BOARD MEETING STATE OF CALIFORNIA AIR RESOURCES BOARD JOE SERNA, JR. BUILDING CALIFORNIA ENVIRONMENTAL PROTECTION AGENCY CENTRAL VALLEY AUDITORIUM, SECOND FLOOR 1001 I STREET SACRAMENTO, CALIFORNIA THURSDAY, NOVEMBER 17, 2005 9:00 A.M. TIFFANY C. KRAFT, CSR, RPR CERTIFIED SHORTHAND REPORTER LICENSE NUMBER 12277 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 ii APPEARANCES BOARD MEMBERS Mrs. Barbara Riordan, Acting Chairperson Ms. Dorene D'Adamo Supervisor Mark DeSaulnier Mr. Henry Gong, Jr., M.D. Mr. Ronald O. Loveridge Supervisor Barbara Patrick Ms. Patricia Salas Pineda Supervisor Ron Roberts STAFF Mr. Tom Cackette, Chief Deputy Executive Officer Mr. Tom Jennings, Acting General Counsel Mr. Michael Scheible, Deputy Executive Officer Ms. Kathleen Tschogl, Ombudsman Ms. Catherine Witherspoon, Executive Officer Ms. Lori Andreoni, Board Secretary Mr. Richard Boyd, Manager, Emissions Evaluation Section, SSD Mr. Michael Carter, Chief, Emission Research and Regulatory Development Branch, MSCD Ms. Edie Chang, Manager, Carl Moyer Off-Road Section, MSCD Mr. Bob Cross, Chief, Mobile Source Control Division, MSCD PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iii APPEARANCES CONTINUED STAFF Mr. Dan Donohoue, Chief, Emissions Assessment Branch, SSD Mr. Jack Kitowski, Chief, On-Road Controls Branch, MSCD Ms. Michelle Komlenic, Air Pollution Specialist, SSD Mr. Jeff Lowry, Staff Air Pollution Specialist, Off-Road Controls Section, MSCD Mr. John McKnight, National Marine Manufacturers Ms. Lucinda Negrete, Manager, Carl Moyer Off-Road Section, MSCD Mr. Bob Nguyen, Staff, Carl Moyer Off-Road Section, MSCD Mr. Hein Tran, Staff, Research Division ALSO PRESENT Mr. Larry Allen, San Luis Obispo APCD Mr. Don Anair, Union of Concerned Scientists Ms. Shirley Batchman, CA Citrus Mutual Mr. Todd Campbell, Clean Energy Ms. Karen Driensowski, Railpower Hybrid Technologies Mr. Michael Eaves, CA NGV Coalition Mr. Sean Edgar, Clean Fleets Coalition Mr. Dennis Gage, Placer County Mr. Jeffrey Green, Grimmway Farm Ms. Bonnie Holmes-Gen, American Lung Association Mr. Richard Kolb, Volvo Penta PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iv APPEARANCES CONTINUED ALSO PRESENT Mr. Joseph Kubsh, MECA Ms. Barbara Lee, CAPCOA Mr. Chung Liu, SCAQMD Mr. Bob Lucas, CCEEB Mr. Paul Martin, Western United Dairymen Mr. Roger McCoy, SJVAPCD Mr. Mark McKinney, Pleasurecraft Engine Group Mr. John McKnight, National Marine Manufacturers Association Mr. Dave Modisette, CA Electric Transportation Coalition Mr. Bernie Orosco, Sempra Energy Mr. Juan Ortellado, BAAQMD Ms. Kathryn Phillips, Environmental Defense Ms. Mary Pitto, Regional Council of Rural Counties Mr. Douglas Quentin, CAPCOA Ms. Catherine Reheis-Boyd, WSPA Mr. Stephan Rhodes, STC Mr. Mark Riechers, Mercury Marine Ms. Teri Shore, Bluewater Network Ms. Susan Stark, WSPA Mr. Rich Waggoner, Indmar Marine Engines Mr. Barry Wallerstein, SCAQMD PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 v INDEX PAGE Pledge of Allegiance 1 Opening Remarks 2 Item 05-11-1 Acting Chairperson Riordan 7 Executive Officer Witherspoon 7 Staff Presentation 8 Q&A 13 Item 05-11-2 Acting Chairperson Riordan 14 Executive Officer Witherspoon 14 Staff Presentation 15 Q&A 23 Ms. Shore 27 Mr. Liu 30 Mr. Ortellado 30 Ombudsman Tschogl 31 Q&A 33 Motion 34 Vote 35 Item 05-11-3 Acting Chairperson Riordan 35 Executive Officer Witherspoon 35 Staff Presentation 36 Ombudsman Tschogl 48 Q&A 51 Mr. Kubsh 52 Mr. McKnight 53 Mr. Riechers 59 Mr. Rowe 61 Mr. McKinney 64 Motion 71 Vote 72 Item 05-11-4 Acting Chairperson Riordan 73 Executive Officer Witherspoon 74 Staff Presentation 75 Q&A 96 Ms. Lee 104 Mr. Quentin 110 Ms. Pitto 111 Mr. Wallerstein 116 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 vi INDEX CONTINUED PAGE Mr. Ortellado 122 Mr. McCoy 126 Mr. Allen 129 Mr. Gage 133 Ms. Reheis Boyd 136 Mr. Smith 140 Ms. Stark 144 Mr. Lucas 148 Mr. Modisette 151 Mr. Rhodes 154 Mr. Campbell 157 Mr. Martin 160 Ms. Batchman 162 Ms. Driensowski 165 Mr. Green 169 Mr. Kubsh 172 Mr. Edgar 173 Mr. Eaves 176 Mr. Orosco 179 Mr. Anair 180 Ms. Holmes-Gen 182 Ms. Phillips 185 Motion 191 Vote 202 Adjournment 203 Reporter's Certificate 204 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 1 1 PROCEEDINGS 2 ACTING CHAIRPERSON RIORDAN: I'm going to start 3 the meeting, because the first item is the informational 4 item. And our Board members are a short distance away, 5 and I think they will be here in time. So let me call the 6 November 17th public meeting of the Air Resources Board to 7 order. And I would like Mayor Loveridge to lead us in the 8 pledge to our flag. And if you would all rise, please. 9 (Thereupon the Pledge of Allegiance was 10 recited in unison.) 11 ACTING CHAIRPERSON RIORDAN: Thank you very much. 12 And Mayor Loveridge, let me congratulate you. He 13 has just been re-elected as Mayor of Riverside. This will 14 be actually he tells me the beginning of your -- which 15 term? The fourth term. So Riverside is very lucky to 16 have him. 17 SUPERVISOR PATRICK: I think he deserves a round 18 of applause. 19 (Applause) 20 ACTING CHAIRPERSON RIORDAN: And then I'd like to 21 call on Dr. Gong, who has a brief comment on an attendance 22 at a goods movement workshop he'd like to report on. So 23 Dr. Gong. 24 BOARD MEMBER GONG: I just wanted to briefly 25 comment that I attended a workshop in Long Beach, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 2 1 California, recently on the goods movement. And basically 2 it was an educational event for me. And I know Catherine 3 Witherspoon and her staff did actually an excellent job of 4 really describing what the current state-of-the-art is 5 regarding that entire process on behalf of the state. 6 One thing that occurred to me weeks later, 7 obviously, is that I have the feeling -- this is just an 8 impression, and I just would like to share it with you -- 9 is that there's many groups out there vying for different 10 goals and objectives, and they have different agendi. And 11 I'm not exactly sure as a Board member what's going on 12 from month to month I guess. And I think it would behoove 13 the Board and Board members especially to have progress 14 reports of some type on the goods movements action plan, 15 et cetera, and what are the successes and problems you're 16 having. Just so that we can be kept informed. 17 I'm concerned, I guess, is that in months to come 18 people will blame, as usual, one entity such as the ARB 19 for not doing something. But, again, I didn't know about 20 it. And I feel kind of left out in the cold. And I'd 21 like to be sure I keep abreast on that, because I attended 22 your wonderful meeting, and I know it has a very important 23 impact. And I guess just not on ports, but I was thinking 24 of airports as well. And I don't know if that's part of 25 the plan either. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 3 1 But anyway, I just wanted to call that to your 2 attention, that I'd like to see some type of progress 3 report to the Board. Maybe you already have it planned in 4 the agenda for next year. But for sure it should be 5 sufficient frequency where we sort of have a good handle 6 as to what's happening. Even if we don't directly control 7 all those actions out there, at least I can say it's not 8 my fault. 9 EXECUTIVE OFFICER WITHERSPOON: That is an 10 excellent suggestion and apologize for not having thought 11 of it ourselves. And I do think that we should brief you 12 at the December meeting on what is happening with goods 13 movement. We're on an incredibly accelerated schedule 14 that was set by Secretary Lloyd and Secretary McPeak for 15 Business, Transportation, and Housing to submit a report 16 to the Governor by December 16th reflecting the 17 recommendations of multiple work groups, and sub-work 18 groups have been meeting over the last several weeks. We 19 just went through a series of meetings this week. There's 20 another one coming up the 28th and 29th in Los Angeles, 21 and again on the 16th to close out. 22 For the broader goods movement action plan, 23 though the Administration has conceded, the schedule is so 24 compressed that it will not be finished on December 16th. 25 It will be a template for going forward in the coming PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 4 1 year. But as part of this effort, ARB has been pressed to 2 accelerate its emission reduction analysis and commitments 3 for goods movement generally, and we are on the hook as a 4 staff to produce a draft report by December 1st, which 5 includes sort of all the elements that many of you have 6 seen before in previous SIPS but updated to the future, 7 the current emission inventory, forecasted inventory, the 8 available control strategies. We have as a terrific 9 launch pad some of the work that was done for the no-net 10 increase process at the port of Los Angeles, which was 11 also a comprehensive assessment of that port and of 12 available strategies. 13 Another key issue that, Dr. Gong, you'd be very 14 interested in is we have been asked to summarize in one 15 document in one place all of the health impacts of the 16 goods movement system. And that will be chapter one of 17 the document. And we have enlisted the help of the Office 18 of Environmental Health Hazard Assessment, the Department 19 Health Services, Dr. John Froines, who is the Chief of our 20 SRP. I always say the wrong Committee. The Scientific 21 Review Panel. 22 We have been inundated with all the literature. 23 We're endeavoring to create a layperson's summary and all 24 the calculations of how the mortality affects add up and 25 also the non-quantitative qualitative affects, and that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 5 1 will be out in draft form on December 1st as well and then 2 be very potent and put to the broader administration 3 effort on goods movement. 4 The thrust of the comments we're hearing out 5 there in our public meetings, we have a public health and 6 environmental mitigation Committee, a community mitigation 7 Committee, which is looking at aesthetic, light, noise, 8 and then all the other health issues are in the other 9 Committee is a demand for a fully enforceable mitigation 10 plan before any of the infrastructure expansion proceeds. 11 And so we've gotten into conversations about what does 12 fully enforceable mean. What does proceed mean. 13 Because all the projects that have been 14 contemplated are in local transportation plans, some of 15 them are undergoing CEQA review already. They've reached 16 that stage of the process, and the State's role is not all 17 encompassing. It's meant to help spur, help fund, help 18 coalesce activities, but what is this expectation. And 19 all of that's coming to a head for December 16th. So I 20 think at our December 8 Board meeting, it will be very 21 timely to bring you our draft report. We'll send it to 22 you the minute we have it. And we were going to schedule 23 that for your consideration early next year as we bring it 24 into a more final form, but it's going to hit the 25 newspapers as soon as we have it out. So we'll get it to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 6 1 you ahead of the newspapers and brief you on the 8th about 2 everything else that's going on. 3 ACTING CHAIRPERSON RIORDAN: Thank you, Dr. Gong. 4 Excellent suggestion. 5 Let me remind anyone in the audience who wishes 6 to testify on today's agenda items to please sign up with 7 the Clerk of the Board. She's to my left. And if you 8 have a written statement, please provide 30 copies to her 9 when you sign up to testify. 10 And then we'll move right along to our first 11 item, which is just a brief comment about -- oh, excuse 12 me. I've been reminded we haven't had roll call, and 13 that's a good idea so we are sure we have a quorum. 14 Madam Clerk, would you like to call roll? I'm 15 just moving it right along. 16 SECRETARY ANDREONI: Ms. Berg? 17 Ms. D'Adamo? 18 BOARD MEMBER D'ADAMO: Here. 19 SECRETARY ANDREONI: Supervisor DeSaulnier? 20 SUPERVISOR DeSAULNIER: Here. 21 SECRETARY ANDREONI: Dr. Gong? 22 BOARD MEMBER GONG: Here. 23 SECRETARY ANDREONI: Ms. Kennard? 24 Mayor Loveridge? 25 BOARD MEMBER LOVERIDGE: Here. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 7 1 SECRETARY ANDREONI: Supervisor Patrick? 2 SUPERVISOR PATRICK: Here. 3 SECRETARY ANDREONI: Ms. Pineda? 4 Supervisor Roberts? 5 SUPERVISOR ROBERTS: Here. 6 SECRETARY ANDREONI: Madam Chairman Riordan? 7 ACTING CHAIRPERSON RIORDAN: Here. 8 Thank you very much. Now we're legal. 9 Earlier this year, the Board adopted the nation's 10 most health protective ozone standard with special 11 consideration for children's health. That standard was 12 supported by a large volume of studies on short-term 13 exposures to ozone and adverse health effects. 14 At the time, the evidence for ozone exposure and 15 premature death was just emerging. The studies we will 16 hear about today delve into that issue a little more and 17 confirm the findings that ozone pollution has a mortality 18 effect. 19 Ms. Witherspoon, would you like to introduce this 20 item? 21 EXECUTIVE OFFICER WITHERSPOON: Thank you, Madam 22 Chairman. 23 Today's health update highlights recent findings 24 that indicate exposure to ozone increases cardiovascular 25 and respiratory deaths. These studies come from three PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 8 1 independent groups of researchers and confirm earlier 2 studies making the same general finding. Mr. Hein Tran 3 from the Research Division will make the staff 4 presentation. 5 (Thereupon an overhead presentation was 6 presented as follows.) 7 MR. TRAN: Thank you, Ms. Witherspoon. Good 8 morning, Madam Chairman and members of the Board. 9 The focus of our update today is on three new 10 written analyses on the relationship between ozone 11 exposure and premature death. As meta-analyses, these new 12 studies pull data from previously conducted studies in 13 order to strengthen the power to observe an effect. 14 Working independently, three different groups of 15 researchers analyze data from various cities and counties 16 but obtained similar results. They all found a 17 significant association between ozone exposure and 18 premature death. 19 --o0o-- 20 MR. TRAN: As you recall, in April this year, the 21 Board adopted the nation's most health protective 22 eight-hour ozone standard by approving a new California 23 ambient air quality standard of 0.070 parts per million. 24 That standard was based primarily on the results of human 25 chamber studies which demonstrate the number of adverse PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 9 1 health effects, including reduced lung function, increased 2 airway inflammation, and respiratory symptoms such as 3 cough and chest tightness. In addition, epidemiological 4 studies have shown the association between ozone exposure 5 and increased hospital and emergency room visits and 6 school absenteeism. 7 Preliminary evidence indicates that exposure to 8 high ozone levels by active children may be related to new 9 cases of asthma. Finally, the ARB and OEHHA staff 10 reviewed multi-city studies that addressed the 11 relationship between ozone and daily death counts. The 12 results of the studies presented today provide further 13 compelling evidence for the association between ozone 14 exposure and death. 15 --o0o-- 16 MR. TRAN: To explore the strength of the 17 relationship between ozone and death, the U.S. EPA funded 18 three independent teams of researchers to analyze all 19 existing relevant data on the subject. The researchers 20 were free to choose the data sets and to carry out 21 analyses that it considered appropriate. There were some 22 overlap in the three studies since some data sets were 23 utilized by more than one team. 24 --o0o-- 25 MR. TRAN: From the analysis of the health and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 10 1 exposure data of the respective studies, the authors found 2 fairly similar results. They found that ten parts per 3 million increase in the one-hour maximum ozone level was 4 associated with a 0.4 percent increase in the non-injury 5 related death rate. 6 The confidence intervals are shown in interval 7 lines. They reflect the uncertainty in the estimates and 8 range from 0.22 to 0.51 percent. In addition, the 9 researchers found ambient PM did not influence the result 10 from ozone exposure. Also, Levy and his colleagues found 11 the prevalence of residential air conditioning might 12 result in a lower ozone mortality effect due to lower 13 personal exposure to ozone. 14 --o0o-- 15 MR. TRAN: To put the results into perspective, 16 we compared the latest findings from these three written 17 analyses through other studies that were included in the 18 ozone standard review. Six major studies were published 19 between 2001 and 2004. As you can see, the effect 20 estimates from these analyses range from 0.1 percent to 21 0.66 percent increase in daily deaths per 10 PP change in 22 one-hour maximum ozone. 23 --o0o-- 24 MR. TRAN: The results from the three new 25 meta-analyses we have just discussed shown in green lie PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 11 1 within the range of the estimates. The smallest estimate 2 is the 2004 study by Bell and colleagues who may have 3 over-controlled for the confounding affects of weather 4 which would explain the small estimate in the graph. 5 On the other hand, results for the 2004 study by 6 Dr. Gryparis, the highest in the chart, apply to the 7 summer season only. Since ozone is typically higher in 8 the summer, it is expected that the summer affect will be 9 higher. The difference in the estimates among these 10 studies and among cities within the studies are likely due 11 to variation in a number of characteristics of the 12 populations in the studies. However, it should be noted 13 that the three teams of researchers independently found 14 consistent results on the association between ozone 15 exposure and premature death. And these results are in 16 fair agreement with previously published work. 17 --o0o-- 18 MR. TRAN: Although the studies of premature 19 death did not form the basis for the ozone standard, they 20 do play a vital role in our health impacts assessment of 21 ozone exposure in California. As presented at the April 22 Board hearing on ozone standard, ARB staff used results 23 from the 2001 to 2004 studies to estimate the health 24 benefits of reducing ozone exposure in California. We 25 estimate that about 630 deaths will be avoided each year PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 12 1 if statewide ozone concentrations were reduced to attain 2 the 0.070 PPM level of the newly improved eight-hour ozone 3 standard. The results for the three new studies discussed 4 today are consistent with the previous studies, and that 5 methodology has undergone pier review by several experts 6 in the field of air pollution health effects and is 7 similar to that used by the U.S. EPA. 8 --o0o-- 9 MR. TRAN: In summary, the three recent analyses 10 show a link between exposure to ambient ozone and 11 premature death. Together, they add substantially to the 12 growing body of evidence of the public health benefits of 13 reducing ozone pollution and they provide further support 14 for the new ambient ozone standard approved by the Board 15 in April of this year. 16 Research into the biological mechanisms that 17 could help explain the association between ozone exposure 18 and death is underway and includes a study approved by the 19 Board last December to investigate the relationship 20 between ozone exposure and heart disease. 21 That concludes my presentation. Thank you for 22 your attention, and I'll be happy to answer any of your 23 questions. 24 ACTING CHAIRPERSON RIORDAN: Thank you very much. 25 Let me offer to the Board, are there any PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 13 1 questions? Dr. Gong. 2 BOARD MEMBER GONG: Comment. I don't think there 3 are any questions. I think that was wonderfully 4 presented. I think you've actually answered some of my 5 previous questions about some of the aspects of your 6 slides. But I think one of the important things for the 7 Board members to appreciate is that these three new 8 "studies" are meta-analyses, and they really I think go a 9 long way to support the Board's decision for the ozone 10 standard for the state that we approved last April. They 11 really go a long way in supporting that. And I appreciate 12 staff representing these three studies. 13 I'm amazed that these independent investigators 14 came up with very consistant similar results. I mean, I 15 feel that it's even more solid evidence that of definite 16 health effects from the ozone exposure and premature death 17 as well. Thank you. 18 ACTING CHAIRPERSON RIORDAN: Thank you very much, 19 Dr. Gong. 20 Any other comments or questions by the Board? 21 Thank you, staff. And we look forward to 22 continuing to gather information from research that's 23 beyond what we do and having you bring it to us. Thank 24 you very much. 25 I'm going to move on to the next agenda item, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 14 1 which is 05-11-2. This is a proposed Airborne Toxic 2 Control Measure for cruise ship onboard incineration. 3 I'll let staff have a moment to change seats. 4 While they're doing that, a word to those who are 5 going to testify on this item and any item for the balance 6 of the day. Because I want to be fair and to have 7 everybody have an opportunity to speak, I'm going to ask 8 you to make your comments within a three-minute limit. 9 You may submit in written form something much longer. It 10 will be made part of the record. But I'm asking you to 11 make your comments three minutes. And if you have 12 something written, also know that you can put that in your 13 own words. You don't have to read from something to us. 14 But put that in your own words, and we'll happily accept 15 it in that form. 16 Now this proposed regulation would implement 17 Assembly Bill 471, which prohibits cruise ships from 18 conducting onboard incineration within three miles of the 19 California coast. At this time, I'll ask Ms. Witherspoon 20 to introduce the item and to begin the presentation by the 21 staff. 22 EXECUTIVE OFFICER WITHERSPOON: Thank you, Madam 23 Chairman. 24 In California, there's been growing concern over 25 the waste disposal practices of the cruise ship industry PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 15 1 on both the air quality and water quality side. As you 2 indicated, last year Assembly Bill 471 was enacted which 3 prohibits cruise ships from conducting onboard 4 incineration within three miles of the California coast. 5 The Air Resources Board is responsible for enforcing this 6 legislation and is authorized to adopt standards, rules, 7 and regulations for that purpose. 8 The proposed ATCM clarifies the boundary of the 9 three nautical mile zone and establishes recordkeeping and 10 reporting requires to facilitate enforcement. I'll now 11 turn the presentation over to Ms. Michelle Komlenic of the 12 Stationary Source Control Division. 13 (Thereupon an overhead presentation was 14 presented as follows.) 15 AIR POLLUTION SPECIALIST KOMLENIC: Thank you, 16 Ms. Witherspoon. Good morning, Madam Chairman and members 17 of the Board. Today I will be presenting staff's proposed 18 airborne toxic control measure for cruise ship onboard 19 incineration. This ATCM is being proposed to implement 20 Assembly Bill 471, which prohibits cruise ships from 21 incinerating waste and other materials within three miles 22 of the California coast. 23 --o0o-- 24 AIR POLLUTION SPECIALIST KOMLENIC: Shown here 25 are the items I'll be discussing today. I will begin with PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 16 1 the background, discuss the proposed ATCM and its key 2 elements, impacts, and future activities planned for 2006. 3 I will conclude with a brief summary and recommendation. 4 --o0o-- 5 AIR POLLUTION SPECIALIST KOMLENIC: Next, I will 6 discuss background information used in the development of 7 the proposed ATCM. 8 --o0o-- 9 AIR POLLUTION SPECIALIST KOMLENIC: As a result 10 of the Legislature's concerns over emissions from cruise 11 ships, Assembly Bill 471 was enacted. Beginning January 12 1, 2005, cruise ships were prohibited from conducting 13 onboard incineration within three nautical miles of the 14 California coast. AB 471 authorizes ARB to adopt 15 regulations to enforce the prohibition. Therefore, we are 16 proposing this airborne toxic control measure to clarify 17 and enforce the three nautical mile boundary in order to 18 ensure the public exposure to emissions from onboard 19 incineration is reduced. Prohibiting incineration within 20 three nautical miles of the California coast will reduce 21 exposure to toxic air contaminants for residents living 22 near ports in the California coast. 23 --o0o-- 24 AIR POLLUTION SPECIALIST KOMLENIC: Cruise ship 25 onboard incineration is a source of toxic air contaminants PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 17 1 such as dioxins, furans, PAHs, hydrochloric acid, and 2 toxic metals. Onboard incineration is also a source of 3 particulate matter. 4 In 2004, there were approximately 650 cruise ship 5 port calls statewide. Industry has estimated a 25 percent 6 increase in the number of cruise ships that will operate 7 in California waters over the next ten years. At many 8 California ports, residents are in close proximity to 9 cruise ship docking berths. For example, at the port of 10 Los Angeles, cruise ships can stay at port on average for 11 about 15 hours. If cruise ships were permitted to 12 incinerate while at port, exposure to emissions of toxic 13 air contaminants could potentially occur to nearby 14 residents and workers at the port and other work sites. 15 --o0o-- 16 AIR POLLUTION SPECIALIST KOMLENIC: The proposed 17 regulation was developed in an open public process with 18 extensive outreach activities. ARB staff held several 19 work group meetings and conducted two public workshops. 20 Staff worked with industry on the development of 21 the cruise ship onboard incinerator survey. The survey 22 provided information on the type and amount of garbage 23 burned annually, the days and hours of operation for the 24 incinerators, air pollution control equipment, and 25 alternative waste treatment. All major cruise lines PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 18 1 responded to the survey, and the responses we received 2 accounted for approximately 90 percent of port calls for 3 2004. Staff also conducted a site visit to a cruise ship 4 to get a better understanding of cruise ship onboard 5 incineration practices. 6 --o0o-- 7 AIR POLLUTION SPECIALIST KOMLENIC: Next, I will 8 discuss the proposed ATCM, including applicability, key 9 elements, and enforcement. 10 --o0o-- 11 AIR POLLUTION SPECIALIST KOMLENIC: As specified 12 in AB 471, the proposed ATCM applies to cruise ships that 13 carry 250 or more passengers. It does not apply to 14 vessels without berths or overnight accommodations for 15 passengers. It also does not apply to non-commercial 16 vessels, military vessels, vessels operated by nonprofit 17 groups, California or federal government operated ships. 18 --o0o-- 19 AIR POLLUTION SPECIALIST KOMLENIC: The proposed 20 ATCM prohibits onboard incineration within three nautical 21 miles of the California coast. It also requires 22 recordkeeping for segments of a voyage that travel within 23 three nautical miles of the California coasts, includes at 24 California ports and terminals. For statewide 25 consistency, we've used the three nautical mile line as PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 19 1 shown on the National Oceanic or Atmospheric 2 Administration, or NOAA, nautical charts for defining the 3 boundary. We also included a mechanism to handle future 4 NOAA updates to the three nautical mile line. 5 --o0o-- 6 AIR POLLUTION SPECIALIST KOMLENIC: Owners or 7 operators of cruise ships must maintain records for each 8 segment of a voyage if during any portion of that segment 9 the cruise ship travels within three nautical miles of the 10 California coast, including ports and terminals. 11 This slide lists the specific recordkeeping 12 requirements in the proposed ATCM. Information related to 13 the date and time of incineration, position of the ship, 14 and amount of waste incinerated are important components 15 of the recordkeeping requirements. I would also like to 16 point out that these recordkeeping requirements are 17 similar to international recordkeeping requirements 18 currently being followed by the cruise ship industry. 19 --o0o-- 20 AIR POLLUTION SPECIALIST KOMLENIC: Staff is 21 proposing to use the three nautical mile line as shown on 22 the NOAA nautical charts in order to promote consistency 23 and enforcement. The state of California is represented 24 by seven NOAA nautical charts, which are incorporated into 25 the proposed ATCM by reference. Many cruise ships PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 20 1 currently use or are familiar with the NOAA nautical 2 charts. 3 --o0o-- 4 AIR POLLUTION SPECIALIST KOMLENIC: NOAA 5 periodically updates its nautical charts to update hazards 6 to navigation and other information essential for safe 7 navigation, and is expected to update them in the near 8 future. 9 The proposed ATCM includes a provision to allow 10 the Executive Officer to revise the definition of within 11 three miles of the California coast to incorporate updated 12 charts. After NOAA updates its charts, ARB will publish 13 the revisions in the California regulatory notice register 14 and will notify potentially affected cruise ship owners or 15 operators. After notification, cruise ship owners or 16 operators will have at least 30 days before the updates 17 take effect. 18 --o0o-- 19 AIR POLLUTION SPECIALIST KOMLENIC: Enforcement 20 of the ATCM will be done by ARB staff and will include 21 annual onboard inspections and review of incineration 22 records. 23 --o0o-- 24 AIR POLLUTION SPECIALIST KOMLENIC: Now I will 25 discuss the expected impacts of the proposed ATCM. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 21 1 --o0o-- 2 AIR POLLUTION SPECIALIST KOMLENIC: The two ships 3 that incinerated waste within three miles of the 4 California coast prior to the effective date of AB 471 5 accounted for approximately 25 percent of California port 6 calls in 2004. One ship reported incinerating about 70 7 percent of its waste within three miles of the California 8 coast. By prohibiting this practice, AB 471, in 9 combination with the proposed ATCM, is expected to result 10 in reduced public exposure to toxic air contaminants and 11 other pollutants, especially for port and coastal 12 communities and along the California coast. Additionally, 13 the proposed ATCM clearly defines within three miles of 14 the California coast which provides for a level playing 15 field and statewide consistency for cruise ship owners and 16 operators. 17 --o0o-- 18 AIR POLLUTION SPECIALIST KOMLENIC: The cost to 19 cruise ship owners or operators are expected to be 20 negligible. Prior to the effective date of AB 471, most 21 ships did not incinerate within three nautical miles of 22 the California coast. Additionally, as previously 23 mentioned, the recordkeeping requirements are similar to 24 international recordkeeping requirements, therefore we 25 expect minimal regulatory burden for this industry. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 22 1 --o0o-- 2 AIR POLLUTION SPECIALIST KOMLENIC: Should the 3 Board adopt the proposed ATCM, we intend to do additional 4 work related to the ATCM. 5 --o0o-- 6 AIR POLLUTION SPECIALIST KOMLENIC: In October of 7 this year, the Governor signed Senate Bill 771. This bill 8 prohibits other ocean-going vessels, such as container 9 vessels, tankers, and bulk carriers greater than 300 gross 10 tons from conducting onboard incineration within three 11 miles of the California coast. SB 771 also charges ARB 12 with the responsibility of developing regulations and 13 enforcing this legislation. Accordingly, in 2006, ARB 14 staff will propose amendments to address SB 771. 15 --o0o-- 16 AIR POLLUTION SPECIALIST KOMLENIC: In summary, 17 the proposed ATCM reduces public exposure to toxic air 18 contaminants. It clarifies the three nautical mile limit 19 for incineration along the California coast, and also 20 establishes recordkeeping and reporting requirements to 21 facilitate enforcement efforts. 22 --o0o-- 23 AIR POLLUTION SPECIALIST KOMLENIC: ARB staff 24 recommends that the Board adopt the proposed ATCM for 25 cruise ship onboard incineration. In doing so, the Board PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 23 1 will also authorize the Executive Officer to adopt updated 2 NOAA nautical charts as revisions to these charts are 3 made. 4 This concludes my presentation. At this time, we 5 would be happy to answer any questions. 6 EXECUTIVE OFFICER WITHERSPOON: Madam Chair, just 7 a couple additional comments. 8 First, why not do the ocean incineration for 9 commercial vessels today? The answer is we had a notice 10 problem. From the date that the bill was signed, we 11 hasn't been in workshop for it. So we'll get to that as 12 quickly as we can. We would have like to have made it all 13 one reg. It's a technical problem that we'll deal with 14 later. 15 The other is why three miles. The simplistic 16 answer is that's what the law said. But because we have 17 the authority to push that out further, staff did an 18 analysis of whether three miles was, in fact, adequate to 19 protect public health. And based on the risk assessment 20 of dispersion and the rest of it, staff concluded at three 21 miles boundary the risk to residents on shore and workers 22 on shore was 1.5 per million. So we do consider the 23 three-mile boundary adequate, and that it's not necessary 24 to push it out further. But we'll be bringing you a 25 regulation next month for auxiliary engine fuel PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 24 1 requirements that uses a 24-mile boundary for switching 2 over fuel types. So there is some latitude the Board has 3 in the position of boundaries. 