this item have 6 been entered into the record, and the Board has not granted 7 an extension of the comment period, I am officially closing 8 the record on this portion of Agenda Item 98-1-1. 9 Written or oral comments received after the comment 10 period has been closed will not be accepted as part of the 11 official record on this Agenda Item. 12 Just a reminder to Board Members about our policy 13 concerning ex parte communications, while we may communicate 14 off the record with outside persons regarding Board 15 rulemaking, we must disclose the names of our contacts and 16 the nature of the contents on the record. 17 This requirement applies specifically to 18 communications which take place after the notice of the Board 19 hearing has been published. 20 Are there any communications that we need to 21 disclose? 22 BOARD MEMBER ROBERTS: Mr. Chairman, my staff has 23 had some contact with the IEA representatives in San Diego on 24 this issue. 25 We were told and in checking back on some of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 64 1 companies that were affected in San Diego, in some cases, 2 while their emissions are going down, their fees are going up 3 and all, without exception, felt that they were being treated 4 unfairly. 5 So, that was the substances of our discussion. 6 CHAIRMAN DUNLAP: Thank you. I appreciate that. 7 Any other that we need to disclose? 8 All right. Very good. 9 We have the Resolution before us, 98-1, which 10 contains the staff recommendation. One comment that I might 11 make while we are looking at that, not to belabor the point, 12 I appreciated the approach that the staff has taken on this. 13 The Board has been very clear in the past and sent 14 a very clear message to Mr. Kenny and the team about fees, 15 that if fees are going to be assessed, people need to know 16 that they are getting some value for those fees and that it 17 is focusing on getting the air cleaner. 18 I think the staff has done a good job there telling 19 people specifically where this money is going to. One thing 20 too, that Governor Wilson said many times, is that the 21 California economy is a fragile thing, and we have to be 22 cognizant of the impact communicatively to any fees have on 23 the viability of companies to compete in our State with other 24 states. 25 So, I think staff has been properly indoctrinated PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 65 1 into that philosophy, and I am grateful for that, it has not 2 been a fight for me to take that message to you. 3 At the same time, make sure that you continue to 4 express to those paying these fees where those dollars are 5 going and what you are doing with them, because that gives us 6 all the credibility that we need to continue getting the air 7 cleaner. 8 Having preached that point, probably far too often, 9 for my part, I would certainly entertain a motion to approve 10 Resolution 98-1. 11 There has been a motion by Supervisor Roberts and a 12 second by Supervisor Patrick to move Resolution 98-1. 13 Any questions or comments as we consider that? 14 BOARD MEMBER RIORDAN: Just a very brief comment. 15 Thank you to the staff for working out some of those items 16 with Mojave, we appreciate that. 17 We have a number of facilities in Mojave that are 18 paying the fees, and clearly it was a matter of just timing 19 on their part. 20 So, I do thank you. 21 CHAIRMAN DUNLAP: Thank you, Supervisor Riordan. 22 Supervisor Patrick. 23 BOARD MEMBER PATRICK: Mr. Chairman, if I might add 24 too, I would like to compliment staff on their outreach. 25 It is phenomenal, the outreach that the ARB does to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 66 1 the regulated community, and I appreciate that very much. 2 CHAIRMAN DUNLAP: Thank you. Well, it's paying off 3 that you are spending all that time in the valley, staff. 4 So, that is good. We will proceed on a voice vote. 5 All those in favor of approving Resolution 98-1, 6 say, aye. 7 Any opposed? 8 Very good. The motion is unanimous. 9 Thank you, staff. Good job. 10 I know that this was not an easy one. California 11 Clean Air Act review of the South Coast Plan. 12 The next item on the Agenda today is 98-1-3, which 13 if I read my Agenda properly, will be the only item we will 14 be taking up in the proper place, right, Mike? 15 It's a public meeting to consider the approval of 16 the South Coast Air District 1997 Air Quality Management Plan 17 as a triennial update under the State Clean Air Act. 18 As you will recall, we considered and approved this 19 same plan last January as a revision to the State 20 Implementation Plan, or SIP, under the Federal Clean Air Act. 21 At that time, the emphasis was on the approval of 22 the PM 10 component of the plan and the submittal of the plan 23 to EPA in order to meet a February 1997 Federal deadline. 24 Although much of what we do as a Board is driven by 25 the Federal Act, it is important to remember that this Board PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 67 1 has responsibility under our own California Clean Air Act as 2 well, including the review and approval of district plans. 3 Because we have already approved this plan as a 4 revision to the SIP, I expect staff will concentrate on the 5 specific California Act requirements and how this plan 6 complies with them. 7 The Board will be considering other districts 8 triennial plan updates later in this calendar year. 9 So with that, Mike, I will ask you to sort this out 10 for us and introduce this item. 11 MR. KENNY: Thank you. The California Clean Air 12 Act was enacted in 1988. For the first time, State law 13 spelled out what the ARB and local districts were to do to 14 attain the State ambient air quality standards, which in many 15 cases are more health protective than the Federal standard. 16 As you recall, the Federal standard for ozone, for 17 example, is .12 parts per million and the State standard 18 is .09 parts per million. 19 One of the requirements unique to the California 20 Act is the requirement for districts to review and update 21 their plans every three years. 22 The most recent of these triennial updates were due 23 at the end of 1997. When local district plans were first 24 approved by the Board in 1992, the approvals were based on a 25 criterion all feasible measures for purposes of meeting the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 68 1 Acts progress requirement. 2 The California Clean Air Act allows this approach 3 in lieu of achieving a five percent annual reduction in 4 pollutants, thus the emphasis of staff's review that you will 5 hear today is on whether or not 1997 AQMP contains all 6 feasible measures. 7 It is also important to recognize that the 1997 8 plan is by no means a new plan. It is an update, but not a 9 major change in the control strategy of the 1994 plan. 10 In addition, the district is in the initial stages 11 of developing its next plan update for year 2000. Therefore, 12 the context of staff's review is to evaluate the 1997 AQMP as 13 a triennial update for the 1997-99 timeframe. 14 One of the advantage of the California Act is that 15 plans are required to be reassessed on a regular basis. 16 In this way control measures in the plans can be 17 continually revisited in light of emerging technologies, so 18 that the maximum emission reductions are achieved at the 19 earliest date possible. 20 This helps ensure an expeditious progress in 21 meeting health based air quality standards. Now, I will ask 22 Mr. Jim Nyarady of the Office of Air Quality and 23 Transportation Planning to begin the presentation. 24 MR. NYARADY: Thank you, Mr. Kenny. Good morning, 25 Chairman Dunlap and Members of the Board. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 69 1 I would like to first give a brief overview of what 2 I will be presenting today. To set the stage, I will first 3 present a background of the California Clean Air Act, 4 including a history of the South Coast District's plans 5 prepared under the Act. 6 I will then discuss staff's evaluation of the 7 District's 1997 Air Quality Management Plan, or AQMP, as it 8 relates to the requirements of the California Act. 9 Finally, I will present staff's recommendation to 10 the Board regarding the 1997 AQMP. 11 I will now begin with a brief background on the 12 California Clean Air Act and a history of the South Coast 13 District's plans. 14 The California Clean Air Act was signed into law in 15 1988 and for the first time clearly spelled out in statute 16 California's air quality goals, planning mechanisms, 17 regulatory strategies and standards of progress. 18 The goal of the Act was for all the areas of 19 California that are not attaining the State ambient air 20 quality standards to reach those standards by the earliest 21 practicable date. 22 The California Act provides California with a 23 comprehensive framework for attaining air quality standards. 24 Prior to passage of the Act, Federal law contained 25 the only framework. However, the then current Federal Clean PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 70 1 Air expired at the end of 1987 and Congress did not 2 reauthorize it until 1990. 3 Thus, in addition to requiring air quality planning 4 and control strategies for attaining the State standard's for 5 the first time, the California Act continued to air quality 6 planning in California in the absence of an operative Federal 7 Act. 8 There are differences between the Federal and 9 California Acts that affect the nature of the ARB's review of 10 district plans. 11 Most significantly, the Federal Act has explicit 12 attainment dates, whereas the California Act requires 13 attainment by the earliest practicable date. 14 Unlike the Federal Act, the California Act requires 15 triennial plan updates. The California Act also takes 16 intrastate transport into account. 17 The California Act has been amended to help align 18 the State and Federal planning processes. The ARB has also 19 aligned implementation of the two acts through administrative 20 actions. 21 One example is the 1994 planning process. In 1994, 22 the Federal Act required ozone attainment plans, the 23 California Act required the first triennial plan revisions. 24 The ARB worked with the affected local districts so 25 that they were able to develop single plans which addressed PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 71 1 both requirements. 2 In short, while most nonattainment areas in 3 California are subject to Federal planning requirements, the 4 California Act is still the attainment planning mechanism for 5 areas of the State which attain Federal standards, but still 6 exceed the State standards. 7 In addition, the California Act's requirement for 8 triennial plan revision allows both the ARB and the districts 9 an opportunity to re-evaluate the ambient air quality data, 10 emissions inventories and control strategies, and to update 11 the plans if necessary in order to attain both the State and 12 Federal standards. 13 I would now like to briefly describe the California 14 Clean Air Act's planning requirements. The California Act 15 requires that local air districts prepare air quality 16 attainment plans in order to attain the State standards for 17 ozone, carbon monoxide, nitrogen dioxide and sulphur dioxide. 18 Of these pollutants, the South Coast is 19 nonattainment for the State ozone and carbon monoxide 20 standards. 21 Because carbon monoxide attainment is projected by 22 the year 2000 without additional control measures, the 23 proceedings will focus on ozone. 24 Under the California Act ozone nonattainment air 25 districts are classified as moderate, serious, severe or PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 72 1 extreme, based on a margin by which health based standards 2 are exceeded. 3 Only the South Coast District is classified as an 4 extreme ozone nonattainment area. There are specific 5 planning requirements for every ozone nonattainment area, 6 such as permitting and control technology requirements for 7 new and existing sources among others. 8 Some requirements vary with classification which 9 ensures that the areas with more difficult air quality 10 problems have more comprehensive air quality plans. 11 State plans were first due in 1991 and updates were 12 due in 1994, and every three years thereafter. 13 In these updates air districts must report progress 14 against their plans both in terms of actual emission 15 reductions and measured air quality. 16 Triennial updates are also to reflect new 17 information such as emission inventories and population 18 growth. Annual progress reports are also required. 19 Finally, under the California Act each district 20 attainment plan is to achieve five percent per year reduction 21 in each nonattainment pollutant or its precursors in order to 22 demonstrate interim progress. 23 A district may use a control strategy which 24 achieves less than five percent if all feasible measures are 25 included in the plan with an expeditious adoption schedule. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 73 1 Because of the substantial emission reductions 2 achieved in the 20 or so years of air pollution control 3 before the California Act was enacted, no 1991 district plan 4 was able to show additional annual five percent reductions 5 consistently between 1987 and 2000. 6 Accordingly, every district used the all feasible 7 measures approach. The emphasis of staff's evaluation today 8 is on whether the 1997 AQMP includes all feasible measures 9 and the districts progress in adopting these measures. 10 We will now spend a few moments discussing the 11 history of the South Coast plans for the California Act. 12 As I mentioned, the first California attainment 13 plans were due from the districts to the ARB in 1991. 14 During 1992 and 1993, the Board traveled throughout 15 the State considering the local districts plans for approval. 16 The Governing Board of the South Coast adopted its 17 first attainment plan under the California Act in July of 18 1991. 19 This 1991 AQMP was amended by the District's Board 20 in 1992 to incorporate the concepts of the regional clean air 21 incentives market, or reclaim. 22 The ARB conditionally approved this amended 1991 23 AQMP under the California Act in October of 1992. 24 In 1994, the District and the Board adopted the 25 1994 AQMP, which was a plan update to the 1991 AQMP, which PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 74 1 addressed the requirements of both State and Federal law. 2 For ozone, the 1994 AQMP addressed the first 3 triennial plan update required under the California Act, as 4 well as the Federal ozone attainment demonstration and rate 5 of progress requirements. 6 The 1994 AQMP was incorporated with some changes 7 into the 1994 Ozone SIP adopted by the ARB in November of 8 1994 to comply with the Federal law. 9 At that time, the Board did not formally act on the 10 local 1994 plans, including the 1994 AQMP, with respect to 11 the California Act. 12 This is because the 1994 Ozone SIP planning process 13 was the most comprehensive ever undertaken in the State and 14 provided a statewide master plan for clean air that more than 15 accomplished what was envisioned in the California Clean Air 16 Act plan review and update process. 17 Then in 1996, the district again modified its AQMP, 18 primarily to meet the requirement to prepare a particulate 19 matter, or PM 10 plan for submittal to the U.S. EPA in early 20 1997. 21 This plan updates the 1997 AQMP, also addressed the 22 California requirements for triennial plan revision by the 23 end of 1997. 24 In January of last year, the Air Resources Board 25 approved the 1997 AQMP as a revision to the South Coast PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 75 1 portion of the SIP for PM 10, as well as for ozone, carbon 2 monoxide and nitrogen dioxide. 3 The Board did not address the 1997 AQMP with regard 4 to the California planning requirements because of the need 5 to expedite ARB's review and action to meet the February 1997 6 Federal submittal deadline for the PM 10 component. 7 Since that time, the ARB staff have evaluated the 8 1997 AQMP in context of the specific planning requirements of 9 the California Act. 10 It is this evaluation that I will be presenting to 11 you today. I will now begin the discussion of our evaluation 12 of the District's 1997 AQMP with respect to the California 13 Act. 14 I will first discuss the specific nonattainment 15 area requirements under the Act. The South Coast District 16 needs to address about a dozen specific planning 17 requirements, either through the District's already adopted 18 rules or regulations, or in its attainment plan. 19 I will briefly touch on some of the more important 20 ones. As an extreme ozone nonattainment area, the South 21 Coast District is required to have a stationary source 22 control program, usually a permitting program, designed to 23 achieve no net increase in emissions from all new or modified 24 stationary sources of VOC's and NOx. 25 This is usually accomplished through the use PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 76 1 off-sets from those sources. The South Coast District is 2 also to use the best available retrofit control technology 3 for all permitted stationary sources. 4 In addition, the District is to use reasonably 5 available transportation control measures to substantially 6 reduce the rate of increase and passengers vehicle trips and 7 miles traveled per trip. 8 The ARB previously issued guidance indicating that 9 holding vehicle miles traveled, or VMT, growth even with 10 population growth, would qualify as a substantial reduction. 11 The District's plan is to also include measures to 12 reduce overall population exposure to ambient ozone levels in 13 excess of the standard, by at least 25 percent, by the end of 14 1994, 40 percent by the end of 1997 and 50 percent by the end 15 of 2000. 16 The District also has to address mitigation of 17 transport of pollution because air pollutants are transported 18 from the South Coast to downwind districts. 19 The South Coast District's plan is to provide for 20 the attainment and maintenance of the State standards, not 21 only in the South Coast, but also in the downwind districts. 22 The South Coast plan is to contain at a minimum all 23 mitigation requirements established by ARB pursuant to State 24 law. 25 Briefly, these require the application of BARCT on PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 77 1 all sources as expeditiously as practical and the option of 2 measures to attain the ozone standard for downwind districts 3 during specific air pollution episode criteria. 4 In addition to these requirements that I have 5 described, there are other provisions of the Act that 6 require, for example, public education, cost effectiveness 7 findings, emission inventories to be included in the plan. 8 I will now move on to staff's findings. After a 9 review of the plan, ARB staff finds that with the exception 10 of the permitting requirements, the 1997 AQMP meets the 11 planning requirements of the Act applicable to an extreme 12 area. 13 With regard to the permitting program, South Coast 14 regulation 13 was amended in 1990 to meet the permitting 15 requirements of the California Act. 16 However, beginning in 1995, sources with a 17 potential to emit less than four tons a year were no longer 18 required to provide off-sets. 19 For these sources the District provides off-sets 20 through an emissions bank. In 1996, the bank began showing a 21 negative balance for NOx. 22 Thus, the District's permitting program now needs 23 to be amended to fully comply with the Act. In February of 24 1997, the District staff notified their Board of the problem 25 and committed to look for the solution. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 78 1 The District is scheduled to amend Regulation 13 in 2 mid-1998 to correct for the shortfall and to eliminate 3 potential for future shortfalls. 4 The ARB staff will continue to work with the 5 District staff to ensure that the District's permitting 6 program meets the requirements of the California Act. 7 In addition to the above requirements, the 8 California Act also sets up progress reporting and plan 9 updating requirements. 10 Before the end of the year each district is to 11 prepare and submit an annual report to ARB summarizing its 12 progress and meeting the schedules for adopting and 13 implementing the control measures in the District's plan. 14 The reports are to contain at a minimum, the 15 proposed and actual dates for the adoption and implementation 16 of each measure. 17 In addition, once every three years each district 18 is to assess its progress towards attainment of the State's 19 standards. 20 These triennial progress reports are to contain at 21 a minimum the extent of air quality improvement during the 22 preceding three years and the expected and revised emission 23 reductions for each measure scheduled for adoption in the 24 preceding three years. 25 Finally, once again, once every three years each PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 79 1 district is to review, and if necessary, provide an 2 attainment plan to incorporate new data or projections into 3 the plan. 4 If a district does revise its plan, then the 5 triennial progress report are to be incorporated into the 6 district's plan revision. 7 On the adoption of each triennial plan revision at 8 a public hearing, the district board is to submit the 9 revision to the ARB. 10 The district may modify the emission reduction 11 strategy for subsequent years based on this triennial review 12 if the district demonstrates to the ARB, and the ARB finds, 13 that the modified strategy is at least as effective at 14 improving air quality as the strategy which is being 15 replaced. 16 Although the information required by the Act for 17 the annual progress report was not exclusively contained in 18 the 1997 AQMP, we were able to summarize the critical 19 information on this slide. 20 This slide shows that of the eight VOC and NOx 21 rules that the District was scheduled in 1997, the District 22 has adopted five to date. 23 As you can see, however, these five rules will 24 achieve all but two tons of the VOC measure reductions 25 expected to be achieved by the year 2010. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 80 1 In addition, the slide shows that the one NOx rule 2 that the District adopted was expected to achieve eight more 3 tons of reduction than originally anticipated. 4 Thus, the District is adopting, for the most part, 5 the largest emission reductions measure first, which is 6 appropriate. 7 Of the three rules not adopted, one has been 8 delayed due to the technology infeasibility at this time, one 9 has undergone a technology assessment documenting that it has 10 been delayed to resolve emission inventory, cost 11 effectiveness and emission reduction potential issues and one 12 has been delayed to approve the estimates of the emissions 13 inventories. 14 As a comparison, in the previous two years the 15 District only adopted five rules VOC reduction rules, which 16 are expected to achieve about 35 tons per day of VOC 17 reductions by the year 2010. 18 As I mentioned, the information required by the Act 19 for the annual progress report is not explicitly contained in 20 the 1997 AQMP. 21 In addition, annual progress reports have not been 22 submitted in the past, thus beginning with this year the 23 District needs to start submitting annual progress reports. 24 With regard to the triennial progress reports, 25 South Coast District did incorporate the air quality PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 81 1 improvement data into the 1997 AQMP. 2 The data showed that there has been continued 3 improvement in the South Coast ozone air quality sense 1987. 4 In addition, there has been similar improvement in 5 all of the downwind areas over the same period. 1997 AQMP 6 does not include a comparison of the expected and revised 7 emission reductions for each measure scheduled for adoption 8 in the previous three years as required by the Act. 9 However, this particular requirement is new to the 10 Act and did not become effective until January 1, 1997, which 11 was after the District had adopted the 1997 AQMP. 12 Nevertheless, the District needs to apply this 13 information in order to fully comply with the California 14 requirements. 15 The requirement that the plan be revised when 16 corporate new data or projections in the plan as specified in 17 the Act has been met by way of the District's substantial 18 improvements to the baseline emissions inventory and future 19 year forecasts in the 1997 plan. 20 By virtue of the fact that the 1997 is a 21 comprehensive revision from the 1994 AQMP, the District has 22 met the Act's requirement for trying a plan revision. 23 The most important aspect of staff's evaluation of 24 the 1997 AQMP was our assessment of whether the plan contains 25 all feasible measures. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 82 1 This assessment included a review of 19 control 2 measures that were in the 1994 plan, but which were removed 3 from the 1997 plan, and 20 measures still proposed for 4 adoption in the 1997 plan. 5 As a supplement to the evaluation of control 6 measures and plans, the ARB staff reviewed 47 of the rules 7 currently in effect in the District to help determine if the 8 District's current control program represents all feasible 9 measures as well. 10 Our assessment looked at stationary source, VOC and 11 NOx control measures and rules. It did not look at 12 particulate matter measures or rules, now emission reduction 13 credit measures and the rules. 14 To give a sense of what is included in the 1997 15 AQMP, this slide shows that the plan contains 14 near-term 16 measures, which are measures scheduled for adoption by the 17 year 2000, for reducing VOC and NOx emissions from stationary 18 sources. 19 These measures are anticipated to achieve about a 20 100 tons per day of VOC and NOx reductions by 2010. The plan 21 also contains six long-term stationary source control 22 measures anticipated to achieve about 90 tons per day of VOC 23 reductions by 2010. 