BOARD MEETING STATE OF CALIFORNIA AIR RESOURCES BOARD JOE SERNA, JR. BUILDING CALIFORNIA ENVIRONMENTAL PROTECTION AGENCY CENTRAL VALLEY AUDITORIUM, SECOND FLOOR 1001 I STREET SACRAMENTO, CALIFORNIA THURSDAY, FEBRUARY 28, 2008 9:00 A.M. TIFFANY C. KRAFT, CSR, RPR CERTIFIED SHORTHAND REPORTER LICENSE NUMBER 12277 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 ii APPEARANCES BOARD MEMBERS Ms. Mary D. Nichols, Chairperson Dr. John R. Baums Ms. Sandra Berg Ms. Judith G. Case Ms. Dorene D'Adamo Ms. Lydia Kennard Mr. Jerry Hill Mr. Ronald O. Loveridge Mrs. Barbara Riordan Mr. Ron Roberts Dr. Daniel Sperling STAFF Mr. Tom Cackette, Chief Deputy Executive Officer Mr. James Goldstene, Executive Officer Mr. Bob Jenne, Acting Chief Counsel Mr. Michael Scheible, Deputy Executive Officer Ms. Lynn Terry, Deputy Executive Officer Ms. Kathleen Quetin, Ombudsman Ms. Lori Andreoni, Board Secretary Mr. Michael Benjamin, Chief, Mobile Source Analysis Branch Mr. Bart Croes, Chief, Research Division PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iii APPEARANCES CONTINUED STAFF Ms. Susan Fischer, Staff, Research Division Mr. Douglas Ito, Manager, Goods Movement Strategies Section, PTSD Mr. Kurt Karperos, Chief, Air Quality and Transportation Planning Branch Ms. Karen Khamou, Air Pollution Specialist, Office of Climate Change Ms. Cynthia Marvin, Assistant Division Chief, Planning & Technical Support Division ALSO PRESENT Mr. Mark Abramowitz, Community Enviromental Services (Vycom) Mr. Rafail Aguilera, LUAQ, Green LA Ms. Athena Applon, WO Environmental Indicators Project Mr. Mark Aprea, Republic Services Assemblyman Juan Arambula Mayor Allen Autrey Ms. Nidia Bautista, Coalition for Clean Air Mr. Frank Caponi, L.A. County Sanitation Districts Mr. Tim Carmichael, Coalition for Clean Air Senator Dave Cogdill Mr. Bob Curry, CA Cartage Assemblymember Mark DeSaulnier, Bay Area Senator Jeff Denham Mayor Amar Dhaliwal, City of San Joaquin PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iv APPEARANCES CONTINUED ALSO PRESENT Dr. Bob Epstein, ETAAC Committee Mr. Jeff Findley, SJVAPCD Ms. Leah Fletcher, NRDC Dr. John Froines, Chairperson, Scientific Review Panel Mr. Jim Ganduglia, CA Trucking Association & CA Partnership Operator Clean Air Mr. Larry Greene, Sacramento AQMD Ms. Jennifer Gress, representing Senator Lowenthal Mr. Dwight Hanson, Cummins Westport Mr. Frank Harris, Southern California Edison Mr. Chuck Helget, Allied Waste Mr. Michael Hertel, Southern California Edison Mr. Henry Hogo, SCAQMD Mr. Roger Isom, CA Cotton Ginners and Growers Association Mr. Tom Jordan, SJVAPCD Mr. Bruce Kern, Easy Bay EDA Mr. Steve Lehtonen, Green Plumbers USA Mr. David Lighthall, Environmental Health at Central Valley Health Policy Institute at CSU, Fresno Mr. Alan Lloyd, ETAAC Committee Mr. Bill Magavern, Sierra Club California Mr. Rick McVaigh, SJVAPCD Ms. Terri Mejorado, Fresno CVB Mr. Taylor Miller, Sempra Energy PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 v APPEARANCES CONTINUED ALSO PRESENT Mr. Fred Minassian, South Coast AQMD Dr. Matt Miyasato, South Coast AQMD Ms. Patricia Monahan, Union of Concerned Scientists Mr. Erik Neandross, GNA Mr. Scott Nester, SJVAPCD Supervisor Leroy Ornellas Councilmember Henry Perea, City of Fresno Mr. Kathryn Phillips, Environmental Defense Ms. Mary-Michael Rawling, Citizen Advisory Committee Councilwoman Tonia Reyes Uranga Mr. Rick Ruiz, Capstone Microturbine Mr. Ira Ruskin, Bay Area Legislators Mr. Seyed Sadredin, SJVAPCD Mr. Doug Selleck, Sterling Trucks Mr. Dave Sherman, Daimler Truck Financial Ms. Muriel Strand Mr. Mark Stout, CleanTech America, LLC Supervisor Tim Smith, Bay Area AQMD Mr. Scott Smithline, Californians Against Waste Senator Mike Velines Mr. Barry Wallerstein, SCAQMD PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 vi APPEARANCES CONTINUED ALSO PRESENT Mr. Peter Weber, CA Partnership for the SJV Mr. Kevin Whilden, Climos Mr. Chuck White, Waste Management PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 vii INDEX PAGE Item 08-2-1 Chairperson Nichols 4 Executive Officer Goldstene 5 Staff Presentation 6 Item 08-2-2 Chairperson Nichols 17 Executive Officer Goldstene 17 Staff Presentation 18 Q&A 26 Motion 34 Vote 34 Item 08-2-3 Executive Officer Goldstene 35 Motion 36 Q&A 36 Ms. Bautista 38 Vote 41 Item 08-2-4 Chairperson Nichols 41 Executive Officer Goldstene 41 Staff Presentation 42 Q&A 63 Ms. Phillips 77 Item 08-2-5 Chairperson Nichols 80 Executive Officer Goldstene 81 Staff Presentation 82 Mr. Caponi 91 Mr. Hertel 94 Ms. Fletcher 97 Mr. Miller 97 Mr. White 100 Q&A 109 Motion 114 Vote 114 Item 08-2-6 Chairperson Nichols 116 Executive Officer Goldstene 116 Presentation 117 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 viii INDEX CONTINUED PAGE (Item 08-2-7) Senator Cogdill 122 Senator Denham 125 Senator Velines 126 Assemblymember Rambula 129 Supervisor Ornellas 131 Mayor Autrey 134 Item 08-2-6 continued Presentation 137 Q&A 158 Mr. Harris 161 Mr. Miller 162 Ms. Fletcher 163 Mr. Whilden 167 Ms. Strand 168 Mr. Lehtonen 171 Mr. White 172 Mr. Smithline 174 Mr. Helget 176 Mr. Caponi 177 Mr. Aprea 178 Mr. Ruiz 180 Ms. Monahan 182 Mr. Carmichael 183 Mr. Magavern 185 Item 08-2-7 Chairperson Nichols 189 Executive Officer Goldstene 189 Staff Presentation 190 Assemblymember Ruskin 212 Assemblymember DeSaulnier 215 Councilwoman Uranga 221 Ms. Gress 224 Mr. Kern 229 Mr. Wallerstein 231 Mr. Minassian 241 Dr. Miyasato 251 Mr. Hogo 254 Mr. Curry 258 Mr. Neandross 259 Mr. Selleck 262 Mr. Hanson 264 Mr. Sherman 265 Supervisor Smith 269 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 ix INDEX CONTINUED PAGE Mr. Nester 271 Mr. McVeigh 274 Mr. Jordan 278 Mr. Findley 279 Mr. Sadredin 280 Mr. Perea 285 Ms. Rawling 287 Mayor Dhaliwal 288 Mr. Lighthall 290 Mr. Weber 293 Ms. Mejorado 297 Mr. Isom 299 Mr. Ganduglia 301 Mr. Stout 303 Ms. Phillips 304 Mr. Aguilera 307 Mr. Carmichael 309 Mr. Greene 319 Mr. Abramowitz 321 Ms. Applon 324 Ms. Sarabia 325 Q&A 327 Motion 332 Motion 341 Vote 342 Vote 343 Item 08-2-7 Chairperson Nichols 344 Executive Officer Goldstene 344 Staff Presentation 345 Public Comment 357 Reporter's Certificate 359 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 1 1 PROCEEDINGS 2 CHAIRPERSON NICHOLS: Good morning, everybody. 3 For those of you who were here last night for the 4 reception in honor of the 40th anniversary of the Air 5 Resources Board -- some of us are still celebrating 6 actually, I see a few others out there as well -- it was a 7 really wonderful event. And it's not over, because we're 8 going to be having cake with our staff at midday today. 9 The e-mail went out this morning, and everyone has been 10 invited to come during their lunch break I believe out in 11 the foyer area here. And some enormous quantity of cake 12 has been ordered. And the Board members are going to be 13 encouraged to come and join also. And I think we'll do it 14 during our lunch break. We are not sure exactly how the 15 timing is going to work out this morning, but I know we're 16 going to need a break for lunch. So I'm assuming that 17 since we have a large number of people involved in all of 18 this, that staff will kind of come in and have as their 19 break time if it works out for them. But Board members 20 are encouraged to go out and mingle and eat cake as well. 21 So in keeping with the theme, we're going to be 22 starting this morning with a review of our Scientific 23 Review Panel in commemoration of their 100th meeting. I 24 guess someone was keeping track. 25 But before we do that, we'll begin by formally PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 2 1 doing our roll call and Pledge of Allegiance, et cetera. 2 I think we have a quorum, obviously. We have a full 3 house, which is great. 4 So let's just start with the Pledge of 5 Allegiance. 6 (Thereupon the Pledge of Allegiance was 7 Recited in unison.) 8 SECRETARY ANDREONI: Secretary, will you please 9 call the roll. 10 SECRETARY ANDREONI: Dr. Balms? 11 BOARD MEMBER BALMS: Here. 12 SECRETARY ANDREONI: Ms. Berg? 13 BOARD MEMBER BERG: Here. 14 SECRETARY ANDREONI: Supervisor case? 15 BOARD MEMBER CASE: Here. 16 SECRETARY ANDREONI: Ms. D'Adamo? 17 BOARD MEMBER D'ADAMO: Here. 18 SECRETARY ANDREONI: Supervisor Hill? 19 BOARD MEMBER HILL: Here. 20 SECRETARY ANDREONI: Ms. Kennard? 21 BOARD MEMBER KENNARD: Here. 22 SECRETARY ANDREONI: Mayor Loveridge? 23 BOARD MEMBER LOVERIDGE: Here. 24 SECRETARY ANDREONI: Ms. Riordan? 25 BOARD MEMBER RIORDAN: Here. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 3 1 SECRETARY ANDREONI: Supervisor Roberts? 2 BOARD MEMBER ROBERTS: Here. 3 SECRETARY ANDREONI: Professor Sperling? 4 BOARD MEMBER SPERLING: Here. 5 SECRETARY ANDREONI: Chairman Nichols? 6 CHAIRPERSON NICHOLS: Here. 7 SECRETARY ANDREONI: Madam Chair, we have a huge 8 quorum. 9 CHAIRPERSON NICHOLS: We're delighted to welcome 10 Dr. Balms. We announced your appointment before, but it's 11 good to have you with us. Welcome. 12 I think I do this comment at the beginning of 13 every meeting. But in case there's somebody here who's 14 not familiar with our procedures, we would appreciate it 15 if you're planning on speaking on any item on our agenda, 16 if you would sign in with the Clerk of the Board over here 17 at this table. And you don't have to do anything other 18 than just give your name. But we'll call you in the order 19 that we receive it. 20 If you have written testimony and you've 21 submitted it, it will be passed out to the Board members 22 and we will all read it. We would appreciate it if you 23 would summarize your written testimony, because we will be 24 imposing a time limit on oral comments just so we can get 25 through our work. Normally it's a three-minute limit. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 4 1 And I'm also supposed to point out to you that 2 there are exits at the back of the room for safety 3 purposes. In the event of a fire alarm or any other kind 4 of emergency, we'd be asked to vacate the room immediately 5 through those doors and then to return after we get the 6 all-clear signal. 7 And I think that's all that I have to do in the way of 8 preliminary remarks. 9 So I'd like to hop right into our first item, 10 which is the commemoration of the 100th meeting of the 11 Scientific Review Panel. And I want to take this 12 opportunity to welcome the members of the Panel who are 13 here today. And we're going to introduce you all 14 individually in a minute. 15 But I think it's important that we note that the 16 Scientific Review Panel has a long and distinguished 17 history and has given us expertise that has been 18 critically important to many of ARB's programs. We want 19 to acknowledge the outstanding work that's been done over 20 the years and also to recognize that we've been really 21 very privileged to have had such a distinguished group of 22 scientists willing to give their service to not only the 23 Air Resources Board but to the people of the State of 24 California. 25 I want to personally acknowledge and welcome a PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 5 1 scientist and friend who I've known for years and had the 2 benefit of having as a colleague at UCLA. And that would 3 be Dr. John Froines. So Dr. Froines, I want to welcome 4 you and your colleagues here today and express on behalf 5 of the whole Board our appreciation to you. 6 And at this point I think I'll ask Mr. Goldstene 7 to say a few words introducing this item and introduce the 8 members of the Board as well. 9 EXECUTIVE OFFICER GOLDSTENE: Thank you, Chairman 10 Nichols. 11 We'd like to welcome this eminent body of 12 scientists comprising the Scientific Review Panel. The 13 Scientific Review Panel on toxic air contaminants is 14 charged to review and scientifically evaluate reports from 15 the Department of Pesticide Regulation and the Air 16 Resources Board, as well as from the Office of 17 Environmental Health Hazard Assessment. These reports are 18 critical in the process of identifying substances as toxic 19 air contaminants. 20 Also, the Panel reviews the Air Toxic Hot Spots 21 Health Risk Assessment Guidelines and the prioritization 22 of toxic air contaminants under the Children's 23 Environmental Protection Act. 24 At this point I would like to welcome the 25 distinguished Chairman of the Scientific Review Panel, Dr. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 6 1 John Froines, for his opening remarks, followed by 2 introductions of the Panel members of the SRP. 3 Dr. Froines. 4 SCIENTIFIC REVIEW PANEL CHAIRPERSON FROINES: 5 Thank you very much. Thank you, Madam Chair and 6 members of the Panel. 7 I'm going to review a little bit what we've done 8 over the last 100 meetings for you. I won't review all 9 the 100 meetings, but -- 10 CHAIRPERSON NICHOLS: Thank you. 11 SCIENTIFIC REVIEW PANEL CHAIRPERSON FROINES: 12 -- I'll try -- yeah. Although Mary frightened me 13 when she said the three-minute limit. And so -- 14 CHAIRPERSON NICHOLS: It doesn't apply to you. 15 SCIENTIFIC REVIEW PANEL CHAIRPERSON FROINES: Let 16 me start out by -- I'm not going to go through a couple of 17 slides. But I wanted you to have them just to remind you 18 what a toxic air contaminant is by the AB 1807 definition 19 and of course what is the makeup of the nine-member 20 Scientific Review Panel on toxic air contaminants. 21 --o0o-- 22 SCIENTIFIC REVIEW PANEL CHAIRPERSON FROINES: 23 Now, this I think is an impressive slide. And go 24 to the three bottom bullets. 25 We have identified during that 100 meetings 29 PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 7 1 toxic air contaminants. We have also conducted -- 2 participated in the review of risk assessments for 189 -- 3 oh, pardon me. That 189 hazardous air pollutants were 4 those that were grandfathered in under the Clean Air Act 5 amendments of 1990. We have in fact reviewed the risk 6 assessments on 299 hazardous air pollutants as TACs. So 7 we have over 300 chemicals that we've done during that 8 period of time. 9 --o0o-- 10 SCIENTIFIC REVIEW PANEL CHAIRPERSON FROINES: As 11 was mentioned earlier, we have reviewed the data on 12 chemicals that have a special impact on children. And six 13 have been established to date. 14 We reviewed the risk assessment on MTBE under -- 15 with respect to drinking water. So we moved a little bit 16 outside of our normal role. 17 We have been petitioned by industry to change our 18 risk assessments on formaldehyde and benzene. And we 19 declined to change the risk assessments and said that the 20 science that the state had used was completely adequate. 21 And those petitions died. 22 There has been one litigation, and that was over 23 diesel particulate risk assessment. And that was ruled in 24 the favor of the Air Resources Board and the Scientific 25 Review Panel. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 8 1 So I think it's a very impressive -- I think it's 2 a very impressive list that out of over 300 chemicals we 3 have literally been sued once and we won the suit and we 4 have never been sued on any of the others. 5 Now, I want to make a special point about these 6 300 chemicals that we've reviewed, because I don't know if 7 everybody realizes how important those risk assessments 8 are. Those risk assessments are used by every other state 9 in the United States. They're used on a national basis at 10 the federal level. They're used on an international 11 basis. And so California has been in the lead for lo 12 these many years conducting risk assessments of very, very 13 high scientific quality. And the important thing to think 14 about is how widely they have been applied in other 15 regions and other places. And so they really do represent 16 something that goes beyond the state and represents 17 productivity that's really quite unique. 18 --o0o-- 19 SCIENTIFIC REVIEW PANEL CHAIRPERSON FROINES: I 20 won't go into the children's environmental health. I just 21 wanted to remind you that that's a very, very important 22 area at this point. We are quite concerned about in utero 23 exposures. We're quite concerned about exposures to 24 newborns. And this is an area that I would anticipate 25 will grow dramatically over time in terms of its PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 9 1 significance and in terms of the science associated with 2 it. There is growing evidence that exposures in utero and 3 in newborns can and do affect the health of children 4 throughout their lifetime. So that we can see health 5 effects associated in adulthood as well as in early 6 stages. And so the children's environmental health is an 7 area that is going to become quite important in the 8 future. 9 Now, I just wanted to very quickly run through 10 five chemicals and give you an example of what was 11 important about them. 12 --o0o-- 13 SCIENTIFIC REVIEW PANEL CHAIRPERSON FROINES: 14 Benzene we did in 1983. And if you'll notice, 15 these are risk assessment curves. In 1983, we didn't know 16 anything about risk assessment curves. We were babes in 17 the woods. And you can see here that there are different 18 models, there are different animals, there are different 19 endpoints. You have the preputial gland. You have 20 leukemia. You have a wide range of dose response curves. 21 And so in 1983 we had to decide how we were going to deal 22 with these kinds of uncertainties and how we were going to 23 deal with these risk assessment values. And we did at 24 that time, and it's grown ever since then. But you can 25 see this is where we started. And of course benzene has PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 10 1 declined in California. 2 --o0o-- 3 SCIENTIFIC REVIEW PANEL CHAIRPERSON FROINES: We 4 also -- with methylene chloride, we learned that 5 metabolism is important. What we call toxicokinetics. 6 And we learned that there are different metabolic pathways 7 and we were going to have to take those into consideration 8 when we look at -- some pathways are risk producing and 9 some are safety producing, and we had to learn how to 10 address those issues. 11 --o0o-- 12 SCIENTIFIC REVIEW PANEL CHAIRPERSON FROINES: 13 Perchloroethylene has a very, very fine history. 14 And you know it probably better than I. There are 15 significant ATCM amendments that have been passed, and 16 that we anticipate over time the removal of 17 perchloroethylene from dry cleaning. 18 --o0o-- 19 SCIENTIFIC REVIEW PANEL CHAIRPERSON FROINES: And 20 I should say -- this is a very important slide. This is 21 from the L.A. Times. Notice the date on that slide. 22 That's April 25th, 1998. It's been ten years Since the 23 Scientific Review Panel voted to approve diesel exhaust as 24 a toxic air contaminant. I think we should have a 25 celebration next -- in April over everything that the ARB PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 11 1 has done to move diesel ahead, because I think it is an 2 extremely impressive record and deserves credit where 3 credit's due. 4 --o0o-- 5 SCIENTIFIC REVIEW PANEL CHAIRPERSON FROINES: And 6 one of the points I want to make is that the evidence with 7 respect to diesel exhaust and lung cancer has increased. 8 I'll read you what's on the board. 9 "Our observation of lung cancer risk is similar 10 for the risk noted by others in the literature. In more 11 than 35 studies of workers with occupational exposure of 12 diesel exhaust, excess risk of cancer is consistently 13 elevated by 20 to 50 percent." 14 That was true in 1998. But in 2004 there is a 15 new -- new studies appeared -- and this is Garshick -- 16 which said, "These results indicate that the association 17 between diesel exhaust exposure and lung cancer is real. 18 And so the evidence has continued to grow and we are more 19 confident now than we were even in 1998." 20 --o0o-- 21 SCIENTIFIC REVIEW PANEL CHAIRPERSON FROINES: 22 And, finally, what about the future? Well, one 23 of the important points in the future is we have to 24 address what compounds should form the highest priorities 25 for the future. And we are in the process of having small PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 12 1 workshops to look at what chemicals are important for the 2 future. Obviously I've already mentioned children's 3 protection. 4 Oh, I for got metam-sodium. Metam-sodium is a 5 pesticide which is highly toxic and it was declared a 6 toxic air contaminant and represents a very good 7 relationship between Department of Pesticide Regulation 8 and the Scientific Review Panel. 9 So pesticides will be coming down the line I 10 think at a significant level. And so we're looking 11 forward to that. 12 And, lastly, global climate change. I threw 13 that -- that's a throw-in because everybody throws in 14 global climate change these days. So I threw it in. And 15 I don't have the slightest idea why I put it in there. 16 (Laughter.) 17 SCIENTIFIC REVIEW PANEL CHAIRPERSON FROINES: But 18 I'll tell you why I did it, if I had any sense whatsoever. 19 And, that is, that the Governor and the Air Resources 20 Board have taken on an immense task to address global 21 climate change. And all I really wanted to say, very 22 simply, was that if we can help out with our scientific 23 expertise, we really would very much like to do that. And 24 so it's an offer without content. But hopefully the offer 25 has meaning in and of itself. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 13 1 So thanks very much. 2 CHAIRPERSON NICHOLS: Well, thank you very much. 3 I think whether you acknowledge it or not, that 4 there was something behind that throw-in, because there is 5 more and more research coming out that draws a link 6 between global climate change and human health risk, 7 including research here in California. And we know that 8 the link exists. But having said that, there's a lot more 9 that could be known about what the implications are in 10 terms of our control strategies. We're going to be 11 hearing more about that this morning as far as how the 12 Board is proceeding to develop its plans under AB 32. 13 But I think that we could look to your group for 14 some help in terms of prioritization and evaluation of 15 various of the proposals that are coming to us from the 16 point of view of how they fit with our other obligations 17 to human health. So you're not just going to slide away 18 from that one so easily. 19 SCIENTIFIC REVIEW PANEL CHAIRPERSON FROINES: 20 Well, I actually knew that there was a connection 21 with health. And so -- 22 CHAIRPERSON NICHOLS: I knew you did. 23 SCIENTIFIC REVIEW PANEL CHAIRPERSON FROINES: 24 -- it wasn't a completely innocent comment. But 25 I wanted to show some humility so that then you would say, PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 14 1 "Can you help us?" 2 CHAIRPERSON NICHOLS: Ah. 3 (Laughter.) 4 CHAIRPERSON NICHOLS: This is getting to be too 5 good. 6 Well, thank you very much. 7 SCIENTIFIC REVIEW PANEL CHAIRPERSON FROINES: Can 8 I introduce the other members of the Panel? 9 CHAIRPERSON NICHOLS: Please. 10 SCIENTIFIC REVIEW PANEL CHAIRPERSON FROINES: 11 Roger Atkinson was our atmospheric science 12 scientist, and he has recently resigned because of family 13 health problems. So Roger is not here and we will now 14 have to replace him. 15 Paul Blanc, please stand. 16 Paul Blanc is from the University of California 17 in San Francisco. And he is the representative for 18 occupational medicine. 19 Craig Byus, from the University of California at 20 Riverside, is biochemistry and molecular biology. 21 I should say that every one of the scientists 22 that you're going to meet are active scientists. They're 23 working in the labs. They're working in the fields. 24 We're not -- this is not a retirement group. These are 25 active -- PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 15 1 (Laughter.) 2 SCIENTIFIC REVIEW PANEL CHAIRPERSON FROINES: I 3 didn't mean to insult you. 4 (Laughter.) 5 SCIENTIFIC REVIEW PANEL CHAIRPERSON FROINES: 6 Gary Friedman hasn't arrived -- oh, Gary, you 7 have arrived. Epidemiology, from Stanford University. 8 Those of us at UCLA are worried about Stanford. 9 Stan Glantz is not here today. 10 Katherine Hammond is -- interestingly enough 11 is -- her title is academic administration. But in fact 12 her scientific expertise is in the area of exposure 13 assessment. 14 Joe Landolph from USC is oncology. So he's our 15 person who's expert in chemical carcinogenesis. 16 And, finally, Charles Plopper from the University 17 of California at Davis. And he is our person who's work 18 is devoted to pathology. Although he does a lot of 19 biochemistry and other biology as well. 20 So thank you very much. 21 CHAIRPERSON NICHOLS: Thank you very much, Dr. 22 Froines. It's been remarked many times in different 23 places that the strength of the California program has 24 been the interaction between science and policy and the 25 fact that policy has always drawn from the science but the PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 16 1 science has been independent and the policy has always 2 been built on that pillar. And over the years, the Air 3 Resources Board's Research Program, which we are going to 4 be talking about more in a minute, has been really 5 critical to that. But in addition to the amount of 6 research which we're able to support, which is never as 7 much as we would like, we also have had this wonderful 8 ability to draw on work from all over the world as a 9 result of the efforts of people such as the members of the 10 Scientific Review Panel who are here today. 11 And we just really want to thank you for being 12 with us on this occasion of our 40th anniversary of the 13 Board, but also of your auspicious 100th anniversary as 14 well. So please don't retire. Keep doing what you're 15 doing. Thank you very much. 16 All right. I think that's it. Thank you. 17 (Applause.) 18 CHAIRPERSON NICHOLS: Our next item -- 19 SCIENTIFIC REVIEW PANEL CHAIRPERSON FROINES: We 20 have to go to work now. 21 CHAIRPERSON NICHOLS: Yes, you do, you do. But 22 come back and have cake if you're up for it. I'm sure 23 it's a very healthy cake. I'm not actually, but we'll try 24 to pretend that it is. 25 Okay. So we're shifting personnel here briefly. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 17 1 We have eight research proposals in front of us 2 this morning, which is great. 3 And I don't think I have any other initial 4 remarks. So I'll just ask Mr. Goldstene to introduce the 5 item. 6 EXECUTIVE OFFICER GOLDSTENE: Thank you, Chairman 7 Nichols. 8 These research proposals support key elements of 9 the Air Resources Board's regulatory programs, including 10 reducing emissions of and exposures to particulate matter, 11 characterizing and reducing greenhouse gas emissions, and 12 reducing California's exposures to ozone. 13 Specifically, the proposals before you today are 14 designed to characterize the economic impact of 15 California's growing climate change industry, establish a 16 state inventory of high global warming potential gasses, 17 characterize criteria and climate change pollution, and 18 assess in-vehicle exposures. 19 Susan Fischer of the Research Division will make 20 the staff presentation, with an emphasis on how the 21 studies will contribute to some of our highest priority 22 programs. 23 Dr. Fischer. 24 DR. FISCHER: Thank you, Mr. Goldstene. 25 Good morning, Chairman Nichols and members of the PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 18 1 Board. We have eight research proposals for you to credit 2 this morning. 3 --o0o-- 4 DR. FISCHER: These proposals address needs 5 expressed in ARB's 2007-2008 Research Plan, whose 26 6 research concepts were approved by the Board in May 2007. 7 ARB staff worked with the collaborators to develop 8 research concepts into proposals, which were externally 9 reviewed and revised through the Board's Research 10 Screening Committee. 11 ARB is continually looking for co-funding 12 opportunities to leverage the state's research funds and 13 has more than matched our total funding for these 14 projects, with $3 1/2 million in co-funding. The 15 dollar-averaged overhead rate for these projects is only 16 15 percent, which is one-third of normal 17 government-approved overhead rates. 18 --o0o-- 19 DR. FISCHER: These proposals all link into one 20 or more of four priority areas for ARB: Clarifying health 21 impacts of air pollutant exposures, reducing emissions of 22 and exposures to particulate matter, reducing 23 Californians' exposures to ozone, and characterizing and 24 reducing greenhouse gas emissions. 25 I will briefly describe the objective and PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 19 1 expected results for each project. 2 --o0o-- 3 DR. FISCHER: This project addresses the need for 4 exposure models that can help determine the health effects 5 of vehicle-related pollution. Exposures to pollutants in 6 vehicles are frequently high, due to proximity to 7 concentrated emissions from other vehicles and the 8 extended periods that Californians typically spend in 9 transit. Levels of ultrafine particles and VOCs in 10 vehicles have been found to be up to ten times higher than 11 ambient levels and can account for a substantial portion 12 of daily personal air pollution exposures. In the 13 proposed study, investigators will collect data in 14 southern California to develop and validate exposure 15 models. These results from the project are essential to a 16 study of pregnant women and infants that will link 17 in-vehicle exposures to health outcomes. The findings of 18 this exposure study will provide information that can be 19 used in ARB's evaluations of the health effects 20 attributable to mobile source emissions. 21 --o0o-- 22 DR. FISCHER: Over the past decade, portable 23 instruments have been developed that are capable of 24 quantifying realtime particulate matter emissions. By 25 virtue of their fast response times and increased PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 20 1 sensitivity, these instruments offer superior performance 2 relative to filter-based methods. However, realtime 3 instruments often use different operating principles, 4 which can lead to varying results. 5 Several years have passed since an instrument 6 evaluation was performed, and the state of the art has 7 advanced. It is therefore necessary to evaluate current 8 instruments to gauge their performance against the 9 filter-based reference method. By expanding a larger 10 study funded by the New York State Energy Research and 11 Development Authority, ARB will leverage its research 12 funds four to one in actual dollars and nearly nine to one 13 if in-kind contributions are included. ARB funding will 14 support testing of gasoline and E85, in addition to the 15 diesel tests supported by the base study. Results will 16 aid ARB staff in determining which instruments are 17 appropriate for specific tasks such as inspection and 18 maintenance, or emissions monitoring. The photograph on 19 this slide shows a portable emissions measurement system 20 being installed on an off-road emissions source. 21 --o0o-- 22 DR. FISCHER: Exhaust emissions from vehicles 23 include both semi-volatile and non-volatile particles. 24 Some emissions control technologies effectively remove the 25 non-volatile fraction of particles, but can increase the PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 21 1 number of semi-volatile particles. Semi-volatile 2 particles dominate the driver's exposure to particle 3 number while commuting. So it would be useful to know 4 whether the semi-volatile material is more or less toxic 5 than the non-volatile fraction. 6 ARB, in collaboration with USC, UCLA, and the 7 South Coast AQMD, is leading a study to investigate the 8 characteristics of PM fractions and their implications for 9 exposure and health impacts. The proposed one-year 10 project expands the ongoing study to include heavy-duty 11 compressed natural-gas-fueled engines. Evaluation of air 12 quality and health implications of these vehicles is 13 critical because natural gas offers a low emission 14 strategy for the Diesel Risk Reduction Plan. Full funding 15 for the project is provided by the California Energy 16 Commission. 17 --o0o-- 18 DR. FISCHER: Organic carbon and elemental carbon 19 are important contributors to PM2.5 concentrations. The 20 proposed project will generate a year-long time series of 21 hourly PM2.5 measurements that can be used to identity the 22 contributions of gasoline-powered vehicles; diesel 23 engines; biogenic secondary organic aerosols, which are 24 derived from plant emissions; and anthropogenic secondary 25 organic aerosol, which are associated with human activity. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 22 1 Clarifying the nature of these emission sources 2 in California will aid development of effective PM2.5 3 control strategies and support health and climate-forcing 4 studies. Study results will also facilitate comparison of 5 different source apportionment tools and provide a 6 framework for assessing the accuracy and stability of such 7 tools. 8 --o0o-- 9 DR. FISCHER: This project addresses ozone 10 formation connected with the use of coatings in industrial 11 applications. These architectural coatings account for 12 nearly 10 percent of the non-mobile VOC inventory. ARB 13 staff is considering the feasibility of reactivity-based 14 VOC control strategies for architectural coatings, which 15 allow industrial users of VOC source categories to 16 determine the extent of allowable emissions based on the 17 ozone-forming potential of the VOCs in their solvents. 18 For the proposed study, U.C. Riverside's environmental 19 chamber will be modified to obtain better correlations 20 with atmospheric reactivity. Selected VOCs used in 21 architectural coatings will be tested to obtain more 22 reliable estimates of their ozone impacts. Findings are 23 expected to help ARB develop strategies that should 24 decrease ozone formation and exposure, while minimizing 25 expenses to the affected industry. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 23 1 --o0o-- 2 DR. FISCHER: These two photos show the 3 environmental chamber laboratory at U.C. Riverside, funded 4 for $3 million by U.S. EPA. At the left, you see air 5 handlers in the clean room; and on the right, monitoring 6 instruments and analyzers. 7 --o0o-- 8 DR. FISCHER: The next project takes advantage of 9 two advanced research aircraft supplied by NASA to obtain 10 more extensive measurements than previously possible and 11 to verify greenhouse gas emissions inventories. 12 Developing effective emission control plans for 13 traditional air pollutants as well as greenhouse gases 14 depends upon understanding emission sources and 15 atmospheric transport and transformations. To improve 16 this understanding, we need complementary suites of 17 measurements for multiple pollutants at location both off 18 shore and over land. Partnering with NASA grants access 19 to powerful aircraft capable of carrying massive 20 instrument payloads and to NASA's scientific expertise. 21 This partnership also allows integration of multiple 22 observations on two aircraft, quality assurance 23 comparisons between these and other research platforms, 24 and integration of aircraft observations with satellite 25 data. Samples will be analyzed to address atmospheric PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 24 1 chemical processes, off-shore and aloft boundary 2 conditions, as well as ocean-land interactions and for an 3 extensive list of gases and aerosols important to climate 4 change and to the protection of public health. Results 5 will support improved modeling and planning for pollution 6 control. 7 --o0o-- 8 DR. FISCHER: This diagram illustrates the use of 9 the two highly instrumented research aircraft supplied by 10 NASA and integration of results with satellite data also 11 supplied by NASA. 12 --o0o-- 13 DR. FISCHER: The purpose of the next project is 14 to generate a detailed California-specific inventory for 15 foam-blowing agents that have high global warming 16 potentials. Foam-blowing agents are widely used 17 throughout California in such applications as building 18 insulation and roofing. Preliminary emissions estimates 19 for existing banks are 11 million metric tons of carbon 20 dioxide equivalent for AB 32 compounds and another 470 21 million metric tons for ozone depleting substances where 22 new production is banned under the Montreal Protocol. The 23 project will include the quantification of emission rates, 24 application growth rates, chemical substitution rates, 25 banks of blowing agents already manufactured or purchased PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 25 1 for use, and end-of-life disposal emissions for each high 2 global warming potential blowing agent. The results of 3 this study will help ARB refine greenhouse gas emissions 4 control strategies with respect to costs and benefits. 5 The study will also help identify and prioritize new 6 mitigation opportunities. High-priority strategies would 7 not only reduce greenhouse gas emissions, but in some 8 cases would provide co-benefits by mitigating emissions of 9 substances that cause stratospheric ozone depletion. 10 --o0o-- 11 DR. FISCHER: Aware of changing public attitudes, 12 a growing number of businesses have begun to invest in the 13 emerging climate change industry. Current and future 14 regulations are expected to further stimulate demand in 15 the industry. Expansion of the industry will increase 16 jobs, profits and exports. This study will complement 17 previous and ongoing research regarding California's 18 climate industry by evaluating benefits of industry 19 expansion and identifying market drivers that can enhance 20 them. It will also assess improvements in business and 21 energy indicators. 22 Results of this study will provide the Board with 23 data on positive impacts of climate change regulations. 24 These results could be coupled with the regulatory costs 25 to better evaluate how climate change regulations may PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 26 1 affect the California economy. 2 --o0o-- 3 DR. FISCHER: This concludes the presentation. 4 These proposals will help ARB fulfill its mission to 5 understand health effects of air pollution, reduce 6 exposures to PM and to ozone, and mitigate greenhouse gas 7 emissions. We recommend that you approve these research 8 proposals, for which we have secured an unusually large 9 amount of co-funding. 10 We will be happy to answer any questions. 11 CHAIRPERSON NICHOLS: Thank you, Dr. Fischer, and 12 welcome to your role here today. It's great to see you. 13 Any comments from Board members on these? 14 Yes, Ms. Berg. 15 BOARD MEMBER BERG: I wanted to say 16 congratulations. Certainly is a wonderful slate of 17 projects that you bring before us. One of the things we 18 had talked about in our previous meetings when looking at 19 research proposals is that we were going to get a list or 20 criteria of which we were going to be looking at proposals 21 so that as we saw which ones were diesel-oriented and 22 which ones were health impacts for other pollutants, that 23 we would have sort of a matrix to kind of review these. 24 And so I was wondering how that information was coming. 25 CHAIRPERSON NICHOLS: Are you speaking of PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 27 1 criteria for selected within an area or looking at that 2 list of the questions that we approved at the beginning of 3 the year that we're supposed to focus those in a 4 direction, or both? 5 BOARD MEMBER BERG: Well, probably both. But my 6 understanding was that instead of just seeing a slate of 7 research proposals which on their own merit are fabulous, 8 that we were going to look at some sort of matrix or see 9 some sort of review, and not an extensive review, but 10 there was going to be other data in front of us that would 11 allow us to be able to see how these research proposals 12 were fitting in the overall plan. I think that's -- I 13 apologize that I'm not being clear. 14 CHAIRPERSON NICHOLS: I understand what you're 15 seeking. I just had -- it wasn't jogging a particulate 16 report in my mind. 17 Mr. Croes. 18 RESEARCH DIVISION CHIEF CROES: Yeah, Bart Croes, 19 Chief of the Research Division. 20 I think what you had asked for last meeting was a 21 research road map: So what's being funded by other 22 agencies, what are our strategic goals for research and 23 how the individual projects fit in that? 24 BOARD MEMBER BERG: That's correct. So as we're 25 looking at these eight projects, that we just see how they PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 28 1 fit on the road map. I kind of feel as a Board member 2 that I'm looking in a -- through a very narrow lens at one 3 project at a time. And I'm concerned, albeit I absolutely 4 trust that everybody is doing their job. But it would be 5 helpful for me to know how these eight projects fit. 6 I appreciate your description on the road map. 7 RESEARCH DIVISION CHIEF CROES: Yeah. So these 8 projects were approved in the research plan that went to 9 the Board last May. And then our plan is for this coming 10 may to present that matrix. So the new projects would fit 11 into that. 12 We have a separate activity to do a greenhouse 13 matrix because that is much more comprehensive, involves a 14 lot of -- pretty much every state agency. So we've 15 partnered with Cal/EPA, Resources Agency, California 16 Energy Commission. We're actually developing a Climate 17 Action Team subgroup to do research coordination. So our 18 plan would be probably this summer to present that matrix 19 for the climate-change-related research. 20 CHAIRPERSON NICHOLS: And, by the way, the 21 document or the approach that you're seeking is something 22 that I think the Legislature is also interested in, and 23 they should be. So that actually reminds me that it might 24 be good to ask you to inform the Board about what is going 25 on with respect to our research budget for this year as PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 29 1 well, just briefly. 2 EXECUTIVE OFFICER GOLDSTENE: Relating to the 3 General Fund. Bart will give you detail. 4 RESEARCH DIVISION CHIEF CROES: Well, we have two 5 research budgets. One is for -- or actually three 6 separate research budgets. So one is for the 7 motor-vehicle-related programs. And that's about $3 8 million dollars. We also have stationary-source-related 9 research, about $2 1/2 million. That's part of the 10 General Fund. So that's going actually through a cut 11 right now as part of the Governor's overall budget 12 reduction plan. And then we have a separate climate 13 change research budget of 2.7 million. 14 And next year there's actually a pretty big 15 initiative by the California Public Utilities Commission 16 to have a climate change research program at 60 million a 17 year for ten years. So our hope is that the research -- 18 if that gets approved by the Public Utilities Commission 19 next month, our hope that this research road map we're 20 developing with the other state agencies would feed into 21 that process. 22 CHAIRPERSON NICHOLS: I think the point that I 23 wanted to make sure -- since everybody in the state at 24 this point is aware of the fact that the state is in the 25 midst of a serious shortfall of revenues and that the PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 30 1 Governor has called for cuts in budgets, that the way this 2 is playing out for the Air Resources Board, which is 3 fortunate in that most of our budget is coming from 4 special funds, special accounts as opposed to the General 5 Fund, that there is a cut -- there is a small cut to our 6 General Fund money, which is going to have some impact on 7 our current year research capacity. And I believe there 8 are a couple of studies that have been -- 9 RESEARCH DIVISION CHIEF CROES: I'm sorry. Yeah, 10 I was focusing on the positives rather than the negatives. 11 CHAIRPERSON NICHOLS: Right. I'm sorry. It 12 isn't always all good news all the time. 13 RESEARCH DIVISION CHIEF CROES: So we've had a 14 cut this year of $100,000. I think there will be an 15 additional cut on the order of about 30 or 40,000. And so 16 we've cut two of the projects that was brought to you last 17 May as part of the research plan. 18 And then we're looking at a cut of at least 19 $243,000 next fiscal year. And those are certainly -- 20 that could be larger. That's being discussed currently 21 right now with the Assembly and the Senate. 22 So one of the issues that we'll have when we come 23 to you in May with the research plan is there will be some 24 uncertainty over what our total budget will be. 25 CHAIRPERSON NICHOLS: Dr, Sperling, followed by PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 31 1 Mrs. Riordan. 2 BOARD MEMBER SPERLING: I did want to start off 3 by complementing the staff for being very frugal and 4 leveraging the money very heavily -- I think that's 5 important -- and being done in a way of targeting 6 important projects that directly support the Air Board's 7 rule making. 8 But I did want to comment on this last item. And 9 I've been talking to -- following up with the staff quite 10 a bit on this. And I have been impressed that they have 11 been working through and thinking through a research road 12 map, especially in a climate change area where we all know 13 much less than we know about the criteria pollutants and 14 therefore are on a steep learning curve. You know, and I 15 speak very collectively when I said "we." 16 You know, and just to emphasize -- you know, what 17 I've been talking to the staff about, and just to 18 emphasize here, is that there is a lot of money and a lot 19 of capabilities elsewhere. And, you know, Dr. Fischer's 20 work leading an effort to inventory what's happening 21 around the state and, you know, elsewhere as well in the 22 U.S. I think is important. And I think out of all that 23 we're going to have to make some difficult strategic 24 decisions about what additional research is needed for us 25 as we move forward and where we can influence the research PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 32 1 agendas for some of these other organizations. You know, 2 like this PUC Institute, if it's funded, is quite a bit of 3 money. And, you know, with ARB having this lead 4 responsibility with climate policy, I think we can play a 5 role in talking with the PUC and whoever is the lead 6 entity running that institute, as well as the University 7 of California system that has various research programs, 8 you know, Stanford -- you know, the private universities, 9 the research -- national labs. 10 So there's a lot of leveraging. So the precedent 11 here of leveraging funds is a good one. And I just 12 want -- you know, the staff is very aware of this. But 13 just for everyone else, I think it is important for all of 14 us to be thinking how can we leverage, you know, all of 15 the capabilities and how can we direct them in a way, you 16 know, that really provides the most value. And so I'm 17 confident we're moving in that direction, but it is quite 18 a challenge. 19 CHAIRPERSON NICHOLS: Okay. Thank you. 20 Ms. Riordan. 21 BOARD MEMBER RIORDAN: Madam Chair, I was going 22 to very much say the same thing about leveraging and how, 23 while we were experiencing some shortfalls here in the 24 State of California, it gives us an opportunity to look 25 elsewhere for funding. And there may even be some PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 33 1 foundations that have an interest in help and could and 2 would be interested in assisting private nonprofit 3 efforts. So that's very much my comment. 4 CHAIRPERSON NICHOLS: Thank you very much. 5 Any others? 6 Yes, Dr. Balms. 7 BOARD MEMBER BALMS: Well, I would also echo the 8 comments that were complementary of staff with regard to 9 trying to leverage funds. But the specific -- the minor 10 suggestion that I would make in response to sort of 11 knowing where research proposals fit into the larger 12 scheme -- you know, having spent many years on the 13 Research Screening Committee, I understand the research 14 planning process that ARB goes through, and I don't have 15 any problem with it. But from the Board perspective, they 16 may forget the research strategic plan because they see it 17 once a year. Right? So it may be some kind of a short 18 item or piece of paper that shows where a specific project 19 fits into the research strategic plan might help the Board 20 members make better informed judgments. 21 CHAIRPERSON NICHOLS: A simple diagram for those 22 of us who like to see them schematically, right. 23 That's a very good suggestion. And we could 24 probably implement that prior to getting the road map. 25 EXECUTIVE OFFICER GOLDSTENE: Yeah, we can do PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 34 1 that now, yeah. 2 CHAIRPERSON NICHOLS: Okay. Good. 3 All right. Well, could I ask for a resolution of 4 approval for all of these, unless there's any desire to 5 take anybody out. 6 BOARD MEMBER RIORDAN: I'd be happy to move all 7 of the resolutions involving all of the staff 8 recommendations that are before us. 9 CHAIRPERSON NICHOLS: Items 8-14 through 8-21. 10 Do we have a second? 11 BOARD MEMBER D'ADAMO: Second. 12 CHAIRPERSON NICHOLS: Okay. All in favor please 13 indicate by saying aye. 14 (Ayes.) 15 CHAIRPERSON NICHOLS: Any opposed? 16 Great. 17 All right then. We will move on to a short item. 18 I understand we don't even have any slides for this one. 19 EXECUTIVE OFFICER GOLDSTENE: Only if we need 20 them. 21 Okay. Mr. Goldstene. 22 EXECUTIVE OFFICER GOLDSTENE: Thank you, Chairman 23 Nichols. 24 The purpose of the ozone early progress plans 25 that staff is asking you to approve today is to establish PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 35 1 transportation conformity budgets for Ventura County, 2 Antelope Valley - Western Mojave Desert, Coachella Valley, 3 eastern Kern County and Imperial County. 4 Normally, emissions budgets would be set with 5 reasonable further progress, or RFP plans. However, U.S. 6 EPA is revising its regulations that set out RFP plan 7 requirements for areas whose air quality is dominated by 8 pollution from upwind regions. Until U.S. EPA finishes 9 revising its regulations, it will not approve RFP plans in 10 their conformity budgets. 11 The transportation planning process still needs 12 conformity budgets, and U.S. EPA's inability to approve 13 RFP plans creates a timing problem. To solve this 14 problem, ARB staff has prepared early progress plans for 15 the sole purpose of establishing transportation conformity 16 emission budgets for the four nonattainment areas caught 17 up by U.S. EPA's revisions, and for Imperial County, whose 18 pending reclassification will generate a need for 19 transportation conformity emission budgets. 20 An early progress plan is a simple plan. U.S. 21 EPA RFP regulations don't apply. So these plans will not 22 be caught up in U.S. EPA's revisions to the regulations. 23 Emissions in each of the five areas drop in the future 24 with already adopted controls. That is all that's needed 25 to demonstrate progress. The plans are simple, containing PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 36 1 just the emissions inventory and the associated budgets. 2 ARB staff has made minor technical modifications 3 to some of the emission estimates in two of the early 4 progress plans: Antelope Valley and western Mojave 5 Desert; and eastern Kern County. This corrects an input 6 error to the EMFAC model of updated vehicle activity data 7 from transportation planning agencies. The modified plans 8 are available here today and are on our website. 9 With that, staff recommends that Board adopt 10 these modified plans today, together with the early 11 progress plans for Ventura, Coachella and Imperial, as 12 originally proposed in order to establish transportation 13 conformity emissions budgets. 14 This concludes my remarks. Given the nature of 15 the item, we didn't prepare a more lengthy presentation. 16 Although we can go into more detail, and staff is here to 17 answer any questions as well. 18 BOARD MEMBER LOVERIDGE: So moved. 19 CHAIRPERSON NICHOLS: We have a motion. 20 I think we do have, however, a couple of speakers 21 on this item. Is that correct? 22 Yes, please. 23 BOARD MEMBER CASE: In trying to understand the 24 transportation conformity issue between various districts, 25 we had problems -- sorry, I didn't push my button -- we PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 37 1 had problems with transportation conformity on the 2 timelines that happened with the San Joaquin Valley, and 3 here we are again with other districts having problems 4 with transportation conformity. 5 How do the two issues compare, just for 6 understanding the issue a little better? 7 EXECUTIVE OFFICER GOLDSTENE: If you don't mind, 8 I'll ask Kurt Karperos from our Planning Division to 9 answer that. 10 AIR QUALITY AND TRANSPORTATION PLANNING BRANCH 11 CHIEF KARPEROS: Timing conformity issues is always very, 12 very sensitive. The issues between San Joaquin and these 13 five areas are separate however. As Mr. Goldstene said, 14 EPA is in a revision process to its rules, revising 15 sections of the rules that apply only really to these five 16 areas. 17 The timing problem with San Joaquin related to 18 the actual submittal of the budgets and their ability to 19 move forward and for the local cog to make transportation 20 conformity findings based on the new EMFAC emissions model 21 that we had released. So there was sort of a mechanical 22 problem needing to move the San Joaquin Valley budget's 23 forward. There's a revision timing problem on EPA's part 24 that's playing in here today. 25 CHAIRPERSON NICHOLS: The one witness whose name PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 38 1 I have signed up here is Nidia Bautista from Coalition for 2 Clean Air. 3 MS. BAUTISTA: Good morning, Chair, members of 4 the Board. Thank you for the opportunity to speak on this 5 item. And I just have a simple request and also to extend 6 some gratitude to the ARB staff. And I did share this 7 Executive Officer Goldstene ahead of today's hearing just 8 to ensure that no one was surprised by it. 9 But our main concern isn't so much with the early 10 progress plan. We want to thank the ARB staff actually 11 for taking the time to clarify that matter with us to 12 better understand this item. And as we understood it, 13 it's basically a band-aid that would not take the place of 14 the final ozone plan for these areas. And so we did 15 appreciate them taking the time, in particular Sylvia Wee, 16 Ravi, and Dennis Wade. So thank you for that. 17 But in terms since we are talking about Imperial 18 County, in particular, although I think that this is good 19 practice for all regions, we would like to ask ARB, 20 because something came to light in our discussion with 21 staff and that was that it wasn't a given that ARB Board 22 would actually be reviewing the Imperial Valley's ozone 23 plan. And we actually think it's good practice for the 24 ARB to do that for all regions, but in particular for the 25 Imperial County because the community members there that PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 39 1 we've been working with would like to ensure that ARB 2 Board does have the opportunity to do that. And we think 3 that ARB's jurisdictional mobile sources as well as its 4 oversight authority really should -- it should be a good 5 practice that this item should come to the Board before it 6 gets submitted to the EPA at the end of this calendar 7 year. 8 So it's a simple request. I think just good 9 practice for public process. And, that is, to ensure that 10 the Imperial County's ozone plan comes to this Board 11 before it gets submitted to the EPA. 12 And I'd just like to say that our colleagues from 13 Imperial County weren't able to come because this item -- 14 we were a little bit surprised by it on the agenda. But I 15 do want to say that I'm here also on behalf of those 16 folks, which is El Comitas Sevico Elvya Imperial and also 17 the Clean Air Initiative in Imperial County. 18 CHAIRPERSON NICHOLS: Thank you. 19 So just to be clear, you have no qualms about us 20 going ahead and approving the transportation? 21 MS. BAUTISTA: Correct. As we understood it from 22 ARB staff, it's strictly a band-aid, a temporary fix for 23 now, until the final ozone plan is drafted by the end of 24 this calendar year. But we would like ARB Board to take 25 this opportunity to actually commit to having the item PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 40 1 heard before you before this calendar year. 2 CHAIRPERSON NICHOLS: Thank you. 3 MS. BAUTISTA: Thank you. 4 CHAIRPERSON NICHOLS: So, Mr. Goldstene, the 5 question here would be I think -- I mean it would come to 6 us for a review before being submitted in its final form. 7 But I think what the community groups want is sort of an 8 earlier opportunity to look at a draft. Is that correct? 9 EXECUTIVE OFFICER GOLDSTENE: Well, it could have 10 been approved just under my signature. But we will bring 11 it to you. 12 CHAIRPERSON NICHOLS: I see. Okay. 13 EXECUTIVE OFFICER GOLDSTENE: We don't have any 14 issue doing that. 15 CHAIRPERSON NICHOLS: Got it. 16 So they're looking for more than just the normal 17 process. 18 EXECUTIVE OFFICER GOLDSTENE: Right. But there's 19 no issue as long as the Board would like us to do that. 20 CHAIRPERSON NICHOLS: Okay. And you think that's 21 appropriate thing to do? 22 EXECUTIVE OFFICER GOLDSTENE: Sure, yeah. 23 CHAIRPERSON NICHOLS: Okay. Great. 24 With that then, if I could have a motion to 25 support Resolution 8- -- oh, I have one already, sorry, PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 41 1 from Mayor Loveridge. 2 BOARD MEMBER RIORDAN: I'll second the motion. 3 CHAIRPERSON NICHOLS: Second from Mrs. Riordan. 4 All in favor say aye. 5 (Ayes.) 6 CHAIRPERSON NICHOLS: Any opposed? 7 Okay. The item carries. 8 And now we will go to our AB 32 implementation 9 update, a regular feature now on our monthly agendas. As 10 we get ready to see our draft of our plan in June, staff 11 has been working at a hectic pace. They want to fill us 12 in on what's going on. 13 EXECUTIVE OFFICER GOLDSTENE: Chairman Nichols 14 and Board. This is the first in a series of updates to 15 the Board on major sectors and issues that we must address 16 in the scoping plan. We want to keep the Board updated as 17 we think through the elements of the scoping plan, so 18 we're starting with the transportation sector because it's 19 the largest contributor to greenhouse gas emissions in 20 California. 21 Today, staff will update you on transportation 22 strategies already in the works and others that we are 23 considering for inclusion in the scoping plan. These 24 strategies are designed not only to meet the 2020 goal, 25 but to put California on a path to meet our 2050 PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 42 1 greenhouse gas emissions reduction target. 2 Karen Khamou from our Office of Climate Change 3 will begin the presentation. 4 Karen. 5 --o0o-- 6 AIR POLLUTION SPECIALIST KHAMOU: Thank you, Mr. 7 Goldstene. 8 Good morning, Chairman Nichols and members of the 9 Board. 10 Today I will present an update on the 11 transportation sector. The transportation sector is 12 composed of cars, trucks, ships, trains, and planes. And 13 the fuel they burn are the largest contributor to 14 California's greenhouse gas emission. 15 --o0o-- 16 AIR POLLUTION SPECIALIST KHAMOU: California's 17 greenhouse gas inventory for 2004 stands at 480 million 18 metric tons of CO2 equivalent. This is an increase from 19 the 1990 level of 427 million metric tons. Greenhouse gas 20 reductions are needed in all sectors. 21 As the chart illustrates, transportation 22 dominates the inventory, at 38 percent of the greenhouse 23 gas emissions. In fact, proportionally transportation is 24 a larger contributor to California's greenhouse gas 25 inventory than it is to the national greenhouse gas PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 43 1 inventory. This emphasizes the need for California to 2 tackle the transportation sector greenhouse gas emissions. 