BOARD MEETING STATE OF CALIFORNIA AIR RESOURCES BOARD SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT 1990 EAST GETTYSBURG AVENUE FRESNO, CALIFORNIA THURSDAY, JUNE 23, 2005 9:00 A.M. JAMES F. PETERS, CSR, RPR CERTIFIED SHORTHAND REPORTER LICENSE NUMBER 10063 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 ii APPEARANCES BOARD MEMBERS Mrs. Barbara Riordan, Acting Chairperson Ms. Sandra Berg Ms. Dorene D'Adamo Dr. Henry Gong Ms. Lydia Kennard Mayor Ronald Loveridge Supervisor Barbara Patrick Ms. Patricia Salas Pineda Supervisor Ron Roberts STAFF Ms. Catherine Witherspoon, Executive Officer Mr. Tom Cackette, Chief Deputy Executive Officer Mr. Michael Scheible, Deputy Executive Officer Ms. Lynn Terry, Deputy Executive Officer Mr. Tom Jennings, Acting General Counsel Mr. Robert D. Barham, Assistant Chief, Stationary Source Division Mr. Richard Bode, Chief, Health and Exposure Assessment Branch Dr. Kenneth Bowers, Population Studies Section Mr. Bob Cross, Chief, Mobile Source Control Division Mr. Tom Evashenk, Manager, ZEV Implementation Section PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iii APPEARANCES CONTINUED STAFF Mr. Mike Fitzgibbon, Manager, Emission Inventory Analysis Section Mr. Bob Fletcher, Chief, Planning and Technical Support Division Mr. Patrick Gaffney, Emission Inventory Analysis Section Ms. Diane Moritz Johnston, Senior Staff Counsel Mr. Jack Kitowski, Chief, On-Road Controls Branch Ms. Diane Kiyoto, Staff Counsel Ms. Kate Macgregor, Population Studies Section Mr. Robert Okamoto, Air Pollution Specialist Mr. George Poppic, Senior Staff Counsel Mr. Dean C. Simeroth, Chief, Criteria Pollutants Branch Mr. Mark Williams, Zero Emission Vehicle Implementation Section Dr. Barbara Weller, Manager, Population Studies Section Mr. Gary Yee, Manager, Industrial Section ALSO PRESENT Mr. Kevin Abernathy, California Dairy Campaign Ms. Diane Bailey, Natural Resources Defense Council Ms. Ginny Barker, representative of Assembly Member Bill Maze's office Ms. Shirley Batchman, California Citrus Mutual Mr. Cesar Baumann, Lubrizol Engine Control Systems Ms. Nidia Bautista, Coalition for Clean Air PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iv APPEARANCES CONTINUED ALSO PRESENT Mr. Audie Burgan, J.M. Equipment Co., Inc. Mr. J.P. Cativiela, CARES Ms. Noelle Cremers, California Farm Bureau Federation Mr. Gary Cross, Industrial Truck Association Mr. Manual Cunha, Nisei Farmers Mr. Teresa DeAnda, Committee for Well Being of Earlimart Mr. William Descary, Citizen(Bakersfield) Ms. Susan Frank, Citizen(Bakerfield) Mr. Tom Frantz, Citizen Mr. Randal Friedman, U.S. Navy Mr. Joe Gerghen, LA Biofuels Mr. Rich Gregerson, Alta Lift Ms. Julie Griffiths, representative of Assembly Member Michael Villines' office Dr. Kevin Hamilton, CMC Asthma Program Ms. Betty Hawkins, Air Transport Association Ms. Karen Hay, IMPCO Technologies Mr. Roger Isom, California Cotton Ginners Association Mr. Bill Jacob, United Parcel Service Mr. Harry Krug, CAPCOA Mr. Joseph Kubsh, Manufacturers of Emission Controls Association Ms. Muriel Kusano, Center on Race, Poverty and the Environment PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 v APPEARANCES CONTINUED ALSO PRESENT Dr. David Lighthall, Relational Culture Institute Ms. Mary Madland, Madland Toyota Lift Mr. Paul Martin, Western United Dairymen Mr. Braulio Martinez, Citizen Ms. Esther Martinez, Citizen Mr. David Modisette, California Electric Transportation Coalition(Modesto) Ms. Denise Mullinax, Hilmar Cheese Company Mr. Brent Newell, Center on Race Poverty and the Environment Mr. Ranjan Nirgude, Tennant Company Ms. Julene Orosco, Wholesale Equipment of Fresno Ms. Kathryn Phillips, Environmental Defense Mr. Bryan Qualls, Bar Area Biofuel Ms. Mary Reynolds, Western Propane Gas Association Ms. Tracy Schohr, California Cattlemen's Association Mr. Robert Schlingman, United Airlines Mr. John Shears, Center for Energy Efficiency on Renewable Technologies Ms. Carolina Simunovic, Fresno Metro Ministry Ms. Daniela Simunovic, Citizen Mr. Mark Stout, Green Energy Network Mr. Todd Stroup, Citizen Mr. Russell Teall, Biodiesel Industries PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 vi APPEARANCES CONTINUED ALSO PRESENT Mr. Pete Thomas, Team Power Forklifts Mr. Josh Tickell, Citizen Dr. Jim Tully, Citizen Dr. Arthur Unger, Citizen(Bakersfield) Mr. Randall Von Wedel, Cytoculture Mr. John (Jay) Waugh, Gray Lift, Inc. Mr. Carlo Zichella, Sierra Club PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 vii INDEX PAGE Pledge of Allegiance 1 Roll Call 1 Item 05-6-1 Acting Chairperson Riordan 6 Executive Officer Witherspoon 7 Staff Presentation 7 Board Discussion and Q&A 12 Item 05-6-2 Acting Chairperson Riordan 19 Executive Officer Witherspoon 20 Staff Presentation 22 Ombudsman Tschogl 41 Board Discussion and Q&A 43 Paul Martin 57 Noelle Cremers 61 Tracy Schohr 62 Todd Stroup 68 Jim Tully 73 Denise Mullinax 75 Diane Bailey 81 Mariel Kusano 84 Brent Newell 86 Harry Krug 91 Braulio Martinez 93 Teresa DeAnda 93 Esther Martiniez 95 Tom Frantz 96 William Descary 98 Arthur Unger 100 J.P. Cativiela 102 Kevin Abernathy 107 John Shears 106 Carl Zichella 109 Carolina Simunovic 112 Nidia Bautista 114 Mark Stout 118 Kevin Hamilton 130 David Lighthall 135 Kathryn Phillips 138 Daniela Simunovic 140 Susan Frank 141 Board Discussion and Q&A 143 Motion 152 Vote 158 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 viii INDEX CONTINUED PAGE Afternoon Session 161 Item 05-6-3 Acting Chairperson Riordan 164 Executive Officer Witherspoon 166 Staff Presentation 167 Ginny Barker and Julie Griffiths 194 Mary Reynolds 195 Joseph Kubsh 198 Ranjan Nirgude 200 Manual Cunha 204 Roger Isom 207 Shirely Batchman 210 David Modisette 212 Betty Hawkins 215 Bill Jacob 219 Robert Schlingman 225 Karen Hay 227 Gary Cross 232 Rich Gregerson 236 Julene Orosco 238 Audie Burgan 240 John Waugh 242 Pete Thomas 244 Randal Friedman 246 Kathryn Phillips 249 Mary Madland 250 Cesar Baumann 253 Item 05-6-4 Acting Chairperson Riordan 256 Executive Officer Witherspoon 257 Staff Presentation 258 Randal Friedman 269 Joe Gerghen 272 Randall Von Wedel 275 Josh Tickell 281 Russell Teall 284 Bryan Qualls 288 Adjournment 292 Reporter's Certificate 293 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 1 1 PROCEEDINGS 2 ACTING CHAIRPERSON RIORDAN: Good morning. Let 3 me indicate that we are about ready to start, so if you 4 could take your seats, please, I would appreciate it. And 5 the June meeting of the Air Resources Board I'll call to 6 order now. And let me indicate that we are very pleased 7 to be in Fresno. And I have asked Supervisor Patrick to 8 lead us in the pledge. 9 So if you'd all join us and stand please. 10 (Thereupon the Pledge of Allegiance was 11 Recited in unison.) 12 ACTING CHAIRPERSON RIORDAN: Thank you very much. 13 Madam Clerk, would you please call the roll. 14 BOARD CLERK ANDREONI: Ms. D'Adamo? 15 BOARD MEMBER D'ADAMO: Here. 16 BOARD CLERK ANDREONI: Ms. Berg? 17 BOARD MEMBER BERG: Here. 18 BOARD CLERK ANDREONI: Supervisor DeSaulnier? 19 Dr. Gong? 20 BOARD MEMBER GONG: Here. 21 BOARD CLERK ANDREONI: Ms. Kennard? 22 BOARD MEMBER KENNARD: Here. 23 BOARD CLERK ANDREONI: Mayor Loveridge? 24 Supervisor Patrick? 25 BOARD MEMBER PATRICK: Here. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 2 1 BOARD CLERK ANDREONI: Ms. Pineda? 2 BOARD MEMBER PINEDA: Here. 3 BOARD CLERK ANDREONI: Supervisor Roberts? 4 BOARD MEMBER ROBERTS: Here. 5 BOARD CLERK ANDREONI: Madam Chairman Riordan? 6 ACTING CHAIRPERSON RIORDAN: Here. 7 Thank you. 8 Before we begin today, I would like -- because 9 this is a little bit of a different venue for us -- a bit 10 of a briefing on the audio and also our microphones. And 11 so I've asked staff from Fresno to give us that. 12 MR. BURT: Good morning and thank you. Welcome 13 to Fresno and to Modesto and Bakersfield. We are 14 video-conferenceing to our other 2 regional offices today. 15 And for the Board Members and for staff around 16 the dais, the microphones in front of you are on at all 17 times. If you do choose to have a side-bar conversation, 18 there is a button on the face of the microphone that you 19 can press and hold, and that will mute the microphone 20 temporarily until you release that button again. 21 For any of the other Board items, the Chair will 22 be going to each of the individual sites for any public 23 comment along with the registration for the speakers 24 through the clerk of the Board. 25 ACTING CHAIRPERSON RIORDAN: This is a real PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 3 1 chance to use video-conferenceing. And I'm very pleased 2 to welcome Bakersfield and Modesto to the meeting today. 3 Also, by way of acknowledgement, let me share 4 with the Board Members and audience a little bit of how 5 special the Air Resources Board staff are to the area of 6 not only Sacramento, where many of them work for El Monte 7 but their own communities. We have been awarded 2 very 8 nice sort of acknowledgments by way of contribution to 9 California State Employees Charitable Campaign. 10 Our employees earned the Gold Award for an 11 average of $90.43 -- they go right down to the penny -- 12 per capita gift. One of the highest in the State service. 13 And also that's a Gold Award, and a Silver Award for a 43 14 percent employee participation in the campaign for the 15 United Way and those agencies that are served by the 16 United Way. 17 We know that the Board staff really do care about 18 their communities, and they're very, very generous. And 19 I'm very pleased that the State Employees Charitable 20 Campaign was so successful here at the ARB. 21 We had 2 people within the ARB that led the 22 campaign, Jim Ryden and Judy Lewis. And I certainly want 23 to thank them on behalf of the Board and hope they're 24 either here today or listening to receive this 25 acknowledgement, because they did such a wonderful job in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 4 1 conducting the campaign, and for such, again, a worthwhile 2 cause. So, Catherine Witherspoon, you're to be commended. 3 And I will provide these awards to you after the meeting 4 today. And we say thank you, because that's real 5 outstanding leadership and dedication on the part of the 6 staff of the ARB. 7 Secondly, I've been asked to take a moment to 8 share with you a recent Public Utilities Commission 9 decision that provides financial incentives for farmers to 10 convert their diesel powered ag pumps to electric motors. 11 Under a new program, approved by the PUC last Thursday, 12 farmers in the PG&E service area that voluntarily convert 13 their diesel irrigation pumps to electric motors, will pay 14 about 20 percent less for electricity. In southern 15 California, Edison service area, the savings will be about 16 12.5 percent. 17 This action is a huge success for our 18 agricultural community and for air quality. There are 19 about 5,700 diesel ag pumps in Sacramento and San Joaquin 20 valleys. During the summer months, these engines account 21 for about 25 percent of the NOx and 17 percent of the 22 diesel PM that's emitted from stationary fuel combustion. 23 Every existing diesel engine that is converted to 24 an electric motor will eliminate the diesel NOx and PM10 25 emissions from that engine. The PUC decision last PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 5 1 Thursday comes after many months of discussions and 2 negotiations amongst the utilities, the ag community, ARB 3 and also our air pollution control districts and energy 4 groups. The ag community and the utilities know how very 5 much we appreciate their efforts and hard work to make 6 this program a reality. 7 I really would like to thank another person for 8 the effort that they made, and that's Member D'Adamo for 9 helping with this, and also to the ARB staff who've helped 10 so much in working with all the parties to get the 11 approval of this program. And we thank you very much. 12 And I want to encourage staff to work with the utilities, 13 the districts and the agricultural community to assist in 14 getting the word out to all of the farmers, so that as 15 many as possible can take advantage of this opportunity. 16 And so I just think this was a very nice thing that 17 occurred for us. And I'm very appreciative. 18 Another item that I just wanted to take a moment 19 to let the Board know, and those in the audience, the 20 Governor is signing an Executive Order S-4-05 which 21 establishes greenhouse gas reduction targets for the state 22 of California. My colleagues will find a briefing packet 23 on their desks about this important policy development. 24 And I'd like to call on our Executive Officer, Catherine 25 Witherspoon, to say just a few words about what the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 6 1 targets mean for our work here at the Air Resources Board. 2 EXECUTIVE OFFICER WITHERSPOON: My first question 3 to you is did you, in fact, get the handout, because we're 4 looking in our -- I'm not sure we have it. 5 ACTING CHAIRPERSON RIORDAN: I'll ask what the 6 handout looked like and then we'll tell. I haven't 7 honestly looked. 8 EXECUTIVE OFFICER WITHERSPOON: I think we're 9 missing it. So we'll locate it during the break this 10 morning, and talk about it shortly after lunch, how about 11 that, because I would like you to have the actual 12 Executive Order and the descriptive bullets about it 13 before I walk you through that. 14 ACTING CHAIRPERSON RIORDAN: All right. We'll 15 take that up then immediately after our lunch break. 16 ACTING CHAIRPERSON RIORDAN: Then back to our 17 regular agenda item. We have first on our agenda today is 18 Item 05-6-1. This is the health update. San Joaquin 19 valley has air quality that is unique. And of great 20 interest is how the air quality in the valley may be 21 affecting the health of valley residents. Today's update 22 will discuss several studies that examine the potential 23 effects of air pollution in the valley. 24 Ms. Witherspoon, would you like to introduce this 25 item, please. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 7 1 EXECUTIVE OFFICER WITHERSPOON: Thank you, Madam 2 Chairman. Asthma prevalence is higher in the San Joaquin 3 Valley than in the rest of the state. Due to the concern 4 over potential impacts of air pollution in the valley, the 5 Air Resources Board and other agencies have funded a 6 number of studies to examine these and other health 7 impacts. The studies discussed in this presentation will 8 illustrate some of the different avenues investigators are 9 pursuing. 10 Today, Dr. Ken Bowers from the Research Division 11 will update the Board on valley-oriented studies. 12 Dr. Bowers. 13 (Thereupon an overhead presentation was 14 Presented as follows.) 15 DR. BOWERS: Thank you, Ms. Witherspoon. 16 Good morning, Madam Chairman and members of the 17 Board. The San Joaquin valley air basin is one of the 18 fastest growing areas in the state. The air quality in 19 the basin is impacted by several sources types, including 20 motor vehicle emissions, oil production and refining and 21 agriculture. 22 Today, we want to discuss several studies that 23 use a variety of methods to study the health impacts of 24 air quality in the San Joaquin valley air basin. Some of 25 these studies have been completed and others are still PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 8 1 being conducted. 2 --o0o-- 3 DR. BOWERS: As a result of the unique geography 4 and meteorology of the valley and the many sources of air 5 pollution, air quality in the valley routinely violates 6 the State and federal standards. For comparison, only the 7 South Coast air basin has a higher maximum ozone 8 concentration for both the 1-hour and 8-hour ozone 9 averages than the San Joaquin valley air basin. 10 The San Joaquin valley also has some of the 11 highest particulate matter concentrations in the state. 12 As an example, the valley has long-term concentrations of 13 both PM2.5 and PM10 similar to the South Coast air basin. 14 --o0o-- 15 DR. BOWERS: The air quality in the valley and 16 the exceedances of the air quality standards can have 17 significant health impacts. For example, if the state 18 annual average PM2.5 standard were met, approximately 19 1,000 premature deaths would be avoided annually. 20 Approximately 100 premature deaths would be avoided by 21 meeting the new California 8-hour ozone standard in the 22 San Joaquin valley. 23 Statewide figures are also presented in this 24 table. When comparing the valley figures to the statewide 25 figures, it should be noted that the San Joaquin valley PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 9 1 has about one-tenth of the statewide population. 2 --o0o-- 3 DR. BOWERS: Of special note are the high rates 4 of asthma prevalence in the San Joaquin valley. Health 5 surveys reported in 2001 by the California Health 6 Interview Survey show a 24 percent higher prevalence of 7 asthma in children in the San Joaquin valley than in the 8 rest of the state, and a 19 percent higher prevalence for 9 adults. 10 There are approximately 110,000 children and 11 240,000 adults with asthma in the San Joaquin valley. 12 --o0o-- 13 DR. BOWERS: In 1999, the ARB funded a study with 14 Kaiser Permanente to investigate the relationship between 15 the exposure to particulate pollution and selected 16 respiratory cardiovascular diseases in the central valley. 17 This study examined the impacts of air pollution on 18 emergency room visits and hospitalizations in 1997 through 19 2001, in both the Sacramento and San Joaquin valleys. 20 --o0o-- 21 DR. BOWERS: In this slide we compare the 22 emergency room visits for chronic respiratory conditions 23 in 4 different cities forming a transect down the valley. 24 For PM10, we observe an increase in levels as we move down 25 the valley from Sacramento to Fresno. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 10 1 --o0o-- 2 DR. BOWERS: For PM2.5 we also observe an 3 increase in concentration from Sacramento to Fresno. 4 --o0o-- 5 DR. BOWERS: The rates of emergency room visits 6 per 1,000 population increased in association with 7 increasing population from city to city with the highest 8 rates observed in Fresno. Although the study did not 9 separate specific admission diagnoses in each area, Fresno 10 has a much higher rate of asthma in the pediatric 11 population than the rest of California. This may play a 12 part in these increased emergency room visits. 13 --o0o-- 14 DR. BOWERS: Investigators from UC Davis have 15 conducted a number of studies in the Fresno area, 2 of 16 which are presented here. 17 In the first study on this slide, researchers 18 used an animal model to investigate the effect of final 19 and ultrafine particles on the respiratory system. Rats 20 were exposed in Fresno to concentrated local ambient 21 particles at varying concentrations. The study found 22 consistent cytotoxic and inflammatory responses in the 23 lungs with exposure to fine and ultrafine particles. 24 The viability of cells recovered by 25 bronchoalveolar lavage was significantly decreased during PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 11 1 4 to 6 weeks of exposure compared to rats exposed to 2 filtered air. 3 In a second study conducted by UC Davis in 4 Fresno, researchers study changes in the airways of young 5 Hispanic men during autopsies following death due to 6 nonrespiratory causes. Lung specimens of the terminal 7 bronchioles which form the transitional zone between the 8 conducting airways and the gas exchange regions of the 9 lungs showed a marked thickening and physiological changes 10 of the walls. 11 The thickened regions contained moderate to heavy 12 amounts of carbonaceous and mineral dusts. The importance 13 of this site as target for particle induced injury is well 14 established in occupational settings as the primary site 15 of injury in coal worker pneumoconiosis, also known as 16 Black Lung Disease; asbestosis; and silica and silicate 17 induced injury. 18 --o0o-- 19 DR. BOWERS: The Air Resources Board is currently 20 funding the Fresno Asthmatic Children's Environment Study, 21 or FACES. This 5-year study involves over 300 children in 22 Fresno who are already diagnosed with asthma and recruited 23 between the ages of 6 and 11. This study is designed to 24 look at the effects of environmental factors, including 25 air pollution on the symptoms and long-term progression of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 12 1 asthma. 2 The investigators have applied to the NIH for 3 additional funding to extend the study through the year 4 2010. They also have applied for funding support from the 5 ARB until the NIH grant is reviewed. 6 --o0o-- 7 DR. BOWERS: The results of these studies confirm 8 our belief that reduction of particulate matter and ozone 9 pollution in the central valley is of great importance to 10 the health and well-being of the population. The Air 11 Resources Board sets standards to protect the most 12 sensitive populations. Ongoing studies, including the 13 Teachers Cohort Study, funded by the ARB, will help to 14 evaluate the effects on elderly persons with 15 cardiovascular disease. 16 Thank you for your attention. I'd be happy to 17 answer any questions. 18 ACTING CHAIRPERSON RIORDAN: Thank you, Dr. 19 Bowers. And lets open it up to questions from any of the 20 Board members. 21 Dr. Gong. 22 BOARD MEMBER GONG: That was very thoughtful 23 presentation about the public health effects going on here 24 in the San Joaquin valley. I have a question then just a 25 general comment. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 13 1 From your review of what's happened and been 2 reported in the literature, do you have a feel for the 3 significance of the different types of air pollution, 4 whether it's particulates or ozone or other types of 5 inhalants as the major causes for public health issues in 6 the valley? They're all particulates, in other words. 7 DR. BOWERS: Well, yeah. It seems to be 8 particulate matter, especially the fine and ultrafine 9 fractions. The increasing studies are reporting that 10 these are the critical fractions of the particulate 11 matter. And particulate is more important than many of 12 the other pollutants. 13 BOARD MEMBER GONG: Including ozone? 14 DR. BOWERS: Including ozone. 15 BOARD MEMBER GONG: Okay. I guess it depends on 16 who you ask amongst the scientists as well. 17 (Laughter.) 18 BOARD MEMBER GONG: Just a general comment. I 19 think this is an excellent health update. It's a terrific 20 segue way into today's 2 major regulatory issues. It's 21 reminiscent for me being from Los Angeles that these types 22 of studies that you've summarized actually have been done 23 in the Los Angeles area, South Coast, over the past 24 several decades. 25 And now you're -- Fresno and everyone here in the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 14 1 valley is catching up, so to speak, with similar types of 2 studies. But they're very important, because the air 3 mixture here is different from Los Angeles, not better, 4 but different. 5 DR. BOWERS: Different. 6 BOARD MEMBER GONG: Thank you. 7 ACTING CHAIRPERSON RIORDAN: Thank you, Dr. Gong. 8 Any other questions? 9 Yes, Ms. D'Adamo. 10 BOARD MEMBER D'ADAMO: Just a couple of questions 11 regarding the FACES Study. The 5-year extension, do you 12 expect that you will receive that grant? 13 DR. BOWERS: Yeah. They have applied through the 14 NIH, and right now the investigators are very optimistic 15 of being funded in the current round. They're putting in 16 their application for a July 1 deadline. 17 BOARD MEMBER D'ADAMO: All right. And then is 18 the purpose to confirm or further solidify the existing 19 findings, or is the study going to be going into yet a new 20 area? And if so, what do you hope to look into, what do 21 you hope to find? 22 DR. BOWERS: It will be continuing the studies 23 that they have ongoing and adding a couple of aspects to 24 it. Do you recall? 25 HEALTH AND EXPOSURE ASSESSMENT BRANCH CHIEF BODE: PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 15 1 This is Richard Bode, I think one of the -- 2 ACTING CHAIRPERSON RIORDAN: Richard, you 3 probably have to come to the microphone over there to get 4 it on the record. 5 HEALTH AND EXPOSURE ASSESSMENT BRANCH CHIEF BODE: 6 I didn't know me didn't have any mics over there. I'm 7 Richard Bode. 8 One of the major aspects of the study itself was 9 to look at what are the short-term changes, how short-term 10 changes in the air pollution affect these kids with 11 asthma. 12 The other major part of the study was to look at 13 how these small short-term changes affect the long-term 14 progression of asthma in these kids as they age. So the 15 extra time we think is going to give us a lot more 16 information on the long-term effects of air pollution on 17 asthmatics definitely in the central valley region itself. 18 And one of the things that happened with the 19 Study in the beginning was they had a very difficult time 20 getting kids at the very beginning, so they lost a bit of 21 time in the beginning. So I think the 5 years will really 22 help to add to these long-term findings. 23 BOARD MEMBER D'ADAMO: Thank you. 24 ACTING CHAIRPERSON RIORDAN: Thank you. 25 HEALTH AND EXPOSURE ASSESSMENT BRANCH CHIEF BODE: PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 16 1 You know, I might add one more thing about Dr. Gong's 2 question about ozone PM. I think I'd have to agree that I 3 think right now, we think PM is really causing a major 4 concern for health effects. But I've noticed when we've 5 looked at the air quality in San Joaquin is even though 6 the highs are probably higher in the South Coast than they 7 are in San Joaquin valley, that the number of exceedances 8 of the 8-hour standard are greater in the San Joaquin 9 valley, meaning that the air pollution tends to linger 10 around. 11 BOARD MEMBER GONG: In terms of ozone? 12 HEALTH AND EXPOSURE ASSESSMENT BRANCH CHIEF BODE: 13 In terms of ozone. So that might be an interesting 14 question in that the exposures are going to be a lot 15 longer here than we've seen even in the South Coast air 16 basin. 17 ACTING CHAIRPERSON RIORDAN: Interesting. 18 BOARD MEMBER GONG: Madam Chair? 19 ACTING CHAIRPERSON RIORDAN: Yes, Dr. Gong. 20 BOARD MEMBER GONG: Just to keep ongoing with 21 this interesting discussion. 22 My poignant question to you, Ken, was even from 23 the FACES Study, which I've sort of monitored as it has 24 gone along, there is evidence that there's a lot of 25 allergens, for example, floating around in the air. And PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 17 1 these allergens could also cause asthma attacks and even 2 asthma itself. So we're really dealing with a potpourri 3 of different agents in the air that could initiate, as 4 well as perpetuate, asthma as just one respiratory 5 disease. Particulates can also cause cardiovascular 6 problems too, as you know. So that's not even being 7 looked at right now. 8 DR. BOWERS: Quite true, yes. 9 ACTING CHAIRPERSON RIORDAN: Thank you. 10 Yes, Supervisor Patrick. 11 BOARD MEMBER PATRICK: Thank you. I have a 12 question too about the FACES Study. Is it primarily 13 studying children that are in the more urbanized Fresno 14 area or are they children from throughout the county? 15 DR. BOWERS: They're within the Fresno/Clovis 16 area. 17 BOARD MEMBER PATRICK: Okay. So they're kids 18 that primarily live in cities, so to speak? 19 DR. BOWERS: Yes. 20 BOARD MEMBER PATRICK: What I think is 21 interesting, as you look at this, is the difference among 22 the counties. And how do we drill down to find out why 23 Fresno, why Kings as opposed to all the other counties, 24 that are here? Are we looking into this at all? 25 Because I look at my own county and it's not too PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 18 1 far off the State average. And it's essentially much like 2 Fresno, and it's got, you know, a few city centers and a 3 whole lot of agriculture and oil and other things. 4 Any idea? 5 HEALTH AND EXPOSURE ASSESSMENT BRANCH CHIEF BODE: 6 Well, actually, I don't have an answer for you. I mean 7 that's one of the confusing things about asthma is that 8 the rates have really climbed the last 20 years. There's 9 a tremendous amount of research into the causes of asthma. 10 In addition to just air pollution other types of reasons 11 that asthma is climbing. So we don't have a good answer 12 why those -- especially in the valley areas when we see 13 these great differences. As a whole though, the valley 14 seems to be a lot higher. 15 BOARD MEMBER PATRICK: Thank you. 16 ACTING CHAIRPERSON RIORDAN: Dr. Gong. 17 BOARD MEMBER GONG: Just as an aside from the 18 southern California children's health study, they actually 19 found a higher prevalence of asthma amongst 11 or 12 20 communities in Atascadero, not in LA. How do you explain 21 that? 22 It could be a migration. People move up there. 23 You know, no one knows why, but you do find these hot 24 spots of asthmatics here and there, but reasons, who 25 knows. And there is a genetic issues involved as well. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 19 1 It does run in the family. 2 ACTING CHAIRPERSON RIORDAN: Very interesting. 3 It does point out why the studies need to continue to 4 answer some of these questions. 5 Any other questions, Board Members? 6 Okay. Well, staff, thank you very much. And we 7 appreciate this information, and we urge you to continue 8 to follow and, you know, promote these studies. 9 Thank you very much. 10 Moving on. Let me indicate to you that we're 11 going to move to Agenda Item 05-6-2. 12 But before we begin, I would like to -- and let 13 me remind you what that item is, in case you don't have 14 that item directly in front of you. It's regarding a 15 proposed definition for the term Large Confined Animal 16 Facility. 17 I would like to express my appreciation for a 18 tour that Board Members D'Adamo, Berg and myself took 19 yesterday. We were hosted by the Western United Dairymen 20 in the Modesto area. And we visited a couple of dairies, 21 so we have had a wonderful opportunity to have not exactly 22 hands-on experience, but at least feet on experience of a 23 real working dairy. And so I did want to acknowledge 24 that, and to say thank you for that opportunity, because 25 it was a very well spent few hours to learn more about the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 20 1 dairy business. 2 Let me move on to say that State law directs the 3 Board to consider air quality impacts, livestock 4 emissions, and available scientific data and other factors 5 in developing the definition of the large confined animal 6 facility. 7 The definition we are considering today sets the 8 stage for achieving emission reductions from large 9 livestock facilities in the areas of California that most 10 need them, especially here in the San Joaquin valley. 11 Ms. Witherspoon, would you like to begin the 12 staff presentation of this item. 13 EXECUTIVE OFFICER WITHERSPOON: Thank you, Madam 14 Chairman. Prior to the adoption of Senate Bill 700 in 15 2003. Staff had been working with a broad range of 16 stakeholders to develop a better understanding of the 17 livestock industry and its air quality impacts. Work that 18 is continuing today. 19 Although, there are still many questions to be 20 answered, it's clear that confined animal facilities 21 produce emissions that can contribute to exceedances of 22 air quality standards in certain areas of the state. This 23 is particularly true in the San Joaquin valley, which has 24 poor air quality as you just heard and is home to most of 25 California's livestock operations. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 21 1 In developing the proposed definition of large 2 confined animal facilities, staff strove to strike a 3 balance between the need to address all significant 4 emissions in regions of the state with the worst air 5 pollution, while avoiding unnecessary regulatory burdens 6 on the livestock industry. 7 The proposed definition considers the severity 8 and nature of regional air quality problems, the number of 9 facilities affected, the percentage of livestock affected, 10 livestock emissions to the air, and the clarity and 11 predictability of the definition over time. 12 After substantial deliberation and stakeholder 13 input, we believe that the proposed approach and the 14 specific facility size thresholds we're recommending 15 provide a solid foundation for the process that lies 16 ahead. 17 As staff will explain in a moment, the 18 Board-approved definition of large confined animal 19 facility will trigger a mitigation process in local air 20 districts, whereby all large CAFs will be evaluated for 21 potential emission control measures. 22 It's too soon to say precisely what the final 23 mitigation requirements will be, since technological 24 feasibility and cost need to be carefully weighed for each 25 source type. But staff expects the mitigation measures to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 22 1 focus heavily on better operational processes, since so 2 much of the emissions are related to the animals 3 themselves and not a point source that you put 4 conventional technology on, but there will be a 5 combination of strategies employed. 6 I'll now ask Mr. Pat Gaffney of the Planning and 7 Technical Support division to present staff's proposal. 8 Patrick. 9 (Thereupon an overhead presentation was 10 Presented as follows.) 11 MR. GAFFNEY: Good Morning, Madam Chairman and 12 Members of the Board. Yesterday, I actually think there 13 was some hands on dairy activity. I think one of the cows 14 was licking the hands of a Sandra Berg yesterday. So that 15 was a good sign. You made friends. 16 Also, as I was preparing for this, I realized 20 17 years ago almost exactly to the day I was graduating with 18 my math degree, and here I am now talking to you about 19 cows and chickens. And I have been dubbed by one of the 20 members of the Board as the cow guy. So life's taken some 21 surprising turns. 22 (Laughter.) 23 MR. GAFFNEY: So today we will be presenting to 24 you our definition for Large Confined Animal Facilities as 25 required by Senate Bill 700. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 23 1 --o0o-- 2 MR. GAFFNEY: First, we will be begin the 3 presentation with some background on Senate Bill 700 and 4 the requirements specific to Confined Animal Facilities. 5 Next, we will discuss the staff proposal for defining this 6 large Confined Animal Facilities followed by a summary of 7 the key issues and staff's recommendations. 8 --o0o-- 9 MR. GAFFNEY: Senate Bill 700 enacted in 2003 10 requires the Air Resources Board to develop a definition 11 of a large Confined Animal Facility by July 1st, 2005. 12 Local air districts that have these large Confined Animal 13 Facilities must then develop rules which require these 14 large Confined Animal Facilities to submit emissions 15 mitigation plans showing how they're going to reduce the 16 emissions from these types of facilities. 17 --o0o-- 18 MR. GAFFNEY: Confined Animal Facilities, which 19 we often refer to as CAFs, as shorthand, include dairies, 20 beef feedlots, poultry operations, swine farms and other 21 facilities that maintain animals in restricted areas for 22 commercial agricultural purposes. And this slide kind of 23 shows some of the pictures of some of the different 24 livestock classifications. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 24 1 MR. GAFFNEY: Now, these photos are specific to 2 dairies, and they show some of the locations at dairies 3 where emissions occur. They include the cow housing area 4 where the cows hang out most of the time; the manure 5 handling equipment, at least some of it; and the manure 6 storage lagoon. And some of us had a chance to see and 7 smell a lagoon yesterday. 8 The sources of dairy air emissions are complex 9 and not easily measured. This poses significant 10 challenges and is the reason why important emissions 11 research and technology assessments are under way. 12 --o0o-- 13 MR. GAFFNEY: Now this slide shows the 14 implementation timeline specified in Senate Bill 700. The 15 Board needs to define large Confined Animal Facilities by 16 July 1st, 2005, so that's kind of why we're here today. 17 Next, the local air districts must develop rules 18 requiring emissions mitigation plans from these kinds of 19 facilities by July 1st, 2006. 20 Then the facilities have until January 1st, 2007 21 to submit emissions mitigation plans that comply with air 22 district's rules. 23 Finally sort of the final step in this, is by 24 July 1st 2008, those facilities that are defined as large 25 and are subject to the regulation, must implement the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 25 1 elements of their emissions mitigation plans. 2 --o0o-- 3 MR. GAFFNEY: Now the emissions mitigation 4 requirements of Senate Bill 700 apply based on an area's 5 ozone air quality status under federal law. The ozone 6 nonattainment areas as of January 1st, 2004 must adopt 7 mitigation requirements for large CAFs in their 8 jurisdiction. 9 Other regions of the state, basically those that 10 are in attainment for ozone, must do the same unless they 11 make a finding that the facilities do not contribute to a 12 violation of any air quality standard. 13 --o0o-- 14 MR. GAFFNEY: Now, once ARB adopts this 15 definition, the local air districts must develop and 16 consider the mitigation rules in a public rule-making 17 process. Senate Bill 700 requires that the districts 18 consider costs, cost effectiveness, technical feasibility, 19 emissions reductions potential, economic impacts, and 20 availability of alternatives and other factors. 21 In addition, emissions mitigation plans must use 22 emission factors approved by the ARB. 23 --o0o-- 24 MR. GAFFNEY: This slide shows the current 25 emission factors for Reactive Organic Gas, which as PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 26 1 shorthand we call ROG, for different livestock categories. 2 ROG is the pollutant of concern for large CAFs 3 from the standpoint of ozone air pollution. You can see 4 that the emissions vary per animal. For example, the 5 current factor for dairy cows is 12.8 pounds per head per 6 year, while feedlot cows have a factor of 5.5 pounds per 7 head per year. And you can see the rest for chickens and 8 turkeys and everything else. 9 Using these emission factors, the number of 10 animals at the facility can be used as a surrogate for the 11 facility emissions. As new research data becomes 12 available, the emission factors will be updated. The goal 13 is to develop more refined emission factors that 14 appropriately apportion emissions to each source at the 15 facility. 16 In the case of dairies, this would include direct 17 emissions from the cows, so basically coming out of the 18 front or the back of the cow, as well as emissions 19 associated with the various waste management practices. 20 --o0o-- 21 MR. GAFFNEY: Most of California's livestock 22 emissions occur in the San Joaquin valley. With 63 23 percent of the state's livestock emissions, it was 24 critical that we focus on the valley in developing this 25 definition of large Confined Animal Facilities. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 27 1 The South Coast and Imperial County each have 2 just over 10 percent of the statewide livestock emissions 3 and no other air district in the state has more than 2 4 percent. 5 --o0o-- 6 MR. GAFFNEY: Now, this slide shows the relative 7 emissions contribution from different livestock 8 operations. As you can see, dairies are the biggest 9 source of livestock emissions of Reactive Organic Gas in 10 the San Joaquin valley. Dairies are also significant 11 sources of emissions relative to other major categories of 12 Reactive Organic Gas as shown in the next slide. 13 --o0o-- 14 MR. GAFFNEY: Here you see the top categories of 15 ozone season ROG emissions in the valley. Light- and 16 medium-duty cars and trucks are the biggest source at 71 17 tons per day; followed by oil and gas production at 30 18 tons per day; pesticides at 26 tons per day; consumer 19 products at 25 tons per day; and dairies at 24 tons per 20 day, once again of Reactive Organic Gas. 21 As the upcoming air quality plans are developed 22 for the challenging new federal 8-hour ozone standard, it 23 will be necessary to identify feasible, cost-effective, 24 new reductions from all emission categories. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 28 1 MR. GAFFNEY: I'd now like to discuss our 2 proposal for defining these large Confined Animal 3 Facilities. 4 Senate Bill 700 directs the ARB to review and 5 consider the following in developing the definition: 6 The Board shall review all scientific 7 information, including emission factors for Confined 8 Animal Facilities, as well as the effect of these 9 facilities on air quality in the basin. 10 The Board is also to consider the emissions as 11 they may affect attainment and maintenance of air quality 12 standards. In developing the staff proposal, we made use 13 of the available information related to each of these 14 considerations. The details of our analysis are described 15 in the staff report of this item. And I'm sure most of 16 you have seen that. It's about 100 pages and goes into a 17 lot of detail on a lot of these issues. 18 --o0o-- 19 MR. GAFFNEY: In developing this proposal, we 20 held a series of workshops throughout the state in August 21 of 2004, followed by a livestock research symposium in 22 January of 2005, and another workshop in March 2005. Both 23 the symposium and March workshop included participants 24 from four locations via video-conference similar to what 25 we're doing here today. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 29 1 In addition to the formal workshops, we had 2 dozens of meetings with various interested stakeholders, 3 including representatives from a variety of livestock 4 industries, environmental and community representatives, 5 local air districts, the California Air Pollution Control 6 Officers Association, academic researchers and others. 7 --o0o-- 8 MR. GAFFNEY: This slide summarizes the results 9 of our analysis of the available data. First, as you saw 10 earlier, the majority of California's livestock emissions 11 are in the San Joaquin valley. This, combined with the 12 valley's challenging ozone air quality problem, makes this 13 region the focus of our proposal. 14 Preliminary analysis shows that substantial new 15 emissions reductions are needed to meet the federal 8-hour 16 ozone standard. This is not surprising, since the valley 17 exceeded the federal 8-hour ozone standard more than 100 18 days last year. Livestock emissions are one of the top 19 emissions categories in the valley and the majority of 20 these emissions are from dairies. 21 Lastly, we acknowledge that the emissions 22 estimates will be revised over time as new research is 23 completed. 24 --o0o-- 25 MR. GAFFNEY: Now, lets look at 2 of the primary PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 30 1 options that we considered in putting together this 2 definition. These options were developed through our 3 public workshop process. 4 The first option would base the definition of 5 "large" on one-half the federal major source threshold. 6 In the San Joaquin valley as of January 1st, 2004 this was 7 12 and a half tons per year of Reactive Organic Gas. That 8 was the major source threshold. 9 The second option is based on the number of 10 animals at a facility, while considering the aggregate 11 emissions impacts in the San Joaquin valley. 12 Now, these following slides describe each of 13 these options in some more detail. 14 --o0o-- 15 MR. GAFFNEY: Option 1, the minimum permit 16 trigger for Confined Animal Facilities under SB 700 is 17 one-half the major source threshold. So if we did nothing 18 at all today, this would be the minimum, one-half the 19 major source threshold. 20 As I mentioned, this would be 12 and a half tons 21 per year in the San Joaquin valley. With this option, 22 only facilities with emissions at or above this value, 12 23 and a half tons, would be considered a large Confined 24 Animal Facility. 25 However, this approach does not account for the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 31 1 cumulative emission impacts of CAFs in the valley, since 2 it would capture only about half of the livestock 3 emissions. Also, it would create regulatory uncertainty. 4 And this is because every time the emission factors 5 change, the emissions estimates change, the facilities 6 defined as large would also change. 7 --o0o-- 8 MR. GAFFNEY: Our preferred option is to define 9 "large" for Confined Animal Facilities based on the number 10 of animals at the facility. The number of animals at a 11 livestock facility relates directly to the amount of 12 emissions produced at a facility. 13 By defining "large" using the number of animals 14 at a facility, we can effectively address regional 15 livestock emission impacts, capture most of the regional 16 emissions at large facilities, and minimize the total 17 number of facilities that are affected. 18 In addition, because the definition would be 19 fixed at a specific threshold, certainty is provided to 20 the industry as well as the regulators about which 21 livestock facilities are large. 22 Now, using this "head-count" approach for 23 defining large CAFs would not require facilities to 24 perform any complicated emissions estimates to determine 25 if they are large, which you would have to do using the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 32 1 other proposal. They will simply need to know how many 2 animals they have at the facility, which they all do. 3 Later in the mitigation process, as air districts 4 develop rules and facilities prepare their emissions 5 mitigation plans, then we expect more refined emissions 6 estimates to be available. 7 --o0o-- 8 MR. GAFFNEY: Now, this chart shows the size 9 distribution of dairies in the San Joaquin valley, and is 10 provided to give you some insight on how we arrived at our 11 definition of large for these Confined Animal Facilities. 12 Looking at the first column, you see the percent 13 of animals included, which is our surrogate for emissions 14 at various thresholds. At 1,000 cows -- which is the 15 middle row there -- we would capture 72 percent of the 16 emissions in the San Joaquin valley. At 2,000 cows, we 17 would capture only 39 percent of the emissions in the San 18 Joaquin valley. At a threshold of 500, we would capture 19 most of the emissions, 89 percent, but many more 20 facilities would also be impacted at that threshold. 21 This type of data was very helpful in designing a 22 proposal that would optimize the mitigation potential 23 while affecting relatively fewer dairies. 24 Now, similar data, combined with facility 25 emission estimates and an understanding of the livestock PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 33 1 industry operations were used to develop our proposed 2 definitions for the other livestock classifications, 3 including chickens turkeys, swines, horses and on down the 4 road. 5 --o0o-- 6 MR. GAFFNEY: Based on the analysis of facility 7 size information, aggregate and facility livestock 8 emissions, air quality impacts, and other factors, we 9 developed the following definitions for large Confined 10 Animal Facilities in federal ozone nonattainment regions. 11 As shown, our proposed definition for dairies is 12 1,000 or more milking cows at a facility. What this means 13 is that any facility that has 1,000 or more milking cows 14 at any time during the year would be considered large 15 under this proposal. 