24 In carrying out the all feasible measures 25 assessment, the ARB staff looked at the completeness of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 83 1 proposed measures and the adopted rules to determine if 2 additional emission reductions could be achieved. 3 Criteria for the analysis were technical 4 feasibility of control measures, cost effectiveness and 5 magnitude of emission reduction potential. 6 For adopted rules the evaluation included a 7 comparison of the estimated emission reduction, or control 8 efficiency of each rule to that of a corresponding reference 9 measure, which could be another district's rule, an ARB 10 reasonably available control technology, or BARCT 11 determination, or another ARB, or U.S. EPA model type rule or 12 control measure. 13 Staff made its determination in consideration of 14 the information in the 1997 AQMP as well as from follow-up 15 discussions with District staff. 16 After this assessment, ARB staff find that the 17 control measures in the 1997 AQMP represent all feasible 18 measures within the 1997-2000 timeframe. 19 Thus, because the control strategy in both the 1994 20 and 1997 plans is the adoption of all feasible measures, we 21 believe that the revised control strategy of the 1997 plan is 22 at least as effective as the 1994 AQMP control strategy which 23 it replaced. 24 However, while staff find that the proposed 25 measures in the 1997 AQMP meet the "all feasible measure PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 84 1 criteria" of the California Act at this time, it is important 2 to note that benchmark will change as new technologies become 3 available. 4 The District must reconsider feasibility with each 5 required triennial update. To this end, both the ARB and the 6 District held a symposium in the fall of 1997 to explore 7 emerging, low-emission technologies. 8 These kinds of efforts, along with ongoing 9 technology reassessments, are needed to ensure that as new 10 measures become feasible, they are incorporated into future 11 AQMP updates. 12 ARB staff will continue to work with the District 13 to ensure that technology assessments continue to be updated 14 as the District measures are developed into rules. 15 For example, the ARB is developing reasonably 16 available control technology and BARCT information for 17 architectural coatings and adhesives. 18 The District is participating in the development of 19 these determinations and is expected to use them in upgrading 20 its rules for these source categories. 21 With regard to the District's adoption schedule, 22 the District should continue its efforts to proceed as 23 expeditiously as possible with the development and adoption 24 of its plan measures and continue to reassess its commitments 25 in light of developing new technologies. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 85 1 To ensure State progress towards achieving health 2 based air quality standards, the District needs to meet its 3 rulemaking commitments according to the schedule established 4 in the plan. 5 With regard to the District's current rules, 6 however, ARB staff have found that five of the rules reviewed 7 do not appear to meet the "all feasible measures criteria." 8 The District needs to evaluate these five rules for 9 further reductions. If the District adds rule improvements 10 for these rules onto its rulemaking calendar, we believe that 11 the District's overall control program would represent all 12 feasible measures. 13 The rules that the District needs to reevaluate for 14 further emission reductions are Rule 1102, petroleum solvent 15 dry cleaners, Rule 1103, pharmaceutical and cosmetic 16 manufacturing operations, Rule 1104, wood flat stock coating 17 operations, Rule 1130, graphic arts operations and Rule 1146, 18 emissions of NOx from industrial, institutional and 19 commercial boilers, steam generators and process heaters. 20 I will now spend a few moments discussing the 21 specific findings for each of these rules. Petroleum solvent 22 dry cleaners use petroleum distillant to prepare the 23 perchloroethylene to clean clothes. 24 Potential improvements the District could 25 investigate for this rule include requiring newer dry-to-dry, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 86 1 closed loop machines and adding leak detection machine 2 testing and operating, handling and disposal requirements. 3 The potential improvements the district should 4 consider for pharmaceuticals and cosmetics manufacturing rule 5 include increase in control efficiency and improving 6 monitoring and record keeping to ensure that the anticipated 7 emission reductions are achieved. 8 The wood flat stock coating rule applies to 9 finished wood paneling and finish wood siding. The District 10 should investigate lowering the VOC content limits for 11 exterior siding and adhesives in this rule. 12 Graphic arts include printing processes and related 13 coating or laminate processes. Potential improvements that 14 the District should investigate include higher collection and 15 control efficiencies, reduced VOC content limits and 16 examining some exemptions. 17 The large boiler and heater rule applies to 18 industrial, institutional and commercial boilers and heaters 19 that have heat input capacity of greater that five million 20 BTU per hour and that are not covered by specific rules for 21 refineries, electric power generation and so on. 22 Potential proof, once the District should 23 investigate, include establishing the appropriate source test 24 requirements to demonstrate compliance and lower emission 25 limits for lower capacity units. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 87 1 I will now present the staff's recommendation. 2 Staff is recommending that the Board direct the South Coast 3 District to take the following actions: To reassess the five 4 rules that I have just discussed, the District should add 5 rule improvements for Rules 1102, 1103, 1104, 1130, and 1146 6 to its rulemaking calendar to determine if further reductions 7 could be achieved, and if so, adopt such improvements by 8 December of 1999; meet its rulemaking commitments according 9 to the schedule established in the 1997 AQMP; third, amend 10 its NSR regulation by July of 1998 to ensure that its 11 permitting program meets the requirements of the California 12 Act; fourth, submit to the ARB by July of 1998, the expected 13 and revised emission reductions for each measure scheduled 14 for adoption in 1994 through 1996, and include in its 2000 15 AQMP the expected revised emission reduction for each measure 16 scheduled for adoption in 1997 through 1999; finally, 17 beginning with this year, submit annual reports containing 18 the proposed and actual dates for the adoption and 19 implementation of each measure scheduled for the year. 20 In conclusion, staff's recommendation is for the 21 Board to conditionally approve the 1997 AQMP as a triennial 22 plan update under the California Clean Air Act on the 23 condition that the District take the specified actions. 24 That concludes my presentation. 25 CHAIRMAN DUNLAP: Thank you. We have some PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 88 1 written comments. 2 Mike, do you want to go through those now, or do 3 you want to wait? 4 I think that we can wait on the written comments, 5 but before we actually get into any testimony, I did want to 6 ask Ms. Walsh to at least make one comment that relates to 7 this plan review that the Board is doing today, and another 8 plan that is pretty much the same under which there is at 9 least a legal cloud at the moment. 10 Go ahead, Kathleen. 11 MS. WALSH: As Board Members you may know last year 12 the Air Resources Board, together with the South Coast Air 13 Quality Management District, was sued by citizens groups for 14 failure to implement some of the provisions of the 1994 ozone 15 SIP. 16 That plan was for the South Coast amended and that 17 amendment was approved by this Board last year, that is the 18 1997 AQMP that you are considering here today. 19 The distinction is that last year you considered it 20 and approved it for submittal to the EPA under the Federal 21 law. 22 The lawsuit that is currently pending suggests that 23 the 1997 plan does not meet those Federal requirements. 24 Today you are considering the plan under the State 25 law, but I do want to caution you that the number of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 89 1 issues that you will no doubt be hearing from the commenters 2 today are issues that have involved in that litigation 3 related to the Federal plan. 4 It is important to keep that legal context in mind 5 as we go through the remainder of the proceeding today. 6 CHAIRMAN DUNLAP: Okay. So, we have a legal issue 7 overlay on this thing. 8 All right. Any other staff additions, Mike? 9 MR. KENNY: We do have the letters, and we can 10 review those at the end of the witnesses testimony. 11 CHAIRMAN DUNLAP: Any Board Member questions? 12 Yes. 13 BOARD MEMBER EDGERTON: Ms. Walsh, could you state 14 as succinctly as possible the way the tests are the same 15 between the Federal and the State? 16 Basically, what I am looking for is something along 17 the lines to my understanding that the State law requires us 18 to use all feasible measures and as a practical matter that 19 is what we have done in the Federal plan as well, if I 20 understand that correctly, but use your own words on what I 21 am driving at so we have context. 22 MS. WALSH: The standards, although they are 23 expressed in different words under Federal law and State law, 24 are substantively very similar. 25 The question is whether the plan includes all PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 90 1 necessary measures and, of course, in the South Coast given 2 the magnitude of the problem, that really is looking at 3 everything that is out there available. 4 That is measures that are technologically feasible 5 and cost effective. Although the language is a bit different 6 we really are looking at the same issues under the "all 7 feasible measures standard" for State law, and the 8 requirements of Federal law that the plan include all 9 necessary measures to meet the standards by the applicable 10 deadlines. 11 BOARD MEMBER EDGERTON: Thank you. 12 CHAIRMAN DUNLAP: Anything else of staff at this 13 juncture? 14 All right. I will run through the witnesses then. 15 We have three. Elaine Chang, from the South Coast 16 District, Tim Carmichael, from the Coalition for Clean Air, 17 NRDC, and Bob Houston, from the Southern Cal Paint and 18 Coatings Association. 19 If I could ask all of the witnesses to come forward 20 and sit in the front row. Elaine, we will have you go first. 21 MS. CHANG: Good morning, Chairman Dunlap and 22 Members of the Board. My name is Elaine Chang, Director of 23 Planning Policy with the South Coast Air Quality Management 24 District. 25 The District staff appreciate your staff's detailed PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 91 1 analysis of our 1997 AQMP. We support your staff's findings 2 and recommendation. 3 We will continue to work with your staff to address 4 each of the approval conditions. Our specific response to 5 the approval conditions is provided in our written comments. 6 However, I would like to highlight two points. I 7 am pleased to report here that as soon as we learned of your 8 staff's recommendation to revisit five existing rules, we 9 have begun a technical analysis, and we placed them in our 10 1998 rule calendar. 11 This will allow us to move expeditiously if we find 12 a cost effective emission reductions. Another item that is 13 information requested regarding measures adopted between 1994 14 and 1996, we provided as part of the written comments. 15 In closing, we support and urge you to approve our 16 plan so that we can move forward to clean up the air. 17 I will be happy to answer any questions that you 18 may have. 19 Thank you. 20 CHAIRMAN DUNLAP: One comment, I am looking more 21 for an impression, Elaine, from your view, you know, it is 22 unfortunate that as local plans are developing you have some 23 contention surrounding, you have some groups that think maybe 24 you didn't do all that you could. 25 What are you guys doing to maintain communications PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 92 1 with the environmental community and some of those that feel 2 that you might have been able to reach a little further? 3 Do you have some process? 4 MS. CHANG: I think that the last couple of years 5 we used the stakeholder meetings, task forces for rulemaking 6 effort, or we initiate any new programs to include the 7 environmental community as well as the business groups to 8 work with us through the rulemaking processes to try to 9 address the issues, you know, to the extent that we can 10 before we bring it to our Board. 11 So, we are trying and making progress, sometimes we 12 cannot resolve all the issues, but make sure there is no 13 surprise and we understand each other's positions and make 14 sure that the technical analysis is accurate. 15 CHAIRMAN DUNLAP: Okay. Mike, I think gave me a 16 heads-up a few weeks ago about your willingness to look at 17 those five or six areas that we suggested and you plugged 18 them in, Mike, they plugged in the rulemaking calendar for 19 the next update. 