3 --o0o-- 4 AIR POLLUTION SPECIALIST KHAMOU: Transportation 5 emissions were 182 million metric tons in 2004, and our 6 preliminary projections indicate that the emissions will 7 grow to 229 million metric tons in 2020. If we do not 8 obtain significant reductions from transportation, it will 9 be difficult for any other sector to make up the tons. 10 Therefore, it is critical that the transportation sector 11 reduce its emissions to 1990 levels, about a 34 percent 12 reduction, in order for the state to meet its 2020 13 greenhouse gas goals. 14 To date, there has been more progress toward 15 reducing transportation emissions than any other sector. 16 We conservatively estimate that AB 1493 greenhouse gas 17 tailpipe standards, the planned low carbon fuel standard, 18 and additional early actions will reduce emissions by 19 about 25 percent in 2020. However, as the graph 20 illustrates, approximately 25 million metric tons of 21 reductions is still needed to return emissions to 1990 22 levels in 2020. In seeking emission reductions, we must 23 also keep our eye on the 2050 goal of reducing emissions 24 to 80 percent below 1990 levels, which will require 25 transformative change in this sector. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 44 1 --o0o-- 2 AIR POLLUTION SPECIALIST KHAMOU: Although we 3 have targeted transportation in many of our first climate 4 change regulations, the previous graph shows that 5 emissions will continue to grow significantly due to 6 increased vehicle use, otherwise referred to as vehicle 7 miles traveled. 8 Between 1990 and 2007, statewide VMT increased 9 about 35 percent. And if current growth trends continue, 10 VMT is expected to increase another 20 percent by 2020 and 11 50 percent between now and 2040. This increase in vehicle 12 use is due not only to population growth, but also because 13 per capita driving is expected to increase. Since 1990, 14 per capita driving has increased at a rate of 3 percent 15 per decade. For California to meet its long-term 16 greenhouse gas emissions reduction goal, this trend must 17 be slowed and ultimately reversed. 18 --o0o-- 19 AIR POLLUTION SPECIALIST KHAMOU: The emissions 20 from vehicles are a function of the vehicle technology, 21 the carbon content of the fuel used, and the frequency and 22 duration of the engine use. We anticipate that greenhouse 23 gas reductions will come from three overarching 24 strategies: More efficient vehicles and engines, lower 25 carbon fuels, and the reduction of vehicle miles traveled PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 45 1 through transportation and land-use policies. 2 --o0o-- 3 AIR POLLUTION SPECIALIST KHAMOU: Transportation 4 emissions are not equally distributed throughout the 5 sector. This graph shows that passenger vehicles make up 6 almost three quarters of the transportation sector's 7 emissions, followed by the heavy-duty fleet at 20 percent 8 of the emissions. Ships, locomotives, and airplanes make 9 up the remaining 6 percent. 10 Because passenger vehicles, which include cars 11 and light trucks, are responsible for 74 percent of 12 transportation emissions, they are the primary focus of 13 initial reduction strategies for the transportation 14 sector. 15 --o0o-- 16 AIR POLLUTION SPECIALIST KHAMOU: The Board has 17 already adopted an important regulation under AB 1493 that 18 reduces greenhouse gas emissions from light-duty vehicles. 19 I will discuss the status of this regulation on the next 20 slide. 21 ARB's Early Action Plan released in 2007 also 22 identifies how additional emission reductions from new 23 passenger vehicles can be achieved by strengthening the 24 current Pavley regulation, starting with the 2017 model 25 year. The technologies that could be used include highly PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 46 1 efficient hybrid vehicles, plug-in hybrids, or the use of 2 light-weight advanced materials. 3 Staff has also identified the use of cool paints 4 as an early action. This measure is envisioned to reduce 5 the solar load on the vehicle, thereby reducing the time 6 the air conditioner is used. Staff is also investigating 7 other technologies that can reduce the solar load on the 8 vehicle such as window glazing. 9 As part of our regulation to reduce NOx and 10 diesel PM emissions from existing on-road trucks, staff is 11 developing a requirement that trucks and trailers be 12 retrofit to reduce greenhouse gas emissions. U.S. EPA's 13 SmartWay program has identified numerous devices that 14 reduce greenhouse gas emissions and fuel use. The fuel 15 savings can pay for the devices within a few years. This 16 regulatory proposal is scheduled for Board consideration 17 in October. 18 Additional early actions such as tire inflation, 19 enhanced enforcement of truck idling rules, hybridization 20 of trucks, and electric standby for transportation 21 refrigeration units are also under development and will 22 provide greenhouse gas emission reductions. 23 --o0o-- 24 AIR POLLUTION SPECIALIST KHAMOU: The AB 1493 25 regulation was adopted in 2004 and applies to new vehicles PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 47 1 beginning with the 2009 model year. It requires 2 greenhouse gas emission reductions from new passenger cars 3 and light trucks. The adopted regulation will reduce 4 greenhouse gas emissions close to 30 million metric tons 5 in 2020. Twelve other states have adopted California's 6 regulation. Together with California, these states 7 constitute about one-third of the nation's vehicle 8 population. 9 As you know, U.S. EPA recently denied our waiver 10 to allow California to implement this regulation. Without 11 the waiver, the regulation cannot be implemented. 12 California and many other states are suing the federal 13 government to reverse EPA's decision. 14 --o0o-- 15 AIR POLLUTION SPECIALIST KHAMOU: Because of the 16 importance of reductions from transportation, ARB staff is 17 exploring additional ways to reduce emissions from 18 passenger vehicles. Even with full implementation of the 19 already adopted Pavley regulation, and the early action 20 measures, we believe the transportation sector can and 21 must do more. The challenge will be even greater if we 22 cannot implement the Pavley regulation because of U.S. 23 EPA's denial of our waiver request. 24 In cooperation with the Institute of 25 Transportation Studies at U.C. Davis, staff will be PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 48 1 holding a symposium this April in Sacramento to identity 2 ways to further reduce transportation's greenhouse gas 3 emissions. We will be discussing vehicle technologies, 4 pricing mechanisms, fuels, and driving behavior, with the 5 hope that new greenhouse gas emission reduction approaches 6 are identified. We will be looking at approaches that 7 reduce emissions by 2020, as well as put us on a path 8 towards the Governor's 2050 goal of an 80 percent 9 emissions reduction. 10 --o0o-- 11 AIR POLLUTION SPECIALIST KHAMOU: As I mentioned 12 at the beginning of my presentation, vehicles are only one 13 element of this problem. On the fuel side, the Governor 14 has directed ARB to adopt a low carbon fuel standard to 15 reduce the carbon emissions of on-road fuels. The Board 16 approved the low carbon fuel standard as a discrete early 17 action item at your June meeting. We estimate that the 18 low carbon fuel standard will achieve 10 to 20 million 19 metric tons of reductions by 2020. Additional benefits of 20 the standard include reducing our dependency on 21 petroleum-based fuels and diversifying California's fuel 22 options. 23 The standard will require fuel sold in California 24 to reduce the greenhouse gas intensity compared to the 25 fuel sold today, taking into account the full fuel cycle. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 49 1 The standard will account for emissions relating to direct 2 and indirect land use, extraction, production, refining, 3 and transport. Staff is closely consulting with national 4 and international experts to account for complex 5 sustainability issues we must address in the development 6 of this regulation. 7 We expect to bring this regulation to the Board 8 later this year or in early 2009. 9 --o0o-- 10 AIR POLLUTION SPECIALIST KHAMOU: The third 11 driver for transportation emissions is vehicle use or VMT. 12 The Land-Use Subgroup of the Climate Action Team 13 is made up of representatives from multiple state agencies 14 and is working on strategies to encourage reductions in 15 VMT. Local and regional agencies are providing 16 leadership, engaging in planning efforts to create an 17 environment that can reverse projected VMT growth. Many 18 local air districts are championing these efforts. This 19 year's Haagen-Smit symposium is focusing on land-use 20 planning and various policy approaches and strategies for 21 reducing VMT. 22 We will return in May to the Board to update you 23 on how land use and transportation planning can play a 24 role in California's greenhouse gas reductions. 25 It is important to note that many land use and PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 50 1 transportation strategies will not provide significant 2 reductions in greenhouse gas emissions by 2020. 3 Nevertheless, improving land use is central in putting 4 California on a low carbon trajectory for the long term. 5 --o0o-- 6 AIR POLLUTION SPECIALIST KHAMOU: In summary, 7 California is leading the nation in reducing greenhouse 8 gas emissions from the transportation sector. The Board 9 has already adopted groundbreaking vehicle greenhouse gas 10 standards. Later this year the Board will consider a 11 comprehensive low carbon fuel standard as well as other 12 early action measures like cool paints and efficiency 13 improvement retrofits for trucks. 14 We believe more can and must be done to reduce 15 transportation emissions. We will continue to explore 16 both technological advancements and means to reduce 17 vehicle use in order to put California on the path to a 18 low carbon future. 19 Now, Mr. Cackette will give you an update on 20 recent federal energy legislation and how it relates to 21 our efforts to reduce transportation greenhouse gases. 22 CHAIRPERSON NICHOLS: Thank you. 23 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Thank 24 you, Karen, and good morning, members of the Board. 25 Recent federal legislation establishing fuel PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 51 1 economy standards caused us to take a look at how this new 2 law interacts with California's greenhouse gas standards, 3 or the Pavley standards that you adopted. We've done some 4 analysis. We wanted to share that with you today. And at 5 the core of this is whether the federal fuel economy 6 standards are more or less stringent than the ARB 7 greenhouse gas standards in reducing greenhouse gases. 8 --o0o-- 9 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Just as 10 a recap of the events here: 11 You adopted the Pavley greenhouse gas standards 12 for California in 2004. 13 We requested a waiver in 2005. 14 Two auto industry lawsuits were filed, but they 15 both upheld California's regulations. This occurred in 16 2007. 17 And then on December 19th the U.S. EPA 18 administrator denied our request for a waiver some 19 two years after we had applied for it. 20 --o0o-- 21 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: On the 22 energy side, that same day, December 19, the federal 23 energy bill was signed. And part of it established a 35 24 mile per gallon fuel economy standard, which is referred 25 to as CAFE, or corporate average fuel economy, standard PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 52 1 for the 2020 models. And the bill gives an administrative 2 agency, the National Highway Traffic Safety 3 Administration, or NHTSA, the job of establishing what are 4 the interim standards between 2011 and 2020. 5 --o0o-- 6 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: In 7 denying our waiver that day, the Administrator Johnson 8 stated three things: 9 One, California does not have, and I quote, "a 10 need to meet compelling and extraordinary conditions." 11 And that is a condition for us to receive the waiver. And 12 I can -- I think I can say without any emphasis that most 13 everybody in California disagrees with that. And I think 14 we certainly do have compelling and extraordinary 15 conditions. 16 He also then said that the climate change is a 17 national problem, and that a national solution, i.e., the 18 CAFE standards adopted that day, would be more effective. 19 And that new federal legislation is more 20 stringent than the California regulation. 21 It's these last two points that again caused us 22 to go ahead and perform this analysis, in part because at 23 the time, on December 19th, and through today at least 24 there is no written support for his -- or documentation 25 for his position. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 53 1 --o0o-- 2 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: So the 3 ARB analysis evaluated the impact of the federal fuel 4 economy standards on greenhouse gas emissions. And we 5 know that there is a relationship, not one to one, but 6 that clearly better efficiency does reduce greenhouse gas 7 emissions. 8 And we compared the California greenhouse gas 9 standards in California. We also compared it for the 10 other states, both the 12 states that have adopted 11 California's standards and all the rest of the states, and 12 the provinces of Canada since some of them have expressed 13 interest in adopting our standards. And we compared them 14 by calendar year, in other words how effective would the 15 two programs be in a given year, like 2016, and also 16 cumulatively from the beginning of the program through 17 various dates, and we picked 2016 and 2020. 18 --o0o-- 19 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Let me 20 start with what the conclusion of the study is. First of 21 all, that the ARB greenhouse gas standards reduced more 22 greenhouse gas emissions than the federal fuel economy 23 standards will. They do that in California. They do that 24 in the other states. They do that in the short term the 25 next 5 other six years and do that in the short term, PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 54 1 meaning in the next five or six years, and they do that in 2 the long term through at least 2020 and beyond. And 3 there's a website here which has the full study on it for 4 your reference. 5 --o0o-- 6 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: So 7 let's look at just a few of the facts that back up those 8 conclusions. 9 First of all we're going to look at California 10 only. And this chart looks at what the greenhouse gas 11 emissions reduced will be in a specific calendar year, in 12 this case, 2016, with the Pavley standards, which I've 13 called California greenhouse gas standard in the second 14 column; and if we only had the federal fuel economy 15 standards. And these are a million metric tons of CO2 16 equivalent per year. 17 And you can see that the Pavley standards would 18 reduce 16.4 million metric tons in 2016 versus only 7.5 by 19 the federal standards. So it's more than twice as 20 effective in calendar year 2016. 21 Here's the results for 2020. You can see that 22 the -- as more vehicles enter the fleet, the benefits go 23 up for both programs. But ours remains much more 24 stringent, in this case about 70 percent more stringent 25 than if we only had the federal fuel economy standards to PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 55 1 rely on for greenhouse gas reductions. 2 --o0o-- 3 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: We care 4 about the cumulative emissions, because CO2 emissions and 5 the other greenhouse gas emissions have a long lifetime in 6 the atmosphere. So when they go in one day, they don't 7 come out for 10, 50, 100 years. So acting early, getting 8 reductions faster than other programs are important 9 considerations to how the cumulative effect is determined. 10 And this chart just simply shows the Pavley 11 program -- the vertical axis is the cumulative reduction 12 over the various years on the X axis. And you can see 13 that the Pavley program starts off stronger, continues to 14 be stronger all the way through 2020. And you can tell 15 from where it's pointing that it will continue to be 16 stronger than just having the federal CAFE standards or 17 the national program on into the future. 18 --o0o-- 19 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: We 20 looked at the other states because, as I indicated, 12 21 other states have adopted Pavley standards. That 22 represents about a third of all the new car sales, 23 passenger vehicle sales in the United States. Other 24 states are still considering adopting our standards. 25 And I present this chart only because the PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 56 1 benefits in the other states can be different than that 2 from California. And that occurs because under federal 3 law some of these states have to delay when they would 4 implement the California standards. They would start 5 later than ours. And interestingly, it's also different 6 because they have a different mix of cars versus trucks. 7 Now, when you think of California, I think you 8 think of all the big SUVs and the pickup trucks. But, in 9 fact, we stand out as being car purchasers. About 70 10 percent of the new vehicles sold in California are either 11 cars or the smaller crossover SUVs like the Honda CRV or 12 the RAV4, and only about 30 percent of them are the 13 full-size pickup trucks and SUVs. 14 In the rest of the nation as a whole that ratio 15 isn't 70/30. In fact, it's 50/50. And so the relative 16 stringency of the truck part of our standards versus the 17 car part of our standards plays into how the benefits will 18 accrue in the other states. 19 And what this chart shows -- and I should say 20 that the underpinning of this is that our car standards 21 for greenhouse gases are actually quite stringent, and 22 people have suggested that our light truck standards are 23 not all that stringent. And so this ratio affects how the 24 benefits play out in the other states. 25 But as you can see, the chart just looks like the PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 57 1 other one is the bottom line. Pavley standards produce 2 more reductions in the early years. This is cumulative 3 reductions. And they continue to build up in the outer 4 years compared to just having the federal fuel economy 5 standards. 6 --o0o-- 7 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: So this 8 slide addresses -- the EPA administrators claim that a 9 national program based on federal fuel economy standards 10 is more effective than the so-called patchwork of state 11 standards. And this was referred to in his letter to 12 Governor Schwarzenegger and the subsequent press releases 13 that were put out by EPA. 14 In the first column you can see the cumulative 15 reduction through 2020 of the federal fuel economy program 16 in gray. And this isn't a very revealing chart I guess, 17 other than the fact that because the California standard 18 is more stringent, when California adopts that in lieu of 19 the federal standard -- the fuel economy standards, you 20 can see then the second bar we get a net eleven percent 21 improvement in greenhouse gas reductions for the whole 22 nation. And when the other 12 states that have adopted 23 California's standards do that and implement it, you'll 24 see that combined with the federal program will be 29 25 percent more stringent than the federal program alone. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 58 1 And of course if all the states did it, it would be 85 2 percent more effective than the federal fuel economy 3 standards alone. 4 So you can tell from that that we disagree with 5 the administrator's statement. 6 --o0o-- 7 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: A lot 8 of the talk of course about the federal standards is that 9 they are expressed as fuel economy and ours are expressed 10 as greenhouse gas reductions and CO2 equivalents. So what 11 we did is we decided we'd go ahead and try to convert 12 ours -- do it the opposite way, convert our standards into 13 fuel economy equivalent numbers so you could see what the 14 comparison looks like in the most common metric that is in 15 the media right now. 16 And so what you should remember is that our 17 standards affect four different gases, and CO2 is only one 18 of them. So what we did is we stripped out the CO2 part 19 and then we compared that to the fuel economy part. 20 That's a fair apple-to-apple comparison. And what you see 21 is that in fuel economy terms in the 2016 model year 22 California's standards would average about 32 miles per 23 gallon, whereas the federal standards would only be a 24 little less than 30. And if you go on to 2020, you'll see 25 that ours are about 39 miles per gallon, and on the right PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 59 1 lower corner is the magic 35 mile per gallon number that's 2 in the federal law. 3 --o0o-- 4 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: So just 5 sort of recap why our standards are more effective. 6 Here's the basic five issues: 7 They start earlier. 8 They ramp up quicker. 9 They address the problem directly. In other 10 words, they're greenhouse gas standards, not fuel economy 11 standards. And the relevance of this is not just a 12 hypothetical. But, for example, if you were to meet the 13 federal fuel economy standards with a diesel vehicle, 14 which you could do because diesels are very fuel 15 efficient, you would get less greenhouse gas emission 16 reductions than if you met it with a gasoline vehicle. 17 And that's because the diesel fuel has more carbon in it. 18 And so while you could meet the federal law, we 19 would be sold short in the reductions that we need in 20 California if that approach was used. Again, we focus on 21 the greenhouse gas. You've got to actually perform with 22 what the objective is here, which is greenhouse gas 23 reductions. 24 There's no loopholes in our law. For example, in 25 the federal law you get credits for producing a vehicle PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 60 1 that runs on another fuel that never runs on the other 2 fuel. And that gives you a fuel economy credit of up to 3 1.2 miles per gallon, eventually phasing out. And that 4 would reduce the CO2 reductions that we would get in 5 California under only the federal law. Whereas under our 6 program, you've actually got to use the fuel to get the 7 reductions. 8 And, finally, we have in here an assumption -- 9 and I think it's more than an assumption -- that the 10 Pavley standards will become more stringent. There will 11 be a so-called Pavley 2. And I want to talk about that 12 briefly. 13 --o0o-- 14 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: The 15 Board approved -- oh, I should say the Climate Action Team 16 report, which was one of the first documents on our plan 17 for reducing greenhouse gas emissions, included a 18 strengthening of the Pavley program, to the tune of four 19 million metric tons in 2020. And the early action plan 20 that you approved last year also includes this. And the 21 staff is actively working now to develop a Pavley 2 22 regulation to be brought to you around 2010. And it would 23 begin in the 2017 models where the Pavley 1 program ends 24 off. 25 And we're looking at the technologies that are PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 61 1 there today or will be there in the next few years that 2 could become mainstream in this 2017 and beyond period. 3 Things like more HEVs, more hybrid electric vehicles like 4 Prius, like the plug hybrid electric vehicles that we'll 5 be addressing next month in the ZEV program revisions, and 6 diesel vehicles. In particular, diesel combined in a 7 hybrid electric mode can give you extremely low CO2 8 emissions. 9 And we think that it's possible to at least 10 increase the stringency of the program from 30 percent, 11 which is what Pavley would be in 2016, to a 40 percent or 12 more reduction in future years. And this four million 13 metric tons looks small; but that's only because if we do 14 this -- follow this schedule, there will only be three or 15 four model years of vehicles that will have turned over 16 into the fleet. In fact, this kind of reduction will give 17 very large -- this kind of program would give very large 18 reductions beyond 2020 and help us on the path towards the 19 2050 objectives. 20 --o0o-- 21 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: So, in 22 summary, the California greenhouse gas standards are more 23 effective than the federal fuel economy standards in 24 reducing greenhouse gas emissions in any individual year, 25 cumulatively over any period of years. They're more PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 62 1 effective in saving fuel. They're more effective in 2 California. They're more effective in the 12 other 3 states. And they would be more effective if they were 4 adopted nationwide. 5 And that specifically the Pavley 2 program will 6 not only help us meet the 2020 goals, but it will put us 7 on the pathway towards the 2050 goal of reducing 8 greenhouse gases by 80 percent. 9 So thank you. 10 CHAIRPERSON NICHOLS: Thank you very much, Mr. 11 Cackette. 12 One of the reasons why this is important to have 13 before the Board is because -- as I know, all of you are 14 out and about in your communities -- people often ask the 15 question whether the denial of the waiver by EPA means the 16 end of our efforts with respect to motor vehicle 17 emissions. And obviously given that primacy of motor 18 vehicles in our problem, I think it's important for the 19 Board members to know that in addition to the litigation 20 and the reality that any new administration in Washington 21 is going to be more likely to be engaged in a positive way 22 on climate change than the current one has been, the Air 23 Resources Board is not just waiting for other things to 24 happen; that our staff is actively involved, as you've 25 heard in the briefing, in developing future proposals so PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 63 1 that we will be ready to move forward as rapidly as we can 2 in that direction, and really not only for California's 3 sake but, as these figures indicate, because our work is 4 going to be relevant for other states and for the country 5 as a whole. 6 This is not a regulatory item. But I hope that 7 the Board members will feel free to ask questions or make 8 additional comments at this time. 9 Ms. D'Adamo. 10 BOARD MEMBER D'ADAMO: I just really want to 11 thank staff for the excellent presentation. And just a 12 little comment, that it looks like the administrator was 13 way off. So thank you for clarifying the situation. 14 CHAIRPERSON NICHOLS: Thank you. 15 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: I would 16 add that the administrator did say that they would provide 17 the documentation and support for their position by the 18 end of this month. So we're anxiously waiting to see what 19 they say. 20 CHAIRPERSON NICHOLS: That's tomorrow, right? 21 Professor Sperling. 22 BOARD MEMBER SPERLING: So this is my favorite 23 topic, along with research. 24 I do want to make a couple comments. And, that 25 is, that, you know, it's clear as we move forward in the PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 64 1 transportation sector that making the vehicles more 2 efficient and, you know, improving the greenhouse gas 3 emissions of the technology and the low carbon fuel 4 standard, you know, reducing carbon content of fuel are 5 the two most effective strategies for the long term and 6 are hugely important. 7 But I do want to emphasize, you know, this third 8 option of VMT. Because, you know, as many of my 9 colleagues know -- and I see Professor Joan Ogden out 10 there who works closely with me on these topics -- is 11 people have known I focus on the vehicles and the fuels 12 most of my career. But -- and some in the environmental 13 community have been disappointed in that. But I really 14 come to believe that we really need to focus on the VMT 15 side. And, you know, we could in theory get our 16 reductions through the vehicles and the fuels, but it 17 would be a hugely expensive way to do it. And there are 18 many reasons to look at the VMT more closely. 19 And I would note -- you know, many people like to 20 say, well, VMT -- you know, we can't get people out of 21 their cars; you know, that's the American way or the 22 California way. But I would note that even the 23 conservative part of the transportation community -- 24 there's an organization called AASHTO, the American 25 Association of Safety and Highway Transportation PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 65 1 Officials. You know, these are the state DOTs, the road 2 builders. You know, this is the conservative part. And 3 even they are saying now that we need to reduce VMT into 4 the future. They're talking about substantial reductions 5 below what the business-as-usual forecast is for 2050. 6 So I think that people that think about this are 7 appreciating that we do need to finally tackle the VMT 8 issue. And we haven't done it for local air pollution 9 because we found that the technology was a much easier way 10 to do it and we could get the reductions. But we can't do 11 that -- with climate change that's not going to be the 12 case. And so, you know, I know we are going to be looking 13 at this and -- one other example I note is that Portland, 14 Oregon, has been a good model. They've shown that there 15 can be substantial reductions in VMT. And actually it 16 turns out to be a better transportation system, a better 17 lifestyle for people. And so we're going to need to get 18 creative. And it's not that the current system is -- I 19 know I'm being a little professorial here, and I 20 apologize. But -- 21 CHAIRPERSON NICHOLS: Well, that is your day job, 22 after all. 23 (Laughter.) 24 BOARD MEMBER SPERLING: But, you know, there are 25 these opportunities to make it better. There are these PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 66 1 so-called co-benefits of doing it. And it's not that 2 today's system is the ideal system. Just because we're 3 accustom to it doesn't mean it's the best way. And, in 4 fact, you know, almost any measure you use, we have the 5 most profligate transportation system, you know, one can 6 imagine. It's inefficient. You know, if you -- whatever 7 measure you use in terms of evaluating efficiency, it's -- 8 it's expensive. You know, we spend almost $8,000 per 9 person per car per year is, you know, the average. And 10 that's a lot of money that we're spending just on cars. 11 So I think as we start being more thoughtful 12 about this and as ARB delves into it, it's -- I know it's 13 politically treacherous territory. But looking at VMT and 14 land use has to be an important part of the solution. So 15 I'm very pleased that the staff has taken its first step 16 in that direction, and I support that. And I just kind of 17 say to everyone else, you know, let's really all get 18 together on this and figure out how to do it and create a 19 better transportation system. And it can be better with 20 less greenhouse gases and less VMT. 21 CHAIRPERSON NICHOLS: Thank you. 22 We're fortunate that the Air Resources Board has 23 a mix of local elected officials as well as people with 24 other specific types of expertise that serve on the Board, 25 and a lot of people here with real experience in the PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 67 1 transportation system. So I expect that they're going to 2 be weighing in as projects come up or as ideas come 3 forward on VMT reduction to give us a dose of reality 4 about some of these items as well. 5 Yes. 6 BOARD MEMBER CASE: Well, as one of those local 7 elected officials, I want to say thank you to staff. I 8 would love to find a way that every resident in California 9 can see these comparison bases to truly understand why 10 California's been the leader and why we need to continue 11 pressing forward and pressing the federal government to 12 allow that to happen with a world-class organization that 13 really has the data. As a local elected official, I think 14 we need to really find ways of balancing some 15 opportunities for public transportation. That's got to be 16 part of the mix. Because when we say who's the enemy and 17 we all look in the mirror, we better be saying, "We are 18 the enemy," because we've developed a lifestyle that 19 really has taken us down a pathway that could have some 20 ultimate destructiveness for all of us. 21 So I guess my suggestion or thought is in how to 22 get this out to public TV channels to show. And maybe in 23 conjunction with that marvelous video that was shown last 24 night about the 40-year anniversary of this agency, and 25 when you see where we started from and where we've come PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 68 1 to. The combination of those two pieces of information 2 together might help us with that public buy-in. Because 3 the public will go when they're well informed. I truly 4 believe that as a local elected official. When they get 5 informed, they make very good decisions. And we need to 6 help them with the information. 7 So if we could do something or maybe reach out to 8 PBS stations to try and get that information out there, I 9 think it would be very helpful. 10 CHAIRPERSON NICHOLS: Thank you. 11 Mr. Goldstene. 12 EXECUTIVE OFFICER GOLDSTENE: Well, we could work 13 with the Public Information Office on that and report back 14 to the Board. 15 CHAIRPERSON NICHOLS: There were several requests 16 last night from people from districts and from NGOs for 17 copies of that video. So I think we may have a best 18 seller on our hands. 19 Yes, Dr. Balms. 20 BOARD MEMBER BALMS: Well, I just wanted to 21 really echo that comment about the analysis showing that 22 the California approach is significantly better than the 23 CAFE fuel standard approach for controlling greenhouse gas 24 emissions. You know, I think that's big news. And I 25 think we should be working to publicize it on a national PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 69 1 level as well as in a California level. We need the 2 California public to support a new transportation system, 3 as Dr. Sperling suggested. But I think -- I mean I don't 4 know if it would mess up our legal position at all. I 5 doubt it. But I mean I think it really needs to be out 6 there, because I think it would get national support for 7 California -- and since there are 12 other states that are 8 in this with us at least. 9 CHAIRPERSON NICHOLS: Right. 10 You have posted this on the website, is that 11 correct? 12 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yes. 13 CHAIRPERSON NICHOLS: Yeah. But now we need to 14 also get it out. 15 BOARD MEMBER BALMS: Yeah, PR. 16 And if I could just take one other moment to be 17 professorial. 18 CHAIRPERSON NICHOLS: Yes. 19 BOARD MEMBER BALMS: I, again, want to compliment 20 staff on the presentations and, in particular, Karen 21 Khamou, a former student of mine. It's good to see her 22 here. 23 CHAIRPERSON NICHOLS: Pardonable pride. Okay. 24 Supervisor Hill. 25 BOARD MEMBER HILL: Thank you, Madam Chair. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 70 1 I too want to add my thanks and congratulations 2 on an excellent analysis of the situation and the problem. 3 But also going back to Professor Sperling's -- 4 the VMT issue and Supervisor Case's idea, I think that we 5 have a real opportunity. And I hate to just leave it to 6 the members of this Board to try to carry that message 7 back to local government. And I think there are -- as 8 Judy mentioned, there are so many -- once the information 9 is available, once there's that knowledge base, that the 10 public does respond I think accordingly. 11 And I think that it would be nice if -- and I 12 think very productive -- if we could develop from the ARB 13 staff some closer relationship with -- whether it's the 14 League of California Cities -- and we said this before -- 15 or the State Association of Counties -- to have maybe a 16 liaison position to develop some of these policies as they 17 move forward regionally, to try and develop this land use 18 and make those decisions in a more productive way. I 19 think it would be helpful to, here again, get that 20 information out to those elected officials, that may 21 not -- I mean I think this mantra is spreading, but it's 22 not quite as rapidly as I think we need to meet the goals 23 that are necessary. 24 EXECUTIVE OFFICER GOLDSTENE: Thank you for your 25 comments, Supervisor Hill. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 71 1 For at least the past year we have been working 2 closely with CSAC and the League of Cities and also the 3 Local Government Commission on this issue, also in 4 conjunction with the Climate Action Team's Land-Use 5 Subgroup. And so there has been -- in fact, of all the 6 subgroups, this has been one of the most active and 7 spirited subgroups. And it has been discussing all of 8 these issues, carbon budgets and mandates, to, you know, 9 having developers present better projects, you know, or 10 more walkable communities, et cetera. So this discussion 11 has been going on in-depth. 12 And of course for the scoping plan we will have 13 to include this -- a component within the scoping plan 14 about this issue, which we'll be bringing to the Board as 15 a draft at the end of June. Professor Sperling has been 16 working closely with staff on this issue as well. 17 BOARD MEMBER HILL: That's great to hear. Thank 18 you. 19 CHAIRPERSON NICHOLS: Yes. And I would remind us 20 that when we named Mr. Goldstene as our Executive Officer, 21 we took away the person who had been in charge of this 22 issue. So hopefully we're bolstering our presence in 23 other ways too. But it's great to have somebody as our 24 leader who has a background in land use and in working 25 with local government. It's a big help in terms of our PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 72 1 dealings with other agencies at the state and local level 2 as well. 3 Okay. Did we have any -- oh, sorry. Yes. 4 BOARD MEMBER LOVERIDGE: One very quick comment. 5 There is serious discussion at the local level 6 over a bill which Darrell Steinberg has been -- to SB 375. 7 And the bill has sort of moved around, so it's hard to 8 tell exactly where it is now and where it's going. But it 9 is really a platform for this discussion. And it sometime 10 may be useful if staff would report on the status of SB 11 375. 12 CHAIRPERSON NICHOLS: Yes. You're right, that 13 the bill was stalled last year. There have been a bunch 14 of amendments. We haven't even had a chance to prepare 15 our proposed analysis for the Governor's office process. 16 But I think by the time of the next Board meeting it might 17 be timely to just have an update on that on the agenda. 18 Supervisor Roberts. 19 BOARD MEMBER ROBERTS: Yeah, I just -- I want to 20 thank Tom and the staff for an excellent report. 21 If this is, you know, one of the only regulatory 22 boards you sit on, you tend to think this is the place 23 where it all happens. And you see -- you have a little 24 different perspective if you serve as a supervisor in a 25 major county or in addition to that serve on a local air PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 73 1 Board or if in addition to that you serve on a transit 2 board. You start to see a whole different picture. 3 Last week at the end of the week I had dinner 4 with some of the local people who are very involved with 5 this issue, including some of the top scientists at 6 Scripps Institute of Oceanography, who have been measuring 7 this for longer than this has been a mantra for many 8 people who are very involved with this now. 9 It seems clear to me that there is a desire -- in 10 fact, you know, I feel like the debate while it lingers is 11 really kind on a limited fringe in terms of whether this 12 is -- you know, merit as attention or not. And there is a 13 desire I think for people to do things and to make 14 changes. When you see some of these numbers and some of 15 these charts, for instance, the incredible small area that 16 residential is in this whole bigger picture, although 17 you've isolated the electric which is a part of that, as I 18 read your charts, it tells you that there is certain 19 limited things that individuals can do in putting 20 lightbulbs in their house. It's merited, but at the end 21 of the day it's not a big paycheck in terms of what we 22 want to see happen. 23 And one of the things that we discussed was sort 24 of the confusion at the lower levels and what needs to be 25 done. Every city and every county is going off in a PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 74 1 different direction, unfortunately. And there's a paucity 2 of solid information in terms of what are the most 3 effective things. There's not a sort of a dollars per ton 4 guide for us in developing. And I think to the extent 5 that the Air Board can have a role in some of this. And 6 vehicle mile travel is a function of a lot of things. But 7 I think it's perhaps in helping establish a best-practices 8 sort of approach in helping to provide information to 9 local areas. Vehicle mile traveled and land use is -- you 10 know, we correctly noted is a -- with respect to land use 11 at least is a very slowly changing animal, and you're not 12 going to make any of your immediate goals, especially as 13 we see in the next year or two that there's going to be 14 very little, proportionately speaking, construction that's 15 going to go on that's going to give you the opportunities 16 even if you had in place those new standards. 17 But there's a lot of work to do. And I would -- 18 I guess my caution would be don't assume that we're the 19 center of the universe. I think our role in this is 20 somewhat different than it has historically been with 21 respect to cleaning out pollutants in the air that were 22 especially driven by the autos. I think the programs here 23 in the California model is so much better with respect to 24 the vehicle side of this, and that needs to be a focus. 25 But we also need to have the partnerships with the transit PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 75 1 boards and the local regulatory bodies that have land-use 2 authority. And I think that can be best done not in the 3 model that's used in Singapore by having a transponder, 4 you know, in everybody's car to say, "We're going to 5 charge you for every mile you drive." I don't see that 6 having literally a critical mass of political support. 7 But I think there are other things that can be done that 8 perhaps in the long run, without those kinds of pains, can 9 lead us to solutions. And I think that's to some extent 10 why we've been successful as a board in the past. 11 CHAIRPERSON NICHOLS: Did you want to respond or 12 add? 13 BOARD MEMBER LOVERIDGE: Not so much a response. 14 But the Attorney General is going to -- with the Local 15 Government Commission is hosting five meetings around the 16 state on how to reduce greenhouse gases. And it seems to 17 me that we as a Board ought to be a participant in those 18 discussions. 19 CHAIRPERSON NICHOLS: Yes. I think your comment 20 is well taken. And I was going to add that, you know, I 21 think the Air Resources Board in recent years has, if 22 anything, been too reluctant to engage in discussions 23 about the role of VMT as a piece of the air puzzle because 24 there was concern about legal authority and about whether 25 we have the expertise in that area. And I think what's PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 76 1 starting to develop is a much more holistic view and 2 administration-wide discussion that's going on in the 3 context of the plan that we have to do under AB 32, that, 4 you know, we're working with the Energy Commission, with 5 the Office of Planning and Research, with other affected 6 state agencies, including Caltrans, to try to not reinvent 7 the wheel or come in with solutions from, you know, out of 8 some textbook but to actually try to see where our 9 specific authority and role would be to be helpful in 10 moving this whole issue forward. Because I think we're at 11 one of those times it may -- yeah, it may disappear. But 12 at the moment at least the combination of the state's 13 economic problems, the fact that the bond moneys that we 14 have now in the transportation infrastructure area are 15 critical that they be spent in ways that support the 16 state's overall environmental goals. The fact that 17 congestion has, as several people have pointed out, become 18 just impossible in some areas. 19 I think they're all kind of conspiring to make 20 people want to work together to try to have a more 21 effective state presence in this area than we've had in 22 the past. But I always -- whenever I go to a meeting on 23 this topic, you know, the first thing that everybody does 24 is sort of pledge allegiance to the primary role of local 25 government in land use. And understandably, that is one PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 77 1 of those things that politically is not about to change. 2 So I think we have to be mindful of where we are. 3 There's one comment on this item -- a person 4 who's asked to comment. Katherine Phillips from the 5 Environmental Defense. 6 EXECUTIVE OFFICER GOLDSTENE: While Katherine's 7 coming up, I'd like to let Supervisor Roberts know that we 8 are working on developing best practices for local 9 governments. And we'll be bringing that to the Board 10 later this year, as well as working with the California 11 Climate Action Registry to develop modeling tools for 12 local governments. That'll be available to them. 13 CHAIRPERSON NICHOLS: Great. 14 Katherine. 15 MS. PHILLIPS: Thanks. Katherine Phillips with 16 Environmental Defense. Thanks for the opportunity to 17 comment on this. I didn't intend to, but I heard 18 Supervisor Roberts' comment. And Supervisor Roberts comes 19 from my hometown, so I listen when he speaks. I know what 20 the land-use issues are down in San Diego. 21 I just wanted to quickly note that we have staff 22 here in California and around the country and actually 23 working internationally on some of these land-use issues. 24 And how do you encourage people to reduce their VMT 25 without going in unnecessarily telling jurisdictions how PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 78 1 they have to realign their property? I know that that's a 2 very sensitive issue in California. 3 And I just want to assure staff -- we've 4 submitted comments already for the scoping plan -- but 5 that there are things that the Air Resources Board can do 6 that would encourage local jurisdictions to help send the 7 right signals to people who develop and send the right 8 signals to people who live and work, and including the 9 companies who live and work in those regions. Everything 10 from indirect source rules to considering doing the kind 11 of pricing that is being done in London and that we're 12 working on -- hoping to get done in New York where the 13 cordon pricing on the roads, you take that funding and you 14 put that back into transit and alternative sources that 15 helps people reduce their VMT. 16 And what we've seen abroad at least there's a lot 17 of enthusiasm once those programs have been put in place 18 if you provide alternatives to the regular passenger 19 vehicle. And you do see reductions in GHG. And 20 coincidentally and worth noting, you do see reductions in 21 criteria pollutants and better public health. 22 Thank you. 23 CHAIRPERSON NICHOLS: Thank you for that comment. 24 One more? 25 BOARD MEMBER CASE: Maybe one comment. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 79 1 You may have caught in the news the San Joaquin 2 Valley Air Pollution District just prevailed in a lawsuit. 3 They have I believe the only indirect source rule for new 4 subdivisions being developed in the Central Valley to look 5 for mitigation monies to offset into our programs. 6 Because every time you add an expansion and development, 7 you do add expanded pollution. So I think that was a very 8 successful effort. And the fact that we prevailed in the 9 lawsuit was very important. And my understanding, it is 10 the only rule out there certainly in this state and 11 possibly beyond that. And I would encourage people to use 12 something such as that. 13 And one other simple suggestion might be to have 14 the State of California -- when they disseminate 15 populations through the Department of Finance, one of the 16 things that happens is they distribute their projections 17 for increases in population, and they don't seem to have 18 any weight towards counties. Counties get their equal 19 share of expansion of population. And if you develop in a 20 county instead of a city, you were by its very nature 21 increasing vehicle miles traveled, because usually those 22 subdivisions have no base of employment, so you have a 23 commuting pattern develop. And I think that would be a 24 very simple change for the Department of Finance in the 25 State of California in how they distribute population and PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 80 1 require general plans to be developed at the local level. 2 CHAIRPERSON NICHOLS: Thank you. That's an 3 excellent suggestion. 4 Well, this was intended as a preview, a taste of 5 what to come. And it seems we've caught your attention, 6 which is great. And I think it's particularly important 7 that we do get out that information that was presented to 8 us this morning about the benefits of our vehicle 9 standards as well, because I think too often we take it 10 for granted that people just understand what it is we're 11 doing and really does require more detail and more basis. 12 So thank you very much for that. 13 We will move on to our next AB 32 related item, 14 which is Consideration of a Board Policy Statement on 15 Voluntary Early Reductions. This is something that we put 16 on the agenda at our October meeting. I think it's 17 important that we be revisiting it now, because we're 18 hearing increasingly that there's a desire on the part of 19 businesses, large and small, to be engaged in the business 20 of cleaning up greenhouse gas emissions. But people are 21 sometimes reluctant to take action or make decisions about 22 investment on things where it may be a closed case or 23 where they're concerned that they might not in some way be 24 able to take credit for that later on when a regulatory 25 program might come into effect. So the staff has been PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 81 1 wrestling with how to deal with this issue, while we're 2 also putting our plans together and make sure that we not 3 sacrifice any forward progress but at the same time that 4 we encourage people to do as much as possible. Because 5 with respect to climate change, the effects are 6 cumulative. And every ton that we can keep out of the 7 atmosphere today is very important for the future. 8 So I'll turn it back to staff to make the 9 presentation. 10 EXECUTIVE OFFICER GOLDSTENE: Thank you, chairman 11 Nichols. 12 Well, with the increasing recognition of the 13 serious threat posed by climate change, many individuals 14 and organizations have begun to reduce their greenhouse 15 gas emissions. With the passage of AB 32, California has 16 made a commitment to achieve significant emission 17 reductions statewide, with the goal of reducing 18 California's emissions to 1990 levels by 2020. Emission 19 reduction actions taken now on a volunteer basis while the 20 broader program to implement AB 32 is being developed will 21 aid the state in meeting our goals. 22 Kevin Kennedy from our Office of Climate Change 23 is here today to present a proposed policy statement 24 intended to encourage voluntary emission reductions. 25 Mr. Kennedy. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 82 1 --o0o-- 2 OCC PROGRAM EVALUATION BRANCH CHIEF KENNEDY: 3 Thank you, Mr. Goldstene. 4 Good morning, Chairman Nichols and members of the 5 Board. I'm Kevin Kennedy, the Chief of the Program 6 Evaluation Branch in the Office of Climate Change. In 7 this presentation, I will discuss some of the issues that 8 staff have weighed as we developed a policy statement on 9 voluntary early actions. 10 --o0o-- 11 OCC PROGRAM EVALUATION BRANCH CHIEF KENNEDY: AB 12 32 directs ARB to address greenhouse gas emissions through 13 a number of a different avenues. 14 Last year, the Board adopted mandatory reporting 15 rules and established the 1990 baseline, and also adopted 16 a list of specific emission reduction measures that could 17 be implemented before the main program goes into effect in 18 2012. 19 This year's major effort is development of the 20 scoping plan, which will provide the blueprint for the 21 main program and will then be implemented through 22 regulations developed in the next few years. 23 In addition, AB 32 emphasized the need to 24 encourage voluntary early actions. 25 --o0o-- PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 83 1 OCC PROGRAM EVALUATION BRANCH CHIEF KENNEDY: Two 2 provisions in AB 32 specifically address voluntary early 3 reductions. 4 First, ARB is directed to design our regulations 5 to encourage early action. 6 Second, we are told to ensure that we provide 7 appropriate credit for early reductions. 8 A third provision applies more broadly to 9 voluntary reductions, calling for ARB to develop methods 10 to quantify these voluntary reductions. Your adoption of 11 the forest protocol last year was the first step in 12 implementing that provision. 13 --o0o-- 14 OCC PROGRAM EVALUATION BRANCH CHIEF KENNEDY: 15 Early actions are an important part of our 16 greenhouse gas emission reduction measures for a number of 17 reasons. Recent science suggests that climate change is 18 happening more quickly than had been anticipated, 19 increasing the importance of reducing emissions as quickly 20 as possible. Early actions, both those embodied in the 21 list of 44 measures adopted by the Board last year, and 22 also those undertaken on a voluntary basis, can provide 23 substantial emission reductions. In addition, those who 24 take early actions help demonstrate what is possible, and 25 can help create momentum for further reductions. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 84 1 --o0o-- 2 OCC PROGRAM EVALUATION BRANCH CHIEF KENNEDY: 3 Over the last year, we have heard from a variety 4 of stakeholders that uncertainty about how AB 32 will be 5 implemented is inhibiting early actions. To illustrate 6 why some might hesitate, imagine we were to implement AB 7 32 by calling for an industry to reduce its emissions by 8 25 percent between 2012 and 2020, using 2011 emissions as 9 the baseline against which the reductions would be 10 assessed. This is not an approach we're particularly 11 likely to take. One reason being, because it would reward 12 those who increase emissions in the next few years, while 13 penalizing those who reduce their emissions during that 14 period. But I offer it as an illustration of why some 15 hesitate until they know what the actual program rules 16 will be. 17 In addition to those who say they are hesitating 18 to take action at their own facilities, we've also heard 19 from some who are focused on the call for AB 32 to develop 20 methods to quantify voluntary reductions. These 21 stakeholders say that they would be willing to undertake 22 some projects outside of their own facilities if we had a 23 process in place to quantify the reductions. They 24 acknowledge that they will not be able -- that we will not 25 be able to tell them what, if any, credit they would get PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 85 1 for such projects until the program itself is in place, 2 but have said that they would be willing to move forward 3 now with just the quantification issue settled. 4 --o0o-- 5 OCC PROGRAM EVALUATION BRANCH CHIEF KENNEDY: At 6 the October Board meeting, we discussed these issues with 7 you, including a possible two-prong approach for 8 addressing the issues. 9 The two approaches we discussed at the time 10 included developing a policy statement on the treatment of 11 voluntary early reductions and a solicitation to request 12 stakeholders to provide protocols for voluntary projects 13 that they would be willing to undertake in the near term 14 if the quantification issue were addressed. At the time 15 you directed us to return with our recommendations, which 16 is why I'm here before you today. 17 --o0o-- 18 OCC PROGRAM EVALUATION BRANCH CHIEF KENNEDY: As 19 part of our review of the options, we have circulated for 20 public comment a draft of the policy statement. And we 21 have also informally shared our ideas for soliciting 22 voluntary protocols and projects. 23 --o0o-- 24 OCC PROGRAM EVALUATION BRANCH CHIEF KENNEDY: The 25 draft policy statement focused on encouraging voluntary PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 86 1 actions now, during the time while the scoping plan is 2 still being developed. It did not really tread on new 3 ground but rather reinforced provisions in AB 32 itself. 4 The key provisions in the statement were to explicitly 5 encourage voluntary early reductions and to provide 6 direction for the development of the scoping plan to 7 ensure that we do that in a way that companies receive 8 recognition for taking action now and ensuring that any 9 future credits are based on reductions that are real, 10 permanent, quantifiable, verifiable, and enforceable. 11 --o0o-- 12 OCC PROGRAM EVALUATION BRANCH CHIEF KENNEDY: We 13 received comments from 17 stakeholders on the draft policy 14 statement. A number of issues were raised. And I'll 15 touch on some of the key ones here. 16 First, the need for the criteria for possible 17 future credit, some said should include additionality; 18 that is, using the words in AB 32, the reduction is in 19 addition to any greenhouse gas emission reduction 20 otherwise required by law or regulation, and any other 21 greenhouse gas emission reduction that otherwise would 22 occur. 23 Another issue that was raised related to how 24 actions that were already taken before AB 32 was enacted 25 would be addressed, with some arguing that any emission PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 87 1 reductions going back as far as 1990 should be considered 2 for credit if they met the appropriate conditions. 3 Another set of commenters also raised two 4 separate regulatory issues. One concerned the possibility 5 of future increases in greenhouse gas emissions resulting 6 from other regulatory requirements. The other related to 7 regulatory barriers to implementing greenhouse gas 8 emission reduction measures. 9 One more issue raised in a number of comments was 10 a desire for quantification methods for early projects. 11 --o0o-- 12 OCC PROGRAM EVALUATION BRANCH CHIEF KENNEDY: 13 We've revised the policy statement to address the 14 first issue. In fact, the absence of the word 15 "additionality" from the list of criteria in the draft 16 policy statement was inadvertent, so much so some of you 17 may have noticed it found its way back into the slide on 18 the draft policy statement. 19 An additional concern has been raised on whether 20 any credit or recognition in the context of overall 21 program design would need to be additional, enforceable, 22 et cetera, as is stated in one of the bullets in the 23 policy statement. For example, reductions that affect 24 allocation of allowances within a cap-and-trade system, 25 would those need to be separately enforceable? The over PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 88 1 all program design would need to be enforceable. But it's 2 not clear that any specific reductions that affected that 3 allocation would need to be separately enforceable. 