16 For feedlots, any facility with 2,500 or more 17 beef animals would be considered large. For chickens, the 18 definition is proposed at 650,000 head and so on as shown 19 on the table there. 20 Each of these definitions is based on the 21 percentage of livestock emissions included in the 22 definition, the number of affected facilities, and the 23 relative facility emissions between each livestock 24 category. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 34 1 MR. GAFFNEY: Now, the effect of this definition 2 on the nonattainment areas, the ozone nonattainment 3 areas -- in this case we used dairies as an example. 4 Using dairies as an example at a threshold of 1,000 milk 5 cows, about 72 percent of the dairy cows and their 6 associated emissions would fall under this large 7 definition. 8 This would affect less than half or about 36 9 percent of the valley's dairies. Using a similar 10 approach, combined with facility emission data and 11 operational characteristics, the large definition was also 12 developed for the other livestock classifications. 13 --o0o-- 14 MR. GAFFNEY: Now, for other areas, these are the 15 attainment areas. The previous 2 slides were discussing 16 our proposed definition for nonattainment areas that 17 exceeded the federal ozone standards as of January 1st, 18 2004. In these other regions, these attainment regions, 19 with better air quality, we are proposing less stringent 20 definitions. As shown, the dairy definition in these 21 regions is set at 2,000 milking cows, feedlots are set at 22 5,000 head and again so on as shown. 23 --o0o-- 24 MR. GAFFNEY: In these areas designated as 25 attainment for the federal ozone standard on January 1st PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 35 1 2004, we expect very few facilities to be affected by the 2 large CAF definition. However, providing a large 3 definition in these areas is important so that the very 4 largest facilities are considered for mitigation. 5 --o0o-- 6 MR. GAFFNEY: As part of the regulation, large 7 confined animal facilities must maintain records which 8 document the daily number of animals at the facility. 9 Most facilities do this as part of their normal business 10 practices. Our proposed regulation requires that this 11 information be maintained and made accessible for 12 enforcement purposes. 13 --o0o-- 14 MR. GAFFNEY: No significant environmental 15 impacts are likely to result from the large CAF definition 16 or the record keeping requirements. Subsequent local air 17 district rules, which will require emission mitigation 18 plans from livestock facilities will result in air quality 19 benefits. 20 --o0o-- 21 MR. GAFFNEY: The large Confined Animal Facility 22 definition and record keeping requirements will also not 23 result in any economic impacts. However, there will be 24 economic impacts as a result of local air districts 25 developing and implementing emission mitigation rules. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 36 1 Economic impacts will be assessed and considered 2 by the local air districts as part of the rule development 3 process. 4 --o0o-- 5 MR. GAFFNEY: We'll now highlight some of the 6 major issues with the proposed definition, including the 7 levels at which the definition is set, emission factors 8 and permitting, mitigation options, and ammonia emissions. 9 --o0o-- 10 MR. GAFFNEY: In our public process of developing 11 the large CAF proposal, we have received comments that the 12 definition of "large" should be more stringent as well as 13 less stringent. We believe that the proposal before you 14 today provides the best balance of ensuring that most of 15 the livestock emissions are included in the definition 16 while minimizing the number of facilities affected. 17 --o0o-- 18 MR. GAFFNEY: Livestock emission factors 19 particularly the emission factors and data used for 20 dairies, have been a point of contention. These factors 21 will impact emission mitigation requirements, permitting 22 and other issues. 23 For the analysis used in this proposal we relied 24 on existing emissions information. It is possible that 25 the emissions estimates, particularly those for dairies, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 37 1 could go up or they could go down, as ongoing research is 2 completed. 3 In either case, changes in the emissions unless 4 they are tremendously different, would not meaningfully 5 change the basis or conclusions for this large CAF 6 definition. To improve the livestock emissions estimates, 7 we're working with the air districts, academics and the 8 industry to incorporate new data as it becomes available. 9 --o0o-- 10 MR. GAFFNEY: Another significant issue is that 11 there are substantial uncertainties in the availability 12 and costs of mitigating livestock emissions. Emission 13 control technologies for livestock operations are in the 14 early stage of development. 15 In addition, livestock facilities, such as 16 dairies, are complex sources of air pollution with many 17 emissions points, such as manure piles, and lagoons open 18 to the air, with emissions generated from a variety of 19 biological activities. So we just don't have like a nice 20 smoke stack where these emissions are coming off that are 21 kind of more straightforward to address. These factors 22 create challenges in working to develop effective 23 livestock emission reduction strategies. 24 Now, Senate Bill 700 requires that air districts 25 consider the costs and availability of effective livestock PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 38 1 emission mitigation practices in developing their rules. 2 To achieve the most effective near-term emissions 3 reductions, it may be beneficial to provide the industry 4 with a menu of emission mitigation options. With such an 5 approach, the individual facilities can tailor their 6 mitigation to be as effective as possible for their 7 particular operation. 8 --o0o-- 9 MR. GAFFNEY: We have also received suggestions 10 to have the large CAF definition focus more on ammonia 11 emissions, which is a potential issue for particulate 12 formation. 13 While we used ozone forming emissions as our 14 basis for our definition, the mitigation plans will likely 15 result in reductions for both Reactive Organic Gas as well 16 as ammonia. In addition, the air districts have a 17 authority to develop rules that specifically address local 18 air quality issues, including ammonia issues. 19 --o0o-- 20 MR. GAFFNEY: In summary, the proposed definition 21 includes a majority of the livestock emissions in the San 22 Joaquin valley, the area that is most impacted by these 23 emissions. The definition ensures a comprehensive 24 evaluation of livestock mitigation options in this area. 25 The definition also addresses the various livestock types PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 39 1 equitably. 2 Finally, the definition is tailored to reflect 3 regional differences being less stringent in those areas 4 with better air quality. 5 --o0o-- 6 MR. GAFFNEY: So the staff recommendation is we 7 recommend that the Board approve the proposed large 8 Confined Animal Facility definitions. Also, we recommend 9 that the Board direct staff to continue their research and 10 coordinate efforts with the local air districts and others 11 on implementation issues. 12 --o0o-- 13 MR. GAFFNEY: And before we finish, it is 14 important to briefly point out a few of the ongoing 15 efforts that are critical to the upcoming implementation 16 faces of the large CAF process. 17 Substantially research is ongoing to better 18 understand the quantity, types and sources of livestock 19 emissions. Questions are being answered, such as: Are 20 more emissions coming from the manure pile or from the 21 lagoon? Are the organic gases produced by livestock 22 predominantly these class of compounds called volatile 23 fatty acids or some other compounds? 24 Within California, over $3 million has been 25 dedicated to obtaining better livestock emission estimates PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 40 1 and it looks like quite a bit more funding is on the way 2 to help understand these issues. There are also 3 significant national efforts to study and quantify 4 livestock emissions. 5 So work is happening both on the State level and 6 the federal level rather aggressively now. 7 --o0o-- 8 MR. GAFFNEY: Now, in addition to the emissions 9 research, there are also substantial efforts underway to 10 understand the most effective approaches to reduce 11 livestock emissions. One such form is the San Joaquin 12 valley district's Dairy Permitting Advisory Group. The 13 Dairy Permitting Advisory Group, also called DPAG, 14 includes representatives from the livestock industry, 15 environmentalists, scientists, and regulators. 16 And, in addition, the Air Resources Board staff 17 and the U.S. EPA are hosting the Dairy Manure Technology 18 Feasibility Assessment Panel -- which is a very long name 19 for a group -- 20 (Laughter.) 21 MR. GAFFNEY: -- to identify technologies that 22 may reduce livestock emissions from air, water and soil. 23 So we're trying to address the multi-media impacts. Some 24 of these mitigation options may improve air quality and 25 make water quality worse. And you need to watch out for PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 41 1 those kinds of issues and so this panel is trying to focus 2 on some of those issues. 3 The panel has examined technologies from a 4 qualitative standpoint so far. The next step will be to 5 develop the data necessary to perform quantitative 6 assessments to identify promising multi-media emission 7 reduction strategies. This will require ongoing 8 collaboration with the livestock industry, private 9 technology vendors, researchers and other stakeholders. 10 So this concludes our presentation. We'd be 11 happy to answer any Members from the Board at this time. 12 I'm going to go sit down over there with the group. 13 EXECUTIVE OFFICER WITHERSPOON: No stay there. 14 MR. GAFFNEY: You'd like me to stay here. Okay. 15 Early, we talked I was going to go sit down and hide. 16 ACTING CHAIRPERSON RIORDAN: Sorry, Patrick, you 17 have to stay there. 18 ACTING CHAIRPERSON RIORDAN: But for a moment you 19 can relinquish the microphone, because I do need to ask 20 our Madam Ombudsman for her comments before we go to the 21 questions from the Board. 22 Thank you. 23 OMBUDSMAN TSCHOGL: Madam Chairman and Members of 24 the Board, although Patrick briefly described some of the 25 outreach, I will expand on it and quantify the outreach. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 42 1 This regulation has obviously been developed with 2 input from many stakeholders. Individuals included the 3 dairy, cattle, egg and poultry industries; 12 4 environmental groups; and several local, State and federal 5 agencies. Also, many university staff provided input and 6 continue to do so. 7 Prior to initiating the rule development process, 8 staff worked with stakeholders to coordinate research and 9 understand emissions from livestock staff. Staff began 10 their effort to develop this regulation in September 2003. 11 Since then, they have held 13 major workshops and 12 meetings. The meetings were held in Bakersfield, Chino, 13 Diamond Bar, Fresno, Merced, Modesto, Tulare and 14 Sacramento. 15 In some cases, the meetings were simultaneously 16 broadcast via video to several other cities. In addition 17 to the workshops and meetings, staff provided monthly 18 updates to the San Joaquin Valley Agricultural Technical 19 Advisory Committee and the San Joaquin Valley Dairy 20 Permitting Advisory Group, and helped the Dairy Technology 21 Feasibility Assessment Panel. They also provided regular 22 updates to the ARB Agricultural Advisory Committee, which 23 includes a broad representation from the agricultural 24 industry. 25 Staff visited poultry ranches, feedlots and swine PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 43 1 operations. They participated in 3 dairy tours, and I did 2 one, with the final being conducted yesterday, as you 3 mentioned earlier. There have been dozens of informal 4 meetings and conversations regarding the development of 5 the regulation with air district staff, industry 6 representatives and environmental representatives. 7 The staff report was released via the listserve 8 and the ARB web site for public comment on May 6th, 2005. 9 More than 900 companies and individuals are included on 10 the mailing list and the listserve. 11 This concludes my presentation. 12 ACTING CHAIRPERSON RIORDAN: Thank you, Madam 13 Ombudsman, and, Patrick, to your report. Thank you for a 14 very comprehensive report. I'm sure this Board 15 appreciated it. 16 Board Members, any questions for staff at this 17 time before we go to public comment? 18 Yes, Lydia. 19 BOARD MEMBER KENNARD: I had a question just 20 regarding the mechanics of it. Is the 1,000 cows per day 21 an average over a period or is it at one point during that 22 year? 23 MR. GAFFNEY: At one point. At any time during 24 the year they exceed 1,000 milking cows, they are 25 considered large. So if just one day they have 1,000 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 44 1 cars, they fall into this large definition. 2 Dairies, typically, they have fairly consistent 3 populations. They're not going up and down, you know, by 4 large amounts. 5 BOARD MEMBER KENNARD: Thank you. 6 ACTING CHAIRPERSON RIORDAN: Dr. Gong. 7 BOARD MEMBER GONG: A very nice presentation. 8 I've learned a lot about it. I have 2 questions. Have 9 you -- maybe I missed this, but did you do calculations as 10 to how many tons or pounds of ROGs would be reduced with 11 the 1,000 head method versus other counts or can you do 12 that? 13 MR. GAFFNEY: We're not at a state where we can 14 figure out what the reductions would be. We know that 15 this would bring, as we showed, about 72 percent of the 16 livestock within the regulatory framework. But then the 17 air district as they develop their emissions mitigation 18 rules, then they start going through that process of 19 figuring out okay, if we put in this control at a manure 20 separator, for example, we might get 15 percent emission 21 reductions. And we apply that towards all our facilities 22 across the Board, and then they start to do those 23 calculations. So the district is going to be needing to 24 do that in the next phase of this. 25 BOARD MEMBER GONG: Okay. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 45 1 MR. GAFFNEY: Right now, it's kind of uncertain 2 because we're still working on what the mitigation options 3 are. 4 BOARD MEMBER GONG: I assume that's important? 5 MR. GAFFNEY: It's very important. 6 BOARD MEMBER GONG: If you're going to do this, 7 you should have an outcome that you can measure or have an 8 idea of what it's going to be. 9 MR. GAFFNEY: The key thing here is to get the 10 ball rolling on this industry, which was previously 11 totally unregulated. And I think it's going to be a bit 12 of an iterative process. And as we learn more, probably 13 the controls will become more and more well defined as 14 time goes on. And we then have a better and better idea. 15 Right now, there's a large amount of uncertainty 16 about what the exact emissions are from these facilities. 17 We know that there are definitely emissions, but whether 18 it's, you know, this amount or that amount -- for the 19 reporter I'm making hand signals. 20 (Laughter.) 21 MR. GAFFNEY: Whether it's 10 or 1,000, you know, 22 that's still kind of yet to be determined. 23 BOARD MEMBER GONG: I have 2 atmospheric 24 chemistry questions. One is, do all ROGs potentially 25 transform into ozone? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 46 1 MR. GAFFNEY: All Reactive Organic Gases do 2 eventually or have the potential to form into ozone. 3 BOARD MEMBER GONG: In the right solar 4 environment? 5 MR. GAFFNEY: Right. That's part of their 6 definition of being reactive. 7 BOARD MEMBER GONG: Okay. And question 3 8 ammonia. That does not transform into ozone, to my 9 knowledge. 10 MR. GAFFNEY: Correct, to my knowledge. 11 BOARD MEMBER GONG: So really when we're talking 12 about ammonia, it's more of a particulate issue. 13 MR. GAFFNEY: There are 2 issues you'll probably 14 hear about some. One is as a precursor to particulate 15 formation. Another is there is some concern about 16 toxicity from very high concentrations of ammonia. 17 BOARD MEMBER GONG: But that would be at the 18 dairy itself, though, right? 19 MR. GAFFNEY: Yes, or potentially very close to 20 the dairy. 21 BOARD MEMBER GONG: Yeah. Just as an aside, I 22 looked this up, I believe that the ammonia transforms as a 23 particulate into ammonium nitrate here in the valley as it 24 does in Los Angeles. Whereas, on the east coast it's 25 ammonium sulfate is the predominant molecule -- or salt. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 47 1 A lot of health studies have been done in both 2 animals and in humans, some, and basically have found 3 relatively minimal toxicity from ammonia nitrate. And I 4 do have references for that. But that's of interest. 5 MR. GAFFNEY: It is of interest. Because, as you 6 know, there are very quite high ammonium nitrate 7 concentrations in the valley during the winter 8 predominantly. 9 BOARD MEMBER GONG: But that's why I asked that 10 pregnant question before. There are a lot of other things 11 floating around in the are as well. 12 MR. GAFFNEY: Yes, there are. 13 EXECUTIVE OFFICER WITHERSPOON: Dr. Gong, the San 14 Joaquin Valley is required to update its particulate 15 matter attainment plan in early 2008. And a key question 16 that carried over from the last plan was the role of a 17 ammonia and particulate matter formation, and whether or 18 not the attainment plan should include ammonia controls. 19 And we did not have enough data at the time to be 20 definitive. So that issue carried over and we'll be 21 addressing it again in the '08 particulate matter plan. 22 That's the place to look at it. 23 BOARD MEMBER GONG: See. 24 MR. GAFFNEY: Yeah. 25 (Laughter.) PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 48 1 ACTING CHAIRPERSON RIORDAN: Ms. Berg. 2 BOARD MEMBER BERG: Is there room in SB 700, if, 3 in fact, we find that the emissions are lower than higher, 4 that we are not going to disrupt an industry with a lot of 5 regulations that may not be necessary? 6 EXECUTIVE OFFICER WITHERSPOON: Yes there is. 7 You can ammend this definition at any time that you 8 believe it needs to be amended. For example, were the 9 emission factor to be cut in half or something like that, 10 a big change, we would probably come back and see whether 11 we should drop the number of dairies affected. 12 But even at a half, there would be 12 tons per 13 day from dairies in the valley, and that's still a 14 significant source. So we would want to look at 15 reasonable, cost-effective strategies to reduce those 16 emissions, you know, an emphasis on reasonable and cost 17 effective. 18 BOARD MEMBER BERG: Thank you. 19 MR. GAFFNEY: Yeah. If we cut the emissions in 20 half, I think the dairies are still in the top 10 21 emissions sources within the San Joaquin valley. 22 BOARD MEMBER BERG: Well, you do bring up one 23 other good point and that is, is there any target for a 24 percent reduction within SB 700? 25 EXECUTIVE OFFICER WITHERSPOON: No there is not. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 49 1 It's the best that we're able to do at a reasonable cost. 2 BOARD MEMBER BERG: Thank you. 3 ACTING CHAIRPERSON RIORDAN: Board Members on 4 this side? 5 Ms. Pineda. 6 BOARD MEMBER PINEDA: While I appreciate the cost 7 analysis is not appropriate for this purpose, I was 8 curious -- and I really regret that I was unable to attend 9 the tour yesterday -- but could you just touch briefly on 10 some of the best management practices that would be 11 envisioned and control measures. I just would like to 12 have a little bit more on that. 13 MR. GAFFNEY: There's a series of them now. Some 14 of them, particularly for -- well I'm not even going to go 15 into dust. I mean there's dust controls where you can 16 basically pave and the way you water your lanes and stuff. 17 For ozone, as I mentioned, the research is 18 evolving. But there are things like the way you manage 19 your manure piles. There are things that people are 20 looking into putting -- getting certain kind of microbial 21 populations in lagoons which may reduce emissions. 22 There's one which has really good benefits, potential for 23 energy generation, but still unclear in terms of air 24 quality benefits of covering lagoons, but that one is 25 potentially very expensive. But that could reduce some of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 50 1 the emissions. 2 Other things would be like there's these big 3 corrals with lots of manure, scraping those more often 4 rather than just having the manure laying out there. 5 There's a variety of options, but at this point we're 6 still working on getting definitive scientific information 7 On what emissions benefits some of those options have. 8 BOARD MEMBER PINEDA: Well, one other question 9 that that leads to then is that it appears that the focus 10 is to try to affect as few dairies as you can and maximize 11 the benefit. 12 But depending on the cost of the measures, there 13 is also the cumulative on all the smaller dairies. Are 14 there practices that we could consider that would not add 15 significant impact, but would be reasonable management 16 practices to require even of the smaller dairies? 17 MR. GAFFNEY: There probably would be. There 18 probably are going to be some housekeeping things that 19 just sort of we call them best management practices, that 20 the small industries could potentially implement. And in 21 working with the Dairy Institute, they've been pretty good 22 in if they see a better way to do things, they'll probably 23 do it, more than likely, if they're not a huge cost. 24 If it's just like okay clean your manure piles up 25 more often, they would probably even do that without a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 51 1 regulation, I would think, based on some of feedback I've 2 received from them. But there are things that are 3 potentially low cost that could be applied across the 4 Board. 5 DEPUTY EXECUTIVE OFFICER TERRY: Also, this State 6 requirement is really the first step. As Catherine 7 mentioned, we will be working on new -- our ozone SIPs 8 over the next couple of years. As part of that process, 9 we'll have to look at all the source categories and look 10 at everything that could be done to reduce emissions. And 11 so this is Step 1 on that project to work on dairies. 12 BOARD MEMBER PINEDA: And some of what I'm, I 13 guess, driving at is that if some of these control 14 measures are potentially costly. And although you're only 15 affecting a smaller population, if you could get the same 16 bang through less costly good management practices across 17 a larger population, it just seems to me that that's 18 something that we should look at. 19 MR. GAFFNEY: And the good thing is the way 20 Senate Bill 700 is structured is that if the District does 21 some of their analysis and they find out that they need to 22 go lower and get some more facilities, they have total 23 authority to do that. 24 BOARD MEMBER PINEDA: Thank you. 25 ACTING CHAIRPERSON RIORDAN: Mayor Loveridge. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 52 1 BOARD MEMBER LOVERIDGE: Three comments. I mean, 2 one is as a mobiles source, I guess there's no crank case 3 device or something else around that we can look to. But 4 I want to follow-up, I think, the kind of direction that 5 Patricia began to go. And it's really the notion of the 6 sort of level playing field. That's what we want to 7 create in terms of the economic marketplace. 8 And if the costs are significant in larger 9 operations, it seems to me I think there is a question of 10 fairness. It's also a question of I would then try to 11 reconfigure my operations to try to reduce the cost. So I 12 I'm not sure about the kind of number of what it 13 represents for, again a level playing field, and what it 14 represents to farming operations. I guess, we'll learn 15 something this morning. 16 MR. GAFFNEY: To clarify, did you mean level 17 playing field between the large facilities and the small 18 facilities? 19 BOARD MEMBER LOVERIDGE: Yes. 20 MR. GAFFNEY: The lower operating costs 21 potentially, because they won't be subject to these 22 mitigation measures. 23 BOARD MEMBER LOVERIDGE: Right. 24 EXECUTIVE OFFICER WITHERSPOON: Mayor Loveridge, 25 just in response to that point. There is a large trend PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 53 1 towards consolidation in the dairy industry. And I doubt 2 that 1,000 cow threshold is going to be enough to stop 3 that trend. But if we were to observe dairies subdividing 4 to avoid air quality controls, then that would be another 5 reason to revisit the threshold. 6 BOARD MEMBER LOVERIDGE: Okay. Us at the South 7 Coast District we spent some time talking about this 8 issue. And you have mentioned anything about what, at 9 least, the South Coast attempted to do. And I was 10 surprised actually at the kind of agreement to the 11 measures that we took. I wonder if you just would 12 identify what the South Coast did as far as that. 13 MR. GAFFNEY: The South Coast did a fantastic job 14 with their outreach with their dairy industry. And 15 they're actually permitting and regulating down to dairies 16 that are 50 head or above. So they've gone much lower 17 than 1,000 head. So every dairy that's 50 head or above, 18 needs to do emission mitigation options. Those include 19 predominantly manure management practices where they need 20 to scrape up their manure more often, much more often, and 21 then often get your manure to composting facilities or 22 other enclosed type of facilities to capture the 23 emissions. 24 It could be a building or they could put the 25 manure in these big old plastic bags. We saw some of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 54 1 those bags yesterday that we used for feed, which use 2 those same things for manure. And so they're being very 3 aggressive down there. 4 There are quite a bit fewer dairies, so, you 5 know, it's a different sort of issues than it is in the 6 San Joaquin valley. And a lot of the dairies are also 7 migrating out of the south coast. And some of them to 8 here. 9 EXECUTIVE OFFICER WITHERSPOON: One of the 10 effects of the South Coast rule is to push dairies out of 11 the basin and into the central valley, and to push the 12 manure out of the south coast and into the central valley 13 and the desert. And so there's some sensitivity 14 highlighting what the district did as the right approach 15 for the valley proper. 16 BOARD MEMBER LOVERIDGE: Well, I'm not sure it's 17 the right approach. I'm just saying that it is an 18 approach that needs kind of -- in the end, it seems to be 19 most people seem to kind of sign off on this. 20 MR. GAFFNEY: Oh, yeah. And there's one other 21 thing they use which is pretty interesting is they have 22 these large industrial scale digesters where a lot of the 23 dairies are shipping -- they're trucking their manure to 24 these digester facilities and. The dump it all into this 25 big giant vat and then they capture all the gases coming PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 55 1 off that, generate electricity and that reduces the 2 emissions also. 3 ACTING CHAIRPERSON RIORDAN: Right. And heavily 4 subsidized and lots of public agencies who are supportive 5 of this. And it's a wonderful project. And I hope that 6 it is very successful and can be replicated somewhere, but 7 at least somebody is doing something to try to make it all 8 happen. 9 MR. GAFFNEY: And I should add that approach is 10 not very applicable to the San Joaquin Valley. In the 11 south coast, their dairies are called dry-lot dairies, and 12 manure just goes on the ground and they scrape it up. IN 13 the San Joaquin valley, almost all the dairies or the 14 dairies that we saw yesterday, they're flush land, and 15 they use much more water. So it's harder just to pick up 16 the manure and truck it to one of these central locations. 17 ACTING CHAIRPERSON RIORDAN: Right. All right. 18 Any other questions, Board Members? 19 Then we're going to public testimony. Let me 20 indicate to those of you who are wishing to speak, I have 21 a list of you who have signed up. And it's a substantial 22 list. And because we have somewhat of a limited amount of 23 time, I am going to use the timer. I'm going to indicate 24 to you that I would like you to make your statements fall 25 within 3 minutes. I think you can do that. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 56 1 Especially those of you who have written 2 statements, please that becomes part of our record. And 3 instead of reading your written statement, I would prefer 4 that you simply tell us what it is in your written 5 statement and contain that within the 3 minutes, but know 6 that your total written statement is part of our record. 7 I would indicate to those of you who are in our 8 satellite areas of Bakersfield and Modesto, I'm going to 9 call on you, and I'll probably have to indicate to you 10 about when your 3 minutes are up. Here, I do have the 11 ability as you begin your presentation, I will start the 12 timer. And fortunately there are some lights there on the 13 speaker's podium that indicate to you as you have kind of 14 your last minute, you'll see a yellow light go on. And 15 when the conclusion of your 3-minute period is there, you 16 will find that there's a red light that goes on. 17 So you're going to see some lights, and that will 18 help you, I think, form your concluding statements to meet 19 this 3-minute time limit. And so let us -- we'll start 20 with a professional first. And, Paul Martin, let me call 21 you forward from Western United Dairymen, and we'll see if 22 I can make this work. You'll be my test case. 23 MR. MARTIN: That's what happens when you're the 24 oldest son in a family you are the test case. 25 ACTING CHAIRPERSON RIORDAN: Following Paul, I'm PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 57 1 going to ask Noelle Cremers and followed by Tracy Schohr. 2 So you get -- I'll try to indicate to you about 3 back so 3 that you'll be getting ready, and you'll have an 4 indication of when you're going to begin. 5 All right. 6 MR. MARTIN: Okay. Thank you, Chairman Riordan. 7 And Good Morning, members of the Board. I sorry I was 8 unable to be with you yesterday, but I was at the Ag Air 9 Quality Task Force meeting in Amarillo, Texas. And it was 10 a very productive meeting. 11 As Patrick was mentioning, momentum is building 12 to get the information that we need to get, in order to 13 handle the livestock emissions. And we have recently 14 created a national dairy environmental task force. And 2 15 dairy producers, the Chairman of Western, who is on the 16 environmental committee, Don Giacomazzi from Hanford, and 17 then Denise Mullinax from Hilmar Cheese and myself are the 18 representatives. 19 And our purpose of this program is to develop the 20 funding to get standardized methodologies and reporting 21 protocols, so that all of our research is done the same. 22 I'll be very quick. We think that emissions 23 should be based on -- or the definition should be based on 24 the actual emissions. We understand why your staff took 25 the approach that they took. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 58 1 I do want to compliment them. They are an 2 extremely good group of people to work with, and we 3 appreciate the opportunity to do that. 4 If I had to pick a flat number, I would go with 5 the number of 2,500 cows. Beyond that, the other 6 important fact, as Patrick mentioned in his report, is 7 that the dairy industry is being asked to submit itself to 8 a regulatory program with that knowledge of what the 9 control measures are going to be. It's still a bit of a 10 black box. And we'd appreciate any help that we could get 11 from your staff to begin to shine some light into that 12 black box, so that our producers know what to expect. 13 I guess that the main point that I would like to 14 leave with you is that black box point. Prior to Senate 15 Bill 700, we had a, I thought, very good collaborative 16 relationship with all of the air quality and regulatory 17 jurisdictions. And if we can realize that when there's a 18 high degree of uncertainty, as far as emission levels and 19 emission sources, that we need to be very cautious in how 20 we implement the program. And if we can go forward with 21 that attitude in mind, I think we can reestablish the 22 collaborative relationship that we had prior to the 23 passage of the bill. 24 So if you have questions, I'd be more than happy 25 to answer them. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 59 1 ACTING CHAIRPERSON RIORDAN: Mr. Martin, first, 2 let me say thank you for sticking to the time limit. I'm 3 very pleased about that. And I trust that lights worked 4 there for you. 5 MR. MARTIN: It did. 6 ACTING CHAIRPERSON RIORDAN: There will be a 7 question. But let me just, on the record, begin to tell 8 you that indeed staff will work with you to help all of us 9 to understand what is the unknown, the black box that you 10 mentioned. And we do a lot of outreach as you well know. 11 We have people who are absolutely committed to that. The 12 staff is very accessible to various stakeholders. And 13 certainly, trust me, from my years of experience, they'll 14 work with you, so that you clearly understand what is 15 going to come, and the issues that are involved, and the 16 cleaning of the air, and the programs that are going to 17 achieve it. 18 Now, Ms. D'Adamo. 19 BOARD MEMBER D'ADAMO: Thank you. I was actually 20 going to say the same thing. So thank you for bringing 21 that up. This is just the beginning, and we intend to 22 continue to work with the industry and the other 23 stakeholders and the district as we move forward with 24 this. 25 I just had one question, and that is you said if PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 60 1 you could pick a number, it would be 2,500. Is that based 2 upon Option Number 1 that staff outlined on one-half 3 federal major source threshold? 4 MR. MARTIN: Yeah, actually not. It's based more 5 on the perception within the industry as to what truly is 6 a large facility. And, you know, relative to the question 7 about the smaller dairies and so forth. And when we're 8 developing a new regulatory program, it's my view that we 9 should focus on the direction that the industry is going. 10 And the direction is, is very likely that you will not see 11 too many new dairies being built under 2,500. So the 12 perception in the industry, if you walked up to a dairyman 13 and asked what's a large dairy? He's probably going to 14 say 2,500 cows. 15 BOARD MEMBER D'ADAMO: And then just to continue 16 that, the staff -- first of all, I think staff has 17 probably landed in the right place. But just to put it in 18 perspective on some of these other options, the 2,500 or 19 what would the number have been had staff selected Option 20 Number 1, based on the emission factor -- the current 21 emission factors? 22 EXECUTIVE OFFICER WITHERSPOON: Well. Yeah, 23 1,700. It would have been 1,700. So less than the 2,500 24 that Mr. Martin is talking about. And that's assuming 25 12.8 pounds per cow, which is a number they changed. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 61 1 BOARD MEMBER D'ADAMO: And in follow up to that, 2 it's my understanding that those changes would be emission 3 factors, unless they are, as you indicated earlier, major 4 changes. What to do with that information would really go 5 to the next stage. And that is the district plans on 6 mitigation. 7 EXECUTIVE OFFICER WITHERSPOON: Right. 8 ACTING CHAIRPERSON RIORDAN: Other questions on 9 the right-hand side here? 10 Mr. Martin, thank you very much. 11 MR. MARTIN: Thank you very much. I appreciate 12 your time. 13 ACTING CHAIRPERSON RIORDAN: Noelle Cremers, 14 Tracy Schohr, followed be Todd Stroup. 15 MS. CREMERS: Good morning, Madam Chair and Board 16 Members. I'm Noelle Cremers with the California Farm 17 Bureau Federation. And based on your conversation that 18 you just had with Mr. Martin, my comments are just echoing 19 that. 20 This is just the beginning. We've been working 21 for a long time to get to where we are today, but we have 22 a long way to go in developing those mitigation measures, 23 which will actually be what will generate real 24 improvements in air quality. 25 And we would hope that ARB continues to ask the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 62 1 thoughtful questions that you've been asking and look at 2 mitigation measures that are cost effective, that actually 3 will provide benefits to clean air. 4 We would like to thank your staff for being 5 willing to work with us, and really sit down and look at 6 all the issues and go through everything in minutia, and 7 really look at the details. And we'd also like to 8 recommend that because, like Mr. Gaffney said, the 9 industry is concerned about the science behind the current 10 emission factors. That's kind of an understatement. 11 We would like to see this definition be reviewed 12 once every 3 years to make sure that the most current 13 science is being used for these regulations. 14 Thank you. 15 ACTING CHAIRPERSON RIORDAN: Thank you very much. 16 Are there any questions? 17 Just a moment Noelle. Are there any questions 18 for this speaker? 19 I guess not. So thank you very much. 20 Tracy Schohr, followed by Todd Stroup and Jim 21 Tully. Tracy. 22 MS. SCHOHR: Tracy Schohr, The California 23 Cattlemen's Association. We request that the Board 24 reconsider the emissions factor associated with the beef 25 feedlots that reflect the industry. California's feedlots PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 63 1 are unique in the fact that a majority of the cattle are 2 shipped from Mexico in addition to Holstein steers that a 3 by-product of the state's large dairy industry to fill the 4 feedlots. 5 The current emissions factor is significantly 6 larger than the actual. The factor considers that all 7 cattle in feedlots are Yearlings, when, in fact, and an 8 informal survey found that 51 percent of the cattle in 9 California's feedlots weigh less than 500 pounds. 10 These smaller animals that are unique to 11 California's industry rationally don't emit the same 12 emissions as that of a Yearling. Therefore, CCA 13 recommends emissions should reflect the industry. 14 Secondly, we recommend that the emissions factor 15 when scaled be based on total solids produced versus total 16 manure. Feedlot cattle consume highly digestible feed 17 rations that result in manure that is 92 percent moisture. 18 Water is not an ozone precursor and should not be included 19 when calculating the emissions factor. 20 Therefore, CCA requests an emissions factor of 21 2.7 to be used, that takes into account the calf food 22 members based on total solids. If you are to base the 23 number on total manure, the resulting emissions would be 24 4.6 pounds of ROG per head per year. 25 Thank you. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 64 1 ACTING CHAIRPERSON RIORDAN: Thank you. Staff, 2 would you like to comment, and then I'll go to Board 3 members. 4 DEPUTY EXECUTIVE OFFICER TERRY: Yes. Two points 5 were raised there. The first one on the emission factor, 6 the total solids without getting into a lot of technical 7 detail, really that involves taking a much more detailed 8 look at the characteristics of various types of manure for 9 different livestock categories, in terms of moisture 10 content and a variety of other factors. 11 That is a level of detail we don't have the 12 science to support at this time. That's why we took the 13 approach of treating all manure from a tonnage perspective 14 as opposed to more detailed differential characteristics. 15 We can work on that together as research develops. 16 However, the second point, in terms of the number 17 of smaller animals and their sizes and the contribution to 18 the herds, this is new information to us in the last 19 couple of days. And it would be consistent with our 20 approach to go back and do a readjustment, if we can have 21 the documentation for that data. 22 EXECUTIVE OFFICER WITHERSPOON: If you could just 23 explain what she meant by being consistent. We already 24 made that adjustment for dairy cows. And we have a cow 25 equivalent -- dairy cow equivalent factor. And so we PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 65 1 would do the same thing for steer equivalent factoring 2 down for smaller sized animals. 3 ACTING CHAIRPERSON RIORDAN: We're going to learn 4 a whole lot about these cows, by the time we're finished. 5 I'm impressed with that. 6 (Laughter.) 7 EXECUTIVE OFFICER WITHERSPOON: That would be a 8 15-day change, Madam Chairman. 9 ACTING CHAIRPERSON RIORDAN: A 15-day change. If 10 you have some questions -- I know this may be new, Madam 11 Ombudsman, wherever you are, I will -- we'll work with you 12 and explain this 15-day change process, because that may 13 be something that you're not familiar with with your 14 organization, and it can accommodate some of the new 15 information that you're bringing forward. 16 So our Madam Ombudsman is right there with her 17 hand up and will help you. But don't leave, Tracy, 18 because Mayor Loveridge has a question. 19 BOARD MEMBER LOVERIDGE: I may have misheard, 20 but -- did you -- I don't plead any knowledge, you were 21 talking about coming from Mexico large numbers come across 22 the border to feedlots is that -- 23 MS. SCHOHR: In the past, yes. 24 BOARD MEMBER LOVERIDGE: In the past. They're 25 shipped by truck from Mexico to feedlots here? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 66 1 MS. SCHOHR: Yes. And they're coming in at a 2 lower weight, versus when they go to be processed, they're 3 weighing 1,200 to 1,500 pounds. Well not every animal in 4 the feedlot is going to weigh 1,200 to 1,500 pounds, which 5 the number that is reflected. They're coming in there 6 weighing 300 to 400 pounds on average. And they grow over 7 the time. So it's not in there as a yearling producing 8 the same amount of emissions the entire time in the 9 feedlot. 10 BOARD MEMBER LOVERIDGE: What percent do you 11 think come from Mexico as opposed to raised here in 12 California? 13 MS. SCHOHR: It changes depending on the time 14 depending on the -- 15 BOARD MEMBER LOVERIDGE: Are they 50 percent, 5 16 percent, I mean -- 17 ACTING CHAIRPERSON RIORDAN: I think if -- it's 18 difficult to hear the gentleman back there. However, 19 Tracy, if you can hear him, please relay it to us. 20 MS. SCHOHR: It depends upon the market, the 21 industry where it's at, the time of the year. It's never 22 going to be the same number every year. 23 BOARD MEMBER LOVERIDGE: So it swings? 24 ACTING CHAIRPERSON RIORDAN: Maybe this gentleman 25 can identify himself and -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 67 1 MR. TAR: Good morning, Madam Chairman and Board 2 Members. My name is Jonathon Tar I'm with Harris Ranch. 3 And your question about cattle coming up from 4 Mexico. It's a hard question to answer. The market is 5 constantly changing. In the past, the southern part of 6 our state has fed a tremendous amount of Mexican cattle. 7 That has now shifted. We're feeding more Holstein steers. 8 What we're Looking at is the change from yearling 9 type feeding, where cattle would enter into a feedyard, 10 we'll say 700 to 800 pounds. The change that we've seen 11 in the last 5 to 6 years is we're feeding more calves. 12 Instead of feeding 750 pound 800 pound animal, we're now 13 feeding probably 350 pound animal when they first come 14 into the yard. And so that's why we're asking for a 15 differentiation a different classes of animals. 16 EXECUTIVE OFFICER WITHERSPOON: We're happy to do 17 that. 18 ACTING CHAIRPERSON RIORDAN: And I think we can 19 accommodate that. So if you work with our staff, because 20 I know you have a lot of experience in the feedyard 21 business. I know at least one of your feedyards. I don't 22 know if you have more than one. 23 MR. TAR: We just have one, ma'am. 24 ACTING CHAIRPERSON RIORDAN: And one nice big 25 one. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 68 1 (Laughter.) 2 ACTING CHAIRPERSON RIORDAN: We know that you 3 have that expertise. Again, we're all learning this 4 business. None of us are experts. And I had never even 5 thought that we had beef coming in from outside of the 6 continental United States. And this is -- it's good to 7 know, and thank you for bringing it forward. 8 MR. TAR: You're very welcome. 9 We appreciate it. 10 ACTING CHAIRPERSON RIORDAN: Thank you very much. 11 Unless there are any further questions? 12 Today Stroup followed by Jim Tully and followed 13 by Denise Mullinax. 14 MR. STROUP: Good morning. My name is Todd 15 Stroup. I'm a Jersey cattle owner and also a dairy 16 management consultant. I've owned and worked with Jersey 17 cattle for over 20 years. I've lived in California for 8 18 years as a dairy manager, and the last 3 years as a diary 19 consultant. 20 As a consultant, I help track dairies -- I help 21 dairies track and monitor their feed efficiencies and 22 inventories. This helps indicate the Jersies use 23 approximately 70 percent of the inputs of a Holstein cow, 24 which I believe is the number that they use on the current 25 proposal. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 69 1 Obvious differences between the breeds include 2 body size and body weights. Jersies are only 3 three-fourths the size of a Holstein cow. An area that is 4 often overlooked is the feed efficiency conversion of 5 Jersies versus Holsteins. Many Jersey herds average 10 6 percent higher feed conversion rates than a Holstein cow. 7 Basically, that means for every dry pound of feed 8 that a cow eats -- that a Jersey cow eats, she's going to 9 produce more energy correct milk. 10 I suggest that Jersey cows should be considered a 11 70 percent of a Holstein cow for emission purposes. This 12 is still within the framework of the current proposal. 13 Total inputs are less, which translates into less 14 waste. Science needs to be the main factor that we 15 consider when calculating air quality issues. I know this 16 is the intent of the Senate Bill 700. 17 Another point is the use of byproducts that need 18 to be addressed. Dairy animals use many byproducts, such 19 as dried distiller's grains from ethanol plants tomato 20 waste, cull vegetables, wet brewers grains, rice straw. 21 Many byproducts that other animal classes cannot utilize. 22 Because the dairy cows are ruminant, she's able 23 to use these products to create food and fiber for our 24 country. 25 So I guess one of the questions I want to address PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 70 1 here is will credits ever be given to the dairy industry 2 for being able to utilize these products that would 3 otherwise end up in landfills? 4 Thank you for your time. 5 ACTING CHAIRPERSON RIORDAN: Thank you very much. 6 Let me comment, and ask the question, staff, do you want 7 to differentiate between certain cows, because he raises 8 an interesting point? I don't know if there are, you 9 know, calculations that show the difference between, you 10 know, some form of a more formal study or not, but, you 11 know -- 12 EXECUTIVE OFFICER WITHERSPOON: Well, there's an 13 equity issue here of should all dairy be treated the same? 14 There's also Ms. Pineda's question about should the 15 threshold go lower if there's reasonable cost-effective 16 things to do. 17 I think this is new information, too, for staff, 18 I believe. No, not on this one. But I think -- well, 19 then, Lynn, you take it from here. 20 (Laughter.) 