20 MR. KENNY: Well, what will happen is that 21 basically the District will be looking at them actually in 22 1998. 23 We will get the reports back from the District in 24 1998 as it progresses as to what is occurring there. 25 CHAIRMAN DUNLAP: Not to have this too far PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 93 1 ranging, but as far as keeping the tons whole, are we close, 2 have they got it, you know what I mean, with the addition of 3 these other measures, from what we put forward in 1994, Mike? 4 MR. KENNY: In terms of the 1994 plan, if you 5 compared it to the 1997 plan, the tons are basically whole. 6 I think, though, you may hear some arguments about 7 how the numbers basically have been made whole. The key 8 thing there was basically if you look at the 1994 plan and 9 you compared it to the 1997 plan, one of the key differences 10 is that there were a number of measures in the original 1994 11 plan which were in the near-term, or short-term and which are 12 now in the longer term. 13 CHAIRMAN DUNLAP: One of the things, and I know 14 Tim Carmichael is scheduled to come up, and I don't want to 15 preclude anything that he might say, but one of the things 16 that this Board, very clearly our staff, Elaine you can take 17 this back to your Board as well, is that the commitments that 18 we have made, tonnage reductions, we feel very strongly 19 about. 20 We also know that inventories change, we get new 21 information, so we are not talking about apples compared to 22 apples every year, because things change and evolve, but it 23 is important that we send very clear signals collectively 24 that, you know, we are going to get those tons, if not by 25 source A, we are going to get it by source B, and it is going PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 94 1 to be time certain. 2 I am heartened to hear that you are striving to do 3 that. 4 Ms. Edgerton. 5 BOARD MEMBER EDGERTON: Could you speak to a couple 6 of issues, please? 7 The Litigation was filed against both of our 8 agencies, I believe, in August of 1997. Unfortunately 9 Mr. Silva is not here, I would have asked him this question, 10 but could you educate us on maybe the actions that your Board 11 has taken in the fall with respect to implementing important 12 measures which will further reduce the air pollution. 13 I'm thinking of, didn't you have the architectural 14 coatings provision? 15 I know you have taken some pretty positive steps, 16 which were scheduled, but your Board has gone ahead and 17 worked on. 18 MS. CHANG: Our Board adopted Phase I of the 19 architect coating in late 1996-97 timeframe. The plan called 20 for over 75 percent reduction by 2010. 21 We did a technical assessment and determined that 22 15 percent reduction that could be achieved at this time and 23 we schedule to look into the Phase II reduction, identify the 24 categories, if feasible, to further reduce emissions. 25 We have been moving forward very aggressively, but PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 95 1 we are limited by the technology, what can afford us at this 2 time. 3 We are trying to implement through several phases. 4 BOARD MEMBER EDGERTON: What have you adopted since 5 we considered this bill? 6 I would like to hear it from you. 7 MS. CHANG: We have adopted Phase I, a portion of 8 the architectural coating measure, we are now in the process 9 of doing the Phase II rulemaking. 10 BOARD MEMBER EDGERTON: Could you comment, one of 11 the objections that I see in some of the writing here is that 12 some of the South Coast measures have disproportionate 13 effects on people who are poor or of color. 14 What steps has the agency taken to assure that is 15 not the case? 16 MS. CHANG: It is my understanding that comment 17 referred to the trading programs, not the control regulation 18 seeking emission reduction, but the compliance inflexibility 19 in the trading program. 20 In our last adopted trading rule, we put in some 21 provisions working along with your AB 1777 regulation here 22 and there is still debate if those provisions are stringent 23 enough. 24 There are several efforts ongoing to identify the 25 community exposure level, whether there are hot spots and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 96 1 reexamine our toxic programs and trading policies. 2 In a year or so, we will have data and 3 recommendation from the task force so we can better address 4 the issues. 5 We do have some provisions in our trading programs 6 to prevent disproportionate impacts. Whether we have gone 7 far enough is being evaluated. 8 BOARD MEMBER EDGERTON: Isn't it true the Chairman 9 of the South Coast has a very strong initiative that he 10 launched in September of last year to address this issue? 11 CHAIRMAN DUNLAP: I don't want to get too far into 12 that, though I think that it is good that you brought it up, 13 the environmental justice issue is one that we have been 14 tracking very closely. 15 We have had good communication with our Board 16 Member representative down there, Lynn, Wayne Astor, he has 17 been communicating with us and been very active and Mr. Kenny 18 has a team watching what is going on and that is going to 19 play out over time. 20 From where I sit, and where the agency would be, we 21 want to be part of that process, but the last chapter on that 22 whole issue has not been played out. 23 Ms. Walsh can comment on that. Lynn, is that, does 24 that answer your questions right now? 25 BOARD MEMBER EDGERTON: Yes, it does. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 97 1 Before we get to that, I want it put on the record 2 that I was very pleased to see that the South Coast has 3 initiated a program for measuring toxics in the areas where 4 it is alleged that there is a disproportionate effect of the 5 trading program, so that we will know whether this is 6 actually true that some of the market trading programs do 7 result in worse exposures for those communities. 8 What I have been told is that it is expected that 9 those allegations are false, going to turn out to be false 10 because some of the trading programs, such as the car 11 crushing, will reduce the benzine in those levels. 12 I just wanted it put on the record that some of 13 these issues that are raised are quite serious but that the 14 South Coast has been moving aggressively, and in a way that I 15 think is very likely to produce positive results. 16 CHAIRMAN DUNLAP: As it results to the market 17 trading program, talk about getting some things on the 18 record, one of the true positive elements about market 19 trading programs, conceptually why so many people in the 20 regulatory community at the Federal, State and local levels, 21 felt, made it worthwhile to pursue, was that it provided 22 flexibility to industry and that they could chart their 23 course, find a way to buy, sell and trade and decide to put 24 expensive control technology on the facility or not, but as 25 long as we are able to keep the tons whole, and that we were PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 98 1 going to continue to make the progress, I feel we have gone 2 very far down that track and that path, and we need to find a 3 way to make these work. 4 If there is some unintended consequence where they 5 do disadvantage people in certain communities, we want to 6 address that. 7 I think there is willingness to do that, certainly 8 locally and at the State level, but we need those programs to 9 work. 10 We are working through that process. I don't want 11 to have that debate here, except to say that we are watching 12 it, they are working on it and it will play out over the next 13 few months. 14 We don't want to send any false signal about where 15 we stand on the flexibility provided for by market trading 16 programs. 17 They are good things. We ought to have them able 18 to be used and be successful. 19 BOARD MEMBER EDGERTON: Yes, and that is point one. 20 You know I favor them. 21 However, I do think that there has been, one thing 22 that we can look forward to is a factual resolution of 23 whether the programs are causing more risk in those areas as 24 a result of air pollution. 25 If that is put to rest, it seems to me that we are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 99 1 home free with our market programs. 2 CHAIRMAN DUNLAP: The process will work its way 3 out. 4 As a matter of fact, Ms. Walsh, and Mr. Kenny, if 5 you don't mind, if there are any problems with it, I would 6 like to get some kind of quarterly update on kind of where 7 things are that you could send out to the Board. 8 It does not need to be necessarily in a Board 9 meeting, but you could do it in writing, so we could keep 10 track of what is going on. 11 MR. KENNY: We can provide that. 12 CHAIRMAN DUNLAP: We have a couple of witnesses. I 13 want to go to Mr. Calhoun, and then we will see if we can 14 move past Ms. Chang. 15 BOARD MEMBER CALHOUN: My question should be 16 addressed to Mr. Kenny or Ms. Walsh. 17 What is the status of the environmental justice 18 suit? 19 MS. WALSH: Well, currently there are a couple of 20 different actions related to the environmental justice issue. 21 There is an administrative civil complaint that has 22 been filed by a community group in the South Coast against 23 the Air Resources Board and the South Coast Air Quality 24 Management District. 25 That has been filed with the U.S. EPA Office of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 100 1 Civil Rights, and they have a process for looking at issues 2 of environmental justice in EPA funding programs and 3 decisions. 4 That administrative complaint is raising that 5 issue. There is a lawsuit pending against four oil companies 6 that have made use of South Coast Rule 1610 to trade emission 7 reductions from car crushing for reductions that come from 8 the application of vapor recovery rules at facilities in the 9 affected communities in the South Coast, and those lawsuits 10 are currently pending. 11 The same community groups have also issued a 60-day 12 Notice of Intent to Sue the Air Resources Board and the South 13 Coast again for failing to enforce the vapor recovery rule. 14 That rule has been approved into the SIP by U.S. 15 EPA, and the trading Rule 1610 has not yet been approved into 16 the SIP, and so the argument is that what is federally 17 required is compliance with those vapor recovery 18 requirements. 19 That lawsuit has not yet been filed, but we have 20 received notice that they intend to do that. 21 CHAIRMAN DUNLAP: Okay. What I would like to do is 22 proceed to the next couple of witnesses. 23 Ms. Chang, we would ask you to stay. Tim, with 24 your indulgence, someone asked Mr. Houston to go next because 25 I think that we are going to take a little bit more time with PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 101 1 you. 2 MR. HOUSTON: Mr. Chairman and Members, my name is 3 Bob Houston, and I have the pleasure of representing the 4 Southern California Painting and Coating Association here in 5 Sacramento. 6 Normally that is before the Legislature, so my 7 credentials as an air expert is somewhat minimal. 8 The Association sent in a letter and called me last 9 evening and asked me to read a portion of that letter into 10 the record. 11 My comments will be as brief in substance and in 12 length as the time that I was given to prepare to be here 13 this morning. 14 Nonetheless, our concern is basically on the two 15 coatings control measures that are in the Association if they 16 both were placed in it would be a 75 reduction of VOC allowed 17 into our products, which has a negative impact on the 18 product and the Association. 19 We would make the offer to work with the Board and 20 would like to have it thoroughly investigated as to its 21 economic as well as technical feasibility, and we would like 22 that opportunity to work, and so therefore, respectfully, 23 they request that they be deferred at this time. 24 CHAIRMAN DUNLAP: Okay. Mr. Kenny, I will appeal 25 to you to meet with Mr. Houston and his constituency and run PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 102 1 through these issues so that we are able to be as predictable 2 and as aware of their concerns and try to work our way 3 through them. 4 Bob, you are being a great diplomat as you usually 5 are, but what you are specifically asking us to do, but I'm 6 not hearing you say that you want to delay action. 7 MR. HOUSTON: I would like the action delayed on 8 those two and look at the economic and technical feasibility. 9 CHAIRMAN DUNLAP: I am not, personally not, 10 supportive of that at this juncture, but I will commit right 11 now, and I'll let Mike address it, if my Board Member 12 colleagues will support that, when we finish with the 13 witnesses I will have him say a few words about that, but I 14 will offer that process to you. 15 MR. HOUSTON: We appreciate that. 16 CHAIRMAN DUNLAP: Thank you. Tim will get back up 17 here. 18 So, staff, noodle this around a bit about what we 19 can do and what we are able to do, okay. Then I will ask you 20 to comment on that in a minute. 