4 If a reduction was something that someone was 5 looking for specific credit or recognition, then that 6 specific reduction would need to be additional, 7 enforceable, et cetera. 8 In terms of the other comments, we believe that 9 those issues are also important ones to consider but are 10 beyond the scope and purpose of this policy statement. 11 The main purpose of the policy statement is to encourage 12 people who are currently hesitating to act. That is why 13 we returned to you as soon as we could. How to address 14 actions prior to enactment of AB 32 and how to address the 15 regulatory issues will require additional consideration 16 during the development of the scoping plan. 17 On the next slide I will start discussing how 18 we're dealing with the question of quantification methods. 19 --o0o-- 20 OCC PROGRAM EVALUATION BRANCH CHIEF KENNEDY: In 21 order to encourage early action, ARB staff is prepared to 22 work with stakeholders who have proposals for voluntary 23 early greenhouse gas reductions. If we receive proposals 24 that include adequate documentation on key elements, 25 including the quantification method, ARB staff will review PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 89 1 the quantification method to determine whether or not that 2 method is technically sound. If so, staff proposes to 3 have the Executive Officer confirm the quantification 4 method. 5 --o0o-- 6 OCC PROGRAM EVALUATION BRANCH CHIEF KENNEDY: 7 This confirmation of the quantification procedure 8 will not address whether or not reductions could be used 9 as credits or offsets in the future AB 32 program. AB 32 10 calls for the regulations that implement the program to 11 provide appropriate credit for early actions. What form 12 that credit will take will need to be determined in the 13 context of the overall program design. 14 While AB 32 calls for us to develop methodologies 15 to quantify voluntary reductions, that same section of the 16 bill requires us to develop regulations on verification 17 and enforcement of those voluntary reductions before they 18 can be used to comply with the limits established under AB 19 32. 20 In the meantime, ARB will also work with the 21 California Climate Action Registry to develop a process 22 for recording these voluntary emission reductions. 23 --o0o-- 24 OCC PROGRAM EVALUATION BRANCH CHIEF KENNEDY: 25 Based on these considerations, staff has revised PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 90 1 the policy statement that was circulated for comment. The 2 final policy statement, which you have before you now, 3 commits ARB to work with the California Climate Action 4 Registry to develop a process for recording voluntary 5 emission reductions. 6 We will also develop a process for reviewing and 7 confirming quantification methods. We are encouraging 8 those with possible early emission reduction projects to 9 submit those projects along with adequate documentation on 10 key elements, including the quantification methods. If 11 the methods are technically sound, ARB will issue an 12 Executive Order confirming that fact. 13 ARB will also work with the air districts, 14 including the South Coast AQMD, to promote the development 15 of quantification methods and protocols. We note that the 16 South Coast Chair has announced an initiative intended to 17 encourage voluntary emission reductions. We plan to work 18 with them as they develop their program and as we develop 19 ours. 20 Finally, I would like to note that the statement 21 makes clear our intention to implement AB 32 in a manner 22 that ensures appropriate recognition of emission reduction 23 actions taken after the enactment of AB 32. 24 Thank you all for your attention. Staff is 25 available for any questions and comments. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 91 1 BOARD MEMBER RIORDAN: Thank you very much. 2 Let me ask the Board before our speakers, are 3 there any questions for staff at this time? 4 Seeing none, let me invite Frank Caponi, Mike 5 Hertel, Leah Fletcher, Taylor Miller, and Chuck White to 6 all come forward. These seats are available in the front. 7 And then you have, as you well know, three minutes to make 8 your presentation to the Board. And we welcome you all 9 here today. 10 MR. CAPONI: Good morning, members of the Board. 11 My name is Frank Caponi, representing L.A. County 12 Sanitation Districts. Pleased to be here today. 13 The card that I put in is a neutral card. We 14 actually would like to support this measure. However, we 15 have significant concerns about the policy statement. We 16 really don't think the policy statement has gone far 17 enough, nor give us the comfort we need to have any type 18 of voluntary early action. I think it's characterized 19 correctly to say that a lot of people are on the sidelines 20 waiting for something, and we don't think this is quite 21 it. 22 At a minimum, this policy should assure 23 reductions must be fully protected by ARB in registries 24 and nationally. The reductions must be fully credited 25 towards future actions derived from AB 32. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 92 1 You know, language in this policy statement like 2 "to the extent feasibility" and language like that doesn't 3 really give us any comfort at all to move forward on these 4 kinds of projects. 5 In addition, offsets developed must be fully 6 fungible in any cap and trade market. During the 7 presentation, it was made very clear that ARB's giving no 8 guaranties on that, and there's very little language in 9 this policy. In fact, it says the Board will later 10 determine the appropriate credits derived in these 11 voluntary actions. 12 Especially in the public sector, we're dealing 13 with very valuable public dollars here, and there's a lot 14 of risk involved in taking these actions. And we need 15 some type of assurance that perhaps we'll have a credit 16 that is salable later on in a market to not only pay for 17 these projects, but also be innovative in our thinking and 18 to take the risk to come up with projects that this Board 19 really needs and deserves. 20 Lastly is the issue of offset reduction 21 protocols. I think this is a huge issue and I think it's 22 really one of the prime issues that we're dealing with. 23 The policy encourages working with CCAR. Quite frankly, 24 we see the process as being very bogged down. Any work 25 that we've done with CCAR on protocols really have been PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 93 1 very difficult. There's really a kind of a rush to 2 judgment here and to get these protocols out. And as a 3 result, we have very little science, very little dialogue 4 that goes into these protocols. And so we're, quite 5 frankly, not happy with the protocols that are being 6 developed. They need time to be developed. And they 7 really need to be flexible in their approach on reducing 8 emissions. 9 We think there's a very valuable opportunity here 10 in this voluntary credit program to get reductions. And 11 maybe use it as a pilot program to try to find out new 12 ways to develop these protocols, because they're really 13 key to making this work. And we hope your Board will give 14 direction to be flexible on these protocols and, to the 15 extent possible, make them workable for industry. 16 Thank you. 17 BOARD MEMBER RIORDAN: Thank you very much. 18 Staff, do you want to comment on this speaker's 19 issues or would you like to take all five and then comment 20 as a whole on the issues that were raised? What do you 21 prefer? 22 EXECUTIVE OFFICER GOLDSTENE: I think we should 23 take all five and then -- 24 BOARD MEMBER RIORDAN: All right. Let's move 25 on to Mike Hertel. And then we'll follow the procedure of PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 94 1 asking staff to respond to all five of you. Since there 2 are only five speakers, I think we can do that fairly 3 well. 4 Welcome, Mr. Hertel. 5 MR. HERTEL: Thank you. 6 Members of the Board. I'm Michael Hertel. I'm 7 with Southern California Edison. 8 I want to express our support for this 9 resolution. We think if the Board adopts it, it will in 10 fact telegraph the Board's strong support to implement a 11 reward system for voluntary early action, as envisioned in 12 AB 32. 13 We are in the process, as I've stated several 14 times before this Board, of putting together a portfolio 15 of projects which we hope will gather about 2.5 million 16 metric tons of voluntary early actions. And we will seek 17 approval of that from the Board and the idea of doing it 18 through this bullet on the second page of your resolution 19 that says, "Where appropriate, the staff will issue an 20 Executive Order," which I assume would be authorized in 21 this resolution to confirm the technical soundness of the 22 methodologies by which you'd quantify these results, will 23 give us enough of a basis to go back to our regulators at 24 the CPUC and say, "Help us and give us the rate payer 25 funds to get these early reductions now when they will be PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 95 1 most cost effective and most beneficial to the 2 environment." 3 So we're very pleased by this revised policy 4 statement. And we recognize that there's a hard balance 5 between, you know, granting full credit, which we don't 6 think you can do at this stage under the law, but 7 signaling very strongly the Board's intent to go in that 8 direction and to take multiple steps that people can go 9 through to actually get partial confirmations of those 10 valid offsets. So we're very pleased. 11 We think the Board staff and the Board Chair 12 particularly should be commended for their strong support 13 throughout this whole process of reaching out to all 14 parties here to try to find a way to move this forward 15 quickly. And I remind the Board, and I think the staff 16 agrees, we have to keep in mind that we have about a year 17 and a half in which to act here and actually get these 18 reductions, or otherwise the rule will take over things 19 and people will simply wait. 20 And so this repetity of action, the urgency is 21 something that I think the Board staff has done its best 22 to recognize. And, again, I want to appreciate the fact 23 staff has reached out to so many of the stakeholders here 24 and have been very open with their dialog. 25 Thank you very much for your help on this. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 96 1 BOARD MEMBER BERG: May I ask a quick question? 2 Sir, thank you very much for your testimony. 3 When we're down the road a couple years from now 4 or a year from now looking at various regulations, what is 5 Southern California Edison's expectation of credit? 6 MR. HERTEL: We hope that what will occur is with 7 the multiple projects. And we range from things like 8 increasing the number of electric forklifts on warehouses' 9 floors to things like plug-in hybrid tugboats even. That 10 if we get a quantification methodology and the Board staff 11 confirms that we in fact will get the number of tons of 12 reduction that we say we're going to get and that the 13 methodologies are sound, that the PUC will give us the 14 money to do those projects quickly, and that at the end 15 when the Board adopts its final rule implementing AB 32, 16 that it will look back on those actions favorably and 17 grant us full credit for those. 18 BOARD MEMBER BERG: Thank you, sir. 19 CHAIRPERSON NICHOLS: Excuse me. I've heard from 20 several other utilities, both electrical and in the water 21 area, that this is something that they would like to be 22 engaged in, that because of the nature of their business 23 that doing things for their customers and with their 24 customers is an area where they would see some real 25 potential for contributing to our goals. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 97 1 Next would be Leah Fletcher. 2 MS. FLETCHER: Hello. I'm Leah Fletcher here on 3 behalf of Natural Resources Defense Council. Thank you 4 very much to the staff and the Board for this statement 5 that early actions will be credited. We think it's a very 6 useful statement and we strongly support it. 7 We recognize also that entities could be 8 interested in further confirmation of early action. What 9 NRDC has suggested is an assurance that allowances won't 10 be grandfathered. That will be a very clear assurance 11 that early actions won't be penalized when all of the 12 regulations in the cap and trade program go into effect. 13 But we definitely support this statement as it is, and we 14 appreciate your hard work on this. 15 Thank you. 16 CHAIRPERSON NICHOLS: Thank you very much. 17 Next will be Taylor Miller. 18 MR. MILLER: Good morning, Chairman Nichols and 19 members. I'm Taylor Miller. I'm doing my three-minute 20 watch here. I'm with Sempra Energy. And as many of you 21 probably know, Sempra is combined -- composed of two major 22 utilities, San Diego Gas and Electric and Southern 23 California Gas Company. And also has non-utility 24 businesses in developing independent energy projects and 25 generation projects and also gas infrastructure. So we PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 98 1 come to this with several different perspectives regarding 2 how AB 32 as well as national legislation potentially 3 affects our customers and our business. 4 We have had just to take advantage of an 5 opportunity to be before you really excellent experience 6 working with the staff on this. And I just wanted to 7 commend them. I think it's a very impressive group of 8 individuals with management -- a terrific management 9 challenge and approaching it openly, fairly as they can, 10 and with a lot of thoughtfulness. 11 We support the overall effort of course to 12 implement AB 32 well and successfully. And like many 13 others, our issues tend to be more not with the goal but 14 with how is it accomplished, at what cost, and with regard 15 to equity issues potentially with other emitting entities 16 or industries. 17 The utilities, particularly Southern 18 California -- sorry -- San Diego Gas and Electric, have 19 made investments through the rate payers for many years in 20 energy efficiency demand response areas. We've put 21 together a good portfolio of electrical sources, so that 22 the result is that we do have at Sempra generally a 23 rather -- a relatively low carbon intensity, at cost, 24 however, over many years. 25 To add to this, we have submitted to the Public PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 99 1 Utilities Commission, just to give you a little note of 2 that as well, what we call our climate action initiative, 3 which is a multifaceted proposal to undertake early 4 actions that we feel can significantly reduce emissions. 5 These include clean energy facilities, clean 6 transportation utility, clean fleets facilities and 7 infrastructure, and consumer assistance programs. Those 8 are all going through review right now. We're dealing 9 with some procedural issues as to what proceeding is 10 appropriate at the PUC. 11 Coming to your policy, we've had a good 12 interaction with staff on this. And the one point I would 13 simply like to make to you is keep in mind that there are 14 sort of two different kinds of early action that need to 15 be thought about separately. One is the kinds of 16 activities I mentioned regarding past investments, so 17 where you are right now with your baseline. That relates 18 more to program design rather than an offset or allowance 19 credit issue. And It's good to keep in mind that that's a 20 separate kind of problem. 21 Regarding the protocol, we support the idea of a 22 registration or notification through an order perhaps, 23 rather than a formally adopted protocol for each kind of 24 project. Because I think we can see just from the initial 25 proposal, which I have been able to look at through the PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 100 1 openness of staff, it contemplated a protocol fully 2 designed sort of like a CCAR protocol, which could take a 3 year or two per project. So we support that approach. 4 And I'm passed my three minutes -- 5 CHAIRPERSON NICHOLS: You are. 6 MR. MILLER: -- so I'll conclude. 7 Thank you very much. 8 CHAIRPERSON NICHOLS: Thank you for recognizing 9 it. 10 MR. MILLER: Thank you very much for the 11 opportunity. And we do support it. 12 CHAIRPERSON NICHOLS: Thank you. 13 Mr. White. 14 MR. WHITE: Thank you, Madam Chair, members of 15 the Board. It's Chuck White with Waste Management. Waste 16 Management is the largest provider of comprehensive solid 17 waste and recycling services in California. And we 18 certainly support the need and the direction that you're 19 going with this policy. 20 Looking forward, Waste Management has a number of 21 projects that we have on line, such as putting a landfill 22 gas to LNG project and an Altamont landfill in the next 23 year or two where we'll be producing biogenic LNG to run 24 our vehicles rather than fossil-fuel-based LNG. We think 25 we can generate credits from that. And we look forward to PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 101 1 working with your Executive Officer and staff to see how 2 that would work out. 3 Likewise, we're looking at implementing and 4 running hybrid vehicles -- hybrid heavy-duty vehicles 5 where we can store the braking power in these vehicles, 6 resulting in as much as 30 percent fuel savings. And we 7 think that kind of project in the next couple of years 8 will be well ahead of the low carbon fuel standard and 9 perhaps well ahead of any other things. So we'll be 10 looking forward to again working with the staff on how 11 credits for that might be generated. 12 Both these projects are very expensive. The cost 13 of a hybrid vehicle is 50 to $75,000 in excess of what a 14 normal solid waste vehicle would be. So we look forward 15 to hopefully generating credits, hoping on the come that 16 these credits will be worth something down the road some 17 day. 18 Looking backwards, we did submit comments asking 19 for further clarification of this policy. I understand 20 you're not going to include it. But I would ask the Board 21 to consider as you go for this scoping plan to recognize 22 past practices. The waste industry is well documented to 23 have made significant reductions in greenhouse gas 24 emissions over the last 30 years from increased recycling, 25 from increased landfill gas capture, from waste to energy PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 102 1 projects, this sort of thing, many of which are not 2 additional. They're in concert with regulatory action. 3 But many of which are. And we would certainly hope that 4 we could go back as far as possible as long as we can 5 demonstrate clearly that these projects are real, 6 permanent, additional, quantifiable, verifiable, and 7 enforceable. As long as those standards are being met, 8 who cares how far back you go as long as they're real 9 reductions. 10 And in many -- on the other hand -- so we hope 11 that you will look backwards, as far as back as possible 12 for generating credits. 13 Likewise, there may be projects that have been 14 done in the past that are not -- they're not easily 15 quantifiable or verifiable to an exact amount. In my 16 comments that we submitted there was a paper written a 17 couple years ago by Keith Whites. He's doing some work 18 now for the Waste Board on organic life cycle analysis, 19 showing the waste industry has been responsible over the 20 last 30 years for tremendous reduction in greenhouse gas 21 emissions. It's published in a technical journal. 22 We would hope that there's some process through 23 the scoping plan or elsewhere, if not giving credit, at 24 least giving recognition for those areas of the economy, 25 because I'm not aware of any other sector of California PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 103 1 economy or the U.S. economy that can point to the amount 2 of reductions and decreases in greenhouse gas emissions 3 that the solid waste sector can, again, through recycling, 4 waste to energy, and landfill gas controls. So if we 5 can't really go back far and get the detailed data, we 6 certainly would like to get the recognition for the 7 progress that we've made over the last 20, 30 years in 8 addressing greenhouse gas emissions. 9 Thank you. 10 CHAIRPERSON NICHOLS: Thank you. 11 This concept of recognition is an important one 12 and I agree with you. We sometimes use that 13 interchangeably with credit, and they're not exactly the 14 same. But they can be equally valid in certain 15 situations. 16 I guess -- that also leads me to this question of 17 protocol versus quantification. I hope in your responses 18 to the questions or the comments that you would address 19 this issue of what exactly it is that we're asking people 20 to present to us and what it is that we expect the 21 Executive Officer would be approving under these voluntary 22 programs. 23 OFFICE OF CLIMATE CHANGE CHIEF SHULOCK: Thank 24 you. 25 With respect to Mr. Caponi's comments, really two PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 104 1 points, the first of which is that this policy does not go 2 far enough in guarantying credit for activities that would 3 be taken. And this is the balance that needs to be struck 4 here. The final rules of the program have not yet been 5 designed, so we can't say -- the Board has not said that 6 there will be a market under this. These things are still 7 being figured out. So in staff's view, it was premature 8 to provide any sort of guarantee. But what we are trying 9 to do, and as has been recognized by the other speakers, 10 what we are trying to do is provide as much assurance as 11 we can with respect to the policy intent and the direction 12 that we're going to be taking. And in addition to that, 13 take some positive steps working with the registry, 14 working with stakeholders who have projects that they want 15 to submit to us, taking positive steps to work with them 16 to provide opportunities to quantify these reductions. 17 CHAIRPERSON NICHOLS: And, again, maybe just a 18 terminology issue. But you could have a credit. It just 19 might not be worth anything. You could have quantified 20 it. You could have registered it. You could be meeting 21 all these tests. But the question is, what are you going 22 to do with it at the end of the day? 23 OFFICE OF CLIMATE CHANGE CHIEF SHULOCK: Yes. 24 CHAIRPERSON NICHOLS: That's what we really don't 25 know at this point. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 105 1 OFFICE OF CLIMATE CHANGE CHIEF SHULOCK: Exactly. 2 And that's the line that we've drawn here, which is there 3 can be quantification, recognition, and Executive Officer 4 Order and Executive Order saying this is worth so many 5 tons provided that it's implemented in the way that it was 6 said. And that is locked in. And then the question of, 7 well, what is that worth in some subsequent regime is what 8 we're saying we're not trying to resolve here. 9 The second question was -- or comment from Mr. 10 Caponi had to do with the registry and the, you know, 11 phrase he used that that process is kind of bogged down 12 and the length of time needed to get results there. And 13 that is what we're trying to address through the policy 14 that we're putting forward here. We want to work with 15 stakeholders who have projects and quantification methods 16 in mind. Work with them. We will review them quickly and 17 recognize -- you know, when those quantification methods 18 do appear to be valid, we would recognize that. 19 So we would just encourage Mr. Caponi and his 20 entity to come forward and talk to staff about particular 21 things that we have in mind. We're trying to signal an 22 open door here. It's not a one-size-fits-all kind of 23 approach. But we very much are open to working with them. 24 And our intent is to have a more accelerated process, 25 recognizing, as Mr. Hertel said, that there's a brief PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 106 1 window of time here where we're trying to make things 2 happen. 3 With respect to the Chairman's comment on, you 4 know, exactly what is it that we're asking for here. It 5 would be the details of how to quantify the reduction 6 associated with a particular project or activity that's 7 underway. I can't go much, you know, beyond that in this 8 timeframe, because these things are all different. But 9 what we're looking for is, for a particular project, 10 confidence that these reductions do meet the tests that 11 we're talking about, that they're real, that they're 12 verifiable, they're enforceable, et cetera, et cetera, et 13 cetera. And I think our main message is really the open 14 door to work with project proponents to evaluate their 15 information and where that information is sufficient that 16 we would bless it and we would recognize the number of 17 tons. 18 Mr. Hertel, his comments were supportive. I'm 19 tempted to repeat the nice things he said about staff, but 20 I won't. 21 (Laughter.) 22 OFFICE OF CLIMATE CHANGE CHIEF SHULOCK: So I'll 23 move on. 24 Ms. Fletcher from NRDC again was supportive. 25 They had commented that we should explicitly rule out the PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 107 1 grandfathering of allowances. And what that term means is 2 that in a market program where people are -- where we're 3 distributing allowances for tons of greenhouse gas 4 emissions, one way to do that is call it grandfathering. 5 And what that means is that you give them out based on 6 historical emissions. So past emissions. So if a 7 particular facility had a thousand tons, they would be 8 granted a thousand tons worth of allowances. That's 9 called grandfathering. 10 Other ways in which you might do that are you 11 could auction off the allowances or you could distribute 12 them on -- it's called benchmarking, which is sort of a 13 throughput. So a particular activity, if they're making 14 ten tons of cement, you have a standard how many tons of 15 CO2 are associated with one ton of cement. So there are a 16 variety of ways to distribute these allowances. And 17 basically although we recognize there are problems with 18 grandfathering in that if you do grandfather allowances, 19 it's, you know, rewarding the particular historic position 20 of various entities, you know. And we certainly recognize 21 that. But we basically felt that it was premature to 22 totally rule that out at this point. There may be -- as 23 this program is unfolding there may be a need to do that 24 in some limited circumstances even if over the long haul 25 people don't think it's the solution. So that was not PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 108 1 included in the policy statement. 2 There is language in the statement saying that we 3 will certainly recognize any reductions made from this 4 point forward, but partially gets at that issue. So it 5 doesn't go all the way. But as NRDC noted, they're still 6 in support of the policy even absent that specific 7 proposal. 8 Mr. Miller from Sempra, we had off line earlier 9 today an extended conversation on one particular issue 10 that he raised here that has to do with -- there's a 11 bullet in the policy that says, "ensure that any credits 12 provided for voluntary action are based on reductions that 13 are real, permanent, additional," et cetera. And his 14 question was, is this intended also to get at this 15 question of how are we going to allocate allowances? His 16 concern is that some past actions that have been taken by 17 a utility might not meet all these tests even though, you 18 know, they've been done and they're real. And our 19 response on that, and Mr. Kennedy spoke to this a little 20 bit, is we're not trying to prejudge here today this 21 decision on how will allowances be allocated. And so this 22 policy doesn't really speak to what we're going to be 23 bringing to you in terms of a staff recommendation or what 24 your ultimate policy would be as to how we're going to be 25 allocating those allowances. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 109 1 And, finally, with respect to Mr. White, again 2 he's generally in support. He raised the issue of looking 3 backwards at past actions that have been taken. And we 4 certainly recognize that that's an important question, but 5 it's not one we're trying -- you know, how far back do you 6 look? I mean, that's a very important question. It has 7 big consequences. That's not something -- that's going to 8 need to be resolved. But that's not something we're 9 trying to resolve here today. Today the purpose of this 10 policy is forward looking so that if somebody's balancing 11 on the edge, that they say "Okay, we're comfortable now 12 that this action is going to be recognized and so we will 13 go ahead and make that investment." So not to minimize 14 the importance of this issue of looking backwards, but 15 it's not really what we're trying to resolve today. 16 Thank you. 17 CHAIRPERSON NICHOLS: Thank you. 18 Comments? 19 Ms. Riordan. 20 BOARD MEMBER RIORDAN: Mr. Caponi, when you spoke 21 it took me back just a moment, because I felt so 22 comfortable with the staff policy statement, that it was 23 so clear, that we were encouraging, that we would give 24 some recognition to these early volunteer actions. And I 25 think as the -- I can only speak on behalf of myself. But PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 110 1 I think that it is embodied in what I would like to say is 2 my support for this policy statement. Policy statements 3 are very general in nature. They can't be finite. To 4 achieve I think what you're looking for is almost like a 5 contractual relationship. And that isn't where we are at 6 this point in time. And it may be, you know, many steps 7 down the road we get to something, not a contractual 8 relationship, but something much more detailed. 9 But I feel very comfortable that this is very 10 clear, and those who are going to support it feel very 11 comfortable in the support that you're going get some 12 recognition for the early action items. And I hope you 13 carry back a little bit of that, because you can do so 14 much. You have a wonderful agency to achieve some of 15 those actions that are going to be needed. And so I just 16 want to encourage you in a very positive way. 17 CHAIRPERSON NICHOLS: Thank you. 18 Yes, Ms. Berg. 19 BOARD MEMBER BERG: Thank you, Chairman. 20 My concern is in absence of specifics -- and I 21 totally understand why we're here. I am also in favor of 22 the policy statement. But I think the onus is on us. In 23 absence of specifics, the expectation becomes the 24 benchmark. So we have expectation of industry. And we're 25 going to be put in a position as the regulations come PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 111 1 forward in the future that I hope staff would very clearly 2 include what the credit or the recognition would be per 3 regulation that we're looking at for the future. 4 And, secondly, that the executive orders that are 5 given back to the companies specifically attempt to 6 identity as many things as possible. And so that 7 industry, who is applying for this Executive Order, is 8 very clear on the documentation that is going to be 9 needed, so when we're looking down the road at the 10 specific regulation and they come forward with their 11 documentation, the rub is going to be when the expectation 12 is missed. They're expecting some sort of regulation -- 13 some sort of recognition, including, I would submit to you 14 on all four of the industry representatives, are thinking 15 they're going to get a one-for-one credit somehow. 16 And so I think we need to be as clear as we can 17 be at this point what our intentions are. So if we can 18 give them 50 percent credit -- I mean we just can't 19 mislead people. I really don't want to be in a position 20 down the road a couple of years from now arguing and 21 having high levels of gap disappointment between what they 22 heard at this meeting and what we're going to deliver. 23 Thank you. 24 CHAIRPERSON NICHOLS: Thank you. 25 Professor Sperling. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 112 1 BOARD MEMBER SPERLING: Just a quick question. 2 My understanding would be that as soon as we do 3 adopt the scoping plan in December or so, then we would be 4 in the position to be much more precise about what could 5 get credit or not, and we could issue then much more 6 precise guidance. Is that correct? 7 EXECUTIVE OFFICER GOLDSTENE: Maybe not at the 8 point where we're adopting the scoping plan. But as we go 9 forward and start developing the specific program elements 10 through the regulatory process, it would be at that point 11 that we would start getting more specific at that level of 12 detail. 13 BOARD MEMBER SPERLING: Well, I'm just thinking 14 that, you know, we do want to not leave people hanging out 15 there for two years. And wouldn't it -- I mean it just 16 seems like even though we wouldn't have the specific rules 17 in place with the scoping plan, we'd have a pretty good 18 sense and we could -- 19 CHAIRPERSON NICHOLS: I think when the allocation 20 scheme becomes clear and when the scope of the market, the 21 size of the market versus the regulated area becomes 22 clear, then everything else will more or less come into a 23 better focus, because people will know whether they need 24 credits for compliance purposes or for other purposes and 25 what they could do with them. I mean the only reason not PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 113 1 to specify a value in terms of, you know, ton for ton or 2 whatever at this point actually is, in my opinion, that 3 the science is evolving in terms of -- my sense today 4 would be that a credit that we get today is worth more 5 than a credit next year because of the cumulative nature 6 of CO2. But we don't know how much more. And there are 7 obviously discounting questions that could come up as we 8 begin to see that perhaps our inventory doesn't include 9 everything that needs to be included. So I think it's 10 probably just not -- it's not something we can really 11 spell out yet. 12 BOARD MEMBER SPERLING: I was thinking could we 13 like in a year from now do something that would be more 14 useful than -- 15 CHAIRPERSON NICHOLS: I hope so. 16 EXECUTIVE OFFICER GOLDSTENE: I think, Professor 17 Sperling, the challenge is of course to create action in 18 the gap between now and the time we have the program in 19 place. But because we don't have the details of the 20 program in place, which by necessity has to be developed 21 through a very public process because that's the way we do 22 it, we're going to have to work all these things out 23 including how this is all handled as we move forward in 24 developing the details. So -- 25 OFFICE OF CLIMATE CHANGE CHIEF SHULOCK: If I PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 114 1 could weigh in on that though. The scoping plan will 2 provide more detail than what we're giving here today. 3 So, you know, without doubt it will provide additional 4 specificity on many of these issues. As Mr. Goldstene was 5 saying, it's not a regulation. So all of the specifics 6 and the kind of contractual certainty that Board Member 7 Riordan mentioned, you know, that level of specificity 8 won't be provided in the scoping plan. But some of these 9 fundamental questions about, you know, how will such 10 actions be recognized in the context of the overall plan, 11 we will be speaking to those sorts of issues. 12 So it's a continuum. And as time goes on, there 13 will be more certainty provided. 14 CHAIRPERSON NICHOLS: All right. If there are no 15 further questions, I'd like to ask for a resolution -- or 16 motion and a second in support of the resolution. 17 BOARD MEMBER LOVERIDGE: So moved. 18 BOARD MEMBER ROBERTS: Second. 19 CHAIRPERSON NICHOLS: All in favor please say 20 aye. 21 (Ayes.) 22 CHAIRPERSON NICHOLS: Any opposed? 23 Okay, great. Well, this is a work in progress, 24 but we are making progress. So thank you. 25 I want to pause for just a moment to talk about PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 115 1 schedule. We have two items coming up that have a number 2 of speakers identified with them, the first being the 3 report from the ETAAC and then the work on 1B goods 4 movement. I would like to suggest that we take the ETAAC 5 report and hear it, as it sort of flows very nicely also 6 with our past two items, and then take our lunch break at 7 that point, and do the 1B goods movement emission 8 reduction guidelines immediately after lunch. I can't be 9 certain of the exact time at the moment, but it would 10 definitely be not before 1:30 at the earliest. 11 Okay. That hopefully will help people decide 12 what to do with their time. 13 All right. Let's resume please. 14 From the movement around the room, it's clear 15 that a lot of interest is surrounding the allocation 16 guidelines. And in that regard, I want to make it clear 17 to the Board members that we've been notified that there 18 are several members of the Legislature who have asked to 19 come over and speak to us on that issue. They may or may 20 not be walking towards us even as we speak. And when they 21 arrive, we will take them out of order in deference to the 22 fact that their schedules are worse than ours. 23 So with that, I'd like to get started with the 24 ETAAC report. We are extremely pleased and grateful to 25 have with us the Chair and Co-Chair of that Committee to PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 116 1 present formally the results of their work to the Board 2 and also to talk to us hopefully a little less formally 3 about what they see as significant in the work that's been 4 done. 5 Just as background, the Air Resources Board 6 formed this Committee. So we're responsible for them. 7 And we did it in response to AB 32, the Global Warming 8 Solutions Act of 2006. The purpose of this Committee is 9 to advise the ARB on the best ways to advance development 10 of promising greenhouse gas emission control technologies 11 and to promote policies that would also advance the use of 12 these technologies. 13 So with that, I want to welcome Dr. Alan Lloyd, 14 the Committee Chair, and Dr. Bob Epstein, the Vice-Chair, 15 both of whom will be presenting. And I believe they're 16 going to be introducing other members of their Committee 17 as well who are here. 18 I do want to turn it over to Mr. Goldstene for 19 any additional remarks. 20 EXECUTIVE OFFICER GOLDSTENE: Thank you, Chairman 21 Nichols. 22 As you noted, we have with us here today former 23 ARB Chairman and former CalEPA Secretary Dr. Alan Lloyd, 24 who chaired ETAAC over the last year. We also have Dr. 25 Bob Epstein, Co-founder of Environmental Entrepreneurs, PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 117 1 who was the ETAAC Vice-Chair. They will present a summary 2 of ETAAC's work and of the final report the Committee 3 wrote and adopted, which contains the body of the 4 Committee's advice and recommendations to ARB regarding 5 climate change technologies and policies. The. 6 ETAAC report provides recommendations that will 7 be carefully considered by staff as we develop the scoping 8 plan under AB 32. 9 With that, I'd like to introduce Dr. Alan Lloyd, 10 who will begin the presentation. 11 DR. LLOYD: Thank you very much, James, and Madam 12 Chair, distinguished members of the Board. It's a 13 pleasure to be here today and to present this report that 14 Bob and I had the pleasure of chair -- co-chairing here. 15 I'd also like to let several of the Committee 16 members that we have with us today do some 17 self-introductions, because they committed substantial 18 parts of their time, as you know, for the amount of money 19 you were paying them, it was a lot of effort in that case. 20 But they did in a tremendously cooperative spirit. 21 So first of all, let Bob and then we'll let the 22 Committee members introduce themselves. 23 CHAIRPERSON NICHOLS: Thank you. 24 MR. EPSTEIN: So I know many of you. I'm Bob 25 Epstein, Co-founder of Environmental Entrepreneurs. And PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 118 1 this was my -- it was interesting, I helped work on the 2 actual law of AB 32, and I never thought that I would 3 actually be part of the implementation. But it's been a 4 really marvelous experience and I'm looking forward to 5 telling you about it. 6 CHAIRPERSON NICHOLS: Thank you. 7 Committee members, do you want to just step up to 8 the microphone, just all of you, and just tell us a word 9 about who you are. 10 MS. CORY: Chair and members. Cynthia Cory with 11 the California Farm Bureau. I've been with them for 18 12 years. 13 CHAIRPERSON NICHOLS: Thank you. 14 MR. BROADBENT: Jack Broadbent, Executive Officer 15 of the Bay Area Air Quality Management District. 16 MR. HAWLEY: Jim Hawley with TechNet. 17 MS. TUTTLE: Andrea Tuttle. And I represented 18 the forest sector here on the Advisory Committee. And I 19 just want to note that as a result of the negotiations in 20 Bali, there is now a renewed and very bright spotlight on 21 forests and the role in climate change. And so thank you 22 for the opportunity to participate. And I look forward to 23 continuing to work with you. 24 CHAIRPERSON NICHOLS: Thank you. 25 MR. ROTHROCK: My name is Dorothy Rothrock. I'm PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 119 1 with the California Manufacturers and Technology 2 Association. And just speaking for myself and perhaps 3 some of my colleagues, we're here to make sure this is 4 really done. 5 Thank you. 6 MR. PATEL: I'd like to echo Dorothy's comments. 7 Amisha Patell with the California Chamber of Commerce. It 8 was a pleasure being on this Committee. As you know, the 9 Cal Chamber has always been pushing the technology front 10 in order to achieve the AB 32 goals. And we feel this is 11 the first step. 12 Thank you. 13 CHAIRPERSON NICHOLS: Thank you. 14 MR. ZALESKY: Rick Zalesky with Chevron 15 Technology Ventures. And I run our biofuels and hydrogen 16 business. And I'd just like to thank Alan and Bob for 17 their tireless effort to get the good work here done 18 before you today. And so I know you'll do that as well. 19 But they really did a great job and it was a pleasure 20 working with them. 21 CHAIRPERSON NICHOLS: Thank you. 22 MS. KREBS: Good morning. Patti Krebs, 23 Industrial Environmental Association. Our membership is 24 primarily based in southern California. And thank you 25 very much for inviting us to participate. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 120 1 CHAIRPERSON NICHOLS: Thank you. 2 MR. OGDEN: Joan Ogden, a professor at University 3 of California at Davis. And it was a pleasure working 4 with everyone on the Committee. Most of what I worked on 5 was transportation. I do my research at Institute of 6 Transportation Studies at Davis. 7 CHAIRPERSON NICHOLS: Thank you. Well, I'm 8 impressed. I attended I believe the last full meeting of 9 the Committee when you were negotiating the final details 10 of the transmittal document. And at the time I thought, 11 well, maybe this was just, you know, the rush of 12 enthusiasm about completing all of their work. But it 13 appears that people are still willing to stick with it. 14 So congratulations on a job well done, Mr. Chairman. 15 DR. LLOYD: Well, I'd like to also recognize Lisa 16 Bicker. Also we had Alex Farrell -- Professor Farrell, 17 Bill Gerwing from BP, Scott Hague from the Small Business 18 Association, Jason Mark from the Energy Foundation. We 19 had Jan Smutney-Jones, who would have been here except 20 came down with the flu I think yesterday. And then we had 21 Fong Wan from PG&E, Jonathan Weisgall from Suett, and then 22 also John Weyant from Stanford. So they were not able to 23 make it, but obviously significant contributors. 24 What I'd like to do is to -- 25 CHAIRPERSON NICHOLS: Excuse me. Before you go PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 121 1 on, as I had warned everybody in advance, we do have a 2 request to take a couple of speakers out of order. And 3 maybe before you launch into your presentation, this would 4 be the best time to do it, since I see that we have now 5 been joined by several members of the Legislature and the 6 Mayor of Fresno. 7 So if you would not mind, we can do that. 8 Oh, there's three people. We have Mayor Autrey 9 and we have Mr. Perea and we have Mr. Ornellas, I presume. 10 Sorry if I've mispronounced your name. These are three 11 elected officials who have asked to be recognized out of 12 order. 13 And if you would come forward just briefly and 14 speak, since I understand you're not able to be with us 15 this afternoon. 16 I thought Senator Cogdill was here too. 17 EXECUTIVE OFFICER GOLDSTENE: Yes, he is. Madam 18 Chair, the legislators are here. 19 CHAIRPERSON NICHOLS: Are they not asking to 20 speak or what's -- we only have three blue cards. The 21 problem is our process requires that people fill out the 22 blue cards. 23 EXECUTIVE OFFICER GOLDSTENE: We're just taking 24 the legislators because of their schedule. Then we'll 25 take the other speakers later during the regular process. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 122 1 CHAIRPERSON NICHOLS: Sorry. I apologize for the 2 confusion here on our part. 3 We had indicated that -- there are a lot of 4 people who've traveled to be here for this hearing today. 5 And what we had asked was that the legislators because 6 they have a unique situation be taken completely out of 7 order since this item isn't even before us at the moment. 8 But we do want to hear from you. 9 So if you wouldn't mind, we'll just hear from the 10 members of the Legislature at this point. And then 11 everybody else we will ask to stay with us and appear 12 hopefully at the beginning of the presentation as soon as 13 we reconvene. 14 Thanks. 15 SENATOR COGDILL: Thank you very much, Madam 16 Chair. And again I want to thank you for your indulgence 17 in allowing us to speak now. You're right, we do have 18 very busy schedules and we've been trying to fit this in 19 all morning. So we really appreciate the opportunity and 20 certainly the courtesy that the Board has shown us here 21 today. 22 I'm Dave Cogdill. For those of you that may not 23 know me, I represent the 14th Senate District. 24 Approximately 50 percent of my district is in the County 25 of Fresno and the remainder of it is in the Sierra Nevada PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 123 1 foothills up into Stanislaus County and also the southeast 2 portion of San Joaquin County. So very much overlaid by 3 the eight-county air district. 4 I wanted to come today to certainly support the 5 request that's being made by the air district relating to 6 the Prop 1B funding allocations. I wanted to give you 7 some reasons why we believe that we need to be considered 8 for a much higher allocation of those funds than what's 9 currently on the docket. 10 The geography and the topography and the weather 11 for the Central Valley I think most of you are aware cause 12 a rather unique situation relating to air quality. And 13 the fact that although we have obviously grown a lot over 14 the last two or three decades, a huge amount of the 15 pollution that impacts our valley comes from other areas 16 of our state, either the Bay Area by way of the winds -- 17 the prevailing winds that blow that pollution down on top 18 of the valley, or just through the overwhelming amount of 19 traffic that uses both Highway 99 and I-5. And as you 20 know, those are the major transportation corridors for the 21 State of California. I think something like 45 percent of 22 all goods in the State of California are transported 23 through that valley at one point or another. 24 And the very again unique physical makeup of the 25 Valley creates a situation where that pollution sits in PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 124 1 our valley up to three or four days sometimes before it's 2 dissipated. So it makes it very different I think from 3 the standpoint of looking at pollution levels on the coast 4 or maybe in other areas of the state that don't have that 5 kind of physicality. 6 We talked about goods movement, and as I 7 mentioned, 45 percent of all the trucks travel through the 8 valley. The ARB recommendations treat a pound of 9 emissions 20 nautical miles off the coast of the 10 United States in the same way that they do the emissions 11 that exist in the valley. And, again, from our standpoint 12 given the fact that those are trapped and that we have to 13 continue to breathe them over a period of several days 14 definitely makes a big difference on how we believe we 15 should be treated when it comes to allocating funds to try 16 to really do some good in cleaning up our air. 17 What we're here today to ask you to do certainly 18 is to again accept the recommendation of the Valley Air 19 District to increase our allocation to 37 percent. We 20 would appreciate it if you would use the officially 21 sanctioned heavy-duty truck emissions inventories in 22 calculating goods movement, air quality mitigation funding 23 allocations. We'd also like you to consider the 24 commitment by the ARB and the Governor to accelerate 25 attainment of the federal ozone standard to 2017 in the PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 125 1 funding formula. We'd also like you to consider 2 population exposure to emissions, as I mentioned, as it 3 relates to the -- rather than use just a very simple 4 population weighing factor formula that I think is 5 currently the standard. 6 We'd also like the ARB staff -- rather, the ARB 7 staff has indicated that the San Joaquin Valley will 8 receive co-benefit from the funding of trucks that service 9 the ports to ensure that this occurs. Twenty-five percent 10 of the port truck funding should be dedicated to trucks 11 that spend 50 percent of their time in the San Joaquin 12 Valley. 13 These are things that we again believe the Board 14 needs to take into consideration to again realize the very 15 unique situation that we have in the valley. And, again, 16 if it's about cleaning the air, we think this is an area 17 that can't be ignored certainly or treated in the way that 18 we maybe have in the past for the reasons that I've tried 19 to articulate. 20 So, again, I thank you very much for your time 21 this morning and look forward to a favorable decision. 22 Thank you. 23 CHAIRPERSON NICHOLS: Thank you, Senator. We 24 appreciate your coming over to see us. 25 SENATOR DENHAM: Thank you. And, again, thank PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 126 1 you for taking us out of order. I'm Senator Jeff Denham 2 representing the coastal area, Monterrey and San Benito 3 County, which is about 25 percent of my district, and 75 4 percent of my district in the Central Valley between 5 Stanislaus, Merced, and Madera. Obviously the north-south 6 corridors of 99 and Highway 5 go right through the middle 7 of my district. 8 I'm somebody that grew up with asthma. And 9 seeing my kids and other kids in the community troubled 10 with the same things. It is a huge concern in the Central 11 Valley when we have bad air days that we not only clean up 12 the emissions but making sure that we've got a fair and 13 equitable solution to dividing up the Prop 1B monies 14 throughout the state. 15 So I'm here to advocate for the request to 16 receive 37 percent allocation. You know, again, I don't 17 want to restate the same issues that Senator Cogdill 18 illustrated, but it is a serious concern for all of us 19 that not only live but have children growing up in the 20 Central Valley. It is an issue that we've got to resolve 21 and I look forward to a favorable decision as well. 22 Thank you. 23 CHAIRPERSON NICHOLS: Thank you for coming over. 24 An extra effort, it looks like, on your part. 25 SENATOR VELINES: Well, thank you, Chairwoman. I PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 127 1 appreciate the opportunity to be here. My name is Mike 2 Velines. I represent half of Fresno County. My colleague 3 who has the other half is here. And then also up in the 4 southern part of Madera County. All the way across the 5 board. 6 Supervisor Case, it is great to see you there. I 7 wish we had you there for ten more years. 8 I just want to come up and echo what my 9 colleagues are saying, that we -- you know, we have some 10 unique situations in the valley. Obviously you know, it 11 is a -- and there have been reports about, you know, the 12 Appalachia of the Central -- you know, the Appalachia of 13 the West. 14 It is tough for us economically to do this issue 15 without a fair distribution of these funds. I have a 16 child with a preexisting condition. You know, we live 17 every day with, you know, asthma or colds or whatever it 18 is that could, you know, have our child inside for the 19 next two months. And there's a lot of kids in this 20 position. And there's no economic barrier to that. It's 21 just the way it is in the Central Valley. 22 If we can get the 37 percent -- and I believe 23 that staff and all the folks back home and those that are 24 up here in the building have made an excellent case for 25 that 37 percent -- it will benefit our children, it will PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 128 1 benefit the Central Valley. The Central Valley is the 2 spine of the entire state. Everything comes through our 3 backyard. And yet it seems to be people want us to pay 4 for the problem that everybody else is a part of. And 5 this is a great way and a fair way. I think it would be 6 equitable for the Central Valley. 7 We really look for your leadership and appreciate 8 the opportunity to come out of order. You know, I'm used 9 to being out of order. We're in the Legislature. We do 10 nothing on time or the right way. So thank you. 11 But I would just say those unique truck issues 12 that we have coming through the Central Valley, the unique 13 air problems that we have because of the Central Valley 14 and the way that it is physically, and what it's doing to 15 our children and the seniors, this is a chance to help it. 16 And I think it's still fair for everybody and a very, very 17 valid case has been made for that 37 percent. And we just 18 look forward to you hopefully looking the way we do and 19 realizing that we've got to represent our constituents. 20 And this is good for all of California. 21 So thanks for the chance to be here. And, 22 Supervisor, great to see you. 23 CHAIRPERSON NICHOLS: Thanks for coming over. 24 Obviously this issue means a lot. And the fact that it 25 does mean enough to bring you all over here is really a PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 129 1 testimony I think to the way this issue has taken hold of 2 people in the valley. 3 ASSEMBLYMAN RAMBULA: Good morning, Madam Chair 4 and members. My name is Juan Rambula, and I'm pleased to 5 represent the other portions of Fresno County and a 6 portion of Tulare County. 7 As a member of the Legislature and as a member of 8 the Assembly Budget Committee, I want to make sure that 9 every public dollar goes as far as possible to improve the 10 lives of all of California. On the issue before you today 11 regarding emissions from goods movement activities, I wish 12 to point out to you that every dollar that is directed to 13 the San Joaquin Valley will have a positive and 14 significant impact on the health of our residents. 15 First of all, the valley, as you know, is a bowl 16 surrounded by mountains, and emission reductions are the 17 only way that we have to clean the air. In fact, every 18 pound of emissions in the valley has at least six to ten 19 times the staying power that the same pound of emissions 20 would have in other regions of the state. In other words, 21 a pound of emissions off the coast is not the same as a 22 pound of emissions in the valley where it remains trapped 23 for days and concentrated for days or weeks at a time. 24 Secondly, of all of the emissions related to 25 trucks in our state's four corridors for goods movement, PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 130 1 45 percent of these emissions occur in the San Joaquin 2 Valley. 3 I do understand the need to control goods 4 movement emissions in concentrated parts close to the port 5 areas, especially in the South Coast and the Bay Area 6 basins. I am sympathetic. 7 I also hope that you understand and sympathize 8 with the fact that there are millions of people in the San 9 Joaquin Valley, the majority of whom are poor and 10 vulnerable, who live in close proximity to our major 11 transportation corridors and the major health risks that 12 they pose. They already suffer from the highest asthma 13 rates anywhere in the country. 14 And in any adopted funding formula there must be 15 a way to account for how many people would be affected for 16 each pound of reductions in emissions. This will give us 17 a more accurate picture of the cost effectiveness of our 18 actions. I do believe a realistic formula would result in 19 a significantly greater funding for the valley than has 20 been proposed with a current version, more specifically, 21 instead of the 25 percent of the total funds, 37 percent 22 should be directed to the San Joaquin Valley trade 23 corridor. 24 I do urge you to carefully consider the testimony 25 provided to you by those who, like me, have come to make PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 131 1 the case to direct 37 percent of the funds to the San 2 Joaquin Valley. The logic for a higher share of funds is 3 quite compelling. And the health and the economy of the 4 valley will, if you'll pardon the pun, ride on your 5 decision today. 6 Thank you very much. 7 CHAIRPERSON NICHOLS: Thank you. 8 SAN JOAQUIN COUNTY SUPERVISOR ORNELLAS: Thank 9 you. First of all let me introduce myself. My name is 10 Leroy Ornellas, San Joaquin Supervisor and Chairman of the 11 San Joaquin Valley Air Board. And it's a pleasure to be 12 here. And I thank you for taking us -- for the courtesy 13 you've extended us taking us out of our normal slot and 14 moving us in here. Thank you so much for that. 15 If I can, I'll just read a short statement. 16 "The San Joaquin Valley air quality challenge is 17 unmatched by any other region in the state. The 18 geography, the topography, the weather create the perfect 19 environment to produce and trap air pollution. 20 "Last year the district developed a plan to meet 21 the federal 8-hour ozone standard. The aggressive plan 22 requires a 75 percent reduction in nitrogen oxide 23 emissions. Goods movement is the single largest source of 24 NOx emissions in the San Joaquin Valley, and roughly 45 25 percent of all the truck emissions in the four goods PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 132 1 movement corridors occur in the San Joaquin Valley. 2 "Unfortunately, in order to submit a legally 3 approvable plan to the EPA, the district was required to 4 request an extreme non-attainment designation with a 2023 5 attainment deadline. While this was our only legal 6 option, this timeline for attainment was not acceptable to 7 valley stakeholders or to the San Joaquin Valley Air 8 District. The District Board directed staff to develop a 9 dual-path strategy to pursue additional measures that are 10 not currently legally enforceable and accelerate 11 attainment to 2017. 12 "This timeline was also endorsed by the Air 13 Resources Board and the Governor, Governor Schwarzenegger, 14 who expressed dismay about the attainment deadline. We 15 are committed to early attainment, and ARB should back up 16 this commitment with its action today. 