4 ACTING CHAIRPERSON RIORDAN: Thank you, 5 Ms. Witherspoon. That was the first question I had asked 6 staff when they were briefing me, why three miles. But 7 when you do the analysis, that's what it takes, which 8 is -- I'm glad we've done it. 9 Ms. D'Adamo. 10 BOARD MEMBER D'ADAMO: I see that the exemptions 11 are based upon the exemptions in the statute. But if we 12 had the authority to regulate those other ships, 13 non-profits, those operated by the state of California, et 14 cetera, wouldn't we be able to do more? Or is it pretty 15 negligible? Do you have an analysis on that? 16 EMISSIONS ASSESSMENT BRANCH CHIEF DONOHOUE: This 17 is Dan Donohoue. 18 We haven't done an analysis on this, but what 19 you're looking at with respect to those other ships is you 20 will not have the volume of materials to be incinerated 21 generated. We're talking about cruise ships where you 22 have thousands of people on those things. If you're 23 talking about tankers or if you're talking about container 24 ships and those cargo ships, those types of things, you're 25 dealing with crews of 20 or so. So the amount of waste to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 25 1 be incinerated would be fairly small. 2 The subsequent legislation will address some of 3 those additional things. There is some language in there 4 that is different from the language in the original thing. 5 So we will be looking a little bit further on that. But 6 as far as significant additional reductions by bringing in 7 those other vessels, based upon the number of people 8 onboard, those things we think it would be very small. 9 BOARD MEMBER D'ADAMO: Thank you. 10 ACTING CHAIRPERSON RIORDAN: Any other questions 11 for staff? 12 Dr. Gong. 13 BOARD MEMBER GONG: I was intrigued by a 14 statement that the coastline recedes or may recede in 15 different areas along the coast of California. I was 16 wondering, is that a factor in applying the three-mile 17 limit? Because it's a moving target in a sense. So I'm 18 just sort of toying with the idea that are we actually -- 19 if the coast line recedes, is three miles an adequate 20 buffer still? 21 EMISSIONS EVALUATION SECTION MANAGER BOYD: Yes. 22 We believe it will still be adequate. Typically, when the 23 coastline does change, it doesn't change by all that much. 24 The beauty of having the NOAA maps is that it does give us 25 a clear indication of where that line is going to be PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 26 1 drawn. And as was mentioned in our presentation, we do 2 have the process for making changes to that. So should 3 there be some changes to the coastline that warrant making 4 such adjustments, NOAA will make those adjustments, and we 5 can make the adjustments into the ATCM. 6 BOARD MEMBER GONG: As I fantasize about this, 7 because I'm not an expert, but what about methodology? 8 Are the winds still going to be stronger or just as strong 9 within those miles of the receding coastline? I'm just 10 adding more factors to your equation. Something to 11 consider. 12 EMISSIONS ASSESSMENT BRANCH CHIEF DONOHOUE: 13 Traditionally, the type of changes we've seen in the NOAA 14 maps are very minor. A lot of times it has to do with 15 shifting of sandbars, the addition of hazards that are in 16 there, too. So there's a lot of reasons for changing that 17 map. We do not anticipate that the basic three mile from 18 the coastline limit is going to change very much. But we 19 needed to establish one set of maps so that the ships will 20 know if we're on one side of the latitude/longitude there 21 it's okay to burn. And on the other side if their records 22 show they're on the other side of that line, then they are 23 within a zone where they shouldn't be burning. 24 So we would anticipate that what most ship 25 operators do is most of them do not burn within three PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 27 1 miles. A number of them have a twelve-mile limit they do. 2 So in most cases it's very unlikely to see them come to 3 the three-mile line burning and then stop there. 4 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Another 5 thing, we'll have access to the records after this has 6 been implemented for a while. And we'll look and see what 7 is their practice and if there is an issue with ships 8 burning at the first opportunity once they're beyond the 9 limit and that seems to cause a problem. That would be a 10 basis for us to reassess that we need something different. 11 ACTING CHAIRPERSON RIORDAN: Other questions? 12 Then we'll move on to the speakers. We have 13 three who have signed up, Teri Shore from Bluewater 14 Network; Chung Liu from South Coast Air Quality Management 15 District; and Juan Ortellado from the Bay Area. So if you 16 would come forward, please, Teri Shore. 17 MS. SHORE: Yes. Good morning. My name is Teri 18 Shore. I'm Clean Vessels Campaign Director for Bluewater 19 Network. We're a division of the Friends of the Earth. 20 We're a national environmental advocacy group, and we work 21 to prevent environmental damage from vehicles and vessels 22 and to protect human health and the planet by reducing 23 dependence on fossil fuels. 24 And I'm here this morning to strongly urge you to 25 support the measure as proposed by ARB staff to prohibit PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 28 1 onboard incineration by cruise ships. We were the sponsor 2 of the bill and now Senator Joe Simitian was the author. 3 I have submitted written comments for you that are in your 4 packets, so I won't read those. I'll hit some of the 5 highlights. 6 I also wanted to draw your attention to comments 7 that were submitted late yesterday from the Bay Area Clean 8 Air Task Force in support of this regulation, which 9 includes the American Lung Association, Bay View Hunters 10 Point Community Advocates, NRDC, Our Children's Earth, 11 RAMP, Sierra Club, TRANSDEF, and Union of Concerned 12 Scientists. So there is a lot of support for this 13 regulation, because it will increase protection of 14 exposure to people who live along the coast as well as 15 workers and cruise ship passengers from the emissions from 16 incineration. So we believe it's a very important 17 regulation. 18 It's also precedent setting, because until now 19 cruise ship incineration and all onboard incineration has 20 been unregulated. There was an international law that 21 went into effect this year for the first time that places 22 some limits but does not prohibit incineration near a 23 shore where most of the exposure would occur. So we think 24 this is a very important regulation, and we hope that 25 other states and entities around the U.S. will consider PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 29 1 this type of a standard. So once again, California's on 2 the forefront of reducing air emissions. 3 I also wanted to say that the enforcement 4 provisions in the regulations are outstanding. We think 5 this will ensure enforcement and compliance. The 6 inspection program, we highly support that. We also 7 support the staff's recommendations related to the NOAA 8 charts that those should be utilized for consistency and 9 also the recordkeeping requirements. 10 We really do commend the Air Resources Board 11 staff, specifically Michelle, for working with industry to 12 collect the data. Much of this data has never been 13 collected in a public forum before. So we'll be learning 14 a lot about cruise ship onboard incineration, when and 15 where they incinerate and how much. 16 And just to conclude my comments, we did also 17 sponsor SB 771 which will extend this provision to 18 ocean-going vessels. And there isn't a whole lot of 19 information out there either on how many of those ships 20 have incinerators, how much they incinerate, where or 21 when. So this will be extremely valuable information, and 22 we have included as well military vessels, so that should 23 be interesting to see whether we're able to get a database 24 from those vessels as well. So once again, we urge you to 25 support this measure. Thank you very much. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 30 1 ACTING CHAIRPERSON RIORDAN: Thank you very much. 2 Chung Liu. 3 MR. LIU: Good morning, Chairman Riordan and 4 members of the Board. For the record, my name is Chung 5 Liu. I'm the Deputy Executive Officer for the South Coast 6 AQMD. And South Coast strongly supports the proposed 7 regulations implementing SB 471. We particularly support 8 the recordkeeping provisions, and we support using the 9 standardized NOAA nautical chart. And I've been 10 instructed to let your Board know that should this issue 11 get into the court, the South Coast is ready to really 12 join suit with you. Thank you. 13 ACTING CHAIRPERSON RIORDAN: Thank you, Chung, 14 very much for being here. 15 Juan. 16 MR. ORTELLADO: Good morning, Chair Riordan and 17 members of the Board. My name is Juan Ortellado, and I'm 18 with the Bay Area Air Quality Management District. 19 I'm here today to speak in support of staff's 20 proposed ATCM for cruise ship incineration. The Bay Area 21 Air Quality Management District has significant cruise 22 ship traffic which is expected to increase in the future. 23 We have also long been concerned about air toxics from 24 incineration generally. I have actively worked to cut 25 incineration exposure from stationary sources. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 31 1 We think that the staff proposal does an 2 excellent job of making sure that potential benefits of AB 3 471 will become actual emission reductions. We appreciate 4 staff's investigation of incineration practices in the 5 industry and the risk analysis based on that work. While 6 we thought that the bill was needed and appropriate, the 7 competency of your staff as shown is exactly why these in 8 fact are correct. 9 In conclusion, we commend staff for the work on 10 the issue and urge you to adopt the ATCM as recommended by 11 staff in its current form. We think this proposal is a 12 solid step in the right direction. We look forward to 13 working jointly with you to continue to work in the 14 future. Thank you. 15 ACTING CHAIRPERSON RIORDAN: Thank you very much. 16 Madam Ombudsman, I apologize I forgot your part. But we 17 want that on the record. So would you please describe the 18 public participation process that occurred when this item 19 was being developed. 20 OMBUDSMAN TSCHOGL: Madam Chairman and members of 21 the Board, I understand that we're under some time 22 constraints today. And in the interest of ensuring that 23 we maintain a quorum for all of the agenda items, I'd be 24 willing to submit all of the outreach reports in written 25 form today, or if it's your preference, I will do them PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 32 1 verbally. 2 ACTING CHAIRPERSON RIORDAN: Do this one 3 verbally, and then we'll talk about the others. 4 OMBUDSMAN TSCHOGL: All right. The ATCM for 5 cruise ship onboard incineration regulations was developed 6 with input from the International Council of Cruise Lines 7 which represents all major cruise lines in California. In 8 addition, a lobbyist group and several cruise lines 9 participated in the development of this rule. 10 In February 2005, staff initiated the ATCM 11 background work with industry and the draft regulatory 12 concepts language process began in May 2005. 13 Since that time, they've had two public 14 workshops. One was on May 17th, 2005, in Sacramento, and 15 the other on August 24th, 2005, in Long Beach. 16 Approximately 25 stakeholders consisting of industry 17 representatives, environmental groups, and community 18 members attended the workshops. Also, several 19 teleconferences were held. 20 The cruise ship onboard incineration work group 21 held meetings that included teleconferencing on July 11th, 22 2005; August 22nd, 2005; and September 14th, 2005, in 23 Sacramento. On average, five industry representatives 24 attended each meeting. 25 On September 30th, 2005, the staff report was PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 33 1 sent to more than 150 individuals on list serve and nearly 2 100 individuals on the mailing list. The notice was also 3 posted on ARB's website. 4 This concludes my comments. 5 ACTING CHAIRPERSON RIORDAN: Thank you very much. 6 I appreciate that. 7 Board members, do you have any questions for 8 staff at this time? Yes, Dr. Gong. 9 BOARD MEMBER GONG: Just quickly, I see that 10 there are no industry spokespersons here today. Were 11 there any major concerns that the industry had at these 12 workshops or in other venues? 13 EMISSIONS ASSESSMENT BRANCH CHIEF DONOHOUE: This 14 is Dan Donohoue. 15 There is a letter sent in by the cruise ship 16 industry that indicated that it was generally okay with 17 what was happening. They still had some issues with 18 respect to specifying the NOAA chart as the baseline. 19 We've been in discussions with them on that. There were 20 some reference to using different charts. 21 What's important for us is for the enforceability 22 of the regulations to establish one standard set of 23 charts. So we have not elected to deviate from that. 24 They've basically indicated they would not be at this 25 meeting because they had a conference in Florida. So PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 34 1 that's where they left it. 2 ACTING CHAIRPERSON RIORDAN: Okay. Any other 3 questions by staff? 4 Unless staff has some concluding remarks, I'm 5 going to close the record on this agenda item. However, 6 the record will be reopened when the 15-day notice of 7 public availability is issued. Written or oral comments 8 received after this hearing date but before the 15-day 9 notice is issued will not be accepted as part of the 10 official record on this agenda item. 11 ACTING GENERAL COUNSEL JENNINGS: Madam 12 Chairwoman, just to clarify, there are no 15-day changes. 13 ACTING CHAIRPERSON RIORDAN: Oh, there are not. 14 That's a good thing. I don't know. It's just part of the 15 record I'm reading. Well, then, but there are ex partes 16 requirements. Okay. I've closed that. 17 Are there any ex parte conversations that need to 18 be noted for the record? 19 Seeing or hearing none, then we'll move on. 20 There is a Resolution that is before us. 21 Ms. D'Adamo. 22 BOARD MEMBER D'ADAMO: I move that we adopt 23 Resolution 05-56. 24 ACTING CHAIRPERSON RIORDAN: Is there a second to 25 the motion? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 35 1 BOARD MEMBER GONG: Second. 2 SUPERVISOR PATRICK: Second. 3 ACTING CHAIRPERSON RIORDAN: Second by 4 Ms. Patrick. 5 Any particular discussion on this particular 6 item? Hearing or seeing none, all those in favor signify 7 by saying aye. 8 (Ayes) 9 ACTING CHAIRPERSON RIORDAN: Opposed, no. 10 The motion carries to support Resolution 05-56. 11 Thank you very much. And thank you, staff. 12 And we'll take a moment while we change staff 13 here to move to the next item. 14 This item is 05-11-3. Item 05-11-3, Amendments 15 to the Current Inboard and Sterndrive Boat Regulations, 16 staff is proposing amendments that would provide industry 17 additional lead time for complying with the 2007 model 18 year requirements while preserving the emission benefits 19 of the existing regulation. 20 Ms. Witherspoon, would you like to introduce this 21 item, please? 22 EXECUTIVE OFFICER WITHERSPOON: Thank you, Madam 23 Chairman. 24 Today staff is proposing that you amend ARB's 25 existing inboard and sterndrive regulations to provide PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 36 1 marine engine manufacturers an optional path to comply 2 with '07 and later model year standards. This is an 3 emissions neutral proposal whereby an optional one-year 4 delay of the '07 standard would be mitigated by faster 5 compliance with 100 percent implementation requirement. 6 The proposal also provides relief for the 7 certification of high performance and competition engines 8 with rated power greater than 373 kilowatts. I'll now 9 turn the presentation over to Mr. Jeff Lowry of the 10 Off-Road Controls Section. 11 (Thereupon an overhead presentation was 12 presented as follows.) 13 STAFF AIR POLLUTION SPECIALIST LOWRY: Thank you, 14 Ms. Witherspoon. Good morning, Madam Chairman and members 15 of the Board. 16 Today's presentation will summarize the staff's 17 proposal to amend California's existing regulations for 18 new recreational marine inboard and sterndrive pleasure 19 craft. This rulemaking is specific to gasoline-fueled 20 vessels and does not apply to commercial marine 21 applications. 22 Staff is recommending that the Board adopt 23 provisions that would allow industry additional lead time 24 to comply with the five gram per kilowatt hour combined 25 hydrocarbon and oxides of nitrogen standard currently PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 37 1 required in 2007 and to provide relief for the 2 certification of high performance engines greater than 373 3 kilowatts in power. 4 --o0o-- 5 STAFF AIR POLLUTION SPECIALIST LOWRY: The 6 presentation begins with an overview of inboard and 7 sterndrive pleasure craft and an explanation of their 8 impact on air quality. After that, the focus turns to 9 staff's proposed amendments. Next staff will report on 10 the status of its ongoing saltwater test program. 11 Following that, staff will discuss several elements 12 pertaining to the control of inboard and sterndrive 13 engines that will necessitate future consideration by the 14 Board. Finally 15-day changes are presented, followed by 15 a summary of the facts supporting staff's recommendation 16 to adopt its proposal. 17 --o0o-- 18 STAFF AIR POLLUTION SPECIALIST LOWRY: Inboard 19 and sterndrive pleasure craft are primarily used for 20 recreational activities, hence their name. The engines 21 are most commonly derived from V8 or V6 gasoline truck 22 engines. Inboard engines typically drive long straight 23 propeller shafts to enable propulsion. This is the oldest 24 configuration, and it places the engine in the middle of 25 the boat. With sterndrives, the engine is situated at the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 38 1 extreme rear-end of the boat, but connects to an external 2 transmission instead of directly to the propeller shaft. 3 The boat shown in this slide is one of four 4 currently being evaluated by the Southwest Research 5 Institute as part of ARB's saltwater catalyst test program 6 in the bay outside of Corpus Christi, Texas. It is 7 powered by a 5.7 liter inboard engine. 8 --o0o-- 9 STAFF AIR POLLUTION SPECIALIST LOWRY: This slide 10 illustrates the statewide emissions inventory of combined 11 hydrocarbon and oxides of nitrogen for all off-road 12 gasoline engines in the years 2007, 2010, and 2020. These 13 estimates take into account all previous Board actions to 14 reduce ozone precursor emissions in California, including 15 the existing inboard and sterndrive regulation. 16 The estimates for each year are separated into 17 two groups: One representing inboard and sterndrive 18 engines, and the other representing the remaining 19 categories of off-road gasoline engines, including 20 forklifts, lawn and garden equipment, recreational 21 vehicles, and personal watercraft. From the charts, we 22 can see the entire off-road gasoline inventory is 23 decreasing over time as a result of the Board's previous 24 actions. However, at 13 percent in 2020, inboard and 25 sterndrive engines continue to be a significant PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 39 1 contributor. 2 --o0o-- 3 STAFF AIR POLLUTION SPECIALIST LOWRY: The 4 current regulation was adopted by the Board in 2001 and 5 applies to only pleasure craft utilizing inboard or 6 sterndrive engines beginning with the 2003 model year. 7 The regulation requires compliance with two phases of 8 increasingly stringent exhaust emission standards. 9 The first phase began in 2003 and requires 10 engines less than or equal to 373 kilowatts in power to 11 meet a manufacturer fleet average of 16 grams per kilowatt 12 hour hydrocarbon plus NOx standard. 13 The second phase requires engines to meet a more 14 stringent hydrocarbon plus NOx standard of five grams per 15 kilowatt hours beginning on a portion of engines in 2007 16 and 2008, then in all engines beginning in 2009. Engine 17 manufacturers have to certify at or below this standard 18 without averaging the product engine family lines. 19 However, manufacturers of marine engines greater 20 than 373 kilowatts in power do not have to comply with the 21 regulation until 2009. Furthermore, the current 22 regulation established the durability period for engines 23 certified to the five gram per kilowatts hour hydrocarbon 24 plus NOx standard beginning in 2009. Emission levels 25 would have to remain at or below the standard for at least PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 40 1 480 hours or for ten years. Additionally, inboard and 2 sterndrive engines must incorporate onboard diagnostic 3 systems in 2007 to monitor the performance of emission 4 related components in use. 5 --o0o-- 6 STAFF AIR POLLUTION SPECIALIST LOWRY: This slide 7 provides an overview of the freshwater test program funded 8 by ARB in 2002 to demonstrate the durability and safety of 9 engines equipped with catalysts in a freshwater marine 10 environment. After 480 hours of operation in freshwater, 11 which is representative of the useful life of inboard and 12 sterndrive engines, the engines were removed from the 13 boats and tested on a dynamometer to assess the emissions 14 performance of the catalysts. The test results indicated 15 that the catalyst deteriorated somewhat as expected, but 16 all were within acceptable parameters. 17 Three of the four catalyst equipped engines were 18 still emitting below the five gram per kilowatt hour 19 hydrocarbon plus NOx standards. Furthermore, at no time 20 during the test program did catalyst temperatures exceed 21 safe levels. This program conclusively demonstrated the 22 feasibility of using three-way catalysts to meet the 23 requirements of the existing regulation. 24 --o0o-- 25 STAFF AIR POLLUTION SPECIALIST LOWRY: Here we PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 41 1 show the types of emission control technologies that are 2 expected to be used to meet the five gram per kilowatt 3 hour hydrocarbon plus NOx standard. These are the same 4 technologies currently used to control emissions from 5 automotive engines. They were used in the freshwater test 6 program described in the previous slide and are currently 7 being used in ARB's saltwater test program, which will be 8 discussed later in the presentation. 9 --o0o-- 10 STAFF AIR POLLUTION SPECIALIST LOWRY: On October 11 24th, 2004, staff updated the Board on the status of the 12 freshwater catalyst test program. The National Marine 13 Manufacturers Association, which represents inboard and 14 sterndrive engine manufacturers, used this opportunity to 15 raise concerns regarding the time frame for introducing 16 catalysts. Specifically, the Association expressed its 17 desire to have ARB amend the regulations implementation 18 schedule such that instead of having the five gram per 19 kilowatt hours hydrocarbon plus NOx standard phased in 20 during model years 2007 through 2009, it should be fully 21 implemented across product lines in 2008. It also raised 22 concerns regarding the compliance of high performance 23 engines greater than 337 kilowatts. Staff expressed a 24 willingness to consider these amendments, but only so long 25 as overall emission benefits in 2007 and later could be PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 42 1 maintained. 2 --o0o-- 3 STAFF AIR POLLUTION SPECIALIST LOWRY: Staff's 4 proposed amendments are meant to provide engine 5 manufacturers with additional lead time for complying with 6 the five gram per kilowatt hour hydrocarbon plus NOx 7 standard, while preserving the emission benefits of the 8 existing regulation. Accordingly, staff is proposing that 9 engine manufacturers be allowed a choice of implementation 10 options to best suit their production needs and that 11 certain relief provisions be made available to ease the 12 certification of engines greater than 373 kilowatts in 13 power. 14 --o0o-- 15 STAFF AIR POLLUTION SPECIALIST LOWRY: Today, we 16 are proposing to create two implementation options. The 17 first option retains the identical standards and schedule 18 of the current regulation. A new second option allows 19 manufacturers to postpone partial compliance with the five 20 gram per kilowatt hour standard in 2007 in exchange for 21 full compliance with that standard in 2008, one year 22 earlier than currently required. Manufacturers choosing 23 this option must provide additional emission reductions to 24 compensate for the loss in emission benefits in 2007. 25 Staff believes that the most likely approach for achieving PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 43 1 additional emission reductions in 2007 will be the 2 replacements of the fuel supply hoses with ones 3 constructed from low permeation evaporative control 4 material. 5 --o0o-- 6 STAFF AIR POLLUTION SPECIALIST LOWRY: To 7 simplify the compliance of high performance engines 8 greater than 373 kilowatts in power, staff is proposing 9 the manufacturers be allowed to average emission levels 10 from these engines with those from engines less than 373 11 kilowatts in power. In so doing, manufacturers may be 12 able to avoid the expense of equipping a relatively small 13 number of these high performance engines with catalysts, 14 should they be able to certify the remainder of their 15 engines to low emission levels. 16 Staff is also proposing to revise the 17 manufacturer warranty period, currently three years 18 without hourly limits for certain mechanical parts, 19 subject to accelerated wear on high performance engines to 20 include hourly limits of either 50 or 150 hours depending 21 on the engine power, yet while maintaining the existing 22 three-year warranty for all electronic emission related 23 components. Similarly, staff is proposing to limit the 24 durability requirement for high performance engines from 25 three years to one year at 50 hours, whichever comes PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 44 1 first, due to the shorter life of these engines and 2 propensity for accelerated wear of critical emission 3 control components. 4 --o0o-- 5 STAFF AIR POLLUTION SPECIALIST LOWRY: ARB and 6 U.S. EPA are funding another test program to determine the 7 durability of catalysts and the feasibility of monitoring 8 them in a saltwater environment. This project is being 9 conducted in conjunction with the marine industry, and 10 Southwest Research Institute has again been hired as the 11 contractor. The United States Coast Guard is supplying 12 the fuel for the project, and the Texas Parks and Wildlife 13 Department has volunteered to operate the boats. 14 The goal is to operate the engines on the water 15 for as long as possible up to 480 hours. However, given 16 the time constraints to complete the test program by the 17 end of the year, and delays brought about by Hurricanes 18 Katrina and Rita, it is possible than less than 300 hours 19 may be accumulated. The engines will be tested 20 periodically to determine whether or not emissions 21 performance has been compromised due to the saltwater and 22 whether or not the hardware from monitoring the catalysts 23 has remained viable throughout the accumulation period. 24 At this stage of testing with approximately 150 25 to 200 hours on the boats, no indications of excessive PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 45 1 deterioration or abnormal performance with respect to the 2 emission control system have been reported by the 3 contractor. 4 --o0o-- 5 STAFF AIR POLLUTION SPECIALIST LOWRY: In the 6 near future, staff intends to propose a carbon monoxide 7 standard for inboard and sterndrive pleasure craft. 8 However, since testing is still underway to determine a 9 level of control sufficient to protect public health and 10 to achieve attainment with air quality standards, staff 11 believes the best approach is to wait until the testing is 12 complete and then return to the Board to propose an 13 appropriate standard. 14 Meanwhile, significant reductions in carbon 15 monoxide will occur nonetheless as a result of the marine 16 industry's migration to three-way catalysts to comply with 17 the five gram per kilowatt hour hydrocarbon plus NOx 18 standard. 19 U.S. EPA is preparing a rulemaking that will 20 establish evaporative emission standards. Once this is 21 complete, staff will evaluate the requirements of the 22 federal rule and will return to the Board with the 23 recommendation to adopt evaporative emission standards in 24 California. Furthermore, staff recognizes that a return 25 to the Board will be necessary to provide a revised PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 46 1 compliance option for small-volume manufacturers whose 2 product lines consist primarily or exclusively of high 3 performance engines greater than 373 kilowatts. These 4 engines are exempt from certification requirements until 5 the 2009 model year, and staff is still considering the 6 best approach for assuring their compliance in the future. 7 Staff is also committed to preparing a white paper on the 8 development of an engine replacement program to accelerate 9 the fleet turnover of older marine engines. 10 --o0o-- 11 STAFF AIR POLLUTION SPECIALIST LOWRY: Recent 12 discussions with the marine industry have raised the need 13 to clarify or modify several of staff's proposed 14 amendments. This slide lists the requirements at issue 15 and how staff intends to address them subsequent to this 16 hearing. 17 The first bullet documents staff's recommendation 18 to transfer the responsibility and liability for 19 installing low permeation evaporative hoses from the 20 engine manufacturer to the boat builder. The fuel supply 21 hose, which bridges the fuel tank and the engine, is 22 typically provided by the boat builder because the engine 23 manufacturer may be unaware of the length of hose needed 24 prior to installation due to the variety of boat 25 applications that may use that same engine. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 47 1 The second and third bullets document staff's 2 recommendation to limit manufacturer's warranty on 3 mechanical parts for all engines greater than 373 4 kilowatts in power instead of only those engines greater 5 than 485 kilowatts as originally proposed, and to limit 6 all other warrantee periods to a maximum of 480 hours, 7 whereas currently only a three-year duration is specified. 8 The last bullet on this slide refers to minor 9 procedural changes and clarifications. Upon Board 10 approval, a detailed description of all changes and the 11 rational inspiring them will be made available in an 12 official notice of public availability of modified text to 13 be released for comment after this hearing. 14 --o0o-- 15 STAFF AIR POLLUTION SPECIALIST LOWRY: This final 16 slide highlights the main points from the presentation. 17 Staff's proposal facilitates compliance by providing 18 engine manufacturers with additional lead time to comply 19 with the five gram per kilowatt hour of hydrocarbon plus 20 NOx standard by allowing emission levels to be averaged 21 for high performance engines such as the incorporation of 22 catalysts on them may not be necessary and by revising 23 emission warrantees and durability periods for high 24 performance engines to account for accelerating mechanical 25 component wear. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 48 1 Staff's proposal also preserves the cost 2 effectiveness and emission reduction benefits of the 3 existing regulation. Since Option 1 maintains the same 4 standards and implementation schedule as the existing 5 regulation, the cost of compliance should not change, nor 6 should estimated emission benefits. 7 Under Option 2, the economic savings from 8 postponing the implementation of catalysts in 2007 would 9 certainly outweigh any costs associated with incorporating 10 the low permeation fuel supply hose. Furthermore, the 11 emission benefits from the hose would make up for any lost 12 benefits as a result of postponing the exhaust standard. 13 This concludes the staff's presentation. Staff 14 is ready to answer any questions the Board might have. 15 ACTING CHAIRPERSON RIORDAN: Thank you very much. 16 I'm going to ask our Ombudsman just to read her report, 17 then I'll open it up for questions. 18 OMBUDSMAN TSCHOGL: Madam Chairman and members of 19 the Board, the National Marine Manufacturers Association 20 and the Manufacturers of Emission Control Association have 21 contributed to the development of staff's proposal to 22 amend the inboard sterndrive recreational marine 23 regulation. 24 The regulatory process for this proposal began on 25 October 28th, 2004, when staff reported to the Board on PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 49 1 the status of the freshwater demonstration program, 2 investigating the durability and safety of the catalysts 3 on inboard and sterndrive pleasure craft. 4 In response to the concerns raised by the marine 5 industry at that meeting, the Board directed staff to 6 gauge industry's progress in meeting the technological 7 requirements of the regulation and to report back to the 8 Board if necessary with a proposal to provide the relief 9 industry was requesting. 10 After several follow-up meetings with the marine 11 industry and other stakeholders, staff began preparing the 12 regulatory package for amending the inboard sterndrive 13 regulation. The Board meeting held on October 28th, 2004, 14 in Fresno, California, was the first public forum at which 15 the topic of amending the 2001 inboard sterndrive 16 regulation was discussed. Approximately 50 stakeholders 17 attended the public Board meeting. In addition, an 18 unspecified number of interested parties participated 19 through video conferencing. Between January 25th and 20 February 9th, 2005, staff met individually in El Monte 21 with representatives from three of the six inboard and 22 sterndrive manufacturers. 