21 DEPUTY EXECUTIVE OFFICER TERRY: Well, actually, 22 the comment is getting really at the heart of the emission 23 factors debate, that we acknowledge that right now we have 24 an emission factor that is a placeholder because we have a 25 lot of research underway. And we're learning more about PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 71 1 the amount of emissions that are coming out of animals, 2 versus the amount of manure produced. And so these are 3 the very kinds of issues that we will be looking at as we 4 pursue these research projects. So, in essence, we didn't 5 have the data to incorporate into the proposal. 6 ACTING CHAIRPERSON RIORDAN: So I think what 7 we're saying is you need to continue to have dialogue with 8 staff, if you have any kind of research that shows the 9 difference between -- you know, I can personally say that 10 there is a difference in the quality of the butterfat milk 11 of the different types of cows certainly. But I had no 12 idea that there was a difference in the emissions. But if 13 there is, maybe we need to take a look at this and it 14 might be that if a dairy is predominantly one 15 particular -- a Jersey or a Guernsey or whatever, maybe 16 there would be a different requirement placed upon them 17 than that of a Holstein. 18 MR. STROUP: Can I comment on that. There are 19 actually studies that have already been done that show 20 that Jersies do eat less, produce less waste than the 21 Holstein cow. 22 ACTING CHAIRPERSON RIORDAN: Then we need to have 23 those. So if you can get them to our staff, we would 24 appreciate that. 25 MR. STROUP: Okay. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 72 1 BOARD MEMBER LOVERIDGE: What's the ratio of the 2 Jersies and Holsteins? 3 MR. STROUP: It's about 70 percent, like if you 4 figure a Holstein is 100, a Jersey is going to be 70. 5 BOARD MEMBER LOVERIDGE: I mean the numbers. Are 6 there more Jersey cows or more Holstein cows? 7 MR. STROUP: Oh, no. There's a lot more Holstein 8 cows. I think there's about 1.8 million dairy cows in 9 California and probably less than 100,000 are Jersies. 10 ACTING CHAIRPERSON RIORDAN: You don't see them. 11 In fact, I asked the question yesterday. And I guess 12 there are some good reasons, but there are people who are 13 developing cross breeds and doing a lot of interesting 14 things with them. 15 MR. STROUP: And they're even more efficient. 16 ACTING CHAIRPERSON RIORDAN: Right. 17 Ms. D'Adamo. 18 BOARD MEMBER D'ADAMO: Of that 100,000, are they 19 spread throughout or are there dairies that pretty much 20 exclusively have Jersey cows? 21 MR. STROUP: In the past, it used to be that 22 Jersies kind of had their own niche for cheese plants and 23 things like that. But as some of these efficiency 24 measures of dairies look at that more, some Holstein 25 dairies are adding Jersey cows just from that standpoint. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 73 1 ACTING CHAIRPERSON RIORDAN: But please be in 2 touch with staff with your research. 3 Thank you. 4 Ms. Berg. 5 BOARD MEMBER BERG: If they're mixed and you were 6 to do a 70 percent versus 100 percent on the Holstein on 7 the overall to a dairyman, is it going to make a 8 difference at the end of the day? 9 MR. STROUP: Well, it depends on the -- 10 BOARD MEMBER BERG: Because the Holstein would 11 have to have more than its current ratio. And so you're 12 going to increase the Holstein and decrease the Jersey. 13 MR. STROUP: It would be an easy calculation, 14 but -- 15 BOARD MEMBER BERG: But it would be important? 16 MR. STROUP: It would be important, yes. 17 BOARD MEMBER BERG: Thank you. 18 ACTING CHAIRPERSON RIORDAN: Thank you very much. 19 Denise. I'm sorry, 20 MR. TULLY: Do you want Jim Tully or Denise? 21 ACTING CHAIRPERSON RIORDAN: Oh, I'm sorry, Jim 22 Tully. I apologizes. 23 DR. TULLY: Good morning. My name is Dr. Jim 24 Tully. I'm an animal nutrition consultant in the valley 25 and I just wanted to make a couple points. The regulation PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 74 1 of the dairy emissions should be based on emissions and 2 not head count. That's easily supported by science. 3 A couple of other points. Dr. Gong, you 4 mentioned about ammonia and nitrogen. In the past 15 to 5 20 years, we have reduced the amount of nitrogen fed to 6 the cows probably 10 to 20 percent. And that's based on 7 science and production and efficiency. And we will 8 continue to do that, based on science to improve the 9 efficiency. 10 Todd mentioned an important point, and I'd like 11 to reiterate it. Do we want cows or no cows? I think 12 cows get a negative too much and there probably are some 13 very positives on the environment as far as impact. 14 I wonder if air quality and other environmental 15 issues get worse without the cows. I know the economic 16 picture of the valley gets much worse without cows. I 17 wonder about the environment. 18 You probably had orange juice for breakfast. We 19 may had some almonds last night. Most of us drove here, 20 some of us alone. We use byproducts from all of those 21 industries to feed these cows to make food that has a huge 22 impact on the valley. If these high fiber waste products 23 are not fed and turned into food, other options are 24 limited and are potentially more detrimental to air 25 quality than if we use them for cows. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 75 1 Thank you. 2 ACTING CHAIRPERSON RIORDAN: Thank you very much. 3 Are there any questions for this speaker? 4 Thank you very much. 5 Denise Mullinax and followed by Diane Bailey, 6 followed by Mariel Kusano. 7 MS. MULLINAX: Good morning, Chairman Riordan and 8 the rest of the Board. It's now my turn. Denise 9 Mullinax, Dairy Environmental Issues with Hilmar Cheese 10 Company. 11 First, let me just thank you for the opportunity 12 to come and speak before you today, and provide our input 13 on the definition. As well as, I'd like to also 14 personally thank all of you for your time investment and 15 just your willingness to try and understand our industry, 16 the very industry that you are attempting to regulate. 17 And we understand that it's a new endeavor for you and we 18 appreciate your efforts to that end. 19 By way of background just on Hilmar Cheese, real 20 briefly. We're located in Hilmar, which is in pretty much 21 the heart of valley. We take in and process about 11 22 million pounds of milk daily and that comes from roughly 23 280 dairies. Those dairies, for the most part, all of 24 them are located right here in the valley, as well as our 25 employees and our employees' families. And right now PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 76 1 we're about 600 plus employees strong. 2 So we are very concerned and aware of the air 3 quality situation right here in the valley, and we feel 4 that everyone, including the dairy industry, really must 5 do their share. 6 I'm going to echo some comments that you've 7 already heard from others in the dairy industry today. 8 And basically we disagree with the flat head count 9 definition. We firmly believe that it real needs to be 10 based on actual emissions, and that that needs to be based 11 on sound science and specifically science done here on our 12 local dairies. 13 We definitely understand the statistical 14 reasoning by, you know, why staff has gone in terms where 15 they're setting their definition. But we really feel that 16 a flat head count is just a real disconnect from the 17 actual contribution to the overall air problem, that any 18 one individual dairy might make. And we feel like 19 emissions would really better represent that. 20 Further more, you heard from the previous 2 21 speakers in terms of this issue of breed differences. An 22 example is the Jersey cow, and I think it is noteworthy to 23 mention that the largest population of Jersey cows do 24 reside right here in the valley. And we really put those 25 producers at a competitive disadvantage if we don't allow PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 77 1 them to have some sort of a scaled determination. We 2 effectively make them less competitive. 3 If they produce -- if they're eating 70 percent 4 less, there's 70 percent of the body matter. It really 5 makes common sense that they're going to produce, roughly, 6 70 percent of the emissions. And one of you asked a 7 question earlier. There is an actual study out of 8 Virginia Tech. It was exactly done at the USDA ARS 9 Station out of Beltville. And that's actually submitted 10 as part of my comments so you can refer to that. 11 So further more, I think all of us agree that the 12 key issue here is really the ramifications of this 13 definition that we're setting, and the BARCT obligations 14 that will set upon those producers. 15 And to that end, again, we would just be 16 consistent with some of the other comments that you've 17 already heard, and say that we would like a menued 18 approach for that to allow producers to really pick 19 management and technological methods that really fit their 20 facilities and give us the greatest total benefit for air 21 quality improvement for all of us. 22 So thank you. 23 ACTING CHAIRPERSON RIORDAN: Thank you, Denise. 24 And I do see the attachment. And I appreciate having 25 that, and we will look into that. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 78 1 Are there any questions for this speaker? 2 Yes, Ms. Berg. 3 BOARD MEMBER BERG: I don't have a question 4 necessarily for Denise, but could staff just review for me 5 one more time as to why -- it appears to me that the head 6 count issue seems to be the easier way to go, but I 7 certainly can empathize with industry saying we would much 8 rather be regulated on actual emissions. Could you just 9 review with me one more time why the actual emissions was 10 not the road we took? 11 EXECUTIVE OFFICER WITHERSPOON: It's the 12 difference between aggregate contribution to air quality 13 and individual contribution to air quality. If you use 14 them -- half of the major source definition, 12-and-a-half 15 tons per day, you're talking about dairies at 1,700 head. 16 It all just converts back and forth to emissions and head 17 counts. And then you've dropped down to about 40 percent 18 of the aggregate emissions in the valley rather than 72 19 percent, if you draw the line at 1,000 head, based on what 20 we understand today. 21 So what staff felt is that a larger quantity of 22 the dairy should go forward into the mitigation process 23 for consideration of are there reasonable controls. And 24 the dairy industry would prefer that a small number of 25 dairies go into the next phase. And only do we include PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 79 1 more, if we determine that we need to push the threshold 2 down. That's the difference between the 2 mitigations. 3 In the end though, the mitigation requirements 4 will be driven entirely by cost and feasibility. And 5 districts will adjust actual thresholds for actual 6 requirements accordingly. 7 BOARD MEMBER BERG: And each district will be 8 able to develop their rules and regulations as they see 9 appropriate for their particular area. 10 EXECUTIVE OFFICER WITHERSPOON: That's correct. 11 BOARD MEMBER BERG: Okay. 12 ACTING CHAIRPERSON RIORDAN: Mayor Loveridge. 13 BOARD MEMBER LOVERIDGE: Just sort of follow up 14 on that. A number is simple if your task was to come up 15 with an emissions number, how would you do that? 16 MS. MULLINAX: Well, even if we use our current 17 emission factor today when we have a lot of new 18 ground-breaking science that indicates that it has every 19 chance of being lower, even to the extent of being half. 20 If you take that 12.8 number, that still gets us to 1,954, 21 which is what we're using now. 22 So, obviously, that's almost twice as high as the 23 1,000 that's proposed. 24 BOARD MEMBER BERG: And would you say that the 25 difference in that again is nonattainment versus PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 80 1 attainment, in that nonattainment they're looking at the 2 lower, but in the attainment area, it is 2,000. So is 3 there an adjustment that we're looking at the 4 nonattainment areas, that we really need more emission 5 savings, because of that nonattainment issue? 6 EXECUTIVE OFFICER WITHERSPOON: Yes, because the 7 valley has severe ozone particulate problems. And so its 8 staff judgment that we should be looking at a larger 9 population of dairies for potential emission mitigation 10 measures, rather than a small population of dairies. 11 So if we made it too small, we wouldn't get 12 enough return. And the odds we're not going to be looking 13 at 80 or 90 percent emission control. We're going to be 14 looking at 15 percent, 30 percent. And so if we can 15 accomplish that over a larger range of dairies, then we'll 16 get more tons of at the end of the day and protect more 17 people's health. 18 BOARD MEMBER BERG: I think it's important to 19 note too that the implementation time is around 2008, and 20 there is an awful steep learning curve to be done between 21 now and then. And we all have to be committed to that 22 steep learning curve, and be willing to look realistically 23 and honestly at the science as we go along this process. 24 Thank you very much. 25 ACTING CHAIRPERSON RIORDAN: Thank you. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 81 1 Diane Bailey, Mariel and then Brent Newell. 2 MS. BAILEY: Good morning. I have a few props 3 with me today. 4 Good morning, Chairwoman Riordan and Members of 5 the Board and staff. My name is Diane Bailey And I'm a 6 scientist with the Natural Resources Defense Council. I 7 wish we could have included these maps with our letter, 8 but they wouldn't fit. 9 (Laughter.) 10 MS. BAILEY: I'm here today in strong support of 11 the approach that's being taken to define large CAFs, 12 based on the number of animals rather than an emission 13 factor. 14 This is an extremely important issue to the 15 environmental justice and public health communities as you 16 can see here today, by the many representatives that have 17 come here. And I hope that you'll seriously consider the 18 points that we raise in our written comments and also some 19 of the testimony that you hear from us today. 20 The most important decision that you can make 21 today is to lower the threshold definition of large CAFs 22 for dairies in particular. And what we're asking for you 23 to consider is 700 dairy cows. And that's not all of the 24 cows that are on a dairy. There are also the dry cows and 25 the calves that are not included in that number. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 82 1 The reasons for that number are stated pretty 2 clearly in our letter. And I think some other folks will 3 go over that in their testimony, so I won't go into 4 detail. But I do want to talk about the issue of dairy 5 clusters in the valley. I think this is really important 6 for consideration. 7 And I think that it's really easy to see on these 8 U.S. EPA maps what I'm talking about when I say that 9 dairies are really clustered in certain areas in the 10 valley. I hope that you can see those maps. 11 CHAIRPERSON LLOYD: Yeah, if you just hold 12 them -- perfect, I know that's difficult. 13 MS. BAILEY: I'm sorry that the rest of the 14 people here can't see them, but what these maps show is a 15 concentration in number of dairies. And then on this map 16 you can see that concentration by dairy size, depending on 17 the size of the circle. 18 And then they look -- U.S. EPA looked at 3-mile 19 grids to see where the largest concentrations of overall 20 numbers of dairy cows were. Those maps are in no way 21 complete. They represent a small subset of data. And so, 22 in a sense, they're really a best-case scenario. 23 For example, there's no data on herd size in 24 several of the counties. And there's very little data on 25 any herds below 1,000 cows. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 83 1 But the maps do show that concentrated animal 2 feeding facilities are concentrated. And they're 3 clustered together, which means many health and quality of 4 life impacts from these dairies to the communities nearby. 5 The cumulative impacts of dairy clusters warrant 6 much further consideration. We evaluated some data from 7 the South Coast Air District to see exactly what the 8 impact would be by lowering the threshold. In one of 9 these dairy clusters, we looked at the City of Chino. And 10 if you choose a threshold of 700 dairies cows, that would 11 result in 70 percent of the dairy herd being regulated, as 12 opposed to just 33 percent, if you look at a threshold of 13 1,000 cows. 14 Similarly, if you looked at a threshold of 500 15 cows, that would result in the regulation of 89 percent of 16 that herd in Chino as opposed to just one-third of the 17 herd, if you go with the 1,000 cow threshold. 18 I see that I'm running out of time here. I'm 19 wondering if you could graciously afford me a few more 20 minutes. 21 ACTING CHAIRPERSON RIORDAN: Well, Diane, the 22 problem is, then I'd have to do it for all those who are 23 still on the list. And so just draw it to a conclusion 24 and maybe you could share something with one of your other 25 speakers. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 84 1 MS. BAILEY: Let me close by urging you to please 2 consider the 700 calf threshold for dairies in the large 3 CAF definition, and also to consider further the 4 cumulative impacts and possibly direct staff to come back 5 to the Board with more information on that in about 6 6 months. 7 And we have serious concerns about the tour that 8 went on yesterday and being excluded from that. And we'd 9 be happy to talk to any of you further on that. 10 Thank you. 11 ACTING CHAIRPERSON RIORDAN: Thank you. 12 Okay. Let's see, Mariel. 13 MS. KUSANO: Good morning. My name is Mariel 14 Kusano. I'm with the Center on Race, Poverty and the 15 Environment. And we're here in support of the definition, 16 but we'd liked to express some concerns. 17 The concerns I'd like to discuss today is the 18 different head count for the attainment areas as opposed 19 to the nonattainment areas. As it stands now, the 20 definition has attainment areas allowing twice as many 21 animals as nonattainment areas. And this raises our 22 concern, because it encourages a race to the bottom. 23 And the race to the bottom is a term used when 24 there's a movement of polluting industries to areas with 25 the least stringent environmental regulations. And with PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 85 1 the definition as it is now, with attainment areas 2 allowing twice as many animals as nonattainment areas, 3 that would encourage industry to either locate or relocate 4 their facilities to areas in attainment. 5 SB 700's goal is to decrease air pollution. And 6 with this incentive to move to areas of attainment, that 7 may increase the air pollution in cleaner areas, such as 8 the northern Sacramento valley or the Imperial valley, 9 both of which are in attainment currently and have room 10 for possible development. 11 These areas would see this race-to-the-bottom 12 effect as more industries move in to avoid the more 13 stringent environmental regulations elsewhere. 14 Section 7 of SB 700 has already considered the 15 differences in nonattainment and attainment areas by 16 mandating different control schemes, so it's not necessary 17 to have a more lenient standard or definition for the 18 attainment areas. 19 So CRPE would encourage the Board to reconsider 20 the definition for attainment to avoid the 21 race-to-the-bottom effect. 22 ACTING CHAIRPERSON RIORDAN: Thank you very much. 23 And are there any questions for this speaker? 24 Seeing none, we do thank for your presentation. 25 Let me call on Brent Newell, followed by Harry PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 86 1 Krug. 2 MR. NEWELL: Good morning, Madam Chair. I'm 3 Brent Newell, staff attorney at the Center on Race, 4 Poverty and the Environment. 5 We are here in support of the regulation. We do 6 have some concerns concerning the levels at which the 7 thresholds have been set. 8 Prior to SB 700, there were no air pollution 9 controls at dairies, period. So, not to sound flip, I am 10 not surprised that when Paul Martin spoke to you about 11 returning to the pre-SB 700 relationship between the 12 industry and the Board, I'm not surprised that that is 13 something that he wants to achieve, because that was a 14 state of nonregulation. 15 And what you've heard from staff here is that the 16 dairies even if, you know, the emission factors are 17 lowered, are a significant part of the ozone problem and 18 also a part of the particulate matter problem, because of 19 the ammonia emissions. 20 The only reason we are here today is because 21 valley residents demanded that the exemption that existed 22 prior to SB 700 they demanded that that exemption go away. 23 They sued the EPA, and successfully sued the EPA. The EPA 24 required the State, as a result of that suit, to remove 25 the exemption or lose its federal highway funding. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 87 1 Thankfully, the only legislator in the San 2 Joaquin valley that had the courage to buck the industry, 3 Senator Dean Florez, carried the bill and delivered what 4 you are doing today. 5 Your role in that bill is simply to define large 6 Confined Animal Facility based on quote, "The emissions of 7 air contaminants from these facilities as they may affect 8 the attainment and maintenance of ambient air quality 9 standards." 10 There are multiple ambient air quality standards 11 that haven't been addressed in the report, including 12 hydrogen sulfide, and particulate matter. Hydrogen 13 sulfide is a very large source of pollution from hog 14 facilities for example. 15 And none of the research that is ongoing now 16 looks at hydrogen sulfide from dairies. Hydrogen Sulfide 17 is an extremely potent brain toxic. The state ambient air 18 quality standards is 30 parts per billion. 19 We have 3 recommendations that I'm pulling out of 20 a host of recommendations from the letter that we sent in. 21 First, lower the threshold for all facilities to 22 be consistent with the federal definition for large 23 Concentrated Animal Feeding operations. The feds have a 24 definition in place at 700 mature cows. And what that 25 would allow the air districts to do is to consistently PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 88 1 regulate this industry with the Regional Water Quality 2 Control Boards. 3 Dairies and other Confined Animal Facilities 4 represent a multi-media pollution threat, water pollution 5 and air pollution. It makes sense that both regulators 6 should be on the same page regulating the same pool of 7 facilities, so that decisions that the regional boards 8 make with respect to water quality that is saying, "Hey, 9 you can't pollute in surface waters. You've got to put 10 your liquid manure in lagoons." So those decisions don't 11 affect air quality, because when you put manure in 12 lagoons, the nitrogen volatizes as ammonia or the manure 13 decomposes and turns into Reactive Organic Gas. 14 It's important that the regulators are working 15 together on the same subset of facilities. We've listed 16 that table in our comments. 17 ACTING CHAIRPERSON RIORDAN: If you'll notice, 18 I'll need you to quickly say what your other 2 19 recommendations are. Just draw your conclusions. 20 MR. NEWELL: That's fine. The dairy threshold is 21 700 cows is very important, reducing that threshold, 22 because by keeping it at 1,000 you are leaving 17 percent 23 of the potential emissions unregulated. The difference 24 between 1,000 and 700 is 17 percent as set forth in page 25 34 of the staff report. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 89 1 Based on the public health effects of this 2 pollution, leaving that set of potential emission 3 reductions on the table is just not acceptable. 4 We also would -- 5 ACTING CHAIRPERSON RIORDAN: I need you to come 6 to a conclusion. 7 MR. NEWELL: -- like the definition clarified, 8 because Confined Animal Facility itself is not defined in 9 Senate Bill 700. We recommend that the definition says, 10 "Agricultural source as defined in Senate Bill 700 that 11 meets the criteria of 39011.5(a)(1) and the following 12 thresholds. I think that's very important to clean up the 13 language in the regulation. 14 ACTING CHAIRPERSON RIORDAN: Thank you. 15 MR. NEWELL: And Finally we were denied access to 16 the tour and I think that's a real serious issue of equal 17 access. 18 ACTING CHAIRPERSON RIORDAN: Thank you very much. 19 Harry Krug followed by Braulio Martinez. 20 Sorry. 21 BOARD MEMBER LOVERIDGE: I wonder if staff can 22 respond to try to have consistency among the regulators. 23 DEPUTY EXECUTIVE OFFICER TERRY: I had a couple 24 of comments on that, because it's an important 25 consideration we discussed in the workshop process. It's PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 90 1 just an obvious multi-media issue. 2 And, you know, Brent said well, this is necessary 3 to allow the districts to regulate consistent with the 4 water agencies. The districts currently have the 5 authority to regulate dairies at whatever level they so 6 choose. What SB 700 does is to start the process and 7 establish this large CAF definition so that within 3 years 8 there are accomplishments achieved. 9 And our view is this is a first step. And we 10 think it's a very effective first step to start at 1,000, 11 but it's certainly by no means -- the result is not going 12 to necessarily be they're unregulated at 700, because as 13 we go through this subdevelopment process, we look at 14 where the emissions are and what can be done. We want to 15 work with all the stakeholders over the next couple of 16 years to work on, what I would call, phase 2 of what more 17 can be done to reduce emissions. 18 EXECUTIVE OFFICER WITHERSPOON: And with respect 19 to water impacts, we have had water officials come to our 20 ag advisory committee to speak with us about their 21 concerns, about nitrate runoff and concentration based on 22 air quality strategies. And the reverse is true, we also 23 have an internal working group at CalEPA where the Water 24 Board and the Pesticide Department and the Air Board are 25 all represented, and the Department of Food and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 91 1 Agriculture participates and the Department of Resources, 2 so that we can be unified at government about what we're 3 doing with dairies, generally, and then we have separate 4 meetings with US EPA, and the NSRC, I forget what that -- 5 and USDA, so we're keep all the channels open. 6 And we did look at 700 as one of the things we 7 considered. And we decided to stick with 1,000 for now. 8 And as we know what the controls strategies are, we'll be 9 able to figure out their applicability to smaller dairies. 10 ACTING CHAIRPERSON RIORDAN: Good morning. 11 MR. KRUG: Good morning, Madam Chairman and Board 12 Members. My name is Harry Krug and I am the president of 13 the California Air Pollution Control Officers Association, 14 better known as CAPCOA. And I'm also the Air Pollution 15 Control Officer in Colusa County. 16 CAPCOA would like to express its support for the 17 large Confined Animal Facility definition as proposed in 18 the staff report of May 6th. In particular, CAPCOA 19 strongly favors the 2 tiered approach with different 20 definitions based on ozone attainment status. We believe 21 this is the most sensible approach to take because of it 22 recognizes the large differences that exist between the 23 more polluted air basins and the areas with cleaner air 24 and less impact from confined animal operations. 25 A 2 tiered approach combined with district PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 92 1 authority to establish requirements at lower thresholds 2 will allow districts to implement programs that address 3 local air quality needs. 4 Secondly, we strongly support the proposal to use 5 numbers of animals as opposed to specific emission limits, 6 as the basis for establishing thresholds. We believe this 7 approach is straightforward and easy for everyone to 8 understand and will allow for a smoother implementation 9 process. Many air quality regulations are based on units 10 that are commonly used to characterize the process or the 11 equipment, such as gallons of fuel, horsepower of an 12 engine or tons of material processed. 13 These approaches are often utilized where 14 specific emissions determinations are complex and somewhat 15 uncertain. Large Confined Animal Facilities are therefore 16 very consistent with other sources in this regard. 17 Lastly, we would like to commend the ARB staff, in 18 particular Bob Fletcher, for keeping CAPCOA engaged during 19 the development process. 20 We believe the proposal before you today is sound 21 and we therefore urge the Board to adopt the staff's 22 recommendation. 23 Thank you. 24 ACTING CHAIRPERSON RIORDAN: Thank you very much. 25 Are there any questions? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 93 1 Mr. Martinez, followed by Teresa DeAnda and 2 followed by Esther Martinez. 3 MR. MARTINEZ(through translator): Good morning. 4 My name is Braulio Martinez. I live in Alpaugh. I've 5 been living there for 15 years. 6 MS. SUSANA DeANDA: I'm Susana DeAnda and I'm 7 with the Center for Race, Poverty and the Environment and 8 I will be translating for him. 9 MR. MARTINEZ(through translator): He says he's 10 here in support of for the 700 count for dairies. He says 11 his family is heavily affected by the air contamination 12 currently. So if we were to reduce that, that would 13 definitely reduce air contamination as well. 14 Also, not only has his family been affected by 15 air quality, his friends who live near dairies as well 16 have health problems, because of contamination there. 17 So to finish up, he says that it's best for us to 18 work together and reduce air contamination, and diaries 19 being one source of air contamination. 20 Thank you. 21 ACTING CHAIRPERSON RIORDAN: Thank you very much. 22 We appreciate it. Teresa DeAnda. 23 MS. TERESA DeANDA: Good morning. My name is 24 Teresa DeAnda, and I am representing Earlimart today. We 25 have a committee there. I just support the 700 number. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 94 1 I'm in support of 700. And I think the head number -- the 2 head count is better than emissions because if we go with 3 emissions, then it will take for ever to be scientifically 4 reviewed and the emissions calculated. 5 So we just need to start doing it. It's like 6 when I tell my kids to clean their room, they need to just 7 start doing it, and not "Well, I'll do this first, and 8 then I'll do this and I'll do the closet today." They 9 just need to start working on it. 10 (Laughter.) 11 MS. TERESA DeANDA: I really am glad that Patrick 12 came up with a number of 1,000, and I really want to thank 13 him for that. I really appreciate that. But we would 14 like it even lower at 700. My son recently, Nicholas, 15 he's 7, he was diagnosed with asthma. Well, okay, they 16 gave him Albuterol. The doctor said it looks a lot like 17 asthma. 18 He has coughing fits where he can't stop 19 coughing. And then my grandson, Angel, he just graduate 20 from pre-school. He'll be in kindergarten next year. He 21 was a premature baby. I think I've talked about him 22 before. He doesn't have asthma yet, but his lungs are 23 really susceptible to getting asthma. And he has really 24 bad coughing fits also. 25 So I just really hope that the Board approves PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 95 1 the -- either -- well, I don't think they're going to drop 2 to 700, but we'll go with a head of 1,000. 3 Thank you. 4 ACTING CHAIRPERSON RIORDAN: Thank you very much 5 and thank you for your analogy of cleaning rooms. I can 6 relate to that, really relate to that. 7 Let me move on to Esther Martinez, Tom Frantz and 8 then William Descary, who's in Bakersfield. We'll talk 9 about Bakersfield in just a moment. 10 MS. MARTINEZ(through translator): Good morning 11 to all. My name is Esther Martinez. I've lived in 12 Alpaugh 15 years. I'm here in support with CRPE's 13 approach of 700 cows. I will start this story with my 14 nephew. 15 She says her daughter lived next to a dairy. Her 16 daughter's sons was told had asthma. So the doctor 17 proposed they would move far away. So they moved 40 miles 18 away from the current place where they live next to a 19 dairy, which is Alpaugh, where she lives now. 20 Given that they moved the area -- they moved away 21 from the dairy where she is living currently in Alpaugh 22 with her, they moved away because of grand -- her nephew 23 had asthma to Alpaugh. And now in Alpaugh they're 24 surrounded by 3 current dairies there as well provoking 25 asthma attacks there again as well. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 96 1 She says on the hot summer days a lot of dust 2 releases and her nephew has asthma problems as well. She 3 says she worries for her nephew. He's only 3 years old. 4 He can't sleep at night. He's got a lot of phlegm. They 5 moved away from a dairy and now they're surrounded by 6 dairies in Alpaugh. Thank you and hopefully you support 7 700 cows. 8 Thanks. 9 ACTING CHAIRPERSON RIORDAN: Thank you very much. 10 Tom Frantz. 11 MR. FRANTZ: May name is Tom Frantz from Kern 12 County. I'm a farmer. I own part of a large family farm. 13 I'm also a school teacher, and I'm president of the 14 Association of Irritated Residents. 15 We've seen a huge influx of dairies in our area. 16 I have lived in the same place 55 years, basically within 17 a couple miles. And until 10 years ago, there weren't any 18 large dairies in my area. Now, there's 25,000 cows in a 19 3- to 5-mile distance to the west of me. My doctor says 20 I'm developing asthma. I've had breathing difficulties. 21 I don't attribute that directly to dairies. There's bad 22 air in this valley though. 23 Fortunately, I don't have to use an inhaler yet, 24 but I hope it doesn't get worse. It's ironic that 25 dairies -- all these dairies are coming from southern PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 97 1 California where they're getting pollution credits in that 2 air region. Meanwhile, you know, if even 50 cows leave 3 there and get pollution credits, but we -- it looks like 4 we're looking 1,000 cows before we can start doing 5 anything about this pollution problem. 6 Dairies -- you know, if the farmers are doing 7 their part, I went to a cleaner diesel engine. Now, I 8 plan on putting in the electric pump again, which is 9 great. I'm willing -- and my brother is doing all the 10 work though. You know, he's oiling the roads and stuff 11 like you've never done before to decrease dust. The 12 farmers are doing their part. 13 The dairies, although they farm, the milk factory 14 is not a farm. It's a factory. It's a manure factory, 15 more than anything else. It's got to be regulated. And 16 as 700 cows as a minimum, you take 500 milk cows and the 17 support stock, you've got more excrement than a city of 18 20,000 people being produced. 19 And a city can't handle that manure just openly. 20 The corrals are scraped in my area about once per year, 21 and that's half the cows are in these corrals. 22 There's got to be a lot more work done. We have 23 to regulate ammonia as well. The language has to be made 24 stronger. You know, the ammonium nitrate, I have a great 25 problem breathing in the foggy air in the winter, because PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 98 1 I figure the ammonium nitrate is one of the biggest 2 sources. 3 The emission factors just if it's emission factor 4 only, it's a loophole to delay further any regulation. 5 They're kicking and screaming to not be regulated, so any 6 delay is an advantage. You've got to go with a head 7 count. 8 Thank you. 9 ACTING CHAIRPERSON RIORDAN: Thank you, Mr. 10 Frantz. 11 Any questions for this witness? 12 All right. The next 2 speakers are in 13 Bakersfield. I'll just sort of have to indicate to you 14 when your 3 minutes, because I know you don't have the box 15 there. I'll indicate to you when the 3 minutes is up and 16 give you a moment to wrap up or make a concluding 17 statement. 18 So Mr. William Descary and Arthur Unger both of 19 you please come to the table, and we'll be very happy to 20 hear your testimony. 21 Give us your name for the record first, please. 22 MR. DESCARY: My name is Bill Descary. I'm a 23 31-year resident of Bakersfield. Madam Chair and Members 24 of the Board, I want to emphasize several points in a 25 letter that I previously submitted to the clerk of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 99 1 Board. 2 I'm pleased to see the staff report that was 3 prepared for this meeting recommend head count as the 4 basis for defining a large Confined Animal Facility. Yet, 5 I therefore support the staff recommendation. 6 An emission factor as a basis for the CAF 7 definition makes no sense. I think it is important that 8 the recommendation makes it a distinction between 9 attainment and nonattainment areas in terms of head count. 10 Head count meets the requirement for regulations to be 11 easily understood, equitable, enforceable and provide 12 consistency for the industry and the regulators. 13 Permit applications that reflect head counts 14 which facilitates determining the types of permits and 15 levels of regulation required. Subsequent inspections 16 could be efficiently accomplished by verifying head count. 17 Everyone is well aware that the San Joaquin 18 valley is a severe ozone nonattainment region for EPA air 19 quality standards. As a result, the District must be 20 aggressive in its plan to improve this condition in the 21 next few years to meet the new federal 8-hour standards. 22 I am concerned about air capacity of the valley, 23 especially the southern end. The Kern County population 24 is projected to double by 2020, a short 15 years from now. 25 It has been reported that the county has received PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 100 1 applications for 24 additional dairies, totaling over 2 200,000 head, which would nearly the double county's cows. 3 In light of these facts, it is imperative that 4 the Air Board adopt a stringent definition of a large 5 Confined Animal Facility. The definition must be such 6 that a large percentage of new and existing dairies are 7 subject to air district regulations. Head counts in the 8 proposed regulation meet this need. Head counts for other 9 animals and birds appear to be reasonable as explained in 10 the staff report. 11 I urge the Board to adopt the staff 12 recommendation. 13 Thank you. 14 ACTING CHAIRPERSON RIORDAN: Thank you, Mr. 15 Descary. Just a moment. Maybe there's a question. Just 16 let me ask Board Members if there are any questions for 17 this witness? 18 There are none. Thank you very much. 19 Mr. Unger. 20 DR. UNGER: Arthur Unger, MD, Sierra Club. I'm 21 retired, so I'll never have to say to my patients we're 22 going to regulate the dairies that make 72 percent of the 23 emissions. You can't expect us to mitigate more than 24 that, because it could reduce profit for the industry. 25 And besides your asthma and emphysema and heart disease is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 101 1 due to many factors, so don't just tell us to do 2 everything we can for you. That wouldn't go over very 3 well. 4 (Laughter.) 5 DR. UNGER: Another source of dairy air pollution 6 is that there's the practice of, as we were told 20 7 minutes ago, of taking the parts of plans that we grow for 8 food but don't use for food putting them in trucks that 9 have emissions and taking them for the cows to eat. 10 Those parts of plants should be returned to the 11 soil. That practice is called conservation tillage and 12 some farmers here practice it. 13 I take the liberty of going back, Madam Chair, to 14 your remarks about replacing diesel pumps with dairy -- 15 with electricity, to say that I hope you've heard from the 16 people at the semi-tropic water agency -- water district 17 they're trying to use solar power for solar electricity 18 for their irrigation pumps. And the Sierra Club hopes in 19 the future to help with that effort. After all, 20 electricity from a powerplant means electricity from 21 sources of air pollution. 22 Thank you. 23 ACTING CHAIRPERSON RIORDAN: Thank you very much. 24 We appreciate your comments. And thank you for your 25 testimony. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 102 1 Now, let's move back to this room and JP 2 Cativiela followed by Kevin Abernathy and followed by John 3 Shears. 4 MR. CATIVIELA: Thank you, Madam Chair. My name 5 is JP Cativiela to represent the organization known as 6 CARES. It's a dairy industry coalition. We represent 7 most of the California State industry. 8 I have submitted written comments. Most of what 9 I was going to say today has already been said. So I will 10 simply say that I am echoing Western's comments, comments 11 made by Denise Mullinax of Hilmar and also many of the 12 things that Patrick Gaffney told you in the staff report. 13 And then I will emphasize just a couple of quick points. 14 It's been brought up during this hearing numerous 15 times that the industry has been previously unregulated. 16 That would come as a surprise to the dairymen in the room 17 and is simply not true. There's already regulations in 18 place in the South Coast for dairies. There's Rule 4550 19 in the San Joaquin Air District for dairies. There are 20 extensive county regulations. And some of you who are 21 county supervisors understand that. 22 There are new dairies in the valley required to 23 go through EIR's, the Regional Water Quality Control Board 24 regulates dairies. And those are just the environmental 25 regulators, and that's not all of the environmental PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 103 1 regulators. 2 These are businesses, so they have to comply with 3 CalOSHA and CDFA regulates milk quality. They're 4 regulated. They're heavily regulated. And so when we go 5 to additional regulations, we want to understand that. 6 The other thing that I don't think was really 7 explained was that this particular regulation doesn't have 8 to do the job for ever and ever. There is extensive 9 authority in the local air districts to do additional fine 10 tuning of regulations. If they feel there's a need to do 11 a rule for smaller dairies that's more focused or focuses 12 on the types of discussion we have had today, they can do 13 that. 14 I want to point out that why we think the staff 15 options that were outlined earlier, one being emissions 16 based, the other being base on a flat number of cows. Why 17 this emissions based effort is superior. 18 One of the most important things here is the 19 equity situation. We believe that when the science is 20 fully reviewed, that that threshold that you've set today 21 is going to come up at around 4 to 5 tons of emissions 22 over the course of the whole year. All the rest of 23 agriculture is being regulated at half the major source 24 threshold, 12 and a half tons. So you're setting an 25 emissions threshold that is lower for livestock PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 104 1 facilities. 2 Now, if there were some assumption that emissions 3 from livestock facilities pound for found were worse than 4 from other types of farming, that might make sense, but 5 it's actually just the opposite. What we have here are 6 natural biological processes going on. The emissions 7 we're talking about are very simple alcohols. They're 8 very -- they're basically natural chemicals from 9 biological breakdown. 10 They tend to be very low in reactivity. Now, 11 while we can't quantify that yet and there's a lot of 12 science to do, the presumption that these have to be 13 regulated in a much lower threshold than the rest of 14 agriculture, I don't think is support by evidence. 15 ACTING CHAIRPERSON RIORDAN: I need to draw to 16 your attention that -- 17 MR. CATIVIELA: That we're out of time. 18 ACTING CHAIRPERSON RIORDAN: Yeah. 19 MR. CATIVIELA: Thanks. I didn't see the light. 20 I'm going to conclude very quickly by saying I 21 think you can fix this. I know why you're doing what 22 you're doing today. I understand it. But I do think that 23 the science is coming, and you can make a decision in the 24 future that is more like your Option 1 earlier, and we 25 would urge you to do that. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 105 1 ACTING CHAIRPERSON RIORDAN: Thank you very much. 2 Mr. court reporter, forgive me. How are you 3 doing? 4 THE COURT REPORTER: Fine. 5 ACTING CHAIRPERSON RIORDAN: Okay, that's good. 6 EXECUTIVE OFFICER WITHERSPOON: Madam Chair, a 7 comment from staff on who's being regulated and what 8 level. Mr. Cativiela referred to other industry being 9 regulated at a lower threshold. He's talking about the 10 permitting threshold for all agricultural industries in 11 the San Joaquin valley, which is one-half the major source 12 definition. 13 However, control measures have been applied at 14 lower levels. For example, particulate matter control 15 measures in the valley's most recent PM10 plan apply at 16 head-count levels, for various industries. And those are 17 dust mitigation measures that are underway right now. And 18 so it's a mixed bag depending on whether you're 19 permitting, doing controls on existing facilities or 20 something else. And so we're taking an approach that is 21 consistent with what's out there today. 22 ACTING CHAIRPERSON RIORDAN: Thank you. 23 John Shears followed by Carl Zichella. 24 Oh, Kevin. I'm very sorry. Kevin Abernathy. 25 Where is Kevin? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 106 1 Okay, John go ahead and then we'll have Kevin. I 2 apologize. 3 MR. SHEARS: Good morning, Madam Chair and 4 Members of the Board. My name is John Shears. I'm a 5 research fellow with the Center for Energy Efficiency on 6 Renewable Technologies. 7 First I would like to thank the ARB and its staff 8 for a commendable job on their report, and trying to find 9 a very difficult balancing point between industry costs 10 and defining health benefits for the members of the 11 community in the San Joaquin valley. 12 I'm here to speak in favor of the ARB staff's 13 recommendations. But also to push for the head count on 14 dairies of 700 head of milking cows. 15 Our main concern with that would be with regards 16 to the issue that has been raised with clustering. As it 17 stand right now, it does not seem that aerial density of 18 dairies has been addressed. And I would hope that in the 19 Board considering 700 head as a count that that would help 20 capture some of these dairy clusters and help address the 21 very localized health impacts that can come from, you 22 know, these densities of dairies. 23 Science has been referred to that the Board 24 should refer to the science the upcoming science. And in 25 addressing that issue, I would recommend that when you PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 107 1 view the science that the standard should be set that we 2 use peer reviewed science, not science that's sort of been 3 generated and what we in the science industry call gray 4 literature. 5 So I would hope that when you consider any 6 submissions that are represented to you as science, that 7 you make sure that they've been independently and 8 objectively reviewed by peers in. -- expert peers in the 9 areas of air quality and air emissions. 