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, OCTOBER 25, 2007 9:00 A.M. TIFFANY C. KRAFT, CSR, RPR CERTIFIED SHORTHAND REPORTER LICENSE NUMBER 12277 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 ii APPEARANCES BOARD MEMBERS Ms. Mary D. Nichols, Chairperson Ms. Sandra Berg Ms. Judith G. Case Ms. Dorene D'Adamo Ms. Lydia Kennard Mr. Jerry Hill Mr. Ronald O. Loveridge Supervisor Ron Roberts Dr. Daniel Sperling STAFF Mr. Tom Cackette, Chief Deputy Executive Officer Mr. Tom Jennings, Chief Counsel Mr. Michael Scheible, Deputy Executive Officer Ms. Lynn Terry, Deputy Executive Officer Ms. Kathleen Quetin, Ombudsman Ms. Lori Andreoni, Board Secretary Mr. Bob Cross, Chief, Mobile Source Control Division Mr. Richard Corey, Assistant Division Chief, RD Mr. Jon Costantino, Office of Climate Change Ms. Susan Gilbreath, Ph.D., Population Studies Section, Research Division PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iii APPEARANCES CONTINUED STAFF Dr. Jeanne Panek, Environment Justice and Special Projects Section, PTSD Mr. Mike Robert, Manager, Greenhouse Gas Reduction Strategy Section, Research Division Mr. Chuck Shulock, Chief, Office of Climate Change Dr. Patricia Velasco, Staff Air Pollution Specialist, Planning and Technical Support Division ALSO PRESENT Mr. Don Anair, Union of Concerned Scientists Mr. James Baker, Roof Coatings Manufacturers Association Mr. Howard Berman, Zinsser Mr. Dave Bischel, CA Forestry Association Ms. Louis Blumberg, The Nature Conservancy Dr. Rasto Brenzy, MECA Mr. Steve Brink, CA Forestry Association Ms. Kelly Boyd, Brown Recycling Mr. Tom Brunello, Resources Agency Mr. Robert Callahan, CA Chamber of Commerce Mr. Tim Carmichael, Coalition for Clean Air Ms. Carolyn Casavan, Valley Industry and Commerce Association Mr. Paul Cort, Earth Justice Mr. David Darling, National Paint & Coatings Association Ms. Karen Douglas, Environmental Defense Fund PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iv APPEARANCES CONTINUED ALSO PRESENT Mr. Kyle Frakes, Tnemec Company, Inc. Mr. Tom Gibson, Lehigh Southwest Cement Ms. Madelyn Harding, Sherwin-Williams Ms. Caryl Hart, State Parks Commission Ms. Staci Heaton, Regional Council of Rural Counties Dr. Michael Hertal, Southern California Edison Ms. Bonnie Holmes-Gen, American Lung Association Mr. Eric Holst, Environmental Defense Mr. Don Hunsaker, San Joaquin Valley APCD Mr. Scott Isaacson, CA Portland Cement Mr. Roger Ison, California Cotton Growers Mr. Thomas Jacob, DuPont Ms. Wendy James, Global Warming Action Coalition Mr. Andrew Jaques, American Chemistry Council Ms. Betony Jones, Sierra Business Council Mr. Chris Kelly, The Conservation Fund Mr. Gregory Knapp, TX1 Riverside Cement Mr. Nick Lapis, Californians Against Waste Mr. Dave Laucella, ACC Solutions Industry Group Mr. Bill Magavarn, Sierra Club of California Mr. Paul Mason, Sierra Club of California Mr. Jim Mattesich, Law Firm of Greenberg Toureg, DEC Products Ms. Laura McLendon, Sempervirens Fund PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 v APPEARANCES CONTINUED ALSO PRESENT Mr. Robert Meacher, Plumas County Mr. John Middlebrook, Forest Landowners of California Mr. David Miller, Miller Catalyzer Corporation Mr. Chuck Mills, California Council of Land Trusts Ms. Anne McQueen, Mitsubishi Cement & TX1 Riverside Cement Mr. Amisha Patel, California Chamber of Commerce Mr. Roy Perez, American GI Forum California Hispanic Chamber of Commerce Mr. Norman Plotkin, ARPI Mr. Matthew Schrap, CA Trucking Association Mr. Kurt Schuparra, Sierra Pacific & Green Diamond Mr. Jeff Shellito, California Trust Ms. Aubry Stone Ms. Muriel Strand Mr. Mike Tunnell, American Trucking Association Ms. Devra Wang, NRDC Ms. Laurie Wayburn, Pacific Forest Trust Ms. Jill Whynot, SCAQMD Ms. Diane Wittenberg, CA Climate Registry PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 vi INDEX PAGE Pledge of Allegiance 1 Item 7-10-1 Chairperson Nichols 3 Chief Executive Officer Cackette 3 Staff Presentation 4 Q&A 10 Item 7-10-2 Chairperson Nichols 13 Chief Executive Officer Cackette 14 Staff Presentation 15 Q&A 43 Ms. Whynot 69 Ms. Wang 69 Mr. Plotkins 70 Mr. Jacob 72 Dr. Hertel 75 Mr. Patel 76 Ms. Casavan 81 Mr. Anair 83 Mr. Schrap 84 Mr. Tunnell 88 Mr. Knapp 90 Ms. McQueen 93 Mr. Gibson 95 Mr. Isaacson 99 Ms. Strand 101 Mr. Magavern 102 Ms. James 104 Mr. Perez 106 Mr. Stone 107 Ms. Wittenberg 108 Ms. Douglas 112 Ms. Holmes-Gen 113 Mr. Carmichael 116 Ex Parte 122 Motion 124 Vote 124 Item 07-10-3 Chairperson Nichols 125 Chief Executive Officer Cackette 126 Staff Presentation 127 Q&A 141 Ms. Wittenberg 146 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 vii INDEX CONTINUED PAGE Mr. Brunello 149 Ms. McLendon 154 Ms. Wang 155 Mr. Bischel 156 Mr. Middlebrook 161 Mr. Meacher 164 Mr. Brink 168 Mr. Callahan 172 Mr. Kelly 173 Mr. Holst 176 Mr. Lapis 179 Ms. Hart 180 Ms. Heaton 182 Mr. Schuparra 183 Ms. Jones 186 Ms. Wayburn 188 Mr. Mills 192 Mr. Shellito 194 Ms. Blumberg 197 Mr. Mason 201 Ex Partes 201 Motion 206 Vote 208 Item 07-10-04 Chairperson Nichols 208 Deputy Executive Officer Terry 209 Staff Presentation 210 Mr. Hunsaker 220 Mr. Ison 221 Mr. Cort 224 Mr. Carmichael 227 Q&A 229 Motion 237 Vote 240 Item 07-7-10 Chairperson Nichols 241 Chief Executive Officer Cackette 241 Staff Presentation 243 Mr. Mattesich 254 Ms. Boyd 259 Mr. Miller 260 Dr. Brenzy 263 Q&A 265 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 viii INDEX CONTINUED PAGE Motion 273 Vote 274 Adjournment 274 Reporter's Certificate 275 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 1 1 PROCEEDINGS 2 CHAIRPERSON NICHOLS: We're ready to get started. 3 Some of our Board members are facing travel delay problems 4 this morning. But we do have a quorum. And we have nine 5 people here obviously and an agenda. 6 I want to welcome everybody here for the October 7 25th public meeting of the Air Resources Board. And we 8 will begin before the roll call with the Pledge of 9 Allegiance. If I could ask everyone to stand. 10 (Thereupon the Pledge of Allegiance was 11 recited in unison.) 12 CHAIRPERSON NICHOLS: Thank you. 13 Clerk of the Board, would you please call the 14 roll? 15 SECRETARY ANDREONI: Ms. Berg? 16 BOARD MEMBER BERG: Here. 17 SECRETARY ANDREONI: Supervisor Case? 18 BOARD MEMBER CASE: Here. 19 SECRETARY ANDREONI: Supervisor Hill? 20 SUPERVISOR HILL: Here. 21 SECRETARY ANDREONI: Ms. D'Adamo? 22 BOARD MEMBER D'ADAMO: Here. 23 SECRETARY ANDREONI: Mayor Loveridge? 24 Ms. Kennard? 25 BOARD MEMBER KENNARD: Here. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 2 1 SECRETARY ANDREONI: Ms. Riordan? 2 Supervisor Roberts? 3 Professor Sperling? 4 BOARD MEMBER SPERLING: Here. 5 SECRETARY ANDREONI: Chairman Nichols? 6 CHAIRPERSON NICHOLS: Here. 7 SECRETARY ANDREONI: Madam Chair, we have a 8 quorum. 9 CHAIRPERSON NICHOLS: Thank you. 10 Before we begin, I would note like to make sure 11 that everyone knows that one of our members, Supervisor 12 Ron Roberts, you may have heard him on NPR this morning if 13 you were tuned into your radio, will not be joining us, 14 although he had planned to earlier, because of the 15 situation in San Diego where he's on the front lines 16 literally dealing with the effects of the fire. So we 17 send him our very best wishes. 18 I need to remind everybody that although in the 19 formal notice there was a closed session indicated for 20 today, we don't have a closed session today, although we 21 will have one tomorrow. 22 And to make sure that everyone knows that if 23 you're planning to speak on any item, we would appreciate 24 it if you would sign up with the Clerk of the Board over 25 here. And we prefer it, although it's not mandatory, that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 3 1 you put your name on the speaker card. 2 We will be imposing a three-minute limit on all 3 speakers on all items today. And we do have Spanish 4 language translation available for the last item of the 5 day, the aftermarket catalytic converters item. There 6 will be head sets available at the clerk's desk. I'll 7 make that announcement again when we get to that item. 8 I'm also supposed to remind everybody for safety 9 reasons there are emergency exists at the rear of the 10 room. In the event of a fire alarm, we're required to 11 evacuate the building immediately. And then when an 12 all-clear signal is given, we will return to the hearing 13 room right away and get back to the hearing. 14 So we will now begin with the first item, which 15 is our monthly health update. Mr. Cackette. 16 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Good 17 morning. 18 Last March, staff gave an overview of traffic 19 related pollutant and health effects found in infants and 20 children. The focus of today's presentation is on the 21 recent study that describes how living near areas of heavy 22 traffic may effect the severity of asthma in adults and 23 seniors. Many previous studies have examined the effects 24 of air pollution in traffic on cardiovascular and 25 respiratory outcomes, but this is one of the first studies PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 4 1 to examine the effects of traffic-related pollution among 2 adults and seniors with asthma. 3 Staff will also present findings from several new 4 studies on adults and seniors which show associations 5 between traffic-related pollution and outcomes such as 6 respiratory symptoms, heart disease, heart attacks, 7 strokes, certain cancers, and death. 8 Dr. Susan Gilbreath from our Health and Exposure 9 Assessment Branch will make the staff presentation. 10 CHAIRPERSON NICHOLS: Thank you. 11 (Thereupon an overhead presentation was 12 presented as follows.) 13 DR. GILBREATH: Thank you, Mr. Cackette. Good 14 morning, Chairman Nichols and members of the Board. 15 In this health update, I'm going to discuss the 16 health effects of traffic-related air pollution. Earlier 17 the year, I presented the effects seen in infants and 18 children. And this presentation will focus on the health 19 effects found in adults, particularly in those with 20 asthma. 21 --o0o-- 22 DR. GILBREATH: First, I would like to present 23 some background information on asthma. 24 Asthma is a chronic disease involving the 25 respiratory system. During an asthma attack, the airway PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 5 1 constricts, swells, and becomes congested. This leads to 2 tightness in the chest, wheezing, and difficulty 3 breathing. In severe cases, asthma attacks can be deadly. 4 Almost nine percent of adults in California have 5 active asthma. Asthma kills approximately 500 6 Californians a year, and it is a contributing cause in 7 thousands of other deaths. Annually, over 16,000 people 8 are hospitalized with asthma, and it is responsible for 9 hundreds of thousands of work absences. 