23 On February 28th, 2005, U.S. EPA held a public 24 hearing in Washington, District of Columbia to evaluate 25 whether or not California should be given authority as PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 50 1 permitted under the provisions of the Federal Clean Air 2 Act to independently enforce the inboard sterndrive 3 regulation adopted by the Board in 2001. Approximately 50 4 stakeholders attended. 5 On April 28th, 2005, staff met with NMMA and 6 representatives, several individuals, and marine engine 7 and boat manufacturers at the Southwest Research Institute 8 in San Antonio, Texas. Approximate attendance was 30. 9 Staff also met with NMMA and several engine manufacturers 10 on October 12th, 2005, in El Monte where 12 persons 11 attended. 12 The staff report was released along with the 13 proposed regulatory amendments on September 30th, 2005. 14 Only the public notice was physically mailed to 15 stakeholders. The staff report was made available as a 16 web document only. However, the required number of hard 17 copies was made available to both the Sacramento and 18 El Monte public information offices on September 30th, 19 2005. Several mailing lists were used to notify 20 stakeholders. These lists included marine vessels, 21 recreational marine, dealers of recreational marine 22 engines, associations, and others. Together, the lists 23 represent nearly 1150 subscribers. The notice was also 24 sent to subscribers on two list serves which combined 25 total approximately 1400 subscribers. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 51 1 This concludes my comments. Thanks. 2 ACTING CHAIRPERSON RIORDAN: Thank you, Madam 3 Ombudsman. 4 Board members, do you have any comments for staff 5 at this time? 6 Dr. Gong. 7 BOARD MEMBER GONG: Quick question. In terms of 8 the engine and boat manufacturers, if you had to give a 9 rough estimate, what percent do you think would go for 10 Option 1 or Option 2 as of today? 11 EMISSION RESEARCH AND REGULATORY DEVELOPMENT 12 BRANCH CHIEF CARTER: I guess I'll try to answer that. 13 All indications are probably 90 percent if not all would 14 probably go for Option 2. But we didn't want to eliminate 15 Option 1, because we want to leave that choice there. 16 ACTING CHAIRPERSON RIORDAN: Do you want to 17 identify for the reporter? 18 EMISSION RESEARCH AND REGULATORY DEVELOPMENT 19 BRANCH CHIEF CARTER: I'm sorry. Michael Carter. 20 ACTING CHAIRPERSON RIORDAN: Okay. Other 21 questions at this time? 22 We have then five persons who wish to speak. Joe 23 Kubsh, John McKnight, Mark Riechers, Dick Rowe, and Mark 24 McKinney. 25 Joe, we'll start with you. And again, three PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 52 1 minutes we'd like it in your own words as opposed to just 2 reading. And so I know you can do that, Joe. You're very 3 good at that. 4 MR. KUBSH: Good morning, Madam Chairman and 5 members of the Board. My name is Joe Kubsh. I'm the 6 current Acting Executive Director of the Manufacturers 7 Emission Controls Association. As many of you know, MECA 8 is a nonprofit association of the world's largest 9 manufacturers of emission control technology from mobile 10 sources. Our members have decades of experience in 11 developing and manufacturing emission control technologies 12 for the full range of mobile sources that are out there in 13 the marketplace. 14 And we have also been a very important partner in 15 the two test programs that Mr. Lowry detailed in the staff 16 presentation here this morning. Both the freshwater test 17 program and the saltwater test program that are being run 18 down in Texas utilize three-way catalyst technology that's 19 been supplied by our members. 20 I want to thank the staff for their efforts in 21 working with our members and the industry and providing an 22 opportunity to demonstrate what three-way catalyst 23 technology can do on these applications. And once again, 24 three-way catalysts have been shown to be a very robust 25 technology for controlling hydrocarbon and NOx emissions PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 53 1 from these marine engines in particular, but in general 2 any off-road application of a spark-ignited engine 3 three-way catalyst technology can provide significant 4 reductions in hydrocarbon and NOx emissions. The kinds of 5 three-way catalysts that have been used in this marine 6 test program are very similar to automotive-based 7 three-way catalyst technology that are used on passenger 8 cars today. 9 Again, I'd like to thank the staff for their 10 efforts. And, again, it's important to note this program 11 not only shows that three-way catalysts can be used to 12 effectively reduce emissions, but they can be used and 13 engineered in a safe manner to also comply with Coast 14 Guard temperature requirements that are associated with 15 exhaust systems on these applications. 16 Again, thank you for your time. 17 CHAIRPERSON LLOYD: Thank you very much. 18 Any questions for this speaker? 19 We appreciate your comments. I note a new title 20 behind your name, do I? 21 MR. KUBSH: Yeah. 22 ACTING CHAIRPERSON RIORDAN: John McKnight. 23 MR. MC KNIGHT: Thank you, and good morning. My 24 name is John McKnight. I'm Director of Environmental and 25 Safety for Marine Manufacturers Association. Behind me PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 54 1 are the representatives from the marine industry, which 2 are the people that are going to have to build and certify 3 these engines for production. And I would like to take a 4 minute to introduce themselves. They've come a long way. 5 Actually, Mark Riechers was working in Amsterdam yesterday 6 on EU regulations. I have no idea how he got here in 7 time. 8 ACTING CHAIRPERSON RIORDAN: Well, we hope that 9 your internal clock has changed. It's about 10:15 here. 10 I don't know what time it is in Amsterdam. 11 MR. RIECHERS: I'm Mike Riechers. I'm the 12 Regulatory Development Manager for Mercury Marine. 13 MR. ROWE: I'm Dick Rowe. I'm Chairman and CEO 14 of Marine Engines in Tennessee. 15 MR. MC KINNEY: Mark McKinney, Vice President of 16 Pleasurecraft Marine Engine Company. 17 MR. KOLB: Rich Kolb, Compliance Engineer for 18 Volvo Penta. 19 MR. WAGGONER: Rich Waggoner, Director of 20 Environmental Activities, Indmar Marine Engines. 21 MR. MC KNIGHT: We basically have the whole 22 industry here for you today, other than the companies that 23 couldn't afford the jet fuel to get here. There's about 24 three of them that aren't here. 25 I only have a few brief comments in which I want PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 55 1 to discuss some very important issues. The first is the 2 importance of approving the staff supported amendments 3 that were recommended today. We support them 100 percent. 4 And we've been working hard with staff for the past few 5 years and finally getting to the point where I think we've 6 reached some success. 7 The second request is that the Board seriously 8 consider the need to properly finish the saltwater test 9 program. And I put a note in there as far as the 10 freshwater tests, some of the problems that we've had with 11 it, and some of the problems with exhaust leaks and things 12 like that that went on in the freshwater test. I know 13 Jeff had mentioned in his testimony that they had put on I 14 think it was 200 hours on the engines on the saltwater 15 portion of the test. The last number I received from 16 Southwest Research was at 75 hours. 17 So one of the things that we're going to be 18 asking the Board today to consider is the fact that we 19 believe that we need to run these engines out for the full 20 480 hours. I think it's critical. Pretty much in 21 summary, it's our position that, you know, this is a 22 safety issue. This is a durability issue. As a Board, 23 the buck stops here. I think staff would support making 24 this work right. We support making this work right. 25 Boaters are counting on you to make this work right. The PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 56 1 Coast Guard, what we feel is we did see some problems on 2 the freshwater test at 300 hours with cracking manifolds, 3 and it's all documented right there. We got 75 hours on 4 these boats in saltwater. Let's run them out. Let's see 5 if we don't have problems with it. 6 Another issue that's come up, and Mark McKinney 7 is going to talk about it, is onboard diagnostics. One of 8 the things we agreed to do was to evaluate onboard 9 diagnostics in the saltwater tests. And based on that 10 evaluation, California could move forward with an OBD 11 system which we support if it works. The problem is they 12 had -- Mark will get into it as he's the technical guy, is 13 they've had some problems with the onboard diagnostic 14 system. Technically, it isn't getting hot enough with the 15 cold water cooling off the engine for it to work at idle 16 speeds and at low speeds. And, really, there hasn't been 17 a solution to work it out with Southwest Research. 18 There's still work to be done on and things are going to 19 allow us to come out with a safe product. 20 We're not saying don't approve the amendments. 21 We're saying let's move forward with 2008 implementation. 22 But at the same time, we're asking you to support what you 23 started, what your resolution was. We must honor the 24 Resolution that we worked on back in 2001. Thank you. 25 ACTING CHAIRPERSON RIORDAN: Thank you very much. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 57 1 Any questions? Dr. Gong. 2 BOARD MEMBER GONG: Actually, for staff. Please 3 stand there. The Southwestern laboratory, I think you 4 mentioned in your presentation you couldn't complete the 5 480 hours of saltwater testing because of the hurricanes. 6 I don't understand that. There's plenty of saltwater 7 around this globe of ours, not to mention you can make 8 your own. 9 MOBILE SOURCE DIVISION CONTROL CHIEF CROSS: Bob 10 Cross. 11 First of all, the freshwater was completed 12 recently, but it was completed. The saltwater will be 13 completed, but it was delayed by several months because of 14 the hurricanes. And the program is progressing smoothly. 15 We expect it to be completed. I think the real issue is 16 that the EPA's calendar is looking at trying to do 17 something by the end of this calendar year in terms of 18 standards of option. And I don't know whether or not the 19 Southwest program will be completed by then. 20 I think what you can expect from your staff is 21 that we will monitor the program through its completion. 22 And if there are problems identified from the program 23 which are critically negative to being able to proceed 24 with the catalyst program on boats, we'll be back. But I 25 think based on freshwater, we're pretty confident there PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 58 1 won't be. 2 BOARD MEMBER GONG: I'm getting the message that 3 480 hours will be done. 4 EMISSION RESEARCH AND REGULATORY DEVELOPMENT 5 BRANCH CHIEF CARTER: Well -- 6 BOARD MEMBER GONG: Eventually. 7 EMISSION RESEARCH AND REGULATORY DEVELOPMENT 8 BRANCH CHIEF CARTER: Well, if the program is finished by 9 the end of the year, which according to EPA's timeline it 10 has to be, according to them, it would most likely not 11 have 480 hours on them at that time. 12 MOBILE SOURCE DIVISION CONTROL CHIEF CROSS: 13 We'll go ahead and run it out. 14 EMISSION RESEARCH AND REGULATORY DEVELOPMENT 15 BRANCH CHIEF CARTER: Because it's more complicated. It's 16 not just our program. We're not the only ones funding it. 17 EPA is a partner in this. They're part of the funding as 18 well. Their funding will stop in the end of the year. 19 Therefore, the testing will stop. 20 MOBILE SOURCE DIVISION CONTROL CHIEF CROSS: 21 We'll make it happen. 22 ACTING CHAIRPERSON RIORDAN: Bob will send money. 23 MOBILE SOURCE DIVISION CONTROL CHIEF CROSS: 24 That's right. I'll have to. 25 EXECUTIVE OFFICER WITHERSPOON: And South Coast PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 59 1 will help if we need them. 2 ACTING CHAIRPERSON RIORDAN: Any other questions? 3 Mr. Riechers. 4 MR. RIECHERS: Good morning. My name is Mark 5 Riechers. I'm Regulatory Development Manager for Mercury 6 Marine. 7 One of the things that I think we should do here 8 is just put our industry in a little better perspective. 9 We're the largest engine manufacturer for marine engines 10 in the world, and yet we still only sell 85,000 inboard 11 and sterndrive engines on a worldwide basis. And when you 12 compare that to automotive, you can see we don't have 13 nearly the resources that the auto industry does. 14 Having said that, we are fully committed to going 15 forward with catalyst development on these engines along 16 with onboard diagnostics. I'd like to thank the staff for 17 their diligent work in making changes to this rule that 18 actually make it work a lot better for us. 19 The couple of big issues that we had were the 20 phase-in, which after in hindsight was not a well thought 21 out plan even by industry, because it required us to 22 control what the boat builders sold in California and that 23 was just not workable. 24 Also we have the issues of the high performance 25 engines. And while that's a very small market, I would PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 60 1 like to put kind of a human side on that. Mercury Racing, 2 which is the largest high performance manufacturer in the 3 world, employs 174 people. Those are jobs that we 4 certainly want to maintain. It's a good viable business. 5 Those engines are also supplied to boat builders and 6 dealers, many of them in California, Eliminator boats, 7 Barron boats, and Lavey Craft are all California boat 8 builders that rely on those engines being available. And 9 would like to thank staff for coming up with a creative 10 way we can keep that market going. 11 Finally, one thing I do want to strongly stress 12 is that we do believe that the saltwater test program does 13 need to be completed. There's always outstanding 14 questions about safety and durability. The Coast Guard 15 has raised these questions, and I think that we and the 16 Board owe it to the public to complete this program. 17 We've supported this program from day one. Currently of 18 the three boats running in the saltwater test, Mercury 19 Marine supplied two out of three of those boats. So we've 20 been an active participant in it. And we just feel that 21 that program needs to get completed. 22 In summary, I'd like to ask that the Board 23 endorse the changes to this rule. I think they're the 24 right changes. They'll allow us to go forward as an 25 industry, develop catalyst systems which will not only PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 61 1 reduce the regulated emissions, it will also reduce carbon 2 monoxide. And those are all goals that we are absolutely 3 in favor of. Thank you for your time. 4 ACTING CHAIRPERSON RIORDAN: Thank you very much. 5 Are there any questions for this speaker? 6 Thank you very much for traveling the distance 7 that you did. 8 Mr. Rowe. 9 MR. ROWE: I'm not quite as tired as Mark is, 10 because I only come from Tennessee. Good morning, Madam 11 Chairman -- 12 ACTING CHAIRPERSON RIORDAN: You may want to 13 bring that microphone down to you. 14 MR. ROWE: Good morning. My name is Dick Rowe. 15 I'm Chairman and CEO of Indmar Marine Engines out of 16 Millington, Tennessee. We're just north of Memphis. 17 We're manufacturers of inboard marine engines. We also 18 have a warehouse sales and service in Corona, California. 19 We have a large establishment there. It's been a long 20 journey since we first met with a group of concerned 21 manufacturers with Bob Cross in 1986. 22 That's a long time ago, right; Bob? 23 It was the beginning of a long journey for a 24 cleaner marine engine environment for all our citizens. 25 We truly believe we have learned a lot over all these PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 62 1 years. From the beginning meeting, we realized both staff 2 and industry that there were difficulties facing us. They 3 don't normally put cars in water. So the idea of 4 catalysts, just slip it over to a marine engine, was a 5 no-brainer. Well, it's proved to be a lot of difficult 6 things. But by cooperation and understanding by both 7 staff and industry, we've come a long way. We're just 8 some 400 hours away from completion and that is very 9 important that we finish this. 10 The first phase of freshwater testing still has 11 some unanswered questions that really bothers the 12 industry, and it should bother every person that would 13 have a catalyst equipped boat. The concern of cracked 14 manifolds, leaking exhaust not only is a fire hazard, but 15 it also is a hazard of CO leaking inside the boat. We 16 hope the problem has been corrected. 17 We're some 90 hours into the saltwater testing. 18 We need to go through the 480 hours to prove that there 19 isn't mechanical and/or metal defects that would cause 20 cracking and things like that. The health and safety of 21 those occupying the boat while it is operated is 22 paramount. 23 Being totally committed to the test program, 24 Indmar supplied two of the four boats originally for the 25 freshwater testing. But because of budgetary constraints PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 63 1 and one of our boats was pulled out, and we've committed 2 that boat to long-term storage on the effect of the 3 catalyst. So we're going to see what happens on storage. 4 I've got agreements with both the Air Resources Board and 5 the U.S. EPA on the results of it. And we were going to 6 do the testing in our lab afterwards. 7 Indmar has always been a major participant in 8 working with the California industry and U.S. EPA. We 9 applaud all the hard work and cooperation we've had over 10 the years. It's been very difficult for small companies 11 to work through the -- I'm stopping for a minute. I'll 12 argue a second with Mr. Kubsh. And if you will let me 13 digress just a minute. 14 Our company is the largest of the small inboard 15 manufacturers. We to this day have never had a phone call 16 returned from any member of Mr. Kubsh's organization. We 17 visited their plants. We've talked with their engineers, 18 and they've refused to call back. They've refused to give 19 us any assistance. Thank gosh we have an engineer that 20 has had all the experience in the auto industry, and 21 Mr. Wagner is with us, and he's been able to bring us to 22 where we are today. Otherwise, companies our size and 23 smaller are dead in the water. 24 ACTING CHAIRPERSON RIORDAN: Okay. 25 MR. ROWE: I just appreciate that comment. It's PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 64 1 off the record. 2 ACTING CHAIRPERSON RIORDAN: Well, now it's on 3 the record, I hate to tell you. 4 But Mr. Rowe, I appreciate this. But you have 5 run out of time. 6 MR. ROWE: Okay. 7 ACTING CHAIRPERSON RIORDAN: But here's the great 8 opportunity for you. He's sitting right here. 9 MR. ROWE: I've talked to him before. 10 ACTING CHAIRPERSON RIORDAN: It's a great 11 opportunity to talk to him. So maybe after the hearing. 12 Mark McKinney, you're next. 13 MR. MC KINNEY: Good morning. My name is Mark 14 McKinney. I'm Vice President of Pleasurecraft Marine 15 Engine Company. 16 Pleasurecraft is a 32-year-old family-owned 17 company. We have 85 employees and we manufacture two 18 types of gas inboard engines, PCM for the inboard ski boat 19 market and crusader for the inboard cruiser market. Our 20 engines are sold by dealers in California and enjoyed by 21 many California boaters. 22 I want to thank you for the efforts of the ARB 23 staff in committing to and funding the freshwater and 24 saltwater catalyst programs. Our main issue is the need 25 for completion of the saltwater catalyst program. As Vice PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 65 1 President of Operations, my responsibility is directing 2 our engineering department to develop a catalyst system. 3 We are a small company. And the amount both financial and 4 manpower resources needed to be directed towards the 5 catalyst system is very important to us what Southwest 6 provides. 7 As Pleasurecraft, we are committed to building 8 cleaner running engines so that the EPA and ARB can meet 9 its goal. At the same time, in the interest of safety and 10 reliability, it's critical we get this right the first 11 time. The freshwater testing has provided us with the 12 valuable information. I've been to Southwest to observe 13 the testing many times and have been in continuous contact 14 with Southwest gathering technical and safety information. 15 But freshwater testing has pointed out some 16 challenges. The engines tested had failures. They locked 17 up with water, and major repairs had to be made to the 18 engines as well as exhaust systems. These failures 19 occurred while the boats were tested in ideal conditions, 20 warm air, warm water, continuous steady use, no winter 21 lay-ups, and under the care of engineers. 22 At a marine industry meeting with Southwest just 23 a few weeks ago, Jim Carol, which is the lead engineer for 24 the catalyst project at Southwest, pointed out very 25 serious problems he identified with the engines being PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 66 1 tested for the onboard diagnostic saltwater. Due to the 2 unique seawater cooling systems used in marine engines, 3 the manifold temperatures where the OBD censors are 4 located could not achieve the proper operating 5 temperatures at low speeds. This means that based on 6 Southwest test results, the OBD system for the marine 7 engines at low speeds doesn't work. Even if the inboard 8 engine -- the onboard -- I'm just stuck. 9 Even the Board ignores the negative results of 10 its own tests. Consider this: The test was done in warm 11 summer waters in the Gulf of Mexico. What will happen 12 when these censors operate in colder waters such as San 13 Francisco Bay or Lake Tahoe? 14 As I pointed out earlier, I have two distinct 15 brands. Our Crusader brand is exclusively a saltwater 16 product. Crusader makes engines for ocean cruisers and 17 off-shore fishing boats. Fifty percent of what we 18 manufacture is -- 100 percent of the time operated in 19 saltwater. The current rule requires that this product 20 has to have a three-year warrantee. It's unlikely that 21 anyone in the industry has tested a production catalyst 22 system for the same time we have to warrantee it, which is 23 for three years. In the past, the cruiser industry has 24 been a one-year warrantee. 25 In summary, these are the points I have to leave PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 67 1 you with. The two boats had major failures in freshwater, 2 both with hydro locking and exhaust leaks. Second, the 3 Southwest research saltwater test has indicated that the 4 OBD censors do not work in applications at low speeds. 5 And finally, what I believe is the most 6 important, is that the Board and staff is to continue the 7 testing of the saltwater program. The decision to do 8 what's right and complete the testing rests with the 9 Board. The staff will tell you it is not necessary, but 10 they do not have the burden of liability that we do. ARB 11 does not have to design and build an engine that won't 12 hydro lock. ARB does not have to design and build an 13 engine with an onboard diagnostic marine system. Thank 14 you. 15 ACTING CHAIRPERSON RIORDAN: Thank you, Mr. 16 McKinney. 17 And I apologize to you and to some of our other 18 speakers. There is a cell phone in this room that must be 19 causing the interference. When you hear that beep, beep, 20 beep, that's somebody's cell phone. So all of us need to 21 check our cell phones and be sure they're turned off while 22 we're in this room. I apologize to you. But I gave you a 23 few extra seconds. I though that's sort of fair. 24 Board members, first of all let me have staff if 25 you have any concluding comments that you'd like to make PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 68 1 before we open it up to questions from the Board. 2 EXECUTIVE OFFICER WITHERSPOON: Well, I want to 3 say we appreciate the industry's unanimous support of the 4 regulatory proposal we brought you today. Even though I'm 5 sure you heard also there's quite a bit of residual 6 concern about whether catalysts will be proven out in the 7 saltwater environment. And we do intend to bring that 8 testing all the way to completion. And Mr. Cross can 9 address that, though EPA might have to make its own 10 regulatory decisions before such time as that is finished. 11 And that will be up to EPA whether they think they have 12 sufficient data to proceed. 13 Bob. 14 MOBILE SOURCE DIVISION CONTROL CHIEF CROSS: I'll 15 sort of have to jump around here, but what I heard in the 16 manufacturers' request that we finish the testing is 17 commitment from them that they will make sure that their 18 boats' equipment and support are available through the 480 19 hours. And I guess I need to check that with them, 20 because we can't do it without them. 21 MR. RIECHERS: You got it. 22 ACTING CHAIRPERSON RIORDAN: They've indicated 23 they will. 24 MOBILE SOURCE DIVISION CONTROL CHIEF CROSS: 25 There are issues in terms of the timing of the national PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 69 1 rule. They may not have the complete program done. EPA 2 needs to make its decision, and we'll have to coordinate 3 with EPA on that. 4 The final sort of general comment that I wanted 5 to make is that you heard a lot of sort of miscellaneous 6 comments about technical problems with that and that many 7 of the problems that they identified were not emission 8 control related or indirectly related to emission 9 controls. There are other durability issues with the 10 marine engine which showed up, which weren't driven by the 11 boat's main emission control. This is the only regulatory 12 program that I'm aware of where government is 13 co-sponsoring industry's development of the complying 14 hardware. And so we've gone beyond I think what we 15 normally do as a regulatory agency in terms of sort of the 16 command and control type things that we do. 17 We will continue to meet that commitment, but I 18 think that there are burdens which fall on industry to do 19 its own homework and do its own development. And I think 20 that we as a staff can't do everything for them. And I 21 think neither can Southwest. There are pieces they'll 22 have to do themselves. 23 ACTING CHAIRPERSON RIORDAN: All right. I 24 appreciate that. Thank you. 25 Let me ask if there are any questions from the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 70 1 Board members before I close the record on this item. 2 Dr. Gong. 3 BOARD MEMBER GONG: Just a change of pace. 4 Carbon monoxide, it's my understanding that the CO 5 emissions will be reduced due to the catalyst itself. 6 MOBILE SOURCE DIVISION CONTROL CHIEF CROSS: It 7 will be a lot better from the catalyst equipped boats. 8 One of the interesting dilemmas is that if you 9 look at the CO health issues associated with current 10 boats, if I was the boat industry, I'd be trying to get 11 catalysts on as fast as I could, because you deal with the 12 health of the boaters and the people who are skiing behind 13 the boat. I think they have things that are pushing them 14 to make this work, too. 15 BOARD MEMBER GONG: I remember the discussion at 16 a Board meeting -- was it last year? I can't remember 17 when. But about the boating accidents, attributing it to 18 alcohol, which could have been part of the problem, but 19 also the CO exposure in that lake in Arizona. So I'm 20 quite concerned about that. And I'm glad that the 21 catalysts will reduce. 22 Can you give me a rough percent of what percent 23 of carbon monoxide is actually reduced? 24 MOBILE SOURCE DIVISION CONTROL CHIEF CROSS: 25 Forty to eighty. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 71 1 BOARD MEMBER GONG: Thank you. 2 MOBILE SOURCE DIVISION CONTROL CHIEF CROSS: I 3 think if they wanted to make that a goal, it would be on 4 the high end. They're dealing with all of the other 5 engineering issues they were talking about. 6 ACTING CHAIRPERSON RIORDAN: Other questions, 7 Board members? 8 All right. Then I'm going to close the record on 9 this agenda item. Now we have a 15-day on this one, which 10 is it will be reopened. Notice of public availability 11 will be issued. Written or oral comments received after 12 the hearing date but before the 15-day notice is issued 13 will not be accepted as part of the official record on 14 this agenda item. 15 When the record is reopened for a 15-day comment 16 period, the public may submit written comments on the 17 proposed changes which will be considered and responded to 18 in the final Statement of Reasons for the regulation. 19 We do have an ex parte requirement. Are there 20 any ex parte communications that any Board members have to 21 be made part of the record? 22 All right. There is a Resolution before us. 23 It's 0-57. Board members, what is your pleasure? 24 SUPERVISOR PATRICK: I would move approval. 25 BOARD MEMBER D'ADAMO: Second. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 72 1 ACTING CHAIRPERSON RIORDAN: Moved by Supervisor 2 Patrick, seconded by Ms. D'Adamo. 3 Any further discussion on this item? 4 Seeing none, then all those in favor signify by 5 saying aye. 6 (Ayes) 7 ACTING CHAIRPERSON RIORDAN: Opposed, no. 8 The motion carries. 9 Thank you very much, staff. And for those who 10 came the great distance that you did, we look forward to 11 working with you on a continued basis on this item. And 12 hopefully all will go well. And we will get our tests 13 completed. Thank you very much. 14 I'm going to take for the Board members and the 15 court reporter just a bit of a break. How about ten 16 minutes? We'll re-start at ten minutes of 11:00. 17 Ms. D'Adamo, yes. 18 BOARD MEMBER D'ADAMO: Madam Chair, I'd just like 19 to say something for the record. I plan on leaving before 20 the next item, because I determined that I need to recuse 21 myself from it, because of a possible conflict of interest 22 that I might have regarding my husband's business which is 23 involved in farming and they have forklifts. So I'm going 24 to be recusing myself from that item, and I won't be 25 attending the rest of the hearing. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 73 1 ACTING CHAIRPERSON RIORDAN: Thank you for 2 letting me know. No wonder I'm worried about a quorum. 3 Thank you very much. 4 All right. We will be adjourned for ten minutes. 5 Thank you. 6 (Thereupon a recess was taken.) 7 ACTING CHAIRPERSON RIORDAN: Ladies and 8 gentlemen, I'd like to call the Board meeting back into 9 session and ask people to take their seats if they would, 10 please. Remember to sign up with the Clerk. Remember 11 there will be three-minute limits. And we will take your 12 written testimony and make it part of the record. And I 13 ask that you put your written testimony into your own 14 words for those three minutes. 15 Now, we still have a cell phone problem, which is 16 there is -- yours is off. This is and has been, and I 17 just heard it just for a moment, somebody's cell phone is 18 on. And so unfortunately it conflicts with the audio 19 system in this room. So if you happen to be carrying a 20 cell phone, please just double check it to be sure it's 21 off. I appreciate that very much. 22 This is Agenda Item 05-11-4. It's proposed 23 revisions to the Carl Moyer Program guidelines and the 24 creation of a new Agricultural Assistance Program. 25 Last year, the Governor and the State Legislature PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 74 1 affirmed their support of air quality incentive programs 2 by providing sustained funding of up to $140 million a 3 year through 2015. A large coalition of business, 4 environmental, agricultural, and regulatory stakeholders 5 worked together to make this happen. And I want to thank 6 them for that support, because it was critical to making 7 that happen. 8 The Carl Moyer Program has experienced 9 unprecedented popularity and success at the local level. 10 Seven-thousand engines have been cleaned up in the first 11 six years of the program, reducing smog-forming emissions 12 by 18 tons per day in California. The additional funds 13 will enable districts to fund even more projects, 14 accelerating our progress towards cleaner, healthier air. 15 Ms. Witherspoon, will you please introduce this 16 item and begin the staff presentation. 17 EXECUTIVE OFFICER WITHERSPOON: Thank you, Madam 18 Chairman. 19 The Carl Moyer Program has a proven track record 20 of achieving real quantifiable emission reductions. That 21 fact and the broad support you mentioned was key to our 22 success last year in securing sustained funding through 23 2015. Earlier this year, staff successfully implemented 24 the statewide part of the program, which is a 10 percent 25 hold-back which focused on ports, locomotives, and trucks PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 75 1 to meet the Governor's objective of reducing emissions 2 associated with goods movement. Almost 3 million in 3 projects were funded through this solicitation and 4 included projects in Sacramento, San Joaquin Valley, the 5 Bay Area, South Coast, and San Diego. 6 Today, staff is presenting proposed modifications 7 to the Carl Moyer Program guidelines reflecting the new 8 requirements and expanded elements added by legislation 9 enacted in 2004. 10 And now if I might go off script for just a 11 moment, a few more contextual remarks. The good news 12 about the Carl Moyer Program is that it's wildly popular. 13 The bad news about the Carl Moyer Program is it's wildly 14 popular. And you have the unenviable task of establishing 15 the rules and procedures under which parties qualify or do 16 not qualify for funding. 17 We are experiencing growing pains with this 18 program. With 140 million per year, it's become more 19 crucial than ever to understand where all the dollars are 20 going and track them in real time. That is imposing 21 administrative burdens on air districts they did not have 22 before, and they are capped at 2 percent for 23 administrative costs. We would be very supportive of 24 legislative change to raise that cap. But it's something 25 they are living with right now. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 76 1 Also, it has added burdens for applicants, and 2 you will hear some concerns about whether it becomes so 3 burdensome that it drives applicants away. And so we are 4 trying to streamline it as much as possible, while also 5 maintaining fiscal integrity. We have asked the 6 Department of Finance to conduct a proactive audit for us 7 in the coming year so that they can give us some early 8 indications of whether the systems we have created are 9 robust enough to manage this amount of funds over the next 10 ten years. 11 The other thing that's happening is that there's 12 an increased tension every day about what's mandatory and 13 what is surplus. Because the Carl Moyer Program is 14 reserved for activities that are voluntary, they're going 15 ahead of regulatory programs. And at the time the Carl 16 Moyer Program began, we did not have a comprehensive 17 retrofit program in the diesel arena. 18 So you heard last month when the Board considered 19 an idling rule that you should wait and let people go get 20 Carl Moyer funds ahead of regulatory deadlines. Next 21 month when we bring you the Public Fleet Rule for 22 municipal governments and the cargo handling rule, you're 23 going to hear similar testimony. So there is a tension. 24 And it's not that we're going to run out of things to 25 fund, but we're going to change over time what's surplus PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 77 1 and what's mandatory. And the Board will need to decide 2 where it wishes to draw the balance. And you'll be under 3 pressure to move regs around so people can get in the 4 early window and get funding. 5 And I think -- oh, the third thing is our 6 policies, your policies, have evolved over the lifetime of 7 the Carl Moyer Program. And one of the things we did in 8 this set of guidelines is to integrate Board policies with 9 the statutory requirements such that we are urging 10 districts to fund control technology for diesel that's 11 compatible with where we're attempting to go with our 12 comprehensive diesel retrofit control program, not the 13 mid-level or low-level controls, but the best controls 14 likewise. We have an element in the guidelines that's 15 related to our quest for zero emissions and asking 16 districts to put added effort in that arena. 17 But as you hear the issues today, I think they 18 will fall in the categories of administrative overhead, 19 tension between regulations and surplus emissions, and 20 then to what extent we use the Carl Moyer Program as a 21 policy instrument and attempt to effectuate the policies 22 of this Board through that massive incentive program which 23 we think would be desirable and you'll have to decide as 24 you hear some of the testimony today. 25 So with that introduction, I'll now turn it over PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 78 1 to Bob Nguyen of the Mobile Source Control Division. 2 ACTING CHAIRPERSON RIORDAN: Ms. Witherspoon, 3 Mayor Loveridge has a question. 4 BOARD MEMBER LOVERIDGE: Help me clearly with the 5 definitions of mandatory versus surplus. What is the 6 definition as you're using them? 7 EXECUTIVE OFFICER WITHERSPOON: State law 8 requires that Carl Moyer funds not be granted when the 9 applicant is required by any rule, regulation, ordinance, 10 enforcement order, Memorandum of Understanding, et cetera, 11 to qualify for funding, because if they're under a binding 12 obligation to undertake the action, they may not receive 13 funding. 14 One of the new issue areas that has come up in 15 just the last month, at least to my awareness, it's 16 probably been around longer than that, is whether a CEQA 17 mitigation requirement constitutes a binding legal 18 obligation. And our legal staff has looked at that 19 question because some CEQA mitigation comes across in the 20 form of advisory. We wish you would, but isn't. Do this 21 or else your project will not be certified. And it lacks 22 some of the enforceable teeth that regulation and other 23 kinds of devices might have. But it's a very good 24 question. There's also a temporal aspect to mandatory. 25 When is it required? And how far ahead of the regulation PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 79 1 order must you be to qualify for funding? 2 BOARD MEMBER LOVERIDGE: In the most common sense 3 terms, if you had to do something during the day and some 4 activities were mandatory and some were surplus or a good 5 thing to do, you'd think you'd want to focus attention on 6 what's required rather than -- help me again. The word 7 surplus means -- 8 EXECUTIVE OFFICER WITHERSPOON: Not required. 9 Not obligatory upon the project applicants. 10 BOARD MEMBER LOVERIDGE: What's the logic then of 11 not supporting what is the, seems to me, basic activities 12 of regulation as opposed to surplus? 13 EXECUTIVE OFFICER WITHERSPOON: The original 14 logic was the Carl Moyer Program would help us to 15 accomplish emission reductions in areas where regulations 16 could not reach. And Carl Moyer himself had concluded 17 that we would not be able to regulate existing trucks on 18 the road. He did an analysis of where we were going to 19 need NOx reductions. He thought we would need 100 million 20 a year for ten years to get all the NOx control necessary 21 in the South Coast. 22 What Carl didn't anticipate is that this Board in 23 later years would adopt a goal for itself of accomplishing 24 diesel risk reductions of 75 and 80 percent and would 25 attempt to do that in part through regulatory mechanisms. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 80 1 And so our diesel risk reduction program has created, you 2 know, a different ordering of the universe of what is 3 outside regulatory reach and what needs to be funded by 4 incentives. 5 And as we've talked about this to the Cabinet, 6 which had similar questions as the Governor has funded 7 Carl Moyer wanting to understand how does this fit, we've 8 explained Carl Moyer will pay for 5 to 10 percent of the 9 total emission reductions we need for attainment. And we 10 expect regulations to deliver the rest, because there's 11 just not enough money coming through Carl Moyer to pay our 12 way to attainment. 13 We do need to use the market power of regulations 14 to shift some of those costs onto the private sector as we 15 have done for decades. But it's going to become, you 16 know, a very pointed issue reg by reg where you draw the 17 balance and who you exempt from the reg, who then becomes 18 eligible for funding, and on whom you impose a reg and say 19 you are responsible to pay for compliance. 20 BOARD MEMBER LOVERIDGE: Thank you. That was 21 helpful. 22 ACTING CHAIRPERSON RIORDAN: Thank you, 23 Ms. Witherspoon. 24 Any other questions for Ms. Witherspoon? If not, 25 let's begin the staff report. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 81 1 (Thereupon an overhead presentation was 2 presented as follows.) 3 MR. NGUYEN: Thank you, Ms. Witherspoon. Good 4 morning, Madam Chairman and members of the Board. 5 Today we are proposing revisions to the Carl 6 Moyer Program guidelines. We are also proposing to 7 establish a new Agricultural Assistance Program incentive 8 program called the Agricultural Assistance Program. 9 --o0o-- 10 MR. NGUYEN: I will start my presentation with a 11 background of the Carl Moyer Program. I will then present 12 an overview of the staff's proposed revisions to the 13 guidelines and discuss the proposed guidelines for the 14 Agricultural Assistance Program. I will also describe 15 modifications to the staff proposal. And finally, I will 16 present staff's recommendations. 17 --o0o-- 18 MR. NGUYEN: The Carl Moyer Program is an 19 important component the ARB's strategy to reduce exposure 20 to air pollutants such as ozone and particulate matter. 21 When first started in 1998, the Carl Moyer Program focused 22 on reducing nitrogen oxide, or NOx, emissions from 23 heavy-duty diesel engines. These NOx emissions combined 24 with reactive organic gasses, or ROG, and other pollutants 25 in the atmosphere to form ozone and fine particulates. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 82 1 Exposure to ozone and fine particulate matter has 2 been linked to increases in premature deaths, reduced lung 3 function, hospital admissions, and increased respiratory 4 disease. In addition, directly emitted diesel particulate 5 matter, or diesel PM, has been identified by the ARB as a 6 toxic air contaminant. Research shows exposure to diesel 7 PM increases premature deaths, hospital admissions, and 8 respiratory disease and can cause cancer. 9 The Carl Moyer Program has achieved significant 10 reductions of these pollutants. Over the first six years, 11 the Carl Moyer Program has reduced NOx emissions by about 12 18 tons per day and PM emissions by about one ton per day. 13 --o0o-- 14 MR. NGUYEN: The Carl Moyer Program pays for the 15 incremental cost of cleaner than required vehicles, 16 engines, and equipment, such as urban transit buses, 17 trucks, agricultural and construction equipment, marine 18 vessels, and locomotives. The emission reductions must be 19 real, surplus, quantifiable, and enforceable to help 20 fulfill California's State Implementation Plan, or SIP, 21 obligations. Qualifying projects include engine repowers, 22 retrofits, and new purchases of cleaner than required 23 engines that are surplus to regulatory requirements. 24 The engine and technology must be ARB certified or 25 verified. In addition, every project must meet a cost PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 83 1 effectiveness cap. 2 Since the beginning, the Carl Moyer Program has 3 been implemented as a cooperative partnership between the 4 ARB and the local air districts. ARB staff has developed 5 program guidelines in consultation with the districts and 6 the public. Local districts follow the approved 7 guidelines to select projects and to administer the 8 grants. The air districts retain considerable flexibility 9 to tailor the use of Carl Moyer funds to meet local air 10 quality objectives. 11 --o0o-- 12 MR. NGUYEN: In 2004, Governor Schwarzenegger and 13 the Legislature gave the Carl Moyer Program a significant 14 boost. Supported by a broad coalition of industry, 15 government, and environmental groups, Senate Bill 1107 and 16 Assembly Bill 923 brought increased funding up to $141 17 million per year through 2015. The Legislature also added 18 ROG and PM to the pollutants that should be considered by 19 the program and also added new source categories such as 20 light-duty vehicles and fleet modernization. The 21 legislation also authorized a new incentive program for 22 agricultural sources. These funds will provide 23 Californians with cleaner air by reducing over 72 tons per 24 day of smog-forming pollutants and over three tons per day 25 of toxic diesel PM. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 84 1 --o0o-- 2 MR. NGUYEN: This slide shows how the air quality 3 incentive funds are distributed. The smog check fee and 4 the tire fee are expected to provide about $86 million a 5 year. The bulk of these funds are provided directly to 6 the local districts for the Carl Moyer Program. ARB 7 retains just under 10 percent of the funds for 8 multi-district projects focusing on statewide priorities 9 such as reducing emissions from goods movement activities. 10 The statute allows 4 percent split between the 11 ARB and the districts to be used for administration and 12 outreach costs. 13 AB 923 also gave local districts the authority to 14 raising the motor vehicle fee by $2, providing up to $55 15 million statewide. Under the statutory provisions 16 authorizing the fee increase, the use of these funds is 17 limited to projects that follow the statewide guidelines 18 for one of four programs: The Carl Moyer Program; the 19 Lower Emissions School Bus Program; the Car Scrap 20 Regulation; or a new Agricultural Incentive Program. 21 --o0o-- 22 MR. NGUYEN: I will now describe the proposed 23 guideline revisions. The most significant proposed 24 revision include formalizing the administrative 25 requirements for the districts; incorporating ROG and PM; PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 85 1 developing project criteria for new source categories such 2 as additional agricultural sources, light-duty vehicle 3 scrap, and fleet modernization for heavy-duty on-road 4 trucks; and encouraging zero emission projects to support 5 the Board's goal of attaining zero or near zero emissions 6 in all categories. 7 Staff is also proposing a number of less 8 significant changes to reflect new legislative direction 9 and incorporate the most recent regulatory requirements 10 and emission information. I will discuss these proposed 11 revisions in more details in the next few slides. 12 --o0o-- 13 MR. NGUYEN: I will begin by talking about the 14 administrative requirements. To ensure public continued 15 confidence and success, the Carl Moyer Program must have 16 clearly defined administrative responsibilities and 17 oversight. The proposed administrative criteria formalize 18 practices and policies, many of which the ARB and 19 districts have already been using with a goal of providing 20 greater program transparency. ARB staff is proposing to 21 report to the Board annually on the status of the Carl 22 Moyer Program, including audit results and enforcement 23 actions. 24 The proposed administrative requirements 25 identified the minimum criteria that air districts must PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 86 1 include in their local programs. Districts continued to 2 retain the authority to establish more stringent 3 requirements in response to local situations and needs. 4 The proposed administrative requirements also identify 5 district and ARB responsibilities pertaining to program 6 oversight audits and enforcement activities. Districts 7 will be required to inspect all projects, audit a 8 percentage of their projects, and report to the ARB 9 annually. 10 In its oversight capacity, ARB is proposing to 11 audit four districts each year. The proposed requirements 12 also describe how districts may become at risk for 13 recapture of their Carl Moyer Program funds if they fail 14 to expeditiously or properly expend their funds. 15 To ensure that we have the proper systems in 16 place for fiscal accountability, ARB staff is working with 17 the Department of Finance to evaluate the Carl Moyer 18 Program in early 2006. ARB staff will incorporate any 19 recommendations made by the Department of Finance. We 20 recognize the significant workload associated with 21 implementing the Carl Moyer Program and that some rural 22 districts which limit the staff may benefit from 23 assistance with the administrative requirements. We are 24 committed to provide this assistance. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 87 1 MR. NGUYEN: Now I will talk about cost 2 effectiveness. One of the key criteria used by the Carl 3 Moyer Program to determine project eligibility is cost 4 effectiveness. Cost effectiveness is a measure of the 5 quantity of emission reductions versus the cost of the 6 project. Previously, Carl Moyer Program cost 7 effectiveness was based only on reductions of NOx. AB 923 8 directed ARB to include ROG and PM into the Carl Moyer 9 Program and into the cost effectiveness formula. The ARB 10 has historically treated NOx and ROG emissions equally. 11 For example, the cost effectiveness of ARB regulations is 12 generally provided in dollars per ton of NOx and ROG. 13 Staff proposes to follow the same approach for the Carl 14 Moyer Program weighting NOx and ROG equally. 15 For combustion PM, staff is proposing a weighting 16 factor of 20. This is because for an equivalent weight, 17 combustion PM emissions are more harmful to human health 18 and are more expensive to control. 19 We believe that the 20 times factor balances the 20 objective of the Carl Moyer Program to obtain SIP 21 creditable emissions reduction while also reducing the 22 risk associated with toxic diesel PM. As authorized by 23 the Health and Safety Code, staff is also proposing to 24 adjust the cost effectiveness cap to reflect increases in 25 the cost of living. The proposed new cost effectiveness PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 88 1 cap is $14,300 per ton of weighted emissions reduced. 2 --o0o-- 3 MR. NGUYEN: I will now talk about agricultural 4 sources. AB 923 extended eligible sources under the Carl 5 Moyer Program to include stationary engines and area wide 6 agricultural sources of air pollution such as dairies. We 7 have not developed criteria for non-engine agricultural 8 projects or sources like dairies. We plan to evaluate 9 these criteria next year, and we are proposing that the 10 Board authorize the Executive Officer to develop and 11 approve project criteria for non-engine agricultural 12 sources when technology is available to ensure that the 13 emission reductions are real, surplus, quantifiable, and 14 enforceable. 15 --o0o-- 16 MR. NGUYEN: Now I want to talk about a new 17 program for previously unregulated agricultural sources of 18 air pollution. The Agricultural Assistance Program is an 19 incentive program that may only be funded through the $2 20 motor vehicle fee. We are proposing to model the 21 guidelines for the Agricultural Assistance Program on the 22 Carl Moyer Program guidelines. However, unlike Carl 23 Moyer, Agricultural Assistance funds may be used to pay 24 for the cost of complying with state and local 25 regulations. Agricultural Assistance projects would only PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 89 1 be funded for source categories for which they are Carl 2 Moyer Program criteria. Thus, non-engine agricultural 3 projects could only be funded after Carl Moyer project 4 criteria are developed next year. 5 --o0o-- 6 MR. NGUYEN: I will now talk about the new 7 light-duty programs. AB 923 authorized projects that 8 reduce emissions from light-duty vehicles. 9 The first project category we have developed 10 under this provision is car scrapping. Car scrapping is a 11 unique type of Carl Moyer program in that there are 12 existing ARB regulations overlaying the proposed criteria. 13 The criteria for the car scrap program relied on existing 14 regulations in order to ensure that Carl Moyer funds will 15 only pay to scrap cars that would not be required anyway. 16 That is, they are surplus to normal vehicle retirement. 17 In addition, staff is proposing that the Board 18 authorize a limited program to be conducted by the South 19 Coast Air Quality Management District to evaluate remote 20 sensing. Under this program, remote sensing devices, or 21 RSD, will be used to identify very high emitting cars and 22 light trucks. The district proposes to evaluate the use 23 of RSD to identify high polluting vehicles as well as the 24 effectiveness of vehicle scrap versus vehicle repair. 25 We propose to return to the Board late next year PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 90 1 to incorporate RSD into the car scrapping regulation, 2 based on the results of the South Coast Program as well as 3 a recent RSD study conducted by the Bureau of Automotive 4 Repair and the ARB. 5 --o0o-- 6 MR. NGUYEN: I will now talk about the new fleet 7 modernization program that was added through Assembly Bill 8 1394. Let me begin by explaining what fleet modernization 9 is. 10 Currently, the Carl Moyer Program only pays for 11 the purchase of a new vehicle if it is cleaner than the 12 emission standards that the Board has adopted, like a 13 natural gas bus. Under fleet modernization, Moyer funds 14 could be used to buy a new or used vehicle that replaces 15 an older vehicle which would then have to be scrapped. 16 The proposed fleet modernization criteria are based on 17 experience gained in two pilot programs that have been 18 operating since 2001; one in the Sacramento area, and one 19 in the region surrounding the Port of Long Beach and the 20 Port of Los Angeles. 21 The proposed fleet modernization criteria target 22 vocations that use oldest trucks. However, eligible 23 vehicles from any vocation may apply for funding. To 24 ensure that real and surplus emissions reductions are 25 achieved, the staff's proposal contained eligibility PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 91 1 criteria including requirements for replacement vehicles. 2 Because the fleet modernization source categories is 3 needed and because of a proposed criteria for this 4 category are different than the typical Carl Moyer 5 project, staff is proposing that districts must submit 6 their fleet modernization plan to ARB for approval prior 7 to initiating projects. 8 --o0o-- 9 MR. NGUYEN: Next I will talk about zero emission 10 projects. Consistent with the Board's goal to deploy zero 11 and near-zero emission emitting technology in all source 12 categories, ARB staff is proposing to require districts to 13 encourage zero emission projects. Districts may choose 14 how to most effectively encourage zero emission projects 15 in their local region, including providing additional 16 outreach, priority processing of applications, or 17 set-aside funds. 18 In addition, recently adopted legislation that 19 takes effect in January, Senate Bill 467, will require the 20 ARB to develop guidelines for projects we are placing 21 off-road internal combustion engines with zero emission 22 technology. ARB staff proposes to initiate a pilot 23 program in 2006 to evaluate potential projects and assist 24 in the development of project criteria. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 92 1 MR. NGUYEN: This slide presents some additional 2 changes that have been incorporated into the proposed Carl 3 Moyer guideline revision. With the expansion of the 4 program to include additional pollutants and source 5 categories, we are proposing to include replacement of 6 gasoline and natural gas engines in the Carl Moyer 7 Program. For example, repower or retrofit of natural gas 8 agricultural pump engines would now be eligible for Carl 9 Moyer Program funding. 10 Staff is also proposing to evaluate ways to 11 streamline the application process. Staff plans to work 12 with the South Coast Air Quality Management District and 13 other districts to develop voucher or rebate systems for 14 some project types. The goal of these pilot programs is 15 to identify ways to reduce application and processing time 16 and expedite grant awards. Staff also proposes to 17 evaluate improved ways to outreach to small businesses. 18 Currently, there is no statewide policy for 19 engine disposal under the Carl Moyer Program. Staff is 20 proposing to establish a statewide policy requiring the 21 destruction of engines that are repowered using Carl Moyer 22 funds. 23 ARB staff is also proposing to require that if 24 Carl Moyer funds are used to repower an engine, that the 25 highest level ARB verified retrofit device must also be PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 93 1 installed. This is consistent with the Board's Diesel 2 Risk Reduction Plan. 3 Finally, staff is also proposing updates to the 4 guidelines to reflect new regulations and to incorporate 5 the newest emission rates. 6 --o0o-- 7 MR. NGUYEN: Since the release of the proposed 8 Carl Moyer guidelines for public comments, staff has 9 received additional input from stakeholder groups. In 10 response to some of these comments, staff is proposing the 11 following modifications. 12 Under the Budget Act, districts must obligate and 13 expend funds on a certain schedule. Staff has set up a 14 schedule in the guidelines to ensure that these deadlines 15 are met. In recognition that some districts, despite 16 their best efforts, may not be able to obligate their 17 funds on this time line, staff is proposing to provide 18 districts with additional flexibility. And we'll work 19 with the districts to develop the appropriate language 20 before these guidelines become final in January. 21 After receiving additional information about 22 remanufacturing, staff is proposing to modify the 23 statewide engine scrap requirement to simply require that 24 the old heavy-duty diesel engine must be rendered useless. 25 The engine parts could be reused or returned to the engine PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 94 1 manufacturer. 2 ARB staff is also proposing a slight modification 3 to the requirement for retrofit on all Carl Moyer Program 4 funded repowers. For on-road projects, the proposed 5 guidelines currently require the grant recipient to 6 install a retrofit with no exception. If no retrofit is 7 currently available, the recipient would have to commit to 8 install a retrofit of one becomes available in the future. 9 We are proposing to modify this requirement to simply 10 require that for on-road projects the grant recipient must 11 install the highest level retrofit that is available at 12 the time of the grant. 13 In the past few weeks, there has been 14 considerable discussion with stakeholders about how the 15 Carl Moyer Program funds school buses. As a result, we 16 plan to evaluate our fleet modernization criteria next 17 year to develop a program tailored to the unique 18 characteristics of school buses. Spark ignited natural 19 gas engines typically are provided by engine manufacturers 20 without emission control systems. Third parties package 21 emission control components on to the engines, which are 22 not certified and used in stationary applications. 23 To ensure that the emission controls are 24 operating properly, the proposed guidelines require annual 25 testing. At the request of the affected industry, we are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 95 1 modifying the annual testing requirement to allow an 2 alternative monitoring program that does not unduly burden 3 the industry provided the emission reductions can be 4 assured. 5 --o0o-- 6 MR. NGUYEN: In conclusion, staff has worked 7 closely with districts and other stakeholders over the 8 last year to develop the proposed guidelines that 9 implement the new legislative direction and ensure that 10 public funds provides cost effective emission reductions. 11 We recommend that you approve the proposed Carl Moyer 12 Program guideline revisions and that you establish the 13 Agricultural Assistance Program. 14 Thank you. 15 ACTING CHAIRPERSON RIORDAN: Thank you very much. 16 Ms. Witherspoon. 17 EXECUTIVE OFFICER WITHERSPOON: Madam Chairman, 18 just to clarify, the Agricultural Assistance Program is 19 the singular exception to the statutory restriction on 20 funding regulated stakeholders. That for agriculture, 21 there is a unique provision that says even if they are 22 subject to regulation, they may qualify for a certain 23 period of time for Carl Moyer funds -- for motor vehicle 24 registration surcharge funds and are consistent with Carl 25 Moyer protocols. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 96 1 The other thing staff indicated is their 2 recommendation that at the point in time we're ready to 3 establish protocols for when dairies can or cannot receive 4 incentive funds, that that would be subject to the 5 Executive Officer's discretion. It would be my intent to 6 bring that before the Board, given the level of interest 7 in dairy issues, unless you told me, please don't bring it 8 here, and decide yourself. But I think that would 9 probably be worthy of public airing and public discussion. 10 But that will be some time down the road. 11 ACTING CHAIRPERSON RIORDAN: Very good. 12 Board members, are there any questions for staff? 13 Yes, Mayor Loveridge. 14 BOARD MEMBER LOVERIDGE: This clearly is 15 unprecedented dollars and major reductions. Several just 16 quick questions. 17 This proposal was developed in close 18 conversation, I assume, with the districts. I was 19 wondering what does slide 16 where it says additional 20 flexibility for districts will be developed with CAPCOA, 21 what does that mean? 22 ON-ROAD CONTROLS BRANCH CHIEF KITOWSKI: That's 23 specifically referring to a requirement that we have 24 workshoped with CAPCOA representatives on the amount of -- 25 the slide is going up right now. That's referring to what PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 97 1 criteria districts need to meet in order to show that they 2 are ready to receive next year's funding. If a district 3 is not ready, we would not want them to receive next 4 year's funding. And the district's pointed out in 5 developing the criteria that there may be some extenuating 6 circumstances that do not allow them to meet it, but 7 they're still on case to expend all of the money in a 8 timely manner, in which case what we did is added a second 9 trigger and said, if you don't meet the first one, we'll 10 reevaluate you and give you five more months. And we need 11 to work out the final language with the districts, but we 12 believe we are in agreement with how that will work out. 13 BOARD MEMBER LOVERIDGE: So District A doesn't 14 spend all of its money this year. It can continue money 15 to next year for additional projects? 16 ON-ROAD CONTROLS BRANCH CHIEF KITOWSKI: Close. 17 How that would work is District A has a little under a 18 year. As we're getting close to the end of the year, 19 District A has spent a lot of its funds. But let's say 20 not all of its funds. Let's say they spent 50 percent of 21 their funds. Are they ready to receive a whole new pot of 22 funds? We would say no, you're not ready. If, in fact, 23 you can -- when we're going to hold those funds, we'll 24 hold them for five more months. If you can demonstrate in 25 those five more months in fact that was a processing issue PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 98 1 or timing issue, and we actually can expend those funds, 2 then we would give you those next year's funds. 3 BOARD MEMBER LOVERIDGE: Couple of just real 4 quick questions. The $2 motor vehicle, that's an option 5 of the district. How many districts would take that 6 option? 7 ON-ROAD CONTROLS BRANCH CHIEF KITOWSKI: Fourteen 8 districts. 9 BOARD MEMBER LOVERIDGE: Out of? 10 ON-ROAD CONTROLS BRANCH CHIEF KITOWSKI: 11 Thirty-five. Most of the large districts have taken that 12 option. 13 BOARD MEMBER LOVERIDGE: The last question, the 14 audits which were identified, the four districts, I assume 15 they're presented in some way to the Board. This is not 16 simply to staff. The Board would have a chance to see 17 these audits. 18 ON-ROAD CONTROLS BRANCH CHIEF KITOWSKI: We 19 certainly would make them available to the Board. There's 20 actually quite a bit of interest in making sure the entire 21 program becomes more transparent. So we're trying to make 22 the entire process available to the public. 23 BOARD MEMBER LOVERIDGE: I think some report on 24 the audit would be helpful since the Board members have 25 oversight. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 99 1 ON-ROAD CONTROLS BRANCH CHIEF KITOWSKI: Let me 2 also point out that we are planning on coming to the Board 3 every year with the status report, and the results of the 4 audit can be included in that. 5 EXECUTIVE OFFICER WITHERSPOON: But there is a 6 certain amount of annual reporting we already do to assure 7 our budget control agencies that the funds were 8 transferred as required and encumbered as required. 9 Otherwise, we have to surrender them to the general fund, 10 which is what we're trying to avoid. So we do that level 11 of paperwork. 12 What's going to be different in the coming year 13 is we've set up new software systems, new deadlines for 14 checking off different activities, and have the Department 15 of Finance evaluate the robustness of that system to 16 prevent fraud, the sort of loss of funds somewhere in the 17 system that we can't account for, that sort of thing. 18 ACTING CHAIRPERSON RIORDAN: Other questions? 19 Yes, Supervisor DeSaulnier. 20 SUPERVISOR DeSAULNIER: On slide 9 on the 21 question of PM and how you weighed that, did you have 22 discussions of more or less of the 20? What's the magic 23 number? 24 CARL MOYER OFF-ROAD SECTION MANAGER CHANG: We 25 had a lot of discussions about more or less than 20. It PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 100 1 was an extensive workshop starting last December. In the 2 end, we were looking at the two primary factors that you 3 see on the slide. PM is simply more expensive to control 4 than ROG or NOx. When we evaluated ARB regulatory 5 measures, it's about 15 times more expensive to control. 6 And then it does have greater health impacts as well. So 7 we chose 20. It's mostly because it's more expensive to 8 control, but it also considers there are greater health 9 impacts. 10 SUPERVISOR DeSAULNIER: And CAPCOA, maybe a 11 question for them. In those workshops, did they indicate 12 an interest high or lower, the districts? 13 EXECUTIVE OFFICER WITHERSPOON: I don't recall 14 that CAPCOA had a different position. They were 15 environmental groups, and they may testify to this effect 16 today who felt the weighting factor should be upwards of 17 30 or 40. 18 SUPERVISOR DeSAULNIER: Thank you. 19 ACTING CHAIRPERSON RIORDAN: Any other questions 20 for staff? 21 All right. We will begin -- Ms. Pineda. 22 BOARD MEMBER PINEDA: Let me start out with my -- 23 ACTING CHAIRPERSON RIORDAN: Ms. Pineda, turn on 24 your microphone or pull it towards you. 25 BOARD MEMBER PINEDA: Let me start out with my PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 101 1 most fundamental question. With regard to the scrap cars, 2 is that available to individuals, or are there formalized 3 district programs you have to go through? Just curious. 4 ON-ROAD CONTROLS BRANCH CHIEF KITOWSKI: That 5 program currently does not exist within the Moyer Program. 6 It exists at district levels. And, yes, it is an 7 individual program as it's going to be -- and as pointed 8 out, it does exist as part of the smog check program with 9 the Bureau of Automotive Repair. If you fail your smog 10 check test, that is an option there as well. 11 As it's going to be structured in the Carl Moyer 12 Program, we would anticipate the same way the districts 13 would allocate a certain percentage of funds, a certain 14 dollar amount. And that money would, as the individuals 15 come in, be expended until they reach their limit. 