17 "The staff proposal for distribution of 18 Proposition 1B air quality mitigation funding completely 19 ignores this commitment. In choosing the factors to 20 allocate funding, ARB utilized unofficial truck inventory 21 estimates that have not been vetted, population numbers 22 that are not weighted by the impact from the goods 23 movement, ignores the commitment to accelerate ozone 24 attainment in San Joaquin Valley, and argued that this is 25 okay because the valley should receive co-benefits from PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 133 1 projects funded in other regions. I respect the request 2 that ARB should modify the allocation formula based upon 3 the issues raised in the resolution that you received from 4 our governing board and ensure San Joaquin Valley air 5 quality challenge and impact from the goods movement in 6 the valley receive the attention they deserve. The policy 7 decisions that your and our boards make in coming years 8 will largely determine the timeline for healthy air in the 9 San Joaquin Valley. This decision is the first of many 10 that will determine ARB's commitment to an accelerated 11 attainment timeline." 12 I thank you for your consideration. I look 13 forward to working with you. 14 And, again, thank you so much for taking us out 15 of order. And it's wonderful to see Supervisor Case up 16 there. You're right where you belong. I hope you're 17 there for a long time. 18 And now batting cleanup... 19 CHAIRPERSON NICHOLS: Thank you, Chairman 20 Ornellas. I just wanted to say I understand that we're 21 going to be hearing this item for a considerable time this 22 afternoon, both with all the witnesses and all the 23 discussion I know the Board is going to have on this item. 24 So if you're not able to stay, we definitely will get back 25 to you and give you a complete account of how we end up PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 134 1 with our final decision. 2 Thank you. 3 CITY OF FRESNO MAYOR AUTREY: My name is Allen 4 Autrey, Mayor of the City of Fresno. And, you know, this 5 is the time where hopefully we can carry out the will of 6 the people. I think the will of the people was to pass a 7 bond that would move goods around this state in the most 8 environmentally sensitive way possible and in a spirit of 9 northern California. 10 You know, I lived in L.A. for ten years. It's my 11 adopted hometown, chasing the movie business. And I have 12 friends and family still there. And they're precious, 13 just as precious as anybody else in this state, citizens 14 and the kids. 15 I went to school up in northern California, got 16 family and friends there. And there are people that live 17 there and their kids, just as precious as any other child 18 and citizen in the state. 19 All we're really asking today is to make the San 20 Joaquin Valley people, particularly the children, just as 21 precious. 22 I got a phone call about three years ago from 23 somebody that won't be identified, kind of irate, said 24 that, you know, "You guys are always up here whining" -- 25 San Joaquin Valley. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 135 1 And on this issue I hope you, when you make a 2 decision -- it's very competitive. I hope we can move 3 from regional competition to regional cooperation very 4 quickly. We need to for the sake of the state. 5 But when you mention that we're a basin unlike no 6 other, that that toxic particles are kept closer to us and 7 in the lungs of our kids like no other region in the 8 country, it's not whining. When we say that 10,000 trucks 9 a day come through the valley spewing out the dirtiest 10 stuff this side of refinery oil, of which 2.9 people live 11 within five miles of that freeway, that's not whining. 12 You know, when you say that you have the highest child 13 asthma rate in the nation -- we wish we didn't. That's 14 not whining. That we lost hundreds of people last year, 15 seniors, directly related to the air, more than any other 16 place in the state, that's not whining. Highest child 17 asthma rate is one I just said, it's not whining. It's 18 sad, horrific truth. 19 So what I'm asking you to do today -- and I'll 20 close with this -- won't go into more statistics -- is my 21 daddy once said -- he was a farmer, and I was whining 22 about working at 16 years old because I was late for Babe 23 Ruth practice. We were out there planting corn. And he 24 sensed my frustration as we were walking back to the 25 pickup truck. He said, "Doc" -- that's what he called PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 136 1 me -- "Doc, what do you think we just did there?" I said, 2 "Well, we stuck a bunch of seeds in the ground." He says, 3 "Well, I suppose you could look at it that way. The way I 4 looked at it, we just helped feed the world." He says, 5 "Son, don't ever forget, there's more to what you're doing 6 than what you're doing." 7 Now, I wish I could have said the light went on, 8 boing, I looked at my dad and teared up and said, "Gee, 9 thanks, dad." But I didn't. I went to Babe Ruth 10 practice. But that seed he planted in me never went away, 11 and it did grow. 12 And there's more to doing what you're doing here 13 than what you're doing. We could be like a bunch of 14 starving dogs in a meat house at this money, trying to go 15 back and serve our constituencies, and nobody would 16 probably blame us. It would be just business as usual. 17 But we have a chance to change the mindset here in the 18 State of California. And it's not going to come with a 19 sweeping declaration, I don't believe, from some 20 charismatic leader, whomever that may be, to come up and 21 say, "Let's stop being a tale of three states and become a 22 story of one state, working to lead the way in the world." 23 We're fragmented. We're a tale of three states. 24 We cannot go on like this. And you have a chance here in 25 this decision to begin a policy of fairness. That's all PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 137 1 we're asking, is fairness, that you don't leave the San 2 Joaquin Valley behind. You say, "Come to the table. We 3 want you. We need you. We want you to be a contributing 4 member, and your kids do matter. They're just as precious 5 as any other in the state." No more, just no less. 6 So just thank you for this time. And I wish 7 you -- well, I'm going to go ahead and say it. I'm not 8 supposed to say it as an elected official. But I'm going 9 to wish you God's wisdom -- God's wisdom on this decision 10 in this allocation. 11 Thank you very much. 12 CHAIRPERSON NICHOLS: Thank you. 13 If we can move our minds back away from the very 14 real and serious problems of truck pollution and on to the 15 equally real but somewhat more global problems of 16 greenhouse gases, I'd like to resume the presentation. I 17 think you were actually just getting started, Dr. Lloyd. 18 DR. LLOYD: Well, thank you, Chairman. It's very 19 difficult to follow that eloquent presentation from the 20 Mayor of Fresno. 21 I don't envy you your task. When people think 22 you've got money to give away, you think it's simple. I 23 know how tough it is. 24 CHAIRPERSON NICHOLS: The only worse thing is not 25 having any money to give away. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 138 1 DR. LLOYD: Well, looking at the time, I'll try 2 to quickly go through certainly the preamble here and let 3 Bob get into some of the meat and then open up for 4 questions if you have any. But, clearly, you've got the 5 report before you, you've got the executive summary before 6 you as well. I think it's well mapped out. And, you 7 know, you'll have the luxury of -- these are 8 recommendations to the Board and to the staff and you can 9 pick whatever you choose to do. 10 --o0o-- 11 DR. LLOYD: Just a quick overview. You can see 12 what I'm going to go through here is some of the purpose, 13 the public process overview and major themes and some of 14 the recommendations there. 15 One of the key goals, by the way, from the report 16 I think that both Bob and I had, to get everybody to 17 really sign on. And you'll see later on that everybody 18 did sign on. Didn't mean to say that they agreed with 19 everything in there. But they did agree to work towards 20 those goals, which I think was very, very important. 21 --o0o-- 22 DR. LLOYD: This is something you know because, 23 as the Chair mentioned, you created this group under AB 24 32. You also asked us to comment on the Market Advisory 25 Committee report to Cal/EPA. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 139 1 --o0o-- 2 DR. LLOYD: We had 20 people on the Board. 3 You've already heard from most of them there. We held 4 nine public meetings, in the Bay area, Central Valley, 5 Sacramento. I'd particularly like to recognize, again, we 6 had people from UC Merced, we had also Stanford hosted us, 7 South Coast hosted those as well. And as you can see on 8 the right-hand side, we did talk to people in white coats 9 as well. And we were very impressed by the hospitality 10 and material we had. 11 And I would also recommend from our visit to UC 12 Merced, which is the newest campus, that it's well worth 13 your while taking a look at what's going on there in some 14 of the energy efficiency areas. So it's a new campus, but 15 down in that area it's very important. 16 --o0o-- 17 DR. LLOYD: You can see the process here. We 18 actually got the draft in November last year, and then 19 draft report just before the holiday. And I would, by the 20 way, at this point also really like to thank the 21 outstanding work done by ARB staff in the Research 22 Division, particularly Steve Church. When I look at that 23 date of December 21st, Steve was there right before the 24 holidays. And a lot of people don't understand that. And 25 so I think it's very right to acknowledge Steve and his PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 140 1 staff support very much. And also Bart Croes in the 2 Research Division. 3 And then the final report that we had adopted, 4 which the Chair came to that meeting. And we actually got 5 to closure there. We actually -- there was some 6 interesting moments, but it came together very well at the 7 end. 8 --o0o-- 9 DR. LLOYD: I think this is an important slide as 10 you're debating this whole issue here of greenhouse gases, 11 and I was pleased to see this morning in the staff's 12 presentation as you look ahead to the future. Not only if 13 you would look at what's happening now some of the 14 immediate, mid, but also the longer term, and you could 15 allay some of the policies in place. Because there's no 16 way you can get from what you see there today, 13.8 tons 17 of CO2 equivalent per capita, to 1.5 in 2050, without some 18 dramatic changes. And so I think that's important to bear 19 in mind as you move ahead. And you'll see from what some 20 of the things that Bob will talk about, and we've looked 21 at there, is you really have to take carbon down to 22 extremely low levels or get out completely to zero, both 23 in terms of the energy side and also in terms of the 24 transportation side. 25 --o0o-- PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 141 1 DR. LLOYD: And I'll turn this over -- again, you 2 saw the people there. I'll leave this as a good juncture 3 point for the people who participated in this. You'll see 4 that we had a broad representation from the different 5 factions across the state. And some of these were not 6 natural allies. Some people came into the process saying, 7 "Well, we were against AB 32, but we're here to support 8 the implementation in the most effective way." 9 So I'll now turn it over to my colleague. 10 Bob. 11 DR. EPSTEIN: Thank you very much, Alan. 12 As Alan mentioned, we all have day jobs and we're 13 all asked as volunteers to spend quite a few hours, much 14 more than we ever thought, figuring this out. And people 15 put in enormous amounts of time. Some of us borrowed 16 staffs from various places, but most of it was a voluntary 17 effort. And I can tell you that for every idea in here 18 there's someone who's passionate about the value of it. 19 And that's what we really looked for in trying to put 20 something together. 21 I just want to comment on a couple of things. 22 First of all, innovation is very strong in California. 23 You know, there was $1.8 billion in venture capital in the 24 clean tech last year. California had 48 percent of the 25 United States venture capital in the clean tech. Four PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 142 1 years prior to that we only had 31 percent. So one of the 2 things you can say about the state is the investment in 3 intellectual property is growing strongly. And that's an 4 important base. 5 And we took this report and we served it in two 6 ways. We did it bottoms-up and then tops-down. 7 So bottom-up, we went out and looked for ideas 8 that we could put together either financial or various 9 sector ideas that we'll summarize in a minute. And then 10 roundabout November we said, "Now, what did we actually 11 learn? And let's go back and do a top-down sense of what 12 it is." 13 And so top-down, these are the five things we 14 really think we observed about everything that we're 15 working on. And these are all policy strategies. 16 --o0o-- 17 DR. EPSTEIN: You know, I think they are actually 18 listed in the right order. 19 Number one is to accelerate greenhouse gas 20 emission reductions. Because, as you know, unlike other 21 types of pollutants, on greenhouse gas, once you start 22 getting the feedback cycle fit in, you might say it's too 23 late. It's at least really bad. And so every -- my 24 feeling is every day matters. And how do you make them 25 happen faster is the main area. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 143 1 Now, one of the things that we then learned which 2 relates to this fifth point here is businesses are going 3 to be asked to meet this thing on a schedule. They'll 4 come up with a scoping plan. It'll be excellent, I'm 5 sure. And there'll be a deadline for every business to 6 meet the reductions. 7 Yet on the same time the state agencies and the 8 rest of that won't necessarily have a deadline to make 9 sure that their approval cycles and the rest happen. 10 So one of the things that we observed from this 11 gets back to the leadership across state agencies, is a 12 number of our issues are designed around how do we make 13 sure, without sacrificing environmental quality, without 14 streamlining or shortcutting the process, that we have an 15 efficient way so when we want to get things done, they can 16 really be done there. 17 The other thing we'd observed in terms of 18 leadership is there are some things the private sector, no 19 matter how much money, is not going to solve -- you talked 20 about it earlier today -- and that's land-use policy. So 21 we really expect people to step up to the table. 22 And I'm going to make an exception to what 23 Supervisor Roberts said earlier. You are the center of 24 the universe in my mind, because I don't have anybody else 25 to go to. While you may not have all the authority to do PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 144 1 everything, you have the moral persuasion. I can tell you 2 people in the Legislature want to know what you're 3 thinking, they want to know what they can do. You have 4 that across all of the state. And so you have an 5 opportunity to help lay that down. And we can solve land 6 use. I mean you're looking at an entrepreneur. Tell me 7 no and I get all excited. You know, that's the definition 8 of an entrepreneur. 9 We move back to some of the other observations we 10 want to make. Number two here, in terms of balancing a 11 portfolio of economic and technology policies. Clearly, 12 one of the major new policies that will be proposed is an 13 actual cap on carbon. And associated with that is very 14 likely to be a price on carbon. We just want to emphasize 15 that while those will be major new features, we need more 16 than that. We are going to need a lot of different 17 mechanisms to make this work. 18 One of the things that Chairman Nichols asked us 19 to do was to look at the Market Advisory Committee report 20 from the perspective of three things: Which policies 21 promote early action, which ones promote innovation or 22 not, and which ones promote clear price signals. And so 23 we'd invite you to look at that section of the report 24 because it provides a lot of insight. And the reason why 25 I think that's so important is we're -- there's no reason PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 145 1 to meet the 2020 goal unless we're really going to get 2 down to very low carbon by 2050. Otherwise we don't solve 3 the problem. Going from 14 tons per citizen, growing the 4 state half a million people a year, down to 1 1/2, we're 5 not going to get it done by playing around the edges. We 6 really have to force technology innovation. And I think 7 California is very up for it and it can be done. 8 So several of our ideas are really focused around 9 how we fund and how we encourage innovation. And that 10 brings up sort of the third point. Is while there is an 11 enormous amount of private investment -- one of the things 12 I'm doing the next couple weeks is just sort of adding it 13 up and meeting with major investment firms about why they 14 should be in California -- it will take some amount of 15 public financing. If you do decide that there will be an 16 auction as that, it does create a new funding source. And 17 so one of the major recommendations we looked at is how 18 can you use auction proceeds to get the maximum possible 19 public benefit from it. In the report there's 20 something -- proposed Public California Carbon Trust. I'd 21 like to recognize that we gratefully plagiarized the UK 22 Carbon Trust. Jim Peacock's here today representing them 23 from the UK. 24 So it brings up the fourth point, which is 25 international and domestic partnerships. This is not the PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 146 1 final exam. We think we should freely borrow ideas from 2 whereever else. One of the things that's truly reported 3 back from Bali is just how humble we should be. How far 4 other countries are than we are, even though we may be the 5 leader in the United States, we have a lot to learn. 6 So those are some of the major things that we 7 learned in terms of strategies. 8 If we looked then at the next slide. 9 --o0o-- 10 DR. EPSTEIN: The innovations really came in 11 four -- in five major areas: 12 First is the efficiency measures. Driven by 13 policies, not just price. We don't think putting a price 14 on carbon necessarily makes the market work well. It may 15 help in some cases. But a lot of that is going to be 16 driven by new financing options which we propose and other 17 ideas. 18 Removing carbon from energy sources is another 19 thing that, you know, the Committee members clearly 20 believe can be done. We saw lots of different companies 21 with ideas. The question is: Can they do it in the time 22 schedule required? So one of the major recommendations 23 you'll see in here is the notion of competitive renewable 24 energy zones. Can we structure the state so we can design 25 where we'd like to see the renewable energy and make sure PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 147 1 that it can happen through a master planning process that 2 also does not slow down activities during the design 3 phase? 4 We also think there's huge opportunities in terms 5 of sequestration, both underground and through nature, in 6 biomass and in electricity storage. Clearly, 7 transportation will play a large role. And we'll give you 8 some examples in a moment. 9 And then probably one of the hardest areas was 10 looking across greenhouse gas emissions from industry, 11 agriculture, forestry, and water. We identified a lot of 12 areas. Probably for me the most fun was watching Dorothy 13 Rothrack carefully manage through the process of getting 14 all the different constituencies in recycling reuse, and 15 et cetera, work through the process. In fact, if you look 16 at the public comments submitted for today's meeting, it's 17 typical of what we've seen. 18 There's a lot of passion on this. And we think 19 it's great because there's a lot of reductions that are 20 possible. But you'll see there's a lot of ideas in there 21 on how we move through the issue. 22 And then the last point I would like to make and 23 then turn it back to Alan is, I spent a lot of time -- I 24 did 124 meetings I counted with the Legislature in 2006. 25 And they all asked for the same thing, which is: PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 148 1 California should see a net benefit from taking this 2 leadership, that we're not sacrificing California so the 3 rest of the world will have a stable climate. So we're 4 really looking for those benefits. And that includes, you 5 know, increasing manufacturing in the state, green collar 6 jobs and training. And we're very concerned as a 7 Committee that we'll get some of the benefits but not all. 8 I would say when you look through the report, 9 we've summarized the ideas and then we've assigned them 10 work. Since we were all volunteers, we've now assigned 11 work out to everyone in state government and some people 12 not in state government. So when you look through that, 13 you won't see your name on everything. I hope you don't 14 mind, we used your name and the authority that you gave us 15 to request that the Legislature do some stuff, the Energy 16 Commission, the PUC. And we even some something to write 17 down for the State Insurance Commissioner. No stone was 18 left untouched in our desire to help you solve this 19 problem. 20 Okay. So we're going to go through a couple of 21 the ideas. And let me talk about the carbon trust and 22 then Alan will do the rest. 23 --o0o-- 24 DR. EPSTEIN: So the goal here again is to say 25 how can we utilize auction revenues to maximize additional PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 149 1 reductions. And so assuming that there is an auction, 2 which obviously is an undecided thing at this point, the 3 Market Advisory Committee did not exam what the proceeds 4 might be used for. So we were asked to do this by the 5 Chair. And so if there ends up being allowances, we 6 looked at several areas that could be done. And we put 7 this under the category of a California carbon trust which 8 could be structured as a nonprofit, as it's been done in 9 other areas with a state charter. You pull the funds if 10 you don't like the result. But something that can work 11 fairly closely and quickly in the market. We identified 12 four areas that the trust could work on: 13 One would be the technology bridging. How do you 14 get the first project finance in place? That's an area 15 where typically venture capital won't touch it, the 16 returns are too low. Banks won't touch it, I can confirm 17 that since I'm a director in a bank, because the risks are 18 too high. So the projects don't get there. So bridging 19 that gap between getting into the first production is one 20 category. 21 The second is -- you can imagine scenarios where 22 there are some limits on offsets in the regulated sector, 23 yet you want to have as broad a voluntary market as 24 possible. You want to see innovations occurring outside 25 of just the regulated entity. And so the carbon trust PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 150 1 could be a funder and a promoter of projects in that area, 2 and help maintain that environment. 3 A third idea is really looking at the issue of 4 disadvantaged communities and trying to accelerate 5 projects in those communities which have both a greenhouse 6 gas benefit and co-pollutant benefits and other problems 7 and including green jobs. So that was another model that 8 we came up with how it would work. 9 And then lastly, although it was the most 10 controversial proposal from public comment, is -- normally 11 when you have a new stock in a market, and in this case we 12 have carbon trading, you need a market maker, somebody 13 that when there isn't enough volume buys, when there isn't 14 enough sellers sells. And to a limited degree in the 15 early part of the market in order to provide a stable 16 price and not have a lot of fluctuations, which benefits 17 nobody, the California Carbon Trust could play a limited 18 market maker role in a while. And I invite you to read 19 arguments on both sides of that equation. That was the 20 most controversial comment on the carbon trust. 21 Alan, back to you. 22 DR. LLOYD: Thank you very much, Bob. 23 It's a little bit slow here. 24 CHAIRPERSON NICHOLS: While you're waiting for 25 the slide to come up, I think it's a mark of the success PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 151 1 of the Committee that you did generate as much comment as 2 you did and, frankly, as much controversy, because most 3 advisory committees, basically people assume, they're just 4 going to complete their work and have it be put on a shelf 5 somewhere. And it's clear that people don't think that. 6 And -- 7 MR. EPSTEIN: Yeah, it's the advantage of not 8 working with shy people. 9 (Laughter.) 10 DR. LLOYD: Moving on to -- and this is an area 11 where, listening to some of the discussion this morning, 12 the ARB is very much on track here. We strongly suggest 13 to continue that leadership, not only on the light-duty 14 side but also into the heavy-duty side. And you'll see at 15 the top both -- to the low and zero emission 16 transportation technologies. And you're going to be 17 looking at some of the keys in the ZEV review coming up as 18 one part of it. 19 And then also on the incentive side, looking at 20 some of the fee bates, fleet purchases, you know, with 21 basically some of the very low carbon hybrids, plug-in 22 hybrids, zero emission vehicles, which the state and also 23 the agencies throughout the state I think that's a 24 mechanism which hasn't been looked at very much. 25 And then also I think, while not mentioned here, PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 152 1 the whole issue of the modal shift is going to be very 2 important. And I know that was addressed last week. I 3 know the staff's looking at that, when you're looking at 4 goods movement. When you look at that in terms of the 5 amount of the tons of goods moved per CO2 emitted, or 6 greenhouse gas emitted, that's another way of looking at 7 that. Then you get into the modal shifts, whether you're 8 better off on the trucks or the trains, ships, et cetera, 9 and how many trailers on that big issue, which I think you 10 need to look at. 11 Next one. 12 --o0o-- 13 DR. LLOYD: Next one is -- and this was discussed 14 this morning, so I won't dwell on it. Again, I think it's 15 a very important one. This was one of the surprises to me 16 to see the amount of effort that needs to go into this 17 area. I was in Dehli last month, and I graphically 18 understood the difference between clean transportation and 19 mobility. And so clearly this whole issue of VMT 20 reduction, looking at the -- providing equivalent clean 21 transportation for people to get around is very important. 22 These are just some of the suggestions we had here. 23 Many people want to come in with their favorite 24 technology. We tried to include those, put them in the 25 appendix in there, without trying to pick winners and PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 153 1 losers. But on the other hand, there's a plethora of 2 programs underway and a tremendous a lot of interest in 3 there. 4 --o0o-- 5 DR. LLOYD: The Energy Efficiency Program, 6 another area where California was to have been a leader in 7 that area, is continuing with some of the utility programs 8 and the working with customers, deploying some of the 9 technologies. As somebody said this morning, I think 10 maybe it was Supervisor Roberts or Mayor Loveridge 11 indicating, "Well, changing lightbulbs, that's easy." But 12 it is. But it's an important piece of that part of it 13 there. 14 And then talking about developmental deployment 15 of light emitting diodes in general lighting. Although 16 somebody raised the point, I read somewhere, that light 17 emitting diodes in cold areas don't generate any heat. 18 So, in fact, if you got snow there, you're not going to be 19 able to see through them. So you have to look in detail 20 there. 21 And the whole issue of conservation -- water 22 conservation and reuse there, because obviously water 23 transport throughout the state is one of the major users 24 of energy. We saw some comments in the report. We did 25 put this in somewhat late, so in all honesty there's a PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 154 1 little bit of a process there. But obviously this report 2 is just a recommendation to you. You can take obviously 3 additional comments from that piece of it. But a very 4 important area. 5 --o0o-- 6 DR. LLOYD: Again, the low carbon energy action 7 plan, these are examples. We're trying to get to 8 extremely low carbon, which Bob highlighted some of the 9 desires to in fact remove the barriers for renewable 10 energy, looking at corridors in those areas. 11 I'm also a big believer in distributed generation 12 in many ways. I think we under-utilized that. And that 13 can work both in the transportation side or the 14 electricity side then. 15 And then the potential to remove carbon from 16 fossil and biomass fuels. I think that's important. But 17 I would say though, I'm, for one -- the more I've got 18 educated on carbon capture and sequestration, the more you 19 realize that that is going to be tough and it's going to 20 be expensive. So the idea that this is something we can 21 just take away is not going to be easy. 22 On the other hand, I think that's an area where 23 you can learn from the Europeans, learn from the amount of 24 work that's going on. And that I think is where we 25 mentioned earlier on the necessity in something like this. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 155 1 This is really a global problem. And linking up with 2 international partners. You heard the carbon trust. And 3 then the U.S. But also lots of partnership there. The UE 4 has done lots of work and doing lots of work with CCS and 5 the whole issue of biomass fuels, you get into that in 6 many ways. But we were fortunate in that obviously, 7 having Alex Farrell on the board and also Rick Zalesky, 8 who does the work on the biomass from -- biofuels from 9 Chevron. 10 --o0o-- 11 DR. LLOYD: This was an area where it generated a 12 lot of interest and discussion. And there are many 13 comments on this piece of it. And the whole issue of what 14 you do with waste, and the emphasis being on waste 15 reduction, recycling, and compost. And any time you talk 16 about actually waste to energy, that drew significant 17 comments in those areas. And I think this is important 18 throughout the state. 19 It's also important here to look at some of the 20 evaluating the differences and the need to look at both 21 the greenhouse gas reduction as well as some of the air 22 permitting, because we see some of these areas how that 23 worked into composting. But, clearly, it's going to be a 24 growing issue, something that has to be looked at. And 25 you'll see the report has got -- trying to get some PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 156 1 consensus there. But you will hear comments on that piece 2 of it in terms of what we should be doing and what the 3 various options are. 4 So I think with that I'd like to -- the other 5 part I'd like to mention following up on Bob, who is again 6 a supreme optimist on venture capital, which is good, but 7 on the other hand there is a difference in getting this 8 translated into reality. And also we've had a number of 9 cases where we can generate jobs within the state, but you 10 can't retain the companies to create and manufacture. So 11 I think that's where the state has got to step up and 12 creatively, you know -- and providing some help in those 13 cases. 14 So I think it's translating that. The idea is 15 the patents, the work, and the intellectual capital to 16 actually manufacturing and taking advantage of those 17 technologies that we could use I think to me is a major 18 issue. 19 And I would also like to recognize Ed Pike, who 20 worked with me, with ICCT, spends a lot of time. And I 21 think Bob would want to recognize some of his colleagues 22 there. 23 And, again, I would like to thank the Committee 24 for really not only outstanding hard work but the spirit 25 of collaboration in which we all worked together. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 157 1 MR. EPSTEIN: Yes, Alan, I'd also like to 2 recognize Ed Pike. You know, we were all volunteers, but 3 Ed actually put in an enormous number of hours, and also 4 Diane Doucette from Environmental Entrepreneurs. And 5 there were -- there's a list of people that we'd want to 6 acknowledge that we won't read right here at the moment. 7 But I will take opportunity to thank Ed and Diane. 8 CHAIRPERSON NICHOLS: Thank you. 9 DR. LLOYD: And I also recognized Steve. 10 CHAIRPERSON NICHOLS: Thank you. 11 The report is a hefty document, as people no 12 doubt realize. And there's just a lot in it. And a lot 13 of good work went into it. I know that some of my fellow 14 Board members have questions or comments about this. And 15 we also have a number of people who've signed up to speak 16 on the report. 17 I know you ran a very open process and that 18 during the course of the Committee you heard from a great 19 many stakeholders who were not Committee members. I just 20 want to make it clear that, you know, we're receiving this 21 report and we're receiving it with a great deal of 22 enthusiasm at this point. We're not committing to adopt 23 any particular measure at this stage without going through 24 further review. And, therefore, when we come to a time 25 for public comment, I'm going to give people a pretty PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 158 1 curtailed amount of time to speak on this item, because I 2 think they had a chance before the Committee and they will 3 have further opportunities with us. So I just wanted to 4 let you know that. 5 Mayor. 6 BOARD MEMBER LOVERIDGE: Two process questions. 7 One, is this the last stand of the task force? Were the 8 people to come back for review of what has taken place? 9 At the local level we're all too familiar with the hard 10 work that goes into many plans. And we accept them and 11 there's sort of rejoicing. And it's promptly forgotten. 12 I guess one is, will they reappear? And, second, 13 how will as a Board and as staff will we consider this, 14 some 55 recommendations, beyond just saying, "Thank you 15 for your good work"? 16 CHAIRPERSON NICHOLS: Well, that's a very good 17 question. I have told the Committee that I thought that 18 they deserved to have official closure as far as their 19 work on the report that they were convened to do. But 20 that separately and collectively I was counting on them to 21 continue to monitor the process and to come back if asked 22 on any specific items. And I think most of them -- I 23 can't speak for all of them -- but most of them are 24 actively engaged in one sector or another and following 25 what's going on. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 159 1 And the other thing I committed was that we would 2 assign out these recommendations as the Committee has 3 asked us to do. But within the context of the scoping 4 plan, that there is a home for every one of these 5 recommendations with a group of people who have an 6 obligation to follow up on it. And I don't know if you'd 7 like to add to that, Mr. Goldstene. 8 DR. EPSTEIN: Well, I would just -- I'm sorry. 9 CHAIRPERSON NICHOLS: I was going to ask our 10 Executive Officer. Then you could -- 11 DR. EPSTEIN: I shouldn't sit behind him. 12 CHAIRPERSON NICHOLS: That's okay. 13 DR. EPSTEIN: It won't happen again. I'm sorry. 14 CHAIRPERSON NICHOLS: He's a big guy. 15 EXECUTIVE OFFICER GOLDSTENE: Also the Climate 16 Action Team is paying attention to the report. And 17 there's a parallel process going on. 18 CHAIRPERSON NICHOLS: Yes. 19 DR. EPSTEIN: I think you'll find about the ETAAC 20 Committee members, we don't wait for supervision or 21 direction. So our view is not that we need another report 22 a year from now, but we're going to take to the issues we 23 think care -- you know, that we're most passion about and 24 try to see them get implemented. 25 And our main goal with the Air Board is of course PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 160 1 to see things into the scoping plan and then work through 2 that process, not create a parallel one. But a lot of 3 these recommendations are in the Legislature. And a group 4 of us met with them this morning on ideas. There's some 5 things that go to other state agencies. 6 So we'll be happy to be coordinated if you'd like 7 us to. If not, we're just going to help make it happen. 8 CHAIRPERSON NICHOLS: I like your spirit. Thank 9 you. 10 Any further comments at this point before we turn 11 to the public? 12 All right. If not, then let's just hear from the 13 members of the public, starting with Frank Harris, Taylor 14 Miller, Leah Fletcher. And I'm going to give you two 15 minutes. 16 A number of people on this list have filed 17 written comments as well. 18 MR. HARRIS: Two minutes. 19 CHAIRPERSON NICHOLS: Two. 20 MR. HARRIS: Madam Chairman, members of the 21 Board. My name is Frank Harris. I'm with Southern 22 California Edison. I appreciate the opportunity to 23 comment today. We have submitted written comments, and I 24 won't go through them. 25 There's three main issues here that I wanted to PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 161 1 raise to your attention. And one is really an overarching 2 issue of attitude and approach. I'd like to think that 3 we're looking at a market-based solution and not 4 discounting the role of the market to achieve innovative 5 technological solutions in deferment to a more 6 prescriptive role. 7 A broad-based cap and trade mechanism is going to 8 create a carbon price which will in turn create an 9 incredible incentive for additional investment both inside 10 the State of California and beyond in the area of emission 11 abatement. And so it's important I think that we minimize 12 the extent to which we have prescriptive directed 13 technology policies, so called picking winners, and allow 14 the overarching -- the broad market to work in an 15 environment of constrained carbon. 16 Frankly, I see the carbon trust as being a step 17 in the direction that I'm opposing here. I see that as a 18 prescriptive approach to innovation and regulation. 19 But, additionally, Edison is concerned that the 20 very description behind the trust prejudges or presumes an 21 allocation mechanism; that when the allocation mechanism 22 hasn't been deliberated and a decision hasn't been made, I 23 find this to be a critically important issue. Decisions 24 on this are going to have an incredible influence on the 25 cost of compliance and meeting the state's goals. And, PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 162 1 frankly, we're talking not so much about 2020 but about 2 2050. If the preliminary costs, if the early costs of 3 achieving these goals skyrockets, I think it's fair to say 4 that we will experience a dramatic waning of public 5 support for continued abatement goals. It's critically 6 important that we recognize this. And we could possibly 7 see something backfire on us in that area. 8 CHAIRPERSON NICHOLS: Thank you very much. I 9 appreciate your comment. And you have filed written 10 comments and we understand the point. And we heard it 11 also. 12 MR. HARRIS: Many times, I'm sure. 13 Thank you very much. 14 CHAIRPERSON NICHOLS: And we haven't made a 15 decision obviously. Not that this is ours to make. It's 16 definitely a legislative item, I think. 17 MR. HARRIS: Thank you. 18 CHAIRPERSON NICHOLS: Thanks. 19 Or at least one that the Legislature would want 20 to share in. I don't think they're about to let me create 21 the carbon trust and run it. 22 Yes, Mr. Miller. 23 MR. MILLER: Good morning -- well, actually 24 afternoon, again. Taylor Miller with Sempra Energy. 25 I would join my colleague from Southern PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 163 1 California Edison in his comments, and otherwise commend 2 the Committee members for an excellent job. I think it's 3 a very interesting and stimulating compendium of ideas on 4 approaches to reducing emissions. And otherwise, I yield 5 my time to the Chairman. 6 CHAIRPERSON NICHOLS: Thank you. Well done. 7 Leah Fletcher, followed by Kevin Whilden and 8 Muriel Strand. 9 MS. FLETCHER: Hi. I'm Leah Fletcher here on 10 behalf of NRDC. And I want to take this opportunity to 11 commend the ETAAC Committee. I participated in their 12 process through a number of iterations. And this report 13 is evidence of much hard work, creativity, and 14 thoughtfulness. And we're appreciative of their work and 15 this report. 16 We submitted a letter this morning highlighting 17 some of the recommendations that we find most promising 18 and noting a few that we would not support. So I'm going 19 to just highlight a few of them in my comment, try to keep 20 it to two minutes. And if I miss something, you can look 21 at the letter that we've submitted this morning. 22 We support the general overview theme of the 23 report, that it's important both to have a price on carbon 24 through something like the cap and trade program, and to 25 have complementary regulatory programs. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 164 1 And specifically going through the different 2 sections of the report, we support many of ETAAC's 3 recommendations in the financial sector and we 4 specifically support the promotion of the California 5 Carbon Trust as Bob Epstein explained it. 6 In the transportation sector we strongly support 7 all of the policy recommendations for smart growth and 8 reducing vehicle miles traveled. Considering ETAAC's 9 market expertise, the Committee supports the 10 pay-as-you-drive insurance, congestion charges. And 11 employer-based commute to trip reductions is particularly 12 noteworthy. 13 We also support ETAAC's recommendations for smart 14 growth in transit villages, noting that a regional 15 planning framework with strong incentives for in-fill and 16 transit-oriented development would be effective in 17 reducing vehicle miles traveled. 18 In the industrial, commercial, and residential 19 energy-use section, we strongly support recommendations 20 for increased energy efficiency in the use of renewable 21 energy. However, there's a recommendation to explore 22 direct access or customer choice of electricity service. 23 And we note, as we've noted throughout this process, that 24 there's no evidence that direct access to electricity 25 suppliers would increase renewables. In fact, we think PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 165 1 that it's very possible that direct access could decrease 2 renewables. So we wanted to make that comment to you guys 3 as well. 4 Also, in this sector we strongly support ETAAC's 5 recommendations for recycling and composting. There are a 6 number of them. And all of the recycling and composting 7 recommendations are very important and we strongly 8 recommend them. 9 There's one recommendation, however, that we 10 think is problematic. And that is the recommendation to 11 look at waste conversion technologies. Many of these 12 technologies are largely unproven and frequently compete 13 with or undermine recycling efforts for paper and other 14 combustible materials. 15 In the electricity and natural gas sector, we 16 strongly support measures aimed towards energy efficiency 17 and increasing the renewable portfolio standard to 33 18 percent by 2020. We also support the RETI process, the 19 Renewable Energy Transmission Initiative process. It's in 20 the ETAAC report under the section "Competitive Renewable 21 Energy Zones." We think that this type of coordination 22 could be very helpful. However, we note that any process 23 that would have a foreshortened timeframe for completion 24 of environmental reviews and issuance of permits would be 25 problematic. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 166 1 In the forestry sector, we very much strongly 2 recommend reforestation and forest management proposals. 3 We think those of course would be great for our forest 4 lands as well as GHG emissions in the state. However, 5 there's one recommendation in the linked forest fuels 6 management and biomass utilization that recommends forest 7 thinning as a way to reduce GHG emissions. And we note 8 that there's no evidence that this forest thinning would 9 reduce net GHG emissions. It's not supported by any 10 evidence. And so we certainly don't support that. 11 And then in the water sector, we recommend 12 everything, I think, in the water sector. 13 And I think that I have to hurry up here. 14 CHAIRPERSON NICHOLS: I think you're done 15 actually. 16 MR. HARRIS: And I will say that there are a lot 17 of things also in ETAAC's assessment of the Market 18 Advisory Committee report that we agree with, as noted in 19 our letter. 20 Thank you very much. 21 CHAIRPERSON NICHOLS: Thank you. And appreciate 22 your involvement and your continued involvement in this 23 process. That's the main reason I'm hurrying you along, 24 aside from the fact that we've got a big afternoon ahead 25 of us. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 167 1 Yes. 2 MR. WHILDEN: Thank you. I'm Kevin Whilden of 3 Climos. We are a Bay Area start-up company developing 4 solutions that take CO2 out of the atmosphere. And our 5 current technology is ocean fertilization that we're 6 developing. 7 As we know, the problem with climate change is 8 accelerating with increasing emissions rates. They're now 9 tripling instead of doubling. That means that we need to 10 actually double our emissions reductions to get to where 11 we think we're going to get with our current targets of 12 emissions reductions. 13 Climos as a start-up company, we are moving fast 14 and we've got an announcement. In the next day or two we 15 hope to say that we'll have a -- called their Series 80 16 round of financing $3 1/2 million. And here's what we 17 plan to do with the money. 18 The first thing we'll do is start on 19 environmental impact assessment of ocean fertilization. 20 And this will be the first comprehensive scientific 21 assessment of potential environmental effects, both 22 positive and negative ocean fertilization. This is a 23 technique that can remove large quantities of CO2 from the 24 atmosphere. 25 We will also start convening a series of PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 168 1 scientific workshops with major research institutions 2 around the country to address all of the issues of both 3 the science, the environmental impacts, and how this 4 technique can be used in the carbon markets, particularly 5 how you can quantify the CO2 reductions from this 6 technique in a way that meets all credibility standards of 7 a carbon reduction project, such that you can have the 8 market pay for the science needed to make this project 9 work. 10 CHAIRPERSON NICHOLS: Thank you. You're about 11 finished. 12 MR. WHILDEN: Okay. Thank you. 13 CHAIRPERSON NICHOLS: Thanks. And we'll keep 14 watching your technology. 15 Muriel Strand, Steve Lehtonen, Chuck White. 16 MS. STRAND: Good afternoon, Madam Chair and 17 members of the Board. Thank you for the opportunity to 18 comment. 19 I'm here really just on my own account, but also 20 hopefully the greatest good for the greatest number and 21 for Mother Earth. 22 I wanted to highlight a few of the points that I 23 submitted in my written comments. I hope that the Board 24 will consider extending and broadening the mission of the 25 ETAAC Committee to include more fundamental changes in the PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 169 1 kind of technology that we use. The Committee's mandate 2 as formulated kind of limited them to relatively near term 3 and doing the things that we're currently doing in 4 slightly different ways. And I would advocate that we 5 need to really get more fundamental. 6 The economy really is very simple. We need to 7 get back to basics. We take resources from the planet and 8 we take in each other's washing. We do things for each 9 other with those resources. That's really what's 10 happening. 11 The assumption that new and fancy innovations are 12 what's appropriate is too limited. We need to also be 13 looking at old and traditional technologies, perhaps in 14 the old ways, perhaps using them in new ways. 15 And also when I was in engineering school, 16 there's huge potential in manual non-engine, non-motor 17 mechanisms. I've been riding my bicycle for years. I've 18 probably ridden my current bicycle 35,000 miles without 19 really pushing it. There's a lot that we can do. 20 Efficiency. We need a bigger definition of 21 efficiency. The output is meeting our needs: Clean air, 22 clean water, healthy food, and warms. The input is the 23 resources: The energy. 24 CHAIRPERSON NICHOLS: Thank you. Your time is 25 up. I understand. And we do have your written PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 170 1 presentation. 2 Thank you. 3 MS. STRAND: I had a couple of additional 4 comments that I wanted to make. I heard Dr. Tu yesterday. 5 And the kind of devices that he was advocating were 6 generally very high tech. And there was one in particular 7 that I found, frankly, creepy, the idea of artificial 8 photosynthesis. 9 CHAIRPERSON NICHOLS: Ma'am, that's just not in 10 front of us at the moment. We're not considering any such 11 technology at this hearing. And it's not even in the 12 ETAAC report. So please let others have a turn. 13 Thank you. 14 I'd like to call the next speaker. 15 MS. STRAND: The item that I asked staff to share 16 with you somewhat speaks to this issue, basically a 17 reverence that we all -- 18 CHAIRPERSON NICHOLS: Ma'am, we have your 19 testimony. It was delivered to all of us. 20 Thank you. 21 MR. LEHTONEN: Thank you, Madam Chair and 22 members. My name is Steve Lehtonen, and I'm with Green 23 Plumbers USA. We have a handout that was distributed to 24 you. 25 We're here in support of Section 3D, page 218 of PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 171 1 the Committee's work for Clean Tech Work Force. 2 We are in business right now training plumbers -- 3 retraining plumbers to be green plumbers. And we fit 4 right in with this clean tech idea. However, we are doing 5 it right now. We've trained 300. Our goal is to train 6 15,000 plumbers in the State of California to be able to 7 help the consumers react and respond to the energy and 8 water needs. 9 And we have agreements with the Center for 10 Sustainable Energy in San Diego. They want us to train 11 people so they will have the installers ready to do all 12 these solar installations that are coming up with regard 13 to SB 1. 14 So we're doing it anyway. We'll just be able to 15 train more people faster if you implement this clean tech 16 work force idea because our funds are limited. But, you 17 know, we're very excited. We also want to work with the 18 utilities. I've heard the speakers this morning. We're 19 anxious to work with Sempra and Southern California 20 Edison, because our goal is to reduce the whole water 21 energy cycle. 22 So thank you very much. We look forward to 23 working with you. And thanks for the opportunity to be 24 here. 25 CHAIRPERSON NICHOLS: Thank you. You're one of PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 172 1 the reasons why we're optimistic about our future. 2 Scott Smithline, followed by Charles Helget. 3 Chuck White was next. I'm sorry. 4 Chuck White was Waste Management, then Scott 5 Smithline, then Charles Helget. Sorry. 6 MR. WHITE: Thank you very much, Madam Chair and 7 members of the Board. Chuck White with Waste Management. 8 Waste Management, as I mentioned before on a 9 previous item, is the largest collector of recyclable 10 materials. 11 We both support -- and I'm a little bit concerned 12 about the report -- we support the provisions to 13 encouraging increased recycling and diversion certainly. 14 Although we're concerned about the couple provisions in 15 the report recommending a phaseout of diversion credit for 16 alternative daily cover and a punitive fee on landfilling 17 due to perceived greenhouse gas emissions from landfills. 18 And, in fact, the Air Resources Board has documented over 19 the last 15 years there's been about a ten percent 20 decrease in greenhouse gas emissions from landfills due to 21 the efforts of our sector. In fact, we, Waste Management, 22 and other in the sector supported landfill control 23 measures and an early action measure to do everything we 24 can to show that landfills are emitting a minimum amount 25 of greenhouse gas emissions. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 173 1 I hope there's some focus on the very first part 2 of this Section 4, Waste Reduction, Recycling, and 3 Resource Management. The concluding sentences of that 4 introductory section says, "In conclusion, some of these 5 recommendations do not reflect a full evaluation of the 6 many thoughtful comments offered to the Committee. ETAAC 7 hopes policymakers will continue to study the options for 8 achieving greenhouse gas emission and reductions through 9 waste management technologies and policies." 10 And we look forward to further dialogue, and we 11 hope more focus is given on further work. We believe 12 that -- we would like to have recognition of the Waste 13 Board's organics life cycle analysis to be completed this 14 fall to more fully evaluate how organics are measured in 15 landfills and other methods. And we hope that as this 16 further dialogue goes forward, that you'll solicit and 17 seek comments and involvement of the solid waste sector, 18 particularly on those initiatives that affect how we 19 deliver services to the good people of the State of 20 California. 21 And we do hope that as you do further evaluate 22 these measures, that there's full and objective evaluation 23 of the benefits, impacts, and costs to the public. 24 Thank you very much. 25 CHAIRPERSON NICHOLS: Thank you. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 174 1 Scott Smithline, Charles Helget, Frank Caponi. 2 MR. SMITHLINE: Madam Chair, Board members. My 3 name is Scott Smithline. I'm with the environmental group 4 Californians Against Waste. 5 I just want to start out by saying that we 6 commend the ETAAC process. It was a very valuable process 7 and there was -- a lot of what will be commented on today 8 was discussed at some length in this process. And so I'm 9 not going to be able to go through all five 10 recommendations that we're supporting in the waste 11 reduction and recycling section and support them and rebut 12 potential concerns. But I would just like to say, from a 13 big picture perspective, there is very close to consensus 14 and I would say largely there is reasonable consensus that 15 waste reduction and recycling offers great potential for 16 greenhouse gas reductions. 17 And if you take a look at items J and K, I think 18 they work together as a unit to a certain extent. K is a 19 recommendation for commercial recycling. This is largely 20 an untapped source of materials that we can be recycling 21 in the State of California. We have focused on the 22 residential waste stream more than the commercial waste 23 stream. To do that we will need a mechanism -- two 24 mechanisms potentially. And you've identified two in the 25 ETAAC report. One is a commercial recycling program of PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 175 1 some sort to have businesses come into the commercial 2 recycling loop. The second is a mechanism to give credit 3 for the actual through process of recycling those 4 materials. And that would be J, which is a suite of 5 protocols. So I think those two sort of work together. 6 L, M, and N are really focused on the organics 7 portion of the waste stream. There's two primary ways 8 we're going to have emission reductions by focusing on the 9 organics portion of the waste stream. One is there will 10 be a methane avoidance component if we divert these 11 materials from the landfill. And that component is 12 directly in line with the Integrated Waste Management 13 Board's 2020 goal of reducing landfill and organics by 14 50 percent. 15 The second way is that depending on what we do 16 with these materials, once we divert them from the 17 landfill, we're going to achieve additional life cycle and 18 direct greenhouse gas emission benefits. If we compost 19 this material, we know there are benefits associated with 20 composting - you know, reduced need for irritation, 21 reduced need for synthetic and chemical fertilizers. On 22 the other hand, if we take some of this material to 23 energy, we're also going to get reduced life cycle 24 benefits associated with displacing fossil fuels. 25 You're looking at me like my time is up. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 176 1 I'd be happy to answer any questions. 2 I appreciate your indulgence. Thank you. 3 CHAIRPERSON NICHOLS: We appreciate your 4 involvement in the process, and hope you'll continue. 5 Thank you. 6 MR. HELGET: Madam Chair, members of the Board. 7 I'm Chuck Helget. I represent Allied Waste. 8 And I will simplify things by saying I support 9 the testimony of Chuck White preceding me, and only add 10 that instead of restricting the use of green waste in 11 landfills as it was recommended in the report, we would 12 just suggest that the focus of any regulatory action from 13 the Board should be on market-based strategies that will 14 increase existing markets for compost and mulch and 15 fostering of new alternative technologies in markets such 16 as anaerobic digestion, biofuels and energy production. 17 We look very much forward to working with the 18 Board and with your staff on any regulatory actions that 19 you may be taking. 20 And if there's any questions, I'll be happy to 21 answer them. 22 CHAIRPERSON NICHOLS: Thank you. There will be 23 market strategies as well for sure. 24 All right. Thank you. 25 Frank Caponi, Mark Aprea, Rick Ruiz. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 177 1 MR. CAPONI: Madam Chair, members of the Board. 2 My name is Frank Caponi with the L.A. County Sanitation 3 Districts. 4 I'll take part of my two minutes to thank the 5 Board and the staff for addressing my earlier comments. 6 They were very constructive and I'll bring those back to 7 my agency. 8 I too will support Chuck White's statements and 9 try to save some time here. 10 I just want to say that, you know, during this 11 process we have a lot of difficult issues, and very often 12 policy has clashed with science on a lot of these issues. 13 And we often try to bridge those gaps through dialogue. 14 So we hope that the dialogue continues here. We're not 15 only landfillers in our agency; we're recyclers, 16 composters, so we support all those alternatives. But we 17 think the science needs to be behind the choices for all 18 those alternatives. And we have very deep concerns, and 19 they're expressed in letters that we've sent, that a lot 20 of the statements in here are perhaps more passion that 21 was spoke about earlier than science based. And so as we 22 move forward in this process, we really need to look at 23 the science and base our decisions on science, and try to 24 steer a little bit away from the passion that everyone has 25 here. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 178 1 Thank you very much. 2 CHAIRPERSON NICHOLS: Okay. Thank you. 3 Mark Aprea, Rick Ruiz. 4 MR. APREA: Madam Chair, members of the Board. 5 My name is Mark Aprea with the firm of Aprea and Company. 