10 That's all I have to say. Thank you. 11 ACTING CHAIRPERSON RIORDAN: Thank you, John. 12 Speaking to science and review, I think we do try to get 13 the very best science. And certainly staff makes every 14 effort to be sure it's well reviewed both by peers and by 15 themselves as well. 16 Thank you very much for your testimony. And I 17 apologize Mr. Abernathy. 18 MR. ABERNATHY: Thank you Madam Chair and 19 distinguished members of the Board. My name is Kevin 20 Abernathy. I'm the executive director with the California 21 Dairy Campaign, and the California Farmers Union. 22 One thing that I would like to bring up this 23 morning is simply we do have a precedence that's been set, 24 as JP had mentioned, with Rule 4550, where the industry 25 actually came together under that situation. And we used PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 108 1 the calculator that happens to be on the district's web 2 site today to calculate total tons, along with a 3 systematic approach that was extremely unique that I would 4 like the Board to -- I'm sure that you know about it, but 5 really consider in this matter. 6 The simple fact that we were able to use a 7 conglomeration of people, whether it was industry, the 8 District, ARB, along with NRCS and the RCDs to come up 9 with a program, that we were then able to change the 10 paradigm of thinking on the producers standpoint, because 11 you've made this comment numerous times today. Changing 12 our thought process from where we've been to where we're 13 going takes time. And we've already set a very unique 14 precedence in bringing a large segment of California's 15 agriculture under the Rule 4550, whether that's dairy or 16 other agricultural operations. 17 The second thing that I would like to bring up to 18 the Board is I was born and raised in the central valley. 19 I was raised on a cattle farm. I have worked in 20 agriculture for the past 43 years. And I'd like to answer 21 the question on some of the lapels in this room, "No, I do 22 not have asthma." 23 Thank you. 24 ACTING CHAIRPERSON RIORDAN: Thank you. All 25 right. The next 3 speakers, and I apologize for -- I will PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 109 1 not be able to pronounce your names. I do apologize for 2 that. Carl, and you'll have to share with me, and then 3 Carolina Simunovic and Nidia Bautista. Those are the next 4 3 speakers. 5 MR. ZICHELLA: Good morning, Madam Chairman. My 6 name is Carl Zichella. I am the regional staff director 7 for the Sierra Club for California, Nevada and Hawaii. 8 I'm speaking today on behalf of our 200,000 members in 9 California. We have 800,000 members nationwide. And this 10 issue of how we regulate animal factories is of supreme 11 importance to our members. 12 I spent 10 years as the midwest regional director 13 of the Sierra Club. And I've seen what happens when you 14 don't regulate animal factories and they begin to 15 proliferate the kinds of impacts on communities that we're 16 seeing now. We're repeating a lot of mistakes. 17 Before I begin, I'd like to say that it really is 18 appropriate for this body to have a Spanish language 19 translator at these meetings. The things we're talking 20 about today and the technical nature of our discussion 21 makes it very difficult for people who speak Spanish only 22 to really understand the back and forth that's happening 23 here. And I think it's very courageous of folks who 24 really can't hear what others are saying or understand it 25 and be translated to individually, which is disruptive of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 110 1 the meeting. So I just want to suggest that in the future 2 that we make it possible for people to have a translator 3 present. If I could have those few moments added back to 4 my time, I would appreciate it. 5 A couple of points I'd like to raise today. And 6 I'm going to take great pains not to repeat things others 7 have said. 8 I will say we support -- the Sierra Club supports 9 the 700 cow limit. We did support any thinking that's a 10 prescription for further delay, as trying to come up with 11 some sort of emissions standard would be. I also think 12 that this body needs to take as much of the authority on 13 itself as possible. We have had to sue repeatedly to get 14 this air district individually to do anything on anything. 15 And I strongly urge you not to devolve very much to this 16 air district, but to make sure there's clarity and that 17 they're implementing. 18 I realize there are a number of things they are 19 going to have to do to come up with these practices. But 20 nevertheless, not a high degree of trust on our end for 21 the San Joaquin Valley Air Pollution Control District. 22 That being said, we've been regulating clean air 23 now -- or air pollution for 35 years. And we've learned a 24 few things that are really relevant to this particular 25 discussion today. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 111 1 We're hearing about let's wait, the science is 2 going to get better. If we had waited 35 years ago to 3 begin regulating air pollution in this country, we would 4 not be enjoying the benefits that we have for reducing air 5 pollution, despite the rapid population growth in this 6 state and across the country. 7 Yes, we don't know all the answers, but that is 8 not a reason to delay action. We're sitting in a city 9 that has asthma rates 5 times the national average. This 10 is a compelling reason to act now and to act forcefully 11 with a stringent and effective standard, the most 12 effective we can with what we know now. Delaying is 13 irresponsible. 14 Uncertainty cannot be an excuse for lax 15 standards. We're going to learn more. Air pollution is 16 an iterative process, always has been. The regulation of 17 air pollution in its history has been, and it's always led 18 to a tightening of the standards not a relaxing of them. 19 So I call that to your attention and remind you of that 20 fact. 21 These are not farms we're talking about in the 22 traditional sense. As someone else pointed out, they're 23 factories. And I do think we need to keep in mind, this 24 is a regulated community of very large scale clustering 25 around communities, creating dramatic impacts upon those PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 112 1 communities and the people within them. 2 The economic concerns about these rules need to 3 be considered in terms of impacts on the victims. The 4 federal government, even this Bush Administration has 5 found through their Office of Management and Budget that 6 clean air regulations are inherently cost effective. When 7 you apply a cost-benefit ratio to them, the benefits in 8 public health and avoided cost health expenses for 9 regulating air pollution always exceed the costs. 10 I just -- in closing, I see the time is returning 11 out. I'd like to say we can't allow the industries to 12 complain their way out of actions. There's a thousand 13 excuses. Many of which we've heard this morning about why 14 we should do less, if not, do nothing and do it 10 years 15 from now, maybe. 16 We have a public health crisis here in the 17 central valley. We need action now. 18 ACTING CHAIRPERSON RIORDAN: Thank you. And I 19 added back in some time for you. 20 MR. ZICHELLA: Thank you very much. 21 ACTING CHAIRPERSON RIORDAN: Thank you very much. 22 Carolina. 23 MS. CAROLINA SIMUNOVIC: Good morning, Chairwoman 24 Riordan and Members of the Board. My name is Carolina 25 Simunovic, and I'm with Fresno Metro Ministry, a 35-year PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 113 1 old nonprofit organization based in the Fresno area. I'm 2 also a member of the Central Valley Air Quality Coalition. 3 I want to welcome you all to Fresno. And I want 4 to thank you, because to me it shows that you recognize 5 the significance of dairy emissions in regards to the 6 valley's air pollution problem. 7 I also want to emphasize that not only is the 8 livestock ROG problem the worst in the valley, as Mr. 9 Gaffney illustrated in his very nice graphs, but with the 10 new emission factor that is potentially higher than the 11 placeholder number that we're using now. Livestock ROG 12 emissions could be at the top of the ROG emissions list, 13 higher than light- and medium-duty vehicles for the 14 valley. 15 This current figure also does not take into 16 account the influx of many new dairies and hundred 17 thousands of new dairy cows that are coming into the 18 southern part of the San Joaquin Valley, which Supervisor 19 Patrick is well aware of. 20 So I'm here to support the -- basing the large 21 Contained Animal Facility definition on a set number. I 22 think that it is clear cut. I think that it addresses the 23 issue of cumulative impacts. 24 And as a member of the Dairy Permitting Advisory 25 Committee, in this past year, I have learned quite a bit PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 114 1 about the complexities of dairies, so I empathize. I also 2 am assured by my colleagues Denise and DeAnda that I'll 3 appreciate the dairy cow a lot more in these next few 4 months. But that's because the baby is on the way. 5 (Laughter.) 6 MS. CAROLINA SIMUNOVIC: So we've had some 7 interesting conversations about that today. 8 Okay, but seriously, what jumped out at me 9 throughout that process is that the emission factor 10 depending on the science and the certainties or 11 uncertainties with this science, is going to be bouncing 12 around for some time, and that we need some definition. 13 We need a set number. And like Teresa said, you know, we 14 need to tell our kids to clean their rooms and move on. 15 If I were to pick a number, it would be a number 16 like 700. I think it better addresses the issues of 17 cumulative impacts, and it will allow us to reduce more or 18 a greater percentage of the emissions being produced by 19 dairies. 20 Thank you very much. 21 ACTING CHAIRPERSON RIORDAN: Thank you very much. 22 We appreciate your testimony. 23 The next speaker is Nidia. And Nidia is going to 24 be followed by Mark Stout and then Kevin Hamilton. 25 MR. BAUTISTA: Good morning, Madam Chair. My PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 115 1 name is Nidia Bautista -- and Members of the Board and 2 staff. My name is Nidia Bautista. I'm with the Coalition 3 for Clean Air. We're a statewide nonprofit environmental 4 organization, working with communities and organizations 5 throughout the state to clean up the air in California. 6 I'm here to support staff's preferred Option 2. 7 We strongly support a head count definition, which allows 8 for a much simpler regulatory scheme for both the farmers 9 and the regulators. As you've heard today, it really -- 10 this option really takes into account the multiple 11 pollutants, such as ammonia, nitrogen oxide, VOCs and 12 particulate matter. 13 A fixed head count avoids uncertainties caused by 14 complex and expensive measuring procedures, and it allows 15 farmers to clearly understand whether or not they are 16 affected by regulations. However, we diverge from the 17 staff, who is proposing the 1,000 head count as the 18 minimum threshold. 19 We strongly support a 700 mature milking cow 20 threshold, which includes approximately 89 percent of the 21 south coast and San Joaquin valley dairy herds. This 22 level captures significantly more emissions than the 23 proposed 1,000 cow level, which would only include 75 24 percent of the south coast heard and 72 percent of the San 25 Joaquin valley heard, resulting in missing basic 1 in 6 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 116 1 cows. That's a potential opportunity there for the 700 2 that we would capture. 3 With regards to cumulative impacts, I think 4 Diane's and Carolina's and other's presentations have 5 really expressed the point clearly that this is really a 6 large concentration of dairy factories. And it's really 7 affecting residents in Tulare County and in other counties 8 who are trying to breathe cleaner air. 9 So the 700 number really addresses this. And by 10 ensuring that they're capturing as many of the emissions 11 as possible, while being reasonable. 12 Now, with regards to the South Coast ruling, 13 those questions earlier today. South Coast has 14 implemented some best management practices, exclusively 15 Rule 1127 that allows for manure management. And again 16 the threshold there was 50. So just a reminder. 17 And then, with all due respect, in terms of 18 what's been the impetus for the dairies coming into the 19 central valley, though regulations may have been a factor, 20 it's really hard to escape -- to argue that really the 21 dramatic increases in land values have been the major 22 reason why people have been moving -- or dairies have been 23 moving to the central valley. So I don't want to 24 overstate -- have anyone overstate that regulations have 25 been the primary driver of that. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 117 1 And in fact, earlier this week, I got to hear 2 Cabinet Secretary Terry Tamminen, and he was speaking 3 to -- talking about industry, and the fact that a lot of 4 the rhetoric often times is said that regulation is as the 5 result of why industry is not or chooses to relocate or to 6 locate in -- or not to locate in California. And he had 7 anecdotal evidence as to why that in fact wasn't the case. 8 Fox Studios a few years back was looking to 9 locate their production's facility in the south coast 10 basin. Unfortunately, because of the high levels of air 11 pollution and traffic, which was what the company cited as 12 their reasons why, they chose to locate in Arizona. This 13 was a loss of high quality, high paying, high tech jobs, 14 low-polluting jobs for the south coast and for the state 15 of California, which now have moved to Arizona. And 16 something that is a major concern to the San Joaquin 17 valley who's looking to garner more economic development 18 and more jobs for the community. 19 So with that I'd like to express our strong 20 support for a 700 threshold count. And thank you for your 21 time. 22 ACTING CHAIRPERSON RIORDAN: Thank you. 23 Any questions. Moving along then, let me -- Mark 24 Stout. 25 MR. STOUT: Thank you, Chair Riordan and other PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 118 1 members of the Board. My name is Mark Stout. I'm an air 2 quality consultant and a former air quality engineer here 3 at the district. I support the proposed fixed head 4 definition for Confined Animal Facilities, but encourage 5 moving to the 700 head standard, as is used by the 6 Regional Water Quality Control Boards. 7 As you know, the San Joaquin valley is, like the 8 south coast, is in extreme nonattainment for the ozone 9 standard with 477 exceedances of the federal 8-hour 10 standards since 2001. That's over -- we're 4 and a half 11 years in there, so it's over 100 per year. And our air 12 basin is also in nonattainment for the new PM2.5 standard. 13 And so given all of this, and as we know the San 14 Joaquin valley is in a health crisis. I mean we've 16 15 percent childhood asthma rate here in Fresno. It's 1 in 6 16 kids. Dairies are big business for California. We're 17 talking about over $5 billion a year, and I guess we're 18 talking revenue there. 19 According to figures from the California 20 Department of Food and Agriculture, the net profits for a 21 700-cow dairy are on the order of $322,000 per year on 22 average. And if you compare these dairies with the other 23 sources that are being regulated and that had to ratchet 24 down and tighten up their emissions because of air quality 25 regulations, and they're not just talking about major PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 119 1 sources like refineries and power plants, but we're also 2 talking about mom and pop dry cleaners. We're talking 3 about fast food restaurants. 4 So if you've got a dry-cleaner, it's a family run 5 business, that has to add emissions controls, I think that 6 we can talk about regulating a 700 head dairy that's got 7 you, you know, a third of a million dollars net profit per 8 year on average. 9 And the burden for cleaning up these dairies 10 should be spread over all -- you know, the biggest catch 11 basin that we can get. If you've got 1 in 6 kids in the 12 valley with asthma, aren't you going to, like, push for as 13 high a percentage that you can catch. I think if you move 14 to a 700 head standard, you'll catch you know a greater 15 percentage. 16 Or if you look at the percent that will get under 17 the regulatory burden, you'll cut that percentage, you 18 know, in half. So 700 heads is not a crazy standard. The 19 water quality boards use it. And the money is there in 20 terms of the profit in the industry. 21 And let's see, I think that's all I had to say. 22 ACTING CHAIRPERSON RIORDAN: That's fine, because 23 you were just right on time. I appreciate it. 24 Question. 25 Ms. Kennard. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 120 1 BOARD MEMBER KENNARD: This is question actually 2 for staff. When we're talking about 1,000 per dairy, what 3 are we talking in terms of just generally the magnitude of 4 business in terms of dollars animal wise? Does anybody 5 have a sense? I know it's a tough question, but I'm just 6 curious. 7 MR. GAFFNEY: Well, I'm going to wing it here. 8 So 1,000 head dairy is about 72 percent of the cows. So 9 I'm going to say about 72 percent of the money is going to 10 those dairies. 11 It was probably biased a little more, because the 12 larger dairies are probably making more money per cow, 13 because of the economies of scale. 14 BOARD MEMBER KENNARD: I guess my question is 15 just generally, if I have a dairy that's 1,000 cows, I 16 mean, what's my annual revenues? 17 MR. GAFFNEY: You know, I don't think I've got 18 that with me. 19 BOARD MEMBER LOVERIDGE: Maybe in the audience. 20 MR. GAFFNEY: I think the annual revenues -- this 21 once again it's in my detailed stuff, I think it's over a 22 million a year, just money flowing through. That's not 23 profit, that's revenues. 24 MR. STOUT: I've got per cow annual profit, that 25 I'd have to multiply out to got the annual revenue. But PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 121 1 according to the Department of Food and Agriculture 2 California, the California Department -- 3 ACTING CHAIRPERSON RIORDAN: I wanted you to cite 4 what you're quoting from. 5 MR. STOUT: Okay. It's from the spreadsheet 6 here. But in order to get the annual revenue, I'd have to 7 multiply it out. 8 BOARD MEMBER LOVERIDGE: Could we ask Paul 9 Martin. 10 ACTING CHAIRPERSON RIORDAN: Yeah. Let me -- 11 MR. STOUT: What were you looking at the annual, 12 like, per cow revenue. 13 BOARD MEMBER KENNARD: What size business is 14 1,000 cow dairy? 15 MR. STOUT: Well, why don't we just look at total 16 costs. 17 BOARD MEMBER KENNARD: Gross revenues. 18 MR. STOUT: Total cost per cow -- 19 ACTING CHAIRPERSON RIORDAN: I don't know that 20 that's -- 21 BOARD MEMBER KENNARD: I just want to know is it 22 a million dollar business, is it a $10 million dollar 23 business? 24 MR. STOUT: Let's say 1,000 cows. The total cost 25 per cow per month is 220, so that would put us in the, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 122 1 whatever we're talking about $2,500 per year per cow. So 2 that is a $2.5 million cost operation. 3 BOARD MEMBER KENNARD: Not the cost of operation, 4 the gross revenues. 5 ACTING CHAIRPERSON RIORDAN: Lydia -- 6 MR. STOUT: What percentage profit? 7 ACTING CHAIRPERSON RIORDAN: -- I'm going to stop 8 here with this particular speaker, because I'm not sure 9 that -- I thought you were just going to cite something. 10 I think from the industry we ought to have a comment as 11 opposed to citings -- I wanted to understand that, which 12 is I'm not sure what I want. 13 MS. BAILEY: Can we submit our data and can I add 14 that the gross revenues is over $5 billion. 15 ACTING CHAIRPERSON RIORDAN: You may submit any 16 anything you'd like in writing, yes, absolutely. I don't 17 know -- and I want to thank you, but I do think I want to 18 hear from the industry as a whole. 19 MR. MARTIN: Mr. Martin, you're back. She won't 20 let me go. 21 What I will do is go out to my car and get the 22 California Department of Food Agriculture Annual Report. 23 ACTING CHAIRPERSON RIORDAN: Okay. 24 MR. MARTIN: And that will be the definitive 25 data. How about that? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 123 1 ACTING CHAIRPERSON RIORDAN: That will be very 2 welcome. Thank you. 3 He's going out to his car and get the -- is it, 4 the U.S, California? 5 MR. MARTIN: California Department of Food and Ag 6 Annual Report. 7 ACTING CHAIRPERSON RIORDAN: California 8 Department of Food and Ag Annual Report. 9 PLANNING AND TECHNICAL SUPPORT CHIEF FLETCHER: 10 Barbara, I might be able to answer this question a little 11 bit. If we assume for the thousand or greater farms, the 12 staff report has a table in it that gives dairy products 13 sales by dairy size and for 1,000 or more dairies there's 14 roughly 517 farms in that category statewide. And the 15 total product sales were about $2.4 billion. So that 16 would make roughly, if you took an average, that would be 17 about $4.6 million of total sales for that revenue. 18 Now, that's not profit. We don't have 19 information on profit, because these are all privately 20 owned and we just don't have access to that kind of 21 information. 22 ACTING CHAIRPERSON RIORDAN: All right. 23 BOARD MEMBER KENNARD: Can I just ask, because 24 this is where I'm really having some trouble, because when 25 I -- in my mind, because I don't understand the dairy PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 124 1 industry, when I think of 1,000 cows, it seems like a lot 2 of cows. But it matters if that's a very small business 3 or if it's a very large business. So I'd like to get a 4 sense of whether 1,000 cows is a mom and pop shop or is it 5 a very large kind of corporate entity. 6 EXECUTIVE OFFICER WITHERSPOON: We're all still 7 trying to figure it out. But I think that it's fair to 8 say it is a significantly sized business. 9 PLANNING AND TECHNICAL SUPPORT CHIEF FLETCHER: 10 They're not necessarily mom and pop organizations, but 11 they're not necessarily large in terms of the resources 12 brought into them. For example, the dairies we went to 13 yesterday are on the order of 500 to 700 milking cows, and 14 they are run by the brother, the father, the son, the 15 mother, you know, so they are typically family owned in 16 those size ranges. 17 When you get into the very large ones, and there 18 are very large ones coming in, then those are more 19 corporation based operations. But there are, you know, 20 there's a range of operations. And there are dairy 21 cooperatives that are brought together to help provide 22 things like, you know, nutritional support, and veterinary 23 support and those sorts of things. 24 BOARD MEMBER KENNARD: When you said very large, 25 though, that's beyond 1,000 cows? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 125 1 PLANNING AND TECHNICAL SUPPORT CHIEF FLETCHER: 2 Yes, that's 1,000 and integrating. 3 BOARD MEMBER KENNARD: So what are you saying 4 5,000? I mean, I have no idea. 5 PLANNING AND TECHNICAL SUPPORT CHIEF FLETCHER: 6 Well, I think that -- I don't have information on the 7 corporations again, because they're privately run and we 8 don't have access to that kind of statistics. So just the 9 anecdotal information that we've gotten from them. 10 EXECUTIVE OFFICER WITHERSPOON: But, Bob, at what 11 size of herd do you think you'd move into a corporate 12 structure rather than a family structure? 13 PLANNING AND TECHNICAL SUPPORT CHIEF FLETCHER: 14 Well, certainly when you get into feedlots, you're looking 15 at, you know, very, very large operations like a Harris 16 Ranch -- 17 EXECUTIVE OFFICER WITHERSPOON: But for dairies 18 at what head count do you think would be corporate? 19 PLANNING AND TECHNICAL SUPPORT CHIEF FLETCHER: I 20 don't know. I don't know. 21 ACTING CHAIRPERSON RIORDAN: JP. 22 MR. CATIVIELA: While they're getting those 23 numbers for you. Just in real simple terms about 99 24 percent of the dairies in California are not corporate 25 owned, they're family owned first of all. What I tend to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 126 1 think of them as small businesses ham. You get a dairy 2 around 700, 800 cows, a family, the sons, 2 families can 3 run that dairy. Maybe 2 brothers or something like that. 4 You get up into the much larger dairies, one of 5 the largest dairies in the state is in Tulare county, we 6 visited in May. It has -- they're milking about 5,000 7 cows. They have 60 employees. So, you know, that's a 8 small business by federal standards of anything under 200. 9 It's a family -- it happens to be a family-owned small 10 business. But it gives you -- I think that gives you an 11 idea of the scale of what you're talking about in terms of 12 the size. 13 So if you think of a business with about 60 14 employees, that's what you're looking at. 15 BOARD MEMBER KENNARD: Thank you. 16 ACTING CHAIRPERSON RIORDAN: Identify yourself 17 again for the record. 18 MR. ABERNATHY: Kevin Abernathy, California Dairy 19 Campaign. I was actually running some of the numbers. I 20 tried to catch Paul before he left. I do have the CDFA's 21 numbers. 22 Using -- I guess, Patrick, you compiled the data 23 in here. I ran the numbers myself, and if you take the 24 average of what he was considering an average production 25 of a Holstein cow, 27,000 pounds of milk on a 305 day PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 127 1 lactation, which I wasn't sure whether you went 305 or 2 365, equals about a 74-pound per day average. Over 30 3 days, divided by the CWT which is the hundredweight 4 process. And then after that, you take into consideration 5 what the average price of milk is. 6 Now, California prices milk in different regions 7 differently. You've got the central valley. You've got 8 the northern valley. You've got the southern valley. So 9 each one has a different price of milk. 10 So if you take in 2003, in which Patrick used the 11 numbers, the average dairy, or I should say all dairies, 12 in the northern part of the valley lost 76 cents a 13 hundredweight per cow. 14 If you go to the southern part of the valley, 15 they lost 87 a hundredweight per cow in 2003. In southern 16 California, they lost a $1.13 per hundredweight per cow. 17 So those are the numbers based off of CDFA's numbers. 18 EXECUTIVE OFFICER WITHERSPOON: Ms. Kennard back 19 to your question about size of business, because again 20 profit and loss is something opaque to us, we are just 21 running calculations ourselves here. And 1,000 head dairy 22 has about $2 million flowing through it annually. And 23 whether they win or lose -- 24 MR. ABERNATHY: Based on what? 25 EXECUTIVE OFFICER WITHERSPOON: Based on the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 128 1 calculation -- 2 MR. ABERNATHY: Based on what price of milk? 3 EXECUTIVE OFFICER WITHERSPOON: Well -- 4 MR. ABERNATHY: I mean, that determines 5 exactly -- 6 DEPUTY EXECUTIVE OFFICER SCHEIBLE: This 7 calculation is simple. It used State numbers. It says if 8 you have 2.8 million dairy cows in California and you have 9 net revenues of $5 billion a year assigned to the 10 industry, then it's an average of almost $2,000 a cow. If 11 you have 1,000 cows -- and everything works out on the 12 average. So it's not an exact number. It's a ballpark 13 number. 14 ACTING CHAIRPERSON RIORDAN: Right. And 15 different ones are going to be different depending on, 16 like you point out, the area. But I suppose the break 17 point might be 1,000 from big to small. 18 MR. ABERNATHY: No, that's not correct at all. I 19 mean, first off -- 20 (Thereupon a discussion occurred off 21 the record.) 22 ACTING CHAIRPERSON RIORDAN: No. No. I think 23 the question came from the Board. So go ahead. 24 MR. ABERNATHY: First off, when you look at the 25 complexity of the California dairy industry, I do not know PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 129 1 of any anything other than what I would consider a large 2 family farm. And the interesting part is based on some of 3 the rules and regulations and economics of the dairy 4 industry, some of these rules that are supposed to benefit 5 the environment quote unquote have consolidated the 6 industry and done the exact opposite of what certain 7 people have wanted to see. 8 So to answer your question, there's 2,500 cows 9 is -- most dairy farmers would say that would be the start 10 of a large CAF. 11 ACTING CHAIRPERSON RIORDAN: Thank you. 12 EXECUTIVE OFFICER WITHERSPOON: Madam Chair, one 13 other point that's very crucial here. Just like we got 14 the price of electricity adjusted to affect the benefit -- 15 to reflect the benefit of going to electric ag pumps, we 16 need the price of milk to reflect the cost of complying 17 with environmental regulations. And so those are 18 dialogues we need to enter into with CDFA, which sets the 19 price of milk in California. 20 And I don't know the extent to which it already 21 encompasses water regulations, OSHA regulations and the 22 rest of it. But this is the main source of revenue to the 23 dairies. And that will be part of our economic 24 evaluations going forward, both what the cost is and how 25 it is that the dairies pay for that cost, and what PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 130 1 subsidies are available and the rest of that. 2 So there's both, you know, within the regulatory 3 structures as they exist on price setting and other flows 4 of revenue from USDA, state laws, et cetera that will help 5 dairy farmers comply with the ultimate regulations. 6 ACTING CHAIRPERSON RIORDAN: Thank you, Mr. 7 Abernathy. 8 Thank you. 9 MR. ABERNATHY: Madam Chair, there's -- I have a 10 summary here of accumulated income and monthly income for 11 the 2002 through September of '04. 12 ACTING CHAIRPERSON RIORDAN: Why don't you make 13 it available to our clerk and she'll make it available to 14 staff. 15 Kevin Hamilton, Dr. David Lighthall followed by 16 Kathryn Phillips. 17 DR. HAMILTON: Good afternoon, Madam Chair and 18 Members of the Board. It's so good to see you today. 19 Thank you for coming to Fresno. I so much appreciate it. 20 My name is Kevin Hamilton. I'm director of the 21 Asthma Education Management Program of Community Medical 22 Centers. I'm one of the founding members of Medical 23 Advocates for Healthy Air. You've probably heard of us. 24 On this particular issue, I think it's really 25 important that we bring the focus back where it belongs, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 131 1 which is on the potential health effects of any emissions 2 from any source in the valley, and the effect it has on 3 our population, and as I call it, the public health, which 4 is the mandate of course, and I don't need to remind this 5 Board of that, and of course my mandate working in health 6 care to look after the public health. 7 As we look at this concept of dairy sizes, I was 8 stand, I must admit, during this whole discussion. And I 9 was part of the Dairy Permitting Advisory Group. I'm also 10 Fresno County's environmental representative to the 11 Community of Advisory Committee for the San Joaquin Valley 12 Unified Air Pollution Control District. So I have a 13 little background in this particular situation. 14 I was stunned to find out that when somebody said 15 to me it's 1,000 cow dairy, they really meant 1,700 cows 16 or 1,500 cows. These kinds of things really worry me. So 17 if you're looking at regulating the emissions from a 18 certain number of cows, and you think it's 1,000, then 19 you've got to adjust, the number that people are 20 declaring. I wish I could do my income tax that way. 21 That would really work out for me, if I could say well, 22 you know I really made $75,000 this year, but you know I 23 only have to do 70 percent of that, because honestly the 24 government taxed and I paid all this other money out for 25 groceries and everything. You know, well anyway. Some PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 132 1 people can do their taxes that way, but I can't. 2 We have a huge horrendous health crisis in this 3 valley. And we have a huge horrendous air pollution 4 problem in this valley. Every industry that steps into 5 this valley must share in the burden of that solution. 6 It's as simple as that. You don't have to like it. Being 7 in business is tough. Being a farmer is twice as tough. 8 There's no argument about that. I'm general manager for a 9 section and a quarter of wheat in Kansas. You know, I get 10 a credit from the FSA if I left them graze one of my 11 quarters, because it reduces the production of my wheat by 12 about 10 bushels to the acre. So the FSA goes ahead and 13 gives me money back to pay for that to encourage me to 14 allow it to be used for graze. 15 So I'm not so sure about the environmental 16 contribution of the waste product of cattle. So we've 17 been kind of -- but I use it to kill certain infestations 18 that might come up on the ground, and it's pretty good for 19 that. So we might run the cattle on a quarter for a year 20 in order to do something like that, knowing the Government 21 is going to guarantee our price back. 22 That has nothing to do with health. If you're in 23 business, and I understand the Member's concern over the 24 size of businesses and whether they're family operated or 25 not, most businesses, as was stated, are still family PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 133 1 operated. Sam Walton will tell you that, the Walton 2 Family. The Walton Family business, and we're Walmart and 3 we're here for your family. 4 So unfortunately, the old definition of mom and 5 pop doesn't apply any more. I wish it did. And I wish 6 that we were looking at more, what we call, mom and pop 7 operations. And we saw much smaller farms. Because I 8 come from an area in Ohio originally where there were 9 small farms, and they were taken out of business in the 10 longer farms, because of large industrial farms that were 11 called big family farms. So, you know, don't even go 12 there with me. That's not helpful. 13 (Laughter.) 14 DR. HAMILTON: What we need to do is buy your way 15 into the air pollution solution. It's as simple as that. 16 We've had arguments over the ROG that's produced by these 17 cattle. No one wants to talk about some of the source 18 gases. When we went and did literature review, 19 peer-reviewed literature we were looking at, and we looked 20 at literature that was generated outside the valley, we 21 were slapped on the wrists and told you should only be 22 looking by industry at literature produced inside the 23 valley, which, at that time, was incomplete and had not 24 been published in peer reviewed journals and to date still 25 has not. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 134 1 So when you tell me that as a clinician, I'm 2 going to ignore that, and I'm going to pursue every 3 literature source that I can find as your staff does and 4 use that. 5 ACTING CHAIRPERSON RIORDAN: I need you to wind 6 up. 7 DR. HAMILTON: Yes, I can see the word -- we're 8 winding up her and I'm winding up, or winding down. 9 Anyway. 10 (Laughter.) 11 DR. HAMILTON: So, at any rate, and it really 12 is -- it's not really funny, but it is and it's important 13 to find humor where you can in life, I've always found. 14 But in this situation, I understand the industry's 15 problems and issues, and that this is a difficult problem. 16 I have stood here and testified when we had the wood 17 burning rule, when we first regulated agricultural pumps, 18 when we first looked at transportation. Every industry 19 that we've looked at and been forced to regulate and has 20 had to buy into this process, has, of course, been unhappy 21 with the fact that that's had to happen, and has, you 22 know, legitimately brought their problems forward. 23 But the overarching concept that we have a public 24 health duty to protect the public health of the San 25 Joaquin valley, which is eminently threatened by the high PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 135 1 levels of air pollution, ozone and particulate matter, has 2 to outweigh all other considerations. So I would ask you 3 to keep that in mind in your final conclusions. And I 4 thank you for your time. 5 ACTING CHAIRPERSON RIORDAN: Thank you. We 6 appreciate that. 7 Kathryn Phillips -- oh, I'm sorry. Dr. 8 Lighthall. 9 Forgive me, I jump ahead. And I don't mean 10 anything by it. 11 DR. LIGHTHALL: That's fine. I can understand 12 why you'd like to get forward to lunch here. 13 ACTING CHAIRPERSON RIORDAN: Well, I want to -- 14 I'm working towards one speaker in Bakersfield, but you 15 start. 16 DR. LIGHTHALL: Thank you, Madam Chair and I 17 appreciate being here. My name is Dr. David Lighthall, 18 and I'm a geographer by training. And I work as the 19 research director for the Relational Culture Institute. 20 We're an organization here in Fresno that is focusing on 21 sustainable regional development here in the valley. 22 I want to make just a couple of broad comments 23 about the valley. I've been doing some research supported 24 by the Hewlett Foundation to try to look at how we can 25 kind of in the next 20, 30 years end up with a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 136 1 sustainable, sort of, future here in the valley. 2 One of the things that I found is around the 3 concept of the carrying capacity. And what I find in our 4 research is that there are 10 times more -- approximately 5 10 times more people per square mile in the South Coast 6 Air District than there are here in the San Joaquin 7 valley. That is what I would call the settlement density 8 or the population density. 9 At the same time, what we find is that our 10 ozone -- let's say 8-hour ozone violations are 11 approximately the same, even though they have essentially 12 10 times more emissions per square mile than what we have 13 here in the valley. We have a unique regional challenge. 14 I could talk a little bit about why it is that in the 15 valley, pollution goes further in terms of ambient 16 violations. It has to do with the efficient ozone 17 formation. But the bottom line is we have a very serious 18 challenge in terms of sustainable economic development. 19 We have, because of this limited carrying 20 capacity, an air pollution budget. We have an air 21 pollution budget, that we are already over-subscribing. 22 And the question is whether or not the different 23 industrial sectors are going to be carrying their own 24 weight in terms of reductions. 25 And if you look at the trends over time, I have a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 137 1 small graph here, in terms of Reactive Organic Gases, and 2 if we compare 1975 and the average of those years up to 3 2000, and we compare that with where we are in the year 4 2004, according to the emissions inventory, we have had an 5 over 50 percent reduction in ROG. The stationary sector, 6 manufacturing has reduced theirs by 78 percent. What we 7 find, though, in terms of miscellaneous areawide, which is 8 essentially agriculture, there has, in fact, been about a 9 17 percent increase. We've also not seen reductions in 10 8-hour ozone violations, even though we've had significant 11 reductions, according to inventories, in ROG and NOx. 12 So this is a big picture sort of view here. But 13 what I'm suggesting to you is that there is an incredible 14 level of responsibility on you. Speaking from a resident 15 near the valley, we are extremely vulnerable. We have to 16 start doing business differently here, in terms of air 17 quality regulation. 18 Industrial facilities, such as dairies, need to 19 be apart of that solution. And a 700 level, I think, 20 would be essentially a minimum. We talked about the 21 economics. But one thing we have to keep in mind is that 22 for the amount of profit that is generated by a dairy, 23 there is also an enormous amount of pollution, a number of 24 constituents of which are not being included in this 25 analysis. So I'm going to close there. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 138 1 ACTING CHAIRPERSON RIORDAN: Good. 2 DR. LIGHTHALL: And I thank you very much for 3 your time. 4 ACTING CHAIRPERSON RIORDAN: Thank you very much. 5 Let me call on Kathryn Phillips and Daniela, who 6 will follow next. 7 MS. PHILLIPS: Thank. My name is Kathryn 8 Phillips. I'm with Environmental Defense. It's a 9 national environmental organization. And I'm based in 10 Sacramento. And my beat is the San Joaquin valley. And I 11 know a number of you from the work I've been doing here. 12 I just want to make a couple of quick comments. 13 First, I want to commend the staff for an excellent 14 report. I've learned more about dairies just by reading 15 the report than I ever thought I'd want to know. And it's 16 actually pretty good, interesting stuff. 17 I also want to commend the dairy industry. I've 18 gotten to know Paul Martin and some others with the dairy 19 industry and feel confident that they are going to be able 20 to meet any of the requirements that they're going to be 21 faced with to help reduce air pollution. I know Paul and 22 some others are very committed to doing that. And I look 23 forward to working with them in the future. 24 And Finally, I just want to bring up a point, if 25 you haven't figured out, so far I support the staff's PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 139 1 report and the staff's recommendations. But as a number 2 of my environmental colleagues have said, it seems to make 3 sense to look at a threshold that's set at 700. And I 4 suggest you look at page 5 in the staff's report. And it 5 notes that California has some of the largest dairies in 6 the nation with an average size of 800 milking cows. The 7 national average size is 100 milking cows. 8 It's kind of odd to be sitting here trying to 9 figure out, you know, defining large at 1,000 instead of 10 700, and 700 is 7 times the average. But that may be an 11 indication of how, in California, numbers are kind of 12 distorted. We think it's a cheap house now, an average 13 house is $500,000. And if you look at the rest of the 14 country, that's not cheap at all. We're seeing what those 15 kinds of prices are doing to our communities. It's not a 16 good thing. 17 I think maybe if we think a little more broadly, 18 we'll recognize that, you know, 700 is a pretty big dairy. 19 And there, as even Paul will probably be able to tell you 20 about the figures on what the earnings are or what the 21 average income of that kind of dairy farm is, but that's a 22 sizable enough -- sizable dairy. And there are going to 23 be the resources to do the best management practices, the 24 practices that are going to be cost effective. 25 So I think it makes sense to lower the threshold PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 140 1 to 700, but again I just want to commend the staff and 2 commend the dairy industry, because I think they're going 3 to be able to meet whatever challenge they're faced with. 4 ACTING CHAIRPERSON RIORDAN: Thank you, Kathryn. 5 I appreciate that. 6 Daniela. 7 MS. DANIELA SIMUNOVIC: Good morning, Chairman 8 Riordan and Members of the Board. My name is Daniela 9 Simunovic, and I'm a 15-year resident of the city of 10 Fresno, and I suffer from asthma. That's why I'm wearing 11 this lapel today. I also have a 13-year old brother who 12 suffers from asthma as well. And I was raised in Fresno 13 with the constant threat my mother would send me to asthma 14 camp for the summer. 15 I think that my asthma makes me extremely 16 concerned about the air quality issue in the San Joaquin 17 valley. And I think that all industries that -- I think 18 that all industries that are polluting should be regulated 19 on their emissions. And I think that includes the dairy. 20 What it comes down to is that we want to breathe clean 21 air. 22 I support the definition proposed for large 23 Contained Animal Facilities. However, I'd like to see 24 that number lowered to 700. 25 Thank you. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 141 1 ACTING CHAIRPERSON RIORDAN: Thank you very much. 2 And we very much appreciate the fact that you're here 3 today. 4 I'm going to call on Susan Frank. Susan is in 5 the Bakersfield -- oh, Modesto. I have Bakersfield on my 6 list. And I'm sorry. I can't -- I was told to check the 7 color of the chairs and I would know. Susan, I'll 8 indicate to you when your 3 minutes are up. And so if you 9 identify yourself for the record. And welcome. 10 MS. FRANK: Thank you Chairman Riordan. I guess 11 I match the chairs, so I don't know if that helps at all. 12 Maybe not. 13 I'm Susan Frank. I'm with the Steven and 14 Michelle Kirsch Foundation. We're based in San Jose. 15 We're an active member of the Central Valley Air Quality 16 Coalition. And hopefully I won't run even close to the 17 end of my time. I just want to make 2 quick comments. 18 In a past life some might be surprised that I ran 19 a chamber of commerce for about 8 years. And I just want 20 to dispel the notion that a family owned business somehow 21 is less profitable than a corporation. In my experience, 22 family owned businesses can generate millions of dollars 23 annually in profits. So I hope that the Board looks 24 closely at some actual figures in answering the question 25 of Board Member Kennard. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 142 1 I also just want to make a comment from the 2 30,000 foot level in terms of the history of industry -- 3 certain industry groups not wanting regulations that 4 protect public health, examples being catalytic converters 5 and seat belts. 6 This is really no different, and I hope that you 7 keep that in mind as your hear comments from members of 8 industry, not all, but some, about how the impact of these 9 regulations will negatively impact them, and the rich 10 region that is the central valley. It really would appear 11 that staff is proposing a compromise between what the 12 environmental and public health communities would like, 13 which is what I would prefer, the 700 number, and what 14 industry would like. So I respectfully urge your support 15 for the staff report, at a, minimum to protect the regions 16 public health. 17 Thank you. 18 ACTING CHAIRPERSON RIORDAN: Susan, thank you. 19 And we appreciate the fact that you came today and made 20 your presentation. 21 Board Members, that concludes those who wish to 22 testify and have signed up today. Let me ask if there are 23 any further questions that you might have for staff, and 24 then I'll ask staff to make any concluding comments that 25 you might like to make regarding this item. And then PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 143 1 we'll go into a more formal close of the agenda. 2 So are there any questions? 3 Ms. D'Adamo. 4 BOARD MEMBER D'ADAMO: I'd just like staff to 5 comment on one of the previous witnesses had mentioned -- 6 had suggested that staff come back to the Board in about 3 7 years. I like that idea. A lot of testimony indicated 8 this is really the beginning, and there is so much more to 9 do. So I was just curious of what staff's suggestion 10 would be as far as the timeframe? 11 EXECUTIVE OFFICER WITHERSPOON: I think that's 12 fine. One thing that happens almost exactly 3 years from 13 now is it's the implementation deadline. So we want to be 14 sure that the review, if it was going to change, happened 15 earlier than 3 years, so as not to be disruptive to 16 complying with that statutory deadline. But I think 3 17 years is appropriate for almost every scientific area as 18 about the rough time to come back. 19 BOARD MEMBER D'ADAMO: So 3 years unless you 20 determine it needs to be sooner? 