10 Air pollution plays a well documented role in 11 asthma. The traffic pollutants such as particulate 12 matter, sulfur dioxide, oxides of nitrogen, and ozone have 13 been found to trigger asthma attacks and worsen symptoms. 14 --o0o-- 15 DR. GILBREATH: In the study I am focusing on 16 today, Dr. Meng and colleagues examined the impacts of 17 traffic on poorly controlled asthma in adults. Poorly 18 controlled asthma is defined as experiencing asthmatic 19 symptoms at least weekly during the past year, or having 20 been hospitalized for asthma in the past year. 21 The investigators followed 1,600 adults diagnosed 22 with asthma and living in Los Angeles and San Diego 23 Counties. They examined whether the asthmatics who lived 24 near areas of heavy or moderate traffic were more like 25 likely to have poorly controlled asthma than those living PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 6 1 in areas with low levels of traffic. 2 --o0o-- 3 DR. GILBREATH: The results of the study are 4 shown in this graph. The original bars represent the 5 percentage increase in risk of poorly controlled asthma 6 among those living in areas of high traffic, while the 7 yellow bars show the increase in risk among those living 8 in areas of medium traffic. These are all in comparison 9 to those living in areas of low traffic. 10 The researchers found that elderly adults living 11 near areas of medium traffic had approximately a 40 12 percent increase in risk, and those living near areas of 13 heavy traffic had a 90 percent increase this risk of 14 suffering from poorly controlled asthma. 15 Younger adults experienced a 25 to 60 percent 16 increase in risk, respectively. These results are 17 important because poorly controlled asthma has such a 18 negative impact on the quality of life. This study is one 19 example of a small but growing body of literature that 20 shows a number of health effects from traffic on adults. 21 --o0o-- 22 DR. GILBREATH: I will now discuss other health 23 effects seen in adults exposed to traffic-related 24 pollution. Researchers conducting studies in the 25 United States have examined health effects related to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 7 1 short-term pollution exposures lasting just a few days and 2 recently to long-term pollution exposures lasting years. 3 Studies of short-term exposure to pollution have 4 found increases in risk of death from cardiovascular 5 causes such as heart attacks and strokes. Increases in 6 risk of death from respiratory causes have also been found 7 as well as an increased risk of hospital admissions. 8 As shown in the table, long-term exposures can 9 lead to the same health outcomes as those with short-term 10 exposures, but additional risks are observed. For 11 example, there is an increased risk of developing 12 arthrosclerosis which can lead to heart disease. 13 Additionally, increased risk of lung and breast cancer 14 have been found in people who have been exposed to 15 traffic-related pollutants for a long time. 16 --o0o-- 17 DR. GILBREATH: Since 1975, the population in 18 California has almost doubled and the number of vehicles 19 on the road has tripled. However, because of regulatory 20 actions to mitigate health problems associated with 21 traffic-related pollution, emissions of many of these 22 pollutants have decreased markedly over the decades. 23 This graph demonstrates how the amount of on-road 24 vehicular emissions of oxides of nitrogen and sulfur, 25 total organic gases, and carbon monoxide have decreased PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 8 1 over the years relative to 1975. 2 Traffic-related diesel PM emissions rose through 3 the 1980s until the first-heavy duty diesel standards went 4 into effect and have since declined. All of these 5 emissions are forecast to drop even more with the recent 6 implementation of tighter emission standards. The dotted 7 lines represent emissions forecast to the year 2015. 8 The graph does not show ultra fine particle 9 emissions or PM sources such as road dust, break wear, and 10 tire rubber. 11 --o0o-- 12 DR. GILBREATH: While we have made significant 13 strides in cleaning the air, additional research is needed 14 to ensure our regulations are protective for even the most 15 sensitive groups of people. As shown here, ARB is 16 currently funding several studies on the effects of 17 traffic on health. The first two studies are examining 18 the health effects of traffic pollutants on the elderly. 19 This third study will attempt to separate the health 20 effects of particles from gasoline and diesel vehicles. 21 The next two studies are in-house research 22 projects assessing the effects of traffic pollutants. In 23 one of the studies, we will look at the effects of 24 traffic-related pollution on respiratory function in 25 bicycle commuters with a focus on ultra fine particle PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 9 1 exposure. 2 The final study listed was approved by the Board 3 last month and will assess the relationship between 4 traffic-related pollution, socioeconomic status, and 5 asthma. 6 --o0o-- 7 DR. GILBREATH: The results presented today show 8 that traffic-related air pollution is associated with an 9 increased risk of disease and death. This is particularly 10 problematic since approximately one million people live 11 within 100 meters of a freeway and almost half of 12 California's population living within a mile of the 13 freeway. 14 Reducing emissions is not the only way to protect 15 the people of California. As our population and the 16 number of vehicles continue to increase, we should also 17 take into account using our land in such a way as to 18 reduce or all together avoid exposures to traffic. 19 Our continuing efforts in research, our control 20 measures, and guidelines will help protect our most 21 vulnerable populations from traffic-related air pollution. 22 This concludes my presentation. We will be happy 23 to answer any questions. 24 CHAIRPERSON NICHOLS: Are there questions from 25 the Board members? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 10 1 BOARD MEMBER D'ADAMO: On the land use guidance 2 document, what buffer do we suggest? I see the one 3 million within one hundred meters. What's the 4 recommendation that we have in our guidance document? 5 DR. GILBREATH: Five hundred feet. 6 POPULATIONS STUDIES SECTION MANAGER WELLER: For 7 schools and day care centers and I believe for retirement 8 homes as well. 9 CHAIRPERSON NICHOLS: Five hundred meters. 10 POPULATIONS STUDIES SECTION MANAGER WELLER: 11 Feet. 12 BOARD MEMBER CASE: A question in regards to 13 this. I know we've seen information on the effects on 14 childhood asthma and the location of elementary schools. 15 And I've recently been sensitized to that when we had our 16 meeting down in Southern California. 17 Are we working with the Legislature maybe so that 18 schools would not be locating adjacent to freeways? 19 Because as an elected official at the local level, I will 20 tell you homeowners want to be close the freeways because 21 they see that as a way to get to work. So there's huge 22 demand for those homes that have easy mobility. 23 But in particular, I'd like to focus on the 24 school location issues. Schools are pretty antonymous in 25 their siting. But yet when we see this kind of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 11 1 documentation for adults as we've seen with children, is 2 there an opportunity legislatively that they might start 3 encouraging schools not to locate there? 4 DEPUTY EXECUTIVE OFFICER TERRY: Great question, 5 Supervisor. And actually, when we did our land use 6 document a few years ago, we looked at that. And there 7 are some very specific restrictions on siting schools. 8 And so I would be happy to get that information to you. 9 There has been legislation on this topic. I can't 10 remember the details today. 11 BOARD MEMBER CASE: I believe there's an 12 elementary school in my region that's recently been built 13 very close to freeways. 14 CHAIRPERSON NICHOLS: I think this would actually 15 be a good topic. We've been hearing again last month also 16 about this issue of the relationship between land use and 17 exposure to air pollutants and just an update on what the 18 Legislature has done in this area for the Board to 19 understand so we'd all be up to speed and any other items 20 that the staff feels we need to be working on that may not 21 have come to public attention yet. I would appreciate a 22 report on that. 23 Do we have any members of the public who wanted 24 to -- I'm sorry. 25 SUPERVISOR HILL: Thank you, Madam Chair. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 12 1 And it's really a dilemma. Because in the Bay 2 Area, we're struggling with transit oriented development 3 and trying to locate housing and mixed use housing and 4 mixed use development along the transit corridors. And 5 the struggle is now we're finding continuously the hazards 6 that we're creating with that. 7 So I think it would be great to have some type of 8 a workshop or some discussion that we can look at 9 solutions to this. My understanding is that you can 10 create that development with appropriate air conditioning, 11 have windows that don't open, and some other conditions 12 that could prevent that. But then you're putting people 13 in prisons almost or feeling that they are which is 14 difficult. So it would be nice to see if we can look at 15 tat a little more in depth. I would appreciate it. 16 CHAIRPERSON NICHOLS: I think you're hearing a 17 demand, popular demand here. 18 DEPUTY EXECUTIVE OFFICER TERRY: We hear you. 19 CHAIRPERSON NICHOLS: Thank you. 20 So do we have any further comment? Yes. 21 BOARD MEMBER BERG: I'd just like to clarify on 22 slide four what were the distances within the study to 23 determine the high risk versus -- the high traffic versus 24 the medium traffic? 25 DR. GILBREATH: They looked at the amount of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 13 1 traffic that's within 500 feet of each person's home, 2 residence. 3 BOARD MEMBER BERG: So it wasn't the distance 4 that was studied, more the amount of traffic that was 5 going through that 500 feet of resident? 6 DR. GILBREATH: Right. It was basically broke 7 into vehicle density. So people who lived within 500 feet 8 of a road that has more than 200,000 miles of traffic on 9 it a day with a highly exposed group. 10 BOARD MEMBER BERG: Thank you very much. And 11 good job on the study. Thank you. 12 CHAIRPERSON NICHOLS: Okay. I see no public 13 comment on this item. I think we'll close and move onto 14 the next one. 15 Appreciate the staff bringing this study to our 16 attention. And clearly illustrates the need to continue 17 our efforts to reduce the levels of exposure. 