16 BOARD MEMBER PINEDA: Not having been aware of 17 that program previously, I'm sort of curious to what 18 extent is it effectively promoted? 19 EXECUTIVE OFFICER WITHERSPOON: Very. Districts 20 have done single batch at a time car scrappage programs. 21 And the money runs out almost as soon as the newspaper 22 notices and radio notices go up. And then there's a long 23 lag time of people who heard about it from friends of 24 friends of friends, and the money is gone by the time they 25 call the district. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 102 1 I think with the level of funding available now, 2 it's possible that there could be year to year quantities 3 of funds. But it still might go out in batches. It 4 depends whether or not districts seek sub-contracts with 5 the Bureau of Automotive Repair to augment the program 6 they're administering, hired dismantlers of their own to 7 conduct scrappage programs and sort of the choices they 8 make. 9 BOARD MEMBER PINEDA: Thank you. 10 I also had -- maybe this is more of a comment 11 than it is a question, because I think I know the answer. 12 But with regard to the emphasis on zero emission 13 projects -- and I've talked to staff. I kind of keep 14 going back and forth on this issue. I understand that the 15 ultimate goal ought to be zero emission. But I guess I 16 would just like to go on the record that I am conflicted 17 by that, because I think that while the zero emission is a 18 laudable and I think ultimately achievable goal, I just 19 worry that there may be technologies that are more interim 20 technologies that are very good technologies that will not 21 benefit from any program that favors zero technology 22 projects. 23 EXECUTIVE OFFICER WITHERSPOON: I understand that 24 point. But the contrary is also true. Zero technology 25 projects tend to be more expensive dollars per ton than a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 103 1 conventional control technology. So if you didn't make a 2 special effort to urge their inclusion, they would fall to 3 the bottom of the barrel and might not get any funding at 4 all. That's why we've included that in the guidelines. 5 BOARD MEMBER PINEDA: I guess my thinking was you 6 may achieve a more immediate benefit through other 7 alternatives and maybe somehow we should be -- 8 EXECUTIVE OFFICER WITHERSPOON: That's true. The 9 money would go further. But you also wouldn't be 10 facilitating the long-term introduction of zero emitting 11 technology. So it's a balance. 12 BOARD MEMBER PINEDA: And again I just want -- 13 EXECUTIVE OFFICER WITHERSPOON: We didn't specify 14 a dollar amount. We just urged districts to consider it 15 and think about, you know, where they might help zero 16 emitting technologies along. 17 BOARD MEMBER PINEDA: Anyway, I think I had a 18 conversation where I was going back and forth. And I'm a 19 little bit more this way. So I wanted to go on the 20 record. 21 And then one other comment or question. And 22 perhaps I'll have a better sense through public testimony. 23 But I'm definitely one who is in favor of transparency. 24 And more transparency than not. And I don't have a good 25 sense of whether or not there -- having looked at some of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 104 1 the letters and having talked to WSPA, if there remains a 2 gap in terms of what we're proposing and what some of the 3 concerns have been. So I just want to go on the record 4 that I am absolutely in favor of transparency. 5 ACTING CHAIRPERSON RIORDAN: Thank you. 6 Other questions for staff? 7 All right. We're going to then go to our witness 8 list. And we're going to start with Barbara Lee from 9 CAPCOA, Douglas Quentin, Mary Pitto, Chung Liu, and Juan 10 Ortellado. I mispronounced that. Forgive me. 11 If you would all come forward, please. Because 12 I'd like people just to get up and ready to go. That 13 would be very helpful if you come to the front row. 14 Barbara, as you know, three minutes. And 15 welcome. 16 MS. LEE: Thank you very much, Madam Chair and 17 members of the Board. My name is Barbara Lee. I'm Air 18 Pollution Control Officer in Northern Sonoma County and 19 currently the President of CAPCOA. 20 I'm here today largely in support of what the 21 staff has proposed, and I want to acknowledge that they've 22 made a tremendous effort to work with the districts in the 23 last year as they've been developing these guidelines. We 24 appreciate that. And it has been a very positive process. 25 There are a couple of outstanding issues that we PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 105 1 have, and one very substantial concern that has arisen 2 today associated with some of the proposed changes that 3 appeared in print this morning. And we just want to go on 4 the record on that one item. 5 Quickly then, there are three outstanding issues 6 that we would like to have addressed in some revision of 7 language in the guidelines. The first, staff acknowledged 8 that they are working with us to come up with appropriate 9 language, and it does speak to some of the questions that 10 your Board members raised. And it has to do with how long 11 we have to obligate funds under contract versus actually 12 expend them. The Budget Act requires that we expend the 13 funds within 18 months. And we appreciate that staff 14 would like midpoint checks to make sure we are in process 15 to do that appropriately. 16 The time frames that were discussed in the draft 17 changes to the Carl Moyer guidelines we felt were a little 18 bit rigid in terms of the consequences of failing to 19 obligate within 10 months and then losing upcoming funding 20 when there are still significant time to expend them. We 21 appreciate staff's willingness to work with us on that. 22 We would be in favor of 15 months to obligate and 18 23 months to expend with midpoint checks between the 24 districts and staff to make sure we're all on track. 25 We also request that the ARB Board include in the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 106 1 adopting Resolution today a commitment to seek and support 2 reasonable increases in the statutory cap on 3 administrative cost recovery. I want to acknowledge that 4 your Executive Officer did say that staff is very 5 supportive of that. It's important that districts are 6 already subsidizing that program to a great degree. And 7 although we're very supportive of the need for 8 transparency and accountability, also don't have money to 9 keep subsidizing further these efforts. 10 And our third issue is that although we 11 completely agree that this program is intended to fund 12 surplus emission reductions, we believe that some 13 additional discussion and language is needed to address 14 what exactly is surplus and is not. And we would like to 15 work with staff to come up with that language. One 16 possibility would be to agree on some underlying criteria 17 by which a district board makes certain findings and 18 certain specifications about what is eligible and not 19 eligible consistent with the statute, and that we would 20 provide that to CARB staff. I think there are ways we can 21 work this out, and we are committed to keep working. I 22 think a little bit of additional time and we'll have it 23 taken care of. 24 ACTING CHAIRPERSON RIORDAN: Barbara, I need you 25 to wind up. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 107 1 MS. LEE: Thank you. 2 The last thing I need to mention, and I am sorry 3 about this language that appeared today regarding staff 4 ability to require a district to repay funds to the State 5 if staff find that the district granted fund to an 6 ineligible project. That's very broad. We're very 7 uncomfortable with that language. We spoke with staff 8 this morning and have a commitment that we will work 9 further on that. There are two places in the amendments 10 that are proposed, page II-1 and page II-38, we are very, 11 very concerned about that language. And I want to be on 12 record with that. 13 ACTING CHAIRPERSON RIORDAN: All right. I think 14 there is a commitment to working with CAPCOA on the issues 15 that you raised where we have a common interest. So we 16 will work on that. 17 Any other questions? 18 BOARD MEMBER LOVERIDGE: Could staff comment on 19 the issue? 20 ON-ROAD CONTROLS BRANCH CHIEF KITOWSKI: Let me 21 bring up the comment on the last point she raised, because 22 I know she was rushed to try to get it in at the end. It 23 was brought to our attention rather late there really was 24 no mechanism in place currently if a district simply fails 25 to follow our guidelines. So we tried to come up with PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 108 1 some language too quick and try to get it out there. And 2 the language needs some massaging. And we're committed to 3 working with all the stakeholders to make sure we get the 4 intent out there and get the language right. 5 Would you like me to comment on any of the 6 others? 7 BOARD MEMBER LOVERIDGE: Would you just quickly. 8 ON-ROAD CONTROLS BRANCH CHIEF KITOWSKI: The 9 first point needs some clarification, because there are 10 two different components, two different time frames that 11 are getting conflicted and lumped together. One of them 12 is the 10 months and the request to extend that to 15 13 months. And that is an ARB requirement that we have 14 committed to work with CAPCOA on coming up with an 15 appropriate sort of second gate in order to determine 16 whether, in fact, it's appropriate to give districts their 17 next year's funds. We think we're on the same page there. 18 We just need to pin down the language. 19 The other is the length of time, the 12 months to 20 18 months. And that's actually in order to obligate funds 21 and that's -- or to expend funds. And that's actually 22 part of the Budget Act. And we do not have flexibility in 23 changing that. So there's not the ability to move on that 24 part of it. 25 On the third point -- on the second point, I PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 109 1 think that's policy level decision. And Ms. Witherspoon 2 has indicated she is supportive of pursuing additional 3 administrative funds. So we would include that in the 4 Resolution if the Board so wishes. 5 The third point, we would agree that some greater 6 clarity on exactly what is a local rule and what isn't and 7 what's surplus and what isn't could be beneficial to not 8 just local districts, to us, to applicants in the process. 9 It is a difficult metric to try to come up with. 10 The legislation actually does call out some 11 instances that are considered rules and regulations. And 12 it also calls out that instances like corporate policies 13 to buy clean equipment wouldn't specifically not be 14 considered a problem in the Carl Moyer Program, and we 15 continue to fund it. 16 So what we have done in the past is trying to 17 say, all right, if the City of Santa Monica comes up with 18 a policy, is that more like a regulation and a rule that 19 the State comes up with? Or is that more like a corporate 20 policy? And we've had to go through each one on a 21 case-by-case basis sometimes. So some greater clarity 22 would be useful things to work through with the districts 23 and the other stakeholders. We think that's ARB's 24 decision to ultimately make. But we could work with them 25 to help develop those underlying principles. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 110 1 ACTING CHAIRPERSON RIORDAN: Well, I think it's 2 particularly important for the applicants. I mean, you 3 know, if I think about all of this, and applicants need to 4 know and it needs to be very clear to them so they don't 5 waste their time and we don't ask them for something that 6 they're not going to be able to qualify. They need to 7 know right away whether or not they qualify. 8 So I think there's a strong commitment to working 9 with CAPCOA to getting these definitions very clear for us 10 all. But particularly for the applicants. I think we 11 need to underscore that. 12 Thank you, Barbara. 13 Douglas. 14 MR. QUENTIN: Thank you, Madam Chairperson, 15 members of the Board, and staff. In the interest of 16 brevity, the Monterey District does support the points 17 that Barbara made that are the CAPCOA's positions in this 18 matter and in particular the late item. I think the staff 19 and your Board has sufficiently addressed the need for 20 teamwork. 21 In particular, we're also worried about the -- as 22 it was said, unprecedented sum of money that's at issue 23 here. And the staff emphasized the need for transparency. 24 And we're all worried about the integrity of this program. 25 And the only way it will work is, as staff has said, to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 111 1 work very closely together to do well. If we don't do 2 well, I think we will all certainly lose. And it's 3 balancing air quality and efficiency as well as handling 4 the public's money properly. And we're very respectful 5 for that. And I very much want to emphasize the Monterey 6 District as well as the other districts support that. 7 One particular point I would like to make that's 8 strictly from our agency is the concern we have for 9 extending guidelines beyond what we think the legislation 10 allows for AB 923. Certainly, as that legislation refers 11 to Carl Moyer Program or the Lower Emission Retrofit 12 School Bus Program, the ARB should develop very strict 13 guidelines. But there are other portions of that program 14 that need to be recognized by the Air Resources Board as 15 flexible at the local level. I'll just make that extra 16 point. 17 But we do support what Barbara has said. I think 18 what your Board and staff has emphasized as far as working 19 closely together and auditing these programs, there has to 20 be very strong program in that area. So thank you. 21 ACTING CHAIRPERSON RIORDAN: Thank you very much. 22 Appreciate your testimony. 23 Mary Pitto. 24 MS. PITTO: Good morning, Madam Chair and members 25 of the Board. I'm Mary Pitto with the Regional Council of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 112 1 Rural County, which represents 30 of the state's rural 2 counties. 3 I'm here to support some requests that you've 4 received to include public agencies, especially in rural 5 counties as targeted vocations, those that have a high 6 percentage of the older vehicles in your new on-road fleet 7 modernization element. 8 In a majority of the rural counties, of the 9 vehicles owned by public agencies and utilities, more than 10 30 percent of those vehicles are the 1987 and older 11 vehicles. In Glenn County, that number is 59 percent. If 12 you look at just the county themselves, the county-owned 13 vehicles which are primarily the road department vehicles, 14 that number in many of our counties is greater than 60 15 percent are 1987 or older vehicles. If you look at Glenn 16 County, they have 27 on-road diesel vehicles. Of those 17 27, 25 are 1987 or older. 18 The fleet modernization guidelines recognizes 19 that truck owners of these older vehicles can't afford to 20 buy the newer equipment, and the income generated doesn't 21 warrant or justify those newer vehicles. And unlike the 22 private sector, our county road departments or any public 23 agency road departments, counties or the cities, their 24 equipment is not there to make them money. Their 25 equipment provides a service. They don't have fees they PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 113 1 can increase to generate income to then replace or improve 2 their fleet. So the funds then have to be diverted from 3 the road maintenance programs which jeopardize their 4 programs and the public. 5 With the scarce money available, our counties and 6 residents would benefit from being able to participate in 7 the new fleet modernization program. And we ask that you 8 include public agencies especially in rural counties as a 9 targeted vocation. Thank you for your consideration. 10 ACTING CHAIRPERSON RIORDAN: Thank you very much. 11 Ms. Witherspoon, do you want to respond? 12 EXECUTIVE OFFICER WITHERSPOON: We're having a 13 huddle down here. Because we don't have targeted 14 vocations. We do, okay. 15 ON-ROAD CONTROLS BRANCH CHIEF KITOWSKI: Let me 16 just explain the term targeted vocation as it's used in 17 here, because it may not be a clear starting point. 18 In the fleet modernization program, we took a 19 look, a very detailed look, at our inventory data and 20 expected life of vehicles that had already survived 20 and 21 30 years. And we came up with a certain set life that 22 these vehicles typically would still remain on the road, 23 and we use that to help in the calculation. 24 But it turned out we did have some census data 25 that indicated certain targets, certain segments continue PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 114 1 to have old vehicles. Even if you clean them up, you 2 know, they're always old. They're just -- and I think we 3 typically think of port haulers being in that category. 4 They're just always older vehicles there. 5 And so what we did is we called out a targeted 6 vocation and said in this program we will allow those 7 targeted vocations to have slightly extra life, added 8 life, which provides them additional funding in the 9 program. And so the comment here is that we should move 10 public fleets from a typical fleet into a targeted 11 vocation fleet and that we did not have actually any data 12 when we were analyzing it specific to public fleets on 13 including them in the targeted vocation. So we have not 14 analyzed this data that she's providing us here today. 15 MOBILE SOURCE DIVISION CONTROL CHIEF CROSS: I 16 think also she is jumping ahead of the public fleets rule, 17 which you'll be considering next month. And the staff 18 proposal for that fleets rule tries to take a lot of the 19 issues that she's raising into account. And it might be 20 more appropriate to discuss it in that context rather 21 than -- as long as the door is left open. 22 ACTING CHAIRPERSON RIORDAN: And I understand. I 23 think what I'd like to say to you is to be sure to be here 24 next month. 25 EXECUTIVE OFFICER WITHERSPOON: It's his rule. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 115 1 He'll be here. 2 ACTING CHAIRPERSON RIORDAN: But did you want 3 to -- 4 EXECUTIVE OFFICER WITHERSPOON: Yeah. Because I 5 got thrown by this, too. I was thinking first that Mary's 6 comments were premature, because it was the regulation 7 that was driving the issue. It was the surplus versus 8 mandated. But actually there's two different aspects. 9 One is who you regulate has to absorb the costs 10 themselves. And then there are the knobs within the Carl 11 Moyer protocols that you turn one way or the other that 12 say what the emission calculation is based on. 13 And the rural cities are having two different 14 issues. One, they're going to be regulated. Or we're 15 proposing that you regulate them. And, secondly, the 16 mileage is so low of these vehicles that they don't 17 accumulate enough tons to make it through the cost 18 effectiveness calculation. So this targeted vocation 19 business is about the length of life you assume for the 20 vehicles. So you have more years to multiply the low 21 miles against and get more tonnage reduction so they can 22 qualify. 23 It's possible to look at both issues. You'll 24 certainly have to consider where you draw the line on the 25 regulation. And we're bringing you one that has postponed PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 116 1 compliance deadlines for rural counties so they have more 2 time to seek incentive funding. And then we can keep 3 working on the more technical issue of what is the 4 appropriate assumption of remaining life for vehicles held 5 by rural counties and are they different from vehicles 6 held by anyone else. 7 ACTING CHAIRPERSON RIORDAN: Very good. Thank 8 you very much. 9 Chung, or is Barry going to take your place? 10 MR. LIU: He's going to take my place. 11 ACTING CHAIRPERSON RIORDAN: Well, let's hope he 12 does as good a job as you would have done. 13 SUPERVISOR DESAULNIER: In what way? 14 ACTING CHAIRPERSON RIORDAN: In being on time and 15 being organized. 16 MR. WALLERSTEIN: Thank you, Madam Chair. 17 ACTING CHAIRPERSON RIORDAN: I meant that as a 18 compliment to both of you. 19 MR. WALLERSTEIN: I'm sure I won't do as good a 20 job as Dr. Liu. 21 Actually, we're pleased to be before you this 22 morning. We've had a lot of interaction with your staff, 23 and it's been very positive. But there are three issues 24 that we wanted to bring to your attention. And I 25 understand others have been commenting on those. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 117 1 And I understand that the first issue which 2 related to the changes provided just this morning 3 regarding payback of non-eligible funds, that there is a 4 specific Health and Safety Code Section, 44291(d) that 5 gives statutory guidance on this. So we would look 6 forward to working out our concerns with the staff prior 7 to the guidance becoming final relative to that. 8 I believe you've also received a nice bright blue 9 sheet. Hopefully, Dr. Liu provided these to the Clerk, 10 that speak to our other two issues. 11 The first is the issue of availability of funds 12 for our local South Coast District fleet rule 13 implementation where we're proposing on page 2-29, Section 14 D, Line 4 that there be a clarification that includes 15 eligible items that are not incorporated into the local 16 Air Quality Management Plan or State Implementation Plan. 17 We believe that your Board's action when you considered 18 South Coast District fleet rules and adopted a Resolution 19 of support indicated that you would support us having a 20 continued ability to appropriately use Moyer funds that 21 are not already included for items that aren't included in 22 our Air Quality Management Plan. 23 Secondly, we believe or at least understood last 24 month when you modified the transit bus regulation and you 25 rolled back the NOx standard that a key purpose there was PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 118 1 to have natural gas transit buses qualify for Moyer 2 funding. And we're very concerned that the guidelines as 3 written might be interpreted otherwise. And we think that 4 needs to be clarified. 5 The other item identified for you on the sheet I 6 understand the staff is committing to work with the local 7 air districts on to clarify prior to finalization of the 8 guidelines and that pertains to the amount of time 9 required to obligate the funds so that there's adequate 10 time given to local districts to obligate a given year's 11 funding. And in initial discussions with your staff, we 12 believe we'll be able to work that out in a consensus 13 manner with the staff prior to finalization of the 14 guidelines. And as long as the staff is moving in that 15 direction, we don't believe that will be a problem. 16 ACTING CHAIRPERSON RIORDAN: Okay. Very good. 17 Let me just ask staff for a comment, and then 18 Mayor Loveridge will -- 19 BOARD MEMBER LOVERIDGE: That was my question. 20 EXECUTIVE OFFICER WITHERSPOON: There are some 21 problems with what Dr. Wallerstein is proposing. And a 22 third one he didn't speak to, which either will come up 23 later in testimony or I'll ask Mr. Cackette to talk about 24 it, that has to do underlying technical assumptions. 25 The State statute that defines what is or isn't PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 119 1 mandated or surplus is not predicated on whether it's also 2 in the State Implementation Plan. It simply says no 3 project shall be funded under this chapter after the 4 compliance date required by any local, state, or federal 5 statute, rule, regulation, MOU, or other legally binding 6 document, except that otherwise qualified projects may be 7 funded even if the State Implementation Plan assumes that 8 the change will occur provided that change is not required 9 by the compliance data, the statute, regulation, or other 10 legally binding document. So it really turns on whether 11 there's a rule or not. 12 The second point Dr. Wallerstein brought up was 13 the meaning of the Board's action on the transit rule. 14 And it is correct that by leaving or aligning the NOx 15 standard in 2007, you've made it possible for Carl Moyer 16 funds to flow in all districts but the South Coast for 17 purchase of natural gas vehicles, because they are not 18 mandated in any other district but the South Coast. But 19 there still is this mandatory versus surplus issue. 20 Now, the third thing turns on what is mandated in 21 the South Coast expressly, and I'm going to ask 22 Mr. Cackette explain that, because the South Coast does 23 not use a numerical standard. They use a definition of 24 fuels. So it turns on how you calculate the difference 25 between the base case and what result is pursuant to that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 120 1 rule. And Mr. Cackette can explain that issue. 2 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: I think 3 the fundamental issue is that since we adopted Carl Moyer 4 in late 1980s and since the district adopted its fleet 5 rules in 2000/2001 period, it has been funding for 6 vehicles that were used -- natural gas vehicles that were 7 used to comply with their regulation. And the reason for 8 that is because the vehicles that have been made available 9 by the manufacturers, in fact, are cleaner than otherwise 10 required. 11 The district rule says it has to be natural gas 12 or alternative fuel, or non-controlling fuel. It doesn't 13 say what the emission level is. It turns out all the 14 natural gas vehicles are significantly cleaner than the 15 state standard that would otherwise -- emission standard 16 or emission limit that would otherwise apply. 17 So what we funded is the difference between what 18 the state standard is and what those vehicles are actually 19 certified at. And that incremental emission reduction is 20 surplus, and we've been able, you know -- some of those 21 projects have been able to qualify under the cost 22 effectiveness limit and get funding. 23 And so the real question that I think you'll hear 24 in other testimony is how do we make that calculation? 25 And how much incremental cost really is associated with PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 121 1 those vehicles? And to put it bluntly, the question is 2 whether in the South Coast, which requires a natural gas 3 vehicle, is the baseline vehicle upon which we calculate 4 the incremental cost a natural gas vehicle that just meets 5 the standard, compared to a natural gas vehicle that's 6 cleaner than the standard that would be some certain 7 amount of cost to make that happen. Or is it a diesel 8 vehicle, which is what we assumed on a statewide basis, is 9 the baseline case. And then calculate the incremental 10 cost of a natural gas vehicle relative to that. 11 Obviously, that's a much larger amount of money. And 12 assuming it meets the cost effectiveness test would afford 13 the applicant more dollars towards the cost of the 14 vehicle. 15 And that's kind of where the issue flows. The 16 regulations have been doing it that latter way ever since 17 we started this program, and we're not proposing in the 18 document in front of that you that change. 19 MR. WALLERSTEIN: Madam Chair, could I just -- 20 ACTING CHAIRPERSON RIORDAN: Right. You may have 21 just a couple of seconds, because you did have some time 22 left. 23 MR. WALLERSTEIN: Thank you. Based on what your 24 staff has advised you, I would recommend you send this 25 element of the proposal back to public consultation and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 122 1 have it brought back before the Board. Because, 2 otherwise, you may have a very chilling effect on 3 technology advancement, competition between fuels. And 4 you may discourage things like no net increase plans by 5 the Port of L.A., which is looking for funding partners 6 and is assuming that there will be Moyer moneys available, 7 because they by adopting such a plan might be interpreted 8 to not fall into availability of Moyer. And this could 9 have very, very dramatic impacts on the rate at which we 10 improve air quality in Southern California. And I would 11 ask that this provision be discussed further with the 12 public and brought back to the Board. 13 ACTING CHAIRPERSON RIORDAN: Thank you, 14 Mr. Wallerstein. 15 Moving on, the next speaker will be Tom, 16 following Juan, Dennis Gage, Catherine Reheis-Boyd, and 17 Dave Smith and Susan Stark, if you'd all come forward. 18 MR. ORTELLADO: Am I the next one? 19 ACTING CHAIRPERSON RIORDAN: You're next. I'm 20 trying to avoid mispronouncing your last name. 21 SUPERVISOR DeSAULNIER: She's just trying to 22 stifle the influence of the Bay Area. 23 ACTING CHAIRPERSON RIORDAN: Oh, no, no, no. 24 That's not true, Supervisor DeSaulnier. 25 SUPERVISOR DeSAULNIER: That's my conspiracy PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 123 1 theory. 2 MR. ORTELLADO: Good afternoon. I think that's 3 appropriate now. Good afternoon, Chair Riordan and 4 members of the Board. My name is Juan Ortellado, and I'm 5 with the Bay Area Air Quality Management District. I 6 would like to start by thanking you for the opportunity to 7 provide comments on the proposed Carl Moyer Program 8 guidelines, and I also would like to take this opportunity 9 to thank staff for the diligent work they've done to 10 develop these proposed guidelines. 11 The Bay Area Air Quality Management District 12 fully shares the objective of strengthening the Moyer 13 Program guidelines to ensure that the program is well run 14 and the fully complied with state law. 15 We've also sent some letters to provide our 16 comments in writing, so I'm not going to go into detail 17 about those. 18 But I just want to share with you a few of our 19 major concerns. Overall, we are concerned about the 20 administrative and monetary requirements that are proposed 21 in the guidelines. We think they may impose a heavy 22 burden on both potential applicants and the local air 23 districts, which may act as a disincentive to apply for 24 funds, especially for the smaller businesses which are 25 typically the ones that have the fewer resources, and yet PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 124 1 they operate the oldest and dirtiest diesel equipment. 2 These also may effect in turn our ability to 3 allocate Moyer funds to eligible projects in the 4 communities that are more heavily impacted by diesel 5 emissions. This is also in addition to the expected 6 significant increase in Moyer funds and also taken into 7 account the universe of eligible projects because of the 8 obvious regulations. So it complicates our work. 9 We also share Barbara Lee's concerns about the 10 use of the funds. We also just learned about these 11 earlier today. We would like the opportunity to discuss 12 this in more detail with staff. 13 We are also concerned about some of the 14 requirements for two specific project types; engine 15 repower, fleet modernization projects. We believe that 16 the decision to require a retrofit device for engine 17 repowers should be left at the discretion of each local 18 air district. 19 Also for fleet modernization projects, we believe 20 that ARB should allow additional flexibility to the air 21 districts to interpret the guidelines and also provide for 22 project administrative costs. Because really if the 23 guidelines are going to be in effect, the administrative 24 work also shared with these types of projects is really 25 major. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 125 1 Finally, while we appreciate the use of Moyer 2 funds by the air district to cover the administrative and 3 outreach costs associated with running the Moyer Program, 4 we believe that 2 percent for the costs for each local air 5 district is not enough to cover these efforts. So we 6 propose the Board consider increased funding to local air 7 districts to offset the administrative costs associated 8 with the implementation of the Carl Moyer Program. 9 That covers all of my comments. Thank you again 10 for the opportunity. And thank you to staff for the 11 diligent work. 12 ACTING CHAIRPERSON RIORDAN: Thank you very much. 13 As I understand it, and staff correct me if I'm 14 wrong, but legislatively of the 2 percent that was a part 15 of the legislation for administration, or the share of the 16 4 percent which worked out to 2 percent for ARB and 2 17 percent for local districts, and that to change this, 18 which I think is a universal request on the part of most 19 districts, may require some legislative change. Am I 20 right? 21 ON-ROAD CONTROLS BRANCH CHIEF KITOWSKI: That's 22 correct. We would need the legislative change. 23 ACTING CHAIRPERSON RIORDAN: I think what we 24 collectively need to do -- and logically the hope that I 25 would have is if we had a little more administrative PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 126 1 money, the faster we can get the money out and working and 2 more maybe outreach to applicants, et cetera, et cetera. 3 So we've got an opportunity when the Legislature comes 4 back into session, you know, we better do something about 5 getting this legislative change. And it may be that we 6 need to seek a sponsor and/or maybe attach it to some 7 other bill that has some relevance to air quality. And so 8 but we need to do that. 9 But that I think goes without saying to anybody 10 who's coming up, we just need to get together to do this. 11 EXECUTIVE OFFICER WITHERSPOON: CAPCOA would need 12 to introduce it, and we'd endeavor to get the Governor and 13 Department of Finance to support it. 14 ACTING CHAIRPERSON RIORDAN: Sounds good. Thank 15 you very much. 16 ACTING CHAIRPERSON RIORDAN: Tom Jordan, and then 17 I'm going to ask Larry Allen, because you do represent 18 another one of the air districts to come forward. So it 19 would be Tom Jordan, Larry Allen, and Dennis Gage, in that 20 order. 