6 And we're here on behalf of our client, Republic Services, 7 which operates as Richmond Sanitary in the San Francisco 8 Bay Area, Consolidated Disposal in Los Angeles, and 9 Taormina Industries in Orange County. And they are also 10 the operator of the largest material recovery facility 11 west of the Mississippi. 12 We want to express our support and admiration for 13 the staff and for the ETAAC folks in their efforts. But 14 we do want to address one item in particular with which we 15 have disagreement, and that's Item M, which is to end the 16 use of green waste as alternative daily cover for purposes 17 of providing municipalities diversion credit. 18 This item asserts that the use of green waste as 19 ADC provides undue competition to composting and that 20 green waste used as ADC contributes to greenhouse gas. 21 The item also states that the implementation of 22 this recommendation to end the use of ADC in such a manner 23 will be easy. 24 I'd like to use my time to just address a couple 25 of points: And, first of all, to support the comments by PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 179 1 Frank Caponi, Chuck Helget, and Chuck White. But to bring 2 to your attention a market-based reality in terms of green 3 waste. 4 When green waste is delivered to a landfill for 5 purposes of use as ADC, the landfill operator charges a 6 full or partial or reduced tipping fee, and then grinds 7 the material and applies it on the landfill as cover. 8 When that same material is delivered to a compost 9 facility, the compost operator typically does not charge 10 the person who is delivering that a fee. Both uses, 11 whether used as ADC or whether composting, receive equal 12 diversion credit. So a municipality would send it to one 13 place versus the other. And so therefore it would seem 14 that it would be economical for them to send it to a 15 compost facility and not to a landfill for purposes of 16 ADC. 17 The reason that more material is not going to 18 composting as opposed to being used at a landfill is not 19 because of the diversion credit that's provided for at the 20 landfill. There are a lack of composting facilities. And 21 that lack of composting facilities is due primarily to the 22 difficulty of the permitting process, oftentimes relating 23 to air quality issues. 24 So we would encourage the ARB staff and the Board 25 members to focus their attention on finding ways of PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 180 1 getting more composting facilities on line. Because if a 2 municipality has those two options, they will always 3 choose the composting option because it's the lesser cost. 4 We would -- 5 CHAIRPERSON NICHOLS: Mr. Aprea, I'm sorry. You 6 have used your time. 7 MR. APREA: I will conclude and say thank you, 8 Madam Chair and members of the Board. 9 CHAIRPERSON NICHOLS: Thank you so much. And we 10 are going to be pursuing these suggestions that you've 11 made as to how to react to the recommendations. We've 12 learned a lot even since the report has come out. And 13 this is all going to be fed into the groups that are 14 working on the specific recommendation. So just know that 15 this isn't the end of the discussion. 16 MR. RUIZ: Madam Chair, Board members. My name 17 is Rick Ruiz, and I'm representing Capstone Microturbine 18 today. 19 I wanted to thank the members of the ETAAC for 20 the great work they did. I know they've heard that a lot 21 today, but I don't think we could say it enough. 22 Just a couple of quick comments. We were very 23 pleased at the section on combined heat and power. 24 Capstone Microturbines are an ideal technology for use in 25 combined heat and power systems. And the report notes PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 181 1 that there are 7300 megawatts potential that could be 2 provided in California by using combined heat and power, 3 with possibly a 25 to 45 percent efficiency gain. And we 4 think that's real significant. 5 One of the other things that we noted was that 6 the report does not look past current technologies for 7 future technologies. It does a little bit of both. It 8 looks at things that are off in the future. And we think 9 it's particularly important that we not look beyond the 10 things that are in front of us right now, like 11 microturbines and other distributed generation things like 12 combined heat and power. And there are good options for 13 providing those opportunities today. 14 There are some policy things that are going to be 15 happening in the Legislature this year on combined heat 16 and power that we hope that the members of the ETAAC and 17 perhaps members of this Board will be supportive of in 18 terms of increasing the opportunity to get SGIP incentives 19 for certain technologies. 20 But in the future, we expect to be able to play a 21 big part in reducing greenhouse gas emissions in 22 California. We look forward to working with the Board and 23 with other members of the ETAAC in the future if we have 24 that opportunity. 25 So thank you very much. Appreciate it. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 182 1 CHAIRPERSON NICHOLS: Thank you, Mr. Ruiz. 2 Patricia Monahan, Tim Carmichael, and Bill 3 Magavern. And that's the last as far as I know. 4 Patricia Monahan. 5 Okay. And then Tim Carmichael and Bill Magavern. 6 MS. MONAHAN: I'm Patricia Monahan with the Union 7 of Concerned Scientists. It's always nice to be on right 8 before lunch. So appreciate the fact that you guys are 9 still awake. 10 I want to commend members of the ETAAC for 11 producing a very impressive report with a great selection 12 of policy opportunities in every sector of the economy. 13 We recommend that CARB's scoping plan incorporate 14 many of these options. I'd like to highlight the 33 15 percent renewable portfolio standard and the fee bate 16 system to award the purchase of clean cars. The ETAAC 17 report implicitly supports the argument that cap and 18 trade, or as we like to say, cap and auction, should not 19 be seen as a silver bullet. The bulk of the emissions 20 reduction should come from other policies. 21 And we're happy with Dr. Sperling on the Board, 22 that you actually have some technical expertise on certain 23 aspects of why complementary policies are necessary at 24 least for the transportation sector. 25 Now, at the same time UCS supports the inclusion PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 183 1 of a well designed cap and auction program as one element 2 of the scoping plan. A well designed program would 3 auction 100 percent of the allowances and would limit the 4 use of offsets as an alternative compliance option. As 5 the ETAAC report recognizes, such an offset limit would 6 protect against the export of co-benefits and would 7 maximize the incentive for innovation in the cap sectors. 8 The ETAAC proposal for a California carbon trust 9 funded by auction revenue represents a valuable model for 10 channeling investments to global warming solutions that 11 provide the greatest benefits to Californians, especially 12 those living in communities that are disproportionately 13 impacted by pollution. 14 We agree with the ETAAC that the scope of cap and 15 auction should be as broad as possible, which in our view 16 means including the transportation sector from the outset. 17 Thank you. 18 CHAIRPERSON NICHOLS: Thank you. 19 Tim Carmichael and then Bill Magavern. 20 MR. CARMICHAEL: Good afternoon, Chairman 21 Nichols, members of the Board. Tim Carmichael, Coalition 22 for Clean Air. 23 Just a couple of words of appreciation for this 24 Committee. And not only the conclusions in their report, 25 recommendations in their report, but the way they PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 184 1 operated. I only attended a few of the meetings. But it 2 was heartening to see a diverse array of business 3 interests come together with, you know, a can-do attitude, 4 "How do we make this work for the best interests of 5 California and achieve the most reductions as soon as 6 possible?" I expected more of what I hear from some in 7 the industry sector -- some -- where the market mechanism 8 approach equated to flexibility, equated to -- with 9 forgetfulness about the need to achieve pollution 10 reductions at the same time. And it's not just about 11 flexibility. It's about how do we achieve these pollution 12 reductions as quickly as possible. 13 When the Committee members disagreed, they did it 14 with humor and civility. It was a well picked committee 15 and I thought they worked well together. 16 We agree -- as my colleagues have already 17 mentioned, we agree with the recommendations of the 18 Committee on transportation, clean transportation, on 19 renewables, on energy efficiency and innovative 20 approaches. We appreciated the support for the auction 21 approach. We don't think that there's any evidence out 22 there that a strict allowance approach really works. 23 And we also very much appreciated the Committee's 24 inclusion of some components that we encouraged along with 25 allies that to the extent that funds are generated through PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 185 1 this process, that a portion of them are dedicated to the 2 communities that are most impacted to reduce cumulative 3 impacts and achieve maximum co-benefits. That was an 4 important message from a business oriented Committee and 5 we appreciate that very much. 6 Thank you. 7 CHAIRPERSON NICHOLS: Thank you. Perfect timing 8 too. 9 MR. MAGAVERN: Good afternoon. Bill Magavern 10 with Sierra Club California. We did participate in a 11 couple of the meetings, and we really think that this 12 Committee got the big overarching issues right, and I 13 would say particularly keeping our eyes not just on the 14 2020 statutory requirement, but also the 2050 goal, which 15 is really where we need to be to stabilize our atmosphere. 16 And the Governor of course included that in his Executive 17 Order. 18 We also strongly agree with use of auctions as an 19 allocation mechanism and with the importance the Committee 20 places on changing our patterns of growth to grow much 21 smarter. That's absolutely essential. 22 We also think that stimulating green jobs is 23 going to be a crucial part of the California economy. 24 A whole lot of the policy mechanisms, too many to 25 comment on, but we strongly support the 33 percent PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 186 1 renewable portfolio standard, the vehicle fee bates. 2 The award for the most improved section of the 3 report over time definitely goes to the solid waste 4 section. And so we commend the Committee for that, all 5 the hard work they put on that, the emphasis on recycling 6 and composting, and especially in getting organic 7 materials out of the landfills. That's essential to 8 reducing methane emissions. 9 We also urge the Board to be skeptical when it 10 comes to some of the high temperature technologies that 11 are being promoted for cooking our garbage at very high 12 temperatures. We really need to see a lot of emissions 13 data before we'd be comfortable with those. 14 And, finally, on forestry, we agree with NRDC, 15 definitely support for a reforestation. But we should be 16 skeptical of efforts to promote thinning as a global 17 warming solution. Although thinning around communities of 18 course is essential for wildfire prevention. 19 Thank you very much. 20 CHAIRPERSON NICHOLS: Thank you. 21 Seeing no more witnesses, we're going to wrap 22 this item up. 23 I guess my only concluding comment, just in 24 response to what I heard -- but perhaps I should just ask 25 the Chair and Co-chair of the Committee to verify this -- PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 187 1 is that having read the executive summary and much of the 2 report, although I admit I haven't studied it in as much 3 detail as I intend to, it doesn't seem to me that there's 4 anything in the report that suggests that you're not 5 assuming that all of this is going to take place within 6 the context of a market-based program, that there are 7 areas where you would see specific incentives or targeted 8 policies to deal with things that the market doesn't 9 necessarily focus on or need to focus on. I just want to 10 make sure that that's the case. 11 DR. EPSTEIN: That's the correct assessment. And 12 we see the market as a basic thing. But no markets are 13 perfect, and the imperfections particularly in energy 14 market that need to be addressed. So we're certainly -- I 15 mean, you know, I'm a capitalist, I'm proud of it, we 16 believe in markets and, you know -- but we got to be 17 careful that the market won't do everything that you want. 18 CHAIRPERSON NICHOLS: Any additional comments? 19 Supervisor Hill. 20 BOARD MEMBER HILL: One final thing, Madam Chair, 21 if I could. 22 And what an excellent report. Thank you so much 23 for the recommendation, to the Committee. And it's just 24 outstanding. And I like the recommendations as they're 25 written. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 188 1 I thought that Mr. Aprea and the solid waste 2 members, they had some interesting ideas, especially when 3 looking at the composting and in moving forward to provide 4 more facilities and things. So hopefully we'll be able to 5 look at that a little closer as it moves in the next 6 process. 7 CHAIRPERSON NICHOLS: I agree. 8 Before we let you all go, while we don't pay you 9 anything, we do have nice folders with gold seals on them 10 from the State of California, which we would very much 11 like to present to the members of the Committee that are 12 here and send to those who aren't. And I think all of us 13 would like to thank you, congratulate you. And if you're 14 willing to come on up here for briefly the members of the 15 Committee, we'd like to shake your hand and give you your 16 certificate. 17 So thank you very much. 18 (Applause.) 19 CHIEF COUNSEL JENNE: Chairman Nichols, just so 20 we can comply with state open meeting laws, I wanted to 21 mention that after the Board adjourns now during the lunch 22 break, we will be reconvening in closed session as 23 indicated on the public agenda. And the purpose of the 24 closed session will be for Board members to confer with 25 and receive advice from legal counsel regarding a pending PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 189 1 litigation listed on the agenda today. 2 CHAIRPERSON NICHOLS: Thank you very much. 3 (Thereupon a recess was taken.) 4 CHAIRPERSON NICHOLS: This meeting is called back 5 to order. I would ask Mr. Jenne to make an announcement 6 about our executive session. 7 CHIEF COUNSEL JENNE: The closed session of the 8 California Resources Board has concluded. The Board met 9 in closed session to receive advice by legal counsel. We 10 were advised by legal counsel. No action was taken by the 11 Board. 12 CHAIRPERSON NICHOLS: Thank you. 13 The next item on our agenda today and the one 14 most people are here for is 08-2-7, the consideration of 15 the adoption of guidelines for implementing the 16 Proposition 1B funds for reducing emissions from goods 17 movement. I'm going to ask the Executive Officer to 18 present this item. 19 EXECUTIVE OFFICER GOLDSTENE: Thank you, Madam 20 Chairman. 21 The proposed guidelines detail the funding 22 criteria and procedures to implement Proposition 1B funds 23 for cleanup of diesel engines used in the goods movement 24 industry. Once the Board adopts the guidelines, ARB can 25 begin the process of funding projects under the first PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 190 1 installment of $250 million. These funds will enable 2 California to expand the use of cleaner technologies to 3 meet multiple air quality goals, to reduce health risk 4 from diesel particulate, to meet air quality standards, 5 and reduce greenhouse gas emissions. 6 Expenditure of the bond funds will reduce 7 emissions near ports, at border crossings from truck and 8 rail traffic in key goods movement corridors. Of course, 9 it's a challenge to set criteria for any funding program 10 since the need generally exceeds the available dollars. 11 And this program is no exception. However, we should bear 12 in mind the funding level for air quality provided by 13 Proposition 1B is unprecedented. 14 With that, I'd look the introduce Doug Ito to 15 make the staff presentation. 16 (Thereupon an overhead presentation was 17 presented as follows.) 18 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 19 Thank you, Mr. Goldstein. Good morning, Chairman Nichols 20 and members of the Board. 21 I'm pleased to present staff's recommendations on 22 the guidelines for implementation of the Proposition 1B 23 Goods Movement Emission Reduction Program for your 24 consideration. 25 --o0o-- PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 191 1 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 2 Over the next 30 minutes, I will highlight the statutory 3 requirements for the program, describe the proposed 4 structure, summarize implementation elements, discuss key 5 issues raised in the public process, and conclude with 6 staff's recommendations for Board action. 7 --o0o-- 8 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 9 The serious health impacts from freight-related air 10 pollution demand action to protect California residents, 11 especially those living near ports, rail yards, roads with 12 high truck traffic, and distribution centers. The Board's 13 adoption of new regulations for drayage trucks, cargo 14 equipment, harbor craft, and ships at dock establish the 15 framework for ARB's response. This new incentive funding 16 will accelerate the benefits of those programs and provide 17 a powerful tool to spur the transition to cleaner 18 technology in other eligible industries. 19 --o0o-- 20 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 21 Proposition 1B provides for over $19 billion in State 22 bonds for transportation and specifically authorizes the 23 Legislature to appropriate one billion to ARB to reduce 24 emissions and health risk from freight activities. 25 Projects funded with these moneys must achieve emission PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 192 1 reductions not otherwise required by law or regulation. 2 This means that the reductions from regulated sources must 3 be early or extra. 4 In January of 2007, the Governor directed all 5 State agencies administering bond funding to ensure 6 transparency and accountability in their implementation. 7 In August of 2007, the new State budget included 8 the first $250 million in funding and the implementing 9 legislation for this program. 10 Senate Bill 88 created the Goods Movement 11 Emission Reduction Program and Assembly Bill 201 made 12 minor clarifications. 13 SB 88 defines the funding structure and criteria 14 for the program and directs ARB the adopt program 15 guidelines as the first step. 16 --o0o-- 17 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 18 By statute, ARB will work with local public entities 19 involved in goods movement or air quality improvement such 20 as local air districts, sea ports, regional transportation 21 agencies, and possibly others. 22 The local agency partners that receive funding 23 must then solicit and award funds to individual equipment 24 owners in a competitive process. 25 Under Senate Bill 88, funds allocated to a local PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 193 1 agency must be awarded by a contract within a limited time 2 or else the funds revert. Also, once funds are obligated 3 under a grant agreement or contract, if those funds cannot 4 be spent within a specified time period on the designated 5 project, the funds automatically revert, or go back to the 6 account created by Proposition 1B and must be 7 re-appropriated by the Legislature. Neither the local 8 agency nor ARB has the discretion to redirect unspent or 9 returned obligated funds to another project. 10 --o0o-- 11 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 12 Senate Bill 88 requires that program funds be used to 13 reduce emissions from freight movement in four priority 14 trade corridors in California. The Legislature named the 15 trade corridors, and we have more specifically defined 16 them based on to commonly used air quality boundaries 17 shown here. 18 --o0o-- 19 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 20 SB 88 also directs us to reduce criteria and toxic 21 pollutants from diesel emissions used in these freight 22 operations. 23 Our proposal focuses on reducing emissions of 24 diesel particulate matter and nitrogen oxides from all of 25 these sources, as well as sulfur oxides from cargo ships. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 194 1 --o0o-- 2 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 3 Finally, SB 88 provides extensive direction on funding 4 priorities and criteria that ARB must consider. 5 This slide highlights three of the Legislature's 6 primary charges to ARB, beginning with the overarching 7 goal to quickly reduce emissions and health risks in 8 heavily impacted community. 9 The table at the bottom lists a dozen other 10 criteria that ARB is to consider at minimum in 11 implementing the program. We combined these legislative 12 directives with the Governor's emphasis on transparency 13 and accountability, then set out to design a 14 straight-forward effective program. 15 --o0o-- 16 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 17 Shortly after SB 88 was passed in late August 2007, staff 18 launched the public outreach effort. In total, we held 19 eleven public workshops throughout the state as well as 20 focused stakeholder consultation meetings. 21 As the foundation for the one-billion-dollar 22 program, we recommend that the Board establish funding 23 targets for the trade corridors and the emission source 24 categories. These targets would not commit the Board to 25 specific allocations in each future year, but they would PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 195 1 help guide the regions in the development of viable 2 project proposals. 3 --o0o-- 4 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 5 These are the draft funding targets for each trade 6 corridor as published in the January 3rd staff report. We 7 relied on three simple factors: Human population, the 8 emissions from freight movement, and the reductions needed 9 to meet federal air quality standards for fine particles 10 under the State Implementation Plan. 11 I'd like to note that all of the targets 12 displayed on these slides and in the documents include 13 administrative funding for State and local agencies. 14 --o0o-- 15 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 16 In addition to targets for each trade corridor, we also 17 recommend funding targets for each source category or 18 groups of categories as shown here. 19 The purpose of the category targets is to direct 20 the optimum amount of available funding to each type of 21 source, based on its contribution to emissions and health 22 risk. Since trucks have the biggest health impact, we 23 propose that more than three-quarters of the funding be 24 dedicated to reducing truck emissions. The remaining 25 funds are distributed among locomotives, ships at dock, PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 196 1 cargo equipment, and harbor craft. 2 We've been asked if ARB might blend the corridor 3 and category targets together to predetermine the mix of 4 projects to be funded with each appropriation. Staff does 5 not recommend this approach. Instead, we believe it is 6 important to let each local agency identity its air 7 quality priorities and apply for funds that can provide 8 the greatest potential benefits. 9 Following each appropriation of funds, local 10 agencies would submit project proposals for each category 11 of interest. Agencies in the same corridor, applying for 12 the same funding category, would compete for funding. The 13 guidelines encourage local agencies to submit their most 14 effective, well developed proposals. 15 --o0o-- 16 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 17 Within each source category shown in blue, we are 18 proposing that program funds be available for a number of 19 project types, called equipment project options. These 20 options, shown in magenta, are based on the list from 21 Senate Bill 88 and are specific to fiscal year 2007-2008 22 funds. Staff proposes to re-evaluate the list of options 23 following each appropriation. 24 In some cases, the statute lists projects, like 25 retrofits for harbor craft, which are not yet feasible. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 197 1 Once retrofit devices for these sources are demonstrated, 2 verified by ARB, and commercially available we will 3 evaluate them for addition to the program. 4 --o0o-- 5 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 6 For each equipment project option, staff developed a 7 comprehensive set of specifications. The guidelines 8 detail the eligibility of old equipment, the requirements 9 of upgraded equipment, deadlines to complete the upgrades, 10 funding caps, and accountability measures to ensure that 11 program funds achieve the intended emission reductions. 12 One key provision would require bond funded projects to 13 operate solely in California. 14 --o0o-- 15 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 16 The funding caps for each equipment project option will 17 ensure that State bond funds are leveraged to the maximum 18 extent possible, while offering a valuable incentive to 19 quickly transition to cleaner equipment. These match 20 dollars can come from the equipment owners, the local 21 agencies, or other sources. 22 Local air districts have expressed an interest in 23 using their AB 923 or discretionary Carl Moyer program 24 moneys. 25 Based on that statute, we believe that these PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 198 1 discretionary Moyer funds could be used to supplement bond 2 funding for truck projects that also meet the Moyer 3 project eligibility criteria. However, combining these 4 funds to provide a higher subsidy for the same project 5 would diminish the total number of upgrades that could be 6 accomplished under the two programs. 7 Since these AB 923 funds would otherwise be spent 8 under the Moyer program guidelines, staff recommends that 9 they be considered State funds in the competitive process. 10 This process is intended to maximize the non-State funds 11 used to match and complete the project. 12 --o0o-- 13 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 14 If a local agency wants program funding, the agency must 15 submit an application for each source category that 16 identifies the equipment project options they are 17 interested in. This is an example of a local agency 18 submitting two applications for two projects. The first 19 for other truck retrofits and replacements and the second 20 for harbor craft, tug, and towboats. 21 --o0o-- 22 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 23 These applications are the basis for ARB's funding 24 decisions. In the application, a local agency must 25 demonstrate its qualifications. Since the guidelines PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 199 1 require a local agency to solicit equipment projects 2 across the entire trade corridor, the agency must show its 3 ability to successfully run a regional scale incentive 4 program. The proposed guidelines detail the application 5 requirements summarized on this slide. 6 --o0o-- 7 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 8 SB 88 authorizes ARB to designate up to 5 percent of the 9 grant awards to be used for local administration. To 10 maximize the dollars going towards cleaner equipment, 11 staff is proposing caps on the administration funds for 12 the source categories that are less resource intensive. 13 Staff is also proposing to restrict a local agency's 14 ability to claim administration funds if it has the 15 ability to impose fees on freight movement sources. This 16 would specifically apply to seaports. 17 --o0o-- 18 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 19 Once local agencies submit their project applications to 20 ARB, staff begins the process of evaluating and ranking 21 them to develop funding recommendations. 22 Competition is between local agencies within the 23 same corridor that are applying for funds in the same 24 category. The competitive process is based on two equal 25 factors. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 200 1 The first is the NOx and PM emission reductions 2 achieved in California over the life of the project. The 3 PM benefits are weighted by a factor of 20, like the Carl 4 Moyer program. 5 The second factor is a cost effectiveness and 6 match component based on the same weighted emission 7 reductions per State dollar invested. 8 Once projects are competitively ranked, ARB staff 9 will consider the funds available in that cycle for all 10 projects, the corridor and category funding targets, the 11 Board's funding priorities, and public input to develop 12 the recommended funding levels for each project. The 13 staff may recommend that the top project be funded in 14 whole, in part, or not at all in that funding cycle based 15 on these factors. 16 If funds are recommended for that trade corridor 17 and that source category, at least partial funding must go 18 to the top ranked project. By statute, the Board will 19 then hold a public hearing to consider public testimony 20 and adopt a list of local agency projects for funding. 21 The Board may choose to award funds to more than one local 22 agency in the same corridor for the same source category 23 in order to expedite implementation. Once the board 24 adopts the list of projects and funding levels, ARB staff 25 will execute grant agreements with local agencies. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 201 1 --o0o-- 2 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 3 This is a hypothetical example to illustrate how local 4 agencies compete within a corridor. In this example, we 5 have seven local agencies, A through G, submitting 6 application for the other truck category. 7 Let's look at local agencies B and C competing 8 for truck funds to be administered in the central valley. 9 If we assume local agency C has the top ranked project, it 10 receives full or partial funding. Staff may also 11 recommend funding for local agency B because of the 12 opportunity to upgrade more trucks faster with two capable 13 agencies running programs at opposite ends of the valley. 14 In the L.A./Inland Empire, local agency E has the 15 top ranked project and receives funding. But the less 16 competitive project from agency B may not be awarded any 17 funding. 18 --o0o-- 19 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 20 SB 8 defines the maximum time frames for local agency 21 action. The proposed guidelines would establish shorter 22 deadlines where feasible to ensure that funds are invested 23 in cleaner equipment to reduce emissions as quickly as 24 possible. 25 --o0o-- PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 202 1 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 2 This slide summarizes the process a local agency must 3 follow under the proposed guidelines to select individual 4 equipment projects for funding. 5 The agency would solicit applications from owners 6 of eligible equipment operating in the trade corridor, 7 regardless of where in California that equipment is based. 8 The guidelines require an extra level of outreach to 9 independent truck owner/operators. 10 The local agency then evaluates and competitively 11 ranks all of the eligible applications within the same 12 funding category. The competitive criteria and ranking 13 process are the same as described for ARB consideration of 14 the local agency projects. 15 The local agency must fund equipment projects 16 starting from the top of the competitively ranked list 17 until the funds are exhausted. Any unfunded projects on 18 the ranked list may be used as backups. 19 Let's look at an example of the process a local 20 agency would use to implement a port truck project. 21 --o0o-- 22 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 23 This example assumes the ports of L.A. and Long Beach 24 receive funding for trucks serving those ports in the 25 L.A./Inland Empire corridor. The point here is to PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 203 1 highlight the fact that the ports must accept applications 2 from any eligible truck, regardless of where that truck is 3 based. The ports may choose to use several contractors to 4 implement the program. 5 As a local agency administrator, the ports can 6 use these contractors to solicit applications. But the 7 truck applications received by all the contractors, from 8 all regions, must be competitively ranked on a combined 9 list. The truck projects that will be administered by 10 each contractor are determined by the results of the 11 competitive ranking. 12 --o0o-- 13 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 14 Public participation is an essential element to a 15 transparent and accountable program. During the 16 development of the program guidelines, we received 17 numerous suggestions from environmental and community 18 groups on how to expand the opportunities for the public 19 to access information, to provide input on decision 20 making, and receive feedback on progress. Many of their 21 suggestions are incorporated in the guidelines. 22 --o0o-- 23 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 24 Although the program is focused on cutting criteria and 25 toxic pollutants to reduce the direct health impacts, it PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 204 1 will also lower greenhouse gasses to meet California's 2 emission reduction goals under AB 32. 3 --o0o-- 4 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 5 The proposed guidelines include numerous provisions to 6 ensure that the program funds deliver the expected 7 results. Just yesterday, the Department of Finance 8 approved the three-part accountability structure required 9 by the Executive Order S-02-07 for this program that is 10 based on the verification, inspection, audit, and other 11 provisions of the guidelines. 12 Now that we've considered the program structure 13 and key requirement in the proposed guidelines, I'd like 14 to move on to some critical implementation elements. 15 --o0o-- 16 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 17 This slide shows staff's recommendations on priorities for 18 fiscal year 2007-08 funds: Local agency projects that can 19 be implemented quickly; truck retrofit projects to 20 immediately reduce health risk by installing PM filters; 21 and truck replacement projects at the ports of L.A. and 22 Long Beach to benefit the heavily impacted communities 23 around the ports and along the truck corridors to 24 intermodal or distribution facilities. 25 --o0o-- PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 205 1 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 2 Senate Bill 88 makes available no more than $25 million of 3 the fiscal year 2007-2008 funds to fast track eligible 4 projects to achieve the earliest possible health risk 5 reduction. 6 Staff requested proposals from air districts with 7 experience running the Carl Moyer program. Five districts 8 submitted over $170 million worth of proposals for this 9 $25 million in early grants. 10 We recommend partial funding for truck projects 11 in each district that can be largely completed over this 12 summer and the Bay Area shore power project at the port of 13 Oakland. 14 --o0o-- 15 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 16 As proposed in the guidelines, the full one billion dollar 17 program would significantly reduce emissions, with the 18 greatest benefits occurring in communities located near 19 goods movement facilities. 20 --o0o-- 21 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 22 This slide shows the anticipated schedule for program 23 implementation. 24 Once the Board adopts the program guidelines, 25 staff will prepare and release a final version of the PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 206 1 guidelines and issue a Notice of Funding Availability to 2 begin the process of soliciting applications from local 3 agencies. We will concurrently post the project benefits 4 calculator for each source category. These are spread 5 sheet tools for local agencies to use in estimating the 6 emission reductions from each proposed project. 7 In a public process, we expect to bring funding 8 recommendations to you for the remaining $225 million at 9 the May Board hearing, with local agency implementation 10 starting shortly thereafter. 11 The Board's action today on the program 12 guidelines is critical to ensure that the full $250 13 million can be obligated to local agencies prior to the 14 end of the fiscal year on June 30th. 15 --o0o-- 16 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 17 Most of the equipment projects eligible for funding under 18 this program are subject to either existing or proposed 19 ARB requirements. This slide illustrates whether the 20 benefits to be achieved with the program funds would be 21 early, extra, or both. 22 --o0o-- 23 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 24 The pioneering Carl Moyer program run by local air 25 districts and ARB offers incentive funding for projects PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 207 1 that are also eligible for bond funds. To ensure that 2 these two funding programs are complimentary, the proposed 3 guidelines for both programs would require that an 4 equipment owner choose up front whether to apply for funds 5 through the Moyer program or through the bond programs. 6 --o0o-- 7 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 8 The final section of the presentation covers key 9 stakeholder issues raised and suggested changes to staff's 10 proposal. 11 For the first issue listed, the equipment project 12 specifications, we are recommending changes in response to 13 public comment and will discuss them in detail on the 14 following slide. Stakeholders have frequently raised four 15 other issues in the workshops and the written public 16 comments. 17 Some equipment owners and local agencies oppose 18 the requirement that bond funded equipment should remain 19 in California operation for most of its useful life. 20 Commenters point out that some trucks and locomotives 21 operating primarily in California also routinely travel 22 into Nevada, Arizona, and Mexico. We recognize these 23 travel patterns. However, we believe California residents 24 should realize 100 percent of the benefits of cleaner 25 equipment funded with California bond moneys, so long as PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 208 1 there is sufficient demand for project funding. We 2 propose to re-evaluate this requirement in each funding 3 cycle. 4 Throughout program development, some stakeholders 5 have pushed for a greater level of funding for each 6 equipment project and a shorter project life. Staff is 7 recommending project funding levels at the high end of the 8 ranges we initially proposed and does not support further 9 increases. Rising the funding caps would result in fewer 10 diesel trucks, locomotives, harbor craft, and other 11 equipment being upgraded under the program. 12 We've heard business concerns about uncertainty 13 and committing to a lengthy contract term. In response, 14 we've included several pro rated options that would allow 15 the equipment owner the choice to request half the maximum 16 funds for half the project life. 17 We received several comments urging early grant 18 funding for a liquefied natural gas truck project proposed 19 by the South Coast Air Quality Management District. The 20 district submitted over $130 million in written project 21 proposals for this $25 million program, with no priorities 22 identified. Those proposals included two projects to 23 replace old port trucks with new trucks meeting 2007 24 emission standards. The first program focused on diesel 25 trucks under a lease-to-own program to be run by Cascade PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 209 1 Sierra Solutions. The second program focused on liquefied 2 natural gas trucks to be manufactured by the Freight Liner 3 company and leased to port truck drivers through Cal 4 Cartage. 5 As proposed in the district's early grant letter, 6 the LNG project was not the most cost effective option. 7 ARB staff recommended approval of the Cascade project and 8 continues to believe the choice is appropriate based on 9 the district's written proposal. You'll hear additional 10 information on the public testimony on the specific of the 11 Freightliner LNG project. 12 The next key issue being raised by local agencies 13 is the requirement that program funds revert back to the 14 bond accounts if a contract falls through or the agency is 15 unable to spend funds on the required schedule. ARB does 16 not have the discretion to change this requirement. It is 17 explicit in SB 88. 18 --o0o-- 19 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 20 The final issue relates to the emissions inventory for 21 trucks used in calculating the corridor funding target. 22 Some public comments have strongly recommended use of the 23 emission inventory in the recently adopted SIPS for the 24 South Coast and San Joaquin Valley. This would result in 25 the change noted on this slide in yellow. Staff sees some PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 210 1 logic in making this change if the Board so desires. 2 --o0o-- 3 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 4 We are also proposing changes to the equipment project 5 specifications in response to public comment. In the 6 other truck category, the change would allow 1997 and 7 older trucks to be eligible for first year bond funds. 8 In the locomotive category, we propose to adjust 9 the performance standard for the new gen-set switchers to 10 include a safety device in the bond eligible costs and to 11 limit the scrappage requirement to the engine block of the 12 old locomotive. 13 In the shore power category, we are updating the 14 specifications to allow non-grid based power projects 15 access to bond funding consistent with the approved shore 16 power regulation. 17 We are also adding an option for pro rated 18 funding and project life to the harbor craft category in 19 response to comments. 20 --o0o-- 21 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 22 In addition to the modifications I've just described, 23 staff is proposing to make minor technical clarification 24 that help implement the changes and clean up some details 25 to ensure internal consistency. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 211 1 --o0o-- 2 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 3 We conclude with staff's formal recommendations for Board 4 action. The first recommendation is to direct staff to 5 evaluate the need to update the guidelines, including the 6 project specifications with each funding appropriation. 7 We further recommend that the first update to the 8 guidelines include an assessment of the feasibility and 9 mechanisms to fund loan programs with bond moneys. Also 10 an evaluation of the 100 percent California operation 11 requirement, including the potential for tracking devices. 12 --o0o-- 13 GOODS MOVEMENT STRATEGIES SECTION MANAGER ITO: 14 In conclusion, staff recommends that the Board adopt the 15 proposed guidelines, funding targets, and priorities with 16 modifications as proposed by staff. And adopt the 17 proposed list of local agencies projects for $25 million 18 in early grant projects. 19 This concludes the staff presentation. Thank 20 you. 21 CHAIRPERSON NICHOLS: Thank you. 22 Do you have any concluding remarks before we hear 23 from Board members or go straight to public comment? 24 I would like to see a list of how many people 25 have signed up for comment so I have a better sense of how PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 212 1 we're going to allocate our time here. 2 EXECUTIVE OFFICER GOLDSTENE: We have at least 50 3 people who have signed up to speak. 4 SECRETARY ANDREONI: 62. 5 CHAIRPERSON NICHOLS: And we know that if we 6 impose a three-minute time limit, by the time you add in 7 the time that people take getting up and sitting down, et 8 cetera, it really is more than that. So that's more hours 9 of time than we have time for people to be here. We will 10 be here long into the night, and I don't think that's 11 going to be particularly helpful to the Board's 12 decision-making process. 13 Can you give me the list, please so I can take a 14 look at this? 15 We have already imposed the courtesy or extended 16 the courtesy of hearing from legislators ahead of anybody 17 else in the cue. And I know we have one legislator who's 18 has asked to speak -- we now have two that wish to speak. 19 Why don't we hear from you first while we're sorting out 20 the time limits for everybody else then. Thank you. 21 ASSEMBLYMEMBER RUSKIN: Good afternoon, Chair 22 Nichols. Thank you very much for the courtesy of allowing 23 me to speak at this point. I'm Assemblymember Ira Ruskn, 24 and I'm here speaking on behalf of my legislative 25 colleagues in the Bay Area. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 213 1 You have the letter signed by every Senator and 2 every Assemblymember from the Bay Area. And I'm here 3 speaking for them. We are all in agreement. 4 Let me first thank you for the critical public 5 health work that you and your staff do and for all your 6 efforts for clean air. 7 Certainly we all appreciate that the voters have 8 approved one billion dollars to cut emissions from goods 9 movement. You may know that support from Proposition 1B 10 was actually highest in the Bay Area. The fact that 11 you're hearing disagreement today over how the funds 12 should be distributed biographically just indicates how 13 large a source of pollution this is and how important it 14 is to spend the limited funding as wisely as possible. 15 I'm going to be brief. I know I appreciate 16 brevity when I'm on the other side of the microphone. 17 I'm here today in response to a request from 18 Central Valley legislators and the San Joaquin Air 19 District that you revise your staff's proposed regional 20 funding targets, increasing funding to the Central Valley 21 at the expense of the Bay Area and the South Coast. 22 My colleagues and I cannot disagree more strongly 23 with this request, and we call on you to reject it. 24 Twenty percent of the statewide goods movement emission of 25 NOx and fine particles unfortunately occur in the Bay PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 214 1 Area. We have the fourth largest port in the entire 2 country with all of the associated pollution. 3 While the risk assessment for the port of Oakland 4 is unfortunately now well over a year over due, your staff 5 are aware of the unacceptably high burden it places on 6 adjacent communities. We have higher risk in the Bay Area 7 from higher air toxics generally and diesel particulates 8 specifically than anywhere in the state except in the 9 South Coast basin. Per your own almanac of emissions in 10 air quality, our diesel risk is 23 percent higher than 11 that in the Central Valley. Even worse, we have roughly 12 twice as many people experiencing the higher risk. We 13 have 22 percent of the population in the goods movement 14 corridors. 15 You can therefore understand that we are very 16 disappointed to see that your staff had proposed that the 17 Bay Area receive only 14 percent of the funding. We 18 believe the region should actually receive about 20 19 percent of the funding. 20 Let me say we recognize the magnitude of the 21 Central Valley's problems with attaining federal standards 22 and the severity of their problems. But I would point out 23 to you the language that we in the Legislature adopted to 24 guide you as you set this program up. The guidelines are, 25 "To maximize the emission reduction benefits, achieve the PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 215 1 earliest possible health risk reduction in heavily 2 impacted communities, and provide incentives for the 3 control of emission sources that contribute to increased 4 health risk in the future." 5 Page 49 of your report shows how to maximize the 6 benefits. Shore power and harbor craft projects are the 7 most cost effective. The directive on risk reduction in 8 heavily impact community is a strong signal to focus the 9 cleanup efforts on communities adjacent to the ports. And 10 the emission sources with the biggest affect on increased 11 health risk in the future are ships. 12 In conclusion, we believe the Bay Area deserves 13 more funding than your staff have recommended. However, 14 we urge you in the strongest possible fashion certainly 15 not to cut the Bay Area, or for that matter the South 16 Coast, below your staff's target. Thank you very much. 17 CHAIRPERSON NICHOLS: Thank you, Mr. Ruskin. 18 Appreciate your patience. 19 Mr. De Saulnier. 20 ASSEMBLYMEMBER DE SAULNIER: This is a -- did you 21 want to say something, or should I wait for comments from 22 my former colleagues? 23 CHAIRPERSON NICHOLS: No. Everybody else want to 24 speak. 25 ASSEMBLYMEMBER DE SAULNIER: Nothing has changed. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 216 1 You still don't let the -- never mind. 2 I am Assemblymember Mark DeSaulnier, former 3 member, sitting out in the audience with former chair John 4 Dunlap. And we joked as McCarther might have said what 5 happens to former Board members? They don't die or fade 6 away. They become lobbyists or Assemblymembers, Mr. Hill. 7 So I won't repeat what Ira said. I just wanted 8 to say that having gone through the same similar issues 9 with DeeDee and Barbara Patrick like particularly in the 10 relationship with the Bay Area and transport to the 11 valley, we want to work with you, the delegation. We are 12 committed to work with our partners in the valley and the 13 Assembly delegation and Senate. 14 The one thing I think that will come with this is 15 we will communicate better in the building amongst 16 ourselves before we come over here. We will do some of 17 the things we did when we were over here. We're not 18 insensitive to public health needs and risks of the 19 Valley, certainly not also of our colleagues in South 20 Coast. But as Ira says, we have a sizable population and 21 a sizable challenge. So we'd at least like you to stay 22 with staff's recommendation. 23 And for that mind, for those of us in the 24 building who think we should go out for another effort to 25 get more money, I think we do have to acknowledge the PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 217 1 political reality of where those votes come from. 2 So with all due respect, thank you for listening 3 to me. 4 And I do want to point out if Charlyne is 5 watching in the back, I got in the building by using my 6 ID. If you don't vote the right way, when I'm -- well, I 7 seriously doubt I'll be here when I'm 62 -- when I get 8 through speaking, I'm going to see if I can get in the 9 back with this still. Thank you. 10 CHAIRPERSON NICHOLS: Thank you. You're here on 11 a very good occasion celebrating our 40th anniversary. 12 I want to ask staff to address a question right 13 now if you can. Because these funding targets obviously 14 are the source of a lot of unhappiness. As you've said 15 before, there's not enough money to go around. And 16 everyone has an argument about why their share should be 17 greater. Not necessarily that somebody else should be 18 less, but they deserve more. We all deserve more. 19 But the real question that I have has to do with 20 where the impacts are likely to occur. Because several of 21 the comments that we've heard seem to suggest that if 22 money is spent in a particular region, that's where the 23 benefits are going to accrue. When we're talking about 24 goods movement, we know that certainly money that is spent 25 at the ports themselves is going to primarily deal with PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 218 1 equipment at the ports. And the risk reduction is going 2 to be primarily for people who live within a reasonable 3 range of the port. 4 But when we're talking about these corridor 5 programs and the things that effect trucks, which by their 6 very nature move around, just as the Valley gets a lot of 7 traffic and pollution that comes from outside their area, 8 they would also presumably experiencing benefits from 9 reductions that come from trucks that don't necessarily go 10 home at night to the Valley. And I'm just wondering if 11 you can give us any kind of an assessment not knowing for 12 sure what these projects are going to be, but can you help 13 us understand how this is likely to actually work out? 14 ASSISTANT DIVISION CHIEF MARVIN: Certainly. 15 What we know at this point is that the program is 16 structured so that both for trucks and locomotives that 17 are traveling in multiple corridors the criteria for 18 deciding which one of those projects would be funded are 19 the emission reductions that are achieved throughout the 20 state, not just the emission reductions that are achieved 21 locally. That's one of the primary ways of determining in 22 the competitive process which projects get funded. 23 We have taken a look quite recently at the data 24 we have from surveys that truck owners have filled out as 25 part of the development of the private truck fleet rule to PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 219 1 look at what sort of activity there is from fleets 2 registered in the Valley traveling to other corridors and 3 vice versa. And what we found is that for the roughly 700 4 fleets that provided information in these surveys quite 5 recently, 21 percent of those fleets indicated that they 6 are based outside the Valley, but they travel within the 7 Valley. And roughly 30 percent of the fleets indicated 8 that they are based in the Valley, but they travel in 9 other corridors. 10 So what that confirms is what we expected. There 11 is a lot of transport back and forth, a lot of travel back 12 and forth. And with the structure of the program, these 13 trucks would be eligible to apply for funds that are 14 administered in any corridor. And those agencies would be 15 looking at the overall benefits from the replacement or 16 the upgrade of that truck. So we think that overall 17 structure would provide additional benefits for the areas 18 where trucks typically travel, including the Valley as the 19 primary north/south route. 20 CHAIRPERSON NICHOLS: Thank you. 21 Okay. I'm going to make a suggestion and see if 22 my fellow Board members are willing to go along with me in 23 the interest of time here. 24 We have quite a number of witnesses who have said 25 they are in favor of the staff proposal. And while it's PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 220 1 always nice to hear from those people, if they're in favor 2 of the staff proposal, I don't think we need to take a lot 3 of time to hear why they're in favor of the staff 4 proposal. We generally speaking like our staff and tend 5 to give a lot of deference to their proposal. So I think 6 what we really we need to hear is people who have 7 criticisms and specific suggestions for changes that they 8 want to see made. And then we can decide, you know, 9 whether we agree with those changes or want to make 10 suggestions for how to change them. 11 Supervisor hill. 12 SUPERVISOR HILL: Thank you, Madam Chair. 13 I have one concern with that. And I think it's a 14 great of idea in the essence of time. But if those people 15 are here to speak in support of the recommendation and 16 others will be speaking with changes perhaps for the 17 recommendation, the people that are here supporting it 18 will not have an opportunity to share why they think it 19 should not be changed. 20 CHAIRPERSON NICHOLS: That's true. Perhaps we 21 can ask them to wait or -- 22 SUPERVISOR HILL: That's fine. I was concerned 23 about that part of it that they may not have that ability. 24 CHAIRPERSON NICHOLS: They may wish to speak 25 against the changes. I've had some indications in advance PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 221 1 that a number of the groups that are here are just 2 supportive of the program in general and don't want to 3 take sides on some of the specific alterations that people 4 are suggesting, which I think is a great position to be 5 in. But unfortunately we're the ones that have to make 6 the decision. 7 BOARD MEMBER RIORDAN: Maybe we could hear, as 8 you recommend, those who have specific concerns and ideas 9 of changes and then we can deal with what follows. 10 CHAIRPERSON NICHOLS: That sounds good to me. 11 This isn't a definitive answer for all time. But I would 12 short calling then on these who have indicated they oppose 13 if they have specific changes they wish to see made in the 14 proposal. 15 And that would bring us I think to number four on 16 my list, Councilwoman Tonia Reyes Uranga, followed by 17 Jennifer Gress. 18 COUNCILWOMAN URANGA: Good afternoon. My name is 19 Tonia Reyes Uranga. I'm a member of the South Coast AQMD 20 Governing Board, representing 51 cities of Los Angeles 21 County Western Region. I'm also the city council person 22 for the city of Long Beach the represents the 23 neighborhoods along side the ports of Los Beach and Los 24 Angeles. As you know, they are heavily impacted by 25 unhealthful emissions and by magnified cancer risks which PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 222 1 have been verified by your very own detailed health risk 2 assessments. 3 As a policy maker, I understand the difficult 4 decision you make regarding allocation of Prop 1B 5 mitigation funds. My experience in partnering with your 6 Board in recent months tells me you will strive for 7 fairness in your decision by reflecting the original 8 intent of this important legislation. And that intent as 9 I quote, "To give priority to emission reductions projects 10 that achieve the earliest possible health risk reductions 11 in communities with the highest health risk from goods 12 movement." 13 When our agency first reviewed your staff's 14 proposed allocation for our region, we knew the proposed 15 55 percent of available funding would be viewed by some 16 other regions as too high a relative percentage. We also 17 knew, however, that the objective health risk data would 18 confirm your proposed allocation. As a matter of fact, 19 simply stated our transportation corridor easily justify a 20 still higher percentage of funds based upon our extreme 21 health impacts associated with goods movement. 22 In a moment, our executive officer will present 23 such information and will do so using CARB's own data. We 24 could use more dollars for our air cleanup efforts like 25 everyone else. We sincerely appreciate the coming PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 223 1 together of our two agencies during the 2007 SIP process 2 and the joint commitment that each agency made to work 3 together to achieve our attainment goals. 4 So while we ask you to consider allocating more 5 funds to the LA/Inland Empire corridor based on highest 6 health risks, let my testimony reflect one critical point. 7 It would be contrary to the legislative intent of 8 Proposition 1B for your Board to allocate anything less 9 than 55 percent contained in your original staff 10 recommendations. 11 And I have here two letters, 36 signatures for 12 the Southern California delegation, Republicans and 13 Democrats, who are asking you, legislators asking you to 14 please keep with the original recommendation. And just in 15 closing I'll quote from their letter. "Any allocation 16 lower than the originally proposed 55 percent to the Los 17 Angeles/Inland Empire/Orange County region would not be 18 fair to the people we represent." 