18 The next item we're considering is approval of 19 additions to the ARB's List of the Early Action Measures, 20 which will begin reducing greenhouse gas emissions 21 pursuant to AB 32. 22 When the Board approved the original list in 23 June, it directed staff to further evaluate early action 24 recommendations made by several stakeholders to see if 25 other items should be included. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 14 1 The staff is recommending a significant expansion 2 of the Early Action List. They will be tripling from 3 three to nine the number of strategies that constitute 4 discrete early action under AB 32. And in addition, 5 recognizing the importance of voluntary Early Action 6 Measures and moving us toward a low carbon society. Staff 7 will be discussing some initial ideas in that area. So 8 I'll ask you to introduce this item, Mr. Cackette. 9 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Thank 10 you. 11 At the June Board meeting, the Board heard 12 staff's recommendations for early action measures to 13 reduce greenhouse gas emissions. The Board accepted the 14 staff's recommendation for 37 early actions, including 15 three strategies that met the legal definition of a 16 discrete early action in AB 32. 17 However, the Board expressed the general 18 sentiment to do more and to do it quicker. You directed 19 staff to conduct additional analysis of recommendations 20 made during the Board hearing by stakeholders, 21 particularly the AB 32 Environmental Justice Advisory 22 Committee, CAPCOA, Association of South Coast Air Quality 23 Management District. 24 You asked us to come back with our assessment 25 within six months. We did that a little earlier. We got PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 15 1 here in about four months or so. Staff has completed its 2 analysis and is here today to recommend an expansion of 3 the list of early action measures from 37 to 44. And 4 we're also recommending placing six additional measures on 5 the list of early discrete actions, bringing the total 6 from three up to nine. 7 Our staff from the Research Division led this 8 effort with considerable support throughout the agency as 9 well many other State agencies and external stakeholders. 10 From Michael Robert, Manager of Greenhouse Gas Reduction 11 Strategies Section, will make the staff presentation. 12 And following Mike, we will have staff from our 13 Office of Climate Change provide the Board with a related 14 subject, which is a brief discussion on our ideas for 15 framing a voluntary early actions program. 16 (Thereupon an overhead presentation was 17 presented as follows.) 18 MR. ROBERTS: Thank you, Mr. Cackette. 19 Chairman Nichols and members of the Board, today 20 staff brings before you a proposed expansion of the List 21 of AB 32 Early Actions. 22 --o0o-- 23 MR. ROBERTS: The impacts of a warming world are 24 evident and inevitable. The Board will act today to 25 consider modifications to the list of early actions it PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 16 1 approved in June. 2 These early actions proposed by ARB are an 3 important first installment from California's Global 4 Warming Solutions Act of 2006 to begin the long and 5 difficult process of abating the impact from global 6 greenhouse gas emissions. They will be complimentary to 7 the overall program design and Scoping Plan, due to the 8 Board in late 2008, which will tie them together to the 9 early actions by other State members, agencies of the 10 Climate Action Team, and voluntary actions at all levels 11 in the context of a possible carbon market. 12 The scope and final strategy for the 13 implementation of each early action will be identified 14 during its development phase in consultation with 15 stakeholders. 16 --o0o-- 17 MR. ROBERTS: There is a growing body of evidence 18 on the impacts of climate change on California. 19 California is particularly vulnerable because of our 20 diverse ecosystems, limited water supply, and climate 21 related industries such as tourism and wine production. 22 Over the past 100 years in California, the 23 average temperature has increased by 1.3 degrees 24 Fahrenheit. This does not sound like much, but it has 25 resulted in at least a half foot of sea level rise, a 12 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 17 1 percent decrease in spring runoff, and we've observed 2 spring blooms advancing by two days per decade since 1955. 3 Even within a lower projected warming range of 4 three to 5.5 degrees Fahrenheit, there will be significant 5 impact from climate change to our state, including up to a 6 60 percent loss in the sierra snowpack, 2.5 times the 7 number of heat wave days, increases in energy demand, and 8 a rise in sea level. 9 In addition to a mitigation strategy to avoid 10 more serious consequence, an adaptation strategy will also 11 be required in order to deal with these changes. The 12 higher warming range of 8 to 10.5 degrees Fahrenheit 13 represents a business as usual greenhouse gas emissions 14 scenario and would result in serious consequences as 15 indicated on this slide, which we must not allow to 16 materialize. 17 --o0o-- 18 MR. ROBERTS: AB 32 directs ARB to develop a list 19 of early actions to reduce greenhouse gas emissions. 20 --o0o-- 21 MR. ROBERTS: Greenhouse gas reduction measures 22 that have been identified by staff in the near term that 23 meet the AB 32 legal definition, meaning they will be 24 regulations enforceable by January 1st, 2010, and are 25 under the jurisdiction of the ARB, have been classified as PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 18 1 discrete early actions. 2 --o0o-- 3 MR. ROBERTS: All other near-term greenhouse gas 4 reduction measures are referred to as simply early 5 actions. These measures are already underway or will be 6 developed by ARB in the 2007-2012 time frame. They may be 7 regulatory or non-regulatory in nature. 8 --o0o-- 9 MR. ROBERTS: At its June 2000 hearing, the Board 10 approval 37 greenhouse gas reduction measures recommended 11 by staff. Three of these were classified as discrete 12 early actions. Of the other 34 early actions, ten were 13 preexisting diesel control measures that could have 14 climate co-benefits. 15 At that same June 2007 hearing, the Board also 16 directed ARB staff to further evaluate recommendations 17 from the Environmental Justice Advisory Committee, the 18 California Air Pollution Control Officer's Association, 19 and the South Coast Air Quality Management District. 20 The Board directed staff to report back on this 21 effort within six months. Chairman Nichols directed staff 22 to accelerate this review, and we come before you today, 23 four months later. 24 --o0o-- 25 MR. ROBERTS: 2007 has been a very busy year with PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 19 1 many early action milestones. Three public workshops were 2 held regarding early actions. The most recent workshop, 3 held in September, followed the release of a revised staff 4 report documenting the revised list of early actions that 5 we are presenting to you today. 6 Public comment was solicited on this second staff 7 report and the associated workshop, and a final staff 8 report was posted on October 5th. 9 --o0o-- 10 MR. ROBERTS: The link to the final staff report 11 is listed on this slide and a copy is in the Board item 12 book. The report represents many, many hours of hard work 13 across the agency. I would like to take this opportunity 14 to fully recognize the contributions from several of my 15 colleagues in the Research Division as well as the input 16 provided to us by staff from the Stationary Source 17 Division, the Mobile Source Control Division, the Planning 18 and Technical Support Division, and the Enforcement 19 Division. They all provided the technical analysis that 20 is the heart of the final staff report before you today. 21 --o0o-- 22 MR. ROBERTS: Since the June 2007 Board meeting, 23 ARB staff has further evaluated the 47 comments submitted 24 by the EJAC Committee, CAPCOA, and South Coast Air Quality 25 Management District. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 20 1 Staff also evaluated several suggestions 2 submitted by an environmental coalition and also advanced 3 its analysis of 17 additional internal suggestions and/or 4 previously approved early actions. 5 --o0o-- 6 MR. ROBERTS: Staff's recommendation for the 7 identification of an early action was based on an analysis 8 of potential emissions reductions and several factors, 9 including cost information, likely technical feasibility 10 and additional considerations as documented in the final 11 staff report. 12 Potential measure evaluations were generated by 13 staff for all suggestions and are included in the final 14 staff report appendices. More comprehensive analyses are 15 still required for many strategies. 16 --o0o-- 17 MR. ROBERTS: This slide graphically summarizes 18 staff's recommendation regarding the proposed list of AB 19 32 early actions. Staff is proposing 44 total measures. 20 Nine of these 44 meet the AB 32 legal definition and are 21 recommended as discrete early actions. Three of these 22 were approved by the Board at its June 2007 hearing. Two 23 are new measures, and four are measures that were 24 previously approved by the Board as early actions but are 25 recommended for reclassification as discrete early PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 21 1 actions. 2 Thirty-five of these 44 are other early actions 3 that do not meet the AB 32 legal definition. Thirty-four 4 of these were approved by the Board at its June 2007 5 hearing. And five are new measures. But four previously 6 approved early actions are recommended for 7 reclassification as discrete early actions. 8 The next several slides will discuss this 9 breakdown in additional detail. 10 --o0o-- 11 MR. ROBERTS: To reiterate, staff is recommending 12 44 total greenhouse gas reduction measures as a revised AB 13 32 Early Action Plan. This represents an increase of 14 seven total measures from the list of 37 that the Board 15 approved in June 2007. 16 The nine discrete early actions represents a 17 tripling of the previously approved list. Cumulatively, 18 these nine measures have an emission reduction potential 19 of at least 16 million metric tons of CO2 equivalent by 20 the year 2020. 21 Cumulatively, the 34 other early actions have an 22 emission reduction potential of at least 26 million metric 23 tons of CO2 equivalent by the year 2020. 24 These measures are summarized in Tables 1 and 2 25 of the final October staff report. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 22 1 --o0o-- 2 MR. ROBERTS: In June 2007, the Board approved 3 three discrete early actions. These included the low 4 carbon fuel standard, restrictions on high global warming 5 potential refrigerants, and an improved landfill methane 6 capture measure. 7 The low carbon fuel standard would establish a 8 carbon content standard for transportation fuels linked to 9 the fuel's impact on greenhouse gas emissions and has an 10 estimated greenhouse gas emission reduction potential of 11 ten to 20 million metric tons of CO2 equivalent by 2020. 12 Restrictions on high global warming potential 13 refrigerants would restrict the use of high GWP 14 refrigerants for non-professional recharging of leaking 15 automotive air conditioning systems. This measure has an 16 estimated GHG emission reduction potential of one to two 17 million metric tons CO2 equivalent by 2020. 18 The landfill methane capture measure would set 19 statewide standards for the installation and performance 20 of active gas collection and control systems at 21 uncontrolled municipal solid waste landfills and will 22 improve efficiency and emission control resulting in total 23 reductions on the order of two to four million metric tons 24 of CO2 equivalent by 2020. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 23 1 MR. ROBERTS: Staff is proposing two new early 2 action measures be added to the list of discrete early 3 actions. These are the reduction of high global warming 4 potential greenhouse gases used in some consumer products, 5 the reduction of the use of sulfur hexafluoride in the 6 non-electric sector. 7 Staff is also proposing that four items 8 previously approved by the Board as early actions be 9 reclassified as discrete early actions. These include 10 green ports, the reduction of perfluorocarbons in the 11 semiconductor industry, a heavy-duty diesel truck 12 efficiency improvement measure, and a tire inflation 13 program. The following slides elaborate. 14 --o0o-- 15 MR. ROBERTS: The high global warming potential 16 consumer products measure involves the reduction of high 17 GWP greenhouse gases used as propellants in aerosol 18 products, tire inflators, electronics cleaning, dust 19 removal, hand-held sirens, hobby guns that may use 20 compressed gas, party products such as foam string, and 21 other formulated consumer products when viable 22 alternatives are available. 23 It has a greenhouse gas reduction potential of 24 approximately one-third of a million metric ton of CO2 25 equivalent by 2020. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 24 1 --o0o-- 2 MR. ROBERTS: The SF 6 in a non-electric sector 3 measure involves the potential ban of sulfur hexafluoride 4 in non-utility, non-semiconductor applications where safe, 5 cost-effective alternatives are available. 6 Its emission reduction potential by 2020 is still 7 to be determined. 8 --o0o-- 9 MR. ROBERTS: The green ports measure previously 10 described as the port electrification measure involves 11 providing an alternative source of power for ships while 12 they are docked. For example, the ships can use cables to 13 receive electricity from the shore, thereby allowing them 14 to shut off their auxiliary engines, reducing emissions 15 from air pollution. 16 It has a greenhouse gas emissions reduction 17 potential of one half of a million metric ton of CO2 18 equivalent by 2020. 19 --o0o-- 20 MR. ROBERTS: The PFCs in the semiconductor 21 industry measure involve establishing a PFC emission 22 reduction goal and determining measures to achieve that 23 goal. 24 There are several approaches the industry has 25 either employed or are committed to continue evaluating to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 25 1 reduce PFC emissions from semiconductor production, 2 including process optimization, alternative chemistry 3 development, emissions abatement, and recovery recycling. 4 This measure also has a greenhouse gas emissions 5 reduction potential of one half of a million metric ton of 6 CO2 equivalent by 2020. 7 --o0o-- 8 MR. ROBERTS: The SmartWay truck efficiency 9 measure involves requiring existing trucks and trailers to 10 be retrofitted with the best available SmartWay transport 11 and/or ARB approved technology. 12 Technologies that reduce greenhouse gas emissions 13 from trucks may include devices that reduce aerodynamic 14 drag and rolling resistance. 15 It has a GHG emissions reduction potential of 16 approximately one and one-third million metric tons of CO2 17 equivalent by 2020. 18 --o0o-- 19 MR. ROBERTS: The tire inflation program measures 20 involves actions to ensure that vehicle tire pressure is 21 maintained to manufacturer specifications. 22 Specifically, the strategy seeks to ensure that 23 tire pressure in older vehicles is monitored by requiring 24 that tires be checked and inflated at regular service 25 intervals. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 26 1 It is also anticipated that signage at fueling 2 stations clearly indicate the availability of compressed 3 air at no charge and that the feasibility of conducting an 4 extensive outreach program being investigated. 5 This measure has a greenhouse gas emissions 6 reduction potential of approximately one-fourth of a 7 million metric ton of CO2 equivalent by 2020. 8 --o0o-- 9 MR. ROBERTS: The other 35 early actions 10 documented in the final staff report include a wide range 11 of regulatory and non-regulatory measures, such as a 12 forestry protocol, local government guidance and 13 protocols, cool automobile paints, and a foam recovery and 14 destruction program. 15 Five of these items are additions to the 16 previously approved list of early actions and are 17 highlighted in red and also superscripted with the number 18 two on the following slides. 19 All of these items will be brought before the 20 Board during the 2007-2012 time frame and a cumulative 21 greenhouse gas potential reduction of approximately 26 22 million metric tons of CO2 equivalent by 2020. 23 --o0o-- 24 MR. ROBERTS: All 44 of these greenhouse gas 25 reduction strategies are commitments that will be PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 27 1 developed and implemented individually via the 2 conventional open and transparent public process for all 3 ARB measures. 4 --o0o-- 5 MR. ROBERTS: The following seven slides present 6 the Early Action Implementation Plan as indicated by the 7 quarter that they are planned for Board consideration. 8 In this series of slides, staff's recommendations 9 for revisions to the previously approved Early Action Plan 10 are highlighted. Specifically, previously approved 11 measures for which no change in classification is 12 recommended are presented in black text and are not 13 footnoted. 14 Recommendations for additional discrete early 15 actions, either new items or reclassified items, are 16 presented in green text and are footnoted with the number 17 one, such as the green ports measure presented on this 18 slide. 19 Recommendations for additional general or other 20 early actions are presented in red text and footnoted with 21 the number two. 22 This slide shows that four of the previously 23 approved general early action measures are scheduled for 24 Board consideration in the fourth quarter of this calendar 25 year. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 28 1 --o0o-- 2 MR. ROBERTS: 2008 will be a very busy rulemaking 3 year. This slide shows the implementation time line for 4 nine of 16 measures scheduled for Board consideration in 5 the calendar year 2008. 6 Three of these measures are recommended additions 7 to the list of discrete early actions. 8 The three previously approved early actions are 9 also scheduled for Board consideration in 2008. 10 --o0o-- 11 MR. ROBERTS: A new general early action measure, 12 anti-idling enforcement, is also scheduled for Board 13 consideration in 2008. 14 --o0o-- 15 MR. ROBERTS: The remaining two of nine discrete 16 early actions will be brought to the Board in the first 17 quarter of 2009, ensuring that the rules can become 18 legally enforceable by January 1st, 2010. 19 Another new general early action, a blended 20 cement measure, will be considered by the Board in 21 mid-2009. 22 --o0o-- 23 MR. ROBERTS: Two of the six early actions to be 24 considered by the Board in 2010 include two new 25 recommendations. The first is a measure to increase the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 29 1 energy efficiency of California's cement facilities. And 2 the second is a measure to conduct research on nitrogen 3 land application practices. 4 --o0o-- 5 MR. ROBERTS: A high global warming potential 6 refrigerant tracking, reporting, and destruction is a new 7 recommended early action measure for consideration by the 8 Board in 2011. 9 --o0o-- 10 MR. ROBERTS: The last identified early action is 11 planned for consideration by the Board in 2012. The Board 12 consideration date for four of the recommended early 13 action measures is still to be determined. 14 And as discussed in the final staff report, the 15 Environmental Justice Advisory Committee recommendation 16 for the electrification of construction equipment at urban 17 sites was addressed by a recently adopted off-road diesel 18 rule, which requires a reduction in off-road diesel engine 19 particulate matter emissions. 20 --o0o-- 21 MR. ROBERTS: California's current greenhouse gas 22 inventory is estimated to be almost 600 million metric 23 tons of CO2 equivalent. 24 The reduction required to meet the 2020 target of 25 returning to 1990 levels is in the process of revision, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 30 1 but has been previously estimated to be 174 million metric 2 tons of CO2 equivalent. 3 The 44 early action measures recommended by staff 4 have a potential greenhouse gas emission reductions 5 estimate of at least 42 million metric tons of CO2 6 equivalent by 2020. These alone will account for nearly 7 one-fourth of the currently estimated emissions reduction 8 target. 9 When added to the 30 million metric ton 10 contribution expected from AB 1493 and anti-idling 11 efforts, the ARB has identified over 40 percent of the 12 reductions required for the AB 32. The balance of the 13 emissions required will be identified in the Scoping Plan. 14 --o0o-- 15 MR. ROBERTS: A stakeholder comment period 16 followed the release of the September 2007 staff report. 17 Approximately 70 comments were received and reviewed. The 18 ARB staff appreciates these valuable inputs and is 19 committed to working with those organizations that 20 provided them during the relevant measure development 21 process. 22 These comments were discussed in the body of the 23 revised final October 2007 report and integrated into 24 measure evaluations in the appendices. 