21 MR. MC COY: Good morning, Madam Chair and 22 members of the Board. My name is Roger McCoy. I'm going 23 to pitch hit for Tom Jordan. I'm the Director of 24 Administrative Services for the San Joaquin Valley Air 25 District. And while I may not be as articulate and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 127 1 persuasive as Tom, I'll do my best to articulate our 2 comments. 3 Our district has participated throughout the 4 workshop process of the 2005 revisions of the Carl Moyer 5 Program guidelines, and we want to thank ARB staff for 6 always being available for us and their willingness to 7 address our concerns. 8 We have submitted detailed written comments for 9 our remaining concerns. There was just three things I 10 wanted to bring up today in public. The first has been 11 addressed just previously by you. We're very concerned 12 about the 2 percent administrative cost. I think enough 13 has been said on that. We're already subsidizing that 14 program, and we'd appreciate any assistance from your 15 Board in getting that increased. 16 The second issue was of great concern to our 17 district, and it has to do with the requirement to enter 18 individual projects into the new Moyer database and wait 19 for approval before funding each project. Throughout the 20 workshop process, the larger districts who already have 21 databases have asked for the ability to electronically 22 upload project info without the delay of waiting for ARB 23 approval. ARB staff has agreed to this request, and 24 language changes are included in the revision before you 25 today. And we just wanted to thank staff for listening to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 128 1 our concerns and agreeing to that change. 2 The third issue which is the most significant for 3 our district relates to school buses and has already been 4 addressed a couple of speakers prior. We would like to 5 request ARB to work with us to modify the fleet 6 modernization component of the Carl Moyer Program to allow 7 us more flexibility in funding school bus replacements. I 8 believe in the slides that were presented to you today 9 they already agreed to do that. 10 As your Board is already aware, the impact of bus 11 exhaust on our school children riding in older buses is 12 quite significant. In the San Joaquin Valley Air 13 District, we have over 200 pre-1977 and over 650 '77 14 through '87 school buses. The reality is the school 15 districts using these buses cannot afford to replace them, 16 and they will continue to use these buses for many, many 17 years. 18 The expected funding from the lower emission 19 school bus program and the substantial local funding 20 provided by our district is not adequate to addressing 21 this problem. We are asking the ARB to work with air 22 districts over the next three months to provide the 23 flexibility on the fleet modernization component to allow 24 for school bus replacement. And as I've already said, 25 they've indicated that they're willing to work with us, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 129 1 and we're looking forward to working with them. Thank you 2 for the opportunity to make these comments. 3 ACTING CHAIRPERSON RIORDAN: Thank you very much. 4 Are there any questions for this speaker? 5 Thank you. Appreciate the information for the 6 number of buses as well. 7 Larry Allen. 8 MR. ALLEN: Thank you, Madam Chair and members of 9 the Board. I'm Larry Allen. I'm the Air Pollution 10 Control Officer for San Luis Obispo County Air Pollution 11 Control District, and I do appreciate the opportunity to 12 comment on this program today. 13 This is a very important program not only for our 14 district, but statewide. And we've seen incredible 15 emission reduction benefits from being able to apply these 16 funds to projects that otherwise would not see reductions 17 occur, and I think from a public health standpoint is 18 probably one of the most important programs that the State 19 runs. 20 And we put a lot of resources into implementing 21 this program and other incentive programs in our district. 22 And I understand the need to ensure that these dollars -- 23 and I agree with the need to ensure and show the public 24 that these dollars are being well spent and effectively 25 managed. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 130 1 But the substantial increase in administrative 2 requirements that are contained in this document are going 3 to place a very large burden on air districts and on the 4 grantees that apply for these funds. And I'm a little 5 concerned that it may actually inhibit participation by 6 some folks out there that may look at this document and 7 say, I'm not getting involved with this. Because, it's 8 just too much of a hassle for me to present a project and 9 go through all of the requirements. 10 Now, I'm not convinced that's going to be a 11 significant portion, but I think it could be some portion. 12 And the districts right now currently subsidize the 13 administrative effort on this to a large degree. The 14 fees, that 2 percent, that we get back, does not come 15 close to covering what our actual administrative costs 16 are. In a district like mine, our costs are closer to 15 17 percent than 2 percent. 18 And so I think if you're going to adopt the level 19 of administrative oversight that is recommended in these 20 guidelines, that there has to be increased funding for 21 these districts to manage these programs. Otherwise, 22 we're going to have to start turning back some of the 23 money, because I don't have staff to comply with all of 24 this right now. So that's a significant issue. 25 The other one that's already been mentioned by a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 131 1 number of folks, and I won't go into a lot of detail, is 2 we need increased flexibility beyond what the guidelines 3 provide to determine which projects are eligible or not. 4 Right now, a lot of projects that have previously been 5 approvable are now being pulled off the table by these 6 guidelines, and that's going to make our job a lot more 7 complex to find eligible projects and continue to achieve 8 the reductions that this program has provided in the past. 9 Another issue for us in particular is that 10 including the AB 923 funds and these guidelines we believe 11 is extending ARB authority that's not really provided in a 12 statute, and that's going to further complicate us as well 13 I think. And I believe that it would be more appropriate 14 to pull those references out of the guidelines and to 15 treat those dollars the same way that other DMV funds from 16 AB 2588 programs are treated right now. We have a very 17 good working relationship with your staff on how those 18 dollars are expended, and it's a good program. And I 19 believe that's a more appropriate method to handle those. 20 ACTING CHAIRPERSON RIORDAN: And your time is up, 21 so I need a concluding statement. 22 MR. ALLEN: My concluding statement is the new 23 language that was proposed today that would require 24 districts to pay back funds for ineligible projects is 25 very problematic for us. It's been addressed already. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 132 1 But for us to even consider that that might be a 2 possibility when sometimes a project might become 3 ineligible after dollars have been granted to think about 4 having to pull those dollars out of our general fund to 5 pay back is not something that we would consider moving 6 forward with. 7 ACTING CHAIRPERSON RIORDAN: Okay. Thank you 8 very much. 9 I don't know whether there needs to be staff 10 comment, but maybe Ms. Witherspoon, you might. And 11 obviously there's going to be discussion among CAPCOA. 12 EXECUTIVE OFFICER WITHERSPOON: Very quick 13 comment on the issue of different funding sources. 14 There's tire fees, smog check fees, motor vehicle 15 registration fees, and they all have attached to them 16 different statutory language. And some flow through the 17 Air Board and some are received directly by the air 18 districts. 19 And so Mr. Allen was suggesting all the same 20 administrative requirements not attached to all. The 21 problem we're having is in the mind of the Governor and 22 Legislature, it's all Carl Moyer money. They think about 23 the 140 million. They appropriated, and where did it go. 24 We've urged the districts even though we know we can't 25 absolutely require it of them to keep track of all the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 133 1 money in the same way so we're able to reduce these 2 comprehensive reports that account for the whole 140 3 million and not just the tire fee, the smog vehicle fee, 4 the motor vehicle fee. But we recognize that's even 5 adding more burdens to them in terms of administrative 6 overhead and all the more reason to get legislation 7 passed. 8 ACTING CHAIRPERSON RIORDAN: Also it would seem 9 to me that as we move through these programs, there is 10 going to be some helpful software program or something 11 that we could utilize and share that would be helpful to 12 particularly the smaller districts who don't have the 13 staff to make a lot of reports. But that it would come 14 down to a really good program that we could give them, 15 share with them, and they could fill it out. I hope 16 that's going to be -- 17 EXECUTIVE OFFICER WITHERSPOON: We're working on 18 that. But the transition from their software to using 19 ours has a cost, too. 20 ACTING CHAIRPERSON RIORDAN: That's life I think, 21 unfortunately. 22 All right. Dennis Gage. 23 MR. GAGE: Good afternoon, Madam Chair, honorable 24 Board members. I'm Dennis Gage, and I don't work for an 25 air district. I do, however, work for Placer County, and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 134 1 I'm a Fleet Manager there. I'm one of the people that 2 will be impacted by any changes that you implement today 3 regarding Carl Moyer and also be back here in December as 4 well as some future date when you do off-road rules. So 5 you'll see me several times. 6 I'd like to first begin with the topic that Mary 7 Pitto presented to you, and that is the targeted vocation. 8 Staff has assured myself and other colleagues that the 9 language in the current proposal does address all of the 10 necessary needs of public agencies. We have read this 11 diligently, and we don't find it to be that clear. We 12 feel that public agencies need to have an equal share in 13 Carl Moyer funding, and we need to be prepared to deal 14 with those needs. So we'd like to have that clarified, 15 number one. 16 Number two, the targeted vocation thing does two 17 things for us. First, not only does it change the 18 formula, it also allows us to apply for additional 19 vehicles. I believe the open category is five vehicles 20 and targeted vocation is unlimited, I believe. I'm not 21 sure. That's a quick review. 22 I also would like to ask for relief on horsepower 23 requirements. It's going to be tough for fleets to handle 24 the current horsepower requirements. Twenty percent is 25 not enough. I know that may not make a lot of sense, but PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 135 1 that's just not enough. 2 GVW, your rule in December will start at 14,000 3 pounds. This one starts at 19,000. Why have the funding 4 lag start at a different GVW than the rule? It doesn't 5 make a lot of sense. Let it be a class by class exemption 6 if you want at a certain level. I would suggest you lower 7 the 33,000 pounds to 26,001. It's where all the other 8 things start. All of the rules regarding safety sensitive 9 commercial vehicles, driver's licensing, lots and lots, 10 FHWA, FTA, all of them are driven on 26,000 pounds. 11 Those are key things we'd like to see perhaps included. 12 But most importantly is the target vocation. 13 In addition, I'd like to plead with you to 14 consider implementing a rule -- I shouldn't say rules. 15 Implementing the procedure to acquire funds from Carl 16 Moyer any time prior to the final implementation of the 17 rule. So in the case of the public fleet rule that you'll 18 hear next month, there are a number of levels proposed, 19 which may conclude let's say in 2015. Don't know the 20 final year. Let's say that might be it. We should be 21 allowed to obtain Carl Moyer funds until the point of 22 2015, not when it's implemented in 2006 or '07 whenever it 23 goes into effect. 24 Same thing with off-road. It has multiple levels 25 of implementation. We'd like to see a six-month window, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 136 1 applications accepted and receive approval up to the point 2 of the rule being implemented by that date. So those are 3 key points the fleet people would like to see. And I 4 represent a number of our colleagues. And I hope your 5 Board will consider that. 6 ACTING CHAIRPERSON RIORDAN: Thank you very much 7 for your testimony. I appreciate that. 8 Catherine Reheis Boyd. And then let me sort of 9 give -- Catherine, as you're coming forward, my thought is 10 that you, Dave Smith, and Susan Stark. Then I think I'll 11 take a break of about a half hour for lunch, and then come 12 back and begin with Bob Lucas, Dave Modisette, and Stephan 13 Rhodes. So that kind of gives you a picture of where I'm 14 going. So Catherine. 15 (Thereupon an overhead presentation was 16 presented as follows.) 17 MS. REHEIS BOYD: Yes. Thank you very much. And 18 I believe the Power Point is up there, and you have copies 19 in front of you. 20 Good morning, Madam Chair and members of the 21 Board. My name is Cathy Reheis Boyd, and I am the Chief 22 Operating Officer of the Western States Petroleum 23 Association. As you all know, WSPA has been a long time 24 supporter of the Carl Moyer Program, and we certainly have 25 worked long and hard with the Air Resources Board, CAPCOA, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 137 1 and probably everybody in this room to bring about the 2 long term and sustained funding source for the program. 3 $150 million is a lot of money, and we all invested a lot 4 of time in making sure it was available for this very 5 important effort. 6 We continue to see this program as really the way 7 to advance towards clean air in an innovative way beyond 8 command and control. And we continue to be very 9 enthusiastic about the promise this program has to help 10 obtain clear air quickly and economically. We support the 11 fuel diversity that will occur through this program, as 12 long as it occurs in a fair and equitable manner. WSPA 13 companies, as I think you know, supply the majority of 14 gasoline, diesel, LPG, LNG natural gas that will be used 15 in Carl Moyer Program funded projects. 16 --o0o-- 17 MS. REHEIS BOYD: We do have some concerns with 18 the guidelines before you today. I'll discuss the first 19 two of those, and Dave Smith and Susan Stark will discuss 20 the other items. 21 We have discussed these concerns with staff. We 22 have attended the workshops and already submitted our 23 comments. And there remains to be some unresolved issues. 24 Our concerns can be summarized in a few simple words. We 25 want the billion-plus dollars that will be spent through PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 138 1 this program to achieve the maximum amount of surplus 2 emissions reductions. If that can be achieved, we will 3 continue to support the program and we will continue to 4 invest an equal amount of time to make sure we can double 5 the amount of funding that's available for it. I think 6 there's a lot of interest in this room to make that 7 happen. 8 While the concept to maximum emission reductions 9 is simple, there are some provisions in this guideline 10 that work against that goal. One of the 11 primary issues -- 12 --o0o-- 13 MS. REHEIS BOYD: -- is relative to SIP credit. 14 One of our primary concerns is to make sure that obtaining 15 credit for the Carl Moyer emission reductions in the SIP 16 and reducing the size of the black box. We understand ARB 17 is in discussions with EPA to include credit in the SIP 18 for the emission reductions achieved through this 19 program's funding, and we are very supportive of that 20 effort. We request that the Board include a commitment in 21 your action today to update the guidelines as soon as 22 possible reflecting any comments that EPA has that are 23 necessary to ensure SIP acceptance. The Carl Moyer 24 Program should be included in the next SIP update due to 25 its sustained funding issue. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 139 1 Additionally, district policies and 2 implementation of the program may also have implications 3 for SIP credibility. ARB and the districts should ensure 4 that district policies and project selection criteria do 5 not jeopardize SIP credibility by not maximizing cost 6 effective emission reductions or paying for non-surplus 7 emission reductions. 8 --o0o-- 9 MS. REHEIS BOYD: The next issue is relative to 10 fuel neutrality. We are concerned with where the 11 guidelines have the tendency to give some power sources 12 unduly favorable treatment and other fuel types 13 unfavorable treatment without regard to whether the most 14 cost effective reductions are achieved. Fuel diversity 15 can be obtained without mandating or limiting one more or 16 more fuels from a project. 17 ACTING CHAIRPERSON RIORDAN: Catherine, I need 18 you to make some kind of a concluding statement. 19 MS. REHEIS BOYD: Be happy to. 20 I think one thing I'd like to note is what 21 Ms. Witherspoon said early on in her opening remarks that 22 we are going through growing pains on this project. And 23 what's good about pains is they're not hard unresolved 24 issues. I think with a little time, all the parties in 25 this room could address every issue that's been brought PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 140 1 before you. And I would encourage you to allow a 2 mechanism to allow that to happen. Thank you. 3 ACTING CHAIRPERSON RIORDAN: Thank you very much. 4 Now, Mr. Smith. 5 (Thereupon an overhead presentation was 6 presented as follows.) 7 MR. SMITH: Thank you. If you could go to the 8 next slide, please. 9 I'm Dave Smith. I work for BP representing WSPA 10 today. That's my drawing. Appendix D of the guidelines 11 contain an example of how to calculate eligible funding 12 for a new CNG powered bus certified to a lower optional 13 NOx emission limit that is on the alternative fuel path. 14 This is a fleet that is on the alternate fuel path so 15 they're not allowed to buy a diesel bus. They either have 16 to buy one or more of these natural gas buses depending on 17 the certified levels. 18 Since there are a few CNG buses for sale that are 19 certified to the higher but allowable emission level, the 20 ARB and the district have had to estimate their costs to 21 determine eligibility funds under Carl Moyer. For several 22 years, they have assumed over objections that the cost of 23 the higher emitting CNG bus is equivalent to a 24 significantly cheaper diesel bus. 25 Based on discussions with engine manufacturers PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 141 1 and CEC, the difference in cost between a diesel and CNG 2 bus is due to those items listed on the slide: The fuel 3 tanks, fuel system, the production volumes. None of these 4 costs change when comparing two CNG buses, whether it's 5 high or low emitting CNG bus. 6 Presumably, there may be a difference between two 7 CNG buses certified to two different emission levels. But 8 if there is a difference, we think it is a lot less than 9 40 to $50,000 that's currently allowed under the Carl 10 Moyer Program. Staff has told us that this practice is a 11 result of a policy decision, and they are unwilling and 12 unable to change this. 13 Next slide, please. 14 --o0o-- 15 MR. SMITH: We, therefore, ask that the Board 16 direct staff to correct this, what we believe is an 17 unjustified practice that results in significantly over 18 funding alternatively fueled vehicles. And it's in our 19 opinion just simply wrong. Similar efforts will need to 20 be done to other district rules, namely the South Coast 21 fleet rules, since they're using the same practices when 22 they estimate their Carl Moyer funds. 23 Previous slide, please. 24 --o0o-- 25 MR. SMITH: My other issue has to do with PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 142 1 something that the staff is calling emission disbenefits. 2 This is the first time that I understand that this is 3 documented in the Carl Moyer guidelines. We call it 4 emission backsliding. But whatever you call it, this 5 allows use of Carl Moyer funds for projects that may 6 decrease NOx but increase PM. 7 The ARB example that we're looking at here 8 actually increases PM emissions by an order of magnitude 9 over the baseline vehicle ten times, in fact. We don't 10 believe this is good public policy and believe that the 11 Board should make another policy judgment to tell the 12 staff that this is not allowable. And, again, we just 13 believe that this is wrong. Especially given the fact 14 that we understand there's lots and lots of projects that 15 are not being funded. And so somehow or other, if we're 16 allowing projects that have a disbenefit and not funding 17 projects that don't have any disbenefit, there's something 18 wrong with the program. 19 So, in conclusion, I would just say that we 20 support the program, but there are some very key changes 21 that need to be made, and they can be made today that 22 would make this program much more supportable from our 23 industry. Thank you. 24 ACTING CHAIRPERSON RIORDAN: Thank you, 25 Mr. Smith. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 143 1 Staff, any comment on the last point that he 2 raised with the PM issue? 3 ON-ROAD CONTROLS BRANCH CHIEF KITOWSKI: Let me 4 give this a shot. 5 In the past, the Carl Moyer Program has strictly 6 been NOx focused. So if you got emission reductions of 7 NOx and they met a certain level, you can get funding 8 associated with that. This year, bringing in hydrocarbons 9 and particulate created some good opportunities but also a 10 few challenges, and we've worked our way through those. 11 One of them is the challenge of let's take an 12 example where you might have a project that gets 90 13 percent NOx reduction but a 5 percent hydrocarbon 14 increase. Is that still good for air quality? And our 15 view was that should still be a good viable project, but 16 we do want to -- if there is any increase at all, we want 17 to take it into consideration and not just add the 18 benefits but also subtract the disbenefits. 19 So we have proposed a calculation that if there 20 is any disbenefit, and we don't think there will be many 21 cases where there are, but we want to capture that in the 22 equation. The example is a bit on an anomaly where the 23 inventory I think is being reworked, and there were some 24 funky numbers associated with this particular example that 25 was quoted by Mr. Smith. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 144 1 ACTING CHAIRPERSON RIORDAN: Thank you. 2 Any other questions, Board members? 3 Thank you, Mr. Smith. And we'll move on to Susan 4 Stark. 5 (Thereupon an overhead presentation was 6 presented as follows.) 7 MS. STARK: Good afternoon. I'm Susan Stark, a 8 consultant retained by WSPA. And I'd like to discuss a 9 couple of issues that we believe would benefit from 10 additional transparency and further elaboration in the 11 guidelines. One area regards district matching funds. 12 And that's a couple slides beyond this. 13 --o0o-- 14 MS. STARK: Most districts must provide matching 15 funds to qualify for Carl Moyer Program funding, and they 16 have considerable flexibility to use those funds. 17 District match may include funding of fueling 18 infrastructure as long as it serves Carl Moyer qualifying 19 projects. But the guidelines don't seem to give any other 20 criteria for such infrastructure funding. 21 So we were wondering, are there any foundational 22 issues that ARB or the districts review when determining 23 if the infrastructure project serves a Carl Moyer project? 24 For instance, are there a certain number of vehicles that 25 must be served or a certain volume of fueling that must be PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 145 1 estimated? Or a certain percentage of vehicles that are 2 Carl Moyer versus non-Carl Moyer vehicles that are served 3 by the infrastructure? If there are such criteria that 4 we're just not aware of, it would really be useful to 5 include them in the Carl Moyer guidelines. And if they 6 don't exist, WSPA believes an additional section of the 7 Carl Moyer guidelines would be really helpful to clarify 8 the criteria for these matching funds. 9 For instance, the CEC -- the old CEC 10 infrastructure program had some specifics listed in 11 statute about what would qualify for their infrastructure 12 programs. We also believe that district reports to ARB 13 should include matching fund information. They certainly 14 are already asked to document and report the amount of 15 matching funding they're providing. But we think it would 16 also be helpful if they report on whatever these criteria 17 are that qualify a project to be matching funds. 18 A second issue regards tracking of Carl Moyer 19 funds allocated to environmental justice areas. There's a 20 requirement that certain large districts have 50 percent 21 of their Carl Moyer funds allocated to projects in EJ 22 areas. We suggest all the relevant districts identify and 23 delineate those areas in their Carl Moyer policies and 24 procedures areas, so everyone knows what those areas are, 25 and that the district's policies and procedures manual PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 146 1 also specify how EJ projects are selected. 2 And, again, if there are criteria that have been 3 developed that specify which projects qualify as EJ, we're 4 not aware of it. For example, does a project have to 5 operate a minimum amount of time in an EJ area? And are 6 there statewide standards? Or does each district come up 7 with their own project selection criteria? So we think 8 this is another important area of transparency and 9 accountability that would be very useful for ARB to take 10 some time to include in the guidelines. 11 And we understand the districts' concern about 12 not having enough money in the administrative 2 percent. 13 And WSPA in comments and workshops in the past has said 14 that we would support a legislative change to increase 15 that percentage. 16 ACTING CHAIRPERSON RIORDAN: Thank you very much. 17 And that concludes your time. Thank you very much. 18 Staff, a comment or a response that I'm seeking 19 for their recommendation about the environmental justice 20 boundaries, could you comment on that? 21 EXECUTIVE OFFICER WITHERSPOON: The first year 22 after environmental justice was added to Carl Moyer as a 23 criteria, every district defined what constituted EJ areas 24 within their jurisdictions. 25 And I was just chatting with staff about it. I PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 147 1 think the issue is cross-referencing after that boundary 2 was defined so that you can track it retrospectively to 3 understand which project was in that area. But every 4 district has a definition of EJ areas. 5 ACTING CHAIRPERSON RIORDAN: Okay. Very good. 6 And any criteria that -- because the point was made I 7 think in the comments, does the project area -- does the 8 funding then have to be 100 percent? Like, I'm thinking 9 about something that travels between one area and another 10 and obviously going in and out of environmental justice 11 areas. And so I don't know if that is mentioned, but 12 perhaps it is. 13 EXECUTIVE OFFICER WITHERSPOON: Well, it depends 14 on the district how discrete the areas are. In the case 15 of the San Joaquin Valley, it's the entire valley. And 16 they use their criteria -- well, they have higher poverty 17 levels. And it was number of children enrolled in school 18 lunch programs as an indicator. And every district is 19 using different statistics to arrive at EJ areas. And 20 so -- 21 ACTING CHAIRPERSON RIORDAN: But they are 22 commenting on that. 23 The point is, again, to give people information, 24 applicants, people who may be auditing or people who may 25 be part of the community that's very interested. Okay. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 148 1 I'm going to take a break, and we'll reconvene 2 back here at 1:15. So just a little over a half an hour. 3 We're going to begin with Bob Lucas, Dave Modisette, 4 Stephan Rhodes, Paul Martin, and Shirley Batchman. So if 5 you'd all come to the front so you can be ready to go, I 6 would appreciate it. And we'll be back at 1:15. 7 (Thereupon a lunch recess was taken.) 8 ACTING CHAIRPERSON RIORDAN: We're going to 9 start, because we have Bob Lucas. I'm going to ask you to 10 come forward. I'm not going to ask you to start, because 11 I'm going to ask people to sit down. But just be ready 12 there. And I appreciate, Bob, the fact that you and Dave 13 Modisette came back to be ready to go. And I'm going to 14 push this along in that interest of the quorum. 15 Bob. 16 MR. LUCAS: Please recall the last time I 17 addressed the Board I was very succinct. I only used one 18 of my minutes, so I may have two left in the bank. But I 19 hope I don't have to use them. 20 My name is Bob Lucas. I'm here today 21 representing the California Council for Environmental and 22 Economic Balance, known as CCEEB. I know you know what 23 the organization is, so in the interest of time, let me 24 acknowledge some of the points that were made earlier 25 about the vast changes to the program that come about PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 149 1 because of the passage of 923, the fact that we have more 2 money now on an annual basis than we had for the entire 3 six-year history of the program with many expanded new 4 uses as well as the expanded dollars. 5 So from our perspective, the priorities should be 6 very clear. These dollars should be used to maximum 7 emission reduction. We should be sure to get SIP credit 8 for the emissions actually reduced, and we should ensure 9 that the projected emission reductions are actually 10 achieved. 11 With regard to maximizing emission reductions, in 12 our view as long as there are many more eligible projects 13 to be funded that can be funded under Moyer, we think it's 14 prudent to avoid using the Moyer moneys for compliance 15 assistance programs. Any dollars that are spent on 16 compliance assistance can't be spent to achieve new 17 emission reduction, something that's not otherwise 18 required by a rule. 19 With regards to fiscal responsibility, we very 20 much support the independent audits that have been 21 included in this packet and the other accountability 22 provisions in the guidelines. 23 With regard to SIP credit, very important point 24 for us. U.S. EPA has given California an opportunity to 25 receive SIP credit for these incentive programs. This is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 150 1 highly unusual. It's being done because this is an 2 ongoing program, ongoing funding. We should take 3 advantage of this opportunity as quickly as we can. We 4 know that staff is having discussions with EPA. We'd like 5 these discussions to be given priority. And then once we 6 have an understanding of what the criteria is that EPA 7 will require for SIP credit, we need to be sure that we 8 update the guidelines as quickly as we can so we make sure 9 they properly reflect those things that need to be 10 accomplished in order get the SIP credit and the districts 11 that follow those guidelines in accordance with that. 12 We still have issues with the definitions of the 13 number of critical terms, project life, contract term, 14 surplus. We've been working with staff and given them 15 several examples and hopeful to come up with some language 16 on that. 17 With regard to the cost effectiveness calculation 18 and the PM multiplier, staff has mentioned that it's 15 19 times more expensive to achieve a PM reduction. We think 20 that should be the multiplier. There's an additional 21 multiplier of five that's added in there for things that 22 relate to things other than cost. We're not sure what 23 that is. We think the factor ought to remain as a cost 24 effective calculation, not a cost effective social benefit 25 or risk type of formula. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 151 1 With regard to -- we do want to support the 2 light-duty program that South Coast is going to initiate 3 as well as the voucher rebate program and some of the 4 other applications streamline provisions that are in the 5 guidelines. 6 Just a final point. You've noticed in our 7 written comments we suggest that because of multiplicity 8 of issues and the large number that are still in 9 contention that the Board consider putting this item over. 10 We'd still make that point. If you do decide to go on, we 11 would like to at least ask that you require a midyear 12 report from the staff to the Board on the progress of 13 these guidelines and how the program is coming out. And 14 that you also reopen these guidelines for additional 15 changes next year, because there are many issues that are 16 just not resolved at this time. 17 ACTING CHAIRPERSON RIORDAN: Thank you very much. 18 Dave Modisette. 19 (Thereupon an overhead presentation was 20 presented as follows.) 21 MR. MODISETTE: Thank you, Madam Chair, members 22 of the Board. I'm Dave Modisette. I'm the Director of 23 the California Electric Transportation Coalition. I did 24 put together a few slides I thought might help make some 25 of the points for you today. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 152 1 Next slide. 2 --o0o-- 3 MR. MODISETTE: First of all, I want to thank the 4 staff for what has been many, many months of hearings and 5 private meetings, but in particular, Jack Kitowski and 6 Edie Chang and Executive Officer Witherspoon. 