19 And it wouldn't be fair to my constituents as 20 well. Thank you. 21 CHAIRPERSON NICHOLS: Thank you for your 22 testimony and keeping it within three minutes. 23 BOARD MEMBER LOVERIDGE: Madam Chair, could I ask 24 for those signatures to be circulated? 25 CHAIRPERSON NICHOLS: Please, would you submit PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 224 1 those. 2 Could I ask the staff, have we got a list that 3 you can distribute to the Board members? You gave me a 4 speaker list. They're making the copies. Because 5 everybody is going to want to follow along here. 6 While you're distributing those, I'm going to 7 call on Jennifer Gress. Is she here? Representing 8 Senator Lowenthal? She would be followed by Bruce Kern 9 according to my list. 10 MS. GRESS: I think was Barry Wallerstein going 11 to do a presentation in conjunction with the 12 Counselwoman's? 13 CHAIRPERSON NICHOLS: No one told me. But if he 14 wants to, I'm willing to let that happen. But where you 15 were signed up, Barry was a little further down the list. 16 Like you would be the next person after Bruce Kern. So it 17 would be two more ahead of you. Is that okay? Can we 18 live with this? 19 MS. GRESS: That's fine. I heard the 20 Counselwoman indicate she was going to have Barry present 21 some data. So I just wanted to defer to him if he wanted 22 to. 23 CHAIRPERSON NICHOLS: Okay. Well, let's just go 24 ahead as we are. 25 MS. GRESS: Madam Chairman and members, I'm PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 225 1 Jennifer Gress with the Senate Transportation and Housing 2 Committee. I'm here on behalf of Senator Lowenthal who 3 sends his regrets he is not able to be here this 4 afternoon. 5 My comments will address the one issue I think 6 many people will talk about today, which is the corridor 7 funding targets. Senator Lowenthal strongly urges this 8 Board to reject the staff's new recommendation to provide 9 the L.A./Inland Empire corridor just 51 percent of the 10 funds, which represents a reduction in funding from the 11 funding targets in the previous publicly available 12 guidelines. 13 I think as we've heard already, the overriding 14 objective of this program as articulated in the 15 implementing legislation and in ARB's staff report is to 16 reduce the health risks of goods movement. A 51 percent 17 funding share for the L.A./Inland Empire corridor does not 18 appear to be in keeping with this objective. The factors 19 that staff proposed, population, SIP commitments, and 20 percentage of goods movement emissions do not directly 21 capture health risk. 22 In addition to the substantive concern, that this 23 recommendation was made public for the first time today 24 is, to put it mildly, troubling. The draft guidelines 25 which had included corridor funding targets has been PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 226 1 available for public review for almost three weeks. It 2 seems hasty to make a change to the one issue most present 3 on everyone's minds on the day the Board seeks to adopt 4 these guidelines. 5 For these reasons, Senator Lowenthal strongly 6 urges this Board to reject the staff's new recommendation 7 regarding the corridor funding targets and instead adopt 8 the original corridor funding targets expressed in the 9 draft guidelines. 10 If, however, the Board finds itself sympathetic 11 to the San Joaquin Valley and to the staff's new 12 recommendation, Senator Lowenthal requests that you put 13 off consideration of this item today so these new funding 14 targets and the methodologies used to create them can be 15 scrutinized in the same manner as the previous corridor 16 shares. Thank you. 17 CHAIRPERSON NICHOLS: Thank you. 18 Can I just make something clear? At least I hope 19 I can help make it clear. 20 First of all, what I heard the staff recommending 21 was their original -- they presented their original 22 recommendation. Yes, they did. They also said they had 23 heard the recommendation for changing to something based 24 on the SIP. And they presented that as an alternative 25 that the Board could consider. They did not state that PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 227 1 was a change in their recommendation for the allocations. 2 If I'm wrong about that, please correct me. I'm 3 not wrong about that. I'm stating the facts as they were 4 presented here to us. I was listening very carefully and 5 watching the presentation. 6 So if there's a shift here that's made by the 7 Board, it's made by the Board, not by the staff. 8 The second thing I want to say to everybody who's 9 listening in the audience is that all of us who are here 10 are human beings. And whatever sympathies we have, we 11 bring with us to our work. But if there's one thing I 12 want to be very clear about and I think I can be very 13 confident about it is that my fellow Board members are 14 here to try to make a decision based as best they can on 15 the language of the bond and the intent of the bond and 16 the best information they can get about what is an 17 allocation formula that will accomplish that goal. If we 18 could avoid doing that and not ever come up with any 19 problems, we probably like to do it. That would be our 20 preference. But since we apparently can't do that in the 21 interest of getting money out quickly and efficiently, we 22 do have to come up with some targets. 23 But you know, the staff has presented us with a 24 rational for the decisions that they proposed, the 25 recommendation they proposed. If we make a change in PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 228 1 that, it's going to have to be based on a rational that is 2 compelling to the Board members. And I think I can look 3 around and see that none of these people are going to make 4 a decision based on anything other than what they think is 5 the best, logical, reasonable, fair, technical based 6 argument that's going to get us the most air quality 7 benefits as fast as possible. 8 I'm taking advantage of your presence at the 9 microphone to make that statement. I'm also saying it 10 because we've heard from now a number of legislators and 11 I'm sure we're going to hear from representatives of other 12 regions as well. If we had wanted to base this on the 13 vote, we could just look at where the votes in the state 14 are from and allocate the money that way and save 15 ourselves a lot of trouble. We're going through all of 16 this analysis, because we're actually trying to bring more 17 science and more public health into the mix. 18 So I hope I can speak for all of us and speak to 19 everybody in the audience and just urge you as strongly as 20 I possibly can not to think that the number of people who 21 make a statement or the passion that you bring to it is 22 going to end up doing more than just making us feel like 23 our job is even harder than we already do. Thank you. 24 BOARD MEMBER CASE: Madam Chair, I think it would 25 be helpful in the dialogue, the first speaker started out PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 229 1 with kind of setting a target that they were identifying 2 as a percentage. And I'm hearing that theme continuing in 3 the dialogue. 4 I think as a Board it's incumbent upon this Board 5 to look at criteria that's reasonable and rational that 6 serves the people that are most greatly harmed by goods 7 movement emissions. We really need to keep the goal in 8 mind it's about the health of those who are most affected. 9 And I think when you suggest any changes, it 10 would be really helpful if you don't get fixated on a 11 number percentage of your piece of the pie, whether it's 12 from the Valley or whether it's from other areas of the 13 state. But looking at the criteria what is reasonable 14 criteria to base this allocation on so we impact the 15 people who are suffering the most. And that would be 16 really helpful as the testimony occurs. 17 CHAIRPERSON NICHOLS: Okay. Thank you. 18 MR. KERN: I also share the incredible job that 19 you're doing with your colleagues. And I would try to 20 keep my comments brief. I'm Bruce Kern. I'm executive 21 director of the East Bay Economic Alliance which 22 represents over 600 corporate companies in the greater 23 east bay. I'm also here on behalf of the other business 24 organizations that have worked very closely over the years 25 to bring a collaboration between both businesses and PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 230 1 government round the issues of goods movement. We've 2 worked very hard to bring forward alternative modes of 3 transportation, moving from trucks to rail. But we've 4 also tried to work with our industry leaders because this 5 is an industry that is not very efficient. Multiple goods 6 movements are made between the Central Valley and the Bay 7 Area. But the Bay Area has over 80 percent of the truck 8 movements start in the Bay Area and end in the Bay Area. 9 So while we make tremendous progress in trying to reach 10 and open up our major trade corridors, we have to realize 11 we have most of the problem right into the Bay Area. 12 As cited earlier, 20 percent of the state's air 13 emission is really within the Bay Area. I would ask you 14 to really increase the allocation from 14 to 20 percent 15 for the Bay Area. You can see that just the application 16 of the 14 percent on the early grant projects results in 17 the elimination of truck replacement grant proposal of 18 pre-93 trucks in the port of Oakland, those communities 19 most impacted by these actions. 20 So I urge you that you would increase this 21 allocation as we work with you between our business leader 22 and community leaders to address this very tough issue 23 that we have in our community. Thank you very much for 24 your time. 25 CHAIRPERSON NICHOLS: Thank you. It's time for PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 231 1 the Barry Wallerstein. And I know you have several 2 people. 3 (Thereupon an overhead presentation was 4 presented as follows.) 5 MR. WALLERSTEIN: Good afternoon. 6 First let me clarify why we thought the staff has 7 changed its recommendation. The draft resolution that has 8 been provided to the public on page 4 states a reduction 9 of four percent in the allocation to the Los 10 Angeles/Inland Empire corridor compared to what was 11 workshopped. So unless you modified the draft resolution, 12 it is reduced. 13 Let me speak to the issue of health impact, 14 because that's what you want to hear about. If I can have 15 my second slide. We looked at a number of the factors. 16 The first one is number of individuals in the state 17 exposed above the federal PM2.5 standard. Eighty-nine 18 percent of such individuals reside in the South Coast. 19 That 89 percent would become 83 percent if we did the 20 calculation for above the state PM 2.5 standard. So any 21 way you look at it, it's well above the 55 percent 22 allocation. 23 --o0o-- 24 MR. WALLERSTEIN: The next slide shows for ozone 25 number of individuals, state of California exposed by the PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 232 1 federal ozone standard 74 percent in South Coast. That 2 would become 72 percent if you looked at the state 3 standard. The next slide shows because we thought -- 4 --o0o-- 5 MR. WALLERSTEIN: -- you might say let's talk 6 very specifically about goods movement. This is the data 7 from the State Air Resources Board 2006 Goods Movement 8 Emission Reduction Plan, and it is the mortality data. 9 There's no better indicator than early death. And this 10 shows 64 percent in South Coast. 11 We then looked as shown on the next slide -- 12 --o0o-- 13 MR. WALLERSTEIN: -- at your railyard risk 14 assessment. So now let's talk with carcinogenic risks. 15 The last slide was particulate pollution. 16 This shows for the risk assessments you've done 17 to date 2.2-plus million individuals exposed above a level 18 of ten in a million, the threshold we use for significance 19 for stationary sources. If we look at the Valley 20 corridor, you see the number is one-tenth, roughly 21 one-tenth of that of South Coast. And please note 22 two-thirds of those exposed individuals above ten in a 23 million actually reside around the Roseville railyard. 24 Then we on the next slide -- 25 --o0o-- PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 233 1 MR. WALLERSTEIN: -- did a calculation looking at 2 your staff's last carcinogenic risk estimate. This is in 3 the almanac and applied population numbers from 2005 to 4 look at carcinogenic risk by another calculation suggested 5 by our colleagues from the Bay Area. That shows 61 6 percent in the South Coast. 7 Our final chart -- 8 --o0o-- 9 MR. WALLERSTEIN: -- is oxides of nitrogen 10 emissions inventories from our latest AQMP and the 11 Valley's latest AQMP. Please note the part within the 12 local district control in the Valley for stationary and 13 air resources is 20 percent. In our district, it's only 14 nine. But also note the total mass emissions of NOx from 15 stationary sources in the Valley is actually higher than 16 South Coast, even though we have four times the 17 population, five major refineries compared to their one 18 small refinery, many more power plants, et cetera. 19 We put this up not to criticize the Valley or to 20 say that the Valley's share from your initial staff's 21 recommendation should be reduced. We put this up to say 22 they have better control over their future destiny than we 23 do in South Coast, because we have more mobile source 24 emissions, higher contributions to our ozone and PM 25 problems. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 234 1 Last night, the 40th celebration everyone said 2 this agency bases its decisions on sound science, the 3 strength for four decades. We're asking you to do that 4 again today. To take this information ito consideration. 5 Our SIP gap's larger than the Valley's. We're asking you 6 to consider that. 7 And we would lastly just like to ask you think 8 about the last time you flew over the Valley at night in 9 an airplane versus South Coast. Think about the last time 10 you drove through the Valley versus South Coast. This is 11 a combination of emissions and people being near the 12 emissions. So it's obvious to us that where you have more 13 people, there's going to be higher risk. 14 And we're supportive of the allocation for the 15 Bay Area. We're supportive of the allocation for the San 16 Diego border areas. We're not asking any ones to be 17 decreased. We're simply asking you to stay with your 18 original staff proposal. Thank you. 19 CHAIRPERSON NICHOLS: Thank you. I notice you 20 have three other people with you from the district. Are 21 they all planning to speak? 22 MR. WALLERSTEIN: Yes, they are, on some of the 23 technical components your staff identified as issues of 24 concern. 25 BOARD MEMBER LOVERIDGE: Could I ask the Chair to PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 235 1 ask the staff what the difference is between the four 2 percent what was sent out? That would be helpful to know. 3 CHAIRPERSON NICHOLS: Sure. 4 EXECUTIVE OFFICER GOLDSTENE: Are you asking 5 about the difference in the dollar amounts or the -- 6 CHAIRPERSON NICHOLS: The resolution versus -- 7 BOARD MEMBER LOVERIDGE: The resolution. 8 CHAIRPERSON NICHOLS: -- versus the report that 9 was presented today or where the staff is. 10 EXECUTIVE OFFICER GOLDSTENE: We should explain 11 the process we went through that got us to that point. 12 From the original release of the draft report as we were 13 working our way towards the Board meeting, we realized 14 that using the other inventory would make sense as well. 15 So I'm going ask Cynthia Marvin to explain more detail, 16 Mr. Loveridge, how we got to that process the difference 17 between the two inventories so you can understand the 18 difference. 19 ASSISTANT DIVISION CHIEF MARVIN: In the original 20 proposal, one of the issues that the San Joaquin Valley 21 has raised is for the factor that considers freight 22 movement emission. So ships, trucks, trains in each of 23 these areas. 24 We had chosen to use a working draft of the truck 25 inventory, which has been underway since the SIPS were PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 236 1 approved just very recently last year. The issue that the 2 Valley raised was that while that inventory may contain 3 improvements on a state-wide basis, it had not been 4 subjected to the regional scrubbing or regional scrutiny 5 that the SIP inventory for trucks had last year. And we 6 thought that was an important point to consider and we 7 wanted to share with you the impacts of the averages for 8 those factors, i.e., the impacts on the potential 9 allocations if one were to consider going back to the SIP 10 inventory for trucks for the two areas that just recently 11 adopted those plans last year. 12 DEPUTY EXECUTIVE OFFICER SCHEIBLE: It's fair to 13 say that last night and this morning we were trying to 14 decide which should we recommend. Should we recommend we 15 put in the staff report or should we say the SIP inventory 16 is a better way to do it. In the end, we decided to leave 17 it to the Board. We didn't change our recommendation. 18 BOARD MEMBER D'ADAMO: Madam Chair. 19 BOARD MEMBER LOVERIDGE: May I just finish? What 20 accounts -- help me out. I understand the language you 21 use. What accounts for the differences in the numbers? 22 EXECUTIVE OFFICER GOLDSTENE: In the two 23 inventories. Michael. 24 MOBILE SOURCE ASSESSMENT BRANCH CHIEF BENJAMIN: 25 I'm Michael Benjamin, Chief of the Mobile Source Analysis PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 237 1 Branch. And it's my staff who developed the emissions 2 inventories for the item before the Board today. 3 What this comes down to is the truck inventory 4 that we assume. The four percent difference is a four 5 percent difference in the combination of the three factors 6 that were considered. But really the inventory changes in 7 the truck inventory are more significant than that. 8 The SIP inventory that was used is, we believe, 9 not as representative of what we think is going on in the 10 real world at this time. The SIP inventory assumed 11 basically there was one fleet of trucks in the state, that 12 they all behaved the same way. And so whether they're out 13 of state, in state, that they behaved in the same fashion. 14 They drove in the same fashion, the same VMT. 15 As part of the private fleet rule development, we 16 have done an extensive amount of work in the past year 17 looking at that. What we found, as makes sense, there are 18 different fleets across the state that drive differently. 19 They have different age distributions, so forth. And 20 that's what's reflected in these changes. More 21 specifically, what accounts for this change is that in the 22 SIP inventory, we assumed all trucks that -- we allocated 23 truck emissions to where they travel in the state based on 24 Caltrans data. And what that did not account for -- 25 really, that was overweighted toward the out-of-state PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 238 1 trucks, those that were traveling from out of the state. 2 When we looked at the truck fleet in more detail, what we 3 found was that the in-state trucks tend to travel 4 primarily within their air basin of registration and 5 they're a lot older than what we had previously thought. 6 What this resulted in is a movement of the 7 emissions from the Central Valley to the coastal areas 8 where many of these trucks are actually registered and 9 where they do most of their travel. So that's really 10 what's happened is there's a shifting of where we think 11 the truck travel is happening within the state, about the 12 age of those trucks, and how that ripples through. So in 13 essence, the older trucks we believe there are more of 14 them in the coastal areas than we had assumed in the SIP. 15 And their emissions are higher than we had previously 16 estimated. 17 CHAIRPERSON NICHOLS: One of the interesting 18 things that this points out is that within the Air 19 Resources Board we sometimes use different sets of numbers 20 for different purposes. And in particular in the case of 21 the SIP, we end up sometimes being frozen in time with 22 numbers that we use because they were the right numbers or 23 the best we had at the time. But we don't keep updating 24 the SIP every time we get a new emissions inventory for a 25 particular source category, even if it might change the PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 239 1 commitments that were made in the SIP. Isn't that true? 2 DEPUTY EXECUTIVE OFFICER TERRY: If I can just 3 brief comment. That is absolutely true. Just to finish 4 Michael's initial thought that he started the discussion 5 with is this exercise of improving the truck inventory is 6 not done. We're in the middle of the process. So I think 7 that's also part of the debate going on is, as Michael 8 said, there's better data in terms of understanding 9 statewide VMT. But understanding in particular the split 10 of travel between the two key regions at issue, South 11 Coast and the Valley, is something we're kicking off a 12 field study to do more work. 13 So while it's true there have been some interim 14 improvements recommended that would go into the next 15 version of our mobile EMFAC model, which as you pointed 16 out is subject to some specific legal constraints in terms 17 of when we can change it. So that will officially be 18 changed sometime next year. So just you have a sense of 19 the time. 20 BOARD MEMBER LOVERIDGE: Just a final comment. 21 Listening to the analysis that you find older 22 trucks driving more around the coast it would seem to me 23 would raise the numbers of the Bay Area and the South 24 Coast. I just make that observation. 25 CHAIRPERSON NICHOLS: That would be the PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 240 1 implications. 2 BOARD MEMBER LOVERIDGE: Untutored observation. 3 CHAIRPERSON NICHOLS: Yes, Ms. D'Adamo. 4 BOARD MEMBER D'ADAMO: I would just add I think 5 someone said -- I think it was the Chair and Supervisor 6 Case we ought not to focus on the numbers but the process. 7 The process is what really matters. 8 Even though there seems to be work underway with 9 this new inventory, I would call it not quite yet cooked. 10 And the numbers that are the numbers that we used for the 11 ozone plan in the Valley and I know in South Coast, those 12 are the numbers that we have to live with. As you 13 indicated, we've got legal constraints. We can't just go 14 and change those. 15 And I believe with the 2.5 plan that's coming up, 16 those are the numbers we'll be using as well. So in other 17 words, the official inventory numbers. 18 So I think that this really gets to the crux of 19 what we're all going to be trying to decide here, and that 20 is what process, what data points are we the most 21 comfortable with. And I just think that in light of the 22 fact it's not quite been through the process, I'm more 23 comfortable with the numbers that we used for the SIPS and 24 think we ought to stick with that. 25 I also think that it's just -- well, I've lost my PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 241 1 train of thought. I just think that as far as setting 2 percentages aside -- oh, yes. Now I remember. As far as 3 the life of the trucks, something in my gut is telling me 4 that that doesn't seem quite right, that the numbers would 5 change so significantly in the San Joaquin Valley where 6 the age of the truck fleet is so very old. All you have 7 to do is just drive through and see the local traffic 8 there. And so I think that's why it's important, as 9 Ms. Marvin indicated, to do as you call it a scrubbing 10 analysis in each region. So I look forward to that 11 process going through a more robust public hearing 12 process, which I think is normally the process that you 13 could take the inventory numbers through. 14 CHAIRPERSON NICHOLS: All right. Well, we need 15 to get back to the public here. So let's hear from the 16 rest of the South Coast witnesses at this time. 17 MR. WALLERSTEIN: Yes, Madam Chair. 18 MR. MINASSIAN: Good morning. I am Fred 19 Minassian, Manager of the Incentive Program at the South 20 Coast AQMD. 21 The South Coast AQMD would look to propose the 22 inclusion of the following changes in the Proposition 1B 23 program guidelines. As stated on page 25 of the 24 guideline, the two dollar DMV surcharge under AB 923 may 25 be combined with Proposition 1B funds to fund truck PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 242 1 projects. 2 South Coast AQMD supports this proposal. 3 However, we don't agree with treating the AB 923 moneys as 4 State funds and their inclusion in the competitive ranking 5 of the projects. 6 The reason for this is that the two dollar DMV 7 surcharge under AB 923 was enacted upon the AQMD Governing 8 Board's vote and approval on December 3rd, 2004. Funds 9 generated under this provision are collected locally from 10 vehicles operating within our jurisdiction and are not and 11 cannot be considered as State funds. They should rather 12 be considered as local cost share, as is the case with 13 CEMAC funds, which will be used in similar fashion for 14 funding Proposition 1B projects in other goods movement 15 corridors. 16 The AB 923 funds would be from the non-Moyer 17 match portion of the funds. Although the overall project 18 cost effectiveness will meet the Moyer requirements, it 19 does not mean to be ranked competitively since this is 20 already allowed under AB 923 for other categories such as 21 the lower emissions school bus program. 22 The second issue I would like to mention is 23 relative to the operation area of the funded projects. 24 South Coast AQMD supports your staff's proposal. However, 25 in case of over-subscription, we would like to have the PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 243 1 flexibility of placing preference on projects that operate 2 at least 75 percent of the time within our air corridor so 3 long as they meet all other requirements and are equally 4 cost effective compared to similar projects not meeting 5 this operational criteria. This will ensure maximum 6 benefits with the funds allocated to our corridor which 7 has the worst air quality in the state. 8 The last issue is relative to return funds from 9 incomplete projects. Under the current legislative 10 language, funds from returned projects are to be returned 11 to the State. 12 South Coast AQMD supports a legislative change in 13 order to be able to reallocate these funds to other 14 projects within the allowed time frame rather than 15 returning them to the State. We have experienced this 16 under the Moyer program that even with our best efforts 17 some of the projects are returned whether it's due to 18 economic conditions or other circumstances. And 19 reallocating them to backup projects is much more 20 efficient rather than return the funds to the state. 21 I thank you for the opportunity to speak. 22 CHAIRPERSON NICHOLS: Question. 23 BOARD MEMBER RIORDAN: I couldn't agree more. 24 And when I've listened to some of the presentations today, 25 I was thinking this is a real issue in my mind. And I PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 244 1 would say in the real world of projects that come in 2 through a competitive process, you need to have a backup 3 list that meet all the criteria. They've been evaluated, 4 but they're next in line. Because projects do follow out 5 for very good reasons. Reasons beyond any of our control. 6 And if you have them come back and be reissued, you are 7 just simply wasting time. And I really think we need that 8 legislative correction as soon as possible. I really feel 9 strongly about that. 10 And I've worked some of those programs that you 11 have in the South Coast for some of your very creative 12 work on the retrofits and the things of that sort. And I 13 clearly saw that happening there that we didn't have a 14 backup program coming right through to pick up those that 15 had opted out for whatever reason. I don't know how every 16 else feels, but I can tell you from the real world we need 17 to have that. 18 CHAIRPERSON NICHOLS: Well, I guess my 19 understanding what the staff was proposing is not quite 20 the way this is being described. So maybe we need to 21 drill down further here. 22 BOARD MEMBER RIORDAN: Maybe I misunderstood. 23 CHAIRPERSON NICHOLS: In my understanding of how 24 these bond programs work, an agency can have a set of 25 projects and they can have them all ready to go and have PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 245 1 them prioritized and their list. And if a project ahead 2 in line falls off, they can go to the next project if it's 3 in fact ready to fund. I think the issue is if there 4 isn't something waiting or we get what we had with South 5 Coast on the early action money that was being proposed 6 was a completely undifferentiated unprioritized list of 7 projects where it was left to ARB to try to decide which 8 ones were fundable and which ones weren't. 9 BOARD MEMBER RIORDAN: That's correct. But you 10 can clearly -- let's say you have so many projects out 11 there -- let's say you have 25 million. But you would 12 actually go through projects that qualified that were 13 equal to but listed in a list of priorities. Then if 14 somebody fell out of the first 25 million, you could push 15 up. And my understanding was -- and if I misheard, I 16 apologize. That was to be sent back to the State. 17 CHAIRPERSON NICHOLS: I may have misunderstood. 18 Let's get it clarified. 19 ASSISTANT DIVISION CHIEF MARVIN: If I could 20 perhaps add to that. This is a specific direction in the 21 Senate Bill 88. What it says is that once a local agency 22 obligates funds to a project, i.e, they've assigned a 23 project with an equipment owner, if that equipment owner 24 backs out or something happens such that it falls through, 25 there is no choice to go through the normal process, which PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 246 1 would be to have the local agency then take those funds, 2 sign a new contract with one of the backup projects. By 3 statute, the funds must revert to the bond account and be 4 reappropriated by the Legislature. 5 BOARD MEMBER RIORDAN: And there's where I think 6 the legislative correction ought to be made. I really 7 feel very strongly about that. Just watching, I mean, I 8 think South Coast could demonstrate just exactly how, you 9 know, it can really work against you so that you have some 10 funds that really ought to be out working, not coming back 11 up here. 12 CHAIRPERSON NICHOLS: Well, I don't disagree with 13 you about that. But I have to say at least in most grant 14 programs it's a long way between having a grant on the 15 list and having a conversation and having a lot of work 16 being done and having it obligated where the contract has 17 been signed. And a project falls through at that point, 18 something strange is going on in the program I would 19 think. I mean, I can't imagine that being a normal 20 process. 21 Mr. Goldstene. 22 EXECUTIVE OFFICER GOLDSTENE: It does happen 23 occasionally in the Moyer program. But the Moyer program 24 gives us the flexibility that Ms. Riordan is saying we 25 should have here. As long as you get all the moneys out PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 247 1 within the time constraints, which are still there. We're 2 still constrained overall. 3 CHAIRPERSON NICHOLS: I wasn't around during the 4 time this legislation was going through. I don't know 5 what the Legislature intended by putting that provision in 6 there. But I'm not opposed to taking a look at whether it 7 could get changed. It's definitely worth discussing. 8 EXECUTIVE OFFICER GOLDSTENE: We could follow up. 9 BOARD MEMBER LOVERIDGE: Madam Chair, could he 10 comment on the one of -- the end of the comment staff 11 comment on the errata sheet? 12 EXECUTIVE OFFICER GOLDSTENE: On the first item 13 Mr. Loveridge, about how State money should be counted, I 14 think staff would recommend again the suggestion from the 15 South Coast here, because what we're trying to do is use 16 State moneys as efficiently as possible. And this seems 17 to have the opposite effect where we're adding State 18 moneys on top of State moneys. 19 And so I don't know if staff wants to add to 20 that. 21 DEPUTY EXECUTIVE OFFICER SCHEIBLE: The intent is 22 to get as much match from some other category. And if 23 allow this, we basically would be buying fewer trucks and 24 emission reductions with the total amount of money 25 available. To me, it's like the money is in the same pair PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 248 1 of pants in different pockets. Were trying to get more 2 money from other purses or pairs of pants. 3 BOARD MEMBER LOVERIDGE: And the second and 4 third. 5 EXECUTIVE OFFICER GOLDSTENE: The second item, 6 we're trying to stay away from setting specific targets 7 like this. And we're hoping that the project 8 prioritization that we're setting out in the guidelines 9 would have the effect of maximizing the statewide 10 multi-corridor impact. 11 This proposal seems to try to lock in with 12 certainty a certain amount of moneys within a certain 13 region. And we're hoping with the way we've structured 14 this that the prioritization effect will be very positive 15 for statewide impact and multi-corridor impact and going 16 down to the highest polluting really polluting vehicles in 17 the local areas. And we have those two effects: High 18 mileage, travel, or really, really dirty trucks. 19 BOARD MEMBER LOVERIDGE: The third point? 20 EXECUTIVE OFFICER GOLDSTENE: The third point, 21 which we haven't -- this is South Coast is changing their 22 suggestion to us or giving us a priority now on which 23 project we should fund for the early 25 million. 24 BOARD MEMBER LOVERIDGE: The language change is 25 replace 130 port trucks with LNG trucks. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 249 1 EXECUTIVE OFFICER GOLDSTENE: Right. I'll ask 2 Cynthia to respond in more detail. This is the 3 Freightliner project versus the Cascade Sierra project the 4 staff briefly mentioned in the presentation. We can 5 quickly touch on that again. 6 ASSISTANT DIVISION CHIEF MARVIN: Certainly. 7 As Doug mentioned in the staff presentation, 8 there were two port truck replacement programs within 9 South Coast's $130 million proposal. And that written 10 proposal had articulated that there was a choice between 11 leasing diesel trucks meeting 2007 standards and LNG 12 trucks meeting 2007 standards. So basically equivalent 13 from an emissions perspective. 14 That proposal had suggested there be $90,000 in 15 State funds for the LNG trucks and 50,000 for the diesel 16 trucks. So when we looked at just those numbers, achieve 17 the same emission reductions with a greater State 18 investment, we said it seems that the Cascade Sierra 19 proposal is more cost effective. 20 What we have heard since then and what I believe 21 you will hear today is that the South Coast District and 22 the proponents of this project are now making clear that 23 they're intending to focus on LNG trucks that are 24 certified to the 2010 standards. So trucks that have the 25 low NOx emissions in advance of the 2010 standards. This PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 250 1 makes those trucks more effective than South Coast had 2 articulated in the original proposal. 3 CHAIRPERSON NICHOLS: So you're okay with their 4 recommendation? 5 DEPUTY EXECUTIVE OFFICER SCHEIBLE: I think we 6 need to see the details and see that it's more cost 7 effective. If there's greater emission reductions and 8 greater costs, it depends on the ratio of the two numbers 9 whether or not it's the most competitive proposal, gets 10 the most emission reductions for the dollars expended. 11 CHAIRPERSON NICHOLS: Can we get this resolved 12 before we have to vote on this item today, or are we going 13 to have to just kick this over? 14 ASSISTANT DIVISION CHIEF MARVIN: We've been 15 wrestling with this issue fairly intensely in the last 16 couple of days, because we have gotten a lot of new 17 information from the project proponents. 18 If I might, one of the possible options would be 19 to allow South Coast to go forward with both of these 20 facilitators of truck projects to recruit actual truck 21 owners who are prepared to scrap their current vehicle and 22 select either a new truck meeting '07 standards or 2010 23 standards. 24 The way the program works in the larger part of 25 the guidelines is that you take all those applications, PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 251 1 you bring them in, you let them all compete against each 2 other. So an application for the same amount of money to 3 fund a truck that's going to get more emission reductions 4 rises to the top of the list. And that's the way that you 5 balance, as Mr. Scheible said, the nexus of the emission 6 reductions and the dollars that go into it. 7 So there's a potential in the early grant program 8 to let South Coast move forward with both the LNG and the 9 diesel components, solicit applications from truckers, and 10 let the competitive process work. And those that are the 11 most competitive rise to the top of the list and could be 12 funded under the early grant program. 13 CHAIRPERSON NICHOLS: Well, we can go on and 14 think about this some more as we hear more testimony. 15 DR. MIYASATO: Madam Chair, we are prepared to 16 testify on that last item. Thank you, Madam Chair, for 17 the opportunity to speak. I'm Matt Miyasato, Assistant 18 Executive Officer from the Technology Advancement Office. 19 And I'd like to specifically address the project 20 that you were just discussing, the early grant of $25 21 million for this program. First of all, we'd like to 22 thank the staff for allocating the 13.8 to the South Coast 23 region. We believe it's an identification and 24 acknowledgement of the severe problem that we are facing 25 in the South Coast. And in particular, the early grant PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 252 1 program was intended to have immediate emissions 2 reductions to offset health risks. And we can think of no 3 better area to offset those health risks than the 4 communities near the ports of Los Angeles and Long Beach. 5 That's why the AQMD staff is a bit puzzled by the 6 original recommendation that the proposal for the drayage 7 application be only for new diesel replacement trucks. 8 Perhaps we were not clear enough in our proposal, but the 9 LNG application that we had provided was for a 2010 10 certified natural gas engine. We believe we were clear in 11 our priorities to staff and are further puzzled by their 12 comment. 13 We believe these early grant projects should 14 provide the cleanest available technology, and that 15 cleanest technology is the Cummins 8.9 liter ISLG engine. 16 As you know, there are four elements that are really 17 needed to make projects such as these successful. One, 18 you need a certified technology. Two, you need a willing 19 end user or fleet user. Three, you need the cost match or 20 local funding. And fourth, you need the clear policy 21 direction in order to make this program successful and 22 achieve the goals that are stated in the statute. At the 23 South Coast, we believe we have the first three elements, 24 but we need your help in obtaining the fourth in a clear 25 policy direction. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 253 1 The Cummins LNG engine is the cleanest available 2 heavy duty engine .2 grams per break horsepower hour NOx. 3 That is compared to the 1.2 gram NOx that's the new diesel 4 engine. That's an 83 percent increase in NOx in the 5 proposal. We are simply requesting that you approve the 6 cleaner technology. 7 The second element I discussed is you need an end 8 user. And we have that in California Cartage Company is 9 one of the largest fleet operators in and around the 10 ports. And they have been an early hand raiser and are 11 showing leadership and they want to implement these 12 projects. It's important to know they are owners of all 13 130 trucks under that are under this proposal and can 14 implement these engines very quickly or these trucks very 15 quickly. 16 There was some discussion about cost 17 effectiveness. It was our understanding we wanted to have 18 immediate emissions reductions. So the South Coast said 19 we would offset any incremental cost to make it exactly 20 competitive with the diesel counterpart. We understand 21 there's a dispute between the AB 923 funds, so we're going 22 to take that off the table ad say we will use federally 23 appropriated dollars we have earmarked to offset those 24 costs. So now they are at least cost effectively the 25 same. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 254 1 So finally we would argue that the staff proposal 2 for the diesel trucks are not the cleanest option. And we 3 need your help in implementing the cleanest option and 4 urge you to adopt our proposal that's on the golden rod 5 sheet that's before you. Thank you. 6 CHAIRPERSON NICHOLS: Thank you. 7 We have one more witness from South Coast, and 8 then we're going to re-assess where we are here. 9 MR. HOGO: Good afternoon, Madam Chair and 10 members of the Board. Henry Hogo, I'm the Assistant 11 Deputy Executive Officer of the Mobile Source Division of 12 the South Coast AQMD. 13 I want to make two comments. And my comments 14 actually have changed since the discussion about the 15 allocation targets. And we support the staff's original 16 proposal with the use of the latest best available truck 17 inventory data. And this is not unprecedented because 18 when we do our regulatory activities, we generally look at 19 the inventories and re-survey and bring out the latest 20 data which represents the real world, not a planning 21 inventory that was used in our air quality management 22 plan. And we generally take the new inventory and we can 23 equate it back to what it would be in a SIP world compared 24 to real world. 25 Here directionally it's clear that the higher PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 255 1 emissions will lead to addressing the larger population of 2 people exposed to higher levels of pollution. So we will 3 urge your Board to stay with the staff original proposal 4 at this point. 5 And lastly, I want to point out with Dr. 6 Miyasato's comment that if it was a choice between 2007 7 engines and an engine complying to 2010, I would think 8 over the long term the person who brought the 2010 engine 9 will be in compliance at your future private fleet rule 10 out to 2020. Whereas, if a person bought a 2007 engine 11 this year or next year, they will have to turn it over in 12 the 2018, 2019 time period. So you have to consider that 13 in the cost calculation also. Thank you. 14 CHAIRPERSON NICHOLS: Thank you. 15 I don't know that we can resolve this at this 16 moment. We have a bunch of loose ends that we have to tie 17 up at the end of the day. 18 What I want to do is re-assess where we are, 19 because our poor Board clerk is being besieged by people 20 who don't think that the way we're doing this is what they 21 want. So I want to at least give us a chance to re-assess 22 where we are. It is now a little past 4:00. We're not 23 going to give this item more than two full hours. And the 24 Board is going to we need a good half hour is my guess to 25 actually discuss this and make decisions. So we could PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 256 1 just roll through and just give everybody two or three 2 minutes to speak. And that seems to be what a lot of 3 people want. One of the problems is that artificiality of 4 saying yes, no, or neutral. I know Seyed is coming up 5 because they said they were for, but that was before they 6 heard the staff presentation. Now they're against 7 probably. 8 MR. SADREDIN: I actually have proposal for you 9 to really cut the time way back. And we want to think 10 about this. I've talked to people that we've brought from 11 San Joaquin Valley. We are willing to limit the 12 presentation from the San Joaquin Valley people, the 13 people that listened to me at least, to only ten people. 14 And that will be the bulk of the presentation from San 15 Joaquin Valley after you hear from the staff from the 16 district. And they will be very short. So we will not 17 take more than 30 minutes of your time. 18 CHAIRPERSON NICHOLS: That's extremely helpful. 19 I appreciate that very much. Then can you all identity 20 yourselves, those of you who are part of that group of ten 21 plus the staff and we can just -- 22 MR. SADREDIN: I can read the names of the 23 people. David Lighthall, Councilmember Henry Perea, 24 Councilmember Blong Xiong, Kim Thompson, Mary-Michael 25 Rawling, Roger Isom, and Terri Mejorado, Jim Ganduglia, PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 257 1 Mark Stout, and Pete Webber. I could give it to your 2 clerk. 3 CHAIRPERSON NICHOLS: Maybe you can give it to 4 the clerk, and she can sort that out. 5 According to the pattern I was on before, which 6 was to call on the people who had specifically said they 7 were opposed, assuming they would have specific 8 suggestions, we would move next to Dwight Hanson from 9 Cummins Westport. So we can hear from him while we're 10 working the rest of this out. 11 Are you there Dwight Hanson? 12 MR. NEANDROSS: We asked to have a specific order 13 to our comments. Is it possible that we can plow through 14 them? Bob Curry would be first from Cal Cartage and then 15 myself. 16 CHAIRPERSON NICHOLS: And you, Erik Neandross and 17 then Dwight Hanson is that -- 18 MR. NEANDROSS: There's two others, Doug, Dave 19 and Dwight. 20 CHAIRPERSON NICHOLS: It didn't come in that way. 21 So there's five of you here for the Cal Cartage project? 22 MR. NEANDROSS: That's correct. 23 EXECUTIVE OFFICER GOLDSTENE: Two minutes each, 24 unless Eric can summarize the project himself. 25 CHAIRPERSON NICHOLS: I know you all believe PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 258 1 that, you know, we weight things by the amount of time 2 that you take. But it doesn't actually work that way. 3 MR. NEANDROSS: We'll be quick. I'll let Bob 4 short. 5 CHAIRPERSON NICHOLS: Let's do your presentation 6 as a group. 7 MR. CURRY: Thank you. Madam Chair, thank you. 8 My name is Bob Curry. I'm President of Cal Cartage 9 Company in Los Angeles. And my company along with our 10 subsidiaries and affiliates has about 1100 owner/operators 11 working for us. 12 I'm pretty close to David Freeman, the President 13 of the Port of Los Angeles Harbor Commission. And he 14 personally came to me several months ago and asked me to 15 make a major commitment to move some of our equipment to 16 alternative fuels. I told David I would do that. And 17 with that in mind, I've committed to 400 or more LNG or 18 natural gas type vehicles to be moved into our fleet. 19 We've got the owner/operators, and we are committed to 20 cleaning up the air with this type of a vehicle. 21 I had my people look at the various types of 22 vehicles that were out there. And we decided that 23 Freightliner had the best vehicle for us, was most liked 24 by the owner/operators, had the best maintenance. So 25 that's where the sterling piece of equipment came in. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 259 1 I even went a little bit further because we got 2 some reports, maybe some of them were circulated through 3 the port of Long Beach, that this vehicle which is a 4 330-horsepower vehicle would not pull a certain grade. So 5 earlier this week, I asked for a test of a vehicle that 6 would be similar to this vehicle. This vehicle is not on 7 the market, so I can't test it. 8 But we had a trash truck with a 320-horsepower 9 Kenworth taken to the Fargo Hill area, which is where they 10 test all the L.A. city and L.A. county vehicles. It has a 11 38 percent incline. And I took my people out there. We 12 saw the vehicle taken up the incline. And it went up the 13 incline very well, was stopped, went right back up the 14 incline. Not a problem. So I am not concerned about this 15 vehicle having the power to pull the loads from the 16 harbor. 17 We can't do this job without funding from you. 18 And I would ask that you support it and give us the 19 financial support that we need to give to the 20 owner/operators to, if you want to put it quite frankly, 21 clean up the air. Thank you. 22 CHAIRPERSON NICHOLS: Thank you. 23 MR. NEANDROSS: Good evening. My name is Erik 24 Neandross. My company is GNA. We're a consulting firm 25 based in Santa Monica, and we've been working with Cal PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 260 1 Cartage for the last year and a half to figure out how to 2 get clean trucks in their operation. I give Bob a lot of 3 credit for stepping up and making an absolutely tremendous 4 commitment to put 400 natural gas trucks in his operation 5 in the San Pedro bay ports. I think we all would agree 6 that's a significant commitment in an area that 7 significantly needs emission reductions. 8 Once the 1B funding came out, we worked with 9 South Coast to put together an application in November to 10 come to the ARB. And almost immediately we began 11 following up with the ARB. And I've submitted as part of 12 my comments here today copies of the letters that were 13 sent to the ARB. First one dated December 6th. This is 14 from Los Angeles Freightliner. There's other letters from 15 Cal Cartage. There's letters from the Executive Director 16 of the port of L.A. and the Commission President from the 17 port of Long Beach, Senator Jenny Oropeza, and others all 18 giving explicit details as to the 2010 emission on these 19 trucks and how these trucks will be used in other factors. 20 So we feel we've done our part to try to get the 21 information across to the ARB immediately after the 22 application was submitted. 23 I think, you know, it's clear to us this is a 24 tremendous opportunity for the state of California to 25 simultaneously achieve multiple benefits. Greenhouse gas PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 261 1 benefits per AB 32. These trucks are 20 percent better on 2 greenhouse gas emission than diesel. We are displacing a 3 tremendous amount of petroleum, helping to meet the goals 4 of 1007, the State Alternative Fuels Plan that was issued 5 by this Board I believe in November. 6 We're obviously using an alternative low carbon 7 fuel and helping to meet the Governor's Executive Order 8 under the Low Carbon Fuel Standard. And of course, 9 perhaps most importantly, we're achieving immediate 10 reductions in priority and toxic pollutants in the San 11 Pedro Bay Harbor. We think this is a tremendous example 12 of the kind of project that should be at the absolute top 13 of the list for Prop 1B funding, especially the early 14 funding. 15 And what a way to come out of the gate with a 16 project with dedicated alternative fuel trucks meeting 17 2010 emissions. There is no better project. There are no 18 cleaner engines. These are the cleanest engines available 19 in the United States. The benefits to the breathers in 20 and around the San Pedro Bay cannot be understated. These 21 trucks have no diesel particulate matter. They're six 22 times cleaner than even the most stringent standards of 23 the ARB's own drayage truck rule, the San Pedro Bay Clean 24 Air Action Plan, and the new tariff and clean truck rules 25 at the port of L.A. and Long Beach. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 262 1 We are surprised that this project was not 2 immediately moved to the top of the list. And if there 3 were questions about the details of the project, that we 4 weren't asked for clarification. We think that this 5 project provides the most surplus emissions reductions for 6 South Coast. It's the most cost effective emission 7 reductions available. And to us, it's the proverbial 8 no-brainer. We strongly urge you to modify the staff 9 recommendation to provide funding for what we think is an 10 extremely important project for the entire state of 11 California and the entire South Coast air basin and the 12 breathers in the ports of L.A./Long Beach. Thank you. 13 CHAIRPERSON NICHOLS: Thank you. 14 MR. SELLECK: Good afternoon. My name is Doug 15 Selleck. I'm the District Manager for Sterling Truck 16 corporation of the state of California. Sterling Trucks 17 is a division of Daimler Trucks of North America. We are 18 a sister company to Freightliner. Daimler Trucks is the 19 largest truck manufacturer in North America in terms of 20 market share and has been in business since 1942. 21 Given all the focus on improving air quality in 22 the ports, using alternative fuels in California, and 23 ultimately the passage of the 1B bond funding last 24 November, Sterling Trucks was able to make a decision to 25 build a factory-assembled dedicated natural gas truck for PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 263 1 the California market. Simply put, we see that there was 2 an opportunity for this product, enough of an opportunity 3 for us to move forward and commit the resources to 4 complete the design, development, engineering, testing, 5 and production of this product. 6 I want to stress to you that prior to all the 7 activity in this policy arena over the last year, our 8 company was planning to build -- to look at building 9 natural gas trucks in the 2011 time frame after we were 10 through addressing the 2010 U.S. EPA emission standards. 11 We firmly believe there is a tremendous opportunity to 12 sell more of these clean alternative fuel trucks in 13 California and believe this is a great start to what we 14 hope will be increased market penetration of these 15 advanced technology trucks. 16 I want to re-assure the Board here today that 17 Sterling Truck Corporation can produce these trucks in 18 time to meet the timelines required by this Prop 1B 19 program. If we are not successful in securing this 20 funding today, these production slots will be transitioned 21 to diesel units and would then be unsure when we again 22 would look to produce natural gas trucks for California. 23 I want to reiterate we see a great opportunity 24 for dedicated natural gas alternative fuel trucks here in 25 California and urge the Air Resources Board to provide PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 264 1 funding for this product to re-affirm our company's 2 decision to reduce these trucks. 3 Thank you very much. 4 CHAIRPERSON NICHOLS: Thank you. 5 MR. HANSON: Good afternoon. My name is Dwight 6 Hanson. I'm the Western Regional Sales Manager for 7 Cummins Westport, a natural gas engine manufacturer. 8 I want to thank you for the opportunity to 9 address you today. The Cummins Westport ISLG engine 10 enables ARB and the State of California to reach several 11 of their emission and greenhouse goals cost effectively. 12 The ISLG reduces greenhouse gases by 18 to 22 percent, 13 which will help meet the goals of AB 32. 14 Natural gas powered trucks are the most cost 15 effective way to achieve the goals of AB 1007 according to 16 the California Alternative Fuel Plans report released last 17 November. ISLG is a low carbon fuel engine option 18 commercially available today to help meet the Governor's 19 Executive Order establishing a low carbon fuel standard. 20 The ISLG Westport engine will exceed the most 21 stringent requirements of the Clean Air Action Plan and 22 ARB's port drayage truck rule. We are the only 23 commercially available heavy-duty engine that meets 2010 24 emission levels today, and our engineers are currently 25 investigating zero regulated emissions on our engine. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 265 1 I have been questioned about the power of this 2 engine to perform in this operation. I can confirm that 3 this engine has already operated under similar load 4 conditions in other applications. The Cal Cartage order 5 is critical to getting our engine into the Sterling truck 6 chassis. We implore ARB to maintain its fuel neutrality 7 by providing early funding for the Cal Cartage natural gas 8 truck order. 9 Thank you very much. 10 CHAIRPERSON NICHOLS: Thank you. 11 MR. SHERMAN: Good afternoon. My name is Dave 12 Sherman. I'm the Regional Finance Manager for Daimler 13 Truck Financial. We're the captive finance company for 14 Daimler trucks of North America, which manufactures 15 Freightliner, Sterling, and Western Star trucks. 16 We are an industry specific lender and have been 17 monitoring this 1B Prop and feel strongly about it. 18 Unlike the traditional banks, such as Wells Fargo, we are 19 not a cyclical participant in the trucking business. We 20 don't offer financing products to homeowners, factories, 21 or anyone that is not in the trucking industry. 22 Daimler Truck Financial has been in the truck 23 industry for 30 years. We have a portfolio of $4.3 24 billion which is made up of 120,000 units that are 25 actively being financed. Given the volume of our business PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 266 1 and our experience, we know very well what it takes to 2 successfully finance trucks in the market. 3 We believe that we are a very important part of 4 the equation as you look to spend this one billion in Prop 5 1B money and are soon about to launch other programs such 6 as AB 118. 7 We strongly urge the Air Resources Board to 8 modify the staff's recommendation and provide at least 9 some funding for these new alternative fuel trucks. We 10 believe this is a significant step to the additional 11 deployment of these kinds of vehicles here in California. 12 And we hope to be a partner on this important project. 13 Thank you. 14 CHAIRPERSON NICHOLS: That completes the 15 presentation on this project. Thank you. You presented 16 us with a lot of information, which I know you believe we 17 should all have known already. But for some reason we 18 didn't. So we're going to have to take it into account as 19 we think about what to do. 20 I will ask the staff to respond at this point if 21 they want to as to how this effected them. I want to say 22 philosophically about the whole business that, you know, 23 I've quite torn in terms of some of the arguments that 24 have been made here because my view about this is somewhat 25 similar to what Cynthia Marvin said earlier that we're PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 267 1 looking for long-term improvements at the port. 2 We're also looking, if we're going to put aside a 3 small pot of money for an immediate early impact project, 4 to do something that actually gets us the greatest amount 5 of reductions in the pollutants that impact people's 6 health as quickly as possible. And that means spreading 7 the money as cost effectively as possible. And cost 8 effectiveness is not just an add-on. It's kind of 9 critical to the whole thing. I mean, you need to look at 10 the numbers and see what's going to get us the most bang 11 for the buck literally in terms of impact on the health of 12 those communities. And if, you know, giving someone a 13 shiny new truck that also has GHG benefits associated with 14 it is doable and it didn't cost any more, it would be a 15 no-brainer. But if it does cost more, then it isn't a 16 no-brainer, and there has to be some analysis done. So 17 I'm looking for the staff to see where they are at this 18 point. 19 DEPUTY EXECUTIVE OFFICER SCHEIBLE: That was the 20 critical issue with us where we saw the money would give 21 more emission reductions if we funded the diesel portion. 22 But that was with the assumption that was inherent in the 23 proposal was they were bringing in $40,000 per unit from 24 something that we considered to be so similar to bond 25 money that was State money. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 268 1 If truly there's a formula here that makes these 2 vehicles equally cost effective and they're cleaner and 3 they may offer -- we have not been able to basically 4 verify the GHG benefits. So in the heavy-duty arena, the 5 fuel is cleaner, but unless the engine is more efficient 6 than the past natural gas engines, it may or may not be 7 more efficient as a GHG source. 