25 As a result of the comments, strategy evaluations PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 31 1 were modified on a case by case basis. And in all cases, 2 groups that submitted comments were identified in the 3 appropriate strategy evaluation. 4 Comments received fell into four groups. 5 The first group of comments addressed specific 6 measures included in the final staff report. 7 The second group were new measures recommended 8 for ARB evaluation. 9 The third pertained to measures and/or sectors 10 that are currently being evaluated as part of the Scoping 11 Plan development effort. 12 The fourth group of comments referred to 13 voluntary greenhouse gas emission reduction efforts. 14 --o0o-- 15 MR. ROBERTS: The first group of comments 16 addressed early action measures identified in the 17 September staff report and presented at the related public 18 workshop. 19 Several comments were received on heavy-duty 20 diesel truck measures, such as SmartWay efficiency 21 improvements, anti-idling, and transportation 22 refrigeration unit electrification. 23 Feedback was also received on several other early 24 actions such as the forest protocol, the use of SF 6, 25 landfill gas capture, business and government protocols, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 32 1 cool communities, refrigerant measures, tire inflation, 2 nitrogen, land use research, HFC, and PFC measures and 3 green ports. 4 Staff strategy evaluations were modified on by 5 case by case basis based on these comments received. 6 Groups that submitted comments were identified by the name 7 in the application strategy evaluations. 8 --o0o-- 9 MR. ROBERTS: The second group of comments were 10 new strategies for staff evaluation in areas such as 11 policy, economics, transportation, and others. These 12 strategies will be evaluated as part of the Scoping Plan 13 development effort. 14 --o0o-- 15 MR. ROBERTS: The third set of comments pertained 16 to measures and/or sectors not addressed by the Early 17 Action Plan, but which are currently being evaluated as 18 part of the Scoping Plan developmental process. 19 --o0o-- 20 MR. ROBERTS: The fourth group of comments were 21 related to the recognition of voluntary greenhouse gas 22 emission reduction actions. ARB agrees that the 23 leadership shown in greenhouse gas emission reductions by 24 many businesses and local governments needs to be 25 acknowledged and supported. A presentation on this issue PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 33 1 by ARB's Office of Climate Change will follow this early 2 action presentation. 3 --o0o-- 4 MR. ROBERTS: The ARB is still near the beginning 5 of the early action process with considerable work ahead 6 to develop full proposals. ARB staff has begun the 7 regulatory development of the three discrete early actions 8 as well as many of the previously approved other early 9 actions. Approval of a new Board resolution will 10 authorize the development of seven new measures. 11 To keep the Board fully apprised of these 12 efforts, staff proposes to provide regular updates every 13 six months. 14 The early actions proposed today do not exhaust 15 all possible ways of stimulating efforts by companies, 16 municipalities, and individuals to reduce greenhouse gas 17 emissions prior to the implementation of the overall 18 Scoping Plan for AB 32. Staff stands prepared to broaden 19 or modify the scope if supported by the full analysis of 20 each measure. 21 --o0o-- 22 MR. ROBERTS: You may be curious about the 23 background image of the slide you have been viewing. It 24 is a picture of glacial ice from the exit glacier in 25 Alaska. It's a land-locked river of ice flowing from the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 34 1 Harding ice cap. The picture was darkened artificially 2 for contrast with white text and was supposed to be 3 brightened here so you could see it in its true form. 4 But the exist glacier is one of thousands of 5 glaciers in recession throughout the world. And early 6 action implementation would equate to approximately nine 7 million passenger cars taken off the road each year. Many 8 of these actions could be copied by other states and 9 jurisdictions and could have a multiplying effect. 10 This concludes the staff's presentation on early 11 actions. Thank you for your attention. At this time I 12 would like to introduce Jon Costantino with the Office of 13 Climate Change to talk about voluntary actions. 14 MR. COSTANTINO: Thank you, Mike. 15 It has been three months since the Office of 16 Climate Change has presented an update on the 17 implementation of AB 32. 18 Before I begin my update, I would like to bring 19 to your attention a study that was published earlier this 20 week by British and Australian scientists. This study 21 showed that carbon dioxide increases in the earth's 22 atmosphere have outpaced previous predictions by 35 23 percent since 2000 and that a significant portion of the 24 increase, about 18 percent, occurred because the earth's 25 land and water are becoming less effective at absorbing PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 35 1 CO2 than they have in the past. 2 Studies such as this one only underscores the 3 importance and urgency of what California is moving 4 forward with under SB 32. 5 To that end, I'm pleased to report that the 6 implementation of AB 32 here at ARB and around the state 7 is gaining momentum. This morning's item describes our 8 current status and introduces the topic of voluntary 9 reductions of greenhouse gas emissions to the Board. 10 --o0o-- 11 MR. COSTANTINO: My presentation has two main 12 parts. 13 The beginning will focus on AB 32 implementation 14 efforts, including progress in our hiring, efforts to 15 complete the first mandated task from the bill, the 16 establishment of the 1990 base line, and adoption of the 17 mandatory reporting regulations, and our development of 18 the Scoping Plan. 19 After a short update, I will discuss the topic of 20 voluntary early actions. Today, we are suggesting that 21 the Board provide general guidance on how we intend to 22 encourage early reductions. 23 --o0o-- 24 MR. COSTANTINO: The Governor and the Legislature 25 recognize that bringing AB 32 to life would take a large PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 36 1 commitment in terms of personnel. ARB's 2007-2008 budget 2 included the addition of 125 employees dedicated to 3 climate change activities here at ARB. ARB managers have 4 been aggressively trying to fill all those spots. 5 Experienced ARB staff have moved into the climate 6 change program, but many of the positions also have been 7 filled with a diverse set of staff from other agencies and 8 outside of state service, bringing new talent, 9 experiences, and expertise to the climate change program. 10 To date, over 60 of the new ARB positions have 11 been filled, and we are continuing to actively recruit and 12 hire to fill the remaining positions. 13 --o0o-- 14 MR. COSTANTINO: Two of the foundational aspects 15 of AB 23 have been well on their way for over a year. 16 They are the establishment of California's 1990 baseline 17 greenhouse gas emissions level, which will define our 18 target for 2020, and the mandatory reporting regulation. 19 Each of these undertakings has included extensive work 20 with affected stakeholders and interested parties. 21 The proposed mandatory reporting regulation was 22 just released last week, and the last workshop on the 23 regulation will be held on October 31st. The 1990 base 24 line report will be released very shortly. 25 Both of these items will be brought to the Board PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 37 1 for consideration at the December 6th Board meeting. 2 Attention is now turning to the Scoping Plan. 3 --o0o-- 4 MR. COSTANTINO: The Scoping Plan will lay out a 5 mix of measures that ARB recommends be adopted in order to 6 meet the 2020 target. Thus, it will provide the 7 organizing framework for all of our AB 23 implementation. 8 To kick off our development of the scope 9 planning, ARB conducted an open solicitation for 10 greenhouse gas reduction ideas. We received over 80 11 potential measures. Taken along with other efforts, 12 including early action item being brought to you today, 13 the efforts of the Economic and Technology Advancement 14 Advisory Committee and the Environmental Justice Advisory 15 Committee, the Climate Action Team, we have over 200 16 potential strategies that we are reviewing along with our 17 other State agency partners. 18 At this point, I would like to mention the 19 unprecedented coordination and interaction among the 20 various State agencies involved in the process. 21 Multi-agency working groups have been meeting at all 22 levels to discuss everything from broad policy to details 23 of specific measures. 24 Staff would like to acknowledge the leadership of 25 Cal/EPA and the Climate Action Team and the work of our PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 38 1 State agency partners. 2 The Economic and Technology Advancement Advisory 3 Committee will provide a report later this year and the 4 Environmental Justice Committee is meeting on Monday to 5 discuss how best to provide input into the Scoping Plan. 6 --o0o-- 7 MR. COSTANTINO: AB 32 requires that ARB adopt 8 the Scoping Plan by January 2009. We are scheduled to 9 bring the Scoping Plan to the Board for consideration in 10 November of 2008. 11 To meet that schedule, we will release the staff 12 report in October 2008. We plan to provide a draft 13 Scoping Plan for public review and comment in June of next 14 year. 15 --o0o-- 16 MR. COSTANTINO: ARB is committed to taking a 17 thorough and transparent approach to crafting the Scoping 18 Plan. The November workshop will kick off the Scoping 19 Plan and discuss fundamental aspects of the plan. This 20 initial workshop will take place at the South Coast AQMD. 21 In December, in Sacramento, ARB and our State 22 agency partners will present summaries of the progress 23 made to understand each greenhouse gas sector to be 24 included in the plan. This summary will profile and will 25 include technical and economic details about each sector PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 39 1 as well as a snapshot of our thinking about potential 2 reduction measures. 3 The January workshop focuses on the nuts and 4 bolts of alternative mechanisms to achieve greenhouse gas 5 reductions, such as voluntary measures, market mechanisms, 6 and incentives. MTC's headquarters in Oakland will be the 7 site for this meeting. 