7 We strongly support the proposed revisions before 8 you today. The proposed revisions recognize the benefits 9 of ZEV technologies which are zero tailpipe and 10 evaporative emissions. Maybe for some of the newer Board 11 members, I want to emphasize that that's really the 12 definition of what a zero emission technology is. It's an 13 emissions-based performance standard, so it is both 14 technology neutral and fuel neutral. 15 But there are other benefits as well: Very low 16 upstream emissions, no degradation emissions over time. 17 In fact, ZEV emissions actually get cleaner over time as 18 powerplants get cleaner. There's no emission control 19 equipment to tamper with or to malfunction. Plus there's 20 significant reduction in greenhouse gas emissions and in 21 petroleum usage. As you know, the Governor has 22 established targets in both of those areas. 23 Next slide. 24 --o0o-- 25 MR. MODISETTE: Here I just wanted to lay out for PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 153 1 you the eligible ZEV technologies under the Moyer program, 2 because it's not just one or two technologies. It's 3 actually quite a few. First of all, truck stop 4 electrification, alternative marine power, electric 5 standby truck refrigeration units, electric ground support 6 equipment, electric lift trucks like forklifts, tow 7 tractors and industrial tugs, electric sweepers, scrubbers 8 and burnishers, turf trucks, and then several other 9 technologies, including electric ag pumps. 10 Next slide. 11 --o0o-- 12 MR. MODISETTE: This slide is really designed to 13 illustrate to you that the emission reductions that are 14 achievable from these technologies that are eligible under 15 Moyer are not small. They're actually very, very large. 16 And this information comes from a study that TIAX, 17 consulting firm TIAX did for us. And we've actually 18 included the executive summary in the attachment to our 19 handout. 20 But you can see in 2020, achievable emission 21 reductions from just these Moyer eligible technologies are 22 158 tons per day of NOx plus ROG; 2.6 tons per day of PM; 23 six million tons per year of CO2 reduction; and about 537 24 million gallons per year of gasoline and diesel. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 154 1 MR. MODISETTE: Lastly, my last slide just kind 2 of illustrates some suggestions for improvement in the 3 future. First of all, we believe ARB staff should 4 promptly continually define surplus emissions for the 5 applicants. That's been mentioned several times today. 6 We've listed four ideas to make the program more applicant 7 friendly: Providing more application, Windows for 8 applicants, maybe having walk-up counter application 9 process for some technologies. The voucher rebate program 10 has been mentioned several times. And we're very pleased 11 to see South Coast and some of the other districts are 12 going to move forward with a pilot project next year. A 13 common application form online with built-in calculation 14 assistance in it. And lastly, encouraging districts to 15 pay for necessary electric infrastructure which the state 16 program does not pay for. 17 And then lastly, we believe in 2006 and 2007, the 18 ARB should conduct a statewide or multi-district 19 solicitation for truck stop electrification. 20 And with that, I probably used up all my time. 21 I'll take any questions you have. 22 ACTING CHAIRPERSON RIORDAN: I don't see any, but 23 thank you very much. 24 Stephan Rhodes. And then Paul Martin and Shirley 25 Batchman, if you don't mind I'm going to put Todd Campbell PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 155 1 in ahead of you, because I want him to be on the plane so 2 he doesn't miss his plane. 3 MR. RHODES: My name is Stephan Rhodes, 4 legislative advocate for the School Transportation 5 Coalition. 6 First, I would like to say that this has been an 7 honor in the past to work with Carl Moyer. And I think he 8 would be very impressed and proud of the efforts that you 9 folks are going through in his program. So I'd like to 10 acknowledge that. 11 We are happy that there will be a little bit more 12 time we think to work with the staff on some of the school 13 bus issues. There's two of them that I would like to 14 point out. One is that toxic particulates as it relates 15 to the PM. We feel that when you deal with school buses, 16 you're dealing with environmental issues and environmental 17 justice, because most of the kids that we transport are 18 poor and minorities. They have no other way of getting to 19 and from school. And I'm working now on gathering the 20 data for my members to show that. Many of the schools, 21 70, 80, 90 percent are poor children. 22 Your study that you did some time ago showed that 23 with these older school buses, the pollution inside the 24 school bus is worse than the pollution outside the school 25 bus. There is much more seepage inside of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 156 1 particulates and the air pollution. And you're dealing 2 with children whose lungs are much more susceptible to 3 damage and breathe at a much faster rate than adults. And 4 consequently, we think that more time should be spent on 5 that particular issue and the impact. 6 And as it relates to the so-called 20 weighting 7 factor, we would actually think that maybe even that gets 8 increased or maybe some exceptions are made for school 9 buses. 10 The second issue has to do with the ages of 11 school buses and the project life of school buses. 12 Unfortunately, we have the oldest school bus fleet in the 13 nation. We don't get rid of these school buses unless 14 there is money to reimburse school districts to get rid of 15 them. We have district after district that have school 16 buses that are more than 25 years old, and it's not just 17 the rural area, a rural problem. L.A. Unified has 18 hundreds of school buses that are more than 25 years of 19 age. They are going to keep them. Everybody that I 20 talked to, they're not going to replace them because they 21 just don't have the money to do so. So I think the 22 project life is a lot longer than people think. 23 The oldest school bus that's running that we know 24 of is a 1965 school bus. And the school district has no 25 intention of replacing that school bus. And so those are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 157 1 the two issues that we'd like staff to focus on. Thank 2 you very much. 3 ACTING CHAIRPERSON RIORDAN: Thank you very much. 4 And we appreciate the longevity that you've recognized and 5 drawn to our attention. 6 Mr. Campbell. 7 MR. CAMPBELL: Good afternoon. Thank you, 8 Chairwoman Riordan, for accommodating my plane ride. I'm 9 going back to Southern California for a very good cause 10 for the Coalition for Clean Air's Annual Fashion Show. So 11 it's a very fun engaging event and -- 12 SUPERVISOR DeSAULNIER: We weren't invited? 13 MR. CAMPBELL: I get to spend time on the catwalk 14 making fun of myself. So I appreciate that. 15 I just wanted to start out -- first of all, my 16 name is Todd Campbell. I'm the Director of Public Policy, 17 not for the Coalition for Clean Air, but for Clean Energy, 18 which is a change from my past. But I wanted to make my 19 comments and make sure that you're aware that I did have a 20 job change. 21 My good friends at WSPA had several 22 recommendations for you today, which I would like you to 23 reconsider. And I think it's because their requests are 24 actually asking you to kill the goose that lays the golden 25 egg, the egg being technology advancement. This program PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 158 1 is designed and has always been designed to enable the Air 2 Resources Board not just to move forward or create it as a 3 SIP attainment program. It is a program to enable 4 technologies that cut emissions significantly and bring 5 them to market so that you can have a stronger regulation. 6 And what I really fear is the historical or the 7 institutional history of the program may be getting lost, 8 particularly over cost effectiveness or other issues as 9 this program evolves. It's a great program. Let's not 10 destroy it. 11 And the first presentation today about ozone 12 impacts and premature death is very, very relevant in the 13 sense that I would actually argue that the regulations or 14 the program actually discriminates to some degree against 15 technology such as natural gas or other alternative fuels, 16 because they have been significantly cleaner ozone 17 emission, and yet the cost effectiveness doesn't always 18 show to be as great as it probably should be rewarded. 19 I also wanted to say we have a problem with 20 rolling back standards as well, although we have a 21 disagreement in terms of the transit bus rule. That has 22 significant repercussions. We're worried about OEMs and 23 invested significant money in research and development 24 dollars to bring you an engine in 2006 that meets 2010 25 standards and suddenly now is in jeopardy, because we PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 159 1 don't have rules on the books that enable those types of 2 technology to be rewarded. We should be rewarding the 3 cleanest technologies, period. And so that's why it's 4 even more critical for us to ensure that we can reward 5 those clean technologies. 6 We also have concerns with regards to the project 7 life and how it's defined under this program. If I buy a 8 2007 or a 2010 standard bus today and I'm only rewarded 9 until 2010 emissions, one, that doesn't reflect reality. 10 But it significantly reduces my chances or my ability to 11 get funding. I think that's a travesty, and we should 12 revisit that. 13 And then, finally, taking off my clean energy hat 14 and putting on my Vice Mayor hat, I want to put an on-road 15 ordinance together so I help you achieve emissions 16 reductions. I want to be able to protect my community and 17 protect my workplace for my employees with construction 18 equipment. And if this program cuts me at the legs by not 19 allowing surplus credits or whatever the definition is to 20 allow me to do what's right, it gives me even a less 21 incentive to be able to tell my colleagues at the dias why 22 we should move forward with this issue if we're not going 23 to get any credit for it. 24 ACTING CHAIRPERSON RIORDAN: And -- 25 MR. CAMPBELL: And wrapping up, I wanted to say PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 160 1 some congratulatory words, in that I think the great thing 2 about this program, and I think what it's evolving to is 3 staff as well as the Board is now considering all 4 emissions, not just NOx emissions, but PM and other 5 emissions. I think that's critical, because obviously 6 when you deal with air pollution, you can't just deal with 7 one element. But I would like also for us to strongly 8 consider Board Member DeSaulnier's recommendation that we 9 postpone the definition of surplus until December so we 10 can have some stakeholders come in and work that 11 definition out. He's making a face so maybe I didn't 12 rephrase that right. But whatever the recommendation -- 13 SUPERVISOR DeSAULNIER: I'm still thinking about 14 you on the runway. 15 ACTING CHAIRPERSON RIORDAN: By the way, that is 16 your concluding statement. Thank you. 17 MR. CAMPBELL: Thank you, Chairwoman. 18 ACTING CHAIRPERSON RIORDAN: Thank you. 19 Paul Martin, Shirley Batchman, and then Karen 20 Driensowski, Jeffrey Green, and Joseph Kubsh, come 21 forward, please. 22 MR. MARTIN: Good afternoon, Madam Chairman and 23 members of the Board. My name is Paul Martin. I'm 24 Director of Environmental Services for Western United 25 Dairymen. We're a trade association of dairy farmers with PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 161 1 members basically on every border in the state of 2 California. Our members produce about 65 percent of the 3 total milk in the state of California. 4 My comments today are going to be specifically 5 directed toward the non-engine source portion of the 6 program. And we do want to speak in support of the staff 7 recommendation. We want to make mention that 923 was 8 specifically intended to help the ag sources including 9 non-engine ag to have funding assistance to comply with 10 and meet the requirements of Senate Bill 700. And the 11 desire was to build on the track record, the successful 12 track record, of the existing Moyer program and extend 13 that to the non-engine ag sources. 14 I do want to convey our appreciation for the time 15 and effort your staff has put into this. It's really 16 gratifying to receive a phone call at 6:30 in the evening 17 well after business hours to answer a question, and we do 18 appreciate that. 19 We concur with the discussion in the staff report 20 regarding the specific project criteria to not be proposed 21 to the Board at this point in time. We're very 22 comfortable that that task is assigned to the Executive 23 Officer, and we're very comfortable that it will be 24 brought back to the Board after what we hope will be an 25 opportunity to work on a collaborative basis and come back PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 162 1 with a unified position. 2 But we do urge that such a discussion be 3 initiated as soon as possible, and that until the criteria 4 are fully developed that individual cases may be 5 considered on a case by case basis. We do share your 6 concerns looking at it from a somewhat different 7 perspective that the technologies we implement do, in 8 fact, create reductions, and that they can successfully 9 meet the real and quantifiable test. Because if it can't, 10 we don't really want to put them in either, if they're not 11 going to accomplish our purposes. 12 We do know we're going to need to make changes. 13 We do know those changes will need to be real and 14 quantifiable. However, if the emissions that we are 15 attempting to control by these changes are serious enough 16 to warrant attention by districts, then we believe that it 17 is only appropriate that they have access to the funding 18 source of the Moyer program. 19 Thank you for your attention. And if you have 20 questions, I'd be more than happy to answer them. 21 ACTING CHAIRPERSON RIORDAN: Thank you very much. 22 Any questions for this speaker? 23 Seeing none, thank you. Thank you for your 24 positive comments. 25 Shirley. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 163 1 MS. BATCHMAN: Madam Chairman and members of the 2 Board, I'm Shirley Batchman. I'm with California Citrus 3 Mutual, and I think one of the few ag representatives here 4 today. So their lack of absence doesn't mean they're not 5 interested. Let me tell you, they're in Hawaii. So tough 6 duty for them. 7 Anyway, let me just say my comments are going to 8 be directed specifically to the ag component of this 9 program. And I want to start out by saying -- and I can't 10 really stress this enough -- that Edie Chang and how she 11 has conducted her comments with the ag industry, because 12 we know we're not always the easiest group, has been -- 13 she has been outstanding to work with. And I just wanted 14 to bring that to your attention. We came to her with 15 several challenges, and the majority of them have been 16 addressed. Specifically what you've got in your comments 17 today on Chapters 10 and 12, we are very supportive of 18 those. Issues that we had concerns about have been 19 addressed. I do specifically, though, want to speak to 20 one, just more for the record than anything else. 21 On Chapter 10 and then it's page 12 on the sixth 22 bullet where they added the new sentence that the 23 alternate monitoring schedule may be used upon approval, 24 we're certainly supportive of that. We look forward to 25 have a further dialogue with the staff, since this is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 164 1 really reflective and really important to our natural gas 2 engine users. 3 The timelines still need to be addressed as far 4 as for monitoring and such. So we look forward to having 5 additional dialogue on those discussions. Also I want to 6 tell you your lunch break was great, because I was going 7 to come up here with something I wasn't in favor of. She 8 took care of it at lunch. So that's off the table. 9 ACTING CHAIRPERSON RIORDAN: Terrific. That's 10 what we call good service. 11 MS. BATCHMAN: I tell you what, she's given it. 12 One last just comment. I'm not looking for any 13 response from the Board. But I just want it to still 14 remain on your radar screen that the Carl Moyer Fund does 15 not allow for replacement of a piece of equipment. This 16 is going to be critical as the LSI rule comes before you. 17 You know there there's been lots of discussion regarding 18 propane forklifts as a component of that rule, and what we 19 are facing in the agricultural industry is a tremendous 20 cost, which will not be addressed through Carl Moyer. 21 Once again, I just wanted to have that be on your radar. 22 So with that, I thank you. 23 ACTING CHAIRPERSON RIORDAN: Thank you, Shirley. 24 Thank you very much. 25 Karen Driensowski, Jeffrey Green, Joe Kubsh, Sean PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 165 1 Edgar, Michael Eaves, and Bernie Orosco, you're the next 2 speakers. 3 (Thereupon an overhead presentation was 4 presented as follows.) 5 MS. DRIENSOWSKI: Hi. I'm Karen Driensowski with 6 Railpower Hybrid Technologies Corporation. I'm here to 7 oppose the current guidelines as proposed. Actually 8 discourage our technology and favor conventional -- how do 9 I make this go forward? 10 --o0o-- 11 MS. DRIENSOWSKI: Our technologies achieve -- we 12 have the green goat. You probably have heard of it. We 13 achieve the deepest reduction in NOx and PM. Hybrids 14 don't idle. They operate quieter. They reduce greenhouse 15 gas emissions through fuel economy. And it's a technology 16 that's somewhat future proof in that Tier 3 non-road 17 engines can be replaced with Tier 4 non-road engines when 18 these become available at a reasonable cost. Whereas, a 19 Tier 2 conventional engine repower will be in existence 20 for the next 40 years, and it emits at higher levels. 21 Also our technology lends itself more easily to 22 diesel particulate filters, because they tolerate a higher 23 back pressure and the filters can be smaller and not 24 compromise visibility and safety. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 166 1 MS. DRIENSOWSKI: So here you have our switchers 2 are the cleanest. Our projects are the cleanest. The red 3 is the comparison between Tier 2 and the hybrid or 4 multi-engine projects. And you can see that it's a factor 5 of two -- or three, two, and four approximately for those 6 different pollutants. And those differences are further 7 magnified by the fuel savings that we achieve through our 8 technology. 9 Next, please. 10 --o0o-- 11 MS. DRIENSOWSKI: Here you see what's happening 12 here is we used to be treated as a repower. In the 13 current proposal reclassifies our projects as new 14 projects. So our minimum cost share for a Class 3 or 15 industrial operator is $192,000. Whereas, a Tier 2 16 repower, the minimum cost share is $50,000. So you can 17 see where that's going to push those projects toward the 18 lower cost share. 19 --o0o-- 20 MS. DRIENSOWSKI: And that is independent of the 21 cost effectiveness. We could be cost effective at full 22 funding at a -- more cost effective at full funding, and 23 still that minimum cost share would apply. 24 This is a big deal for this group of operators, 25 because they have limited financial resources. You only PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 167 1 have three projects in the state so far that have been 2 funded by Carl Moyer. And one of them was originally 3 funded to a level that required $165,000 cost share, and 4 that project would not go forward because the fellow 5 looked high and low for the additional funding, and he 6 really couldn't find it. So the district said, okay, 7 we'll kick in a little bit more. And that pushed the 8 project forward. 9 And the Carl Moyer Program should encourage small 10 business participation. And with the $50,000 cost share 11 for Tier 2 repower, that puts these projects within reach. 12 But 192,000 for hybrid and multi-engine projects which are 13 the cleanest, that puts these projects out of reach for 14 this group of operators. And these locomotives are going 15 to continue to emit at uncontrolled levels because there 16 are no regulations. 17 Next, please. 18 ACTING CHAIRPERSON RIORDAN: Karen, I need you to 19 sum up. 20 MS. DRIENSOWSKI: Could you go to the last slide, 21 please? 22 --o0o-- 23 MS. DRIENSOWSKI: So I'd like to request that ARB 24 continue to consider hybrid and multi-engine projects as 25 repowers, or they lower the cost share for hybrid and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 168 1 multi-engine conversions to 50,000, the same cost share 2 for Tier 2, or fund conversions at 80 and 60 percent of 3 the new purchase price, which would be 1.3 million if we 4 didn't use an existing platform. And that they use the 5 same baseline factors for repowers and conversion projects 6 and remove the minimum ten-year project life and use the 7 GPS systems on there. Thank you for your time. 8 ACTING CHAIRPERSON RIORDAN: Thank you. And you 9 really moved. 10 BOARD MEMBER LOVERIDGE: Can staff make a quick 11 comment? 12 ACTING CHAIRPERSON RIORDAN: Mayor Loveridge 13 would like a response. 14 ON-ROAD CONTROLS BRANCH CHIEF KITOWSKI: Well, I 15 think I would characterize our role in this a little bit 16 different. We initially -- we are very supportive of this 17 technology and would like it quite a bit. And initially 18 we moved very quickly when these projects came up for the 19 very first time to come up with interim criteria so that 20 they could be funded so the applicant and the districts 21 had the flexibility to fund them. 22 And quite honestly, I think we moved a little too 23 quickly, because we weren't able to do a deep enough dive. 24 And through this last year, we did do a deeper dive into 25 exactly how we would look at this category consistant with PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 169 1 the way we look at other Moyer categories. And when we 2 did do that, we feel technically it called for tightening 3 of the criteria a little bit. And, yes, unfortunately 4 that does work against and provide a little less funding. 5 We still hope that there -- we believe they're still 6 viable projects, and we still think they can be funded and 7 we're still supportive. 8 ACTING CHAIRPERSON RIORDAN: Thank you. 9 MS. DRIENSOWSKI: Well, Texas has 141 of our 10 locomotives. California, ten. 11 ACTING CHAIRPERSON RIORDAN: Jeffrey Green. 12 MR. GREEN: Good afternoon, Madam Chairman and 13 members of the Board. My name is Jeff Green. I'm General 14 Counsel to Grimmway Farms. Evidently, we're the only 15 farmers that weren't invited to Hawaii. 16 Grimmway Farms is a grower, packer, shipper of 17 carrots in the Bakersfield area. We employ approximately 18 4,000 employees, farm approximately 40,000 acres. We farm 19 in eight different air districts. We have 138 portable 20 irrigation engines; 60 stationary engines; and 23 off-road 21 mobile agricultural harvesters. 22 We've submitted written comments regarding the 23 proposed revisions to the Carl Moyer Program, and I won't 24 repeat them here. Generally, we support the program in 25 full. However, we did have two small issues: One with PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 170 1 the replacement of certified. We'd like the program to 2 allow spark-ignited agricultural engines to be replaced 3 with certified diesel engines and to expand the incentive 4 opportunities for natural gas to electric conversions. 5 And since we've made written comments, I won't repeat them 6 here. 7 However, one thing that was not addressed in the 8 program revisions was multi-district use of engines. 9 Because of the seasonal nature of our farming operations, 10 our portable irrigation equipment and off-road mobile 11 harvesters are regularly moved from ranch to ranch, and in 12 many instances from air district to air district. Because 13 of the nature of the Carl Moyer Program and the limited 14 funds available to the individual districts, the regular 15 movements of these engines and harvesters into and out of 16 the different air districts significantly restricts the 17 incentive opportunities of the Carl Moyer Program. 18 To further the goals of the Carl Moyer Program in 19 accordance with the Health and Safety Code, I'd like to 20 ask this Board to consider that the funds that are 21 reserved by the Board for multi-district projects for the 22 2005-2006 year be made available to portable agricultural 23 engines and off-road mobile agricultural equipment that 24 regularly travel from district to district. 25 I want to thank the staff for their help with us, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 171 1 especially Edie for her help. She's been enormously 2 helpful to us in this process. And thank you very much. 3 Thank you very much. 4 ACTING CHAIRPERSON RIORDAN: Thank you very much. 5 And you raise an interesting question. And I don't know 6 that we have an answer right off the top of our heads, 7 whether or not -- what kind of help that we can provide to 8 equipment that moves from air district to air district. 9 But we need to think about it and work with you and try to 10 figure that out. It is an issue that I hadn't thought of. 11 I thought of it in terms of construction equipment, but 12 not thought of it so much in terms of farming equipment. 13 Ms. Witherspoon. 14 EXECUTIVE OFFICER WITHERSPOON: Yes, Madam 15 Chairman. We reserve 10 percent of funds available that 16 flow through the Air Resources Board for projects of 17 statewide significance. And then the staff established 18 guidelines principally for goods movement. And this 19 year's 10 percent was $3 million. Next year's 10 percent 20 will be more like 8 million, 8 1/2. And we certainly 21 would appreciate some input from the Board on what are the 22 appropriate priorities. 23 There was a witness earlier today who said you 24 ought to do IdleAire -- I think was IdleAire truck 25 electrification projects as one priority. And this one to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 172 1 do ag. And goods movement is going to remain on the 2 priority list as well. 3 ACTING CHAIRPERSON RIORDAN: The other thing that 4 might happen is there may be a district in which this 5 equipment moves that has a little bit more money and more 6 opportunity. And maybe what we can do is try to help 7 steer these people to that district that has more money as 8 well. I mean, I can see that happening. I don't know 9 where you may be. But it may be just knowing exactly 10 where to go and who might have the money available. 11 MR. GREEN: We appreciate that. Thank you very 12 much. 13 ACTING CHAIRPERSON RIORDAN: Thank you. 14 Joe. 15 MR. KUBSH: Good afternoon, Madam Chair and 16 members of the Board. Again, Joe Kubsh with the 17 Manufacturers of Emission Controls Association. 18 MECA would first like to commend the State of 19 California and ARB for its leadership in establishing and 20 expanding the Moyer Program. And we're very supportive of 21 the proposed guideline changes that are before you this 22 afternoon. 23 Our members are especially interested in Moyer 24 projects that make use of verified diesel retrofit 25 technologies. And our members are continuing to invest PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 173 1 significant resources in developing and verifying retrofit 2 technologies for all applications. 3 To date, many of the verified technologies have 4 focused on on-road highway applications. But as noted in 5 the staff report for the proposed Moyer guidelines, many 6 of these on-road retrofit technologies can also be 7 successfully applied to appropriate off-road or stationary 8 diesel engines. MECA believes there's an opportunity to 9 expand the range of verified off-road diesel retrofit 10 technologies available for Moyer grants through the 11 careful extension of many existing on-road verified 12 technologies. Sound engineering principles complemented 13 by limited engine test data can streamline and accelerate 14 the verification process for off-road and stationary 15 engines without the need for expensive and time-consuming 16 testing associated with a full scale verification 17 application process. 18 MECA would like to work with staff to define such 19 a streamlined extension process that would deliver more 20 verified options to the off-road and stationary sectors 21 and expand opportunities for Moyer-supported projects in 22 these sectors. And I ask the Board for your support of 23 this effort. Thank you. 24 ACTING CHAIRPERSON RIORDAN: Thank you. Thank 25 you, Joe. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 174 1 Sean Edgar, Michael Eaves, Bernie Orosco, and 2 then you're going to be followed by Don Anair, Bonnie 3 Holmes-Gen, and Kathryn Phillips. 4 MR. EDGAR: Madam Chairman and Board members, 5 welcome. Thank you for having me. Sean Edgar on behalf 6 of the Clean Fleets Coalition. And I complement you, 7 Madam Chair, on letting Todd get on a plane. I've 8 oftentimes on the opposite sides of the issue wanted to 9 get on a plane early without testifying. But now that 10 he's gone, I can say that. 11 ACTING CHAIRPERSON RIORDAN: Now you can say 12 anything you want. 13 MR. EDGAR: Absolutely. 14 We're in support of your staff recommendations 15 and offer a few comments on the surplus issue as well as 16 CAPCOA's comments and then also a few items about 17 experimental technologies. 18 First off, on behalf of our refuse operators, 19 Moyer early on the old program did, in fact, provide a 20 jump-start for some significant changes, and that was 21 appreciated and allowed some folks to cut their teeth on 22 alternative fuel technology. The rub really of the issue 23 I'll address with regard to surplus is -- and that's why 24 I'll borrow from Mr. Lucas' suggestion that a lot of it 25 will come down to what EPA says. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 175 1 And I endorse what Mr. Lucas laid out in terms of 2 the next few months of getting U.S. EPA clarification on 3 that. But the fact of the matter is that I really see the 4 rub being that the command and control regulations that 5 are coming forward are really lacking in cost 6 effectiveness to some degree. As an example, I believe 7 the number was $136,000 a ton was our trash truck rule for 8 PM. And then as we get out, unless we resolve this 9 surplus issue, we're going to be in a circumstance where 10 very early on here fleets won't be able to -- unregulated 11 fleets will not be able to borrow from limited Moyer 12 resources. And then once -- unless we put a box around 13 the surplus issue, we're going to be in a circumstance 14 where we don't have anybody to get the money to. 15 So just as a side note, I'll be in front of your 16 Board I believe in February to give you an update on how 17 the refuse rule has worked out. We've made a lot of 18 progress there, but there's a lot to do. The key being 19 that today as I stand here, none of our regulated fleets 20 are eligible for any Moyer funding. So I find it very 21 intriguing some of the discussion of public transit and 22 the discussion about their increased eligibility, private 23 businesses not being treated the same with regard to the 24 consideration on Moyer eligibility. 25 But we're going to continue with regard to moving PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 176 1 our refuse rule. We're going to continue to try the sell 2 that program to our customers, understanding it is costly. 3 Hopefully, we'll avoid more lost opportunities on future 4 fleets with regard to being able to get Moyer funds to 5 them cost effectively. 6 And in closing, I'll recommend that Mr. Lucas' 7 comments with regard to federal EPA clarification be moved 8 forward, that CAPCOA also notice the districts need 9 flexibility, and we endorse that. Finally, just to 10 clarify, and the staff can comment after I'm gone, I 11 believe it's already in the package, but I would ask that 12 some of the experimental technologies with regard to fuel 13 formulations and other things that are in the technology 14 pipeline with Mr. Cross's group in El Monte be considered, 15 because I currently read the package that only completely 16 verified technology would be eligible. We'd like district 17 flexibility in consultation with ARB for products that are 18 in the pipeline that we have some eligibility for Moyer as 19 we use those non-regulated fleets. Thank you very much. 20 ACTING CHAIRPERSON RIORDAN: Thank you very much. 21 I don't know whether, staff, you want to respond or just 22 take those in as some good suggestions. Thank you. 23 Mr. Eaves. 24 MR. EAVES: Yes. Good afternoon, Madam Chairman 25 and Board members. I'm Mike Eaves of the California PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 177 1 Natural Gas Vehicle Coalition, and the Coalition supports 2 the expansion of the Moyer Program as defined in the 3 guidelines. And we're very pleased at the way the fleet 4 modernization has been included in the guidelines, because 5 we were the ones that helped support and sponsor that 6 legislation a couple years ago. 7 We do have some problems and concerns with the 8 guidelines, especially in the area of surplus. The 9 guidelines suggest that the purchases under CARB rules 10 like the transit rule and the South Coast fleet rules 11 would not be eligible for Moyer funding. I went back and 12 looked at other versions of the guidelines in previous 13 years, and they're not identical, but similar language has 14 been in there for years with those same provisions. But 15 Moyer has continued to fund the fleet rules in Southern 16 California. 17 At the last Board meeting on October 27th, the 18 Board voted to change the transit rule standard from .2 19 to 1.2 grams so the alternative fuels could qualify for 20 Moyer funding. But nothing was said in the staff report 21 about the fact that the transit properties in Southern 22 California that were under the South Coast fleet rules 23 would not be able to qualify for that funding. 