21 EXECUTIVE OFFICER WITHERSPOON: Right, because we 22 wouldn't to want change it on the eve of a compliance 23 deadline. 24 BOARD MEMBER D'ADAMO: Right. 25 ACTING CHAIRPERSON RIORDAN: Ms. Pineda. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 144 1 BOARD MEMBER PINEDA: I have a question for 2 staff. I guess I am troubled with regard to 1,000 versus 3 700. And I'm also troubled that we really, and for good 4 reason, don't have our arms around, sort of, the science, 5 and there are still some uncertainties. 6 I am trying to get a better sense of if the local 7 districts are going to be the regulators, won't those 8 districts be the ones to determine whether or not there is 9 an appropriate regulation for a dairy of 700 versus 1,000. 10 They have to factor in a reasonable cost, so that if a 700 11 is, in fact, more of a mom and pop, one would think that 12 the controls would sort of reflect what's reasonable for a 13 smaller dairy. 14 And so I guess my question is, if we were to err 15 on the side of ensuring public health or to go down to the 16 700, the local districts would have the authority to 17 distinguish between 700 versus 1,000? 18 EXECUTIVE OFFICER WITHERSPOON: Yes, they would. 19 There's 2 different ways to go. You're setting the 20 minimum threshold of what must be considered for 21 mitigation. 22 And so were you to set it at 1,000, the districts 23 would have the latitude to drop the threshold lower 24 themselves when they set their mitigation requirements. 25 If you set it lower at 700, districts have the option of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 145 1 differentiating types of controls by size of dairies over 2 700, so either approach can work. 3 The reason staff ultimately went to 1,000, is 4 because there's so much uncertainty about what the 5 controls are even going to be, that we don't have our arms 6 around it. It's not like catalytic converter. It's not 7 like seat belts. There's no silver technological bullet 8 here. And so there's really just -- you know, we felt it 9 absolutely had to be 1000, but, you know, we were waiting 10 on the decision to go lower until we knew what the control 11 options are going to be, what the relative cost is, the 12 simplicity of them, the complexion of them and then you 13 could make that decision later. 14 But districts will have both issues in front of 15 them simultaneously, along with revised emission factors. 16 The San Joaquin valley intends to put out emission factors 17 later this summer. We, the staff, intend to have new 18 emission factors or our decision on emission factors by 19 the end of this year. All of those things will be 20 affecting control decisions by July of next year. 21 BOARD MEMBER PINEDA: If you envisioned having 22 more information, would you envision coming back to the 23 Board? 24 EXECUTIVE OFFICER WITHERSPOON: On if it's 25 dramatically different. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 146 1 ACTING CHAIRPERSON RIORDAN: Mayor Loveridge. 2 BOARD MEMBER LOVERIDGE: Kind of correlary, but 3 in principle. I mean, I guess one thing is -- I bring to 4 this is wanting you to sort of share the burden concept 5 that -- and if you take that, I don't see why 700 doesn't 6 work? 7 EXECUTIVE OFFICER WITHERSPOON: It can work. 8 It's just more dairies. You have to consider -- more 9 dairies have to submit mitigation plans. You know, more 10 work has to be accomplished in a shorter period of time. 11 That's all. 12 ACTING CHAIRPERSON RIORDAN: Supervisor Roberts. 13 BOARD MEMBER ROBERTS: Yeah. I'm puzzled by some 14 of this. It's nice. And it's boiled down just to 700 15 versus 1,000 when you take such a complex issue and just 16 start throwing darts now. 17 I guess we could go to 500 or we could go to 18 1,500 or we could pick any number you want. And I guess 19 I'm even puzzled by some of the testimony. But I come 20 from an urban area where we used to actually have dairy 21 farms and we don't anymore. And the fact of the matter, 22 asthma is a major problem. In fact, it's the leading 23 cause of absentee among kids in school today in San Diego. 24 And we've started Asthma Coalition, and we're doing 25 everything -- a lot of things, hopefully, that are being PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 147 1 done by all the groups we heard speaking to asthma here. 2 But we don't have any dairy cows. 3 And so, you know, I'm wondering what the heck is 4 causing all the asthma in San Diego. Obviously, all of 5 know, there's a lot of factors that do it. None of us 6 know the difference between 700 and 1,000. And 700 sounds 7 fair because it's tougher. You know 1,000 at $2 million 8 dollars per business in revenues. That's not a big 9 business, okay. 10 The lady that testified that said that family 11 owned businesses may have millions of dollars in profits. 12 If there's a family owned business and 2 million in 13 revenues that has millions of dollars of profits, I want 14 to get in that business. 15 (Laughter.) 16 BOARD MEMBER ROBERTS: I'll put cows back in San 17 Diego tomorrow, if that's what it takes. 18 (Laughter.) 19 BOARD MEMBER ROBERTS: But realistically, at 20 1,000, you're talking about pretty modest revenues. This 21 is not agribusiness in the sense that I would think about 22 it. 23 So if that's one of the criteria to try to paint 24 those kinds of operations as huge businesses, it's failing 25 with me. And it seems to me that -- I don't know what the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 148 1 number is, but we're talking about at 1,000 you're talking 2 about 72 percent of all of the cows being caught in that 3 category. I don't know what happens at -- 4 EXECUTIVE OFFICER WITHERSPOON: 89 percent, if -- 5 BOARD MEMBER ROBERTS: Eighty-four. So you're 6 going to pickup another 12 percent. I don't know if it 7 makes a difference to be honest with you. 8 CHAIRPERSON RIORDAN: Well, we have a moment to 9 think about, because, you know, I want to finish the 10 questions to the Board. I realize I did this a little 11 awkwardly, but then we can have our discussion. But I'm 12 thinking of questions to the Board. 13 So Mayor Loveridge -- I mean staff. 14 BOARD MEMBER LOVERIDGE: South Coast set the 15 number at 50, is that right? 16 EXECUTIVE OFFICER WITHERSPOON: For a specific 17 manure management requirement, that's correct. 18 ACTING CHAIRPERSON RIORDAN: Board Members, 19 questions for staff? 20 BOARD MEMBER GONG: This was distributed to the 21 Board, and I was wondering if somebody could explain it to 22 us? 23 (Laughter.) 24 ACTING CHAIRPERSON RIORDAN: That would be great. 25 EXECUTIVE OFFICER WITHERSPOON: I don't PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 149 1 understand it either. 2 BOARD MEMBER GONG: What's the source? What does 3 it mean? 4 ACTING CHAIRPERSON RIORDAN: Is it important? 5 Should I throw it away? 6 BOARD CLERK ANDREONI: That was from Abernathy. 7 ACTING CHAIRPERSON RIORDAN: Well, I don't know. 8 Mr. Abernathy, I just really want to hold to the 9 discussion here. The reason I say that is because, as Ms. 10 Witherspoon said, we have to look through income expense 11 at this point in time. I believe it's, as you said, 12 opaque. It's more what we need to do to begin to start 13 the process. At some time, this may be more critical to 14 us, but it isn't so much today. And it's not that I want 15 to cut you off exactly, but I think it would confuse the 16 issue. And I don't want to confuse the issue, because 17 this is so complex. 18 And if I may, and I beg the indulgence of the 19 Board to be able to do, that it may be a burning question 20 which we can work through in maybe some workshop or some 21 time to meet. But I really uncomfortable with this, very 22 uncomfortable. 23 MR. ABERNATHY: Madam Chair, I have to thank you 24 so much. This is a very tenuous process that we're 25 discussing now on this definition. If we get into milk PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 150 1 pricing, we will be here for months. 2 ACTING CHAIRPERSON RIORDAN: I can't bear that. 3 (Laughter.) 4 ACTING CHAIRPERSON RIORDAN: Besides that, I've 5 got to conclude the meeting here, because we have much 6 more on our agenda. So if you'll bear with me, Dr. Gong, 7 hold on. 8 BOARD MEMBER GONG: I'll wait for months. 9 (Laughter.) 10 ACTING CHAIRPERSON RIORDAN: Do not throw this 11 away. But are there any more questions for staff? 12 Okay. Let me now deal with the more formal 13 procedure of closing the record on this agenda item. 14 However, the record will be reopened when the 15-day 15 Notice of Public Availability is issued. Written or oral 16 comments received after this hearing date, but before the 17 15-day notice is issued will not be accepted as apart of 18 the official record on this agenda item. 19 When the record is reopened, for a 15-day comment 20 period, the public may submit written comments on the 21 proposed changes, which will be considered and responded 22 to in the final statement of reasons for this regulation. 23 We do have a requirement for ex partes, just as a 24 reminder to Board Members. Is there any ex partes on any 25 part of the Board here or here. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 151 1 There is none. 2 Yes, Ms. D'Adamo. 3 BOARD MEMBER D'ADAMO: I am going to err on the 4 side of caution. I had quite a few conversations that 5 I've had with a number of stakeholders regarding dairy 6 issue generally, in which this issue only came up really 7 more by way of reference. So I'm going to just list quite 8 a few meetings that I've had in which it came up just by 9 way of reference. 10 On the 23rd of May I participated in a meeting 11 with representatives from Western United Dairymen Paul 12 Martin, Michael Boccadora, Ray Souza and Mike Marsh. 13 And then on the 9th of June a meeting with 14 representatives from the San Joaquin Valley District staff 15 Dave Crow, Seyed. And then also ARB, Catherine 16 Witherspoon, Lynn Terry, and the same representatives from 17 Western United, plus Denise Mullinax, JP Cativiela, and 18 Richard Clark. 19 Then yesterday I participated in a tour that was 20 sponsored by Western United Dairymen. And then also 21 yesterday I had a telephone conversation with Kathryn 22 Phillips from the Environmental Defense. 23 ACTING CHAIRPERSON RIORDAN: Okay. 24 Ms. Berg. 25 BOARD MEMBER BERG: Yes. I participated PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 152 1 yesterday in the tour sponsored by the Western United 2 Dairymen. 3 ACTING CHAIRPERSON RIORDAN: Okay. As did I for 4 the record. 5 BOARD MEMBER PATRICK: And I also participated in 6 the discussion on June 9th. I believe it was here at the 7 Air District with all the parties that were mentioned by 8 Ms. D'Adamo. 9 ACTING CHAIRPERSON RIORDAN: Okay. Thank you 10 Board Members. 11 Now, is there any final comment that the staff 12 would like to make? 13 EXECUTIVE OFFICER WITHERSPOON: Nothing further. 14 ACTING CHAIRPERSON RIORDAN: Then, Board Members, 15 I'm going to leave it open for discussion for you to 16 discuss and then perhaps form a motion. There is a 17 resolution before us, containing the staff recommendation. 18 BOARD MEMBER D'ADAMO: Well, I'm prepared to make 19 a motion. But on the issue of size, my motion would be to 20 support the staff recommendation. So I don't know, Madam 21 Chair if people had any discussion. 22 ACTING CHAIRPERSON RIORDAN: That's a good 23 beginning. I think that helps in the discussion. So I 24 will accept the motion. 25 BOARD MEMBER ROBERTS: I'll second that. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 153 1 ACTING CHAIRPERSON RIORDAN: Second by Supervisor 2 Roberts. Further discussion of that? 3 Ms. Kennard. 4 BOARD MEMBER KENNARD: I have quite an extensive 5 amount of commentary, so forgive me. But this is a very, 6 very difficult question for all of us. 7 First of all, I'd like to say I very much 8 appreciate staff for this extremely thorough and 9 voluminous report. 10 And I want all of you out there to know that I'm 11 not unfamiliar with the San Joaquin Valley. My 12 grandparents actually owned a farm here. I spent my hot 13 summers here as a child. And I do know what cow manure 14 smells like. 15 But I'm really torn by all of this. And this is 16 the reason why. I'm persuaded by Option 1 in that basing 17 this on actual emissions is really the only equitable way 18 to impose a burden of mitigation in the final analysis, 19 especially given where we are in this very premature stage 20 of it all, with the lack of science and the lack of 21 understanding of the economic impact. 22 I'm very perplexed about size. And I think it 23 does matter the size of the business relative to their 24 ability to suffer the burden of mitigation in some ways, 25 and also their percentage of their contribution to the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 154 1 actual emissions. 2 And I think there's also a way, and no one really 3 mentioned this, but I also think there's a really devious 4 way to trick the system. If I own a dairy, I can keep my 5 count down to 999 cows in that year and be at a 6 competitive advantage to that dairy next door to me that 7 has a 1,001. And so I'm troubled by that very simple -- 8 and I don't know if this would, in fact, occur, but it 9 struck me as a possibility. 10 There are certainly down sides of the Option 1, 11 and it only captures 40 percent of the problem. And it 12 doesn't clearly address the cumulative impact, which I 13 think is really important. 14 And yet with all of that, I like the idea that we 15 can reserve the fact -- to reserve the right to redefine 16 what this large CAF really means. And I really believe 17 that it will press staff and the industry and people that 18 really care about air quality if we go with Option 1, to 19 go -- if Option 1 forces staff in a different way to come 20 up with the science that really tackles the problem on a 21 long-term basis from a public policy standpoint. 22 So that's kind of where I am. 23 ACTING CHAIRPERSON RIORDAN: Comments from other 24 Members of the Board? 25 Discussion? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 155 1 BOARD MEMBER PATRICK: Sure. 2 ACTING CHAIRPERSON RIORDAN: Supervisor Patrick. 3 BOARD MEMBER PATRICK: I would just say that I 4 think that head count is definitely the way that we need 5 to go. It's just so much easier for everybody to do. And 6 we're never -- never is a bad word. It will be many years 7 before we have all the information, if we ever have all 8 the information, that we need to have about dairy 9 emissions. Even today, we've talked about different 10 Jersies versus Holsteins and so on and so forth. 11 The science will go on for many, many years. But 12 I think that we need to do the head count, because I think 13 it's quite a bit easier for everybody to do that. 14 And we have -- in Kern County, we have 24 dairies 15 that are in the cue. And I can guarantee you I don't 16 think there's one of them that is a 700 cow, dairy, or 17 even a 1,000 cow dairy. These are very, very large 18 dairies. And so it seems to me that I'm okay with the 19 1,000. I'm okay with the 700. But the reason I'm okay 20 with 1,000 is because eventually it's going to come to the 21 districts and the districts are going to have to look at 22 the threshold, they're going to have to look at the 23 technology, they're going to have to look at the 24 management practices. And they're going to have to look 25 at the cost effectiveness of all of this. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 156 1 And so if there's a way for our district to 2 capture many emissions at a lower threshold of 1,000, our 3 board will have to consider that and we'll have to talk 4 about socioeconomic reports, or we'll have to talk about 5 cost effectiveness reports. 6 And so, to me, what we're doing today is we're 7 setting the floor. And we know that we may have to go one 8 way or the other as the science comes in. But to me 1,000 9 is a reasonable number for us to start with. But if we're 10 going to ask everybody to, you know, get out their slide 11 rules and figure out how many cows and what kind of cows 12 and so on and so forth, I think we're bypassing what we 13 need to do, which is to clean the air. And we're getting 14 into more and more paperwork and burdensome regulation, 15 burdensome on the dairies, burdensome on those who are 16 regulating those dairies and burdensome on those of us who 17 do not have an intimate understanding of what a dairy is 18 like, but want to make sure that we are looking at what's 19 a threshold for clean air, and so forth. 20 And so those are really all the comments I have 21 to make. 22 ACTING CHAIRPERSON RIORDAN: Mayor Loveridge. 23 BOARD MEMBER LOVERIDGE: Since I grew up next to 24 a dairy and -- 25 BOARD MEMBER PATRICK: You got me. You know a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 157 1 lot more than I do. 2 BOARD MEMBER LOVERIDGE: Maybe we could take a 3 judgment on Option 1 or Option 2. I persuaded by the 4 Statement for Option 2, but I think maybe we could -- 5 before we pick a number, we could go on record for either 6 Option 1 or Option 2. 7 ACTING CHAIRPERSON RIORDAN: Well, Mayor 8 Loveridge the motion that's on the table is the staff 9 recommendation, so that is 1,000. And then if that should 10 not be successful, we'll go back and revisit that. I 11 think that's the best way to deal with that. It's very 12 simple. 13 Any further discussion? 14 Let me indicate then I'd like to have the vote on 15 -- this is resolution number 05-35. 16 ACTING GENERAL COUNSEL JENNINGS: May I make one 17 clarification to the Chairwoman? 18 ACTING CHAIRPERSON RIORDAN: Yes. 19 ACTING GENERAL COUNSEL JENNINGS: That is the 20 resolution that's before you is actually a proposal to 21 adopt the staff proposal in toto as recommended without 22 any 15-day modifications. There was one 15-day 23 modification that was discussed. 24 EXECUTIVE OFFICER WITHERSPOON: With respect to 25 equivalent steer, equivalent cow to reflect the younger PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 158 1 animals at the present. 2 ACTING GENERAL COUNSEL JENNINGS: And one 3 approach would be to modify the resolution to include the 4 normal 15-day language and direct the Executive Officer to 5 make an adjustment, if appropriate, to the large CAF 6 definition for feedlots to more accurately reflect the 7 size distribution of cattle at beef feedlots consistent 8 with methods used to establish the other large CAF 9 definitions. 10 ACTING CHAIRPERSON RIORDAN: Would the maker of 11 the motion like to add that? 12 BOARD MEMBER D'ADAMO: Yes, I would. And in 13 addition, to report back 3 years or before as determined 14 by staff. 15 ACTING CHAIRPERSON RIORDAN: Okay. 16 BOARD MEMBER ROBERTS: Yes. 17 ACTING CHAIRPERSON RIORDAN: So we'll add those 18 2. And the seconder agrees? 19 Very good. 20 There's a motion before you. All those in favor 21 of the motion, please signify by saying aye? 22 (Ayes.) 23 ACTING CHAIRPERSON RIORDAN: Opposed no? 24 (Noes.) 25 ACTING CHAIRPERSON RIORDAN: Okay. We'll take a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 159 1 vote here or a count. I'm going to vote aye. So there's 2 1, 2, 3, 4, 5, 6, 7. It passes with 3 -- 3 noes. 3 Great. 4 (Thereupon the voting went as follows: 5 Ms. Berg - yes 6 Ms. D'Adamo - yes 7 Dr. Gong - yes 8 Ms. Kennard - no 9 Mayor Loveridge - no 10 Supervisor Patrick - yes 11 Ms. Pineda - no 12 Supervisor Roberts - yes 13 Madam Chairman Riordan - yes) 14 EXECUTIVE OFFICER WITHERSPOON: Madam Chair, I 15 would like to, with respect to Ms. Kennard's question, 16 point out that districts are required to use ARB approved 17 emission factors when they go into the next phase. And we 18 will be continuing to do this research and have the 19 science. And so it's not that it won't play in a major 20 way in the control decision. It's just not the foundation 21 of the definition that the Board just approved. 22 ACTING CHAIRPERSON RIORDAN: And let me clarify 23 if I'm counting. The motion passes 6 to 3. 24 I want to thank everyone who came today to 25 testify. We appreciate each and everyone's input and to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 160 1 the Board, thank you. I'm very pleased that we were able 2 to finish this because my fear was there were some people 3 in those other locations that needed to leave and could 4 not come back after lunch. 5 I'd like to take about a 40-minute lunch, so if 6 you would plan on being back for the next Item at 10 after 7 1. We're adjourned until 10 after 1. 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 161 1 AFTERNOONSESSION 2 ACTING CHAIRPERSON RIORDAN: Ladies and 3 gentlemen, I'd like to call our meeting back to order. So 4 if you find seats, my colleagues will be joining me in a 5 moment. 6 The item that we had earlier in terms of comments 7 preceded any of the agenda items. And it's more of an 8 issue of current information. There's an executive order 9 by the Governor Titled S3-05. And it talks about climate 10 change. And I've asked Catherine Witherspoon to give us a 11 little bit of information about how it might affect the 12 work of the Air Resources Board. And we now have that 13 executive order in front of us. So, Ms. Witherspoon, so 14 let me turn it over to you. 15 EXECUTIVE OFFICER WITHERSPOON: Thank you, Madam 16 Chairman. At the World Environment Day Conference in San 17 Francisco a United Nations gathering of mayors from around 18 the world, Governor Schwarzenegger announced new targets 19 for the state of California to reduce greenhouse gas 20 emissions by milestone dates of 2010, 2020, and 2050. And 21 those are laid out in this executive order. 22 And between now and January a lot of analytical 23 work is going on that had already started on what the 24 specific strategies to achieve those targets will be and 25 what the consequences of not undertaking this work would PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 162 1 be for California in terms of public health effects on 2 agriculture, affects on our coastline, affects on our 3 water supply and affects on forestry. 4 And so there's a half a million dollars being 5 expended on contract work to support that effort. There 6 are staff being pulled from agencies across the state. 7 What I have in the handout for you is the executive order. 8 The Governor's press release, the text of the Governor's 9 speech in San Francisco. And it was one of his best 10 speeches ever, I think. 11 And you can see a video clip of it both on the 12 CalEPA web site and on a new web site that's been created 13 off the Governor's page. It's climate.ca.gov. And 14 everything going on in California with respect to climate 15 changes is on that web site. 16 The last 2 pages of the handout I've given you 17 drill down a little deeper on what it is the Air Resources 18 Board has been charged with carrying out. And one other 19 point, Secretary Alan Lloyd is the head of this entire 20 effort on behalf of the Governor, and is coordinating the 21 work of all the various departments. But particularly on 22 the second page of -- the last page of this handout, the 23 bulleted list of the strategies that we're responsible 24 with, some by ourselves and some in concert with other 25 departments like the Energy Commission is to analyze the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 163 1 tonnage reductions possible from these different 2 categories listed here. 3 And as we go through that effort, some of them 4 will come back to you in the form of rulemakings, some 5 will go to the legislature as proposed bills, some will be 6 bonds ideas, some will be other departments carrying 7 forward entirely. But this is going to be an enormous 8 effort. It's not a sprint like the greenhouse gas 9 regulation for motor vehicles. It's more of a marathon. 10 And State government will be reorganizing itself to take 11 on this new challenge. 12 ACTING CHAIRPERSON RIORDAN: Thank you, Ms. 13 Witherspoon. Are there any questions for staff on this 14 particular item? 15 I would just ask that as things develop, if you 16 would keep this Board abreast of what you are doing as a 17 staff, and some of the things that we will need to either 18 address or support you in your research and it will be an 19 exciting opportunity. 20 Ms. Cackette. 21 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: I just 22 wanted to also point out that you'll see on the list here 23 things that are underway, is that the greenhouse gas regs 24 that the Board adopted is on top of the list. It's on top 25 of the list because it turned out it's the most PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 164 1 significant action to reduce climate change emissions that 2 is on our portfolio. 3 EXECUTIVE OFFICER WITHERSPOON: In the 2020 4 timeframe. 5 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: By at 6 least I think almost a factor of 2, compared to the next 7 one. So just point out its importance in the action you 8 took. 9 ACTING CHAIRPERSON RIORDAN: We appreciate that. 10 We've made a good beginning. 11 EXECUTIVE OFFICER WITHERSPOON: And in response 12 to your point, madam Chair. I do think that January would 13 be the right time to tell you more about this major 14 planning effort that's going on. And the Governor will be 15 releasing more documents in January. 16 ACTING CHAIRPERSON RIORDAN: Let's put that on 17 the January agenda. And I thank you for that. 18 Moving on. Our next agenda item is 05-6-3. It's 19 proposed emission standards and test procedures for 2007 20 and later for the off-road large spark-ignition engines, 21 and proposed fleet average requirements for the existing 22 off-road LSI engines. 23 Prior to my turning this over to the staff, let 24 me share with my board members and the audience and anyone 25 who's listening, we have been asked by 2 of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 165 1 legislators here in the San Joaquin area, the valley, to 2 hold final action until our July meeting. And maybe Ms. 3 Witherspoon can comment on some of the reasons why. But 4 my hope is -- and I said to Ms. Witherspoon, I think 5 that's a reasonable request. I have no problem with that. 6 I would like to go forward, however, with the 7 testimony and the staff presentation and the public 8 testimony, because many of you have driven a long ways. 9 And what we will do is continue the item over, if my board 10 members agree with me, until the July date. 11 I am hopeful, from a personal standpoint, that we 12 can then gather support, particularly from the 13 legislators, to find means to fund some of these 14 improvements that we are requiring. 15 And it probably is going to take some legislative 16 fixes. And so I'm hopeful that this can happen in the 17 month process that we delay final decision, and we really 18 get some support. And so I'm hopeful that that will 19 occur. And perhaps there will be some dialogue between 20 staff and the legislative staffs of these members. 21 So, Ms. Witherspoon, let me turn this over to you 22 and for the staff report and any comments you'd like to 23 comment. And then, board members, unless I hear any 24 opposition, I would appreciate your indulgence to hear the 25 item today, but to continue it over for final decision PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 166 1 until July. 2 EXECUTIVE OFFICER WITHERSPOON: Thank you, Madam 3 Chairman. Staff believes it's a reasonable request as 4 well. There are a number of issues as can you tell from 5 the thickness of your comment letter folder, both with 6 respect to the major industries affected by the rule and 7 the agricultural industries affected by the proposed rule. 8 But we would like the opportunity to begin a 9 acquainting you with this category, and why we're 10 proposing a regulation and some of the issues and then 11 we'll continue working on them in the intervening 30 days 12 and hope to wrap it up at your next meeting. 13 In 1998, the ARB first established emission 14 standards for large spark-ignition engines used in 15 off-road equipment. These are fueled by propane or 16 gasoline. Example of the engines affected by the rule 17 include those used in forklifts, scrubbers, sweepers, 18 generators, large turf care equipment and airport ground 19 support equipment. The full implementation of the 20 standards in 2004 reduce hydrocarbon and NOx emissions by 21 approximately 75 percent. 22 In 2002, as our role is being phased in, U.S. EPA 23 adopted a federal program similar to ours, but with new 24 test procedures and more stringent standards beginning in 25 2007. In evaluating the federal program, the state of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 167 1 technology and commitments that we made in the 2003 State 2 Implementation Plan for ozone, it became clear that 3 further reductions from new and in-use engines are both 4 achievable and necessary. 5 Consequently, staff began the proposed 6 rule-making before you today in 2004. Staff's overall 7 strategy is to ensure that high polluting, uncontrolled 8 equipment is cleaned up in the near term, and that more 9 stringent emission standards are in place to reduce 10 emissions over time. 11 Specifically, the staff proposal consists of 4 12 elements, adoption of cleaner emission standards for '07 13 and 2010, related test procedures, verification procedures 14 for retrofit systems on existing equipment, and fleet 15 average requirements to accelerate turnover in mid- and 16 large-sized fleets. I'll now turn over the presentation 17 to Mark Williams. 18 (Thereupon an overhead presentation was 19 Presented as follows.) 20 MR. WILLIAMS: Thank you, Ms. Witherspoon, Madam 21 Chairman Riordan and Members of the Board. As Ms. 22 Witherspoon discussed earlier we're here before you today 23 to propose a control measure to reduce emissions of 24 hydrocarbons and oxides of nitrogen from new an in-use 25 off-road large spark-ignition engines. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 168 1 --o0o-- 2 MR. WILLIAMS: I would like to begin the 3 presentation with a brief background on large 4 spark-ignition or LSI engines, the type of equipment 5 they're used in, and the history of control. 6 Most commonly engines in this category are fueled 7 by gasoline or liquefied petroleum gas. The engines are 8 typically simpler versions of current or past automobile 9 engines with less sophisticated fuel and emission control 10 systems. They have greater than 25 horsepower, and have a 11 displacement of more than one liter, and typical life 12 times on average of 7 to 11 years. 13 --o0o-- 14 MR. WILLIAMS: LSI engines are mainly used in 15 industry applications, such as forklifts, -- 16 --o0o-- 17 MR. WILLIAMS: -- airport ground support 18 equipment or GSE, -- 19 --o0o-- 20 MR. WILLIAMS: -- sweepers and scrubbers, -- 21 --o0o-- 22 MR. WILLIAMS: -- industrial tow tractors -- 23 --o0o-- 24 MR. WILLIAMS: -- portable generators -- 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 169 1 MR. WILLIAMS: -- large turf care equipment -- 2 --o0o-- 3 MR. WILLIAMS: -- and a wide array of other 4 agricultural construction and general industrial 5 equipment. New equipment used primarily in farm and 6 construction activities with engines of less than 175 7 horsepower is preempted from California's authority to 8 regulate. 9 Emissions from this equipment account for about 10 12 percent of California's total LSI emissions. 11 --o0o-- 12 MR. WILLIAMS: LSI engines hydrocarbons and 13 oxides of nitrogen or NOx. In 2004 the almost 90,000 LSI 14 engines in California's emission inventory accounted for 15 about 5 percent of off-road hydrocarbon plus NOx 16 emissions, about 70 tons per day. And as you'll recall 17 from the last presentation, ROG emissions from off-road 18 equipment represent the next largest emissions source 19 after dairies. 20 As cars and trucks meet more stringent emission 21 standards, the relative emissions contribution from LSI 22 equipment will continue to increase. 23 --o0o-- 24 MR. WILLIAMS: Several actions have been taken to 25 address these emissions. First, the ARB adopted LSI PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 170 1 regulations in 1998 that established a 3-gram per brake 2 horsepower hour hydrocarbon plus NOx certification 3 standard, and 4 gram in-use standard. Those regulations 4 were phased in in 25 percent increments between 2001 and 5 2004. 6 For these model years, there is no operational 7 difference between the 3 gram equipment and the 8 uncontrolled equipment. As a result, some fleets may have 9 been buying equipment with significantly lower emissions 10 since 2001. In 2002, based on the results of combined ARB 11 and U.S. EPA supported research into LSI emission 12 controls, the U.S. EPA adopted their own LSI regulation. 13 It harmonized in 2004 with the ARB's 3 gram 14 standard but drops 2 grams in 2007. 15 Finally, in 2002, the ARB entered into a 16 Memorandum Of Understanding with the air carriers 17 operating in the south coast air basin. The MOU requires 18 them to reduce the fleet average emission levels of their 19 ground support equipment at south coast air basin airports 20 by the end of 2010. 21 --o0o-- 22 MR. WILLIAMS: While these regulations are a good 23 start, staff believes that we have an opportunity to 24 further reduce emissions from LSI equipment. To 25 illustrate this point, we've developed a chart that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 171 1 compares the normalized emission certification levels of 2 heavy-duty trucks, LSI equipment and passenger cars. 3 It is clear that from the standpoint of the 4 amount of emissions per unit of work done, forklifts are 5 dirtier than the trucks they're loading, and the emission 6 disparity is going to become more pronounced over time. 7 It is also clear that while forklift engines may not be as 8 advanced as car engines, they are similar in size and run 9 on cleaner fuels. And, yet, again there's a huge 10 disparity in emission levels. 11 Given that many of the companies that make LSI 12 engines make those car engines too, we believe there 13 should be some technology transfer opportunities. 14 --o0o-- 15 MR. WILLIAMS: These opportunities for further 16 reductions were addressed in California's 2003 State 17 Implementation Plan or SIP. The SIP identifies new 18 stationary and mobile source measures that the State has 19 committed to, to reduce criteria pollutant emissions and 20 move for compliance with the current federal health based 21 air quality standards in 2010. 22 Two of the mobile source measures addressed LSI 23 engines. The first measure proposed that California 24 harmonize with the 2007 U.S. EPA standards. The second 25 measure proposed that emissions from in-use LSI engines be PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 172 1 reduced by 80 percent or to a 3-gram verification level. 2 It also proposed developing requirements to 3 increase the use of 0 and near 0 emission technologies. 4 Combined, these 2 measures commit the ARB to reduce 5 statewide hydrocarbon and NOx emissions by approximately 6 6 to 13 tons per day in 2010. That brings me to our 7 proposal. 8 --o0o-- 9 MR. WILLIAMS: This rule-making has 4 distinct 10 and significant elements. Each of these elements could 11 have been a stand-alone rule-making. But it made sense to 12 group the elements together in an omnibus rulemaking 13 Because of their interaction with one another. 14 The first element of our proposal is new engine 15 standards. This element applies to manufacturers of LSI 16 engines that are greater than 25 horsepower, greater than 17 one liter and not federally preempted. 18 --o0o-- 19 MR. WILLIAMS: This element provides that the ARB 20 standardized -- oh, pardon me -- that the ARB standards 21 harmonize with the U.S. EPA in 2007 requiring 22 manufacturers to certify to a 2 gram standard using the 23 transient test cycle, control evaporative emissions and 24 install on-board diagnostic systems. 25 The U.S. EPA regulation provides an alternative PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 173 1 certification formula that provides manufacturers the 2 flexibility to let carbon monoxide emissions increase so 3 that they can achieve lower hydrocarbon plus NOx 4 emissions. 5 To meet the 2004 and 2007 standards, 6 manufacturers have begun to incorporate several emission 7 control systems that have long been applied in 8 automobiles. Those systems include oxygen sensors and 9 fuel injectors to control fuel metering and delivery for 10 better combustion, and 3-way catalytic converters. 11 The standards subsequent require manufacturers to 12 certify to a 0.6 gram level in 2010. While some 13 manufacturers may have to improve the efficiency of their 14 emission control systems to meet the 2010 standard, in 15 many cases this will be through calibration changes and 16 not hardware requirements. 17 The following slide compares typical 2004 LSI 18 emission control technology with expected 2010 LSI 19 technology and typical 2004 automotive technology. 20 --o0o-- 21 MR. WILLIAMS: In general, nearly every aspect of 22 the emission control system for an LSI engine is 23 significantly less refined than that of the typical 24 passenger car. Specifically, the emission control system 25 of the 2004 forklift has a catalytic converter that is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 174 1 only 40 percent as large by volume as that of the 2004 2 car, and with much less precious metal loading. 3 As a result of the lower catalyst volume and 4 precious metal loading, emissions from the 2004 forklift 5 are more than 15 times greater than those from the 2004 6 car. Fork-lifts designed to meet the 2007 standard can 7 achieve the 2010 standard through calibration changes or 8 modifications to the catalyst. 9 In some cases catalyst efficiency has been 10 increased through advanced watch codes, without increasing 11 precious metal loading. 12 We would expect manufacturers certifying to the 13 2010 emission standard to have certification emissions in 14 the range of 0.1 to 0.3 grams. It is worth noting, that 15 several manufacturers have current models with 16 certification emissions in this range. 17 --o0o-- 18 MR. WILLIAMS: Some LSI equipment manufacturers 19 will be able to offer equipment at emission levels 20 significantly below current and pending standards. Staff 21 is proposing that manufacturers be allowed to certify 22 model year 2007 and later equipment to several optional 23 tiered new emission standards as shown here. 24 Manufacturers who optionally certify to these 25 very low emission levels will be allowed to accrue credits PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 175 1 for their clean engines that they can either bank or 2 trade. These standards will help make fleet average 3 requirements discussed later more viable. 4 Fleet operators who procure optional low-emission 5 equipment may be eligible for Carl Moyer program incentive 6 grants, provided that the emission reductions they 7 obtained are in excess of or in advance of those required 8 by this proposal. 9 --o0o-- 10 MR. WILLIAMS: Accompanying the new engine 11 standards is the second element of our proposal, new 12 engine test procedures. 13 --o0o-- 14 MR. WILLIAMS: The regulatory proposal 15 incorporates by reference with minor modifications the 16 test procedures and general compliance provisions adopted 17 by the U.S. EPA as part of their regulations for LSI 18 engines finalized in 2002. 19 On June 3rd of this year, the U.S. EPA publicly 20 released revisions to these requirements. Consequently, 21 staff proposes that additional conforming changes be made 22 as necessary to the referenced federal test procedures and 23 general compliance provisions as part of a 15-day change 24 package. 25 It is the ARB staff's intent to maintain PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 176 1 consistency to the greatest extent possible with the 2 federal requirements. In most of the cases where 3 individual provisions differ, the U.S. EPA language is 4 more general than that adopted by ARB, rather than being 5 incompatible. 6 --o0o-- 7 MR. WILLIAMS: To provide ample opportunity for 8 public review and comment, staff proposes that any 9 additional technical clarifications be available for 10 comment for a period of 45 days. While the ARB staff does 11 not anticipate any significant issues with this process, 12 we would return to the Board, if necessary. 13 --o0o-- 14 MR. WILLIAMS: That brings me to the third 15 element of the proposal, the operator fleet average. The 16 fleet average is a near and mid-term requirement that 17 addresses significant emissions from uncontrolled in-use 18 equipment as well as causes fleets to move toward 19 low-emission or electric equipment. 20 --o0o-- 21 MR. WILLIAMS: The fleet average requirements are 22 limited to the 4 categories of equipment shown here 23 because they comprise the vast majority of LSI emissions 24 and are most amenable to the fleet average requirement. 25 The fleet average requirements apply to any user who PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 177 1 either owns the equipment or possesses it through lease or 2 rental for a period exceeding 1 year. 3 Equipment that meets new standards and is leased 4 or rented for a period of 1 year or less is exempt from 5 the fleet average Calculations. 6 Two of the most effective tools for reducing a 7 fleet's average emission level are the control or 8 retirement of uncontrolled equipment and the use of a 9 modest percentage of electric equipment where feasible. A 10 fleet that chose not to incorporate any electric 11 equipment, would need to be more aggressive. 12 --o0o-- 13 MR. WILLIAMS: The fleet average requires LSI 14 fleet operators to meet progressively more stringent fleet 15 average emission levels, based on engine certification 16 standards, retrofit verification; levels and default 17 emission rates for their uncontrolled engines. 18 It applies tighter standards to large fleets 19 because they have greater flexibility to incorporate zero 20 and near zero emission equipment into their fleet. It 21 also applies tighter standards to the forklift portion of 22 the fleet than to the nonfork-lift LSI portion of the 23 fleet, because electric powered forklifts are readily 24 available for or use in many applications and already 25 comprise a major market share. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 178 1 And forklifts are the most prevalent application 2 in the LSI category. So it is more likely that there will 3 be retrofit kits and new equipment certified to optional 4 lower emission standards available for fleets to 5 incorporate into the fleet average. 6 This slide presents nonfork-lift fleet average 7 standards that have been revised from the proposed 8 standards, published in the staff report. This will be 9 discussed later in this presentation. The following 10 slides discuss technology options for complying with the 11 fleet average standards. 12 --o0o-- 13 MR. WILLIAMS: One of the most cost effective 14 ways to move toward the proposed fleet average 15 requirements is to address the emissions from uncontrolled 16 equipment. Currently uncontrolled equipment includes all 17 pre-2001 and roughly half of 2001 through 2003 engines. 18 And emissions from uncontrolled engines are substantial. 19 As a comparison of single uncontrolled forklift produces 20 approximately the same emissions during three 8-hour 21 shifts as a new car certified to California's lowest 22 emission level would emit over its entire life. 23 In response to regulatory and market influences, 24 a number of companies have developed retrofit control 25 systems for a variety of engines. The technology has been PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 179 1 available for a approximately 10 years and manufacturers 2 are now certifying systems for off-road applications 3 including forklifts and other industrial equipment. 4 These systems can significantly reduce overall 5 emissions through the use of engine management systems, 6 electric fuel injection, and application of catalysts. 7 --o0o-- 8 MR. WILLIAMS: These systems are expected to be 9 applicable to both newer engines and most of those engines 10 produced prior to 2001. The average cost to the enduser 11 is typically close to $3,000. However, improved fuel 12 consumption and engine life can greatly offset these 13 costs. 14 --o0o-- 15 MR. WILLIAMS: Another way to reduce a fleet's 16 average emission level is through procurement of very 17 clean LSI equipment. Staff believes that LSI 18 manufacturers will be able to offer forklifts at emission 19 levels significantly below the current 3 gram standard and 20 the 2007, 2 gram standard using readily available and cost 21 effective emission control technologies. 22 Under this proposal, manufacturers can 23 additionally certify equipment to optional new engine 24 standards that range from 50 to almost 97 percent lower 25 than the current 3 gram level. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 180 1 This low emission equipment, which provide 2 endusers significant flexibility in meeting the proposed 3 fleet average emission levels. Some manufacturers are 4 already preparing to offer low-emission equipment. The 5 ARB is currently reviewing 2 applications submitted by a 6 major manufacturer that request certification to optional 7 low-emission standards. 8 On average the typical new LSI forklift will cost 9 around $20,000. Procuring the cleanest low-emission LSI 10 forklift, may add several hundred dollars to the purchase 11 price. 12 --o0o-- 13 MR. WILLIAMS: A simple na effective way to 14 reduce a fleet's average emission level is through 15 procurement of electric equipment primarily forklifts. 16 --o0o-- 17 MR. WILLIAMS: Electric forklifts have no exhaust 18 emissions and extremely low upstream or powerplant 19 emissions. Thanks to alternating current motors that 20 allow for better lift and travel speeds, waterproofing 21 technologies that allow outdoor operation, and fast 22 charging technologies that eliminate the need to swap out 23 batteries and have separate battery rooms, they can 24 perform in a wider variety of environments than ever 25 before. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 181 1 An electric forklift may cost a few thousand 2 dollars more than a comparable LSI forklift, but generally 3 are less expensive in the long run, as a result of their 4 lower life-cycle costs. 5 Another technology that promises to eliminate the 6 need to swap out batteries and to have separate battery 7 rooms is fuel cells. Fuel cell forklifts are not 8 commercially available, but several manufacturers have 9 fuel cell demonstration programs in place. These 10 forklifts do not suffer from reduced lift or travel speed 11 during the course of ship, and can refuel with hydrogen in 12 a couple of minutes. Manufacturers expect these forklifts 13 to become commercially available in some applications in 3 14 to 5 years. 15 The next series of slides provides examples of 16 how a large forklift fleet can meet the fleet average 17 requirements using the compliance options. 18 --o0o-- 19 MR. WILLIAMS: The example assumes that the fleet 20 has been procuring equipment every 2 years. As a 21 conservative assumption, the fleet did not procure any 22 complying forklifts in 2002. Their 2005 baseline fleet 23 average is 10.2 grams. 24 --o0o-- 25 MR. WILLIAMS: During the 3-and-a-half-year PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 182 1 period between 2005 and the first fleet average 2 requirement on January 1st, 2009 the fleet has attained a 3 fleet average well below the standard by procuring 4 electric forklifts to replace their oldest uncontrolled 5 1996 forklifts, procuring new lower-emission LSI forklifts 6 to replace their uncontrolled 1998 forklifts, and by 7 retrofitting their 2000 and 2002 uncontrolled forklifts. 