8 In March, we plan to present potential scenarios 9 of how the plan might achieve the 1990 cap by 2020. The 10 different options will lay out possible directions the 11 draft Scoping plan might take. Once the draft plan is 12 ready, staff will hold workshops around the state. 13 --o0o-- 14 MR. COSTANTINO: I'm going to switch gears now 15 and talk about voluntary early emission reductions. These 16 should not be confused with the discrete Early Action List 17 previously discussed this morning. 18 AB acknowledges of the importance of voluntary 19 early actions. AB 32 acknowledges the importance of 20 voluntary early actions requiring the ARB to identify 21 opportunities, adopt methodologies, like the forestry 22 protocol also being presented to you today, and to the 23 extent the Board decides appropriate, provide credit for 24 early voluntary reductions. 25 If the Board allowed voluntary reductions to be PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 40 1 used to meet a required emission reduction obligation, it 2 must also at a later date adopt regulations to verify and 3 enforce the reductions before they can be used for 4 compliance. 5 --o0o-- 6 MR. COSTANTINO: Although there is broad 7 agreement that early reductions are beneficial, our 8 conversations with stakeholder indicate that uncertainty 9 about how AB 32 will be implemented is causing some 10 parties to think twice before making early emission 11 reductions. 12 Some industrial sources are holding off on 13 facility updates because of concerns that greenhouse gas 14 emission reductions undertaken now will not be counted 15 toward their regulatory commitments in the future. 16 Other groups have decided not to actively pursue 17 potentially low cost greenhouse gas reduction offset 18 projects because they are uncertain how many tons those 19 projects will be worth. 20 --o0o-- 21 MR. COSTANTINO: Staff believes there are many 22 reasons to encourage voluntary emission reductions. 23 Therefore, we are proposing steps to remove some of the 24 uncertainty surrounding these projects. We propose a 25 two-prong approach. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 41 1 First, we will develop a policy statement for 2 your consideration clarifying the importance of early 3 emission reductions and reiterating the Board's intention 4 to following AB 32's direction to provide appropriate 5 credit for voluntary early reductions. 6 Second, as required in AB 32, we propose to start 7 now to develop protocols for voluntary emission reduction 8 projects. This protocol development will take numerous 9 forms, from State agency stakeholder working groups to the 10 existing California Climate Action Registry protocol 11 development process. 12 We also propose to provide an open solicitation 13 period for interested stakeholders to submit potential 14 protocols. I will describe this open solicitation process 15 on the next slide. 16 --o0o-- 17 MR. COSTANTINO: In order to provide an 18 opportunity for the public to nominate potential early 19 emission reduction projects and related quantification 20 methods, we propose an open solicitation. The intent of 21 the solicitation is to identify projects that are already 22 well defined and have quantification protocols and the 23 proponents are prepared to implement. We will prioritize 24 the submittals, focusing on projects that can provide the 25 greatest benefit first. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 42 1 ARB staff and our State agency partners will 2 evaluate our submittals and where necessary convene 3 stakeholder working groups to develop quantification 4 protocols for the Board's future consideration. 5 Although this process cannot guarantee how the 6 emission reductions will count toward future regulatory 7 commitments, it will help provide a level of certainty 8 that the impacts of the projects are well quantified. 9 Staff is proposing that the solicitation process 10 be open only for a limited time. This will enable us to 11 quickly move on the most beneficial options with available 12 staff resources. This effort will also enable us to gauge 13 workload and the effectiveness of the ongoing effort. 14 --o0o-- 15 MR. COSTANTINO: To ensure that the review and 16 evaluation efforts are being directed in the most 17 effective way, it is anticipated that rigorous evaluation 18 criteria be used. This slide shows some of the possible 19 criteria staff could use to make sure that quantification 20 protocols that are brought back to the Board have wide 21 applicability, are ready to move forward, and encourage 22 the highest quality greenhouse gas reductions possible. 23 Staff is requesting from interested stakeholder 24 comments on this list of potential evaluation criteria 25 prior to the evaluation of the solicitation period. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 43 1 --o0o-- 2 MR. COSTANTINO: In conclusion, we recommend that 3 the Board direct staff to pursue ways to encourage early 4 reductions of greenhouse gases by developing both a policy 5 statement for the Board's consideration at a future 6 meeting and by working with stakeholders through a 7 solicitation process to develop quantification protocols 8 for voluntary projects. 9 Thank you. 10 CHAIRPERSON NICHOLS: Thank you. 11 This is a lot of material that we've thrown at 12 you, Board member. And as you can see, a lot of work has 13 been going on for the last few months to pull this all 14 together. I would invite to you ask any questions or 15 raise any issues. 16 Yes, Ms. D'Adamo. 17 BOARD MEMBER D'ADAMO: Well, first of all, I'd 18 like to compliment staff. I believe at the last hearing I 19 made the motion to advance the staff proposal, but 20 included in the motion to ask staff to come back. And it 21 appears that this has been a very thoughtful and 22 deliberative process. So I really want to compliment you 23 for the hard work and the extended list. 24 If we could turn to slide 22 -- kind of dawned on 25 me as we were going through with the different colors of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 44 1 noting new measures versus the old measures and this color 2 coding system, I'm wondering if it could be utilized in 3 the next go around to highlight those action items where 4 we would be receiving co-benefits. 5 I think it's important as we move forward as much 6 as possible to somehow prioritize those action items where 7 we would be receiving co-benefits with regard to criteria 8 pollutants and would just invite staff to comment on that 9 and also what methodology you're using to assess and 10 prioritize co-benefits. 11 OFFICE OF CLIMATE CHANGE CHIEF SHULOCK: The 12 notion to color coding it to highlight that makes sense. 13 In terms of the prioritization issue, we don't 14 have any quantitative method to weigh co-benefits visive 15 the greenhouse gas benefits. But it's clear that those 16 measures which do have those co-benefits would be high on 17 our list. It's a little difficult to get more specific 18 than that. But we can continue to highlight for you as we 19 move forward where those co-benefits occur. 20 BOARD MEMBER D'ADAMO: One just kind of jumps out 21 on slide 24, anti-idling. I know of a number of these 22 involve a very lengthy stakeholder process and workshop 23 process, but anti-idling is already on the books. Is 24 there any way that can be moved up? 25 I know your staff resources are spread thin. So PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 45 1 I'm not pushing real hard for that. But just would like 2 to see if there's anything that can be done given your 3 stretched staff resources. 4 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: We are 5 very concerned about that one, because I think it does 6 take a lot of enforcement resources. We're working the 7 internal processes to see if we can get some additional 8 resources for it. And we are also in discussions with the 9 local districts to see what role they would like to play 10 in not just this one but many of the diesel related 11 projects. 12 In general, on your question, I think anything 13 that is efficiency oriented that is efficiency of burning 14 some kind of fuel has the potential of at least reducing 15 NOx emissions. So that's a co-benefit that we look for. 16 Clearly anti-idling is an example of when we get CO2 17 reductions and also co-pollutant reductions. But there's 18 other ones on here as well. 19 CHAIRPERSON NICHOLS: I'd like to pursue if I may 20 a comment. It really gets at the heart of something that 21 I know we're struggling with at the moment, which is early 22 on in the process of identifying these measures, it's kind 23 of difficult to claim specific air quality benefits when 24 you haven't even really developed the proposal yet to the 25 degree that we normally would in bringing a rule forward PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 46 1 for Board consideration. Where in the world of SIPS we're 2 used to counting much more precisely than we are at this 3 stage of the process I think. 4 On the other hand, both for communications 5 purposes and also I think again for focus and 6 prioritization for the Board, this issue of how we tag 7 those measures that are likely to have significant air 8 quality benefits as well as climate benefits is really an 9 important one. And I would encourage the staff to come up 10 with a way in the matrix that you're developing to do that 11 kind of a highlighting. I think it will be helpful as we 12 continue to monitor our progress on all of these measures. 13 Good idea. 14 BOARD MEMBER D'ADAMO: I had just one more 15 question on slide 23, manure management. I recall that we 16 also have -- I thought we had something calendared on 17 methane digester protocols. I didn't see that on the 18 list. Didn't know if I somehow missed it or it fits in 19 someplace else, or is that the manure management that is 20 the methane digester protocols? 21 DEPUTY EXECUTIVE OFFICER TERRY: That is the 22 protocol work. 23 BOARD MEMBER D'ADAMO: And I imagine that this 24 other issue probably has to do more with the Scoping Plan. 25 But wondering from staff what thoughts are underway to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 47 1 develop strategies to incentivize infrastructure and use 2 by the natural gas utility sector. Because I know that 3 goes hand in hand with the development of these digester 4 systems. If you don't have a home for it, it's difficult 5 to encourage the development. 6 DEPUTY EXECUTIVE OFFICER TERRY: In the last 7 week, we've been having staff discussions and coordinating 8 with other agencies on sector-based work groups for 9 Scoping Plan purposes as well as protocol development. 10 What we're trying to do is be very efficient with 11 everybody's resources and have broad-based sector groups. 