24 So we see that Board action and staff 25 recommendation seems to be at odds with one another. We PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 178 1 think that the Board and staff need to clarify what is 2 surplus. The Coalition would recommend that the purchases 3 that comply with South Coast fleet rules do qualify for 4 Moyer funding. And we support Dr. Wallerstein's 5 recommendation that this provision be withdrawn for 6 further reviewed and clarification. 7 We also have some concerns regarding staff 8 guidelines of project life. Staff is recommending the 9 project life be limited to as little as three years if new 10 standards or rules go into effect in the future. Todd 11 Campbell talked about a 2007 purchase of a .2 gram engine 12 and how that would only have a three-year life for 13 purposes of Moyer calculations. 14 The Coalition recommends that if a project has a 15 lower emission than the current applicable standard, 16 project life should be for the forecasted life of the 17 vehicle and service, irrespective of the future phase-in 18 of other standards and rules for NOx, PM, or ROG. 19 Moyer funds are designed to incentivize early 20 market penetration of the cleanest technologies. We think 21 the decisions to purchase clean fuels, clean vehicle fuels 22 today generates a stream of emission reductions for the 23 life of the vehicle. It is those emissions streams that 24 should qualify for Moyer. 25 We think that artificially truncating the life of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 179 1 a project for calculation purposes, what it does is it 2 raises the cost effectiveness of the project and decreases 3 the potential award under Moyer. So we urge staff to 4 revise the criteria regarding the effective project life. 5 ACTING CHAIRPERSON RIORDAN: Mr. Eaves, I need a 6 concluding statement. 7 MR. EAVES: In conclusion, in talking with a lot 8 of people that have been involved with the Moyer Program, 9 we think that CARB should require an analysis of each and 10 every time a rule is put forward to the Board that they 11 analyze the potential impacts on Moyer funding. 12 ACTING CHAIRPERSON RIORDAN: Thank you. 13 MR. EAVES: Thank you. 14 ACTING CHAIRPERSON RIORDAN: Thank you very much. 15 Bernie Orosco. And let me invite Don, Bonnie, 16 and Kathryn to come down and take a seat. 17 MR. OROSCO: Good afternoon, Madam Chair, 18 members. Bernie Orosco with Sempra Energy representing 19 Sempra Energy Utility Companies, which is Southern 20 California Gas Company and San Diego Gas and Electric. 21 Right offer the bat, great conversations today. 22 Great comments to be made. I think Mayor Loveridge, I 23 think you hit the nail on the head at the very beginning 24 how you go about looking at this issue of surplus. 25 We have a couple concerns, but I think they've PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 180 1 been already said today. We basically are in support of 2 the staff recommendation. Those few concerns that we have 3 have been expressed by the California Natural Gas Vehicle 4 Coalition, which we are a member of. And I think Todd 5 Campbell's comments from the Clean Energy hit the nail on 6 the head. This is a suggestion about the project life and 7 how do you incentivize new technology. So we would just 8 iterate our support for those comments, and I'll leave it 9 at that. Thank you. 10 ACTING CHAIRPERSON RIORDAN: Thank you very much. 11 I appreciate that. 12 Don Anair. 13 MR. ANAIR: Hi. Good afternoon, Madam Chairman 14 and members of the Board. My name is Don Anair. I'm with 15 the Union of Concerned Scientists. 16 And I just wanted to offer my support for the 17 proposed guideline revisions. We've been supportive of 18 the Carl Moyer Program since its inception and continue to 19 be supportive of the program. We support the use of Moyer 20 funds to go above and beyond State and Federal 21 regulations. 22 As we've heard today, there seems to be some 23 discussion about local measures where the surplus 24 emissions are in question. And I think it is an important 25 area to discuss. There are local actions that are being PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 181 1 taken to try to basically encourage the use of cleaner 2 technology, and they may come in the form of local 3 ordinances or other mandates in these local 4 municipalities. And the support for these measures 5 largely depends on access to funding. And I would just 6 say that I think the discussion of surplus emissions in 7 these cases warrants further discussion. 8 With regards to today's proposal, I just wanted 9 to say we're supportive of the cost effectiveness 10 calculations proposed by staff. We think the factor of 20 11 is an appropriate balance between the cost of control and 12 the relative health impacts of diesel PM. 13 Staff's previous calculations of the health and 14 economic impacts of nitrogen oxides of particulate matter 15 show one pound of particulate matter results is over 40 16 times the damage as one pound of NOx. And I think the 17 impacts of PM should be considered when we're talking 18 about relative cost effectiveness or NOx and PM. 19 So we think 20 is appropriate at this time, 20 because it is not going to be prohibitive for projects 21 that are reducing PM. But we do ask in the future as cost 22 control changes and research is done on the impacts of PM 23 and economic evaluations are done in the future that staff 24 comes back and re-evaluates the factor of 20. And we 25 think that if it continues to be a factor of 20 and it PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 182 1 becomes prohibited, then it should be updated. 2 Just quickly wanted to say we support the use of 3 Moyer funds to encourage and use zero emission 4 technologies in these different applications. And we also 5 support the requirement of best available control retrofit 6 control technology for both the repower and retrofits 7 projects of on-road and off-road projects. I think it's 8 very important not to encourage the use of lower tiered 9 retrofit technology, especially in light of the 10 regulations that CARB is passing, because these vehicles 11 may be retrofitted, but the device has to be replaced 12 after a regulation is put in place. We think that makes 13 sense and it's good for air quality as well. 14 That sums up my comments. Thank you. 15 ACTING CHAIRPERSON RIORDAN: Thank you for 16 staying within your limit. 17 Bonnie. 18 MS. HOLMES-GEN: Thank you, Madam Chair. And 19 Bonnie Holmes-Gen with the American Lung Association of 20 California. 21 The American Lung Association has always been a 22 strong supporter of the Carl Moyer Program. We consider 23 this program to be a key element of the State's program to 24 fight diesel pollution and to reduce the large array of 25 health costs imposed by diesel pollution ranging from lung PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 183 1 illnesses, asthma attacks, hospitalizations, emergency 2 room visits, lung cancer, and premature deaths. We're 3 very pleased to be one of a group of organizations that 4 last year supported new and sustained funding for the Carl 5 Moyer Program, and we hope to secure additional funding in 6 the near future. We need to work together on that. 7 A key point I wanted to make is that we continue 8 to believe that the Moyer Program should not be used for a 9 regulatory compliance and we appreciate your staff report 10 makes this point. This has been a core principle in the 11 Moyer program since its inception. 12 And just as you know, every time regulations are 13 coming before you now, there's a lot of consideration 14 about what is this going to have -- what effect will this 15 have on Moyer. And we believe that we should not be 16 pushing back any kind of regulatory deadlines in order to 17 make Carl Moyer funding available. As I think has been 18 said, we cannot pay our way to attainment. And the Moyer 19 Program was never designed to cover all the costs of 20 regulatory compliance. 21 So while we urge the Board to adhere to this 22 important principle, we also recognize that it does appear 23 there's a need for some further discussion to clarify 24 which types of locally imposed plans and requirements 25 would or would not preclude Carl Moyer eligibility. I PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 184 1 think that's the discussion of surplus. We agree there's 2 going to be further discussion on that. 3 I want to talk for a minute about sensitive 4 populations. We did submit a joint letter to you in which 5 we suggested that the Board develop guidance to air 6 districts to consider the impacts to sensitive populations 7 in their own selection process for Carl Moyer projects. 8 This would be guidance from the Air Board to the local 9 districts. This would mean help the air districts 10 prioritize projects that impact sensitive areas such as 11 densely populated areas or areas that children frequent, 12 such as schools, playgrounds or other areas, daycares, 13 other areas. We believe this is a natural extension of 14 the Board's concern about children's health and sensitive 15 populations and recognizes that children's lungs are 16 damaged for life by early pollution exposures, and there 17 have been a lot of studies on diesel pollution and 18 proximity of children to freeways and impacts on 19 exacerbation of asthma. 20 I also want to comment that we would encourage 21 anything you can do to promote alternative fuels and zero 22 emission technologies through the Carl Moyer Program. And 23 we want to remind you that the Governor has called for a 24 plan early next year in the first quarter to reduce 25 petroleum consumption, and that newly adopted legislation PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 185 1 calls on your Board, the Air Board, and the Energy 2 Commission in partnership to develop a plan to increase 3 alternative fuel use. I want you to consider those other 4 guidance and mandates that are urging the State to move in 5 the direction of reducing petroleum consumption and 6 thinking about how this program can also contribute to 7 fuel diversity. 8 ACTING CHAIRPERSON RIORDAN: Bonnie, you're out 9 of time. 10 MS. HOLMES-GEN: Thank you very much. We 11 appreciate the opportunity to comment, and we look forward 12 to working with you. Generally, we support these 13 guidelines. But we do think there's some additional 14 discussion needed about the local component and which 15 items will be considered. 16 ACTING CHAIRPERSON RIORDAN: Thank you. 17 Kathryn Phillips. 18 MS. PHILLIPS: Thank you. I'm Kathyrn Phillips 19 with Environmental Defense. It's almost like old home 20 week here today, because I'm seeing some folks that I sat 21 around tables with over a period of many months, often in 22 disagreement, trying to fashion what became AB 923 and 23 became the basis for some of the new funding for the 24 Moyer. I'm proud to have been involved in that. And I'm 25 proud now I can call some people that have often been foes PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 186 1 on different issues at least when we are outside of these 2 rooms, we can speak to each other as friends because we 3 worked so well together. 4 One of the things I'm going to address 5 specifically is that the original purpose of the Moyer 6 program was to reduce emissions from engines. When we all 7 went into negotiations about how to raise more money, the 8 purpose was to reduce emissions from engines. When we 9 left the room and went over to push what we had come up 10 with over at the Legislature, it was still to reduce 11 emissions from engines. 12 At about the eleventh hour, some people started 13 reading of some the details of the language and references 14 that some of us who were less experienced and foolish 15 hadn't read and realized that the definition for the 16 agricultural sources that would be covered was very, very 17 broad and didn't just include reducing emissions from 18 engines. I, myself, didn't learn until after the law was 19 already signed that what we had done was open it up for 20 potential reductions of dust, potential reductions of 21 using Moyer money for reducing dust, reducing emission, 22 from CAFOs, confined animal feeding operations, and so 23 forth. 24 I still very strongly support the idea that 25 agriculture needs a break, and we've provided that in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 187 1 Moyer because of their sudden -- sort of suddenly being 2 required to comply with a lot of new regulations. And I 3 do think that they need a lot of help on engines. And as 4 you heard from Grimmway Farms, a lot of these farms have a 5 lot of engines. And as the regulations move forward to 6 start controlling agricultural, mobile engines, tractors, 7 et cetera, they're going to need some help. 8 I want to ensure that the Moyer funds continue to 9 be used to reduce emissions from engines and that those 10 engines are given priority before a Board even considers 11 looking at any other agricultural emission source. 12 So I would urge the Board to not follow the staff 13 recommendations. And I do know the staff has been working 14 very hard on the guidelines. But not follow the staff 15 recommendations that suggest that the Board instruct the 16 Executive Officer to develop and approve project criteria 17 for non-engine agricultural sources. 18 Instead, I would urge the Board to instruct the 19 staff to continue the focus on engines including 20 agricultural engines. And that when it becomes 21 appropriate, when it becomes clear, that the State has 22 reduced its engine load, emissions load problem, then 23 maybe we can start considering if there is any leftover 24 Moyer funds where those should go. And I say this with 25 one more thing. I say this with great respect -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 188 1 ACTING CHAIRPERSON RIORDAN: Sort of with a 2 concluding comment. 3 MS. PHILLIPS: -- with great respect for Paul 4 Martin and Shirley Batchman. We're working with both of 5 their organizations on finding other funding from other 6 sources to address some of their other emissions 7 reductions problems specifically through the farm bill and 8 elsewhere. So thank you for that. 9 ACTING CHAIRPERSON RIORDAN: Thank you, Kathryn. 10 I appreciate your comments. 11 Board members, that concludes those who have 12 signed up to speak. I'm going to say unknown to me that 13 we were going to have such a balance of a quorum issue, 14 wasn't intended until about 10:00 this morning. 15 So, Ms. Witherspoon, do you have any closing 16 comments that you'd like to make very briefly? And then I 17 will do the ex parte and go back to Board discussion. 18 EXECUTIVE OFFICER WITHERSPOON: Just one, and 19 that would be staff prefer that the Board vote on the 20 proposed guidelines today. We've already disbursed this 21 year's funds to air districts. We've given them interim 22 guidelines to begin their contracting process, but it's 23 important that the Board give them final guidance as 24 quickly as possible, and statute requires the Air 25 Resources Board issue guidelines by January 1, '06. So if PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 189 1 we delay at all, it would only be to the December 8 Board 2 meeting. 3 But we're quite open to how we go forward and 4 continue working on the open questions that were raised 5 today and what process we use and how soon we come back. 6 We will be in back in February on the schools issue. We 7 can come back at any other time on other freestanding 8 issues. And we're back once a year on updates to the 9 guidelines. So that's my only comment. 10 ACTING CHAIRPERSON RIORDAN: Thank you. Let me 11 do this. Let me close the record, since all the 12 testimony, written submissions, and staff comments for 13 this item have been entered into the record. The Board 14 has not granted an extension of the comment period. I'm 15 officially closing the record on this portion of the 16 Agenda Item 05-11-04. Written or oral comments received 17 after the comment period has closed will not be accepted 18 as part of the official record on this agenda item. 19 Are there any ex parte communications that need 20 to be noted for the record? 21 Supervisor DeSaulnier. 22 SUPERVISOR DeSAULNIER: I just wanted to note I 23 had two conversations during the break here today with 24 Catherine Reheis Boyd and with Barry Wallerstein that were 25 consistent with some of their testimony today. And I'll PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 190 1 have some suggestions that were part of those discussions. 2 ACTING CHAIRPERSON RIORDAN: Okay. And I need to 3 disclose that I had spoken with Gina Gray from WSPA; Grant 4 Kuhn from Chevron; Susan Spark, WSPA; and Dave Smith from 5 BP. 6 SUPERVISOR PATRICK: Thank you, Madam Chair. 7 I had a conversation with -- conference call with 8 Dave Smith from BP and Susan Stark, a consultant to WSPA. 9 And I'm not exactly sure when that date was, but it was 10 about a week ago I believe. 11 And I had several conversations with -- two 12 conversations on November 9 and November 10th with Seyed 13 Sadredin from the San Joaquin Valley Air District. And 14 our discussions were very consistent with the letter that 15 we have received from the San Joaquin Valley Air District. 16 And I did have two sidebar conversations this 17 morning, one with Barbara Lee and one with Roger McCoy 18 from the Valley Air District. And those conversations 19 were of some concern about one of the provisions that was 20 added at the last minute regarding some of the Moyer 21 criteria. 22 ACTING CHAIRPERSON RIORDAN: Ms. Pineda. 23 BOARD MEMBER PINEDA: Yes. I'd also like to just 24 disclose that I participated in a conference call on 25 November 8th with Gina Gray of WSPA, Dave Smith of BP, and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 191 1 Susan Stark, a consultant to WSPA. And our conversations 2 were consistent with WSPA's letter of November 7th to 3 Catherine Witherspoon. 4 ACTING CHAIRPERSON RIORDAN: Okay. Are there any 5 further ex partes? I don't see any. 6 So Board members -- Supervisor DeSaulnier. 7 SUPERVISOR DeSAULNIER: Well, first of all, I'd 8 like to thank staff for all the hard work they've done, as 9 usual. 10 But it strikes me that the importance of what we 11 do today is more than just the issue that the real success 12 of this program outside of in the field was the political 13 success of forming this coalition. And it's concerned me 14 today that maybe we're seeing potentially the cracks of 15 that coalition coming apart. 16 In as much as we're going to go back and seek 17 legislative remedies for some of these anyways, I would be 18 willing to offer a motion -- and I'm a little bit 19 conflicted about whether we just continue it or not. But 20 let me try this just for discussion, that we would move 21 Resolution 05-58, but add a further amendment that read to 22 the effect, "be it further resolved" -- and we put this on 23 page 6, I think. But please correct me if you think it's 24 better in some other form or fashion. "Be it further 25 resolved that the Board directs the Executive Officer to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 192 1 convene a Carl Moyer Advisory Group of stakeholders that 2 would include, but not be limited to," and would leave 3 discretion to the EO, CAPCOA representatives, fuels 4 representatives, environmental representatives, to meet 5 and come back to the Board with recommendations to 6 unresolved issues, including the administration fees, the 7 transit standard that South Coast has brought up around 8 alt fuels, and to clarify the surplus, and also the 9 retroactive language that came in today that if a district 10 approves something and then it's found at some point it's 11 ineligible, it comes back. 12 And I say this because at the beginning of the 13 program I was on an advisory group that the original 14 statute actually required. And it seemed to me that one 15 of the things that worked about that, Mr. Kinney convened 16 that, was that everybody was in a room. It really worked 17 by consensus rather than just a workshop. That would be 18 my suggestion. 19 SUPERVISOR PATRICK: Second. 20 ACTING CHAIRPERSON RIORDAN: There is a second. 21 SUPERVISOR DeSAULNIER: And one addition, if it's 22 all possible that you come back with some kind of report 23 in December, because I think that would help South Coast's 24 issues in regard to whether it can be accomplished or not. 25 And I defer to Ron. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 193 1 BOARD MEMBER LOVERIDGE: I just want to raise the 2 question of why not come back on the December. It seems 3 to me what we have here is a final draft. It would be 4 helpful I think to do exactly what you indicated, to come 5 back and have everybody together on a final vote in 6 December. I want to ask, why vote now as opposed to 7 December? 8 SUPERVISOR DeSAULNIER: I was deferring to staff 9 for once. But I'm open to that, Ron, if you want to 10 suggest that as a friendly amendment and if there's 11 consensus to that. 12 EXECUTIVE OFFICER WITHERSPOON: Among the list of 13 issues you enumerated, some we can solve very quickly, 14 like the language on turn-back of funds that went to the 15 wrong purpose, for example, or the timing of how fast is 16 there need to commit funds. There's others that there's 17 no way we're going to solve in three weeks. And so I 18 wouldn't want to mislead you. Like the fuels debate has 19 been going on for seven years now. And the surplus debate 20 is a complicated one and will sort of emerge in pieces I 21 think. 22 So what I would say is the only thing that should 23 be open are those more minor language changes so that we 24 can have as close to a final draft. Because we were going 25 the issue one in January anyway. We'll just pretty it up. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 194 1 But then have the working group that Supervisor DeSaulnier 2 proposed for the nittier-grittier more time-consuming 3 discussions and be back. We can come back quarterly, send 4 you memos, bring it semi-annually, whatever you think is 5 right, because there will be legislation introduced even 6 in placeholder form while these other work group meetings 7 are going along. 8 ACTING CHAIRPERSON RIORDAN: Do you think you 9 could get back sooner than quarterly? I mean, I'm 10 supporting Supervisor DeSaulnier's motion. I think -- 11 EXECUTIVE OFFICER WITHERSPOON: We can come back 12 as often as you'd like. It's just how much we'll have 13 finished at each interval. Every month we can give you a 14 little update. 15 ACTING CHAIRPERSON RIORDAN: We want to get the 16 money out to people. We want to get that accomplished by, 17 you know, supporting the Resolution. But it would seem to 18 me maybe you could get back -- 19 EXECUTIVE OFFICER WITHERSPOON: We would love to 20 have a Board member volunteer to be on the working group, 21 and then you would know. 22 SUPERVISOR DeSAULNIER: I didn't volunteer the 23 first time and I got on it. 24 ACTING CHAIRPERSON RIORDAN: That's very easy to 25 solve, because I don't know how long I will be the Interim PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 195 1 Chairman -- 2 SUPERVISOR DeSAULNIER: I don't know how long 3 I'll be here. 4 ACTING CHAIRPERSON RIORDAN: I have some power 5 today. And Supervisor DeSaulnier, it seems to me that 6 corporate memory is extremely important, just as Kathryn 7 Phillips brought up today some history that I think was 8 very important to the conversation. And like you, I think 9 your leadership would be very helpful. So that's not a 10 discussion. 11 SUPERVISOR DeSAULNIER: What did General Sherman 12 say? 13 ACTING CHAIRPERSON RIORDAN: Just march. Okay. 14 Yes, Ms. Pineda. 15 BOARD MEMBER PINEDA: I have a question. While 16 I'm comfortable with what you're proposing, I also 17 probably am I little bit leaning towards the proposal of 18 Mayor Loveridge. 19 My question is if we move forward and there are 20 issues aside from the legislative issues, do we end up in 21 difficult situations? I just want to make sure. 22 EXECUTIVE OFFICER WITHERSPOON: More difficult 23 situations if you don't move forward, because we have 24 already dispensed the money to the air districts, and they 25 need to get it committed and spent or we'll have to return PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 196 1 it to the General Fund. So we've given them interim 2 operating rules by staff's word alone that we're hoping 3 you'll ratify by voting on the proposed guidelines. And 4 the longer that we leave things undecided, the less 5 certainty there is for project applicants and for 6 districts to issue RFPs and get the money out the door. 7 We can change it for every -- we're going to be at this 8 for multiple years. 9 BOARD MEMBER PINEDA: But you're comfortable with 10 if in the long run we end up with a final proposal that is 11 somewhat different from what we agree to today that you 12 can undo or modify -- 13 EXECUTIVE OFFICER WITHERSPOON: Oh, yes. You can 14 amend the guidelines at any point. And we can bring them 15 to you at any point for amendment. 16 BOARD MEMBER PINEDA: I'm also talking about we 17 can modify whatever actions have been taken? 18 EXECUTIVE OFFICER WITHERSPOON: No. I don't 19 think that's the case. That's not fair to the project 20 applicants that if they've been awarded funds -- 21 BOARD MEMBER PINEDA: Well, that was my question. 22 EXECUTIVE OFFICER WITHERSPOON: Those projects 23 should go forward. And the changes would be prospective. 24 Because as long as it was legal, and we've brought you 25 guidelines that are legal, that that would, like I said, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 197 1 be unfair to a recipient of funds that invest the time and 2 energy. 3 BOARD MEMBER PINEDA: That was a clarification I 4 wanted, because it appeared to me we were approving a 5 proposal that was subject to change. And I wasn't quite 6 sure how we would administer that. 7 SUPERVISOR DeSAULNIER: Maybe a suggestion would 8 be that part of the motion is that we convene this group 9 and actually bring a report back in December. And we 10 address as much as we can, including the issues of South 11 Coast and have that as part of the report. 12 EXECUTIVE OFFICER WITHERSPOON: There's only 13 three weeks, and Thanksgiving is next week. 14 SUPERVISOR DeSAULNIER: Either that or we can 15 continue it. 16 EXECUTIVE OFFICER WITHERSPOON: You can only 17 continue it until December, because the statute requires 18 the Board adopt by January 1st, '06. 19 SUPERVISOR DeSAULNIER: Understood, Catherine. 20 I'm trying to make it easier for you. But I can change it 21 and we can just continue the whole thing. 22 Ron, does that give you any level of comfort, or 23 would you rather just continue it? 24 BOARD MEMBER LOVERIDGE: WE obviously have to 25 have a document by January. I was trying to understand PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 198 1 the difference between approval now and approval on 8th. 2 I understand can't come -- the macro ones you're not going 3 to resolve. The more micro ones seems to me would result 4 in a finished document, rather than amending it as changes 5 come forward. 6 SUPERVISOR DeSAULNIER: But we're not going to 7 really have that finished document, is what you're 8 suggesting. And by December 8th, either way we go at it. 9 ALTERNATIVE STRATEGIES SECTION MANAGER NEGRETE: 10 Yes, we can. The edits -- CAPCOA -- we will have a 11 revision next. Week the minor issues, yes. We already 12 have draft languages in them. 13 BOARD MEMBER LOVERIDGE: If you have the draft 14 language for the issues with CAPCOA, why not wait until 15 the 8th to have a finished document? 16 SUPERVISOR DeSAULNIER: I'll amend the motion to 17 continue it with the direction as part of this we're going 18 to have this Advisory Group to work on any unresolved 19 issues, unless by some miracle you can resolve them all. 20 ACTING CHAIRPERSON RIORDAN: Now I want to be 21 very clear that we have a quorum in December. 22 EXECUTIVE OFFICER WITHERSPOON: At the moment, we 23 have seven members committed to attend in December. 24 There's a chance we'll have a new Chair appointed before 25 the December meeting. And he or she may or may not wish PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 199 1 for a postponement in order to come up to speed, which is 2 a separate issue that starts getting us into trouble with 3 the statutory deadline for completion of the -- 4 ACTING CHAIRPERSON RIORDAN: Well, the Chair -- 5 EXECUTIVE OFFICER WITHERSPOON: Oh, that's the 6 other thing. We have to look at the seven who are coming, 7 we have two members who are not here today who are 8 conflicted on this item, and one who left who was 9 conflicted. We have to see of the seven how many are 10 conflicted to vote on the Carl Moyer guidelines in 11 December. 12 ACTING CHAIRPERSON RIORDAN: I know, Supervisor 13 roberts, you will not be here. 14 SUPERVISOR ROBERTS: I will not be here in 15 December. 16 ACTING CHAIRPERSON RIORDAN: Now Mayor Loveridge, 17 you're going to be here in December? 18 MAYOR LOVERRIDGE: The National League of Cities 19 has a Congress cities that week. I will not be here. 20 ACTING CHAIRPERSON RIORDAN: Okay. 21 EXECUTIVE OFFICER WITHERSPOON: You better vote 22 today. 23 ACTING CHAIRPERSON RIORDAN: Ms. Pineda. 24 EXECUTIVE OFFICER WITHERSPOON: We can always 25 amend. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 200 1 ACTING CHAIRPERSON RIORDAN: You know, you're 2 running into I think a difficulty here about a quorum. 3 You know, we know we have two conflicts -- 4 EXECUTIVE OFFICER WITHERSPOON: Three. We have 5 three conflicts. 6 ACTING CHAIRPERSON RIORDAN: We have three 7 conflict. 8 SUPERVISOR ROBERTS: Two absentees. 9 ACTING CHAIRPERSON RIORDAN: And two absentees. 10 SUPERVISOR PATRICK: Madam Chair, I just in the 11 interest of moving this along, I'm wondering if we can 12 look at that original -- if we looked at the original 13 motion. And then I'm just a little bit concerned about 14 where we're going to be on December 38th in terms of 15 folks. 16 And so I'm wondering the districts -- we need to 17 issue this by January 1. If the districts have 18 outstanding issues of concern, they would not necessarily 19 have to move forward and award any of their money, would 20 they, if there were issues that they felt might influence 21 them to go into one direction or another? 22 EXECUTIVE OFFICER WITHERSPOON: They have until 23 June of '07 to completely spend the money. So between 24 January 1st, they have 18 months to issue RFPs, review 25 projects, bring them before their Board, make decisions PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 201 1 about local priorities, et cetera, and then actually cut 2 the checks by the 18th month to distribute the moneys. 3 But there is ample time in that 18-month window for you to 4 update guidelines before they're finished spending all 5 their money. They can go ahead and spend money on the 6 things they're comfortable on and hold some back hoping 7 for a change in direction. 8 SUPERVISOR PATRICK: I'm wondering if that helps 9 Mayor Loveridge at all. Because we want to make sure to 10 address your concerns. I'm just a little bit afraid of 11 that January 1 deadline with so many people who are 12 conflicted out and can't come. 13 ACTING CHAIRPERSON RIORDAN: Supervisor 14 DeSaulnier. 15 SUPERVISOR DeSAULNIER: Well, Ron, I'm trying to 16 help here. But given that you're not going to be here, 17 maybe the original motion with the direction that you 18 actually come back with as comprehensive as a report on 19 December 8th as possible. 20 BOARD MEMBER PINEDA: Second. 21 ACTING CHAIRPERSON RIORDAN: All right. We 22 have -- let's go back to the original motion, which is 23 moved by Supervisor DeSaulnier and I have really two 24 seconds, Supervisor Patrick and Ms. Pineda. And so I'm 25 going to ask for a vote on that, because I know time is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 202 1 moving along. 2 All those in favor of that motion, please signify 3 by saying aye. 4 (Ayes) 5 ACTING CHAIRPERSON RIORDAN: Opposed, no. 6 Motion carries. 7 So we're going to have -- staff, I hope you know 8 what you're about here. And we're going TO get together. 9 I think the working group is critical, and Supervisor 10 DeSaulnier, 11 SUPERVISOR DeSAULNIER: Well hopefully the new 12 Chair will take me off of it. 13 ACTING CHAIRPERSON RIORDAN: I'll advise them. 14 SUPERVISOR DeSAULNIER: So can I get the names? 15 ACTING CHAIRPERSON RIORDAN: I'll advise the new 16 Chair not to do that. 17 SUPERVISOR DeSAULNIER: Well, they won't be 18 confirmed then. 19 ACTING CHAIRPERSON RIORDAN: But you can see that 20 we are working towards a collaborative effort here. I'm 21 hoping that maybe some of you who are still in the room 22 who represent the stakeholders can perhaps just informally 23 talk to Catherine about when you might be able to meet, 24 and Catherine and staff because I don't know who Catherine 25 will assign that to. But now is the time to talk to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 203 1 everybody. 2 And I apologize for the lack of a quorum at this 3 point in time. But, fortunately, I have no speakers 4 signed up to speak under public comment. So I'm simply 5 going to adjourn the meeting and wish you all the happiest 6 of Thanksgiving. And we'll see you in December. 7 (Thereupon the California Air Resources Board 8 adjourned at 2:31 p.m.) 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 204 1 CERTIFICATE OF REPORTER 2 I, TIFFANY C. KRAFT, a Certified Shorthand 3 Reporter of the State of California, and Registered 4 Professional Reporter, do hereby certify: 5 That I am a disinterested person herein; that the 6 foregoing hearing was reported in shorthand by me, 7 Tiffany C. Kraft, a Certified Shorthand Reporter of the 8 State of California, and thereafter transcribed into 9 typewriting. 10 I further certify that I am not of counsel or 11 attorney for any of the parties to said hearing nor in any 12 way interested in the outcome of said hearing. 13 IN WITNESS WHEREOF, I have hereunto set my hand 14 this 1st day of December, 2005. 15 16 17 18 19 20 21 22 23 TIFFANY C. KRAFT, CSR, RPR 24 Certified Shorthand Reporter 25 License No. 12277 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345