21 Tim, by the way, I didn't mean to preclude my 22 colleagues. 23 Anything that you want to ask Mr. Houston? 24 Okay. Tim, we have before us a lengthy letter on 25 Coalition for Clean Air and NRDC letterhead. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 103 1 MR. CARMICHAEL: I apologize for the tardiness of 2 that letter. I am working on a few other things. 3 CHAIRMAN DUNLAP: I don't want to rush you, but we 4 know generally where you stand. What I would appeal you to 5 do would be to talk about the evolution of where you were a 6 year ago, you know, your two organizations, and where you are 7 today. 8 What is different? 9 Is it better? 10 Is it worse? 11 Is it the same? 12 I mean could you give us a context? 13 MR. CARMICHAEL: Okay. For the record, I am Tim 14 Carmichael, with the Coalition for Clean Air. 15 Today I am also representing the Natural Resources 16 Defense Council. First of all, the Chairman's question, I 17 would say the biggest difference between where we were a year 18 ago and where we are today is Chairman Burke's initiative 19 package in the South Coast. 20 We are very big supporters of what has been 21 proposed, and in some cases they are actually moving on the 22 initiatives. 23 It is not just on paper. That, to our 24 organization, is probably the biggest difference on the 25 positive side. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 104 1 On the negative side -- 2 CHAIRMAN DUNLAP: You are talking about 3 environmental justice, primarily. 4 MR. CARMICHAEL: It is actually a series of 5 initiatives, 10 in total. I suppose that you could say that 6 they all relate to environmental justice in some way. 7 I think that the four most important of those 10 8 are increased public participation, and to that end their 9 Board is holding meetings around the South Coast basin in the 10 communities so that more people have the opportunity to come 11 see what they are doing or not doing. 12 They are committed to do more on diesel. As this 13 Board well knows, we are not big fans of diesel. 14 So, that is very positive, and they are going to be 15 doing more analysis and more monitoring in supporting 16 incentive programs to move away from diesel. 17 CHAIRMAN DUNLAP: And State and Federal initiatives 18 as well. 19 MR. CARMICHAEL: Correct. There is also a 20 commitment to revisit the toxic rules. 21 In the South Coast we have two primary toxic rules, 22 one that lists which compounds should be considered toxics 23 and the other one which sets limits for emissions of those. 24 That is going to take about a year for the staff to 25 prepare for, but that is very positive. There is a fourth, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 105 1 they are going to be committed to enhance their monitoring 2 capabilities, and they are going to be doing more monitoring 3 in the communities, as was referred to earlier by Kathleen 4 and Lynn Edgerton. 5 There are communities that feel that they are 6 disproportionately impacted, and we have not done a very good 7 job of monitoring those communities in the past and we now 8 have the technology to actually move monitors into the 9 communities for a fixed period of time and evaluate the 10 situation. 11 Okay. So, that is on the positive side, and the 12 negative side is that, as it has been referred to, we are in 13 litigation, and another thing that I would point out is 14 separate from the two agencies here today, we have not made 15 much progress on the front of airports and ports. 16 In the South Coast basin, as other major cities in 17 the State, that is a big problem. It's a big source of 18 emissions. 19 We entered into an 18 month, or more than 12 20 months, program to try and find emission reductions at the 21 ports and airports, and it has been very unsuccessful, 22 unfortunately. 23 The bright spot, if there is one, is more 24 acceptance that we can find emission reductions with the 25 ground service equipment, the equipment that operates at PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 106 1 airports. 2 Now, if I could make a few other comments. It 3 shouldn't be a surprise to anyone here that we are not in 4 support of this plan, and we don't think that it should be 5 approved today by this Board. 6 We have laid out in our letter, and in previous 7 correspondence and testimony, that we don't think all 8 feasible measures are being employed. 9 We are troubled by the fact that the schedules have 10 slipped and slipped and slipped, and as referred to earlier, 11 we think that this 1997 revision moves in the wrong 12 direction. 13 It actually does less to reduce emissions in the 14 near term and that bodes very negatively for the people 15 living in Southern California. 16 Another point that I wanted to make, and there are 17 just a couple really, the Federal and California Clean Air 18 Acts are very distinct. 19 It is very important to make the distinction. As 20 was pointed out, the Federal Act requires attainment by a 21 certain date. 22 We in the South Coast have more time than any other 23 region in the country, but we still struggle with how to get 24 there in 2010. 25 The California Act, in theory, is supposed to be PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 107 1 more stringent, five percent reduction per year, which is a 2 greater reduction than required under the Federal Act, and we 3 are trying to get to tighter standards, or more health 4 protective standards in California. 5 Unfortunately, the California Act includes the 6 mother of all escape clauses, and it is called "all feasible 7 measures," and that in our opinion has been abused, similar 8 to what we believe is abuse in the Federal Act of the 182-85 9 provision, which is the black box, the long-term undefined 10 measures. 11 In the California Clean Air Act, the opportunity 12 for abuse is "all feasible measures" and just how that is 13 defined. 14 One of the -- so, just to be clear, we don't 15 believe that the 1997 plan employs all feasible measures, and 16 it is a requirement of the Act. 17 We were very troubled by the staff report in the 18 respect that it focused almost exclusively on District 19 measures. 20 In fact, the South Coast, the 1997 Air Quality 21 Management Plan relies very heavily on State control measures 22 as well as Federal control measures. 23 There is virtually no discussion of the State 24 control measures in the plan and the potential for employment 25 of other feasible mobile source measures. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 108 1 That is a real problem. 2 Another point, on all feasible measures, it was 3 referenced twice by staff that the issue here is 4 technological feasibility. 5 That is only part of it. Really, a big part of our 6 definition or acceptance of feasible measures is our resolve 7 and how committed we are to employing existing technologies. 8 How far are we prepared to push polluters and 9 insist that they employ technology that is up and running in 10 their competitors shops. 11 That is a tough decision. It does involve spending 12 money, but it is something that we think neither the South 13 Coast Air Quality Management District nor this Board has been 14 willing to push very hard on. 15 If we are going to reach our goal in 2010 in the 16 South Coast, or in other regions in the State, we have to be 17 prepared to push that with resolve. 18 It is not just about waiting for technology to come 19 down the pipe. 20 The second point that I would like to make is 21 adoption and implementation schedules matter. This week the 22 environmentalists are not the only one's that think so. 23 We are very concerned with the analysis in the 24 staff report. The conclusion states that the District meet 25 its, this is one of the conditional points, the points that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 109 1 the staff is proposing conditional approval on is that the 2 District meet its rulemaking commitments according to the 3 schedule established in the 1997 plan. 4 Two problems here. One, they are not meeting their 5 schedule on at least five measures, maybe more, as measured 6 against the 1997 plan. 7 We are not talking about the 1994 plan. We are 8 talking about the 1997 plan exclusively here. 9 They are not meeting their schedule. The staff 10 directive is that they meet it. 11 Does that mean a year from now if they are off 12 schedule for one or two measures, the plan is still not 13 approved? 14 That is not clear to us. Another important point 15 is that, here again, the staff at the ARB only looked at 16 district measures. 17 If we take a fair review of all of the control 18 measures impacting the South Coast, this agency should hold 19 itself to the same standard. 20 The fact is that you are not meeting your rule 21 adoption and implementation schedule. So, we have problems 22 with that. 23 Finally, I would like to have, second to last, I 24 would like to step back from the 1994 and the 1997 debate and 25 point out that our air quality plan in California has PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 110 1 problems on many fronts. 2 We have identified in our testimony and 3 correspondence specific problems with adoption and 4 implementation of VOC rules and some of the mobile source 5 measures, and I mentioned the airports and the ports, but we 6 haven't really talked about rules that were adopted years ago 7 that are not delivering as anticipated. 8 I would just like to highlight a couple of those. 9 The Smog Check Program, fingers crossed is going to get on 10 track this year, but the fact is that the Program that we are 11 pursuing is a scaled back program. 12 Though it states in the staff report that no 13 additional measures are necessary for carbon monoxide 14 attainment, in the South Coast 2010 is our attainment 15 deadline for carbon monoxide. 16 That attainment demonstration relies heavily on the 17 Smog Check Program. A full blown Smog Check Program, not the 18 scaled back version. 19 We are very concerned that we will not attain the 20 carbon monoxide attainment standard in because we are not 21 proceeding with a Smog Check Program and very little if 22 anything is being done on that front. 23 It came out just in the last six months that there 24 is reason to believe that heavy-duty diesel trucks, regulated 25 heavy-duty diesel trucks, may be emitting 50 percent more PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 111 1 than previously thought. 2 We have identified similar shortfalls relative to 3 lawn and garden equipment, some of the consumer product 4 categories. 5 It is foolhardy to think that everything that we 6 put in our plan trying to predict 15 years down the road, or 7 even three or four years down the road, is going to come 8 through as anticipated. 9 What we have done a very poor job of in the State 10 of California is accepting that X program is not going to 11 work and finding a replacement and getting it go on the books 12 and getting it in place so that those emission reductions are 13 achieved in a timely fashion. 14 I will come took back to that point in a just 15 second. So, in summary, we do not believe this plan should 16 be adopted or approved for a number of reasons. 17 Simply given the reasons that the staff identified, 18 the five rules that are not currently employing all feasible 19 measures, are not as stringent as other districts in the 20 State, that alone is grounds for disapproval. 21 We think we can do more to identify feasible 22 measures, and by we I mean the royal we, the State Air 23 Resources Board, the U.S. EPA and the Air Quality Management 24 District, all agencies, more can be done to employ all 25 feasible measures. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 112 1 We will simply not meet our emission reduction 2 goals if we do not find additional measures because as could 3 have been expected some of the measures that we planned on 4 are not delivering. 5 We have to find replacement measures, and we are 6 not moving aggressively on that front in my opinion. 7 To end on a positive note, there are two programs 8 coming before this Board, we hope, this year. We hope that 9 they hold great promise, and we are going to be pushing this 10 Board very hard to make it a stringent program with very few 11 exemptions. 12 The other point, which I just received 13 correspondence on earlier this week, relates to my earlier 14 complaint that we haven't done a very good job of identifying 15 measures that could replace measures in the plan that aren't 16 delivering. 17 It is going to come before this Board, I think next 18 month, or there is a public hearing next month at least to 19 discuss one of the mobile source measures, M 7, and the fact 20 that it may not pan out, we are accepting that and it is 21 probably not going to pan out as anticipated, and we may have 22 a replacement measure. 23 That is very positive and that is something that we 24 are pushing for. So, we urge you not to approve the plan 25 today, but we do urge you to move expeditiously on adopting PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 113 1 new rules and control measures this year so that the South 2 Coast has a chance of breathing clean air in 2010. 