8 So I think we're open if the cost effectiveness 9 can be solved. The State dollars buy just as many 10 vehicles or they buy better vehicles that are justified 11 under the cost effectiveness formula, then we don't have 12 any objection. That would be a reasonable matter of local 13 discretion. 14 CHAIRPERSON NICHOLS: Is this something that you 15 think can be sorted out in a fairly short period of time 16 so if we were to delegate the resolution of this to the 17 Executive Officer with some instructions we could get it 18 solved? 19 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Yes. 20 CHAIRPERSON NICHOLS: Good. Excellent. That was 21 the right answer. We're ready to go on that one. 22 All right. There is one gentleman waiting in the 23 audience who has to go who has been waiting and who 24 apparently was put in the wrong category in terms of where 25 his comments fall. So I'm going to call on him, and then PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 269 1 we're going to go to the San Joaquin Valley as a group I 2 think. So let's start quickly with Supervisor Tim Smith. 3 SUPERVISOR SMITH: Thank you, Chairperson Nichols 4 and members of the Board. 5 I appreciate a lesson learned about filling out 6 the wrong color speaker card. 7 Well, your job is kind of like putting socks on 8 an octopus. I don't envy you that. 9 My name is Tim Smith. I'm a member of the Sonoma 10 County Board of Supervisors and also the Chairperson of 11 the Mobile Source Committee for the Bay Area Air Quality 12 Management District. 13 I realize your job is impossible to make 14 everybody happy. I, too, share the luxury of making 15 people sometimes not fully satisfied on a daily basis. 16 And I know how that is. But let me just make a pitch and 17 very quickly. Both Assemblymembers Ruskin and 18 Assemblymember Mark DeSaulnier really took my thunder, 19 which is to say that we in the Bay Area who take our 20 responsibilities very, very seriously about trying to do 21 something better to relieve people of the dangers of 22 particulate matter and all the pollution that goes with 23 the goods transfer throughout the Bay Area. 24 And the bottom line of it all is I was going make 25 a very strong pitch to say we disagree respectfully with PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 270 1 the staff recommendation to limit the various portion of 2 these Prop 1B funds to 14 percent. And simply said, that 3 we've got like 22 percent of the problem right in the Bay 4 Area. So we have a numerical disagreement, although it 5 may be a very simple observation on my part. And as the 6 Chairperson I think accurately said their job would be 7 very easy if we just weight the vote and allocate the 8 moneys that way and we can't do it. 9 But the bottom line is if we're going to engage 10 in any kind of dispute or disagreement as apparently is 11 taking place today between the various air basins, the 12 bottom line I think for us in the Bay Area is we certainly 13 don't want to be the receivers of any less money than is 14 being proposed by the staff. Fourteen percent we don't 15 believe is really going to do the job for us. But we know 16 zero certainly won't. And we certainly would appreciate 17 consideration for 20 percent, if that's possible, 18 believing that's fair and equitable. 19 But I don't want to use up any more of your time. 20 I don't want to deprive you of the right to hear from the 21 other 48 speakers that are waiting behind me. So with 22 that, I thank you very much for your kind attention and 23 hope we can get some consideration for that. 24 CHAIRPERSON NICHOLS: Thank you for taking the 25 time to come. We do appreciate it, even if we don't PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 271 1 always show it. 2 Okay. San Joaquin Valley. I have to say that 3 you guys are the ones who started this, because if you 4 hadn't gone out with your 37 percent campaign, we wouldn't 5 have all the rest of these people focusing on their 6 numbers and we could be talking about criteria instead. 7 (Thereupon an overhead presentation was 8 presented as follows.) 9 MR. NESTER: I'm Scott Nester, Planning Director 10 for San Joaquin Valley Air Pollution Control District. We 11 have some slides to go through. We'll try to be as 12 concise as possible. 13 Appreciate the opportunity to speak here. 14 Appreciate the work that staff has done so far. 15 In the San Joaquin Valley, the mountains and the 16 meteorology make the emissions that much worse. Our 17 location is wedged in between San Francisco and Los 18 Angeles. We are the perfect transportation corridor. The 19 flatland there is a perfect place to put an interstate 20 highway. That's what's there. It's attracted a lot of 21 trucks. 22 The San Joaquin Valley I should remind you is 23 plagued with chronic double digit unemployment and severe 24 poverty. Valley residents receive very little economic 25 benefit from goods movement along I-5 and the San Joaquin PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 272 1 Valley, and we bear a very significant air pollution 2 impact from that corridor. 3 --o0o-- 4 MR. NESTER: The question is why does it matter 5 to all of us. The Valley as a whole has one of the 6 highest asthma rates in the state at about 17 percent. 7 That means one in six children suffer from asthma. That's 8 about ten percent higher than the state average. That's 9 about ten percent higher than the South Coast average. 10 This slide also shows the health impacts, the 11 human suffering that were enumerated by Dr. Jane Hall, an 12 economist at CSU Fullerton. We're talking about 460 13 premature deaths according to Dr. Hall's study. More 14 recent numbers put that at about 1260 deaths, compared to 15 about 1700 deaths in the statewide air pollution control 16 plan published by the Air Resources Board. 17 There's also a huge number of lost school days, 18 lost work days, asthma attacks, all totaling up to about 19 $3 billion per year in health-related costs. 20 --o0o-- 21 MR. NESTER: The next couple of slides I'll get 22 through very quickly. They're just to show that a ton of 23 pollution, a ton of emissions in the San Joaquin Valley 24 produces more pollution than it does in South Coast or Bay 25 Area. Our natural conditions are conducive for producing PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 273 1 that pollution and retaining it. We have very hot, 2 stagnant summers, cold stagnant winters. Those are the 3 perfect conditions for producing ozone and PM2.5. 4 --o0o-- 5 MR. NESTER: Our natural carrying capacity like 6 what I was just saying is that much lower than the Bay 7 Area and the South Coast. The carrying capacity is how 8 much emissions the air basin can hold and still be in 9 attainment. As you can see, ours is the lowest of the 10 three major corridors there. 11 Next slide. 12 --o0o-- 13 CHAIRPERSON NICHOLS: You're now on borrowed 14 time? 15 MR. NESTER: I'll be real brief here. This is 16 the NOx emissions broken down by category. We're at about 17 620 tons in 2005. We have to get down to about 160 tons 18 per day, and that's about a 75 percent emission reduction. 19 Eighty percent of those emissions are mobile sources 20 beyond the regulatory authority of the San Joaquin Valley 21 Air District. That's why we're looking to the state and 22 federal government to help us clean up the trucks that the 23 trucks are the biggest source of emissions. We need to 24 clean those up as soon as possible. 25 --o0o-- PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 274 1 MR. NESTER: We are committed very seriously to 2 attaining the ozone attainment demonstration with the 3 ozone deadline -- attainment before the deadline in 2024. 4 We think 2017 is doable with some extra effort. 5 Now I'll introduce Rick McVeigh, the Deputy Air 6 Pollution Control Officer. 7 MR. MCVEIGH: As Scott said, I'm Rick McVeigh, 8 the Deputy Air Pollution Control Officer for the San 9 Joaquin Air Pollution Control District. 10 --o0o-- 11 MR. MCVEIGH: The chart shows the exposure of 12 goods movement emissions on a per capita basis, which you 13 can see is much higher in the San Joaquin Valley. 14 Next slide. 15 --o0o-- 16 MR. MCVEIGH: This table we think is real 17 important. This shows the impact of heavy-duty trucks in 18 the four trade corridors throughout California. As you 19 can see from the first line in the table, in the San 20 Joaquin Valley, we're in extreme non-attainment area for 21 the ozone standard and also in non-attainment for the 22 PM2.5 standard just like South Coast. 23 But if you look at the amount of heavy-duty truck 24 miles traveled in the San Joaquin Valley based on EMFAC 25 2007, which is the official model for determining truck PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 275 1 traffic in California by the ARB, we have almost 9 million 2 miles a day of truck traffic -- of heavy-duty truck 3 traffic. That's about 45 percent of the total truck 4 traffic in the state. 5 In terms of emissions in NOx emissions, that 6 equates to about 50 percent of the NOx emissions in the 7 state from heavy-duty trucks. There's a reason that the 8 emissions are a little bit higher we believe in San 9 Joaquin Valley. Even though we only have 45 percent of 10 the truck traffic, we have 50 percent of the emissions. 11 That's because our trucks tend to be older in the San 12 Joaquin Valley. 13 In PM emissions -- and we're talking about toxic 14 diesel particulate emissions here, it's essentially the 15 same story. For heavy-duty trucks, we have 46 percent of 16 the total inventory. 17 And then in terms of the air quality impact, that 18 has we have 86 exceedance days of the ozone standard in 19 2006. And that's at the same level of South Coast. 20 Next slide. 21 --o0o-- 22 MR. MCVEIGH: I have two specific comments. One 23 is on the emission inventory that we talked about. 24 Our main comment here is we believe we must use 25 the official PM2.5 and ozone SIP inventory. And when we PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 276 1 talked about the PM2.5 and ozone SIP inventory, we're not 2 talked about ones that were used in plans two years ago or 3 five years ago. We actually asked up to last week what 4 inventory should be used for our PM2.5 plan that we're 5 putting together right now. We've been instructed by ARB 6 staff to use the same official SIP inventory that was used 7 for the ozone plan. 8 We're also aware there's this draft truck 9 inventory out there. It was presented at a workshop last 10 summer. We believe there's some significant problems with 11 that inventory. It's not yet peer reviewed. It lacks 12 documentation for our review. It doesn't incorporate the 13 results of the most recent ARB ag survey that showed that 14 trucks were much older than this inventory predicts. 15 As was pointed out, the activity within the air 16 basin in this graphed inventory is based on the location 17 of registration. We believe there may be problems with 18 that. A lot of the agricultural trucks that travel in the 19 Valley are registered in the South Coast or the Bay Area 20 where the company headquarters is. 21 It also estimates that 50 percent of the Valley 22 truck travel was out-of-state trucks, newer trucks. And 23 we don't believe that's true. It estimates the average 24 Valley truck age to be only seven years in this draft 25 inventory, and we believe that the ag survey helps PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 277 1 contradict that. 2 But we do strongly agree with the ARB staff 3 proposal to go ahead and do additional field studies, 4 which includes a license plate study and origin 5 destination study that would get more answers to these 6 questions. We believe that's a great idea, and we look 7 forward to working with the Air Resources Board staff on 8 that. 9 CHAIRPERSON NICHOLS: And you're share of the 10 time is up. 11 MR. MCVEIGH: And until that time, we ask that 12 the official SIP inventory be used. 13 I have one more slide. I'll try to do it in ten 14 seconds. 15 --o0o-- 16 MR. MCVEIGH: We also disagree in general with 17 the use of raw population as a factor. We think exposure 18 needs to be taken into account. With our challenging 19 meteorology, each ton of emissions as got pointed out has 20 much more of an impact than it does in coastal areas. We 21 believe the enabling legislation does not specify raw 22 population as a criteria. If you look back at the ARB 23 presentation, those 12 criteria were presented and raw 24 population was never presented as one of those. Thank 25 you. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 278 1 CHAIRPERSON NICHOLS: Thank you. 2 MR. MCVEIGH: I'd like to introduce Tom Jordan, 3 our Senior Policy Advisor, for a few more comments. 4 MR. JORDAN: Thank you, Madam Chair, members of 5 the Board. I'll try to make up a little bit of the time. 6 One of the things we think could be done to the 7 staff proposal to improve it is ARB has talked about broad 8 statewide benefits to the funding. We think regardless of 9 where the funding goes, the goal of making sure there are 10 statewide benefits is a good goal. 11 In the truck category, we believe that all 12 regions of the state have this interplay of trucks 13 traveling from one region to another. We think a way to 14 make sure that no matter where the funding goes in the 15 state, that there are benefits throughout the state is to 16 make sure that 25 percent of the funds expended go to 17 projects that travel in more than one corridor. Whether 18 that be a port project or a project in the San Joaquin 19 Valley, we think 25 percent of the funds should be for 20 projects that travel in between the two regions. 21 The staff pointed out that it's a ranking based 22 upon cost effectiveness. As everyone has pointed out 23 today, there's not enough money to go around. And our 24 concern is without this safeguard, regions could come up 25 with projects that are in their region only. And we think PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 279 1 it's better to look at the state as a whole. It's 2 consistent with Carl Moyer and other processes in the 3 past. 4 Thank you. 5 CHAIRPERSON NICHOLS: Thank you very much. 6 MR. FINDLEY: Good afternoon. My name is Jeff 7 Findley, the manager of the district's incentive programs. 8 Next slide. 9 --o0o-- 10 MR. FINDLEY: I have two issues I'd like to bring 11 to your attention. The first involves the funding caps. 12 We feel that the funding caps was written may be too 13 restrictive and may prohibit participation in the 14 incentive programs. 15 What we would like to suggest is that we would 16 suggest using the 80 percent of the vehicle cost that's 17 currently under the Carl Moyer program for the truck 18 replacement portion and also for the retrofits. The 5,000 19 per retrofit device for PM retrofit is we feel sufficient. 20 It's approximately 50 percent of the cost. However, if 21 somebody would like to install a NOx and PM device, we 22 feel that that should be doubled to approximately $10,000. 23 And as far as the truck trade down, we would like 24 to thank ARB staff for including this provision. We would 25 like to expand the eligible years from 2003 to 2006 to PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 280 1 include something similar with the other truck category 2 from 1998 to 2006. We feel we will get far greater 3 participation and most likely achieve far greater 4 emissions reductions. 5 Another concern involves the retrofit device for 6 the -- that's required for the truck being traded in. As 7 the requirements are currently written, funding is not 8 allowed for this particular project. However, we would 9 like to suggest funding be allowed for this project as 10 long as it is cost effective within the project itself. 11 And finally, to summarize, we feel that the cost 12 effectiveness for the individual projects will dictate 13 which projects will get funded rather than the individual 14 funds. 15 CHAIRPERSON NICHOLS: Thank you. 16 MR. SADREDIN: Madam Chairman, members of the 17 Board, thank you for your time. 18 Before I submit my comments, I want to thank you 19 personally, Madam Chair, for listening to the Valley 20 stakeholders and express our gratitude for your continued 21 attention and devotion to the Valley's needs. 22 I also want to entire Board for all the hard work 23 you did last year with our ozone plan, for the task force 24 that was put together headed by Supervisor Case and Board 25 Member D'Adamo. You did really all you could and went PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 281 1 beyond the call of duty to find every possible way to 2 expedite attainment in the Valley. 3 I also wanted to thank your staff once again. 4 They have been very responsive, open-minded. And once 5 again, they have done you a great service in this work. 6 Last November, after your Board received a report 7 from your staff that indicated that the San Joaquin Valley 8 has one of the strongest stationary source air pollution 9 control programs, if not the strongest in the state, your 10 Board voted unanimously to send the Valley's ozone plan to 11 the EPA. At that time, you said that you will also make 12 the 2017 a commitment for coming into attainment much 13 earlier than the 2024 legal deadline that you have to 14 abide by. 15 That is exactly what our Board has done. And you 16 did say you will add weight to that commitment with real 17 action on the part of the Board that could help early 18 attainment. Today is really your first opportunity to 19 back that commitment with real action. And we are 20 satisfied with the staff's revised recommendation today. 21 We think it does take us in the direction that we need to 22 go. 23 Madam Chairman, members of the Board, when it 24 comes to cleaning our air, there is no other area in the 25 state that faces the same level of difficulty. A ton of PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 282 1 air pollution in the heart of San Joaquin Valley on I-5 on 2 Highway 99 cannot be given the same weight as emissions 25 3 miles off the coast of California. We are quite sensitive 4 to the needs of the other people around the ports and the 5 railyards and South Coast, about a million of them. But 6 there are three-and-a-half million people in San Joaquin 7 Valley that every day they breathe the air that is in the 8 heart of the Valley on I-5 and 99. Air pollution from 9 goods movement, which is really what we're all about 10 today, is the biggest source of air pollution in San 11 Joaquin Valley. 12 Environmental justice is really a top priority to 13 the air district and the Valley. And we think it should 14 play a big role in your decision today. It is hard to 15 argue that a ton of emissions 24 miles off the coast of 16 California, 24 miles off the coast of Newport Beach has 17 the same impact that a ton of emissions in the heart of 18 San Joaquin Valley, people that live in cities like Arvin 19 that you became quite familiar with, they should not be 20 weighed the same way. 21 Now, you have heard the number 37 percent. If 22 all the changes that we are suggesting are adopted by your 23 Board, the Valley's entitled 37 percent. If you use the 24 correct inventory, if you take into account population 25 exposure as opposed to just raw population, and if you PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 283 1 take into account our ozone SIP, 37 percent would be the 2 number that you would come up with and would be the 3 equation that your staff has proposed. 4 But I'm here today on behalf of the San Joaquin 5 Valley to accept and support the staff's revised 6 recommendation that is in the resolution that is before 7 you, especially in light of the clarifications that have 8 been made and the guidelines and in the resolution also to 9 ensure that we put a great amount of focus on 10 multi-corridor projects. 11 I believe you should accept the 25 percent goal, 12 only as a goal. Doesn't have to be a hard requirement 13 requiring South Coast or Bay Area to look at 14 multi-corridor projects. But let's set out a goal and ask 15 your staff to come back with a report and see if the 16 stated goals of your staff do actually come true that the 17 Valley will see those co-benefits. 18 Just quickly two last suggestions we have for 19 you. One is to expand the funding cap so we can actually 20 fund some of these projects. You do already have a cost 21 effectiveness criteria and also a requirement that the 22 districts have to fund projects on a cost effective 23 competitive basis. 24 We also ask that for the tiered-down projects, 25 let us expand the model years that are eligible for that. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 284 1 You don't want to crush a 2002 truck while we have many 2 trucks 1980s, 1990s that are running around the Valley. 3 We could take those trucks and give it to some of these 4 owners that could have older trucks and get cost 5 effective, more reductions. 6 With that, Madam Chairman, I thank you for your 7 time. And again, sorry for all the commotion. And 8 hopefully you understand the passion that exists in San 9 Joaquin Valley. We do feel over time we have not been 10 given our fair share. The Valley receives thirty-one 11 percent, less than the national average, in federal 12 funding. And a lot of people like to use air pollution as 13 a hammer to hit the Valley over the head with. But when 14 it comes to doing something about it, then the Valley is 15 seen as the fly-over country. Have you seen the Valley 16 when you fly over San Joaquin Valley or when you pass 17 through the Valley. That is not really the way to deal 18 with it. 19 CHAIRPERSON NICHOLS: Thank you. 20 You have a question. 21 BOARD MEMBER LOVERIDGE: No question. Just a 22 personal story. And I appreciate the passion that you 23 bring representing San Joaquin Valley. 24 But let me say, I'm the Mayor of the city of 25 Riverside. Where I live every morning I get up and take a PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 285 1 walk. When I see in a distance the monitoring station by 2 the South Coast. We're 90 miles from the coast. The 3 monitoring station has measures monitoring 2.5 particulate 4 matter. It is the worst in the country. And I see that 5 every day, and I'm 90 miles inside and representing four 6 million people in the inland area who likewise experience 7 air that comes from the coast. 8 MR. SADREDIN: No argument from us. We agree 9 that the South Coast has a great deal of problem, is 10 entitled to more than half of the money. 11 By the way, the proposal that we are 12 suggesting -- 13 BOARD MEMBER LOVERIDGE: It's more than Newport 14 Beach. It's more than the coastal cities. There are 18.5 15 million people that live in South Coast and you've seen 16 the data. I appreciate your passion. But don't try to 17 misinterpret or misstate or miscast the problem that we 18 face in the South Coast. That's the only point. 19 CHAIRPERSON NICHOLS: All right. Thank you. 20 There were more from your group that were part of 21 this organized presentation I think. So let's hear from 22 the rest. 23 MR. PEREA: Thank you. Appreciate the long day 24 that you've had. Just a few days ago, our city council 25 had a 12 hour meeting. So I appreciate what you're going PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 286 1 through. And I thank you for taking the time to listen to 2 all of us. My name is Henry Perea. I'm a member of the 3 Fresno City Council. And I'm also a governing board 4 member for the San Joaquin Valley Air Pollution Control 5 District. 6 And you know, I'm here really not to ask you for 7 your sympathy, but to ask you for your support. To 8 support the staff's revised recommendation. Your staff 9 has seen the opportunities, has seen the information, and 10 has thus up come back with a revised recommendation for 11 you to vote on which does increase the Valley's share 12 another 4 percent from 25 to 29 percent. 13 You've gone through the 8-hour ozone plan. You 14 know the issues in the Central Valley. So I won't 15 reiterate those issues. 16 What I will tell you is while we all have a 17 passion for the dirty air we're breathing in different 18 parts of our state, it's going to be difficult for you to 19 try to make everybody happy. And you're not. But I think 20 the revised plan is a very good compromise, and it gets us 21 moving in the right direction. So I would ask you to 22 support the staff's revised recommendation. 23 BOARD MEMBER D'ADAMO: Madam Chair, I want to 24 make sure we're on the same page about the revised staff 25 proposal. If staff could pull up slide 33. As I PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 287 1 understand it, staff's proposal is to use the new 2 inventory. But slide 33 would be in the event that we 3 chose to use the old established inventory. Correct? 4 EXECUTIVE OFFICER GOLDSTENE: I think -- 5 BOARD MEMBER D'ADAMO: The councilman was saying 6 the revised proposal. And I don't want to put words in 7 his mouth. But this is the proposal that you're saying 8 you support, just to make sure I understand. 9 MR. PEREA: Right. 10 CHAIRPERSON NICHOLS: This is what Mr. Perea 11 would be supporting. 12 EXECUTIVE OFFICER GOLDSTENE: The proposal is the 13 other slide from the original staff report. What we were 14 showing in this slide is if you use the SIP inventory -- 15 this is the other analysis. If you use not the truck 16 inventory that we're developing but the established SIP 17 inventory which we're using for the SIP, you can see the 18 comparison. But we were recommending the numbers where we 19 use the newer data. 20 CHAIRPERSON NICHOLS: Thank you. Yes. 21 MS. RAWLING: Good afternoon, Madam Chair and 22 members of the Board. My name Mary-Michael Rawling, the 23 Chair of the Valley Air District Citizens' Advisory 24 Committee. And on behalf of those members of that 25 Advisory Committee, I would like to express the concern PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 288 1 our members had with the formula for the distribution of 2 funds recommended as of at least earlier this month. I 3 know some things have changed since then and have even 4 seemed to have gone back and forth a little bit today. 5 The Valley Air District, like all the other 6 regions here today, do want a bigger slice of that pie, 37 7 percent as we heard before. 8 As you know, the San Joaquin Valley has an 9 extreme ozone problem, and we desperately need your help 10 to tackle the emissions, especially from heavy-duty diesel 11 trucks in our region. That's our worst offender as far as 12 pollution goes. So thank you for tackling that issue this 13 year. 14 I just finally thank you for considering 15 population exposure, the health risks that you have seen 16 today, and the sound science you're using as you take this 17 important step forward today in cleaning up California's 18 air. I know we're all facing insurmountable challenges 19 given the limited amount of money to go around today. 20 Thank you. 21 CHAIRPERSON NICHOLS: Thank you. 22 MAYOR DHALIWAL: My name is Amar Dhaliwal, Mayor 23 of City of San Joaquin. And I'm here to support the 24 revised proposal by Central Valley Air Pollution Control 25 District. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 289 1 Just to let you know my perspective. San Joaquin 2 is agricultural rural community that comprises of mostly 3 farm workers and farmers, some merchants like myself. 4 Most of the neighboring communities in the Central Valley 5 and my community, it ranks consistently in top ten most 6 poor communities in the state of California. 7 And as was mentioned by some other folks from the 8 Central Valley, the poverty is a big issue. And we know 9 from an environmental justice perspective the poor people 10 usually get the worst end of it. I would like you to 11 consider that factor. 12 Also we have simply for the southern 13 California -- I do travel south. And we see that they 14 have a lot of traffic congestion problem. But from visual 15 notice, I think they have a lot more mobile cars that are 16 source of air pollution than we -- as if you notice on 99, 17 you see more of the trucks. I think it's statistically 18 proven we have more truck emissions than southern region. 19 I live in my town. I know most of the trucks that pass 20 through it, they are not new by any means. Some of the 21 trucks I would rather see them in a museum of something 22 they're so old. So it's a problem there. 23 And thanks for your consideration. 24 CHAIRPERSON NICHOLS: Thank you for coming and 25 spending the day with us. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 290 1 We're going back down the list as it was 2 originally presented. So as I have it, we're on number 9 3 with Diane Bailey to be followed by Tim Carmichael. 4 Have I left out one of the San Joaquin people? 5 I'm sorry. I thought your group was finished. 6 DR. LIGHTHALL: No, we're not. My name is Dr. 7 David Lighthall, Senior Scientist for Environmental Health 8 at the Central Valley Health Policy Institute at CSU 9 Fresno. 10 I think I just want to reframe the issue here and 11 look at the long-term attainment challenge. The Prop 1B 12 attainment funds are only a down payment on the overall 13 investment. Each of these regions is going to face 14 billions beyond what this Proposition is going to provide. 15 And so I have two points. 16 First, the Valley's ozone and PM attainment 17 problem is much more directly tied to goods month. I have 18 a slide up there to show that. That one out of every two 19 tons of mobile source NOx in the Valley comes from trucks, 20 from heavy-duty trucks. 21 The second point I want to make is that the 22 Valley has a lower capacity over time to deal with the 23 overall problem. So in contrast then to that one out of 24 every two tons, only one out of every five tons in the 25 South Coast of their mobile source NOx actually comes from PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 291 1 heavy-duty trucks. You have about one-quarter is actually 2 from off-road mobile sources. 3 And if you look at figure two, you can see that a 4 similar situation exists with PM2.5. So in other words, 5 our attainment problem is disproportionately based on the 6 need to reduce emissions from heavy-duty trucks, which is 7 the primary focus of the Prop 1B funds. 8 Now the second point is more complex. And that 9 is the South Coast is more capable of generating the 10 additional funds beyond Prop 1B that are necessary for 11 attainment. The borrowed funds in the case of Prop 1B is 12 an incomplete, expensive, and unsustainable policy tool 13 for air policy mitigation. More efficient equitable 14 policy mechanisms for generating mitigation funds must 15 reflect a structural nature of the goods movement problem. 16 The ideal policy model is one that forces 17 wholesalers, retailers, consumers to pay a slightly higher 18 price for their goods through the imposition of pollution 19 fees. And what we're seeing is exactly this process 20 taking place in the South Coast. The Long Beach and Los 21 Angeles ports have put in a container fee that's going to 22 generate 1.6 billion by 2012. They have the demonstrated 23 legal authority. 24 In contrast, the Valley district does not have 25 that tool. We cannot according to interstate commerce law PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 292 1 impose these fees on passing trucks. We're stuck with the 2 other policy tool, which is higher vehicle registration 3 fees. This policy model doesn't have an integral 4 connection to shipping and purchase of goods and can only 5 generate a small fraction of the funds necessary for 6 accelerated attainment. 7 Here again, the South Coast has a significant 8 advantage over the San Joaquin Valley. Has a population 9 over 18 million people. It will be able to raise far more 10 funds to concentrate on fewer tons of heavy-duty diesel 11 NOx. So as shown in Figures 1 and 2 as you can see in 12 absolute terms, the Valley's truck emissions actually 13 exceed those of the South Coast. 14 So I want to honor the points that were made 15 about the risk assessment. The point made about 16 Riverside. This is absolutely true. But in the long 17 term, which of the regions are going to have the 18 mechanisms, the policy mechanisms, for dealing with the 19 problem? Those regions that have major port authorities 20 have a significant advantage over the long term. 21 So I realize, I want to acknowledge our respect 22 to ARB staff that my core argument was not a criteria in 23 their analysis. But I think it's very important that you 24 keep this criteria in mind as you move forward in your 25 deliberations. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 293 1 And I also want to say you have a great clerk. 2 Thank you. 3 CHAIRPERSON NICHOLS: All right. 4 MR. WEBER: Madam Chair, my name is Pete Weber 5 from the California Partnership of San Joaquin Valley. 6 And before I take up my three minutes, could I 7 raise a point of order? Because I have been sitting here 8 thoroughly confused all afternoon. I've been looking at a 9 resolution that says on page 4, "Now, therefore be it 10 resolved," et cetera, "the modified trade corridor funding 11 target," and it says $290 million, which would be 29 12 percent. And yet I've heard Mr. Goldstene say that is not 13 the recommendation of staff. But that is the resolution 14 you have in front of you. 15 Could we clarify that and then I'm take my three 16 minutes? 17 CHAIRPERSON NICHOLS: I think they tried this 18 once before, but let's try it again. 19 EXECUTIVE OFFICER GOLDSTENE: We apologize for 20 the confusion. We were going back and forth trying to 21 finalize our staff recommendation. 22 The staff is recommending the numbers that were 23 in our original draft report which shows 55 percent for 24 South Coast and 25 percent for the San Joaquin Valley. 25 CHAIRPERSON NICHOLS: So in other words, the PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 294 1 draft resolution was prepared when you were going back and 2 forth, and it wasn't fixed to reflect your -- 3 EXECUTIVE OFFICER GOLDSTENE: Final 4 recommendation. We are presenting the information to the 5 Board so you know what our thinking is and so you're aware 6 there are two inventories that we were using to try to 7 figure out the best way to present to you what our 8 recommendation is. So we apologize for the confusion. 9 CHAIRPERSON NICHOLS: I think the best 10 interpretation of this is that the staff has been really 11 struggling to come up with the recommendation. We will 12 accept that apology. But we understand it has confused 13 confusion. With that, go ahead. 14 MR. WEBER: Thank you, Chair Nichols. I 15 appreciate how tough a job yours is and the rest of the 16 Board. 17 Let me first say that I do not see this as a 18 civil war between the regions here. I don't even see it 19 as sectarian violence. 20 What I think is going on here is we all have 21 enormous needs. And we are very sympathetic to the needs 22 of the other regions, in particular our brethren in the 23 South Coast. I mean, the South Coast and the San Joaquin 24 Valley live in the twin towers of air pollution in the 25 United States. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 295 1 We have enormous challenges. And we are very 2 sympathetic to the people that live in close proximity to 3 the ports, the people in Riverside that referred to 4 earlier in the dialogue. It's important, however, for me 5 to express that we also have tremendous sympathy for the 6 65 percent of our population that live in comparable 7 proximity to highway 99 as it true of the people who live 8 in the ports exposed to the same levels of toxicity. 9 I think it was Board Member D'Adamo said we 10 shouldn't be talking about percentage here. We should be 11 talking about the criteria and whether the criteria are 12 the right criteria, whether they ave been applied 13 correctly, whether they have been weighted directly. 14 And I don't want to repeat a lot of testimony 15 that has already been offered, but basically the staff has 16 used three criteria. One of them is inventory levels. 17 And on the question of inventory levels, there are two 18 inventories. One of them is the official level. The 19 other one is a inventory number that is not been vetted, 20 that has not been subjected to public process, that the 21 staff has recommended be subject to additional surveys, 22 that your deputy staff director has said is not going to 23 be ready for prime time until sometime next year. That's 24 what I heard Lynn Terry testify to. 25 The second criteria is with regards to SIP needs. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 296 1 And I have to tell you that when the Governor in June of 2 last year expressed the view that the Valley attainment 3 date for 24-hour ozone had to be accelerated, it was 4 inexcusable for us to go to 2024, we were in violent 5 agreement. You know, we applauded when on November 15th 6 this Board declared that while 2024 is the legal date for 7 24-hour ozone attainment, that this Board was committed to 8 the notion that 2017 should be the unofficial target date 9 and ARB will lend its weight to the attainment of that 10 date. So we were clearly disappointed when that was not 11 considered by the staff in its recommendations. 12 The third criteria -- so you know, we agree with 13 both of those criteria yeah. It's just method of 14 application that was used that we think is incorrect. 15 The third criteria was population. And I'll tell 16 you, I've read and reread and read for the third and 17 fourth time the SB 88. There is nothing in the 12 18 criteria used in SB 88 that refers to raw population as a 19 suitable criteria. This is about goods movement impact. 20 And as was presented by Mr. Sadredin and by staff and by 21 Dr. Lighthall, we in the San Joaquin Valley suffer more 22 from goods movement impact than any other region in the 23 state. And so I think population should be considered in 24 the state in the context of goods movement impact. I 25 don't think that was done. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 297 1 Now, correcting the revised -- I was going to say 2 the revised recommendations from staff. I guess the 3 unrevised recommendation from staff. The recommendation 4 from staff to the 29 percent level does not fully address 5 those issues by a long stretch. But at least it goes part 6 way to getting us there. 7 And you know, it doesn't -- our legislators were 8 arguing for 37 percent. I'm basically suggesting let's do 9 the 29 percent. Let's get on with it. It's been 10 14 months since the voters approved this funding. It's 11 time for us to put that funding to good use and get our 12 air cleaned up for our residents. Thank you very much. 13 CHAIRPERSON NICHOLS: Thank you. I think we can 14 guarantee it will be put to good use no matter what 15 happens here today. Thank you. 16 MS. MEJORADO: Good afternoon. Thank you for 17 your time. My name is Terri Mejorado, tourism manager for 18 the Fresno City and County Convention and Visitors Bureau. 19 Fresno County is shouldered by three magnificent 20 national parks. But today I'm going to focus on Sequoia 21 and Kings Canyon, which are home to the world's largest 22 trees, the nation's highest peak, and some of the most 23 rugged, unique, and diverse terrain in the country. With 24 this vast range of elevation, climates, and environments, 25 it is important to consider our county's air quality. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 298 1 Unfortunately, Sequoia and Kings Canyon is home 2 to some of the nation's dirtiest area. In 2004, the EPA 3 designated Sequoia and Kings Canyon as an ozone 4 non-attainment area with levels of ozone pollution that 5 threatened human health and plant life. Monitors located 6 in popular destinations within the park show ozone levels 7 that can exceed those in Los Angeles which limit outdoor 8 activities for both park visitors and staff and this 9 inspiring outdoor classroom. 10 In a study conducted by the National Parks 11 Conservation Association, Sequoia and Kings Canyon were 12 labeled the nation's smoggiest park as it has 13 consecutively had the most days for exceeding the national 14 health standard of ozone of any site in the national park 15 system. During the summer months, these parks have 16 experienced an average of 61 days of unhealthy ozone 17 levels. In 2005, the parks did see a small step of 18 improvement with 54 days of high ozone levels. However, 19 this number still amounts to nearly two months of bad air 20 for visitors during the summer. 21 In 2005, Sequoia and Kings Canyon hosted 1.2 22 million visitors. That's 1.2 million people in addition 23 to our own Valley residents that were exposed to hazardous 24 air quality. With such high ozone levels, visitors of 25 Sequoia and Kings Canyon are exposed to serious PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 299 1 respiratory health. 2 Ozone is a powerful respiratory irritant that can 3 cause coughing, wheezing, shortness of breath, and pain 4 when inhaling deeply. Sequoia and Kings Canyon have 5 thousands of miles of hiking and biking and climbing, yet 6 these outdoor activities require vigorous activity, 7 causing the continued inhalation of air pollution. 8 The safety of Fresno County is at risk with the 9 current ozone pollution as it is, which threatens human 10 health and plant life. The Fresno City and County 11 Convention and Visitors Bureau recently unveiled its new 12 strategic plan to actively promote tourism in the Fresno 13 regional area and our attempt to promote Fresno through 14 trade shows, conventions, and other various media outlets, 15 it is imperative that we are able to offer a safe and 16 healthy environment for our guests. Thank you. 17 CHAIRPERSON NICHOLS: Thank you. 18 MR. ISOM: Good afternoon. My name is Roger Isom 19 with California Cotton Ginners and Grocers Association. 20 In the interest of time representing several ag 21 organizations, including many of the audience and also 22 independent oil producer agency. 23 Let me be short and sweet, because I think most 24 of it has already been said. First of all, let me be very 25 clear we support the alternative proposal, the 29 percent PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 300 1 alternative. There are three basic points I want to make, 2 some of which have been made. 3 First, last year this Board approved an extreme 4 ozone plan for the San Joaquin Valley, one of two in the 5 state. This Board also appointed a fast track task force 6 which I sat on that was cleared by two of your members. 7 And one of the findings that we made was the exceedingly 8 important need for incentive funding was very clear that 9 was one of the findings we made. 10 A point was also made there was going to be a 11 container fee bill passed this year. The Governor has 12 indicated he would sign it, which will add a huge influx 13 of money into South Coast and the Bay Area, none into the 14 San Joaquin Valley, or very little in the port of Stockton 15 maybe. But the bottom line is we're going to be paying 16 that fee because we ship our products through those ports 17 and we'll pay the container. 18 So the bottom line is San Joaquin Valley does 19 deserve a larger share. I don't disagree with anything 20 Mr. Wallerstein had said or Mr. Broadband said from the 21 Bay Area. We all need more money. We could use $10 22 billion, $100 billion. But I think we've made a very good 23 case for the San Joaquin Valley as to why we need more. 24 Your Board has recognized this through the finding of 25 extreme non-attainment and also the fast track task force PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 301 1 and their findings. This is one way to fulfill that 2 commitment. Thank you. 3 CHAIRPERSON NICHOLS: Thank you. 4 MR. GANDUGLIA: My name is Jim Ganduglia. I 5 represent the Environmental Policy Committee for the 6 California Trucking Association. 7 Thank you, Madam Chairman and all the Board 8 members. 9 I would like -- I'm representing Ganduglia 10 Trucking that's been in existence for 69 years, and 11 according to the ARB fleet calculator, I'm scheduled for 12 extinction in 2013. 13 I have 15 trucks that are retrofitted. We 14 service the San Joaquin Valley and the South Coast. I 15 have APU units. I have big wide fast tires. I have 16 everything under the sun that's new, and I still can't get 17 there. 18 We need $50 billion to flip the existing fleet of 19 diesel trucks in the state of California. When you drive 20 home tonight, every truck that you see on the road is 21 junk. Every truck that you see. There are very few 22 trucks out there that are even close to compliance. 23 One of the big ag haulers in the state of 24 California has 350 trucks. To retrofit those with 25 particulate traps would cost him $3.5 million, which in PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 302 1 four years he has to throw away. That's the ugliness of 2 all of this stuff. 3 Trying to reach attainment by 2014 is virtually 4 impossible. We don't have enough money, and there are not 5 enough good enough trucks to get there without spending a 6 huge amount of money to retrofit. My fleet alone in 2013 7 I will go from an average yearly equipment payment of 8 275,000 to $660,000, which is a $385,000 increase. No 9 truck dealer on the face of this planet will sell me a 10 truck, because they know I can't make those payments. One 11 in 12 of every employee in the state of California works 12 associated with the trucking industry; warehousing, all of 13 that sort of stuff. 14 Thirteen million tons of tomatoes were grown in 15 the San Joaquin Valley last year. If we do anything to 16 impede the commodities -- the farming commodities that are 17 grown in this country in this Valley, we will destroy the 18 economy of the state of California, at which point air 19 pollution will not be a concern anymore. When people 20 can't eat, when they can't buy stuff, air pollution is not 21 going to be a priority anymore. I do not want to see us 22 get there. 23 What I would like to do for this organization at 24 some point is run the fleet calculator for you and watch 25 it in its destructive best. Because you will not believe PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 303 1 it until you see it. And it is an amazing thing. 2 In our efforts to try to clean up the planet -- 3 and I want to clean up the planet as soon as possible -- 4 you won't believe what happens. And whether it's in the 5 first, second, third, or fourth year, it destroys every 6 trucking company I've run the calculator through. 7 Thank you very much. I don't know who's up next. 8 CHAIRPERSON NICHOLS: We have to be coming to the 9 end of this group here. 10 MR. STOUT: I may be the last of Pete's people. 11 Chairman Nichols and Board member, my name is Mark Stout 12 from Fresno. I'm the San Joaquin Valley director of the 13 utilities style renewable power project developer 14 developing several projects in the San Joaquin Valley and 15 have been actively working with the California Partnership 16 for the San Joaquin Valley Air Quality Work Group. Also 17 had to throw in I've been a Sierra Club member for over 15 18 years. 19 When it comes -- the main point I wanted to focus 20 on was the question of the impact of trucks towards the 21 Valley's NOx inventory. Mobile source emissions are the 22 vast bulk of the Valley's NOx inventory. And of that, as 23 Dr. Lighthall has pointed out, one half of the mobile 24 source NOx emissions in the San Joaquin Valley are from 25 trucks. Just in comparing that to South Coast where only PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 304 1 one-fifth are mobile source NOx emissions are from trucks. 2 Trucks are just a huge footprint in the NOx inventory of 3 the San Joaquin Valley. And if we're going to make 4 progress towards ozone attainment, we need to do something 5 about rapidly accelerating truck fleet turn over and get 6 newer engines in. And as Mr. Ganduglia pointed out, it 7 requires a whopping investment. It's mind-numbing to 8 think of how much investment it takes to turn over that 9 quickly to meet the new rules. And Prop 1B can help do 10 that. 11 So I support the staff's revised recommendation. 12 Would like to of course see more money for the Valley. 13 But the most important thing is to move forward with -- 14 this funding is critical statewide on helping us address 15 mobile source emissions. Thank you. 16 CHAIRPERSON NICHOLS: Thanks very much. 17 We're now going to hear from a couple of 18 environmental group representatives who I think want to 19 speak in order, Rafael Aguilera, Tim Carmichael, and 20 Kathryn Phillips. Maybe not. 21 MS. PHILLIPS: Thank you. I'm Kathryn Phillips 22 with Environmental Defense. I'm speaking on behalf of 23 Environmental Defense, the Natural Resources Defense 24 Council, Union of Concerned Scientists, Fresno Metro 25 Ministry, Grace and Neighborhood Council, Green L.A. Port PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 305 1 Work Group, Clean Air Network, Regional Asthma Management 2 and Prevention Initiative. I think that does it for the 3 moment. Plus we've submitted a letter as a much larger 4 group. 5 I just want to say right off the bat I want to 6 thank the staff of ARB for the extraordinarily open, 7 transparent, well managed approach to developing the 8 guidelines for distributing this money. I think that's 9 been missed a little bit today in all the conversation. 10 But I've gone through about six years of different kinds 11 of workshops with this organization, and I don't think -- 12 they're always good -- you have wonderful staff across the 13 board, but I think this was extraordinary in the amount of 14 openness. And I've heard others from other sectors say 15 that at workshops. So I think you deserve to know that 16 Doug and Cynthia did a wonderful job. 17 The other thing is that we support the January 18 4th proposal, including the formula for distributing the 19 corridor funds. We are disappointed though because of the 20 what we thought has been a wonderfully managed process. 21 We are disappointed that of the eleventh hour today we've 22 come in with another proposal. So now there's all this 23 confusion. 24 We liked what we saw in the January 4th proposal. 25 We have been talking to staff. We've been attending PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 306 1 workshops. We thought that what had come up with was a 2 fair division. It was a fair formula. 3 Regarding the 100 percent issue, I just want to 4 say that for the most part we think that especially the 5 first year 100 percent of the money -- or the money should 6 be spent on projects that essentially are 100 percent of 7 the time in California. We think that's important to 8 maintain voter trust in how the money they voted for gets 9 spend. 10 Now we understand that there's always the 11 possibility that somewhere down the road we find all those 12 vehicles that travel 100 percent in the state have been 13 fixed. And there's no more things to fix except those who 14 travel 99 percent of the time in the state. So then we 15 can consider it. But I think this first year it's 16 important that we have 100 percent spending. 17 Finally, we don't want to delay distribution of 18 these funds. I think it's very important to get the money 19 out, especially the 25 million. We know we'll be getting 20 some benefits right away. 21 And a couple of my colleagues in the 22 environmental community will speak now. But I want to let 23 you know we appreciate the work you've done. And we'd 24 like to see something that's consistent with the January 25 4th proposal that we all participated in. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 307 1 CHAIRPERSON NICHOLS: Thank you. 2 MR. AGUILERA: Good afternoon. Rafael Aguilera 3 with the Verde Group. 4 I just want to say, Mary, I saw you out there cut 5 up the cake and distribute it in a fair manner. So I 6 think you can do a good job here with this money. Pretty 7 confident in your ability. 8 (Laughter) 9 CHAIRPERSON NICHOLS: When it comes to chocolate, 10 I know what to do. 11 MR. AGUILERA: I just really want to echo some of 12 the comments that Kathryn had mentioned on behalf of the 13 larger coalition. You know, I've been involved in this as 14 Kathryn and others have since the inception of the SB 88 15 legislation. We've been following it all the way through 16 here. And you know, we knew back that this allocation 17 would probably be the hairiest thing. We didn't want to 18 deal with it there, so we punted it over here with some 19 clearer objectives. 20 And I also wanted to compliment Douglas Ito and 21 Cynthia Marvin on their exceptional staff work. They've 22 run an exceptionally open, transparent, and very 23 responsive process. 24 I thought it would be helpful to walk you through 25 the process we had in our regional coalitions that I PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 308 1 represent. Green L.A., which is coalition of 60 groups in 2 L.A., and the Central Valley Air Quality Coalition of 3 Central Valley. 4 And the Green L.A. Camp, the Port Working Group 5 consisting of a number of members decided to sign on to 6 support the January 4th version. We do not have a 7 position on the staff's resolution. 8 In the Central Valley we have a little bit 9 more -- less unanimous. There were members that were 10 willing to sign on to the statewide letter to support the 11 January 4th version on the premise that we believed the 12 data was accurate and consistent. And the process was 13 open and fair. 14 There were others that just agreed not to oppose 15 it. 16 So it is a little disappointing that at the 17 eleventh hour we have seen a change and we don't have a 18 position on the resolution on the Central Valley side 19 either. 20 That said, we know that this is just the first 21 quarter of a billion dollars. And we do want to see the 22 rest of it go out there as well as this. So we don't want 23 to have the Legislature or the advocates lose faith in the 24 process. And so we want to urge you to support the 25 January 4th proposal, but also to resolve these issues of PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 309 1 inventories and numbers that may change. 2 MR. CARMICHAEL: Good afternoon. Tim Carmichael 3 with Coalition for Clean Air. 4 I wanted to touch on two items related to the 5 early money, the 25 million, where we would like to see 6 change. One, you've heard quite a bit of testimony on. 7 One you haven't heard about yet. 8 On the LNG trucks for the ports and the South 9 Coast, agree very much, Chairman Nichols, with your point 10 about cost effectiveness being a very important criteria. 11 But I also wanted to remind this Board as I've done 12 recently and I expect I'll be doing again this year, this 13 Board adopted a very strong alternative fuels plan under 14 the AB 1007. From our perspective, that makes the 15 implementation of alternative fuels a priority for this 16 organization going forward. There's no way that we are 17 going to achieve the goals laid out in that plan by 2020 18 for alternative fuels penetration if this Board isn't 19 consciously prioritizing opportunities to introduce and 20 employ alternative fuels. 21 We also supported the solution that was proposed 22 by I think it was a staff member that proposed or 23 suggested that one way to resolve this might be to put 24 this money or the decision back to the South Coast and 25 give them the discretion on whether to apply these funds PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 310 1 to LNG trucks or diesel trucks. We would support that as 2 a way to resolve this specific issue. 3 The other point on the early money has to do with 4 some criteria. As you know, the current staff proposal 5 does not allocate any of the early money to cargo handling 6 equipment. We think that's a mistake. And we support a 7 request that's been put forward by a few different 8 parties. And I believe the South Coast also supports 9 this, though they didn't testify to it today. To take 10 750,000 of that South Coast money, which is almost 14 11 million, take 750,000 and allocate it to cargo handling 12 equipment. 13 There is a project that was on the South Coast 14 list specifically on energy storage devices that can be 15 applied to cargo handling equipment today. One of the 16 logics that we didn't agree with or rationales we don't 17 agree with in the staff proposal is that you should not be 18 investing this money on cargo handling equipment until 19 Tier 4 engines are available for that cargo handling 20 equipment. From our perspective, that's not a really good 21 approach, because it may be years before the Tier 4 22 engines are available. 23 If we have opportunities to get real reductions 24 today by adding on an energy storage device that not only 25 can be effective in this application but could be PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 311 1 effective in other application going forward, we think 2 that's an opportunity we should cease. Again we're 3 talking about a relatively small portion of this money, 4 750,000. I believe the staff are aware of this request, 5 and I also believe as I said a moment ago the South Coast 6 AQMD supports this request. 7 Those are the two, you know, specific changes on 8 the early money that we're making. I think it's important 9 to register that it's two requests that staff has covered 10 a lot of territory with this Prop 1B money. And I think 11 as my colleague said earlier, they've done a very good 12 job. And the fact we have two specific concerns out of 13 all of the things they put forward I think is very telling 14 about what we think about the proposal overall. 15 BOARD MEMBER LOVERIDGE: Chair, could I ask Barry 16 Wallerstein about his position on cargo handling? 17 MR. WALLERSTEIN: Yes. 18 BOARD MEMBER LOVERIDGE: Thumbs up. 19 CHAIRPERSON NICHOLS: Whose is the cargo handling 20 equipment. Who is it? 21 MR. CARMICHAEL: It's specifically the mobile 22 cranes at the ports that currently are diesel powered. 23 And there's a technology application to put energy storage 24 devices on these cranes. And as far as I know, it's the 25 only fix that we have in the near term for this portion of PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 312 1 the pot. 2 CHAIRPERSON NICHOLS: I received a briefing on 3 that. It is a very promising and does get apparently 4 immediate reductions. 5 BOARD MEMBER RIORDAN: Who owns the equipment? 6 MR. CARMICHAEL: I actually don't know the answer 7 to that. 8 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Typically the 9 terminal operator. It's not owned by the port. It's 10 owned by the terminal operator. 11 BOARD MEMBER RIORDAN: I could be convinced. But 12 let me tell you I will never forget the truck drivers that 13 appeared before this group who frankly do not have a way 14 to fund the improvement on their trucks. I just -- and 15 when you have a big corporation that may handle that cargo 16 equipment, a little less inclined to agree with you. Only 17 because I just will not forget that testimony. It was 18 very compelling. 19 MR. CARMICHAEL: I share that concern. My 20 perspective on this is we're talking about a small enough 21 percentage of the money it will not affect the number of 22 trucks that would be funded through this program in the 23 staff proposal. 24 CHAIRPERSON NICHOLS: Thanks for your comments. 25 We're going to lose Board members at 6:00. And PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 313 1 so you're not -- those of you who insist upon speaking are 2 doing it at your own risk, because you may be losing one 3 of the people who would have been one of your votes on 4 this item. I'm warning you now. 5 I do have a question for the environmental 6 community that was here. Maybe they've all disappeared. 7 But putting you in a tough position. But Kathryn, you can 8 do for the group. 