12 I think as we formulate that within the next week 13 or so we'll be working with the regional water Board, Food 14 and Agriculture, local air district to come out with a 15 process that brings everybody to the table for Scoping 16 Plan purposes and protocol development purposes as well. 17 So I think that's something we can put on that task list. 18 CHAIRPERSON NICHOLS: Ms. Berg. 19 BOARD MEMBER BERG: Thank you. 20 One of the conversations that we did have during 21 the June Board meeting was our concern of the workload of 22 what we have for the SIP plans and the upcoming several 23 years, especially before 2015, on the PM and the issues 24 within the San Joaquin Valley plus the issues within South 25 Coast Air Quality and the scope of the regulatory items PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 48 1 that are in front of us. 2 And then with the addition of the greenhouse gas 3 things that we need to address, how many priorities there 4 are and how in fact we are going to be able to address 5 these in a thoughtful, consistent manner. And we want to 6 run as quickly as possible. And I'm in full agreement on 7 that. 8 But what has changed in staff's mind that is 9 going to allow us to add these additional early action 10 items so that we will be able to continue this plan we 11 have that feels to me like regulations on steroids? 12 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Well, 13 let me start back with the priorities. The message that 14 we've heard from the Board and I think our own view is 15 that there is a priority, and the number one priority 16 remains protecting public health. That means 17 implementing -- aggressively implementing accelerating the 18 SIP items, getting all the VOC and NOx reductions, doing 19 the diesel risk reduction program. You know, following up 20 on other toxic programs. We don't see any need at this 21 point to slow any of that down. 22 If there's any hick-ups along the way, it's 23 probably just from some re-distribution of staff at their 24 own initiative because people do want to work on the 25 climate change program. It's exciting and new. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 49 1 But we're not slowing down. There's not any 2 delay in dates for any of the urban pollution related 3 things. And that includes the new efforts to beat the SIP 4 in the San Joaquin Valley and to come up with even more 5 aggressive rules to satisfy the South Coast Plan. 6 So where do we get the resources? As the slide 7 shows, we got about 125 new people to work on climate 8 change. And we think that is an adequate at least first 9 step for what we're facing. The biggest challenge of 10 course are getting PYs turned into people. But once 11 again, because it's such an exciting new area, we're 12 finding really good people and lots of them that want to 13 come to work on this program. Not just being cannibalized 14 within ARB, but other agencies and outside as well. 15 So we're not finding it difficult to fill the 16 positions. And many of the people have skill sets that 17 are quite mature already and can hit the ground just about 18 running. 19 So I'm not trying to underestimate how big the 20 challenge is of AB 32. I mean, I think we all lose sleep 21 over trying to get the confidence we're going to be able 22 to pull this all off. But we believe we will. We are 23 optimistic. 24 And at least the early items you've seen I think 25 are fairly comprehensive and well thought out. And we're PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 50 1 on schedule or even ahead of schedule on some of these. 2 Admittedly, they're not the most challenging ones. But 3 the Scoping Plan will be the next really big one. And I 4 think we're adequately staffed and able to produce that on 5 the schedule the law requires us to. 6 So far I think it looks pretty good. 7 BOARD MEMBER BERG: Of the 60 people that we have 8 added to the climate area, are those new head count? Or 9 does that also include the transfers leaving other 10 departments with voids are filling those areas? Do we in 11 fact have 60 new people? 12 DEPUTY EXECUTIVE OFFICER SCHEIBLE: I believe 13 about half or perhaps a little more than half are new 14 employees at ARB and the rest are transfers within ARB. 15 But where that employee left, we've been hiring behind 16 them also. So we are not losing resources in other parts 17 of the organization. We may be losing expertise that we 18 have to replace. 19 BOARD MEMBER BERG: Well, I just want to be very 20 encouraging and very mindful. I so appreciate the effort 21 of staff and your willingness to have a passion as I 22 believe everybody on this Board does to protect public 23 health. But I'm really hopeful that you will not -- I'm 24 trying to think of the right word -- sugar coat or take on 25 all the stress of trying to move all of this forward PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 51 1 without realistically letting us know where you need help 2 and where you do need the resources so that we can all be 3 moving together. 4 I think that the greenhouse gas area is new. 5 It's going to take some new thinking. It's going to take 6 a different mind set than we have looked at over the last 7 40 years. It is going to be extremely challenging. 8 And I really want to encourage and I can't say it 9 enough times that I'm just hoping that you will let us 10 know when you need additional resources, when we're coming 11 up again new thoughts that are having a difficult time 12 moving forward. Because we don't want to implode earlier. 13 The global warming is a problem, a significant problem 14 that we need to address. But we don't want to address it 15 with things that's going to implode and have other 16 unintended consequences that may be because we felt so 17 compelled to push early that we missed. And I'm very, 18 very concerned about that. And so however I can help, I'm 19 available. 20 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: We 21 appreciate that. And, you know, I think there's an 22 awfully good check and balance system in place here. If 23 we bring a half baked proposal to you, one is you won't 24 approve it. And second of all, even if you might have not 25 noticed it was half baked, the stakeholders in the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 52 1 audience are not going to let you get by with approving 2 something that's half baked either. 3 BOARD MEMBER BERG: I'm sorry, Mr. Cackette. I 4 certainly didn't mean to imply that you would bring a half 5 baked proposal. The staff has never done that. I mean -- 6 but it is -- 7 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: It's a 8 fear. 9 BOARD MEMBER BERG: But it's a concern, because 10 we don't have -- we are pushing fast. That's all. And in 11 the goal of pushing fast and for pushing for all the right 12 reasons, there is a greater chance to miss an unintended 13 consequence. And that is a big -- it is a concern of 14 mine. 15 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: It is a 16 concern of ours, too. 17 CHAIRPERSON NICHOLS: I think other Board members 18 have comments on this particular item. Let's start with 19 Mayor Loveridge and then Professor Sperling. 20 BOARD MEMBER LOVERIDGE: Let me raise a different 21 emphasis. I don't see this as CARB versus the world. It 22 seems to me the greenhouse gases is beyond simply the 23 mission and responsibility of CARB. 24 And I know on slide 23 we talked about local 25 government protocols. But let me just suggest an PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 53 1 emphasis. And, Tom, I'd be interested in your reaction to 2 this. Is that, you know, meeting next week are the mayors 3 of maybe cities represented 65, 70 million people with the 4 Mayors' Climate Protection Agreement. I think well over 5 30 percent of the 478 cities in California have signed 6 that agreement. And the cities are sort of looking I 7 think how to step up. 8 The League of California Cities is about to put 9 together a climate protection paper and position. ICLEI 10 is trying to help local governments deal with greenhouse 11 gases. The attorney general is now sitting down talking. 12 I know he's sitting down talking with our city about our 13 general plan and what we can do. And it seems to me we 14 need some kind of checklist. 15 But I think the principle point is that rather 16 than see local government as another kind of constituency 17 out there where there's going to be command and control 18 and shape up, I think there's potential for an allied and 19 potential to create greater support. I think there's a 20 possibility of creating more interesting initiatives. 21 And I don't get a sense of that from the 22 presentation. And I would strongly recommend that on the 23 greenhouse gases that you look to the League of Cities and 24 CSAC as real allies in this. Not simply as people to 25 impose regulations on. But alleys in making this whole PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 54 1 intention to reduce greenhouse gases, making the 2 recommendations and regulations possible and acceptable 3 and support it. So I really ask that as a question. I 4 think we need to partner with local government. 5 CHAIRPERSON NICHOLS: Mr. Shulock, do you have a 6 response? 7 OFFICE OF CLIMATE CHANGE CHIEF SHULOCK: And that 8 work is actively underway. And protocols as described 9 here you might think of as best practices where there 10 could be information about ways in which reductions could 11 be reduced. 12 But this is very much a two way street. And 13 we've been working very actively with ICLEI and the League 14 and other State agencies that have responsibilities in 15 this area. It works in both directions. It's to capture 16 and channel the energy and enthusiasm that's out there 17 very broadly in the local government area and figure out 18 what's the best way to take advantage of that in what 19 we're doing. 20 And then the other direction is for those 21 jurisdictions that maybe aren't out on the leadership 22 curve to provide information and guidance that they could 23 use to help advance their efforts. 24 But we have a lot of activity underway. It's a 25 challenging area, because there are a lot of jurisdictions PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 55 1 and moving parts and just a lot of things underway. But 2 we're very much engaged with those entities that are 3 working on this at the local level. 4 BOARD MEMBER LOVERIDGE: It seems to me 5 engagement with particularly League of California Cities 6 and CSAC would be worthwhile. 