3 CHAIRMAN DUNLAP: Thank you for those thoughtful 4 comments. If I might lead off with just a comment, Tim. 5 One thing that we pride ourselves on as a 6 regulatory body is having a partnership with the 7 stakeholders, not just the people who regulate, but with the 8 environmental community, too. 9 So, any time that we are criticized collectively as 10 not doing enough, we fret about that because that is not how 11 we want to be portrayed. 12 There are a lot of tough decisions, you have 13 acknowledged that, that we have to make here and we try to 14 serve the breathers by making those tough decisions. 15 At the same time, I am must tell you, I am seeing 16 an increasing reluctance at a time that really puzzles me, 17 the timing, because we have had some very good air quality, 18 particularly in the past couple of years in Los Angeles, that 19 you are AWOL relative to being the kind of boosters and 20 supporters for that progress and taking the tactic of being 21 more of a critic. 22 I know that is not completely without cause, I know 23 that there are some things that would motivate you to be 24 critical. 25 I really think as we look at how far we have come PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 114 1 and where we need to go and what we have on our agenda like 2 the LEV II issue, and we are looking at some other things 3 that staff is very fervently working on trying to secure 4 those black box tons this year, if we can, we need you guys 5 to be a positive force in that debate, not that you have to 6 tell us that we are doing it right completely or that you 7 agree with us all the time, because that is impossible, you 8 won't, and we don't expect you to, but I am troubled a bit 9 about the tone, not your personal tone, but about the 10 criticism, because it is, I think it is a little harsher than 11 it needs to be, and also the legal tack that you are taking, 12 I think might be able to be avoided and you could still be 13 the positive force that you need to be. 14 That is my two cents. 15 We don't want to go into this last year of this 16 administration being at odds with you. We want to find a way 17 to work with you. 18 I don't think there is much in the way of substance 19 of disagreement of what we are trying to do. I just wanted 20 to offer that up. 21 So, with that -- 22 MR. CARMICHAEL: I will take the opportunity to 23 respond briefly. 24 It should be noted that we, the Coalition and my 25 colleagues at NRDC, start virtually all of our public PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 115 1 speaking engagements with an acknowledgment that tremendous 2 progress has been made. 3 In fact, it is surprising to us to this day that if 4 you poll people in Southern California, you still get about 5 50 percent of the people saying that it is the same as it 6 ever was. 7 That speaks to our need for greater public 8 education on the efforts that we are making and the things 9 that are working. 10 Most people still are not making the connection 11 between driving their cars and air pollution. That is a 12 connection that has to be made. 13 We acknowledge the past progress. Where we differ, 14 I think, is that we are not optimistic about the continued 15 progress and the future progress as much as it would make the 16 business community, and probably the staff people here 17 cringe, reductions today have been relatively easy compared 18 to the reductions that we need to make between now and 19 attainment, and a lot more people are going to be impacted. 20 We had a rule come before the District just this 21 month that will impact 30,000 different businesses or 22 operations. It is the boiler and heater rules. 23 Those are the type of controls affecting more 24 people accepting that most people are contributing to the air 25 pollution problem, those are going to be the hard sells. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 116 1 We need to do a lot now to continue the progress 2 and see the progress that we have grown accustomed to seeing 3 in the future, in the next three to five years. 4 We have been disappointed in progress in the last 5 couple of years. 6 CHAIRMAN DUNLAP: We can go back and forth and I 7 don't want to do that. 8 Two comments that I would like you to ponder, 9 because I am going to think about them as well, we have seen 10 dramatic improvement in clean car technology, the auto makers 11 are willing to do beyond what we are asking them to do. 12 Tom and his team had a few things to say in Irvine 13 four or six months ago, and we had some auto makers say, hey 14 that would be tough to do, or we don't want to do it, or we 15 can't do it and then come to the auto shows around December, 16 January, we had a bunch of them making a public announcement 17 that they are going to do it with or without regulation and 18 some have gone beyond that. 19 So, not everything, I know that you know this, but 20 let me remind you that not everything needs to be done 21 through regulation, either, and just like these market 22 trading programs, there is another avenue to get the 23 progress. 24 I will be quiet at that point and, Lynn, you are 25 welcome to go. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 117 1 BOARD MEMBER EDGERTON: Let me just second what you 2 said about our continuing wish that we could work together 3 more on these issues and not have found ourselves in an 4 adversary position with NRDC and the Coalition in litigation. 5 I have a couple of questions, specific questions 6 about policies that you all are advocating, or at least I 7 think that you are advocating. 8 First, you made some comments about Smog Check, the 9 1994 Smog Check Program. 10 Could you refresh my memory, or bring me up to date 11 on whether the Coalition or NRDC expects the 1994 Smog Check 12 Program to achieve significant emission reductions? 13 MR. CARMICHAEL: The 1994 program is the program 14 that is going forward. 15 Are you making the distinction? 16 BOARD MEMBER EDGERTON: The 1994 program, is that 17 the smog check, is that an area where you expect, is that a 18 critical area, is that an area where there are emissions, 19 where you are optimistic, you expect it to work, you support 20 it as critical to clean air? 21 MR. CARMICHAEL: Yes. 22 BOARD MEMBER EDGERTON: It is? 23 MR. CARMICHAEL: Yes. The reason that I say that 24 definitively is that our plan relies on 60 tons per day of 25 emission reductions in 1999 from the Smog Check Program, so PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 118 1 it better work. 2 What we are discouraged about is the Legislation 3 that went through in the fall of 1997, just a few months ago, 4 that scaled back the Program. 5 Some of those changes were clearly warranted, but 6 the net result is fewer emission reductions and that is 7 likely to lead to us not meeting our carbon monoxide 8 attainment goal in 2000 and will negatively affect our 9 ability to meet our ozone attainment goal in 2010. 10 BOARD MEMBER EDGERTON: I guess that if I 11 understand you right, you have changed your position on the 12 1994 Smog Check Program, because I was here when you 13 testified in strong opposition to the adoption of the 1994 14 Smog Check Program into the plan, strong objection. 15 We spend hours and hours on that particular 16 measure, and my recollection is that what you said at that 17 time was that you did not believe it was an effective 18 program. 19 MR. CARMICHAEL: Point of clarification, first of 20 all, I wasn't here for the Coalition in 1994. 21 BOARD MEMBER EDGERTON: I didn't mean you 22 personally. 23 MR. CARMICHAEL: And secondly, we are supporters of 24 smog checks and the Smog Check Program. I think the 25 criticisms that were made at the time related to how the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 119 1 program was structured, is there centralized testing or not, 2 is it administered the EPA versus the ARB debate about how 3 best to structure that program. 4 As far as whether or not we should have a smog 5 check program, the whole State should have a smog check 6 program, no if and/or buts about that. 7 BOARD MEMBER EDGERTON: That's helpful. So, then 8 if I understand you correctly, you support Smog Check, but 9 not the part that would have funded Smog Check? 10 MR. CARMICHAEL: Again, I was not here in 1994 so I 11 don't know what the specific criticism was, but I believe it 12 related how the program was implemented, whether or not you 13 had centralized testing and there was great concern at that 14 time about the mom and pop operations that repair and test 15 and whether that was a program open to fraud, or if it was a 16 program that could work. 17 I don't know if that really has been resolved. 18 BOARD MEMBER EDGERTON: If I understand you 19 correctly you are now supporting the 1994 Smog Check Program 20 as amended by the Legislature? 21 MR. CARMICHAEL: We support Smog Check. We are 22 concerned about the amendments that just went through the 23 Legislature that scale back the Program and achieve fewer 24 emission reductions. 25 As a result, we are going to achieve fewer emission PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 120 1 reductions from the Program then we anticipated were going to 2 be implemented this spring. 3 CHAIRMAN DUNLAP: What percentage effectiveness did 4 we lose with those changes, Tom? 5 MR. CACKETTE: Five to eight percent. I think we 6 lost for all the enhanced theory is around 10 percent, which 7 includes the revisions to the Program and the exemption of 8 the older cars. 9 CHAIRMAN DUNLAP: Lynn, let me proceed. 10 I want to come back to a point, I mean the Board is 11 welcome to ask Tim anything that you want, but I want to come 12 back and get the staff to comment so that we can discuss this 13 item with our staff. 14 BOARD MEMBER EDGERTON: I will try to finish up 15 this point and give some other people some time and come back 16 because there are a number of these things that trouble me. 17 My recollection is that the principal concern of 18 the environmental organizations who oppose the adoption and 19 inclusion of the Smog Check Program in the 1994 SIP was that 20 the emissions reduction we believed that we might potentially 21 get were not feasible, that it was not a feasible measure it 22 was not going to be effective. 23 Now, I was very responsive to those arguments at 24 that time, and I was very concerned that we might be over 25 reaching in terms of emission reduction that we could get PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 121 1 from Smog Check, in part because I didn't see the Legislature 2 appropriating the money to try to get those. 3 But because there were people of standing, and 4 people who had carefully considered it and thought other than 5 I did, I thought that it made to put it in there and see if 6 we could do it. 7 Subsequently, as has been discussed, the Program 8 has been cut back because the amounts of emissions 9 reductions, which were the most optimistic, did in fact prove 10 to be over optimistic in the short run, any way, but so for 11 lack of a better word, maybe the Legislature thought they 12 weren't feasible. 13 The reason that I bring this up is that now I find 14 myself being sued by the Coalition for Clean Air for not 15 enforcing a program which I heard the Coalition come and tell 16 me that you thought that it wasn't feasible and the argument 17 that you have in court and the argument that you have today 18 is that it is feasible even though you said you didn't think 19 it was feasible before. 20 It's a problem for somebody sitting in this 21 position. You say you don't think it is true, maybe I don't 22 understand it. 23 MS. WALSH: We may be talking about two related 24 concepts. M 1, being the Vehicle Scrappage measure in the 25 SIP, and Smog Check, and because of the way that the two PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 122 1 programs have played out over the last couple of years since 2 the adoption of the SIP, we are looking at having to pull 3 emissions from the scrappage programs to meet the performance 4 under the Smog Check Program, but those really are two 5 separate programs. 6 BOARD MEMBER EDGERTON: That's true. I stand 7 corrected. 8 It was really scrappage that you were very much 9 opposed to. 10 Are you suing to enforce scrappage? 11 CHAIRMAN DUNLAP: Lynn. 12 BOARD MEMBER EDGERTON: I am having a difficult 13 time. 14 I am trying to understand the concept of, I am just 15 trying to point out some of the difficulties, and some people 16 called it SIP gap, which is when you go in and put something 17 in a program and you think it will work, and then later you 18 see it does not work, and you make a change and then you get 19 sued for having made a change because it won't work. 20 CHAIRMAN DUNLAP: Well -- 21 BOARD MEMBER EDGERTON: It is a problem. 22 CHAIRMAN DUNLAP: Tim, I know you are here 23 representing some people and -- 24 MR. CARMICHAEL: Can I bring my counsel? 25 CHAIRMAN DUNLAP: You know that some of us view PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 123 1 litigation as kind of a last resort, that is all. 2 So, we are troubled by that, because we don't want 3 to be there with you on this. It is not our intent to do 4 anything to grow that problem. 