8 --o0o-- 9 MR. WILLIAMS: To attain the 2011 fleet average 10 emission level, the fleet need only replace their 2000 11 forklifts with a 0.67 gram new lower emission forklifts. 12 And Finally, to attain the 2013 fleet average 13 emission levels, the fleet need on replace their 2002 14 forklifts with 0.6 gram new lower emission forklifts. 15 In this example, the purchase of electric and 16 lower emission forklifts as part of the normal procurement 17 cycle has made it fairly simple to comply with the 18 standards. A large fleet on a shorter turnover cycle 19 would have an even easier time than this example fleet, 20 especially if they incorporated complying equipment into 21 their fleet in 2001 through 2003. 22 --o0o-- 23 MR. WILLIAMS: A fleet that does not incorporate 24 electric equipment into their fleet could still meet the 25 fleet average emission levels, but would have to place a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 183 1 greater emphasize on low-emission forklifts. We assume 2 the same fleet starting with a 10.2 gram baseline fleet 3 average. 4 To attain the 2009 fleet average emission 5 standard with room to spare, the fleet would have to 6 turnover their 1996 portion of forklifts -- their 1996 7 portion to forklifts meeting the Standard. They would 8 have to turnover their 1998 portion to forklifts meeting 9 an optional low-emission standard, and retrofit their 2000 10 and 2002 uncontrolled forklifts to a 3 gram level. 11 --o0o-- 12 MR. WILLIAMS: Replacing their retrofitted 2000 13 and 2002 forklifts with forklifts meeting the 2010 14 standard would allow the fleet to attain a fleet average 15 well below the 2011 fleet average emission standard. 16 --o0o-- 17 MR. WILLIAMS: Finally, to attain the 2013 fleet 18 average emission standard, the fleet would have to replace 19 their 2004 forklifts with 0.6 gram forklifts. Again, 20 fleets with faster turnover rates, especially those that 21 procured compliant forklifts in the 2001 through 2003 22 period would find it easier to attain the fleet average 23 emission standards. 24 --o0o-- 25 MR. WILLIAMS: The slide is new. And it's a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 184 1 proposal for nonfork-lift fleets. And it incorporates new 2 useful life information that has been provided, regarding 3 the ground support equipment. 4 And as a result, we've modified the fleet average 5 standards to make the 2011 and 2013 levels higher for the 6 nonfork-lift fleets. And, again, that reflects longer 7 useful life data. 8 --o0o-- 9 MR. WILLIAMS: Small fleets would be exempt from 10 the fleet average requirements, but would have to reduce 11 emissions from their in-use equipment to 3 grams through 12 retrofit or replacement with a new or used piece of 13 control equipment by January 1st, 2011. 14 Low hours of use equipment would not have to 15 achieve the in-use reduction until January 1st, 2013. 16 --o0o-- 17 MR. WILLIAMS: The ARB has been working closely 18 with agricultural businesses and has developed an 19 alternative proposal to address issues specific to the 20 industry. 21 The economics of the agricultural industry are 22 such that they are less able to pass through environmental 23 compliance costs to the retail price of goods. Because of 24 this, agricultural businesses do not turn over their 25 forklift fleet at the same rate as other forklift users PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 185 1 even with similar hours of use. In recognition of these 2 issues, staff is putting forth an alternative proposal 3 that addresses owned forklifts in agricultural operations. 4 The proposal requires that 10 percent of these 5 forklifts be retrofitted or replaced each year for a 6 period of 10 years. The proposal also has indefinite 7 limited hours of use and specialty equipment exemptions. 8 --o0o-- 9 MR. WILLIAMS: This chart represents the phase-in 10 schedule we would expect within the conventional fleet 11 average requirement and within the alternative 12 agricultural proposal toward reducing uncontrolled 13 forklifts. 14 As can be seen in the conventional fleet average 15 proposal, in green, reaches approximately 85 percent 16 control by January 1st, 2009. At this point, the 17 alternative agricultural proposal, in blue, is still at 20 18 percent. The remaining 15 percent of the conventional 19 fleet is controlled within 2 years as the exemptions is 20 eliminated. 21 The agricultural fleet eventually reaches a peak 22 of approximately 85 percent in 2016. But under the staff 23 propose the 15 percent associated with the low-use 24 exemptions remains indefinitely. 25 In addition to having a more rapid rate of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 186 1 progress, conventional fleets also have fleet average 2 numbers that are twice as stringent as those of the 3 agricultural fleet. 4 --o0o-- 5 MR. WILLIAMS: This slide shows that based on the 6 average age and useful life of agricultural forklifts, we 7 expect more than 40 percent of owned forklifts to be 8 addressed through natural turnover or 1 of the 2 9 exemptions that we have provided. 10 In this case, we took the agricultural industry 11 data of an average age and estimated the average turnover 12 rate to be 33 years. Note that although turnover rate of 13 the agricultural fleet is slow, over a 10-year period even 14 a very slow turnover rate is noticeable. 15 Of the remainder, we expect that approximately 16 one-third will comply through low-cost retrofit in the 17 2007 through 2010 timeframe. An additional one-third will 18 comply through moderate cost replacement in the 2010 19 through 2012 timeframe. We expect that the remainder will 20 comply through the purchase of low-cost forklifts in the 21 2013 through 2016 timeframe as older forklifts meeting the 22 3 gram standard would become widely available. 23 --o0o-- 24 MR. WILLIAMS: We expect that retrofits and 25 latter year replacement with used 3-gram lifts will be PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 187 1 very cost effective. The cost impact of the middle year 2 replacements may be offset by the reduced fuel and 3 operating costs. 4 Additionally, staff has been very conservative 5 about the number of retrofits that may occur in the middle 6 years. Retrofit manufacturers may be able to address 7 significantly greater numbers of agricultural forklifts 8 yielding decreased regulatory costs. 9 --o0o-- 10 MR. WILLIAMS: Using the cost estimates just 11 described, staff assessed the proposed rule's impact on 12 the typical midsized agricultural fleet. Assuming an 13 operation consisting of 17 owned forklifts, 7 would comply 14 through natural turnover or 1 of the 2 exemptions. 15 Of the 10 remaining forklifts, 3 would be 16 retrofitted in earlier years of the 10-year project, 3 17 would be replaced by moderate cost forklifts in the middle 18 years and 4 would be replaced by low-cost forklifts in the 19 latter years. 20 --o0o-- 21 MR. WILLIAMS: The ARB staff also assessed the 22 impacts of the proposal on small size -- on a small-sized 23 agricultural fleet. The nature of the phase-in of the 24 requirements can provide fleets of less than 10 several 25 years to act, in this case, until the 4th year as the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 188 1 fleet is comprised of 3 forklifts. 2 For purposes of this analysis, we made the 3 conservative assumption that none of the forklifts would 4 be retired through natural attrition or receive 1 of the 2 5 exemptions. To meet the proposal, 1 forklift would be 6 retrofitted and 2 would be replaced by low-cost forklifts 7 in the latter years. 8 --o0o-- 9 MR. WILLIAMS: The total capital and fuel savings 10 are presented for both fleets. As shown, the average 11 capital costs for the large fleet is less than $5,000 per 12 year. Combined with the fuel savings, the overall impact 13 to the fleet is estimated to be between $2,000 and $3,000 14 per year. Similarly, for the small fleet, the net cost is 15 less than $1,000 per year. 16 --o0o-- 17 MR. WILLIAMS: The fleet average emission level 18 proposal would require fleet operators to maintain the 19 fleet average information shown on this slide. That 20 information will assist us in auditing for compliance. 21 Staff is proposing that users be required to maintain that 22 information on file through the end of December 2015. 23 Staff is also proposing that fleet operators 24 maintain fuel invoices or other documentation that 25 certifies the LPG fuel -- that certifies that LPG fuel PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 189 1 meets motor vehicle grade standards for a period of 3 2 years from the date of the invoice. 3 --o0o-- 4 MR. WILLIAMS: The final element of today's 5 proposal is the retrofit verification proposal -- I'm 6 sorry -- the retrofit verification procedures. 7 --o0o-- 8 MR. WILLIAMS: As discussed earlier, there is a 9 need to reduce emissions from uncontrolled LSI engines. 10 Currently, the ARB does not mandate a procedure for 11 manufacturers to use to verify the emission reduction's 12 capability of their retrofit technology for off-road LSI 13 engines. A verification procedure would provide the ARB a 14 mechanism to verify that any claim to emission reductions 15 are real and durable over the life of the system. 16 --o0o-- 17 MR. WILLIAMS: We have worked extensively with 18 the industry to develop a verification procedure to 19 determine the emission benefits from these retrofit 20 systems. The retrofit verification procedure for off-road 21 LSI engines is consistent with the verification 22 requirements for diesel engines -- for diesel equipment 23 but adapted to reflect LSI equipment. 24 As with optional low-emission equipment, fleet 25 operators who apply verified retrofit systems to their PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 190 1 equipment, may be eligible for Carl Moyer program 2 incentive grants, provided that the emission reductions 3 they obtain are in excess of or in advance of those 4 required by this proposal. 5 --o0o-- 6 MR. WILLIAMS: The retrofit verification 7 procedures or procedure applies to manufacturers of LSI 8 retrofit kits. It requires that they verify their 9 emission reductions in durability, conduct a field 10 demonstration and in-use compliance testing, and warrant 11 installation performance. 12 Finally, it requires the manufacturer to place a 13 label on the equipment specifying the level to which it is 14 controlled. 15 --o0o-- 16 MR. WILLIAMS: Manufacturers of retrofit emission 17 control systems may verify their control equipment to 1 of 18 the 4 levels shown on this slide. Depending upon the 19 level, the manufacturer may verify on the basis of a 20 percentage reduction or to an absolute emission level. We 21 have received 3 initial applications and all 3 indicate 22 greater applicability and greater emissions reductions 23 than we originally envisioned. 24 --o0o-- 25 MR. WILLIAMS: The emission benefit numbers that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 191 1 are contained in the staff report have been revised. The 2 new numbers are lower than those in the staff report, but 3 still within the range of the SIP commitment, which was 4 6.1 to 13 tons per day in 2010 and 3.3 to 11.1 tons per 5 day in 2020. 6 --o0o-- 7 MR. WILLIAMS: Cost effectiveness for the various 8 compliance options range up to a $1.40 per pound. The 9 retrofit and zero emission options show a lower range of 10 zero dollars. That's based on the life-cycle cost savings 11 associated with fuel and operations and maintenance costs. 12 The cost effectiveness of the LSI proposal 13 compares favorably with other mobile source regulations 14 that are typically in the range of $5 per pound. 15 --o0o-- 16 MR. WILLIAMS: As I'm sure you will hear shortly, 17 agricultural economics limit an operator's ability to pass 18 compliance costs along to the consumer. This creates an 19 environment where equipment is not turned over as quickly. 20 As a result, these operators will not be able to rely to 21 the same extent on retrofits and will have to consider 22 more costly replacements. 23 The staff's proposal already incorporates changes 24 to minimize the burden on agricultural industries. 25 However, staff is also committing to seek out sources of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 192 1 funding to assist the agricultural industries to comply 2 with the requirements of the regulation. The agricultural 3 businesses would like even greater assurance that this 4 funding will be available. 5 As mentioned previously, we have worked with the 6 Air Transport Association and modified the staff proposal 7 to incorporate the most recent information about the 8 useful life of this equipment. The Air Transport 9 Association continues to express concerns about the 10 intersection of the proposed regulation with the MOU 11 within the South Coast. 12 Some rental companies, generally LSI dealers, 13 have a concern that the fleet average requirements would 14 adversely impact them. This concern is a especially 15 strong for those companies with a high percentage of 16 uncontrolled equipment that has been purchased recently. 17 We have not identified a way to address their 18 concerns that would not result in a loss of emission 19 reductions. 20 --o0o-- 21 MR. WILLIAMS: ARB staff has also received 22 comments that the 2010 new engine standards will be 23 difficult to meet, particularly considering the changes in 24 test procedures. 25 As noted earlier in the presentation, the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 193 1 proposed standards are modest, given the availability of 2 automotive technology that can be adapted to the LSI 3 market to achieve much lower levels, and given the 4 existence of engines currently meeting emission levels 5 well below the proposed standards. 6 Finally, manufacturers have made it clear that 7 the advanced emission control technologies require precise 8 fuel metering that is fuel injection. However, state of 9 the art injectors perform poorly when subject to poor 10 quality LPG fuel. ARB is committed to working with fuel 11 providers and distributors as well as reviewing the 12 adequacy of existing fuel quality standards. 13 --o0o-- 14 MR. WILLIAMS: In conclusion, the proposal 15 provides significant emission reductions and are very cost 16 effective. The standards are attainable with existing 17 technologies. 18 Staff recommends that the Board adopt the 19 proposal with the proposed modifications. That concludes 20 my presentation, and we welcome your questions. 21 ACTING CHAIRPERSON RIORDAN: Thank you, Mark, 22 very much. Board Members, are there any questions for 23 staff at this time? 24 Then I'm going to open -- thank you, Mark -- the 25 item for public testimony. We have a number of people who PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 194 1 do want to testify today. And I want to give everybody an 2 opportunity. And so I am going to tell you, as I told 3 this morning's audience, I have a timer. I'm going to 4 give each speaker 3 minutes. I'm going to ask you to 5 conclude at 3 minutes, but fortunately, you'll know when 6 that is, because there's a red light on the speaker's dais 7 there that will indicate to you that your time is up. 8 There's a yellow light that indicates to you that there is 9 one minute left, so it gives you a minute to wrap up. 10 Know that anything that you bring in terms of 11 written material will be made part of the record. If you 12 have a letter and it has some length to it, please sum it 13 up in your own words so that we'll accept the letter as 14 part of the record, but can't have you read the whole 15 letter into the record, but will accept it, and then rely 16 on you to summarize that letter. 17 So let us begin. Ginny Barker and Julie 18 Griffiths representing 2 of our assembly members from this 19 area. If you would come forward please, followed by Mary 20 Reynolds and Joe Kubsh you'll be the next two speakers on 21 the list. 22 MS. GRIFFITHS: Hi. I'm Judy Griffiths. This is 23 Ginny Barker from Assembly Members Mike Villines and Bill 24 Maze. And we just had quick statement which veers off a 25 little bit from the letter there. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 195 1 We'd like to thank the Board for continuing this 2 matter to allow further assessment and to ensure a more 3 equitable resolution, based on the collective efforts of 4 both sides of this issue. 5 ACTING CHAIRPERSON RIORDAN: And we appreciate 6 your comments. And we look forward to working with you. 7 MS. GRIFFITHS: Thank you. 8 ACTING CHAIRPERSON RIORDAN: We have a lot of 9 work to accomplish in a month. Very good. 10 Mare Reynolds, Joe Kubsh and Ranjan Nirgude. 11 MS. REYNOLDS: Good afternoon, Madam Chairman and 12 Members of the Board. My name is Mary Reynolds and I'm 13 here this afternoon representing the Western Propane Gas 14 Association. I'm also here to speak in favor of staff's 15 proposal and their recommendations. 16 This has, many of us can attest to, has been a 17 very long process, involving a number of very complex 18 issues, with a large number of stakeholders. I would be 19 remiss if I didn't publicly thank particularly Mark 20 Williams for all his efforts on this, as well as the ARB 21 staff. 22 I think that we -- the proposal that Mark has 23 outlined for you is a workable solution that addresses the 24 majority of the stakeholders' major concerns, as well as 25 it significantly helps to reduce emissions which is a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 196 1 concern for all of us. 2 The Western Propane Gas Association feels that 3 we've done just that with the proposal and the 4 recommendations. And in so doing, we have preserved the 5 right of choice of equipment for endusers, and we have 6 also helped to significantly reduce emissions in 7 California, and therefore improve air quality. 8 Thank you for the opportunity to comment. 9 ACTING CHAIRPERSON RIORDAN: Thank you very much. 10 If I might, Joe, you come on up. I did forget somebody in 11 the process and I apologize for that. If I turned the 12 page in my agenda, I'd know that, Madam Ombudsman, you 13 have a portion. And so, Joe, just stay where you are and 14 let's have a report. 15 OMBUDSMAN TSCHOGL: Well I'm sharing my seat with 16 Jack, so that he could answer questions. Thank you. 17 Madam Chairman and Members of the Board, the 18 large spark-ignition engines rule was developed with input 19 from the American Trucking Association, International 20 Truck Association, Manufacturers of Emission Controls 21 Association, Engine Manufacturers Association, National 22 Propane Gas Association, Western Propane Gas Association, 23 Federal EPA Railroad Commission of Texas, various 24 truckload and less than truckload service providers, State 25 and local government agencies, utility companies, and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 197 1 retail businesses. In spite of this outreach, you may 2 hear from some individual companies that they were not 3 aware of this until recently. 4 Staff began working on this regulation in late 5 2003, with formal working group meetings and calls 6 beginning in January 2004. They held 5 workshops. The 7 first was in Sacramento on May 26th, 2004, the second and 8 third were held in El Monte on August 25th, 2004 and 9 Sacramento on August 26th, 2004. The 4th and 5th were 10 held in Fresno on March 22nd, 2005 and in Sacramento on 11 March 24th, 2005. 12 Approximately 25 stakeholders attended each 13 workshop. Staff had 21 teleconference calls with the 14 working group, 17 teleconference calls with the retrofit 15 subcommittee working group, 18 individual meetings with 16 manufacturers and owners of rental equipment businesses. 17 There were also 10 individual meetings with associations, 18 EPA, consultants and government agencies. 19 Staff toured 15 facilities located in Sacramento, 20 Modesto Lathrop, Fremont, Fresno, San Bernardino, Pomona 21 and Chino. 22 Facility operation include warehouse supply 23 distribution, major logistics operations, food beverage, 24 produce handling and equipment sales and rental. The 25 staff report released via listserve and using mailing PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 198 1 lists for public comment on May 6th, 2005. 2 More than 700 hard copies were mailed and nearly 3 3,800 notices were Emailed. 4 This concludes my comments. 5 Thanks. 6 ACTING CHAIRPERSON RIORDAN: Thank you, Madam 7 Ombudsman. We appreciate that. Joe. 8 MR. KUBSH: Good afternoon, Madam Chairman and 9 Members of the Board. My name is Joe Kubsh. I'm the 10 deputy director of the Manufacturers Emission Controls 11 Association, and I'm also here to add our support to the 12 proposed regulations that are before you today as staff 13 has indicated both in their report and in Mark's very fine 14 presentation for you this afternoon here. 15 The emission control technology that will provide 16 the solutions for both new equipment and used equipment in 17 this application range is the use of 3-way catalytic 18 converters in conjunction with closed-loop controls. This 19 is a well proven technology. And as Mark indicated in his 20 presentation, the significant improvements in this 21 technology that have been made in the automotive 22 technology -- in the automotive arena, excuse me, can be 23 easily transferred over into this off-road category to 24 provide significant emission benefits and achieve both the 25 2007 requirements for new engines and the proposed 2010 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 199 1 requirements for new engines. 2 As Mark also indicated retrofit options in this 3 marketplace have been available for nearly 10 years. 4 Again, these are durable systems that can be engineered to 5 achieve the requirements that are apart of the 6 verification protocols that are apart of this proposal. 7 We believe all these options are cost effective, 8 durable, and will provide endusers with the performance 9 that's apart of the proposal that's in front of you. 10 We'd like to also thank staff for their hard 11 efforts in putting together this proposal over this long 12 timeframe, as indicated by the previous person who spoke 13 here. 14 In summary, we believe that there are cost 15 effective 3-way catalyst technology solutions available 16 both for retrofits and for reducing emission performance 17 of new in-use -- excuse me of new vehicles in this 18 category. 19 And with that, I'd be happy to answer any 20 questions you may have. 21 ACTING CHAIRPERSON RIORDAN: Thank you, Joe. 22 Are there any questions for this speaker? 23 We thank you and we appreciate what you're 24 members do to bring the technology forward that we need. 25 Yes, next speaker please. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 200 1 MR. NIRGUDE: Madam Chair and Members of the 2 Board, I'm Ranjan Nirgude. I'm from the Tennant Company 3 in Minneapolis, Minnesota. And we are the OEM original 4 equipment manufacturers. 5 I have a slight presentation, just a small one, 6 and I'm going to go through it quickly. 7 (Thereupon an overhead presentation was 8 Presented as follows.) 9 MR. NIRGUDE: We make industrial sweepers and 10 scrubbers. We've been in business for 135 years. 11 --o0o-- 12 MR. NIRGUDE: And we are located -- our main 13 headquarters are in Minneapolis. And we are about half a 14 billion is our company, about 1,600 employees. Our 15 primary businesses is industry sweepers and scrubbers. 16 --o0o-- 17 MR. NIRGUDE: And the emissions -- I'm here to 18 support the 2007 emission regulations. We are also 19 supporting the clean -- we have a passion and a mission 20 for clean, lean and green mission statement. 21 --o0o-- 22 MR. NIRGUDE: And based on that, we are 23 supporting 2007, which is in aligning with 2007 EPA. But 24 I'd like to see the changes for 2010 emission levels. And 25 the reason -- I'm going to walk through them very quickly. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 201 1 --o0o-- 2 MR. NIRGUDE: We have 17 different machines here. 3 And each of those have 3 different models, gas, LP and 4 diesel. And we have found out coming from 2004 emission 5 regulations that we have gained a lot of experience on how 6 to do that, and working with the engine suppliers and 7 manufacturers and the distributors -- in our business 8 engine suppliers really don't make a lot of changes. It's 9 the changes on distributors. And the distributors 10 engineering knowledge level is not as wide spread as the 11 automotive engineer's is. So there's a tremendous gap 12 between knowledge level and between the industrial 13 distributor and engineer. 14 So there is a considerable testing. And we 15 have -- there's a sort of level of anxiety between the 16 communication between the OEM and distributors and the 17 engineers. Not only that we have found out the cost 18 increase related to this engine -- related to emission 19 law, have gone up from about coming from 2004 applications 20 almost $2,500. Engine costs themselves jump from $800 21 dollars to $1,300, plus additional $200 or $300 for 22 catalytic mufflers. 23 So you add that up, that is a considerable cost 24 increase. It doesn't -- original estimates for the CARB 25 were $800, $700, so that it didn't match up. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 202 1 Not only that, we have found out the fuel economy 2 is not there. That was -- we also predicted that we would 3 get the fuel economy. And we already realize that we 4 didn't get that. 5 --o0o-- 6 MR. NIRGUDE: We have spent -- as you can see in 7 this pie, we spent about 24 percent of our project money 8 went into the engine project, instead of new product 9 development. So I'm going to jump to the last slide here. 10 ACTING CHAIRPERSON RIORDAN: Okay. 11 --o0o-- 12 MR. NIRGUDE: Basically, what we are saying is 13 the communication between the companies and coordination 14 between the manufacturers and distributors. We need -- 2 15 things I want to emphasize here. We get -- the 7-year is 16 our product life. And 7 years is like a return on 17 investment. We have also on a tooling investment we have. 18 So we like to see your regulations 7 years apart. 19 And also one of the other things we found out is 20 that the engine manufacturers are not -- they're 21 technology is -- they're developing technology as we are 22 moving along on our projects. So it's really a chaos 23 trying to come up with a new product for 2007. 24 But we are -- we support the regulations, but 25 2010 we'd like to see it extended further out another 2 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 203 1 years. 2 Thank you. 3 ACTING CHAIRPERSON RIORDAN: Thank you. And I 4 appreciate your hurrying to try to finish in your 5 timeframe. 6 Staff, is there any comment to this gentlemen's 7 request? 8 ON-ROAD CONTROLS BRANCH CHIEF KITOWSKI: Well, 9 I'd have a couple of points to. Make several of the 10 comments that were made really were related to the initial 11 phase-in of our original regulations in the '02 to '04 12 timeframe, and then the 2007 time frame. If you isolate 13 the 2010 requirements that are part of this proposal, what 14 an equipment supplier, such as the Tennant Company, would 15 need to do is ensure that the engines that are 16 manufactured and provided to them would, in fact, fit in 17 their equipment. 18 We think they are substantially similar. The 19 changes that will be occurring from the 2007 standards to 20 the 2010 standards are not, you know, overwhelming. It's 21 primarily catalyst changes and calibration changes. 22 So we feel that they will be well suited. Now, 23 there will be some development costs and there will be, 24 you know, some work certainly needed. But we think they 25 will be well suited to incorporate the 2010 engines into PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 204 1 their equipment. We'd be happy to continue to work with 2 them. 3 ACTING CHAIRPERSON RIORDAN: Yes, if you would. 4 And I thank you very much. 5 The next 3 speakers, Manual Cunha, Roger Isom and 6 Shirley Batchman, if you could come forward. 7 Manual, I'll turn it over to you first. 8 MR. CUNHA: Well good, afternoon. Welcome to 9 Fresno to the San Joaquin valley. This is the heart of 10 all of agriculture. So if you're from another state, 11 forget it. It's the San Joaquin valley. 12 (Laughter.) 13 MR. CUNHA: I'm glad you had a great tour 14 yesterday. I think it was excellent to see board members 15 do that. I think it's great when members of the boards of 16 any board can do that with their specific industry to go 17 out and understand what's going on, if it's agriculture or 18 even if it was a dry-cleaner, so we appreciate that. 19 I'm Manual Cunha, President of the Nisei Farmers 20 League. I think the first thing is I want to thank 21 Catherine for -- and the Board for allowing this to be 22 extended for 30 days. I think it helps to resolve some of 23 the issues that our industry faces compared to many other 24 industries. 25 And in this area, we certainly have a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 205 1 disadvantage. And that is that the agricultural forklifts 2 are old. They're older engines. Farmers packing house, 3 co-ops, they rebuild their equipment. Farmers have been 4 noted to weld, weld, weld rather than go buy new, new, 5 new. Just take a piece of steel and weld it and goes down 6 the field. 7 The same thing with engines, redo the heads, the 8 valve jobs or whatever needs to be done, farmers have 9 don't that, and our packing houses. 10 So when you look at our fleet, 61 percent of our 11 fleet cannot qualify for retrofits at all, 61 percent of 12 our fleets, which are from 1995/96 down. The oldest 13 forklift, and a gentleman will talk about that, Mr. Isom 14 will. The amount that we have that can be retrofitted is 15 17 percent that is eligible for Carl Moyer funding. 16 Our big great concern is the funding mechanism. 17 If there isn't funding out there, very difficult for a 18 farmer to go trade in and buy a new forklift. It's just 19 not going to happen. The cost is -- when somebody asks to 20 what the cost is for agriculture, the cost for agriculture 21 is in the negative. The net return on my federal reserve 22 board presentation several months ago, was that the 23 agriculture industry in California is in the negative net 24 return of investment, net return is in the negative. 25 In other words, you're making more money on your PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 206 1 CD at 2.1 percent interest, if that's what you got it in 2 there for. Or if you're a gambler you're on 27 percent on 3 some stock. But the agriculture industry is in the 4 negative net profit. I wanted to make that very clear. 5 So those issues are very important to us, when we 6 can't pass that cost on. And the staff I recognize, Mark, 7 the presentation about that, that we are unable to do 8 that. I appreciate that. 9 We do look forward with the staff to try to 10 resolve the funding issue with Carl Moyer to allow this to 11 go forward for farmers to do this. Carl Moyer has done a 12 great job for the engine rule. We have replaced 3,000 13 engines. The air district has put $34 million in it. Our 14 industry has put $22 million into it. We still have about 15 5,000 zero emission forklifts to go forward at a cost of 16 about 130 million for those. 17 After we're done with that, we've still got to 18 come back and replace engines that were replaced under 19 Tier 1 and Tier 2, which was 3,000, which could be another 20 $40 million or $50 million. So you're looking at about 21 $180 million on agricultural pump engines, ones that we've 22 already replaced and others. 23 Now, we're going to come up with a forklift rule. 24 We've got to figure where to get those dollars. We also 25 have the ARB working on a portable engine rule. Where are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 207 1 we going to get those dollars? 2 So we have dollars out there, but they are very 3 accountable for. And this district has done, I think, a 4 premium job with spending their Carl Moyer monies in all 5 areas. They have done an excellent job. I commend the 6 Board for that -- the ARB for their efforts to help on 7 923, which was the DMV. Those funds are very important. 8 I know I've got about 10 seconds. 9 So this is the fastest I've ever done through 10 engines. 11 (Laughter.) 12 MR. CUNHA: You are so lucky. Jack, you are 13 lucky, too. 14 (Laughter.) 15 MR. CUNHA: But we look forward to working with 16 the staff to resolve the ag issues. We are different. We 17 understand that. We appreciate the staff working with us 18 and the Board. 19 Thank you very much. I can't believe I did it. 20 (Laughter.) 21 ACTING CHAIRPERSON RIORDAN: Thank you. And I 22 appreciate that. Thank you very much, Manual. 23 Roger Isom. Can you do it as well as your 24 friend, Manny there. 25 MR. ISOM: My friend? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 208 1 (Laughter.) 2 MR. ISOM: Yeah, I think so. 3 Good afternoon, Madam Chairman and Members of the 4 Board, Supervisor Patrick. My name is Rover Isom. I'm 5 with the California Cotton Ginners and Growers 6 Association, representing cotton gins and growers from 7 throughout the state. 8 You hit the nail on the head, Madam Chairwoman, 9 this issue is about the Carl Moyer money and our ability 10 to use those funds. My gins typically only 2 to 7 11 forklifts, 75 percent of those are owned the other 25 12 percent are rented. The average age in our industry, the 13 cotton gin industry, is 15 years old. And I have -- one 14 of my gins has a 1945 Allis-Chalmers. It's still running 15 like the day that they bought it. And I have several in 16 the 1950s-60s range. 17 A comment was made and recognized by ARB that we 18 have no way to pass along our costs, so we're going to 19 make these things run as long as we can. And that's where 20 we're at. We have no argument with rule. We've been 21 working for over a year with Jack and his staff to hammer 22 out what we think is a reasonable, feasible rule. It's a 23 10/10/3, as they have called. It works for the 24 agricultural industry. 25 It simply comes down to the point of the Carl PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 209 1 Moyer money. These engines are so old, we can't retrofit 2 them. We have to replace them. We didn't know until 3 March at the March workshop that the Carl Moyer money 4 wasn't going to be available. And so we've been stuck on 5 that point right there. 6 The cotton gin right now are going through a rule 7 called Rule 4204 with the local air district. It's going 8 to cost us $250,000 to $300,000 over the next 4 years to 9 implement and we're doing that. 10 The air district is currently workshopping 3 11 other rules that we'll affect cotton gins, both on small 12 boiler humidifier rule and also a drier rule. The same 13 thing, anywhere from $25,000 to $125,000 over the next 2 14 to 5 years, that we will have to bear that cost and no way 15 to pass that along. 16 So this is simply just one more rule that we're 17 going to have to comply with. Again, we think it's 18 reasonable. We've worked out that agreement. We would 19 just ask that the staff work with us over this next 30 20 days to try to do something with the Carl Moyer to open 21 that up and make it available to the ag industry. 22 We will take advantage of it. We will do it. We 23 did it with the Carl Moyer money on ag pump engines, 3,500 24 engines replaced in 5 years in the state, through that 25 program. It's a great program. We've even got USDA, NRCS PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 210 1 to expand their program to cover ag pump engines. We 2 tried to do it on this one. Unfortunately, they won't 3 cover the forklifts that are at cotton gins or packing 4 houses. But we're doing everything we can. And we're 5 committed to working with you guys the next 30 days to 6 come up with something. 7 ACTING CHAIRPERSON RIORDAN: Thank you very much 8 I appreciate that. 9 Shirley, while you're coming up, let me indicate 10 to Dave Modisette in Modesto to forward please to follow 11 Shirley. 12 MS. BATCHMAN: Good afternoon, Madam Chair and 13 Board Members. My name is Shirely Batchman and I am with 14 California Citrus Mutual. We represent the citrus 15 industry throughout California. 16 To keep my comments brief, I will echo a lot of 17 what Manual and Roger have just said. However, I do want 18 to stress that we are in support of the basic program that 19 has been developed with Jack, with Catherine. At times, 20 it has been bumpy road. But I think at the end of the 21 day, we are all committed to what we call the 10/10/3. I 22 want to make that very clear. 23 We realize we have a role to play and we are 24 committed to that. We were all on board until March when 25 we found out that there was not Carl Moyer funding. I PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 211 1 believe that there was a belief on both the part of 2 industry as well as staff that Carl Moyer funding was 3 available. And this program was developed with that 4 understanding. 5 When it became aware that us that we could not 6 qualify, that put us in a whole different direction. I 7 don't know if you added up Manual's percentages, he was a 8 little bit off. But anyway, 83 percent of our industry 9 cannot retrofit. That is over $40 million. Let me just 10 give you one little bit of anecdotal information. One of 11 my packing houses in Tulare County right now will pay over 12 $100,000 a year for 10 years. That's just a forklift 13 rule. That doesn't take into everything else that they're 14 doing. That's a lot of money. That's a million dollars. 15 So we need to say we need help with funding. 16 Without the funding, I really question whether we're going 17 to be able to accomplish what all of our objectives are. 18 Now, one other concern with this existing rule, 19 is that this rule has an implementation date in it. I 20 have great concern that we have an implementation date for 21 a rule on an industry when there is no guarantee of we're 22 going to have any funding at all. I think as we revisit 23 this rule that we need to have an implementation date be 24 moved out so we know where our funding is coming from 25 prior to actually have the clock start ticking, because PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 212 1 right now it starts ticking next June. We have nothing. 2 So we look forward to having a partnership with 3 the staff and working to see what we can do to find 4 funding. 5 Thank you. 6 ACTING CHAIRPERSON RIORDAN: Thank you very much, 7 Shirley, I appreciate that. And we will be working with 8 you. 9 Let me indicate before David Modisette begins, 10 Betty Hawkins you will follow David. Bill Jacob and 11 Robert Schlingman. 12 So, David, if you would begin and I'll try to 13 indicate to you when your time is up. 14 MR. MODISETTE: Thank you, Madam Chair and 15 Members of the Board. I am David Modisette. I'm the 16 director of the California Electric Transportation 17 Coalition. We did submit some written comments. There 18 are 3 issues that we wanted to bring to your attention and 19 ask the Board and the staff to address these over the next 20 30 days. 21 The first is that the impacts of the proposed 22 regulations on the eligibility for financial incentives 23 under the Carl Moyer program does need to be known and 24 understood by both the Board and the stakeholders. 25 As you know, the Board has a couple of powerful PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 213 1 tools. You have regulatory tools, now with the passage of 2 the legislation last year. You have a $1.4 billion 3 incentive program over the next 10 years. But these tools 4 are somewhat mutually exclusive. So our recommendation to 5 the Board is that when you're bringing regulations 6 forward, at the same time if they involve equipment and 7 vehicles eligible under Carl Moyer, that you also bring 8 the Carl Moyer guidelines with those 2, so that you can 9 understand and other stakeholders can understand the way 10 these 2 work together. 11 Right now, the current rule will significantly 12 cut out and limit and eliminate eligibility for certain 13 types of LSI equipment. And before you do that, we think 14 that you and the stakeholders need to understand exactly 15 how that's going to work. 16 The second issue is that zero emission LSI 17 equipment should be an eligible compliance option for the 18 new equipment manufacturer fleet average standards. The 19 Board has said for the last 15 years or more that it wants 20 to encourage zero emission equipment, that it's the gold 21 standard. 22 And yet the regulations that staff has brought 23 forward to you today does nothing to encourage zero 24 emission equipment. In fact, it actually excludes zero 25 emission equipment from the new equipment manufacturer PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 214 1 fleet average standards. And we think that that needs to 2 be corrected, particularly in this area where zero 3 emission equipment has a very, very large market share. 4 This is not a technology forcing regulation. This 5 technology is readily available. 6 So we think that electric equipment should be 7 eligible as a compliance option under the manufacturer 8 fleet average standards. 9 One of the things that staff has said when we've 10 raised this issue before is that well, this could be 11 disruptive to the industry because there are some 12 industries that make no electric equipment. There are 13 other industries that make both electric and internal 14 combustion equipment. There are other companies that make 15 only electric. And we would agree that in the near term 16 it could be disruptive. But the solution to that is to 17 give this a longer timeframe to say that 8 to 10 years 18 from now that during that time period that zero emission 19 equipment will be eligible for use in the manufacturers 20 fleet average standard, and they will be able to use that 21 equipment in that timeframe. 22 ACTING CHAIRPERSON RIORDAN: David, while you 23 take your breath, you are at the end of your 3 minutes, so 24 can you sort of conclude. 25 MR. MODISETTE: Yes. The last issue is simply PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 215 1 that the estimated emissions reductions from the operator 2 fleet average, we think, are actually overstated. And the 3 reason for that is because they haven't included any 4 electric equipment in that average. Electric equipment 5 does comprise 42 percent of this area. And so just to 6 ignore that and not include that, we think will greatly 7 reduce the emission reductions. 8 Once that is done, our estimate is that your 9 total emission reductions will decrease to 4.8 tons per 10 day statewide in 2010, which is below the SIP commitment 11 level. 12 We urge you to consider that. 13 ACTING CHAIRPERSON RIORDAN: Thank you, David, 14 very much. We appreciate your testimony today. 15 Okay. We'll move back to this room. Betty 16 Hawkins followed by Bill Jacob. 17 MS. HAWKINS: Thank you, Madam Chairman. Good 18 afternoon, Madam Chairman and Members of the Board. My 19 name is Betty Hawkins. I'm with the Air Transportation 20 Association. Our members are the major passenger airlines 21 and cargo carriers that provide idle air transport 22 services to every part of California. 23 We would like to thank the staff of ARB for the 24 work that they've done with us to try to adapt the rules 25 so that it applies well to our fleet of ground service PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 216 1 equipment. 2 Our carriers use a wide variety of ground service 3 equipment types at their various airports around the 4 state, some of which is powered by LSI engines. 5 For perspective, the carriers, LSI fleets, 6 including forklifts among that fleet, account for 7 7 percent of the NOx and hydrocarbon emissions statewide, 8 compared with 91 percent that's attributable to forklifts 9 in general. 10 As Mark Williams mentioned, ARB is adopting this 11 rule and others against the backdrop of a landmark 12 voluntary agreement, the South Coast MOU. The MOU 13 provides for emissions and NOx and hydrocarbon between now 14 and 2010 at the 5 airports in the south coast air basin. 15 It's the largest fleet conversion ever undertaken to our 16 knowledge, and would involve a conversion of approximately 17 85 to 90 percent of the total GSE fleet between now and 18 the end of its term. 19 As we've discussed with the executive officers, 20 the overlay of this rule and others on the south coast MOU 21 is almost certain to put the carriers in a position to 22 where they will have to terminate their -- exercise their 23 right to terminate the MOU. 24 This is largely because the early investments 25 that the carriers are now making in current generation PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 217 1 technology to meet the immediate requirements of the MOU 2 even with an exemption that lasts a couple of years past 3 the expiration of the MOU will put the carriers at a 4 disadvantage once the rules kick in. They would have to 5 double-control their equipment, specifically in the case 6 of LSI, their 3.0 engines that they're currently buying as 7 part of their compliance strategy. 8 ATA's key concern with the rule as originally 9 proposed was the useful life of the equipment. As you 10 know, the original rule assumed a 7- to 8-year turnover. 11 When, in fact, GSE has a median useful life of 19 years. 12 We've been able to work very constructively with the 13 staff, and have come to an agreement that 19 years is the 14 actual verifiable figure for the median useful life. 15 The task that remains before us is to translate 16 that understanding into a rule that properly accommodates 17 that useful life to yield compliance dates and fleet 18 averages that allow for an orderly turnover of the GSE 19 fleet. 20 We've only seen the revised fleet average 21 proposal very recently, so we'll need to analyze it and 22 work further with this staff to deal with it. 23 We believe there are several things that need to 24 be looked at. First, we think that the solution will be a 25 combination of not only the fleet averages but the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 218 1 effective dates to accommodate the GSE management issues 2 that Bill Jacob of UPS will speak to. We would be looking 3 at timeframes of between 2012, 2014, 2016 range. 4 ACTING CHAIRPERSON RIORDAN: Your time. I've got 5 to get you to wind up here. 6 MS. HAWKINS: I understand. Two further 7 observations. From a broader perspective, ATA has always 8 believed that from a legal point of view regulations of 9 this type are preempted by Federal Aviation Law. And our 10 concern for that stems from the possibility that there 11 might be a conversion schedule that requires the carriers 12 to rely on technology that hasn't been adequately attested 13 in GSE. So we are working with staff to avoid situation 14 that triggers that type of prohibited effect. 15 We hope to reach a solution working with staff 16 that addresses the air quality needs of the state and 17 allows for a conversion schedule that recognizes the 18 useful life of GSE, avoids double controls and allows for 19 an orderly fleet conversion that doesn't compromise 20 reliability. 21 Thank you. 22 ACTING CHAIRPERSON RIORDAN: Thank you. And let 23 me just ask staff to indicate if there is some differences 24 there, perhaps during this 30-day period you could work 25 with this industry and see what could be done. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 219 1 ON-ROAD CONTROLS BRANCH CHIEF KITOWSKI: Yes, 2 absolutely. And as a matter of fact we've worked rather 3 fervently in the last week to try and sort out the 4 technical aspects of the different numbers. And we, as 5 Ms. Hawkin's was saying, they need more time to digest our 6 more recent numbers. We think that revised proposal will 7 actually accommodate a lot of the more technical nuts and 8 bolts issues associated with it. 9 ACTING CHAIRPERSON RIORDAN: Very good. 10 Thank you very much. 11 MS. HAWKINS: Thank you. If I may ask one 12 question. Now, that the timeframe for the Board adoption 13 has been extended, I would ask if the Board could just 14 make it clear, at some point, how that ties in with issues 15 that would otherwise be subject to a 15-day notice like 16 some of ours would be. 17 ACTING CHAIRPERSON RIORDAN: I'll let Mr. 18 Jennings comment on that. 19 ACTING GENERAL COUNSEL JENNINGS: We would 20 anticipate that the 15-day notice would run after you 21 agree to the action at next month's hearing. 22 MS. HAWKINS: Thank you. 23 ACTING CHAIRPERSON RIORDAN: Thank you. Mr. 24 Jacob, Mr. Schlingman and followed by Karen Hay. 25 MR. JACOB: Madam Chairman and the Board, I'd PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 220 1 like to thank you for giving me the opportunity to address 2 you this afternoon. My name is Bill Jacob. I'm the 3 Airline GSE Manager for UPS Airlines in Louisville, 4 Kentucky. I have 33 years of experience in my 2 careers, 5 Eastern Airlines and UPS with ground support equipment. 6 I wanted to talk to you about some of the things 7 that we've run into with ground support equipment and this 8 LSI rule. Ground support equipment is a specialty market. 9 Unlike forklifts, it takes 2 to 5 years to design and 10 build a piece of ground support equipment with new 11 technology in it. 12 We were a proponent of putting on-road technology 13 into ground support equipment, and worked with the 14 manufacturers of GSE as well as with the engine 15 manufacturers to implement this. 16 In doing so, we came up against many, many 17 obstacles. In putting an electronically controlled fuel 18 injected engine in our pieces of equipment, we saw 19 failures in the ECM circuits, failure in the wiring 20 circuits, failures in the O2 sensor circuits, the auto 21 control circuits. And all of these failures compounded 22 major delays in our reliability to our customers, as well 23 as safety of our operators on the ramp, which is a very, 24 very safety-conscious environment. 25 So it wasn't as easy as putting a new engine in a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 221 1 piece of ground support equipment. Some of our equipment, 2 like cargo loaders, which have been powered by older LSI 3 technology, won't even take a retrofitted new style fuel 4 injected engine, because it simply won't fit in the 5 package. 6 So the only alternative there would be to 7 retrofit with diesel, which is not a real good 8 alternative. The point I want to make here is, because I 9 know we don't have a lot of time, in the GSE market, which 10 is very, very small, every project, whether it's a 11 electrification of ground support equipment, whether it's 12 LSI, whether it's cleaner diesel, all takes a lot of time 13 for design to build a prototype, to test a prototype, to 14 correct and debug the units and then build production 15 units. 16 And you should also know that whenever we 17 retrofit, whenever UPS retrofits a piece of equipment, 18 we're required to get the approval of the GSE manufacturer 19 on that retrofit. We don't allow our people to change 20 anything without the manufacturer buying into that change. 21 We actually have to integrate this new technology 22 in our fleet, which requires us to do extensive training, 23 keep spares onboard, while we operate the old equipment 24 and improve the new equipment, and then continue -- as I 25 talked about continuing operating the older unit. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 222 1 In wrapping up, the point I'd like to try to make 2 is the 2009 standard is 3-and-a-half years away, which 3 will be followed in short order by 2011 and 2013 fleet 4 averages. There are no 3-way catalysts verified as of 5 yet. Engines that can meet 2.0 standards in 2007 and .6 6 standards in 2010 have yet to be designed for GSE. And 7 based on my 30 years of experience, these new technologies 8 will require a minimum of 3 years to integrate into our 9 fleet. 10 Because of that, I'd like to strongly urge the 11 Board to delay the effective dates for the GSE fleet by 3 12 years until 2012, 14 and 16 respectively, which will help 13 ensure the safety and reliability of our fleet at 14 airports. 15 ACTING CHAIRPERSON RIORDAN: Thank you very much. 16 Thank you for keeping on time. 17 MR. JACOB: Are there any questions? 18 ACTING CHAIRPERSON RIORDAN: First, maybe staff 19 can respond a little bit to your request. And then if 20 there are any questions from board members we'll entertain 21 those. 22 ON-ROAD CONTROLS BRANCH CHIEF KITOWSKI: The 23 fleet average is set up to be consistent dates from one 24 fleet to the other, which is why the GSE -- the fleet 25 average standards are in 2009, 2011 and 2013. We kept PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 223 1 them the same for all fleets. We think from a consistency 2 standpoint that works. 3 In terms of adapting the technology to ground 4 support equipment, specifically, I mean we would agree 5 that ground support equipment is a small fraction compared 6 to forklifts. If you have a retrofit system you primarily 7 start with forklifts, and you work with others. But these 8 retrofit systems have been around for over 10 years. Some 9 of them do have experience in limited GSE applications. 10 We have talked to all of them since this issue 11 has come up and they've all said, you know, we want to get 12 out there. We want to, you know, get more experience, but 13 we don't foresee any specific issues with a GSE. There's 14 no specific technical issues that should prevent the 15 widespread application. 16 And then I guess I would say in addition to that, 17 we've done a number of factors within our regulations. 18 One of them in discussions in negotiations with the 19 American -- the Transport Association, that will help 20 this. One of them we've been calling an off-ramp, that is 21 if, in fact, we find that for a specific group or category 22 that retrofits are not available, then the Executive 23 Officer does have the ability to come in and delay that 24 application and it would not count towards their fleet 25 average. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 224 1 And alternatively, we could also come back to the 2 Board, but we put that discretion within our proposed 3 changes. So we think there's enough flexibility there. 4 EXECUTIVE OFFICER WITHERSPOON: So, Jack, just to 5 make sure I understand, the proposal that you made on GSE 6 adjusts the fleet average number, but not the date by 7 which it applies, correct? 8 ON-ROAD CONTROLS BRANCH CHIEF KITOWSKI: Yes. 9 EXECUTIVE OFFICER WITHERSPOON: So there's a less 10 stringent standard on the same data. 11 ACTING CHAIRPERSON RIORDAN: And it sounds like 12 there's an opportunity to work together. 13 We appreciate that. 14 MR. JACOB: Thank you. 15 ACTING CHAIRPERSON RIORDAN: Mr. Reporter, is 16 this a good time to take a break? 17 THE REPORTER: Yes. 18 ACTING CHAIRPERSON RIORDAN: Okay. We need to 19 take about a 5-minute break, and please be back, because I 20 want to keep moving forward at 10 of 3. That's like 5 21 minutes. 22 (Thereupon a recess was taken.) 23 ACTING CHAIRPERSON RIORDAN: I'd like to ask 24 everybody to come back. Let me invite Mr. Rob Schlingman, 25 followed by Karen Hay, followed by Gary Cross. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 225 1 We'll just weight one minute while people find 2 their seats here. 3 Thank you very much. 4 MR. SCHLINGMAN: I thank you, Madam Chairwoman 5 and Members the Board. My name is Robert Schlingman. I'm 6 employed as a California Air Compliance Manager for United 7 Airlines and up here before the Board today on behalf of 8 United Airlines. 9 On June 17th, 2005 United submitted written 10 comments to the Board regarding the proposed LSI rule. As 11 one Of the major airlines operating in California, with 12 among the largest ground support equipment fleets in the 13 state of California, United has a significant interest in 14 the proposed rule. 15 In our written comments United identified certain 16 provisions in the LSI rule that we strongly believe need 17 to be modified so that the rule accurately reflects the 18 highly specialized nature of airport ground service 19 operations. 20 I'd like to take this opportunity to briefly 21 highlight 2 of those concerns. 22 First, the definition of airport ground service 23 equipment or GSE should be modified to ensure that GSE 24 fleet operators are allowed to include zero and low 25 emission equipment used in lieu of LSI equipment in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 226 1 calculating the fleet average emission levels. 2 If the Board does not make those changes, United 3 is concerned that the rule could actually discourage the 4 development of low use of zero and lower-emission GSE 5 equipment, which we believe is not warranted by the Board, 6 and the Board would not want or intend to have. 7 Second, proposed rules compliance states and/or 8 emission level requirements should be modified to more 9 accurately reflect the actual median useful life of ground 10 support equipment. United believes that the previous LSI 11 proposal incorrectly assumed that all nonfork-lift LSI 12 equipment has a 7 to 8 year turnover cycle. This 13 assumption dramatically underestimated the useful life of 14 GSE and significantly understated the economic costs of 15 complying with this regulation by the industry. 16 United appreciates the efforts staff has made to 17 understand these concerns and the very specialized nature 18 of GSE. And when we have a chance to review the revised 19 proposal, of course we will reserve the right to submit 20 supplemental written comments at that time as well. 21 Thank you very much. 22 ACTING CHAIRPERSON RIORDAN: Absolutely. And, 23 yes, submit additional comments and work with staff at the 24 same time. 25 Thank you very much. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 227 1 Karen Hay, followed by Gary Cross and Rich 2 Gregerson. 3 MS. HAY: Madam Chairman, Members of the Board, I 4 appreciate this opportunity to comment. My name is Karen 5 Hay. I'm with IMPCO Technologies. We're a leading 6 supplier of gaseous fuel systems and components. We 7 provide certified engines to OEMs who then put it into 8 their equipment. 9 We're interested in this topic because since 2001 10 IMPCO has certified over 20 LSI engine families to 11 California's Emissions regulations. And we plan to do 12 many more in the future, at least we hope to. 13 We've been extremely involved with this 14 regulatory process and have been involved since day 1, 15 have been represented in every conference call and every 16 workshop that's happened thus far. 17 Today, I'd like to focus on 2 topics of concern. 18 (Thereupon an overhead presentation was 19 Presented as follows.) 20 MS. HAY: This first is to allow an optional 21 non-methane hydrocarbon plus NOx standard in lieu of the 22 hydrocarbon plus NOx standard that's in existence today. 23 And the second is to propose -- or I'm sorry to 24 postpone proposing a radical reduction in the hydrocarbon 25 plus NOx standard that's presently proposed for 2010. And PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 228 1 there are a number of other items that we also have 2 addressed with staff, and we'll continue to do so in the 3 future. 4 ARB's air quality objectives, the very first 5 objective, is to maximize cost effective emissions 6 benefits. 7 --o0o-- 8 MS. HAY: Now first of all, NMHC, non-methane 9 hydrocarbon -- hydrocarbon is comprised of 2 components, 10 hydrocarbon -- I'm sorry, non-methane and methane. 11 Methane is extremely non-reactive and contributes a 12 minuscule amount towards the ozone emissions inventory, 13 and ozone formation. It's counter productive to require 14 manufacturers to meet a standard for which there is no 15 benefit to air quality, public health or otherwise. 16 We have provided 3 written letters formal written 17 letters to ARB in the past providing technical 18 justification and additional substantiation behind this 19 request. 20 --o0o-- 21 MS. HAY: Presently, non-methan hydrocarbon 22 standards apply in California to passenger cars, trucks, 23 heavy-duty engines, and they also are optionally allowed 24 for small off-road engines. So there are no total 25 hydrocarbon standards in existence for any of these PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 229 1 categories other than small off-road. Any even so, 2 meeting NMHC is optional in that case. 3 EPA granted established a hydrocarbon plus NOx 4 standard. However, they's always stated they have no 5 concern -- they're not concerned about methane at all. 6 And additionally the only reason they establish a 7 hydrocarbon standard in lieu of NMHC standard is to 8 simplify in-use testing. So they really don't care about 9 the methane one way or the other. 10 Now, as we know ARB propose a .6 hydrocarbon plus 11 NOx standard in 2010. EPA intentionally did not mandate 12 Hydrocarbon plus NOx emission standards less than 2.0. 13 They intentionally did not mandate standards less than 14 2.0, because they determined that it was not appropriate 15 to adopt more stringent emission standards based on a 16 steady state duty cycles. 17 Now, the emission standards were developed using 18 a test cycle that is not representative of the test cycle 19 that we will have to meet in the year 2007. So the EPA 20 recognizing that specifically stated they did not want to 21 adopt anything be low 2.0. 22 Well, ARB took that 2.0 standards and reduced it 23 by 70 percent, and is now proposing a .6 standard in 2010. 24 Now, no new data was generated between that provided by 25 EPA to generate this standard and that which ARB used to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 230 1 reduce the standard by 70 percent. 2 ACTING CHAIRPERSON RIORDAN: Your time is drawing 3 near. 4 MS. HAY: Okay. I apologize. You can go ahead 5 across industry. LPG fuel quality is also another major 6 contributor towards the 2010 standard in meeting the .6. 7 It's been addressed by staff, and we hope to do that as 8 well. But the new technologies that are required to meet 9 these lower standards, and new technology will be 10 required, are extremely sensitive to fuel quality and 11 composition. And it will be extremely difficult to meet 12 the long term .6 NOx emission standards in use. 13 So, again in summary, I'd like to just again 14 state that measuring non-methane hydrocarbon, instead of 15 total hydrocarbons towards meeting the total hydrocarbon 16 standard would be greatly appreciated. And additionally, 17 we're not asking for relief on the standard per se. We're 18 asking for additional data and time to develop, and to 19 make sure that the 2010 standard is technologically 20 feasible. 21 Thank you. 22 ACTING CHAIRPERSON RIORDAN: Thank you very much. 23 BOARD MEMBER LOVERIDGE: Can staff respond to the 24 first question. 25 ON-ROAD CONTROLS BRANCH CHIEF KITOWSKI: PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 231 1 Regarding the non-methane hydrocarbon versus hydrocarbon. 2 We have had those discussions with Ms. Hay on the emission 3 standards. And contrary to the statements about what 4 EPA's intent was or was not during this period, what they 5 did do was adopt a hydrocarbon standard -- a total 6 hydrocarbon standard. And so we came in and we have 7 regulations that we're proposing that are consistent with 8 the regulations adopted by EPA. 9 They're consistent at the 2007 standard, and they 10 are consistent at the 2010, because EPA has an alternative 11 compliance strategy that allows hydrocarbon and NOx to go 12 as low as .6 with a higher CO level. We match that exact 13 point. If EPA had come in and proposed a non-methane 14 hydrocarbon standard, we probably would have matched -- 15 I'm sure we would have matched them as well. But we 16 stayed consistent with EPA. At this point, if we changed 17 it, it would result in a relaxation. 18 BOARD MEMBER LOVERIDGE: That's fine. 19 ACTING CHAIRPERSON RIORDAN: That's fine. 20 MS. HAY: I'm sorry I could address that very 21 quickly. 22 ACTING CHAIRPERSON RIORDAN: Well, no. This is 23 not a debate. Sorry. It's in your writing. And you have 24 30 days to work with staff. Sorry. 25 Gary Cross and Rich Gregerson. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 232 1 MR. CROSS: Thank you, Madam Chairman and members 2 of the Board. My name is Gary Cross. I'm with the law 3 firm of Dunaway & Cross. And our firm is general counsel 4 to the Industrial Truck Association. And those are the 5 folks that manufacture forklifts. 6 As you've heard, forklifts are most of the action 7 here in this LSI rule, and we have therefore been very 8 interested in this project. I can attest to Karen's 9 attendance at all those workshops and conference calls, 10 because I was there as well and a number of Other ITA 11 members were. 12 Let me pick up sort of where Karen left off, if I 13 could, discussing the 2010 emission limits. And just by 14 way of contrast, the 2007 emission standards that was 15 developed by EPA, but with CARB as a partner did, in fact, 16 develop as an alternative standard, what we call, the EPA 17 curve or equation, where the manufacturer could certify to 18 different HC plus NOx points on that curve and then the 19 corresponding CO standard would automatically be derived 20 from that relationship. 21 That provided flexibility to manufacturers who 22 were trying certify engines, because you had the option of 23 either trying to minimize the HC plus NOx by permitting 24 your CO to go up with the opposite or any place in 25 between. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 233 1 To us, that flexibility was extremely important 2 for several reasons. And those reasons have to do with 3 the uncertainties behind a lot of the data that this 4 regulation is based upon. 5 One of those uncertainties is the data behind the 6 curve itself. It was generated based upon a maximum of 12 7 and a minimum of 5 data points depending upon which ones 8 you think are the most relevant. And it was based upon 9 test cycles that, in some cases, have nothing do with 10 forklifts. So they took very few data points and 11 developed an equation or curve that is supposed to for, 12 all time, equate the HC NOx and the CO. 13 We don't have that much confidence that for all 14 the forklift engines out there that curve is really that 15 solid. Now, if you're allowed to certify to any point on 16 that curve, you can live with some of that uncertainty, 17 because you've got the flexibility as you calibrate your 18 engine to see how it can perform at different points. 19 But what the staff has proposed here for 2010 is 20 to lock down that HC plus NOx at .6. So you no longer 21 have the option if you can't meet the .6 of going up a 22 little higher, while your CO goes down, you're stuck at 23 the .6 only. To us, that destroys some flexibility that 24 was really critical to our ability to comply, and critical 25 to finding that this standard is technologically feasible. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 234 1 I should point out that in '07, EPA concluded, as 2 Karen has said, that they reached the limits of 3 technological feasibility. ARB was a partner in that. 4 Nothing has really happened since then. We've seen some 5 paper explanations of how one might reduce emissions 6 further, but there's been no new data. And there won't be 7 any data on the ability of these engines even to meet the 8 '07 standard, until probably around 2010, because it's 9 only then that the useful-life testing will be done on 10 engines that were certified in '07. 11 So we're finding ourselves in a position of 12 trying to meet the '07 standard with all the uncertainties 13 that arise from questions about the curve with a brand new 14 transient test procedure, which we all know imposes a 15 penalty, if you will, on the emissions measurement. It 16 makes them higher. A great debate about how much, but we 17 know that it always makes them higher. And Finally, we 18 have concern about the fuel. 19 So given all those uncertainties, it's our view 20 that you really need more flexibility than the staff has 21 proposed here when it locks down to .6. 22 Our proposal -- and I'm almost finished -- is to 23 go ahead and use the curve, but don't lock it down at .6. 24 Instead, maybe chop off the curve at the 1.0 HC plus NOx 25 level and let the CO fall in line with that. We think if PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 235 1 you do that, you'll get a substantial reduction. You'll 2 be doing more than EPA did, and you'll provide the 3 flexibility that we really believe is necessary for 4 compliance. 5 Thank you very much. 6 ACTING CHAIRPERSON RIORDAN: Thank you very much. 7 Staff, any comments? 8 ON-ROAD CONTROLS BRANCH CHIEF KITOWSKI: Well, I 9 would comment that the concept Mr. Cross was discussing is 10 a rather difficult comment to try and explain with the EPA 11 curve and the flexibility they allow. I guess to try and 12 help in that process and clarify it, I would agree that 13 the flexibility has been important. Manufacturers have 14 had, since 2002, when EPA adopted the requirements, to 15 gain some experience with that. And they have between now 16 and 2010 in order to continue to refine their systems. 17 But our proposal is doing what we really do need 18 it to focus on, and that is, it is taking away some of 19 that ability in the long-term, so that we are no longer 20 focusing on CO reductions, but instead focusing on ozone 21 reductions, which we have more of an issue with. 22 So we think it's necessary reduction in 23 flexibility in order to optimize the emission reductions. 24 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: And 25 also, if I could add, the kind of question is how sure are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 236 1 we that they can meet these levels? And there's already 2 2 forklifts that have emission levels below the 2010 3 standard now. And, yeah, there are some procedural 4 changes and durability uncertainties, but given the time 5 that's left, you know, we're pretty sure that this is a 6 doable -- technologically doable effort. 7 If you looked at those bars where it showed the 8 level of control CARB versus the level of control of 9 forklifts. You know, these engines are not being pushed 10 that extreme that they wouldn't meet in years and years of 11 use to comply from our viewpoint. 12 ACTING CHAIRPERSON RIORDAN: Thank you. Rich 13 Gregerson. Julene Orosco, and Audie Burgan. 14 MR. GREGERSON: Good afternoon. My name is Rich 15 Gregerson. I'm vice president and general manager of Alta 16 Lift. We're a forklift distributor in central California, 17 headquartered here. We have 5 stores throughout central 18 California. And I want to thank you, Madam Chairman and 19 Board for your decision today to postpone your final 20 decision for another 30 days. 21 That's primarily why I'm here today to get the 22 opportunity to work with staff and try to have a better 23 understanding of what our situation as a dealer and the 24 impact that it's going to have on our financial resources 25 as you look at some of the repercussions of retrofit PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 237 1 technologies. 2 I agree in terms of the premise of what we're 3 trying to do here. We want better quality in California. 4 We especially need it here in Fresno county. We're 5 probably the worst in the nation. So as a resident of the 6 county, as a parent, a grandparent, I support what we're 7 trying to do here. 8 I do have some concerns though basically on some 9 of the assumptions we've used on the proposal. One of the 10 biggest ones is it had very little impact on the 11 financial -- financial impact on the dealer itself. And I 12 assure you that that's not the case from our standpoint, 13 at Alta Lift. 14 We have about 300 lift trucks in our rental and 15 used fleet, that will be directly impacted or required to 16 be a retrofit candidate. At the cost we're talking about, 17 that's well over a million dollars. That has a definite 18 financial impact on us. Let alone, the fact that we also 19 use long-term leasing. We've got guaranteed residual 20 rates that have been in place for several years. It's 21 very common in our practice to do 7 -- 5-year type leases. 22 You've got to establish the residual rate scoring upfront. 23 I guess mostly I want to just talk about the 24 opportunity to work with you going forward. And I was 25 glad to hear that you did recognize that dealers and the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 238 1 rental fleets would be kind of a special category. We 2 haven't worked out a solution yet for that. A big part of 3 what we do in our rental fleet deals with the ag market 4 especially here in central California. 5 If we could have some sort of a phase-in similar 6 to the ag folks that would allow us to -- in our fleet, to 7 do the same type of thing. If we also had the financial 8 support, Moyer Funding or something close to that, that 9 would make it much more palatable to us to be able to do 10 those conversions and stay in business. 11 So with that, I'd like to close, and thank you 12 again for your decision. 13 ACTING CHAIRPERSON RIORDAN: Thank you very much. 14 We appreciate your input. We know we'll see you in July. 15 Audie Burgan, John Waugh and Pete Thomas. 16 Oh, Julene, I'm sorry. I apologize. I'm also 17 one ahead. 18 MS. OROSCO: Thank you, Madam Chairman and 19 Members of the Board. My name is Julene Orosco. I'm 20 representing Wholesale Equipment of Fresno. We are a 21 dealership here. We have a store here. We have one in 22 Stockton. We have one in Sacramento. I'm going to 23 apologize upfront. We are one of the dealers that falls 24 under the category of didn't know anything about the 25 meetings. I'm not sure why. I'm sure your staff did send PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 239 1 things out. For some reason, we didn't know anything 2 about at it until Tuesday. So I'm kind of having to do 3 this off the top. So I apologize for that. 4 Our biggest concern also is finances. I put a 5 call into the owner of Wholesale Equipment and said, you 6 know, how many forklifts do you have that would fall under 7 this category? And we're looking at 375 forklifts. In 8 the ag industry and in the industry here in the valley, 9 especially because of raisins and the way the industry has 10 been going, they are very right when they say people hold 11 on to forklifts a heck of a lot longer than they do 7 12 years. 13 I mean, we do rebuilds all the time. We have old 14 forklifts there, that they just can rebuild them and 15 rebuild them and rebuild them. And the retroing is going 16 to be the toughest part. I mean, look at a million 17 dollars in this economy, that's a lot of money, even if 18 you do spread it over. 19 So I first want to say thank you for the 30 days, 20 because we're going to use that wisely, trust me. So 21 thank you for that. 22 We are the same way as Alta Lift, we do want to 23 work towards it. We all live here. We all have children 24 here. We all want to make sure that we don't have to, you 25 know, worry about the air quality. So we just think that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 240 1 the retrofitting thing may be needs a little work. 2 So thank for your time. 3 ACTING CHAIRPERSON RIORDAN: We appreciate that. 4 And also be sure that staff that you have her address, so 5 that we can keep in touch with you. 6 MS. OROSCO: No. No. Right, re want to find 7 you. 8 Audie Burgan. 9 MR. BURGAN: Good afternoon, and thank you. My 10 name is Audie Burgan. I'm a partner in J.M. Equipment 11 Company. I have 5 dealerships in California from Fresno 12 to Sacramento. 13 I'd like to state that we're happy and appreciate 14 the opportunity to be part of the solution. And we also 15 recognize the strict need to improve our air quality. I 16 would like to call your attention to page 41, Section 9.2, 17 the impact on the rental companies. I currently have 18 1,200 forklifts in my rental fleet, 800 of which would 19 require some type of retrofit. And at the tune of $3,000 20 per unit, that's $2.4 million in investment that I have no 21 avenue to recover that expense. Our current lease 22 portfolio is based on a lot of retail values that were 23 brought forward prior to this mandate. 24 I'd also like to call your attention to page 21 25 the 4th paragraph, the refit and repower of old engines. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 241 1 I've been in this business for 28 years, and I would like 2 to see -- at least get some more information on which 3 engine manufacturers are supporting the replacement and 4 repower of pre-1996 engines. 5 Certainly, going forward with the technology that 6 we have with our Tier 2 compliant engines, we're a Nissan 7 dealer. They're, you know, on the forefront of some of 8 this. And going forward it makes a whole lot of sense. 9 Page 35, item 7.2, the increased cost was stated 10 that it would impact us less than one percent on the value 11 of a new piece of equipment. I can tell you today that 12 that value is actually closer to 8 percent. We just saw 13 it in the introduction of our newest unit being Tier 2 14 compliant. 15 The last thing I'd like to bring up is on page 1 16 of your introduction, it states that, "The ARB estimates 17 there are 88,000 LSI engines in California." With our 18 state currently replacing about 12,000 units each year, 19 natural attrition will eliminate these in 6 to 10 years, 20 without having to financially impact or repower or 21 retrofit the units. 22 Again, thank you very much. 23 ACTING CHAIRPERSON RIORDAN: Thank you very much. 24 Thank you for sticking to the time. 25 John Jay -- is it Waugh? How do you pronounce PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 242 1 that? 2 MR. WAUGH: Waugh. 3 ACTING CHAIRPERSON RIORDAN: Followed by Pete 4 Thomas, and Randal Friedman. 5 MR. WAUGH: Good afternoon. And I want to thank 6 the Board for the opportunity here to express our views on 7 this issue. I'm John L. Waugh, Jr., commonly known as Jay 8 and probably a few other names to some of my employees. 9 (Laughter.) 10 MR. WAUGH: Our offices are located here in 11 Fresno. We also have stores in Bakersfield and Santa 12 Maria. We employ about 110 people. Our family business 13 has been operating in central California continuously 14 under the same ownership for over 48 years. And I've 15 personally spent about 34 years in sales and management 16 with the company. 17 We strongly support cleaning up the air. 18 Somebody else said, we live here. We breathe it. And 19 we're certainly cooperative in that regard. However, I've 20 examined the subject proposal, and I have found them to be 21 extremely unfair to the forklift dealers, such as us. Of 22 particular concern is the fact that it does not include 23 any grandfathering of existing equipment. 24 At the present time, I have 168 forklifts in my 25 short-term rental fleet, 28 in my used equipment PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 243 1 inventory, and another 95 on lease that will come back to 2 us that are all noncompliant with the current emission 3 standards. And plus, there's some units we have that we 4 use for ourselves. 5 So we're close to 300 units that would have to be 6 retrofitted. There are currently no approved kits that 7 would allow to us bring these units up to compliance 8 standards. Your staff estimates that when they become 9 available, they would cost in the neighborhood of 10 $3,500 -- $3,000 to $3,500. 11 All of these units will sooner or later be sold 12 under the retail or wholesale market. It would not be 13 appropriate to sell these to unsuspecting consumers 14 without first retrofitting these units. 15 At $3,500 a kit, retrofitting the above inventory 16 would cost us over a million dollars. The $3,500 retrofit 17 of these units does not translate into $3,500 of added 18 value. This cost is not recoverable from the buyers of 19 this equipment. 20 An alternative would be to scrap the equipment. 21 And this would cost us even more, probably in the 22 neighborhood of about $2 million. In addition, these 23 regulations require small fleet users to have no 24 uncontrolled equipment by the end of 2010 4 and a half 25 years from now. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 244 1 I believe nearly all of these units are 2 noncompliant at this time and is very doubtful that very 3 many of these units owned by these small fleet users could 4 be retrofitted. Forcing these forklift owners to replace 5 this equipment would be unfair and would be unrealistic. 6 These forklifts should be exempted from these regulations. 7 I disagree with many of the assumptions contained 8 in the proposal. I would like an opportunity to discuss 9 them further with staff members. I've talked to several 10 of my fellow forklift dealers here in central California. 11 Most of them had never heard of these regulations. The 12 ones that had assumed they applied only to new equipment 13 manufacturers. 14 I strongly believe the forklift dealers in 15 California have not been sufficiently involved in drafting 16 these regulations. I now hear, of course, that you've 17 extending the 30 days to us to talk to them. And I want 18 to thank you for that. And I will promise that we'll make 19 good use of their time and thanks again. 20 ACTING CHAIRPERSON RIORDAN: Thank you very much. 21 Pete Thomas, Randal Friedman, and Kathryn 22 Phillips you follow Mr. Friedman. 23 MR. THOMAS: If I don't need my 3 minutes, can I 24 sell a couple of minutes to somebody else? 25 (Laughter.) PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 245 1 ACTING CHAIRPERSON RIORDAN: No, I'm going to be 2 the seller of those minutes. 3 (Laughter.) 4 ACTING CHAIRPERSON RIORDAN: Good idea. Good try 5 though. 6 MR. THOMAS: I'm Pete Thomas. I come 7 representing a forklift dealer in Sacramento, Team Power 8 Forklifts. My owner couldn't be here today. Well, not my 9 owner, I'm not owned. I'm an employee. 10 (Laughter.) 11 MR. THOMAS: I think you've heard from the other 12 forklift dealer representatives here the rough numbers 300 13 400, up to 1,200 units are being affected by these 14 proposals. I don't want to restate those. My primary 15 objective was to get a letter that we wrote to the Board 16 on March 28th into the public record and to make a few 17 statements. 18 But, again, most of those have been said. I 19 would like to address a couple of things. In section 20 7.3.2 of the staff report they state that there are 21 significant fuel savings to be made by retrofitting 22 existing noncompliant engines into a compliant state with 23 closed loop fuel systems and so forth. 24 And this would help offset or mitigate some of 25 the price and the cost of that. We've talked to 2 OEMs PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 246 1 Clark Forklift and Daewoo Forklift and neither 2 manufacturer has come to us and been able to document any 3 improved savings on brand new engines, as opposed to the 4 Tier 1 or Tier 2 compliant engines as opposed to 5 nonregulated engines. There is not a -- they have not 6 been able to improve a significant increase in fuel 7 savings. 8 So I don't know how the logic flows that you'll 9 be able to get a significant increase in fuel savings from 10 an old worn engine putting these devices on them. So if 11 there is supporting statements made in the report that 12 says that it's going to -- they're making circumstances 13 with using the retrofit kits that help offset the economic 14 impact, I think that should be relooked at to make sure 15 that, you know, we're using correct and accurate 16 information. 17 Thank you. 18 ACTING CHAIRPERSON RIORDAN: I appreciate that, 19 and thank you. I won't sell the time though, just bank it 20 for next time. 21 Randal Friedman, Kathryn Phillips and Mary 22 Madland. 23 MR. FRIEDMAN: Madam Chairman, Board Members, my 24 name is Randal Friedman. I'm here representing the United 25 States Navy and the military services in California. We PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 247 1 just have a couple of quick comments. 2 One is a question in terms of the definition of 3 an operator. Our concern is by the way the example is you 4 would make the entire Department of Defense in California 5 a single operator, and we would like clarification that an 6 operator would be an individual military installation, in 7 terms of compliance and in terms of record keeping and not 8 compiled for the entire state. So I guess we would like 9 that clarification. 10 The second item is your definition of military 11 tactical support equipment and vehicles in this regulation 12 is slightly different than in other regulations. For 13 example, other regulations include not just equipment 14 owned by the Department of Defense, but also our allies. 15 So, for example, if at China Lake or El Centro 16 the British Air Force comes for training, they bring their 17 own equipment. We would like to make sure that their 18 equipment is covered under this when they bring it in as 19 well. So the clarification of operator and that change is 20 are only comments on this. 21 ACTING CHAIRPERSON RIORDAN: Okay. Mr. Friedman, 22 let me see if I can get you some answers. 23 ON-ROAD CONTROLS BRANCH CHIEF KITOWSKI: We have 24 not seen those issue before. I think the first one in 25 terms of redefining an individual branch of the military PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 248 1 as opposed to the larger Department of Defense, I don't 2 think we have any issues with that. We can clarify. 3 But we'd have to look at the tactical vehicles. 4 I'm sure it's reasonable toe tweak the definition to make 5 it consistent. 6 ACTING CHAIRPERSON RIORDAN: Mr. Friedman, do we 7 have your address so that we can get back to you on this? 8 MR. FRIEDMAN: Yes. And, again, our request was 9 for individual installations not just by service. So to 10 have them each individual installations to be it's own 11 operator. 12 (Laughter.) 13 ACTING CHAIRPERSON RIORDAN: I don't know what's 14 so funny. They were concerned about your address. I just 15 want to be sure that we get back to you. 16 BOARD MEMBER ROBERTS: Some of us know it. 17 (Laughter.) 18 MR. FRIEDMAN: Yes, Supervisor Roberts, knows how 19 to get ahold of me. 20 (Laughter.) 21 MR. FRIEDMAN: Actually, he knows how to get 22 ahold of my admiral so that's even better. 23 BOARD MEMBER ROBERTS: Worse than that they know 24 how to get ahold of me. 25 (Laughter.) PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 249 1 MR. FRIEDMAN: Thank you. 2 ACTING CHAIRPERSON RIORDAN: Okay. Good. 3 Somebody knows you. That's a good thing. 4 Kathryn Phillips. 5 MR. PHILLIPS: Kathryn Phillips with 6 Environmental Defense. I'm also representing Natural 7 Resources Defense Council, Coalition for Clean Air, and 8 Union of Concerned Scientists. We submitted comments in 9 letter form earlier this month, June 2nd, and those are in 10 the record. 11 I just want to say, we support this effort. We 12 think this is a good rule. And as you heard earlier about 13 the air pollution in San Joaquin valley, it's extremely 14 important. 15 And I'm speaking only for Environmental Defense, 16 I spent a significant part of my life last year and the 17 year before working on getting more funding for the Carl 18 Moyer program. And I'm familiar with the program. And 19 I'm concerned that it's -- that we tread very carefully as 20 we look forward and start looking for ways to help 21 agriculture meet various and sundry rules. We've made 22 some accommodations in the Moyer program to help ag in 23 recognizing that they are a special case. 24 And I understand that there is a need to find 25 some new funding, that ag feels there's some need for some PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 250 1 additional funding. I don't think it's going to be 2 something that we should look at changing the Moyer 3 program to meet, but I think maybe there's an opportunity 4 to find some additional funding through other avenues. 5 And I would be happy to -- speaking for my environmental 6 group, I would be happy to work with ag and maybe Assembly 7 Member Maze and others to look for other fund. 8 But I, again, caution the Board and the staff as 9 you move forward without the approach with the Moyer 10 money. 11 ACTING CHAIRPERSON RIORDAN: Thank you very much. 12 Just let me say that we would appreciate your 13 help. And so we will make some effort to contact you or 14 you contact us as we go through these next 30 days. 15 MR. PHILLIPS: We've just done a card exchange 16 back there. 17 ACTING CHAIRPERSON RIORDAN: All right, very 18 good. 19 Mary Madland, Cesar Baumann. 20 MS. MADLAND: Hello. My name is Mary Madland. 21 I'm the President and owner of Madland Toyota Lift. And 22 we're based out of Bakersfield and we also have branches 23 in Oxnard and Santa Maria. And I wanted to comment on -- 24 I just found out about the meeting this morning through 25 Mr. Waugh. He contacted us at 10. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 251 1 So there are quite a few dealers that are unaware 2 of this predicament. And I'd just like to bring up that, 3 you know, I think our industry as a whole is trying to 4 address this issues. About probably 85 percent of my 5 business is on conversion accounts, people switching from 6 LP and gas trucks into electrics, because of the cost 7 savings. And, you know, I think the industry is very 8 aggressive in that. 9 I just came back from Japan and Toyota has 10 developed a lift truck with the Prius engine. So we'll 11 have the dual fuel. And I just -- you know, also it was 12 brought up about grandfathering a lot of these units, 13 because these things are slowly -- well, not slowly, but 14 rather quickly leaving our industry, whether it be 15 distributors of beer or, you know, of course all our 16 growers, and the industries is just totally switching away 17 from the IC units. 18 Even though our mechanics -- you know, even 19 though on the IC units we aggressively check emissions, 20 with our test units for cold storage and, you know, 21 because of Workman's Comp and all the other issues we have 22 to deal with. And our endusers are, you know, really 23 looking for solutions. You know, I'm a third generation 24 person here from the central valley. We've been in the 25 equipment and car business forever. And I've lived here, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 252 1 my family lives here, and I actively want to hopefully 2 clean our air. 3 But I just -- I think this thing is kind of 4 evolving and taking care of itself without a lot of added 5 regulations, you know, because our growers and people in 6 business in the San Joaquin valley, a majority of my 7 customers are family owned and have lived here. You know, 8 it's to their advantage to kind of step ahead of the times 9 without regulations. 10 And I just think there's a whole bunch going on 11 in our industry that's being very proactive on the 12 conversion from the gas and LP trucks in the electric and, 13 you know, that's a concern of mine of just another 14 regulation here on the dealers and added cost. 15 I mean, Mr. Waugh and some other people have 16 brought up the amount of trucks that we do have in our 17 rental fleet, which affects, you know, the profitability 18 of my business, you know, which we have a profit-sharing 19 and retirement plan. You know, it affects the employment 20 of the people in my company, who, if we start losing some 21 of these benefits, will go elsewhere in other industries. 22 And I just want to thank you, but I did find out 23 about this at the last minute. 24 ACTING CHAIRPERSON RIORDAN: All right. And we 25 appreciate that. And we appreciate you making the effort PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 253 1 to be here today. 2 Probably what we would want to do is again be 3 sure that we have your name and address. And so through 4 the following month, we'll be working with people and 5 certainly contact you for our next meeting or at least it 6 will be noticed and hopefully your organization can be 7 present. 8 Thank you. 9 MS. MADLAND: All right. Thank you. But I think 10 there's just a lot of proactive things that people aren't 11 seeing. 12 ACTING CHAIRPERSON RIORDAN: And we are 13 appreciating that, and hopefully we'll learn from that. 14 MS. MADLAND: All right, thanks. 15 ACTING CHAIRPERSON RIORDAN: Cesar Baumann. 16 MR. BAUMANN: Hello, good afternoon. My name is 17 Cesar. I'm with Lubrizol Engine Control Systems. 18 First of all, I would like to thank the Members 19 of the Board this opportunity to speak, and maybe address 20 a couple of the issues that have been raised by other 21 participants in this hearing. 22 We are a manufacturer of retrofit kits that we're 23 talking about for meeting this new regulation. We are a 24 supplier of emission controls to industrial applications. 25 So everything that we do is pretty much a retrofit that is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 254 1 specific to the industry. It's not a commodity market. 2 It's always that we need to implement. 3 So that's one of the things that our types of 4 industries can bring to some of these fleets that we 5 need -- that need to be meeting these regulations. 6 The drivers for our types of technologies have 7 typically been occupational health and safety. They are 8 now becoming more environmental. And part of that, you 9 can see the technology where once it was geared to 10 maximize reductions in carbon monoxide for occupational 11 reasons. Now, with simple tweaking of programs and 12 calibration, we have optimized it for NOx reduction, while 13 keeping the CO at the levels that they need to be. So we 14 can address both occupational and environmental issues. 15 In terms of the retrofit kits, like has been 16 mention, they have been available commercially for about a 17 decade now. It is not something new. It's new for some 18 applications, because the requirement has not been there. 19 Typically, these have been used on indoor applications. A 20 lot of these fleets are outdoor. It's a new requirement 21 for them, and it's easily transferable from an indoor to 22 an outdoor application. 23 They are proven systems, including some testing 24 that we have done as part of this over the last year where 25 we've been doing all this work with ARB staff. We have PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 255 1 done durability testing in the field for systems that have 2 nearly twice the durability requirement. And they are 3 working almost as good as new. 4 They are also cost effective. You do get a 5 return on the investment on the intangible side maybe 6 there are benefits, intangible from the perspective of the 7 operator who implements. But the fuel savings is real. 8 The reason for that is that the retrofit kit is 9 controlling the fueling system and it's not allowing the 10 engine to run rich, where it's just passing fuel without 11 it being used as energy. 12 So that is a real fuel savings that can be 13 achieved. It has been documented. We have -- we 14 retrofitted a 10-year old truck, which had over 10,000 15 hours. It was at a point where many people have retired 16 it. We retrofitted it, and it still achieved a 23 percent 17 fuel savings. 