9 Kathryn, I understand the difficulty of this. 10 And I'm going to take the blame here for having raised 11 this SIP issue to one that has caused so much confusion. 12 Because of all the comments that have been made about 13 fairness and percentages and need and all of the rest of 14 it, that was the only one that grabbed me as being 15 potentially a real problem with the original staff 16 proposal. I understand all of the optics and the 17 obviously the concern about any kind of change from the 18 staff proposal. And the last thing I want to do is to 19 throw this over into some other arena to resolve. I think 20 the Board needs to make its own decision on the merits. 21 But I'm troubled about the fact that we would be 22 using a formula which was based on numbers which may be 23 better than the SIP numbers. I don't know if they're 24 better. But they haven't been through the same process, 25 and they're not the numbers we're using for other PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 314 1 purposes. And I just question whether that causes our 2 credibility to be impaired. And you're a SIP maven as 3 well as a truck maven, so what do you say about that? 4 MS. PHILLIPS: I'm also an incentive maven. 5 First of all, I'm speaking only for Environmental 6 Defense -- for myself and Environmental Defense. 7 I think there are two tough issues here. One is 8 how do you continue to maintain confidence and credibility 9 in CARB's approach to distributing this money? And then 10 the other is how do you deal with the SIP issue and to 11 interact? 12 My concern is that -- I mean, what I have said to 13 staff is I like the idea of using the most up to date 14 information you have available. But the concern is I 15 haven't had a chance to sit down and look at both of those 16 and understand both those issues. But what I've heard 17 from today's presentation is it sounds like CARB has a 18 pretty good handle and a pretty good sense that there's a 19 difference between the SIP if they did it today and the 20 SIP if they did it in February a year ago, which became 21 part of the SIP -- the inventory a year ago which became 22 part of the SIP in September. 23 So I feel like the inventory today as they learn 24 more, as they look at it deeper, is probably going to be 25 different from the inventory before. And I think we are PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 315 1 probably going to find that as we go forward. So I 2 probably feel more comfortable with the more contemporary 3 now SIP or inventory numbers. 4 The other issue is that I know there has been a 5 lot of desire by the San Joaquin Valley to get a lot more 6 money. And all of us have been under extraordinary 7 pressure to do that, even the environmentalists. And at 8 some point we should talk about the level of the pressure. 9 Because in my case I found somewhat offensive. 10 But I do think that while there is this 11 extraordinary need in the Valley and there's extraordinary 12 need in South Coast -- and I don't really -- you know, 13 it's sort of like which baby are you going to let die 14 first. You can't choose between your children. 15 But I do think there has to be sort of an 16 understanding that it's not just us in this room that are 17 going to make decisions about how this money is going to 18 be distributed. There are a lot of people over at the 19 Legislature who are going to be watching this and who 20 haven't been here today and will be watching us. What we 21 need to do is start getting that money out and get it out 22 in a way that guarantees we can get it out for every 23 budget season for the next four years. 24 I worry again that if we change what was 25 generally believed to be a reasonable approach, a PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 316 1 reasonable formula -- I mean, South Coast has been over 2 there asking for 80 percent -- at least not South Coast 3 but L.A. people since the beginning of time. And Seyed 4 was asking for 37 percent from the beginning of time. 5 Now we've come up with this amount that's not as 6 much as South Coast can prove it deserves. It may be more 7 than what San Joaquin Valley if people started looking at 8 per capita or number of voters they can get. 9 Bay Area is willing to settle for 14. It just 10 seems like politically you're in a situation that if you 11 change that formula now, we could damage the ability to 12 get money going forward. Frankly, a wasp's nest has been 13 stirred. And I felt very comfortable in January with the 14 proposal, because I felt like staff had come up with a 15 sound approach. 16 But again, I do think that using the most up to 17 date data, which is what staff has done with the PM2.5 18 stuff. They based that on the most up to date data, and I 19 think that's reasonable. I don't think anybody's going to 20 argue they should use San Joaquin Valley's much more 21 optimistic or significantly more optimistic approach to 22 PM2.5. 23 You know, I haven't heard the Valley come up here 24 and argue that their draft PM numbers ought to be the ones 25 that should be used, not the modeling numbers that CARB PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 317 1 just came up with. 2 You're saying you used the draft PM numbers? 3 That's interesting, because if the modeling 4 numbers are showing there's worse so you get more money -- 5 well, anyway, it's all very confusing. But I think we 6 should stick with the January 4th numbers. 7 CHAIRPERSON NICHOLS: I called you down here and 8 asked you to answer my questions because you're in a 9 position I think that has some relevance to how I think 10 about these issues for all those reasons. 11 MR. WEBER: Chair Nichols, since you raised the 12 issue, I think it's only fair for me to report that in a 13 conversation with you and with Supervisor Case, Mayor 14 Autry, and a senior member of your staff, you raised that 15 same question in our meeting. And as you will recall, a 16 senior member of your staff said that she disagreed with 17 the use of the unofficial inventories. 18 The fact that there is dissension within the 19 members of your senior staff suggests to me that those 20 inventory numbers are not ready to be used for this 21 allocation formula. And I frankly resent the fact that 22 Kathryn would come up and say that's putting undue 23 pressure. All we're saying is let's be fair. If those 24 numbers are the subject of significant disagreement 25 between your staff, they should not be used for this PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 318 1 purpose. Thank you very much. 2 CHAIRPERSON NICHOLS: You need to identify 3 yourself for the reporter, or I can. 4 MR. WEBER: Peter Weber, California Partnership 5 for San Joaquin Valley. 6 CHAIRPERSON NICHOLS: Let's go. 7 BOARD MEMBER KENNARD: Madam Chairman, I 8 apologize, but I'm one of the Board members that you're 9 going to lose at 6:00. If you don't mind, I'd like to 10 either encourage you to filibuster or encourage you not to 11 speak, so you know where I am. 12 You know, it's incredible to me after hearing all 13 this testimony that we are losing sight that there's a 14 billion dollars of money that not too long ago we didn't 15 know we would have. And what we're really fighting over 16 is only $40 million. And it's kind of astounding to me 17 all this energy is going toward, you know, who gets that 18 other $40 million. 19 And I did have a briefing from staff about a week 20 ago, and I felt very, very comfortable with the rationale 21 that they utilized. And then today San Joaquin came with 22 a totally different number set of metrics supporting their 23 view, close to 37 percent. And South Coast came in with 24 another sets of metrics and to suggest that 55 is not 25 enough. So we could be all over the map with this. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 319 1 And so I'm feeling very comfortable with the 2 55/25 proposal, which is the original number. And I think 3 that we ought to go with that and be done with it. 4 Because to do anything else also takes -- if you just want 5 to look at the shear numbers, takes over 7 percent away 6 from South Coast and doesn't distribute that delta 40 7 million across the other three jurisdictions. And I don't 8 think that's quite fair either. 9 So, you know, in any event, it's not going to be 10 a perfect solution. And I feel very, very comfortable 11 with the rationale that staff came up with originally. 12 SUPERVISOR HILL: If you want to make a motion at 13 some point to that effect, I'll second it. 14 CHAIRPERSON NICHOLS: We're getting very close to 15 that point. I think people have already sensed from our 16 questions what our issues and concerns are. But I've 17 still got more witnesses who are on the list here. So I 18 think we can give ourselves, I don't know, a few more 19 minutes if there's anybody that feels like they have 20 something to add to the debate that hasn't been said. You 21 do. I know. You're an air pollution control officer from 22 another place. 23 MR. GREENE: I filled out a neutral card. I want 24 that to go on the record. One thing I would like to 25 mention -- PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 320 1 CHAIRPERSON NICHOLS: Identify yourself. 2 MR. GREENE: I'm Larry Greene with Sacramento Air 3 Quality Management District. 4 I want to talk to the Moyer program for a second. 5 We started the Moyer program in the mid 1990s. It has way 6 more than ten years under its belt. And We have a brand 7 new program here that we can tell the staff spent a hell 8 of a lot of time putting together. They have worked very 9 hard and you see how complex this is. 10 The thing I want to ask very quickly is that we 11 not rush to implement the parameters of this program into 12 the Moyer program until we've tested it, until we know 13 they're going to work. 14 And I'll give you a quick example. One example 15 is 100 percent in California. The way that plays out in 16 northern California is most of our trucking fleet, all of 17 our line haul rail go out of the state. They go over to 18 Nevada and to Oregon. If in fact we use the 100 percent 19 parameter, it will be very hard to find enough trucks and 20 rail to execute programs in northern California. I don't 21 want to export that parameter into the Moyer program, 22 which is a viable program we've been running for many 23 years. 24 So my request would be that we're very careful 25 about executing moving parameters of this program into PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 321 1 Moyer until we've tested it and we know where we are 2 there. 3 CHAIRPERSON NICHOLS: That's good advise. You're 4 not suggesting we're going to go doing that today? 5 EXECUTIVE OFFICER GOLDSTENE: That's in the 6 guidelines. 7 CHAIRPERSON NICHOLS: It is. Sorry. I'm glad 8 you pointed it out then. 9 MR. GREENE: That would be my request is that the 10 items that we're thinking we're going to move from this 11 program immediately into the Moyer program, let's wait a 12 cycle and see how those are. Let's see what works and 13 what doesn't. I think that's just prudent. 14 CHAIRPERSON NICHOLS: Okay. Good suggestion. 15 BOARD MEMBER LOVERIDGE: James is nodding his 16 head. 17 CHAIRPERSON NICHOLS: Mark, you have a technology 18 thing, right. Okay. Quick. Fast. 19 MR. ABRAMOWITZ: Thank you, Madam Chairman, 20 members of the Board. My name is Mark Abramowitz, and 21 today I'm here on behalf of Vycom. Vycom is a 22 manufacturer of technologically advanced viable energy 23 storage system. Vycom provides manufacturing jobs right 24 here in California, producing green products that reduce 25 fuel use, control air toxics, and reduce criteria PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 322 1 pollutants and greenhouse gases. 2 Staff has done a remarkable job in developing the 3 1B guidelines, but we have some concerns with the 4 guidelines as applicable to energy storage systems. We 5 would request that the Board modify the equipment project 6 specifications to eliminate the language requiring Tier 4 7 engines, or level three devices, as a criteria for 8 eligibility. I have some language, but I'm going to save 9 you time and not read. It but I can provide that. 10 We do ask that you leave in the language there 11 ensuring that the bonds funds are not used to pay for any 12 reductions that are required under your cargo equipment 13 rule, which has a final compliance date of 2015. It also 14 allows the South Coast to begin an RTG crane retrofit 15 program that will enable both Los Angeles area ports to 16 retrofit cranes within two years. This will provide an 17 immediate air quality benefit of approximately 32 tons a 18 year of diesel PM, 613 tons a year of NOx, 40 tons a year 19 of hydrocarbons, 179 tons a year of CO, and over 90,000 20 tons a year of CO2. 21 Unfortunately, the current draft guidelines will 22 virtually kill any such program. This is due in part to 23 the unavailability of Tier 4 engines. With expect to have 24 the port retrofitted before these engines even become 25 available. South Coast staff supports this change, as do PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 323 1 other organizations including some EJ organizations. 2 Secondly, Vycom urges you to allocate funds as 3 part of early grant funding for port operators to purchase 4 10 energy storage systems as applied for by South Coast. 5 By funding a small amount of energy storage systems, you 6 reduce emissions on sources that never leave the port that 7 consistently provide their benefits within the diesel hot 8 spot. This can provide the biggest health improvement in 9 the worst area. 10 Lastly, every funding decision that you make here 11 sends a message, a message to the market, to businesses, 12 to innovators. Vycom is ready to quickly install energy 13 storage systems in the ports. And there are those ready 14 to buy those units if, and only if, you can allocate even 15 just a small amount of matching funds as part of your 16 early funding allocation. 17 Will you send a message that you fund California 18 home grown innovation, small companies, those that go out 19 on a limb to improve air quality and provide manufacturing 20 jobs in the state to provide cost effective clean air 21 equipment? Thank you very much. 22 CHAIRPERSON NICHOLS: Thank you, Mark. 23 Do you agree that the owners of these cranes are 24 the shipping companies, the terminal operators? 25 MR. ABRAMOWITZ: The terminal operators. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 324 1 CHAIRPERSON NICHOLS: Okay. 2 MR. ABRAMOWITZ: There's not much interest in 3 purchasing them here. Only In Asia where the fuel prices 4 are so much higher. They're not so much interested in the 5 air quality benefits, but they can and will take them if 6 you folks were to provide those incentives. 7 CHAIRPERSON NICHOLS: Thank you. 8 EXECUTIVE OFFICER GOLDSTENE: I have to ask staff 9 to clarify the issue that Mr. Greene raised earlier just 10 to make sure we're all clear about the 100 percent issue. 11 I'm going to ask Cynthia Marvin to clarify that. 12 CHAIRPERSON NICHOLS: How many more people think 13 they are going to absolutely die if they don't speak? Two 14 of you. And we will clarify the issue about the 15 guidelines. 16 MS. APPLON: My name is Athena Applon. I'm 17 representing West Oakland Environmental Indicators 18 Project, also a member of the Ditching Dirty Diesel 19 Collaborative and West Oakland resident. 20 I'm going to be brief. I think the main goal for 21 the goods movement emission reduction plan is to mitigate 22 exhaust emission to low income communities and communities 23 of color around the trade corridor. Diesel pollution from 24 freight transport contribute to health risk throughout the 25 state. While we can stand here and argue about which PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 325 1 region should get the greater share of the money, it is 2 important to keep in mind that the people in the 3 neighborhoods are really bearing more than their fair 4 share of the breathing in the air pollution. 5 Also that's why I would also like to urge the ARB 6 to also include a requirement to create a formal community 7 advisory group comprised of residents that are impacted by 8 freight transport. These groups should have the power to 9 make recommendations on the project design and even which 10 project should receive priority for funding within each 11 region. These groups should also play a role in tracking 12 and monitoring whether the funding projects are 13 successfully reducing emissions. Thank you. 14 CHAIRPERSON NICHOLS: Thank you for waiting, and 15 thank for your comments. 16 MS. SARABIA: I'm sorry. My name is Sofia 17 Sarabia from the Center on Race, Poverty, and the 18 Environment. I'm here on behalf of the Association of 19 Irritated Residents, AIR. 20 I just have two quick comments that have nothing 21 to do with any of the other comments today. We expressed 22 our support for the direction the proposed guidelines are 23 taking, but we have two improvements that we think this 24 Board should ask staff to include. 25 And the first is just to make sure that outreach PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 326 1 is targeted to independent owner/operators and to make 2 sure they are aware of these funds and the availability of 3 them, because those are the people who are going to be 4 most affected who are really in need of getting these 5 funds. And we would hate -- it's probably -- a majority 6 of them might not know these funds are out there. There 7 needs to be targeted outreach to those individual. 8 And in that same vain, we believe that there 9 should be language in the guidelines mandating that 10 funding should be allocated on an income need basis so 11 those independent owner/operators whose trucks are usually 12 in the worst shape but have the least resources to make 13 those upgrades have access to the funds over large 14 trucking fleets. I think there's some language that says 15 that the districts, you know, may consider income when 16 determining which application for funds to accept. And we 17 feel there should be a priority based on the need. 18 So that, for example, a former farm worker with 19 his one truck receives the funds he desperately needs to 20 make these upgrades over, say, Wal-Mart or Pepsi who 21 clearly have the resources to make those upgrades without 22 the assistance. So income based allocation is necessary 23 to minimize the impact on those independent 24 owner/operators. 25 Thank you. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 327 1 CHAIRPERSON NICHOLS: Thank you very much. 2 Although this isn't a formal regulatory hearing, I'm going 3 to declare the hearing closed at this time. 4 BOARD MEMBER CASE: I have a question for staff. 5 Do we have a history where we used an inventory 6 before that has not gone through a full public hearing 7 process so it gets scrubbed at all the levels before being 8 accepted and used it in important decisions? Have we done 9 that before? 10 DEPUTY EXECUTIVE OFFICER TERRY: Well, you can 11 see we are looking at each other. After all of these 12 years of -- Chairman Nichols mentioned earlier that 13 multiple inventories for different programs. There are 14 very constrained rules with regards to SIP inventories. 15 That is why the new PM 2.5 plan will use the current SIP 16 inventory. And it will be different than the one that is 17 proposed for use here. 18 As we typically take rule makings to the Board, 19 that is a key opportunity to update inventories. So 20 virtually every regulatory item contains an updated 21 inventory. When those inventories then get folded into 22 that public process, then they ultimately become part of 23 the formal inventory. For example, in the EMFAC mobile 24 model. 25 So, you know, there's also different rules for PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 328 1 the on-road mobile model because of SIPS and conformity. 2 We have more ability to be flexible when we're talking 3 about construction equipment and other types, ship 4 emissions, so on. 5 So there's not a simple, straight forward answer 6 other than to say we have many inventories and they are 7 improved on an ongoing basis. And it is up to the Board 8 to decide how to handle that. 9 DEPUTY EXECUTIVE OFFICER SCHEIBLE: I'll give 10 another example, which is when we did the Goods Movement 11 Emission Reduction Plan, we used various inventories to 12 get our best estimates of all the different sources. And 13 we weren't constrained by the SIP process because all we 14 were trying to do was give the Board what's the various 15 contributions on a healthy basis of the different source 16 categories. 17 And lastly I'll say we clearly never use any 18 inventory to help us figure out what's the best allocation 19 of a billion dollars in funding before. 20 BOARD MEMBER CASE: I realize it's a complex 21 issue. 22 When would this new proposed SIP inventory that 23 hasn't gone through public vetting, when would it be 24 approved formally by this Board for use in whatever new 25 plan we have coming forward? When would that process be PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 329 1 completed? 2 DEPUTY EXECUTIVE OFFICER TERRY: Well, we won't 3 see a new SIP inventory until there are new SIPS. But in 4 terms of what we're talking about today on trucks, because 5 that is part of our mobile inventory, the EMFAC model, the 6 time frame for taking that through public process, working 7 with the transportation commissions, and all the 8 stakeholders that need to be involved in that would be in 9 2009. And then that inventory would then need -- this new 10 model would be approved again by U.S. EPA and used for 11 conformity. And then in the 2010 and '11 time frame, the 12 next revisions to SIPS, that would be the time frame we 13 would actually be used for SIP purposes. 14 BOARD MEMBER CASE: So we've said we are going to 15 spend a couple more years studying this particular 16 inventory. I'm somewhat shocked that for those who say 17 they like a transparent process that they want something 18 to go through a full public vetting are now supporting an 19 inventory that hasn't gone through that full public 20 vetting and transparency that we always talk about. 21 So Madam Chairman, you know, I'm concerned we're 22 using an inventory that's not yet proven. And probably 23 what alarms me most is my understanding is that it is 24 using an assumption that in the San Joaquin Valley the age 25 of the truck fleet, the average age is seven years. And PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 330 1 all you have to do is drive through the Valley and I 2 suspect it's pretty intuitive. But I certainly don't see 3 brand-new trucks driving up and down the Valley. I see 4 old trucks and I see trucks spewing black smoke. 5 So I'm concerned we haven't gone through that 6 process of verifying and quantifying what we are making 7 assumptions about today instead of using an inventory that 8 has been proven and discussed openly in the public and 9 gone through that scrutiny 10 CHAIRPERSON NICHOLS: Supervisor Roberts and then 11 Mayor Loveridge. 12 BOARD MEMBER ROBERTS: Thank you, Madam Chair. 13 This has been a long day and mostly entertaining, 14 especially if you're from San Diego. I don't even feel 15 like I'm part of the state. I want to feel terribly 16 sympathetic that we have two areas that are arguing over 17 almost 80 percent of the funding. They don't contain 80 18 percent of the people and they don't contain 80 percent of 19 any kind of problem. But we've devised a system and 20 that's what we are arguing over. 21 And I'm just sitting here thinking this is -- I 22 think I know what the staff recommendation is. So several 23 that have been discussed. And I came here thinking 24 that -- when we started out, we were talking about 25 six-and-a-half percent, which I thought was low. And then PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 331 1 we went to six percent and now down to five percent. And 2 you know, I know everybody is sure that San Diego has no 3 problems and the air is just perfect. And the fact of the 4 matter is we don't recognize some of the problems and not 5 only at our port and some of those areas that are adjacent 6 to it which are similar to what you'll find in Los Angeles 7 and Oakland and other areas, but also at the border areas 8 where we have very long lines of diesel trucks. And 9 they're not going to qualify because they cross the 10 border, as the gentleman said from northern California. 11 So to some extent, we have problems that are not 12 going to get realized and so the way we're doing business. 13 It's a little frustrating. It's frustrating that, you 14 know, there is so much money available and we're arguing 15 over this. 16 I didn't arrange to have a whole series of San 17 Diego legislators here. I guess I feel a little remiss 18 now that I didn't do that. I guess at the next meeting 19 I've got to have that for your entertainment. 20 And it just strikes me. And when we talk about 21 problems, with all due respect to the San Joaquin Valley, 22 all you have to do is go to the Imperial County and you 23 get the highest asthma rates in the state. And if you 24 look, a lot of the money that's coming in that is going to 25 at least be credited on your title of San Diego is PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 332 1 actually going to Imperial Valley for trucks in that area. 2 I'm not arguing about that, because it's valid. But it's 3 a little hard for me to sit here for hour after hour after 4 hour with the enormous resources that are coming and to 5 listen to, well, you know, I have to have a bigger piece 6 of the pie. 7 CHAIRPERSON NICHOLS: I think we just gathering 8 our closing thoughts and then we're going to have a 9 motion. 10 BOARD MEMBER ROBERTS: I'm completely satisfied 11 with what I understand to be the staff recommendation. 12 And I'd like to move that. 13 And I would hope that when we get to the bigger 14 issues that, you know this is an incredibly complex 15 document. And there's a lot of biases in this document 16 the way it's put together. And at the end of the day, 17 it's partially science. It's not completely science 18 driven. And we shouldn't pretend that. 19 And I want to sort of sign off on that, even 20 though I'm going to probably have some explaining to do 21 when I get back to San Diego. But I would hope that maybe 22 we could move through the future parts of this in a little 23 bit of expeditiousness. There's not going to be enough 24 money for anybody. We ought to all understand that right 25 now. And there's no perfect system for dividing it up. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 333 1 BOARD MEMBER KENNARD: Madam Chair, if that's a 2 motion, I will second it. Assuming it's the motion for 3 the 55/25. 4 CHAIRPERSON NICHOLS: I think the two of you have 5 made it clear that's what you intend to do. I will accept 6 that at this time as a motion and a second. 7 CHIEF COUNSEL JENNE: Madam Chairman, briefly, 8 what the Board would be voting on if it's the original 9 proposal would be resolution 812, which does not reflect 10 the original proposal. So if you decide to go with the 11 original proposal, I can ask staff counsel -- 12 CHAIRPERSON NICHOLS: They'll have to amend it to 13 actually reflect what the staff recommendation as of today 14 was. 15 CHIEF COUNSEL JENNE: That's correct. 16 BOARD MEMBER CASE: What it's appropriate, there 17 was one other issue that was brought forward to me. And 18 that was that our staff proposal repeatedly stated there 19 were co-benefits to distribution. But yet the regulation 20 said the co-benefits if a truck were operating in one or 21 more regions if we could find a way to be more distinct 22 that those co-benefits do in fact occur, one of the 23 proposals was on the money that 25 percent would be 24 allocated to trucks that are traveling 25 multi-jurisdictional. I'm not saying which jurisdiction. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 334 1 I'm just saying multi-jurisdictional. As I understand it, 2 the Valley has 30 percent of their trucks travel outside 3 of the region. And South Coast has 21 percent of their 4 trucks that travel outside of the region. 5 And that may actually be an erosion to the 6 Valley, but that's not the point. The point is if we're 7 going to get co-benefits, we need to define that a little 8 tighter than it's currently defined, because I think it 9 allows for any jurisdiction to back up and really look to 10 businesses specifically in their region as opposed to 11 really being open to the co-benefits of 12 multi-jurisdictions. 13 CHAIRPERSON NICHOLS: There's a couple of 14 different issues I think people want to address here, 15 including I know we thought we had a resolution on the 25 16 million in sort of quick money for the South Coast, but we 17 need to make sure we include that in the final resolution. 18 We need to deal with the issue of whether energy 19 storage projects would be eligible for a slice of that or 20 other funds, Carl Moyer, the implications to the Moyer 21 guidelines. I cut you off because we were finishing on 22 the testimony on that. 23 SUPERVISOR HILL: The LNG from South Coast. 24 CHAIRPERSON NICHOLS: That's what I was referring 25 to in the early action piece. And then -- PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 335 1 BOARD MEMBER BAUM: The witness that talked about 2 trying to get community organizations involved in the 3 decision making. I thought that was a reasonable idea. 4 CHAIRPERSON NICHOLS: I do, too. I think it is a 5 reasonable idea. I don't know that we have a proposal for 6 exactly how to do that at this time other than to ask the 7 districts, because they're the ones that are really 8 putting these proposals together to do it. And I believe 9 they do have advisory committees. Perhaps not as 10 inclusive as some might want. And that's a good question 11 that probably should be raised. 12 Mayor Loveridge. 13 BOARD MEMBER LOVERIDGE: Really quick points. 14 One, I was counting some 35 people who signed letters from 15 the South Coast, but legislators. I think what we do not 16 want to do is have this be one person or one legislator 17 for one vote. This is not a question of political muscle. 18 And you use words in politics being fair and 19 equitable. I guess that comes through a process, a 20 process of agreement. And our strength it seems to me is 21 advocates for clean air is our agreement rather than our 22 differences. 23 Just also want to emphasize two points. One is 24 goods movement is not simply what happens in Long Beach 25 and L.A. Eighty-five percent of the goods that come to PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 336 1 the ports come through the Inland Empire where I live. 2 And the last is the SCAG, the regional 3 organization for our southern California, passed an 4 emergency resolution this past year. The first time 5 they've ever done it. They did it because of the 6 information that's really on the Valley handout which was 7 5400 premature deaths and it called for state and national 8 action to do something about this. 9 CHAIRPERSON NICHOLS: I think maybe, staff, we 10 need to hear from you now about the issue of the Moyer 11 guidelines and the eligibility for the storage projects. 12 EXECUTIVE OFFICER GOLDSTENE: Let's start with 13 the Moyer clarification based on Mr. Greene's comments and 14 perhaps my misunderstanding, Cynthia Marvin is going to 15 clarify that. 16 ASSISTANT DIVISION CHIEF MARVIN: We're putting 17 words in Larry's mouth perhaps. My understanding is he's 18 looking at the work that's being done to try to coordinate 19 the Moyer and the bond program. 20 And in the latest proposed update to the Moyer 21 guidelines, there is a proposal that Moyer, instead of 22 funding 80 percent of the eligible truck costs, instead 23 caps that funding at $50,000 per truck, which is the bond 24 proposal. 25 And my understanding of his comment was don't PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 337 1 transfer that bond funding cap to Moyer yet. Test it out 2 in the bond program and see if it works. So as I 3 understand it, it's not a comment about the bond program. 4 It's a comment about the updates to the Moyer guidelines 5 that you will be considering next month. 6 CHAIRPERSON NICHOLS: Next month. Okay. Thank 7 you. We got that one done. Excellent. 8 Now what about this issue of energy storage being 9 ruled out because it's not Tier 4, for the cranes? 10 ASSISTANT DIVISION CHIEF MARVIN: One was energy 11 storage as an early grant project. We do not believe it 12 would be appropriate to fund those projects under the 13 early grant program. Those are the least cost effective 14 projects in the entire proposal here. 15 The Legislature requires that we look at that 16 sort of a program, that we look at cargo equipment. Some 17 terminals are choosing to invest in those devices because 18 there are fuel savings. And there's relatively a 19 five-year payback for that. That is the primary 20 motivation to put those devices on. We identified a 21 certain level of funding that might be available in the 22 bond program, but that was contingent on those projects 23 competing with shore power for funding. If those projects 24 could be competitive and it's cost effective or better 25 than shore power, than they would be eligible. The early PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 338 1 grants have no competition. 2 CHAIRPERSON NICHOLS: That makes sense to me 3 also. All right. 4 Other comments here, Board members? Yes. 5 BOARD MEMBER BERG: Thank you, Madam Chair. 6 I would just like to state for the record the 7 reason I'm uncomfortable with the two proposals is because 8 it appears to me that when we did the reallocation on the 9 emissions that we didn't do it across the board. So we 10 used a new inventory for South Coast and the Valley and 11 left the old inventory for the Bay Air and San Diego. To 12 me, that inconsistency doesn't pass muster. Is that 13 correct? 14 EXECUTIVE OFFICER GOLDSTENE: We can explain 15 that. The issue is that they don't have an ozone SIP. So 16 it didn't apply. 17 BOARD MEMBER BERG: So they had the updated or 18 they're using the new model in the first place? 19 ASSISTANT DIVISION CHIEF MARVIN: Yes. The two 20 areas with the adopted ozone SIPS and South Coast with the 21 PM SIP that have been through that full public process are 22 San Joaquin and South Coast. San Diego and Bay Area have 23 not had to do ozone SIPS. 24 BOARD MEMBER BERG: So what inventory did we use 25 for them? PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 339 1 ASSISTANT DIVISION CHIEF MARVIN: In the staff 2 proposal, we used to working inventory for everyone. In 3 the alternative, we just used the -- for your 4 consideration, we just relied on these numbers that were 5 actually in the adopted SIPS for San Joaquin and for South 6 Coast. 7 BOARD MEMBER BERG: So the freight emissions that 8 are 9 and 20 where we changed the other ones on the 9 freight emissions we -- 10 ASSISTANT DIVISION CHIEF MARVIN: We did not 11 change Bay Area and San Diego, because they have not gone 12 through that SIP process. 13 BOARD MEMBER BERG: Madam Chair, did we need to 14 do anything about the co-benefits issue? 15 CHAIRPERSON NICHOLS: Oh, yes. The issue raised 16 by Supervisor Case about whether we need to explicitly 17 require that consideration. 18 ASSISTANT DIVISION CHIEF MARVIN: If I might, we 19 had unintentionally created a little bit more confusion by 20 phrasing things about truck operation in one or more trade 21 corridors. 22 What we meant was truck operation in the trade 23 corridors combined. That is one of the technical 24 clarifications that we have suggested to the guidelines. 25 And there are proposals in the guidelines that local PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 340 1 agencies not be able to restrict funding to trucks that 2 only operate within their local region. They have to 3 leave it open to a broader area. 4 There's also two components in the resolution 5 that would have the Board ask ARB staff to be tracking 6 this. We'll get data when trucks apply for funding about 7 where they're based, where they operate, which agencies 8 are funding trucks coming from where. And our proposal 9 will be to report back to you with the first update with 10 the guidelines expected this fall about how that's 11 working, what's really happening on those numbers. 12 BOARD MEMBER CASE: Is it possible that a 13 district could even not using criteria to only fund those 14 that are in their area that in fact their allocation could 15 end up being only for vehicle miles traveled in the 16 jurisdictions? 17 ASSISTANT DIVISION CHIEF MARVIN: We don't know 18 the answer to that. It is our expectation that by 19 focusing on the trucks that achieve the greatest emissions 20 reduction either because they are trucks that travel a lot 21 of miles through multiple corridors or because they are 22 very old trucks that do a lot of short local trips, either 23 one of those two types of trucks should rise to the top of 24 that project list. Exactly what that balance is going to 25 be we don't know until we see who applies. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 341 1 CHAIRPERSON NICHOLS: I want to see if I can 2 bring this to a vote before we lose two of our Board 3 members who have to leave for the airport. I'm sorry. 4 Because I hate to ever cut people off. But I think in 5 this instance, we are going to have to do that if we want 6 to have a degree of consensus that we would hope to 7 achieve. I don't know if we can. 8 But what we have in front of us is the resolution 9 which contained the numbers which the staff then decided 10 actually did not represents their recommendations. So 11 we're going to need an amendment and a second in order to 12 return to the numbers that we -- 13 BOARD MEMBER LOVERIDGE: That was the motion. 14 BOARD MEMBER ROBERTS: That was the intention of 15 the motion. 16 BOARD MEMBER KENNARD: And that was the intention 17 of my second. 18 BOARD MEMBER ROBERTS: Modified the resolution in 19 keeping with the original. 20 CHAIRPERSON NICHOLS: In keeping with the 21 original. 22 BOARD MEMBER D'ADAMO: But Madam Chair, because I 23 have a different point of view, and I would move to amend 24 that resolution to apply the SIP inventory. 25 BOARD MEMBER CASE: Second. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 342 1 CHAIRPERSON NICHOLS: We have a motion and a 2 second to use the SIP inventory. 3 We're going to need to vote on that first then 4 and then vote on the main motion; is that right? Is there 5 anything else we need to do as an amendment? I think 6 we've clarified everything else that we need to clarify at 7 this point. All right. 8 In that case, I'm going to have to ask the clerk 9 to call the roll. 10 SECRETARY ANDREONI: Dr. Baum? 11 BOARD MEMBER BAUM: I vote no. 12 SECRETARY ANDREONI: Ms. Berg? 13 BOARD MEMBER BERG: No. 14 SECRETARY ANDREONI: Supervisor Case? 15 BOARD MEMBER CASE: Yes. 16 SECRETARY ANDREONI: Ms. D'Adamo? 17 BOARD MEMBER D'ADAMO: Yes. 18 SECRETARY ANDREONI: Supervisor Hill? 19 SUPERVISOR HILL: No. 20 SECRETARY ANDREONI: Ms. Kennard? 21 BOARD MEMBER KENNARD: No. 22 SECRETARY ANDREONI: Mayor Loveridge? 23 BOARD MEMBER LOVERIDGE: No. 24 SECRETARY ANDREONI: Ms. Riordan? 25 BOARD MEMBER RIORDAN: No. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 343 1 SECRETARY ANDREONI: Supervisor Roberts? 2 BOARD MEMBER ROBERTS: No. 3 SECRETARY ANDREONI: Professor Sperling? 4 BOARD MEMBER SPERLING: No. 5 SECRETARY ANDREONI: Chairman Nichols? 6 CHAIRPERSON NICHOLS: No. 7 SECRETARY ANDREONI: Motion defeated two to nine. 8 CHAIRPERSON NICHOLS: Okay. Then we take up the 9 original motion, which is to pass the allocation plan as 10 originally proposed by the staff. 11 Call the roll. 12 SECRETARY ANDREONI: Dr. Baum? 13 BOARD MEMBER BAUM: Yes. 14 SECRETARY ANDREONI: Ms. Berg? 15 BOARD MEMBER BERG: Yes. 16 SECRETARY ANDREONI: Supervisor Case? 17 BOARD MEMBER CASE: No. 18 SECRETARY ANDREONI: Ms. D'Adamo? 19 BOARD MEMBER D'ADAMO: Yes. 20 SECRETARY ANDREONI: Supervisor Hill? 21 SUPERVISOR HILL: Yes. 22 SECRETARY ANDREONI: Ms. Kennard? 23 BOARD MEMBER KENNARD: Yes. 24 SECRETARY ANDREONI: Mayor Loveridge? 25 BOARD MEMBER LOVERIDGE: Yes. PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 344 1 SECRETARY ANDREONI: Ms. Riordan? 2 BOARD MEMBER RIORDAN: Aye. 3 SECRETARY ANDREONI: Supervisor Roberts? 4 BOARD MEMBER ROBERTS: Yes. 5 SECRETARY ANDREONI: Professor Sperling? 6 BOARD MEMBER SPERLING: Yes. 7 SECRETARY ANDREONI: Chairman Nichols? 8 CHAIRPERSON NICHOLS: Yes. 9 SECRETARY ANDREONI: Motion passes ten to one. 10 CHAIRPERSON NICHOLS: Thank you very much, 11 everybody. And thanks to all who contributed to this 12 decision. 13 We have one quick item, the commemoration of the 14 40th anniversary. Some of us are feeling historical. 15 EXECUTIVE OFFICER GOLDSTENE: It will take a 16 moment for the staff to come up here. 17 CHAIRPERSON NICHOLS: We'll turn to the last item 18 of the day. We'll have a brief period for open comment 19 and we have one. And then we'll really be done. 20 EXECUTIVE OFFICER GOLDSTENE: Thank you, Chairman 21 Nichols. 22 Looking back on the last 40 years, the Air 23 Resources Board can be proud of the significance of what 24 has been accomplished in cleaning the air and making our 25 state a healthier place to live, work, and raise our PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 345 1 families. 2 The improvement in air quality since the Board 3 was founded in 1968 has been dramatic. Ozone and 4 particulate matter levels have decreased significantly 5 since the 1960s, which has resulted in a marked reduction 6 in the number of cases of illness and premature deaths. 7 Since 1990, it is estimated for every dollar 8 spent on control programs, we realized about four dollars 9 in health benefits. When we consider how polluted the air 10 would be today if it were not for the work of the Board 11 and other public agencies such as the local air districts, 12 we can truly understand why this work has been so 13 important. Jeff Austin will provide a presentation about 14 the 40-year history of the Air Board. Jeff. 15 (Thereupon an overhead presentation was 16 presented as follows.) 17 MR. AUSTIN: Thank you, Mr. Goldstene. Good 18 evening, Chairman Nichols and members of the Board. 19 When the Air Resources Board met for the first 20 time in 40 years ago, they knew they were facing a 21 difficult challenge. Within two weeks of the hearing, the 22 South Coast air basin saw its first stage one smog alert 23 of the year. By the end of that year, it had experienced 24 almost 200 stage one and 50 stage two smog alerts. Yet, 25 the fact that this surprises us today is a testament to PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 346 1 the success of the Board and other agencies in cleaning up 2 California's air. Thanks to that success, the South Coast 3 hasn't had a stage one alert for nearly ten years. 4 Today, the Board's programs stand as a model for 5 air quality control efforts all over the world. On the 6 occasion of our 40th anniversary, let's recall the story 7 of how we achieved those successes. 8 --o0o-- 9 MR. AUSTIN: We'll begin with recounting some of 10 the history of the Air Resources Board. We'll discuss 11 some of the major air quality problems and how California 12 has led the way in solving them. Then we'll describe the 13 progress in air quality. Next, we'll show that the 14 benefits of air pollution controls far exceed the costs. 15 We'll finish with a look at the challenges that lie ahead. 16 --o0o-- 17 MR. AUSTIN: First, a brief sketch of the history 18 of the Air Resources Board. 19 --o0o-- 20 MR. AUSTIN: While the city of Los Angeles began 21 controlling local industries in 1945, the research of 22 Professor Arie Haggen-Smit and others made it clear that a 23 strong statewide approach was needed. 24 In 1967, California's Legislature passed the 25 Mulford-Carorell Act establishing the California Air PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 347 1 Resources Board. They met for the first time on February 2 8th, 1968, in Sacramento. 3 The newly formed Board was authorized to adopt 4 health basin air quality standards, establish air basins, 5 conduct research, and set emission standards for motor 6 vehicles. 7 The minutes of the first meeting show one of the 8 main topics was California's application to the federal 9 health, education and welfare department -- the US EPA 10 didn't exist yet -- for a waiver to set its own emission 11 standards more health protective than the federal ones. 12 This unique ability has allowed the Air Resources Board to 13 spearhead one of the world's most successful air pollution 14 control programs. 15 Also on the agenda were the upcoming California 16 vehicle standards for 1970 and a research proposal for 17 $56,000 to measure diesel smoke. At the time, the Board 18 employed a staff of 60. 19 --o0o-- 20 MR. AUSTIN: Today, the Board's authority has 21 broadened to include other mobile sources, stationary 22 sources, area wide sources, toxic substances, and 23 greenhouse gases. 24 The Board's programs cover a wide spectrum 25 ranging from cars to pleasure boats, power plants to PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 348 1 irrigation pumps, construction materials to consumer 2 products. 3 To meet these added responsibilities, the staff 4 has grown to 1250. 5 --o0o-- 6 MR. AUSTIN: Of course, the Air Resources Board 7 is not the only agency responsible for cleaning 8 California's air. That responsibility is shared with 9 numerous other public agencies. Academic research has 10 also lent a big boost to air quality efforts. 11 California's large size, varied topography, and diverse 12 demographic and economic makeup require flexible 13 solutions. At the same time, cooperation among the 14 various agencies, academia, and industry has been a 15 critical ingredient in California's successful campaign 16 against air pollution. 17 --o0o-- 18 MR. AUSTIN: Let's move on now to outline some of 19 the main air pollution problems in California and the 20 solutions that have been adopted to remedy them. 21 --o0o-- 22 MR. AUSTIN: In 1968, the air quality of 23 California was filthy by today's standards. The most 24 visible aspect of air pollution was the brownish haze of 25 smog that cloaked California cities, particularly in the PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 349 1 South Coast, throughout much of the year. The smog was 2 thick with irritating substances like ozone, formaldehyde, 3 and peroxyacetyl nitrate which made breathing difficult 4 and made eyes water. 5 Most Californians breathe high levels of led, 6 nitrogen dioxide, sulfur dioxide, carbon monoxide, 7 particulate matter, and air toxics, pollutants that are 8 harmful to human health. 9 Toxic emissions from industry, incinerators, and 10 consumer products poured into the air with few 11 restrictions. 12 --o0o-- 13 MR. AUSTIN: To reduce emissions, the Air 14 Resources Board and local air districts adopted an 15 aggressive strategy of air pollution controls. The Air 16 Resources Board has led the way in pursuing controls which 17 pushed the technological envelope and encouraged 18 innovation. 19 Key mobile source controls include cleaner 20 engines, after-treatment systems such as three-way 21 catalysts for automobiles, and diesel particulate traps 22 for large trucks, cleaner gasoline and diesel fuel and 23 alternative fuels. Adopted mobile source emission 24 standards represent a reduction of over 99 percent for new 25 gasoline vehicles and 98 percent for new diesel vehicles PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 350 1 relative to their pre-control levels. 2 Industrial source control measures include low 3 NOx burners, selective catalytic reduction, and cleaner 4 fuels such as compressed natural gas. These have resulted 5 in an 80 to 90 percent reduction in oxides of nitrogen. 6 Other control measures on smaller sources include 7 vapor recovery systems in cars and gas pumps and low VOC 8 consumer products. Together these controls have achieved 9 around a 75 percent reduction in reactive organic gases. 10 --o0o-- 11 MR. AUSTIN: California leads the world in 12 setting emissions standards for motor vehicles. Our 13 standards have influenced the U.S. EPA and the European 14 Union to modify theirs. And they are now being adopted by 15 many developing countries as well, particularly in Asia. 16 The chart on the left shows 71 percent of the 17 world's population lives in nations with vehicle emission 18 standards pioneered by California. The chart on the right 19 shows 65 percent of the world's vehicles are driven in 20 nations with modern vehicle emissions standards. 21 --o0o-- 22 MR. AUSTIN: Now let's take a look at the 23 progress we've made. 24 --o0o-- 25 MR. AUSTIN: The effort to reduce ozone has been PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 351 1 a cornerstone of the Board's policy since the 1960s. 2 Thanks to control program adopted by the Air Resources 3 Board and other agencies, emissions of ozone-forming 4 compounds, reactive organic gases, and oxides of nitrogen 5 have diminished to less than half of their 1960s levels. 6 In all categories, on-road vehicles, off-road vehicles, 7 area wide and stationary resources emissions have seen 8 sharp reductions. 9 --o0o-- 10 MR. AUSTIN: This graph shows the trend in peak 11 ozone concentration for the South Coast, which 12 historically has had Californian's worst smog. 13 In the late 1960s, peak ozone concentrations in 14 the range of .5 to .6 parts per million. Today, we're 15 used to thinking of smog as a summertime phenomenon. But 16 in those days, ozone reach unhealthy levels almost every 17 day of the year. Stage one alerts where the ozone 18 concentrations exceeded .2 parts for million were declared 19 on over half of all days. The ozone levels recorded in 20 Los Angeles in the 1906s are the highest levels reported 21 anywhere in the world. Today, their peak concentrations 22 are roughly a quarter of their 1960's levels. 23 Other areas of the state have also seen a 24 dramatic reduction in ozone levels. This chart shows peak 25 ozone levels for the San Francisco, Bay Area, San Diego, PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 352 1 and the San Joaquin Valley. Ozone levels have decreased 2 in all the state's major urban areas. 3 --o0o-- 4 MR. AUSTIN: Lead is another succeed story. 5 Until the 1970s, lead compounds were added to gasoline to 6 improve engine performance. All that lead spewed of 7 tailpipes and ended up in the air as particulate matter, 8 causing a serious health problem. 9 In the mid-1907, which catalytic converters were 10 introduced on automobiles, lead additives began to be 11 phased out. By the early 1990s, lead was banned in 12 gasoline. Today, lead is no longer a major air 13 contaminant in California. 14 If lead had not been banned from gasoline, lead 15 concentrations would have continued to rise as fuel 16 consumption increased. Base on a simple calculation, 17 annual average ambient lead concentrations in the South 18 Coast would have increased to around 6 micrograms per 19 cubic meter. 20 Lead interferes with children's brain 21 development. Using a health model to estimate the impact 22 of lead on children's IQ, the average child in the South 23 Coast would have lost around two IQ points if lead 24 emissions had not been controlled, with some children 25 losing as many as seven points. That's a total loss of PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 353 1 around 2.8 million points for whole basin. 2 --o0o-- 3 MR. AUSTIN: This graph shows the annual average 4 PM2.5 concentrations for the South Coast. Since PM2.5 5 wasn't measured directly until the late 1990s, the results 6 for 1995 and earlier are derived from measurement of total 7 suspended particulate. 8 PM2.5 concentrations have gone down gradually 9 since the 1970s, partly because of reduced oxides of 10 sulfur and nitrogen emissions, but mainly due to 11 reductions in partical emissions such as diesel soot. 12 Particulate matter is responsible for a large 13 share of the health problems caused by air pollution. 14 Without the Board's programs, PM2.5 concentrations would 15 have continued to rise in step with population growth. By 16 2005, the mean annual concentration would have reached 17 around 60 micrograms per cubic meter, five times the state 18 annual standard. 19 Based on the difference between actual and 20 projected concentrations in 2005, using ARB standard 21 methodology for estimating health impacts, air pollution 22 controls have prevented approximately 6,000 to 18,000 23 premature deaths, a tremendous health benefit of 24 California's pollution control efforts. Other serious 25 health impacts such as hospitalizations were avoided as PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 354 1 well. 2 --o0o-- 3 MR. AUSTIN: PM2.5 concentrations have also 4 decreased in other areas of the state. The San Francisco 5 Bay Area and San Diego air basins, the second and third 6 largest urban areas in the state, are close to attaining 7 the state standards. 8 --o0o-- 9 MR. AUSTIN: Levels of other pollutants have 10 diminished considerably as well. Since 1968, the peak 11 level of carbon monoxide has shrunk by 87 percent, 12 nitrogen dioxide by 83 percent, and sulfur dioxide by 90 13 percent. 14 Pollutant levels have fallen in spite of 15 California's rapid growth. In the same time period, 16 California's population almost doubled, the number of 17 vehicles on the road increased by 170 percent, and the 18 number of vehicle miles traveled almost tripled. 19 --o0o-- 20 MR. AUSTIN: Now let's contrast the costs and 21 benefits of air pollution controls. 22 --o0o-- 23 MR. AUSTIN: The improvements in California's air 24 quality over the last four decades have come at a modest 25 cost to society. The total cost of air pollution controls PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 355 1 is estimated to be $10 billion, a small share of 2 California's $1.7 trillion economy. At the same time, the 3 air pollution control industry in California generates 4 around $6.2 billion and employs 32,000 people. So much of 5 the money spent on control stays in the state. 6 The benefits of controls include thousands fewer 7 premature deaths and hospitalizations each year and 8 millions fewer lost school and work days. The value of 9 these benefits is approximately four dollars for every 10 dollar spent on control. California's air pollution 11 control strategies are cost effective. 12 --o0o-- 13 MR. AUSTIN: Finally, let's take a look at the 14 challenges that lie ahead. 15 --o0o-- 16 MR. AUSTIN: Today, as the Air Resources Board 17 greets its 40th anniversary, the entire state attains the 18 lead, carbon monoxide, sulfur dioxide, and nitrogen 19 dioxide standards. Peak ozone concentrations diminished 20 by 75 percent. The health risks posed by PM2.5 and toxic 21 substances have shrunk by at least half. And all these 22 reductions have been achieved in spite of rapid growth in 23 California as population, economy, and vehicle use. 24 Health protection and climate change are our top 25 priorities as we confront the air quality challenges of PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 356 1 the 21st century. As we move closer to attaining the 2 ozone standard in the San Joaquin Valley and the South 3 Coast, we look to advanced technology and new less 4 controlled emission categories to achieve the reductions 5 we need. With the new state implementation plan in 6 progress, PM2.5 is a major focus of our efforts. 7 The diesel risk reduction and goods movement 8 programs target some of the big remaining sources of air 9 pollution. And as we developed measures to curb 10 greenhouse gases, implementing these measures will likely 11 lead to air pollution co-benefits. 12 At we move forward to confront the challenges 13 ahead, four decades of succeed at cleaning California's 14 air gives us confidence the Air Resources Board will meet 15 the challenges in future decades with the same innovative 16 spirit and technical excellence that has made us a world 17 leader in improving air quality. 18 CHAIRPERSON NICHOLS: Thank you very much. 19 And I want to say that I wish this presentation 20 could have come at the beginning of the day instead of at 21 the end of the day. We would have had obviously a full 22 house here. And I know that everyone would have 23 appreciated and still will appreciate the work that you've 24 done. 25 I really want to thank you for putting this PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 357 1 together. I think it will serve many other purposes 2 besides just the Board briefing for today. 3 I also I guess have to observe having been here 4 last night and had at least one person who was here at the 5 beginning 40 years ago that I'm hoping that at least a few 6 of the very young faces that I see around the Air 7 Resources Board these days -- not too many of them in the 8 audience -- maybe in the halls will be around to celebrate 9 that anniversary. Although I don't expect to be. All 10 right. Thank you very much. I really appreciate it. 11 Before we lose everybody to the roads, which 12 people have to get on to, we have one person who had asked 13 to give open testimony. Go right ahead. 14 MS. SARABIA: I know I'm not very popular. I'm 15 going to make this quick, being the last person. I'm here 16 again Sofia Sarabia with CRPE here on behalf of AIR, also 17 speaking this evening on behalf of NRDC and the Coalition 18 for Clean Air. 19 We have submitted into the record a joint letter 20 from NRDC and air regarding a February 13th, 2008, letter 21 that was sent to EPA by Mr. Goldstene. And basically I'm 22 going to let the letter speak to itself, but I want to 23 point out some key main points of our letter. 24 Basically we were troubled when we received this 25 letter. And this letter from Mr. Goldstene to the EPA PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 358 1 rescinding key portions of the 2003 SIP. And basically 2 not only do the recissions that are listed in this letter 3 condemn the public to endure extra pollution past the 4 dates promised by this Board and ensure that the South 5 Coast air basin will not meet the one-hour ozone standard 6 by 2010 opening the industry and stationary sources to 7 penalties, but we feel the action itself infringes on the 8 Board's exclusive authority to adopt clean air plans. And 9 we feel that Mr. Goldstene overstepped his authority as 10 the Executive Officer and the Board should really be 11 concerned about that. 12 Basically all we're asking for is that the Board 13 set an item on the next agenda to direct staff to retract 14 the February 13th letter and the alternative if the Board 15 should wish to proceed with the recissions that are listed 16 in -- outlined in that letter that a public hearing needs 17 to be set on that matter and that the decision needs to be 18 one of this Board and not one made by the Board staff. 19 Thank you. 20 CHAIRPERSON NICHOLS: Thank you for your comment. 21 I had not seen the letter before now, but I have it. And 22 we will review it and we will respond. Thank you. We are 23 adjourned. 24 (Thereupon the California Air Resources Board 25 adjourned at 6:26 p.m.) PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 359 1 CERTIFICATE OF REPORTER 2 I, TIFFANY C. KRAFT, a Certified Shorthand 3 Reporter of the State of California, and Registered 4 Professional Reporter, do hereby certify: 5 That I am a disinterested person herein; that the 6 foregoing hearing was reported in shorthand by me, 7 Tiffany C. Kraft, a Certified Shorthand Reporter of the 8 State of California, and thereafter transcribed into 9 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 12th day of March, 2008. 15 16 17 18 19 20 21 22 23 TIFFANY C. KRAFT, CSR, RPR 24 Certified Shorthand Reporter 25 License No. 12277 PETERS SHORTHAND REPORTING (916) 362-2345 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345