5 We can be very sincere people, and we can be trying 6 to do the people's business, but if the accounting don't 7 work, you are going to call us on it, and you are going to 8 use what tools you have, supposedly you are choosing to use 9 the legal ones, we are troubled. 10 We need you as part of the solution. We don't want 11 to be in court. 12 That's it. I think you understood that. 13 That is why we have had our Executive Officer and 14 our Chief Counsel spend as much time talking with your 15 constituencies to try to work through some things. 16 You don't want to be irrelevant ever to us, insofar 17 as you don't want us to think that we can't ever satisfy you, 18 therefore, we have no reason to pay attention to your 19 criticisms. 20 You have got to strive also to find some common 21 ground to work through these things, because we are not in a 22 good place now, and I think that you know that. 23 All right. What I would like to do is unless 24 anyone else has anything that they want to say to Tim, thank 25 him for his comments, I'll let you take your seat and then PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 124 1 let's have a discussion with our staff to see what we do 2 here. 3 Thank you, Tim. Mr. Kenny, or Ms. Terry, or Ms. 4 Walsh. 5 A couple of concerns that have come to the fore 6 here. One is that, perhaps what might be easier, is 7 Mr. Houston still back there? 8 Mr. Houston is saying there is a couple of issues 9 relating to paints and the effectiveness of those coatings. 10 He thinks that we missed the mark here, that the 11 plan misses the mark. Mike, you know, I know you are 12 well-aware of this issue and all of that, do you have 13 anything that you can say to Mr. Houston about this? 14 MR. KENNY: What I can say to Mr. Houston is that 15 we are willing to continue to try to work with him, but his 16 request that the Board not include the paint measures in its 17 approval is something that we think would be unwise. 18 The paint measures are in the 1997 AQMP that was 19 approved by this Board last year. We have been working with 20 the paint industry for years in terms of trying to come to 21 some type of cooperative effort with them. 22 The issues that Mr. Houston is raising are the same 23 issues that have been raised before this Board in the past 24 and also in litigation, and in litigation Mr. Houston's 25 organizations have been unsuccessful. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 125 1 We would like to continue to work with him. We 2 think that there is an opportunity there, but not to put 3 those in the plan at this point would be inappropriate. 4 CHAIRMAN DUNLAP: Okay. Mr. Houston, you are not 5 off the hook either. You have been suing us, too, in the 6 past. 7 What I would like to then, Mike, why don't you put 8 together a process, talk to Mr. Houston and keep a dialogue 9 going. 10 Also, we have some interest here, the 11 administration has had some interest in talking to your 12 industry about some kind of legislative proposal that might 13 unify authority, so you would have one standard, not a bunch 14 of local standards that perhaps are different. 15 I would encourage you to explore that opportunity, 16 because there are some things that could be positive for your 17 industry and positive for us collectively. 18 Mike, would you get with Mr. Houston and his team, 19 thank you. 20 As it relates to Mr. Carmichael's concerns, say a 21 word about the accounting, Mike or Lynn, the tons, the bottom 22 line is the tons. 23 I will pick on my colleagues to the left of me here 24 when we have rolled back a rule on occasion. I have heard 25 some say, hey, Mike, what are we are doing? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 126 1 We are going in the wrong direction. Give us a 2 sense about what this plan does. 3 MR. KENNY: We are sensitive about any kind of 4 criticism that we are essentially rolling back. 5 We take very seriously the charge. It comes both 6 from this Board and the Governor that, in fact, we are to 7 make up all of the tons and includes filling in the black 8 box. 9 There are occasions in which as a measure is 10 adopted by this Board, what happens is that the technology 11 has not progressed the way that we thought it would and so we 12 bring the measure to the Board which is less than we had 13 originally anticipated. 14 But when that occurs, what we also do is we take 15 into account the fact that we need to make it up and we make 16 every effort not to basically move those measures into a 17 black box. 18 We try to figure out what we can do in more of a 19 short term, and when we could we identified those, and when 20 we couldn't we would provide for a realistic approach to try 21 to achieve the tons. 22 To give the Board some examples, last year, we 23 brought to the Board an off-cycle emission measure that was 24 associated with light-duty vehicles. 25 It was not part of the SIP, it was not in the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 127 1 inventory, and yet it stole 100 tons of additional emission 2 reductions per year that will go to the breathers of this 3 State. 4 Next month we will bring to the Board a revision 5 with regard to M 7, that is heavy-duty trucks scrappage. 6 The reality there is that the money is not 7 available for heavy-duty truck scrappage. We can't achieve 8 the emission reductions that we had originally anticipated 9 within the timeframes that had, but we will bring to the 10 Board alternatives and the alternatives include taking into 11 account some of the emissions that were received from what 12 the Board did last month when it adopted the HTVIP and PSI 13 programs and expanding those particular programs. 14 So, we are looking for ways to ensure that in fact 15 every possible measure that we can identify is brought before 16 this Board so that we don't have shortfalls. 17 We are also working right now with the Heavy-Duty 18 Engine Manufacturers Association to ensure that we can 19 achieve additional emission reductions that haven't yet been 20 quantified from the off-cycle emissions from those vehicles 21 in their operation. 22 We hope we will have some resolution on that in the 23 near term. 24 CHAIRMAN DUNLAP: So, you are not trying to get out 25 of securing the emission reductions, you are trying to be PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 128 1 accountable to the ones that might have been slipped and make 2 sure that we keep the SIP whole. 3 MR. KENNY: Let me give you two other examples that 4 I think are helpful. We will be bringing to this Board 5 sometime this year, and probably closer to the end of the 6 year, a measure with regard to jet skis. 7 The reality there is that the emissions associated 8 with jet skis are more than we had originally anticipated. 9 So, the emission reductions that we can get from 10 jet skis are also greater. So, this Board will hear that and 11 there will be benefits from this Board's action. 12 And then in March we will bring to this Board 13 what Tom previously referred to as a relaxation on the 14 non-hand-held side, the lawnmower side. 15 What has also occurred while we have been looking 16 at that is that we found that there was a substantial large 17 number of emissions that occur from refueling. 18 So, when we bring to this Board at some point in 19 the near term our refueling measure where we look at all of 20 the different types of equipment that is refueled, whether it 21 is a jet ski, or whether it is a lawnmower, whether it is a 22 piece of portable power equipment, all those different types 23 of things will be looked at from a refueling standpoint 24 because the emissions there are very substantial. 25 To summarize, we are not trying to get out of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 129 1 emission reductions and in fact, when we find a shortfall as 2 a result of technology not advancing as rapidly as we had 3 originally hoped, we recognize that we still need the 4 emission reductions, and we will try to identify an 5 alternative that will give us those emission reductions. 6 CHAIRMAN DUNLAP: All right. You think that is 7 enough for us to move on this plan and approve it? 8 MR. KENNY: Yes. 9 CHAIRMAN DUNLAP: Okay. 10 BOARD MEMBER EDGERTON: I would like to make a 11 comment. 12 CHAIRMAN DUNLAP: Before you do that, Kathleen, 13 would you like to add anything to that? 14 MS. WALSH: No. 15 CHAIRMAN DUNLAP: Let me ask a legal question, if I 16 may as it relates to Mike's summary. 17 Taking this action, legally, any implications 18 beyond where we are already at? 19 MS. WALSH: No. We have worked with the staff 20 legal office on the proposal to approve the 1997 AQMP under 21 State law, and we feel confident that that recommendation is 22 warranted. 23 CHAIRMAN DUNLAP: Okay. Lynn Terry, anything on 24 that point? 25 Okay. Sally, and then Lynn. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 130 1 BOARD MEMBER RAKOW: Just a quick question, on the 2 point that Mr. Houston made, I note that the staff said there 3 was an economic analysis of the total plan that you are 4 proposing, was there a specific economic analysis on the 5 architectural coating section? 6 MS. TERRY: Yes, there was. 7 BOARD MEMBER EDGERTON: I would like to apologize 8 to people. 9 The whole time I was talking I meant to be saying 10 scrappage. 11 I was all the time talking about scrappage, and I 12 said Smog Check. Thank you for catching that. 13 I don't know if there is a mechanism to go back and 14 correct that in there. 15 CHAIRMAN DUNLAP: They are intertwined in 16 Legislation. 17 BOARD MEMBER EDGERTON: Thank you. It was 18 scrappage that I had in my mind, and Smog Check that I had in 19 my mouth. 20 In response to the Chairman's comment asking about 21 making this plan whole, it is my considered judgment that as 22 a factual matter it would be incorrect to say that this 23 strategy is greater exposure to air pollution than would be 24 the case under the 1994 AQMP. 25 The reason is because if certain measures are found PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 131 1 infeasible, they are infeasible. They would not be 2 implemented if there is no technology for an idea that we 3 have, it can't be implemented, so you would not have those 4 benefits. 5 I recognize that it is frustrating for citizens to 6 see, to get their hopes up and think that a particular 7 measure is going to be successful and then find that it is 8 not. 9 However, I would say from my own vantage point, and 10 having talked with the Air Resources Board staff and been 11 pushed as much as any other organization may push us, that I 12 feel confident that the review has been very careful, very 13 thorough and that we are squarely on course with respect to 14 meeting the standards of the California law, which we have 15 adopted with all feasible measures with the exception of 16 those five measures that you suggested that could be 17 conditionally approved. 18 I can only say that in my heart and in my mind I 19 believe that we are really there. I have worked on it for a 20 number of years. 21 I would like to see even more happen, and I believe 22 even more is going to happen, the sweep of new measures 23 proposed in September at the symposium was outstanding, 24 LEV II, outstanding, and so, I would counsel that it is 25 important for the public to get the message that not only is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 132 1 the air cleaner, but the programs are very much on target and 2 it is wrong that the air is going to be less clean as a 3 result of our programs, simply wrong. 4 Thank you. 5 CHAIRMAN Dunlap: I appreciate that. I see some of 6 the press Officers of the Board over there, they have a 7 charge now, Jerry and Allen. 8 Supervisor Roberts. 9 BOARD MEMBER ROBERTS: I want to support this 10 today, but I will not jump up and down and kick my heels over 11 this. 12 There are a number of things that make me 13 uncomfortable in this plan. I would like staff to maybe 14 respond to one of those because it is inconceivable and it 15 may be reflection of very poor management in administration, 16 but it is not clear to me how an emissions bank can have a 17 negative balance and why something like that would even be 18 allowed to come about. 19 CHAIRMAN DUNLAP: Do you want to, anyone on staff, 20 Lynn, do you want to take a stab at that? 21 MS. TERRY: When the District adopted their new 22 source review program and established a threshold for those 23 facilities that would basically not have to come with their 24 own off-sets, but subject to a District pool, obviously there 25 were technical judgments involved in estimating what kind of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 133 1 pool of emission reductions would be needed to make sure that 2 those facilities could be covered, and the District has done 3 the tracking necessary so that when they got to a point where 4 the pool was diminishing at an alarming rate and new sources 5 were continuing to come into the basin, to their credit they 6 recognized the problem, and our Stationary Source Division 7 staff have been working and tracking this very closely to 8 make sure that this pool is replenished and that their new 9 source review rule is amended as appropriate to take care of 10 the problem. 