18 In closing, I just want to say the technologies 19 are there. They are available. They are proven. And 20 we're happy to work with ARB and with the fleets to help 21 in this regulation. 22 ACTING CHAIRPERSON RIORDAN: Thank you. And we 23 appreciate your testimony here today. That's good to hear 24 kinds of things that you shared with us. 25 That concludes those who have signed up to speak. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 256 1 And I want to indicate to you I'm very appreciative, 2 because I know some of you came some distance to make the 3 testimony that you gave today. 4 Let me indicate that I'm now going to continue 5 this item to our next regularly scheduled hearing in 6 Sacramento. And we will again address the issue and 7 complete the hearing on this particular item. 8 Mr. Jennings, is that appropriate for -- 9 ACTING GENERAL COUNSEL JENNINGS: Yes, I think 10 that's adequate. The intent is the record will remain 11 open, so people could submit comments. If they want to 12 have informal interactions with the staff that they don't 13 want to be public comments per se, they should just 14 identify those as such. 15 ACTING CHAIRPERSON RIORDAN: Right. And also 16 people have an opportunity to make contact with staff 17 during this period of time? 18 ACTING GENERAL COUNSEL JENNINGS: Definitely. 19 ACTING CHAIRPERSON RIORDAN: Fine. Thank you 20 very much. Thank you all for attending. 21 And I'm going to move right into the next item. 22 This is our last item. It is an information item on 23 biodiesel in California. And with California's increasing 24 demand for petroleum, we need to investigate options for 25 energy diversification. Renewable fuels, such as PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 257 1 biodiesel are one of those options that just -- 2 We're going to take a 5-minute break while we 3 have our system reinvented. 4 (Thereupon a recess was taken.) 5 ACTING CHAIRPERSON RIORDAN: We have reinvented 6 ourselves technically. 7 This is Item 05-6-4. It is an information item 8 only. There's no action required. And I'm going to turn 9 it over to the staff. 10 EXECUTIVE OFFICER WITHERSPOON: Thank you, Madam 11 Chairman. For all kinds of reasons California needs to 12 develop strategies for encouraging the use of renewable 13 fuels. That is not an easy proposition, because to truly 14 displace a significant portion of petroleum, the fuels 15 must be produced in large quantities and at competitive 16 prices. They also need to go through the same screening 17 for multi-media environmental impacts. Finally, the 18 market needs to mature and become standardized so we all 19 know what is meant by biodiesel specifically what those 20 fuels consist of. 21 There's a reason to keep trying. Biodiesel is 22 very attractive. It cuts particulate matter in half, and 23 has significant greenhouse gas advantages. The downside 24 is a modest increase in NOx emissions that so far we have 25 not been able to overcome. But as staff will soon PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 258 1 describe the outlook for a combination of biofuels plus 2 after-treatment is promising. 3 Mr. Robert Okamoto of the Stationary Source 4 Division is going to make a rapid fire staff presentation. 5 (Laughter.) 6 ACTING CHAIRPERSON RIORDAN: Rapid fire. Okay. 7 (Thereupon an overhead presentation was 8 Presented as follows.) 9 AIR POLLUTION SPECIALIST OKAMOTO: Thank you, Ms. 10 Witherspoon. Good afternoon, Madam Chairman and Members 11 of the Board. I'm here today to provide you with an 12 update on biodiesel use in California. 13 --o0o-- 14 AIR POLLUTION SPECIALIST OKAMOTO: This update 15 well cover biodiesel topics shown on this slide. 16 --o0o-- 17 AIR POLLUTION SPECIALIST OKAMOTO: I will first 18 begin with some background information. 19 --o0o-- 20 AIR POLLUTION SPECIALIST OKAMOTO: The 2004 21 taxable sales of diesel fuel in California was 2.9 billion 22 gallons. Gasoline sales were 15.9 billion gallons, which 23 is over 5 times higher than diesel. 24 However, the growth rate of diesel fuel sales is 25 significantly higher than gasoline. And the ratio of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 259 1 diesel to gasoline is expected to change in the future, 2 that is diesel will become a more significant portion of 3 total motor vehicle fuel demand. 4 --o0o-- 5 AIR POLLUTION SPECIALIST OKAMOTO: On June 1st of 6 this year, the Governor issued an Executive Order that 7 established aggressive greenhouse gas emission reduction 8 targets. The first target goal or the near term goal was 9 to reduce greenhouse gas emissions by 11 percent below our 10 current levels. This would amount to a reduction of about 11 59 million tons of greenhouse gas emissions in 2010. 12 --o0o-- 13 AIR POLLUTION SPECIALIST OKAMOTO: Biodiesel can 14 play a role in achieving the 2010 near-term goal since 15 studies have shown that biodiesel can reduce greenhouse 16 gas emissions. If the use of biodiesel displaces one 17 percent of California's diesel fuel supply, then it would 18 reduce carbon dioxide, a greenhouse gas, by approximately 19 300,000 tons. 20 This is based on a national renewable energy 21 laboratory lifecycle assessment on the use of biodiesel in 22 transit buses that showed in comparison to diesel one 23 gallon of soy base biodiesel reduces carbon dioxide 24 greenhouse gas emissions by approximately 22 pounds. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 260 1 AIR POLLUTION SPECIALIST OKAMOTO: In addition to 2 greenhouse gas emission benefits, biodiesel has been shown 3 to generally degrees emissions of particulate matter and 4 overall toxic emissions. Additionally, biodiesel can be 5 used with no engine modifications. However, biodiesel has 6 been shown to have an adverse impact on NOx emissions. I 7 will discuss this point later in the presentation. 8 --o0o-- 9 AIR POLLUTION SPECIALIST OKAMOTO: What is 10 biodiesel? 11 Biodiesel is a fuel made from products such as 12 vegetable oils and animal fats. The process for making 13 biodiesel is called transesterification, and oil fat is 14 reacted with an alcohol in the presence of a catalyst to 15 produce biodiesel. 16 A useful by-product of this process is glycerol. 17 Glycerol is a raw material that is used in the production 18 of many food, cosmetic, and chemical products. 19 --o0o-- 20 AIR POLLUTION SPECIALIST OKAMOTO: Biodiesel can 21 be used as a neat or pure fuel or can be blended with 22 diesel fuel, however, biodiesel is usually marketed as a 23 blend. Neat biodiesel is Commonly referred to as 24 Biodiesel or B100. Blends of biodiesel are noted by the 25 letter "B" followed by a number which refers to the amount PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 261 1 of biodiesel blended with diesel fuel. 2 For example, B20 refers to biodiesel blend 3 consisting of 20 percent biodiesel and 80 percent diesel 4 fuel. 5 --o0o-- 6 AIR POLLUTION SPECIALIST OKAMOTO: A commonly 7 asked question is can biodiesel be used in California? 8 Yes. It is legal to use biodiesel provided that 9 biodiesel meets the ARB diesel regulations for aromatics 10 and sulfur content. Most biodiesel meets these limits. 11 Second, retail sales of all fuels including 12 biodiesel are regulated by the Division of Measurement 13 Standards. Current Division of Measurement Standards 14 regulations generally allow for the retail sale of 15 biodiesel blends up to B20. Neat biodiesel can sold at 16 retail with a fuel variance issued by the Division of 17 Measurement Standards. Sales of biodiesel are not 18 regulated for nonretail operations. 19 --o0o-- 20 AIR POLLUTION SPECIALIST OKAMOTO: Biodiesel is 21 currently used in California. Users include the federal 22 government, such as at military installations, and 23 National Parks. Other biodiesel users include 24 municipalities, utilities, private companies and 25 individuals. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 262 1 --o0o-- 2 AIR POLLUTION SPECIALIST OKAMOTO: The next topic 3 is biodiesel production and distribution. 4 --o0o-- 5 AIR POLLUTION SPECIALIST OKAMOTO: Okay. The pie 6 chart shows the volume and types of feedstocks that are 7 potentially available for biodiesel production. Of all 8 the feedstocks shown in the pie chart, most biodiesel is 9 produced from recycled greases, animal fats, and vegetable 10 oils. A feedstock in large supply, but not currently used 11 is trap grease. However, as manufacturing processes 12 improve more biodiesel can be made from this feedstock. 13 In 2001, the National Renewable Energy Laboratory 14 estimated that there were available biodiesel feedstocks 15 to produce 1.6 billion gallons of biodiesel in the U.S. 16 --o0o-- 17 AIR POLLUTION SPECIALIST OKAMOTO: Currently, 18 biodiesel is being produced, distributed and sold in 19 California. There are 4 major production facilities, 29 20 distributors and 23 retail outlets. This picture on the 21 slide is of a biodiesel production facility located in 22 Santa Barbara, California. 23 --o0o-- 24 AIR POLLUTION SPECIALIST OKAMOTO: It is 25 estimated that in 2005 California has the capacity to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 263 1 produce 16 million gallons of biodiesel per year. The 2 current potential biodiesel production represents 3 approximately one half percent of the total production of 4 diesel in California. To achieve a 1 percent displacement 5 of diesel fuel, biodiesel production capacity would have 6 to double. 7 --o0o-- 8 AIR POLLUTION SPECIALIST OKAMOTO: I will now 9 address air emissions form biodiesel. 10 --o0o-- 11 AIR POLLUTION SPECIALIST OKAMOTO: The studies 12 identified on this slide represent the most comprehensive 13 summaries of historical data on biodiesel effects on 14 exhaust emissions. 15 --o0o-- 16 AIR POLLUTION SPECIALIST OKAMOTO: First a 17 summary of published studies. The U.S. EPA conducted a 18 comprehensive review of the effects biodiesel has on 19 emissions from 1997 and older engines. The findings were 20 that biodiesel reduces emissions of particulate matter, 21 carbon monoxide, and hydrocarbons with higher blends 22 showing higher emission reductions. Of note is that B20 23 on average can reduce particulate matter emissions by 10 24 percent, and 100 percent biodiesel by 48 percent. 25 Another finding is that NOx, unlike the other PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 264 1 criteria pollutants, increase with the use of biodiesel. 2 For B20 the average increase is 2 percent, and for B100 3 the average increase rises to 10 percent. When biodiesel 4 is compared to a cleaner California fuel as opposed to 5 National diesel fuel, the NOx increase can be higher. 6 Another complicating factor is that emissions are 7 dependent on the feedstock used to produce biodiesel. For 8 example, soybean derived biodiesel has a greater NOx 9 increase than animal fat derived biodiesel. 10 Recent National Renewable Energy Laboratory 11 studies, although limited in scope, have compared newer 12 engines and have found greater PM benefits and varied NOx 13 response. 14 Staff has conducted an initial evaluation of 15 these studies. However, most of these studies are aimed a 16 fuels and engines of the nation as a whole. And so 17 adjustments to those emission numbers may be needed when 18 they are applied to California. 19 When additional information becomes available, 20 our evaluation of benefits of biodiesel may need to be 21 revised. 22 --o0o-- 23 AIR POLLUTION SPECIALIST OKAMOTO: A summary of 24 significant studies of toxics from biodiesel indicates 25 that toxics are generally decreased. Reduction of key PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 265 1 toxics such as formaldehyde, acetaldehyde, particulate 2 matter, and PAHs have been shown with the use of soy-based 3 biodiesel and to a lesser extent with these other 4 biodiesel feedstocks. 5 --o0o-- 6 AIR POLLUTION SPECIALIST OKAMOTO: The next topic 7 is on the costs and incentives. 8 --o0o-- 9 AIR POLLUTION SPECIALIST OKAMOTO: The cost of 10 making fuel can be divided into feedstock and processing 11 costs. Feedstock cost is a significant part of the 12 overall cost and does vary. For example, soy feedstock 13 cost about $2.22 per gallon in comparison to recycled 14 grease feedstock at $1.09 per gallon, which is about half 15 the cost of soy feedstock. Processing cost of $.47 per 16 gallon is the same for soy and recycled grease. 17 Glycerol, which is a by-product of biodiesel 18 production, can be soled as a chemical feedstock 19 offsetting the cost of biodiesel by $.15 per gallon. 20 --o0o-- 21 AIR POLLUTION SPECIALIST OKAMOTO: The federal 22 government supports biodiesel use by providing credits and 23 incentives. At the production level, the federal 24 government's bioenergy program provides incentive funds 25 aimed at increasing the production of biodiesel. At the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 266 1 blenders level, it is a tax credit. For vegetable oil and 2 animal-based biodiesel, there is a tax credit up to $1 per 3 gallon. For recycled grease-based biodiesel, the tax 4 credit is up to $.50 per gallon. 5 --o0o-- 6 AIR POLLUTION SPECIALIST OKAMOTO: I will now 7 discuss biodiesel fuel related issues. 8 --o0o-- 9 AIR POLLUTION SPECIALIST OKAMOTO: The 10 compatibility of biodiesel with verified diesel 11 particulate matter controls has not been confirmed. ARB 12 is working -- excuse me, ARB staff is working with control 13 manufacturers to demonstrate a B20 blend will not 14 adversely affect these add-on controls. Successful 15 demonstration would allow the use of B20 with verified 16 particulate matter controls. At this time, biodiesel 17 blends above B20 are not supported by equipment 18 manufacturers. 19 --o0o-- 20 AIR POLLUTION SPECIALIST OKAMOTO: As previously 21 noted, biodiesel has the potential to play a role in 22 reducing greenhouse gases. However, there is a need to 23 gain broad acceptance of biodiesel as an alternative to 24 diesel. Although, most engine manufacturers have approved 25 the use of biodiesel blends up to B5, issues with engine PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 267 1 warranty are still unresolved with higher blends of 2 biodiesel. 3 Distributors have concerns of additional costs 4 associated with blending biodiesel. Although, new tax 5 incentives may partially address these concerns. Also, 6 concerns have been raised that biodiesel has the potential 7 to contaminate the distribution network, especially in 8 pipelines, where residual biodiesel could contaminate jet 9 fuel. 10 Issues faced with the enduser are the lower 11 energy content of the fuel and effects on engine 12 durability. 13 --o0o-- 14 AIR POLLUTION SPECIALIST OKAMOTO: I will now 15 review our recent activities. 16 --o0o-- 17 AIR POLLUTION SPECIALIST OKAMOTO: There is an 18 ASTM adopted fuel specification for 100 percent biodiesel 19 as a blending component for diesel fuel, to ensure the 20 consistent quality of biodiesel as a blending component. 21 There are no ASTM specifications for finished biodiesel 22 blends or 100 percent biodiesel as a need for pure fuel. 23 --o0o-- 24 AIR POLLUTION SPECIALIST OKAMOTO: Additional 25 efforts are ongoing at ASTM. First, there is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 268 1 consideration being given to modify ASTM D975, which is 2 the diesel fuel specification to incorporate B5 or 5 3 percent biodiesel. 4 Second, there is effort underway to develop a B20 5 fuel specification, because it is the most common blend of 6 biodiesel. Finally, efforts have been initiated to update 7 the B100 feedstocks specifications. The main modification 8 is the addition of fuel stability specifications. 9 --o0o-- 10 AIR POLLUTION SPECIALIST OKAMOTO: To facilitate 11 the development of possible biodiesel specifications, 12 staff established a biodiesel workgroup. The workgroup 13 consists of a broad range of stakeholders, including 14 biodiesel producers, distributors, petroleum refiners, 15 regulatory agencies and biodiesel endusers. 16 The first meeting was held in March 2004. The 17 second meeting was held in June 2005. Key discussions 18 have focused on biodiesel's impact on NOx emissions and 19 how biodiesel can be encouraged and integrated into ARB 20 regulatory programs. 21 --o0o-- 22 AIR POLLUTION SPECIALIST OKAMOTO: Staff is 23 coordinating with the California Energy Commission in 24 assessing biodiesel's role in California. Because 25 biodiesel is renewable, it has potential to provide energy PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 269 1 diversity. 2 --o0o-- 3 AIR POLLUTION SPECIALIST OKAMOTO: Ore goals in 4 these efforts are to: First determine a pathway to 5 incorporate B20 into our diesel retrofit program so as to 6 take advantage of its benefits. Secondly is the need to 7 resolve NOx issues with biodiesel. This requires a better 8 understanding of how biodiesel affects NOx emissions. The 9 Third goal is to address user acceptability issues. 10 --o0o-- 11 AIR POLLUTION SPECIALIST OKAMOTO: To address 12 these goals would require the ARB to continue to work with 13 ASTM, the California Energy Commission and industry to 14 resolve the remaining issues. 15 This concludes my presentation. 16 ACTING CHAIRPERSON RIORDAN: And you did a very 17 good job. 18 (Laughter.) 19 ACTING CHAIRPERSON RIORDAN: You went right 20 through that. Any questions of staff, at this time, Board 21 Members? 22 Then I'm going to move right along to you witness 23 list. Randal Friedman, Joe Gerghen. I'm not sure I 24 pronounced that correctly, and Randall Von Wedel. 25 MR. FRIEDMAN: Madam Chairman, Board Members, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 270 1 once again Randal Friedman on behalf of the U.S. Navy and 2 the military services in California. 3 In response to the many positive things that your 4 staff has just talked about biodiesel, energy independence 5 and a number of other factors, your federal government, 6 and the military in particular, as a result of 7 Congressional requirements and Presidential Executive 8 Orders, has been a leader in the use of biodiesel in 9 California. 10 In fact, the numbers I've seen is the military 11 alone purchases between one-third to one-half of the 12 biodiesel sold in California right now. We have a lot of 13 experience in this. And unfortunately one of those -- 14 some of that experience is problems dealing with existing 15 and down-the-road regulations of this board. 16 There is a waste hauling company in San Diego, in 17 fact, that had with much met fanfare in 2002, switched its 18 entire fleet over to the use of B20. With little fanfare 19 this year, they've abandoned the use of B20, because they 20 could not use B20 in compliance with the regulation you 21 adopted dealing with solid waste collection vehicles. 22 Our concern has been that was where we were 23 headed as we have, under Congressional Mandates and 24 Executive Orders, a federal requirement to use this. Yet, 25 we could see that there was compliance issues that would PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 271 1 force us to be in noncompliance with the State. 2 For that reason, we approached Senator Ashburn, 3 who introduced Senate Bill 975, that is up for its first 4 Assembly Hearing next Monday, that would give a window of 5 time that we can continue -- we and others can continue to 6 use B20 to meet our federal requirements, while we 7 continue to work with the Air Resources Board, the Energy 8 Commission and others to resolve these issues. 9 And I would like to, at this time, thank you as 10 the Board for taking this item up today. It's a very 11 serious issue for us. We have a very strong commitment 12 biodiesel. One of the things we're doing, in fact, is 13 based in Port Hueneme in Ventura county, we've had a pilot 14 project that actually takes waste cooking oil and other 15 waste oils and does the conversion into biodiesel. 16 That's been so successful that we are going ahead 17 with the ground breaking for a full scale plant. That 18 ribbon cutting is going to be in September. Certainly, we 19 would like to invite the Board to be part of that 20 demonstration that this truly is a renewable resource. We 21 recognize that we need to work with you on resolving these 22 issues. 23 I would like to just close with one thing on the 24 NOx issue. And I would encourage all of you to look at 25 the presentation that the researcher from UC Riverside PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 272 1 gave at the last workshop. They've been doing a lot of 2 emissions testing including some for some of our vehicles, 3 and they have questioned that NOx increase. And, in fact, 4 their conclusion was there really wasn't a NOx increase 5 that was statistically significant. And it varied on the 6 engine, It varied on the use. And they seem to indicate 7 that the EPA test was flawed. That's been used as sort of 8 the Bible for this NOx increase. 9 So, again, thank you for having this hearing and 10 we look forward to working with you in the next period of 11 time to make biodiesel work for us and for California. 12 Thank you. 13 ACTING CHAIRPERSON RIORDAN: Thank you, Mr. 14 Friedman. We appreciate it. 15 Joe. Pronounce your last name for me. 16 MR. GERGHEN: Joe Gerghen, thank you. 17 Thanks for letting me speak today. My company, 18 LA Biofuel is committed to improving access to and 19 awareness of biodiesel in southern California. We've put 20 a lot of effort into increasing regional production and 21 distribution, while offering public outreach and education 22 programs through our nonprofit organization Green Depot. 23 We've been working for the last 3 years with 24 corporate small business and municipal customers and 25 clients, as well as the public, helping them to understand PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 273 1 all environmental handling and use issues regarding 2 biodiesel, as they transition their existing diesel fleets 3 to run on this domestically produced renewable fuel. 4 In the next year, these conversions will 5 represent hundreds of thousands of gallons of displaced 6 petroleum usage in California. Our work with the City of 7 Santa Monica, which recently celebrated its 11th year as a 8 sustainable city, resulted in the conversion of 80 of 9 their vehicles to biodiesel last February. 10 With our help, the City has also submitted a 11 preliminary proposal to South Coast AQMD to test an SCR 12 NOx mitigation technology on 2 of Santa Monica's new 13 heavy-duty diesel tractors, with a goal of eventual CARB 14 verification. And will be testing several new promising 15 NOx reduction additives at the City's beach facility next 16 month. 17 We're committed to improving the emissions 18 profile of what is already a tremendously effective 19 alternative to petroleum diesel in California. 20 Like the City of Santa Monica, many other 21 municipalities in the region that we've been working with 22 have expressed a strong desire to use this fuel in their 23 fleets and would appreciate continued efforts by ARB and 24 South Coast AQMD to get biodiesel back on their list of 25 proved fuels. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 274 1 In addition to our municipal efforts, we've been 2 working with large clients in the restaurant, 3 manufacturing, transportation media and entertainment 4 industries. These industries represent a large contingent 5 of fleets in California. There's a strong interest, and 6 more importantly a strong support, within these industries 7 to see biodiesel gain wider acceptance and approval within 8 California. 9 Some of our clients are even planning to build 10 production facilities in the state, which will provide 11 jobs and revenue for California. 12 Every day we are inundated with calls and Emails 13 from consumers who are clamoring for retail access to 14 biodiesel. We plan on opening small retail pumps 15 throughout our region to address this demand and 16 anticipate strong sales. 17 Support from the entertainment community, in 18 particular, has been quite amazing. Our regional strategy 19 for biodiesel is an integral part of a broader philosophy 20 of sustainability. Developing community, municipal and 21 regional business to support the growth of the California 22 biodiesel industry, will provide jobs and environmental 23 benefits, help to grow our State's economy while 24 simultaneously easing some of our fuel supply problems. 25 It will also promote the use of renewable PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 275 1 low-emission fuel while helping California build a 2 sustainable energy future. We appreciate the efforts of 3 ARB to continue this discussion on behalf of fleet 4 customers and consumers across the south land. 5 I urge the Board to make a serious effort to 6 accommodate biodiesel. 7 Thank you. 8 ACTING CHAIRPERSON RIORDAN: Thank you very much. 9 We appreciate your information. It sounds very 10 innovative. 11 Randall Von Wedel, and -- I recognize you're 12 going to be speaking for Scott Hughes. 13 MR. VON WEDEL: Thank you. Good afternoon and 14 thank you for having me attend. I came all the way in the 15 hot heat to get here and we all wanted be here as part of 16 the biodiesel community trying to encourage our Board to 17 take a harder look at some of the regulations. 18 As we just heard this morning or this afternoon, 19 our rapid fire presentation by Mr. Okamoto, very well 20 done. I want to hit a few highlights that we covered on 21 the June 8 conference session with your staff just 2 weeks 22 ago. I want to emphasize it's just not California and the 23 United States. Actually, there's a world of biodiesel out 24 there right now. 25 France is up to 5 percent of all of its diesel PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 276 1 fuel in the entire country, including locomotives are now 2 running on biodiesel. Germany is up to about three or 3 four percent. Italy and Spain are coming up 2 or 3 4 percent and Britain is next. So this is actually a world 5 phenomenon. Japan has become the first city in the 6 Pacific to utilize biodiesel as its sole source of fuel in 7 one city, which was Kyoto, following what Berkeley has 8 accomplished here in the Bay Area, where Berkeley was the 9 first city in the United States and the world to use 10 biodiesel exclusively as its fuel in diesel vehicles. 11 They did that for a variety of reasons, including inn 12 environmental health and public health concerns. 13 I want to also emphasize that California was the 14 host of the first biodiesel station in the United States, 15 outside of Hawaii. We have friends here in the audience 16 that opened one almost the same day in Nevada. So there 17 was a long, strong history of momentum from the citizens, 18 as well as from researchers, like myself, to try to use 19 biodiesel as a tool in the many options that we would 20 consider for improving air quality, reducing our 21 dependence on petroleum imports and reducing greenhouse 22 gases. 23 You heard earlier that there are 23 retail 24 stations. Those will go all the way from Ukiah through 25 Berkeley, of course, Lafayette, Santa Rosa, San Jose, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 277 1 Santa Barbara, Ventura and all the way down to San Diego. 2 Biodiesel, however, still represents less than 3 one-tenth of 1 percent of the diesel fuel in this state. 4 We have a long ways to go. And we're counting on your 5 support and your cooperation in helping us develop 6 flexibility and regulations to make sure that biodiesel 7 doesn't accidentally get pushed off the table. 8 As you've heard, that's already happened with the 9 solid refuse vehicles. And we're hoping that there may be 10 some opportunity to allow those vehicles to get back into 11 the biodiesel program with perhaps B20. 12 You've already heard that the military is the 13 largest user of biodiesel. And they're doing that largely 14 because of their belief in what they're doing, but also 15 because it's a federal mandate. So that's another entire 16 dimension of this program that we need to address. 17 The NOx issue, as a technical -- I need to 18 address that as well. I personally flew out to Colorado 3 19 and a half weeks ago to meet with Bob McCormack, who was 20 one of our presenters last June 8th, to make sure I 21 clearly understood what he was telling us about why the 22 NOx question is so complicated. 23 And I'm going to just give you a few quick 24 points. These are on my notes. And I'll be very brief. 25 The EPA web site data that we've all heard about and what PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 278 1 is often used as a source of information regarding NOx 2 emissions for biodiesel is really an average of at least 3 14 different studies that involve both engine testing, 4 that means an engine in a block as well as vehicle 5 testing. 6 And one of the details I learned from Dr. 7 McCormack was that vehicle testing, of course, which 8 included the powertrain, the driver, and it's actually 9 operating on a rolling chassis dynamometer. It's much 10 more of a real world scenario than would be an engine just 11 setting on a block. 12 And he pointed out to me that the way much of the 13 testing that was done that's in that web site was based on 14 testing technologies that were developed for engine 15 testing not necessarily fuel testing. And that the power 16 curve used for the emission testing tended to shift to the 17 right, which he basically said made it look like there was 18 more NOx emission. 19 So he's concerned that both our methods and the 20 actual engines that we're testing may not be accurate 21 enough for us to make a blanket comment that NOx increase 22 is really a problem with biodiesel. 23 And, in fact, his most recent research that he 24 addressed just a couple of weeks ago, shows that new 25 engines from the year 2000 through transit buses in the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 279 1 year 2004 actually are now showing a 5 percent decrease in 2 NOx with B20. That's completely the opposite of what 3 we've been hearing for my decade of working with biodiesel 4 here in California. 5 So I want to emphasize that the world is 6 changing. There's more information coming up. And we 7 need to be careful before we accidently discourage the use 8 of biodiesel by imposing regulations based on the NOx, 9 when, in fact, the NOx question is really quite 10 complicated. 11 There's also a complication that I wouldn't get 12 into detail, but you may have heard of the weekend ozone 13 effect. And briefly, what was found was over a weekend 14 study that actually was conducted by the National 15 Renewable Energy Lab, and I believe was funded by CARB, 16 that on weekends the levels of NOx emissions in the Los 17 Angeles basin actually decreased, as we expected, with 18 fewer UPS and other diesel vehicles operating on weekends. 19 However, as I understand it, the ozone levels 20 actually increased substantially. In fact, I heard it was 21 as high as a 70 percent increase. And it brings up the 22 question well, if ozone is going up while nitrogen oxides 23 are going down, what's going on. 24 One potential hypothesis that I was told by the 25 NREL people is that it could be that in some areas of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 280 1 California we're actually hydrocarbon limiting and that 2 the increase might have been cause just by the use 3 two-stroke gasoline motors in lawn mowers and other types 4 of garden equipment, ATVs and that type of thing. 5 So, again, we're concerned that NOx is being 6 overly emphasized when B20, even under average conditions, 7 is thought to increase maybe 2 percent. And that's with 8 the older vehicles. And as I mentioned newer vehicles it 9 looks look there's a 5 percent decrease. 10 I want to lastly point out NOx reducing 11 technologies are coming along. We already know about EGR 12 and SCR and other after-treatments. But there's also a 13 lot of chemical research going on here in California, 14 Texas and even in West Virginia using CARB protocols to 15 determine if additives or similar biodiesel type of fuels 16 that can be co-blended might, in fact, reduce the NOx 17 anyway. 18 So just be aware there's a lot of effort going 19 on, a lot of money and effort being put into finding 20 chemical solutions, in addition to the physical solutions. 21 We know that -- 22 ACTING CHAIRPERSON RIORDAN: I need to ask you 23 to -- I've given you time for both. 24 MR. VON WEDEL: Thank you. Okay. Well, then 25 I'll wrap it up and saw, we've already heard it's a fuel PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 281 1 reduction strategy. What we're asking basically is that 2 there be flexibility in regulations that allow us to 3 utilize the benefits as best as possible. 4 I'm always available if there are technical 5 questions on the research. 6 So thank you for your time. 7 ACTING CHAIRPERSON RIORDAN: We appreciate that. 8 Thank you very much. 9 Josh Tickell and Russ Teall followed by Brian 10 Quails. And that would be the limit of those who are 11 still on the list. 12 MR. TICKELL: Good afternoon, Madam Chairman and 13 Members of the Board. Thank you, first of all for having 14 a forum to discuss biodiesel. I am the author of 2 books 15 on the subject. I've traveled to 5 countries, spoken with 16 people using biodiesel in those 5 countries, and have 17 interviewed both users, producers and scientists around 18 the world who are involved with biodiesel. 19 I have a couple of questions for you today that 20 relate to the recent research that I've done on biodiesel. 21 The first one is how many of you or how many people in 22 this room would feel comfort with California's energy 23 supply if Saudi Arabia suddenly ceased to be able to 24 supply this nation with crude oil? 25 And the second question is, how many folks in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 282 1 this room are comfortable with the knowledge that we have 2 with asthma, with the recent toxicology tests that have 3 been done in school buses, with sending your children to 4 school on diesel school buses? 5 The reason I ask these questions is I recently 6 met with Matt Simmons who is as energy advisor to the 7 President, as well as Dick Cheney. And he said to me very 8 clearly, we have no clear data on how much oil Saudi 9 Arabia intends to supply the United States. However, we 10 do know that in the next 30 to 60 months the United States 11 will outpace its demand with Saudi's supply, meaning Saudi 12 will cease to be able to supply this country what we 13 demand. 14 California is in a particularly dangerous 15 position in regards to that statement, because we are at 16 maximum capacity in terms of our production of petroleum 17 distillate. 18 The second question relates to a series of 19 medical doctors and toxicologists with whom I've met in 20 the past several months. These people present very 21 convincing data connecting the polycyclic aromatic 22 hydrocarbons in diesel fuel to potential asthma and 23 potential cancer cases. 24 Now, considering that we have about 40,000 diesel 25 school buses on the road in California, and those buses, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 283 1 many of them are 20 years old or older, this is a very 2 serious issue that we face. So I cannot be more clear 3 then when I say you hold the keys not just to California, 4 but to America. 5 Everyone in this nation looks at CARB. Everyone 6 in this nation gauges their emissions' policy based on 7 your emissions' policy. Your emissions' policy very much 8 mirrors that of the Euro 4 standard with a few minor 9 exceptions, biodiesel being one of them. 10 So I encourage you wholeheartedly not just to 11 look at the issue of NOx with biodiesel, not just to look 12 at the issues of potentially minor decreases in certain 13 emissions, but to look at biodiesel as a means to reduce 14 specific toxic emissions in school buses, in other closed 15 population density zones, where it can have a significant 16 impact to people like you and me who are breathing it 17 every day. 18 Biodiesel unlike many fuels, unlike many things 19 is available today. It's not perfect, but it is 20 functional. I drove here on 100 percent biodiesel. And I 21 know several other people did. I've been doing that for 8 22 and a half years. 23 So rather than a mythology or something that we 24 can institute in 5 or 10 years, all of which we need these 25 progressive measures. We need biodiesel today. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 284 1 ACTING CHAIRPERSON RIORDAN: Thank you very much. 2 MR. TICKELL: Thank you for your time. 3 ACTING CHAIRPERSON RIORDAN: Thank you. 4 Russell Teall and Bryan Qualls. 5 MR. TEALL: Thank you. My name is Russell Teall. 6 I'm the president of Biodiesel Industries. And we have 7 the largest network of built, owned and operated biodiesel 8 production facilities in the world. Each plant ranges 9 from 3 million to 10 million gallons, and is scalable 10 upward from there. 11 The plants are located in Las Vegas, Denver, 12 Dallas, Australia and on the Naval Base at Port Hueneme. 13 There's one correction about the slides. That was our 14 plant that he showed there, but that's the one in Denver. 15 (Laughter.) 16 MR. TEALL: But you're welcome to come down to 17 Port Hueneme when we have the ribbon-cutting and actually 18 see what that operation entails. 19 Just a few brief comments. I signed up neutral 20 because I hadn't had a chance to see Bob's presentation. 21 Change it to a blue card, I'm in favor of it. It looks 22 like a very good report. 23 A few things to add to it. Randall and I, Dr. 24 Von Wedel and I are doing some research under a grant from 25 the Bay Area Air Quality Management District on biodiesel, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 285 1 and we'll be able to release the results shortly. But 2 working with a combustion analysis laboratory at UC 3 Berkeley, we've looked at several different technologies, 4 including additives for reducing NOx and they look very 5 promising. 6 We're also looking at feedstocks from different 7 agricultural waste products, resources, et cetera. And it 8 looks like the inventory in California, without any 9 additional work, is about 200 million or 300 million 10 gallons, potentially, of feedstock so it can be turned 11 into biodiesel. 12 And we're also working with California State 13 University on other crops that could be grown and 14 supplemented for that effort. 15 One thing that was left out in the presentation 16 is the Tier 2 health effects testing. With the EPA 17 there's 2 levels of health effects testing. Tier 1, which 18 was done at UC Davis, looks at emission speciation, you 19 know, what are the components. In other words, there was 20 a good discussion this morning about particulate matter, 21 and not only the size, but the composition is really 22 important. 23 And in diesel exhaust there's over 100 known 24 toxic or carcinogenic compounds. And what the Tier 1 25 study showed is that there were very few and lower amounts PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 286 1 of those toxic and carcinogenic compounds in biodiesel. 2 And they allowed to us to go under Tier 2 health effects 3 testing, which involved animal testing. 4 And we're the only fuel to have ever successfully 5 made it through that, either conventional fuel or 6 alternative fuels, including natural gas. So it's a known 7 as a decreaser of toxic and carcinogenic compounds as a 8 result of combustion. 9 Just in conclusion, I think there's a tremendous 10 potential for biodiesel in California. We'd love to build 11 our next 5 plants here. But it's a question of balance. 12 If Dr. Rudolph Diesel, the inventor of the diesel engine, 13 showed his first engine in 1900 running on peanut oil. 14 And his vision was that all diesel engines would run on 15 these agricultural products. 16 Well, we know that that's not true today. But 17 imagine if his vision were true and right now all the 18 diesel engines were running on biodiesel, and petroleum 19 was just discovered in Bakersfield last year. And I came 20 in and wanted to get petroleum approved, I'd have to tell 21 you it's toxic. 22 (Laughter.) 23 MR. TEALL: It's hazardous to transport, and 24 extract. It increases particulate matter. It increases 25 CO. It increases hydrocarbon. And our only possible PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 287 1 benefit, based on some studies that are under question, is 2 that it might improve NOx. What would the chances be that 3 that we would accept petroleum now? 4 Thank you. 5 ACTING CHAIRPERSON RIORDAN: Thank you very much. 6 (Laughter.) 7 BOARD MEMBER GONG: Question. 8 ACTING CHAIRPERSON RIORDAN: Yes, Dr. Gong. 9 BOARD MEMBER GONG: Just a quick question. Maybe 10 you can clear this up for me. What causes the NOx 11 production in biodiesel? Is it because of the fatty acids 12 or because of the diesel or both? 13 MR. TEALL: Generally -- and there are people in 14 here that are more expert at that that I am, but generally 15 it's the temperature in the combustion chamber. And the 16 research we are doing at Berkeley is that the higher the 17 temperature, the more likely atmospheric nitrogen is going 18 to combine in the combustion chamber to form NOx. 19 Biodiesel has a lower exhaust gas temperature. 20 So if it takes high heat, but there's low heat coming out 21 of the tailpipe what's going on. And the hypothesis has 22 been maybe there are hot pockets, you know, that are 23 occurring in the combustion chamber. By using some of 24 these additives, it's making a fuller, more dispersed 25 spray pattern in the combustion chamber. And it could be PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 288 1 something as similar than that, but we saw some very 2 dramatic decreases in NOx at the Berkeley studies. 3 And it was interesting because the additive 4 didn't work on diesel fuel. We didn't see a 15 percent 5 decrease in NOx on CARB diesel. It was the BP ultralow 6 sulfur diesel that we were testing. But we did see it 7 with be B20. So it has something to do with a combination 8 of that additive with B20 that actually reduces the NOx 9 below the CARB ultralow sulfur diesel level. 10 BOARD MEMBER GONG: There was a slide, I think, 11 that was shown, Slide 11 or something, that the higher up 12 B20 versus B100 there was more NOx relatively speaking 13 with the B100. But I would have thought intuitively there 14 would be less NOx, because you have less diesel. You're 15 saying it's temperature, but I guess that's reasonable. 16 More research. 17 MR. TEALL: That's the conclusion of every 18 research study, isn't it? 19 (Laughter.) 20 ACTING CHAIRPERSON RIORDAN: All right. 21 Thank you so much for your testimony. We 22 appreciate that. 23 Bryan Qualls. This will be our final speaker for 24 today. 25 MR. QUALLS: So I'm actually a Fresno native and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 289 1 currently working at a company where we make biodiesel in 2 the Bay Area. And we are currently working with the City 3 of Pacifica to get biodiesel on line. And I guess my 4 point is it's really kind of a no-brainer biodiesel in the 5 central valley. And, I mean, I worked on an organic 6 form -- 7 ACTING CHAIRPERSON RIORDAN: Come a little closer 8 to that microphone. Thank you. 9 MR. QUALLS: Yeah. I've worked on an organic 10 farm, and farming and biodiesel are just so complementary, 11 it's pretty obvious. And especially in a place like 12 Fresno, which is, you know, the fast food testing grounds 13 of the nation. 14 (Laughter.) 15 ACTING CHAIRPERSON RIORDAN: I mean I grew up 16 with, you know, these random chain restaurants like Hot 17 and Now, that would be around for 2 weeks. And so I know 18 there's a lot of used cooking oil in Fresno. And in the 19 central valley. And it's a pretty big untapped market. 20 It's a pretty obvious next step. 21 And we've been doing it with used cooking oil, 22 working with the City of Pacifica. The City of Berkeley 23 already uses biodiesel. And I would encourage the City of 24 Fresno to, you know, be on the frontlines and try a pilot 25 study for the city buses or the school buses, where the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 290 1 kids are breathing the toxic air. 2 And also on the NOx issue. I just -- I know you 3 had already talked about a lot of the NOx issues. They 4 had shown there's been an increase in NOx. And I'd like 5 to echo what Randall had said that really a lot of these 6 studies have not been very conclusive. 7 But what has been conclusive to me is that soy 8 bean oil tends to increase NOx more than others. To me 9 that seems like the only conclusive thing if that on the 10 NOx issue. 11 So, anyway. The jury is still -- I'd like to 12 echo the fact that the jury is still to be out with the 13 NOx issue. 14 EXECUTIVE OFFICER WITHERSPOON: Madam Chair. 15 ACTING CHAIRPERSON RIORDAN: Yes. 16 EXECUTIVE OFFICER WITHERSPOON: This is a 17 concluding remark from staff. We think the NOx problem is 18 soluble. And in the scoping analyses that were done prior 19 to the Governor's announcement on climate change targets, 20 one of the strategies that was looked at was having B1 or 21 B2 in all of California diesel. And we would need to 22 increase the volume of biodiesel about 30 times from what 23 it is today. 24 So the much bigger barrier is economics and 25 volume to getting where we want to go, and how will that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 291 1 happen, and what will the feedstocks be. There certainly 2 is room to expand, but is it going to all be waste cooking 3 oil are we going to have to use other grape seed oils and 4 the rest of it, and how will we pay for it, if this is 5 what our objective is. 6 But I think we are at a major turning point in 7 terms of integrating our ozone and particulate matter 8 strategies with our climate change strategies. And that 9 was the point of putting this on your agenda today. And 10 we're closer in line with what all the witnesses have said 11 than we've ever been. 12 ACTING CHAIRPERSON RIORDAN: Well, that's good 13 news. And then there's somebody who's willing to start a 14 pilot study in Fresno, if they'll do it. 15 Staff, I want to thank you. That was an 16 interesting presentation and obviously good for us to 17 hear. 18 I do know that there is a board member and a 19 staff member traveling to France and the quote was there's 20 5 percent use of biodiesel there. Did I hear that? You 21 might want to confirm that as you travel through France 22 for us and bring back a report. 23 Board members, it's my pleasure to -- we don't 24 have to formally close this item, because it was for 25 information only. And I thank you. And we'll see you -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 292 1 and I'll close the meeting. We'll see you in July in 2 Sacramento. 3 Thank you very much, and Fresno thank you for 4 hosting us. 5 (Thereupon the California Air Resources 6 Board meeting adjourned at 4:25 p.m.) 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 293 1 CERTIFICATE OF REPORTER 2 I, JAMES F. PETERS, 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 California Air Resources Board meeting was 7 reported in shorthand by me, James F. Peters, a Certified 8 Shorthand Reporter of the State of California, and 9 thereafter transcribed into typewriting. 10 I further certify that I am not of counsel or 11 attorney for any of the parties to said meeting nor in any 12 way interested in the outcome of said meeting. 13 IN WITNESS WHEREOF, I have hereunto set my hand 14 this 6th day of July, 2005. 15 16 17 18 19 20 21 22 JAMES F. PETERS, CSR, RPR 23 Certified Shorthand Reporter 24 License No. 10063 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345