11 CHAIRMAN DUNLAP: Well, on that point, why don't 12 you work with the South Coast staff and in another month or 13 so get to the Supervisor, if agreeable, and update him on 14 what the plan is to make this bank -- 15 BOARD MEMBER ROBERTS: As I understand it, their 16 extended credits that were not warranted by the reality of 17 the situation -- 18 CHAIRMAN DUNLAP: Ron, it may be situational and it 19 may be timing. 20 You have more detail than I have on that right now, 21 but I think what might answer it more completely is to get a 22 plan of how it is going to be, the account is going to be 23 made right and what the plans are because there may be things 24 that don't show up now in the accounting that will in a 25 matter of weeks or something. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 134 1 BOARD MEMBER ROBERTS: I would suggest that in 2 going forward some of the things that we have to watch out 3 for in making these kinds of projections and a lot of people 4 off of the hook without maybe a sound basis for that. 5 CHAIRMAN DUNLAP: That is a good point. I would 6 ask the South Coast staff and our staff to get together an 7 explanation, and the Supervisor could be given and certainly 8 a copy to the Members of the Board, so they can see that too, 9 this is not a small point, I mean, it is a concern to keep 10 our books balanced. 11 Anything else? 12 Very good. We have before us no more witnesses, 13 nobody else that wishes to testify, none that is provided to 14 me on the list. 15 Staff, we have before us in the file that you gave 16 us generous time to review the written comments, I am going 17 to suspend the summary of that because we had the chance to 18 look at that ourselves. 19 Mike, do you have any closing, is there anything 20 else? 21 MR. KENNY: I have nothing to add. 22 CHAIRMAN DUNLAP: Thank you. Since it is a 23 regulatory item, I will not close the record, however, we do 24 have a Resolution before the Board for action. 25 It is my personal opinion, and I have expressed, I PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 135 1 have said probably too much on this thing, the bottom line 2 is, we have got to get the performance out of any plan. 3 I am hearing that the staff is willing to make up 4 any tons where there are shortfalls. One thing I must 5 disagree with some that have criticized us collectively, the 6 South Coast and the State, that somehow we are looking to get 7 out of not securing tons, that is not the case, you have 8 heard the assurances from staff here today. 9 I am pleased South Coast, last year I was of the 10 opinion that South Coast did some things to alienate some 11 stakeholders, the process somehow was lacking, and I am 12 hearing from them that they have renewed their commitment to 13 reach out to the stakeholders, keep the dialogue open. 14 We have heard Mr. Carmichael, and I know that he is 15 sincere about what they believe in and want ultimately the 16 same goal that we do. 17 Tim, you know we sent some messages to you today, 18 too, you take them back and say, hey, this has some concern, 19 the Board has expressed concern to you as well about our 20 views of the legal situation and the like. 21 I think this proposal ought to be approved, and we 22 ought to watch it carefully and, Mike, we are going to hold 23 you and your team accountable to that and also the South 24 Coast folks as well, and if there are problems we need to 25 know about them, they need to come back, and they need to be PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 136 1 addressed. 2 I would entertain a motion to move and support the 3 staff recommendation on this item with all of those points 4 emphasized that I expressed and that you expressed. 5 BOARD MEMBER RIORDAN: Mr. Chairman, I would be 6 happy to move that, and I sort of look at the dias and maybe 7 out into the audience, I suspect I have lived in the South 8 Coast longer than anybody who is here and do recognize the 9 positive things that have happened. 10 I clearly see tremendous strides for improvement 11 and believe very strongly that this plan is going to bring us 12 even more improvement in that basin, and so, I am very happy 13 to move it. 14 CHAIRMAN DUNLAP: Supervisor Riordan made the 15 motion and seconded by Mr. Calhoun. 16 BOARD MEMBER CALHOUN: And I would like to 17 emphasize that this is conditional approval, and I have 18 already voiced my concerns to the staff that we follow up on 19 these conditions that are specified to see that they are in 20 fact abided by. 21 CHAIRMAN DUNLAP: Thank you. 22 Any discussion? 23 We have a motion and a second. 24 Any further discussion? 25 We will proceed on a voice vote. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 137 1 All those in favor of Resolution 98-3, say aye. 2 Any opposed? 3 Very good. Thank you. 4 Thank you to staff. There was a lengthy but 5 complete staff presentation. We appreciate that. 6 South Coast, thank you for doing the leg work to 7 get it up here to us, and we will continue to work with you 8 all. 9 All right. We have one gentleman, we have an open 10 comment period, and let me say a word about that. 11 The next item on our Agenda today is the Open 12 Comment Period. During this period, although no formal Board 13 action may be taken, it will provide an opportunity to 14 members of the public to directly address the Board on items 15 that do not appear on today's Agenda. 16 We ask that each witness be respectful of time and 17 limit his or her comments to a few moments and to ensure that 18 everyone has a chance to speak. 19 We will invite you to come forward now. Mr. 20 Alegre, thank you for being patient. 21 And Mr. Alegre, where is your business located, may 22 I ask? 23 My father is in the trucking industry, so I know a 24 few things about your business. 25 MR. ALEGRE: Lodi. We will be out of business when PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 138 1 I get rid of diesel. 2 Anyway I want to thank you for having me here, and 3 I want to apologize for you people getting sued, because all 4 you are doing is trying to do the job that we put you here to 5 do. 6 It is sad when you have to be sued for being on a 7 Board. I have been on a Board in the reclamation district 8 and we are always getting sued, too. 9 Maybe we shouldn't do anything for the public. We 10 do appreciate and I think that you people are doing a great 11 job. 12 The reason that I am here is that I got mad. I got 13 mad about a year and a half ago. 14 I was driving to my business after I went home and 15 I went back to work, and I could see nothing but a cloud of 16 smoke. 17 Not smoke, dust. I thought it was a fire. 18 I got down here, and here is a guy with a blower, 19 and he is blowing all this stuff from the side of the street 20 blowing it to the other side of the street, cleaning the 21 whole street, honest to God, next to a sanitary service down 22 there. 23 So, then about three weeks ago, we have got a yard 24 in Stockton, and I am driving down the street, and guess 25 what, there are some guys over there with these blowers, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 139 1 blowing the leaves, the dirt, everything out into the street. 2 We talk about pollution. 3 What is pollution? 4 Is that pollution? 5 I think it is. I think it is pollution that we 6 don't need. 7 I think that it is pollution that you can do 8 without hurting any taxpayers in this State. Nobody should 9 have the right, blowers ought to be outlawed. 10 I run a gravel operation in Stockton, a recycling 11 plant. The Air Resources guy comes over there and says, you 12 are making too much dust. 13 I said, okay, I will shut her down. 14 He said, why don't you put some more water things 15 on there. I said, fine. 16 I put the water things on and the next day he comes 17 back and he was happy. 18 I made money! 19 Do you know why? 20 Because that product was going out, and it was 21 going to weigh more so I would get more money. That was 22 something that I could do that really did not hurt me, and it 23 saved the environment, and I don't mind doing that. 24 These blowers are all over. How many blowers are 25 there in the State of California? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 140 1 Do you have any idea? 2 CHAIRMAN DUNLAP: Tom, do you know offhand? 3 MR. CACKETTE: Lots. 4 CHAIRMAN DUNLAP: That is a reasoned scientific 5 opinion, sir. 6 MR. CACKETTE: I don't have the number off the top 7 of my head. 8 MR. ALEGRE: I called the City of Stockton, and I 9 said, you know, I am going to go get a blower and blow all of 10 my stuff out into the street, if that's okay. 11 The guy said, don't you dare. 12 I said why don't you come down here and take a 13 look. So by the time he got down there, the blower guys were 14 gone. 15 The leaves were on the street, and he says, well, 16 not much I can do. All the dirt is in the street, and I have 17 to pay, or me as taxpayer, has to pay to clean that street. 18 What I am saying here is that we have to have 19 common sense in this country of what we can do and what we 20 can't do. 21 If we want to shut off diesel, that is fine, but 22 can you live without food, or without driving or without 23 clothing? 24 I don't think that you can. So, we have to look at 25 things a little realistic. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 141 1 But blowers we don't need. 2 You know, why don't these guys that have the 3 blowers use vacuums? 4 I use it in my yard. Instead of blowing the dust 5 in the air, you vacuum it up and send to the landfill, the 6 shrub, mulched up and you have a product. 7 If we vacuumed all of the dust up, this State would 8 be a cleaner place to be in. We allow blowers to not only 9 put emissions out with fuel and they are blowing dust all 10 over the place. 11 I would like to see, take a mile of street and take 12 a blower and run it all of the way down and then check this 13 truck and measure the emissions and see who has more 14 emissions. 15 That is my case. Thank you, very much. 16 CHAIRMAN DUNLAP: Thank you. Mr. Alegre, before 17 you leave, one thing that I wanted you to know, it is not 18 this Board's intention to ban diesel in any way. 19 We want you to know that. So, what I am going to 20 ask you to do is to hang around a few minutes, we will get 21 you some material about what exactly is under consideration 22 later this year, and we don't mind you coming here and 23 letting us have it. 24 We want you to have the facts on this diesel thing 25 because a lot of people think we are going to do something PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 142 1 that is precipitous and we are not and we want you to know 2 that. 3 MR. ALEGRE: That gentleman back there did not like 4 it, okay. You people did me wrong. 5 Some of these people just don't know what trucks 6 do. You have to remember, everything you get comes by truck. 7 Everything. 8 Several years ago I was before this Board, it was 9 not a friendly Board, you are much nicer, but they were the 10 snap-idle test, and I will tell you something, you were that 11 close to seeing the trucks shut down in California. 12 This State would be in disaster in two or three 13 days. I came here to tell you something that you really 14 ought to have the staff look at, what we can use and what we 15 don't need. 16 That is where we start. Another thing, I heard 17 here today was we are going to get these companies to produce 18 500 tons of emissions and charge them so much. 19 I'm sorry. Every one of us from little to big 20 should have to be involved in reducing emissions and when you 21 charge the big companies, they are going to leave this State 22 a lot quicker than us little guys. 23 Something to think about. 24 CHAIRMAN DUNLAP: Thank you for coming today sir, I 25 appreciate that. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 143 1 We will ask the Ombudsman's office to spend a new 2 minutes with Mr. Alegre, if you would. 3 Anyone else wish to speak today? 4 Thank you for your attendance here, and with that, 5 we will close this the January meeting of the California Air 6 Resources Board. 7 (Thereupon the Air Resources Board meeting was 8 adjourned at 12:45 p.m.) 9 --o0o-- 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 144 1 CERTIFICATE OF SHORTHAND REPORTER 2 3 4 I, VICKI L. MEDEIROS, a Certified Shorthand 5 Reporter of the State of California, do hereby certify: 6 That I am a disinterested person herein; that the 7 foregoing hearing was reported in shorthand by me, Vicki L. 8 Medeiros, a Certified Shorthand Reporter of the State of 9 California, and thereafter transcribed into typewriting. 10 I further certify that I am not of counsel or 11 attorney for any of the parties to said hearing nor in any 12 way interested in the outcome of said hearing. 13 IN WITNESS WHEREOF, I have hereunto set my hand 14 this eighth day of February, 1998. 15 16 17 VICKI L. MEDEIROS 18 Certified Shorthand Reporter License No. 7871 19 20 21 22 23 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345