7 Cities have a tough time figuring out what their 8 own greenhouse gases are. And one of the services that 9 could be provided was some ways that cities without 10 somehow going on to -- it's very difficult to find out how 11 to do that and who's able to do that. 12 Just by way of closing -- I apologize for taking 13 the time. But I really think -- to borrow Ronald Reagan's 14 metaphor -- that there's a green prairie fire developing 15 across this country. And it seems to me we need to 16 connect our regulations with that really kind of cultural 17 change taking place. 18 OFFICE OF CLIMATE CHANGE CHIEF SHULOCK: We agree 19 completely. And that relates back to Board Member Berg's 20 comment in a way that this is a huge effort. And we're 21 certainly not envisioning that this all needs to be done 22 by ARB. We're trying to identify what's going on out 23 there that could be accounted for in this Scoping Plan. 24 But the work could be work that could be done at the local 25 level. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 56 1 CHAIRPERSON NICHOLS: Professor Sperling and 2 Supervisor Hill. 3 RESEARCH DIVISION ASSISTANT CHIEF COREY: This is 4 Richard Corey. I had one additional I wanted to make to 5 Chuck's comments. And that is that, in December, we 6 plan -- staff plans to present to the Board examples of 7 what Mayor Loveridge was referring to. Examples of what 8 locals have done, some leadership organizations, some 9 opportunities where we think that can be replicated in 10 multiple communities as a forefront in terms of 11 information that will feed into the guidance that Chuck 12 spoke of. 13 CHAIRPERSON NICHOLS: That would be good. Thank 14 you. 15 BOARD MEMBER SPERLING: I'd like to add to 16 comments by some others that this really is an incredibly 17 great job that the staff has done in putting together 18 these early action items and making great progress. I 19 think that's very impressive in terms of what it is as 20 well as sending a signal out there about the seriousness 21 of the agency and moving forward. 22 And I do want to note that, you know, in many 23 ways, the world's eyes are upon us. And we do have a very 24 large responsibility to do it right and to do it well. 25 And to follow up on Board Member Berg's thought PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 57 1 about we need new thinking. To move the whole process 2 forward, let me suggest some positive thoughts. And that 3 is that, you know, this agency has been extraordinarily 4 effective over the last few decades in reducing the 5 conventional pollutants. But it's been done almost 6 totally through technology and almost totally through a 7 rule-based approach. 8 And it's been effective because the problem has 9 been amenable to those kind of approaches. You know, in 10 fact, when ARB got started in the transportation area, for 11 instance, it was thought half of the reduction would be 12 done through technology and half through behavioral 13 change. There was transportation control measures. And 14 it didn't take too long to figure out that the technology 15 was a lot easier than getting people to drive less and 16 change their behavior. 17 But now this is a whole new ball game we're in 18 here. And I think we need to be thinking more broadly and 19 in some new ways. 20 So just to start off when we talk about these 21 early action items, it's an outstanding list. But in many 22 ways, I get worried because there's so many of them. And 23 this is just the beginning. If we do it in exactly the 24 same way, there will be hundreds and hundreds more of 25 them. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 58 1 And to follow Board Member Berg's comments, that 2 would worry me that we would have the resources to develop 3 it, to implement, the data, to deal with litigation 4 issues. And so I think that we need to be thinking much 5 more in terms of how can we cluster initiatives and 6 actions and programs and that would cluster and integrate. 7 If we're looking at PFCs in the semiconductor 8 industry, perhaps that can be pulled under a cap for the 9 industry. If we were looking at the SmartWay program, 10 perhaps this can be part of some broader truck greenhouse 11 gas standards. If we -- green ports, you know, maybe that 12 can be part of a cap on ports. Cool paints, maybe that 13 can be part of the 1493 program or the low cycle, off 14 cycle rules that are being considered that could be 15 integrated into the 1493 greenhouse gas standards for 16 vehicles. 17 And, you know, I'm not saying that's exactly what 18 should be done. But those are the kinds of ideas, you 19 know. We did the low carbon fuel standard, and that took 20 a huge chunk. There's a huge number of actions that are 21 going to be folded into that. And we could have done it 22 where we had 50 different rules, but I think we're going 23 to be able to do it with one program. 24 And so we need to be thinking more along those 25 lines I think in terms of being able to do this. But also PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 59 1 because we want to create some flexibility in the 2 programs. And whereas with a lot of the conventional 3 pollutants, a lot of it was amenable to straight forward 4 technical fixes. And, in fact, much of it was low hanging 5 fruit in a sense. It was relatively cheap to do. A lot 6 of it was. 7 And so as we think more about -- we're going to 8 have to bring more incentive-based approaches into it. We 9 have to think about how to get people and organizations to 10 behave and do things differently, buy different 11 technology, behave differently. 12 And part of it -- you know, bringing it back to 13 Mayor Loveridge's thoughts about the cities, let me be a 14 little radical here and kind of suggesting the kinds of 15 ideas that we might eventually want to come to. Because I 16 think in the end, we all have to buy into this. This 17 won't work if we just adopt rules and tell people and 18 companies what to do. There has to be some 19 incentive-based process to it. There has to be some kind 20 of buy in. 21 So, you know, we might not end up with this, but 22 something we should seriously start thinking about is 23 ideas of, for instance, carbon budgets for individuals or 24 carbon budgets for cities or counties. We need some 25 mechanism for how to influence people and give something PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 60 1 to work around. 2 So when I talk about carbon budgets, you know, 3 right now households have money budgets. This would be 4 parallel. You have a certain number of carbon credits you 5 get to spend every month, and you can use it in different 6 ways. If you don't use them, you can sell them. 7 You know, cities -- as Attorney General Brown is 8 working with cities to try to come up with ways they can 9 work with land use and travel and projects that they're 10 investing in. We can come up with a whole bunch of 11 piecemeal rules working with the cities. But we can also 12 come up with some broaden mechanism where we push some of 13 the responsibility down to the city and then even lower. 14 So anyway, so I'd like to kind of -- this is the 15 new thinking idea I think we really need to be pursuing. 16 And hopefully some of this will come through the Scoping 17 Plan. A lot of these ideas will come in. 18 I would just note we really need to do that, just 19 on the transportation side. We talked about low carbon 20 fuels and vehicle efficiency. But the forecasts are from 21 now to 2050 that for the country we're going from three 22 trillion vehicle miles to seven trillion vehicle miles. 23 That's just extrapolating what we've seen in recent years. 24 If we're going to offset that, you know, with 25 these low carbon fuels and vehicle emission standards, we PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 61 1 can maybe offset that. But then we're just back to where 2 we are. If we're really serious about these 50 to 80 3 percent reductions from 1990 levels, we're talking about a 4 very different world. And I guess that's the real point 5 I'd like to make is that incrementalisms not going to 6 work. Politically, we have to think -- we have to start 7 incrementally, but we need to keep in mind that we really 8 are headed towards major transformations of our economy. 9 And we've got to come up with good ways of being able to 10 implement that. 11 And so the one question -- so if you want to 12 respond to that, that's fine. But the one question I have 13 is if we approve these items -- and I support all of them, 14 support them doing this. But if we do so, does that in 15 any way preclude taking some of these actions and folding 16 them into these other broader initiatives, some that 17 already exist or some that might exist, for instance, 18 through a cap and trade program in the future? 19 DEPUTY EXECUTIVE OFFICER SCHEIBLE: I don't think 20 so. This has been conveyed to me by some people as we 21 have a conveyor belt we put these measures on. All we're 22 doing now is speeded up the conveyer belt and added new 23 measures. And we get to the Scoping Plan which is the 24 grand plan, all the policies, the options, which way to do 25 this better, how to link what we're doing to what others PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 62 1 are doing in California and the rest of the world. 2 And at that point, I think the Board has the 3 decision to say these things make sense to continue as a 4 traditional regulation. These things make sense to move 5 to a different program. And these new things get added to 6 the list. So I don't think we limit options. What we've 7 bet on here is that these things seem to make sense and 8 we're going to move them forward. We'll harvest them 9 either as discrete regulations eventually or as pieces of 10 the final plan that go into a different system. 11 CHAIRPERSON NICHOLS: I'd like to hear from other 12 Board members and then maybe add some thoughts before we 13 go to the audience on this as well. 14 Supervisor Hill. 15 SUPERVISOR HILL: Thank you, Madam Chair. 16 And more of a follow-up to Mayor Loveridge's 17 comments. You look at local government, whether it's 18 cities or counties and CSAC with the League as well, much 19 of the leadership comes from local government in terms of 20 setting the stage, setting the example, whether it's the 21 green building initiatives or conservation issues, 22 purchasing of low emission vehicles. 23 I think that we can look and work very closely 24 with local government and with those organizations to 25 really engage them to allow them -- especially with the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 63 1 voluntary reductions that they're now engaging in and 2 working towards that we can incentivize them in some way 3 or use them and work closely to allow them to really be 4 that model for the future as it moves from there to 5 industry and to the commercial aspects of it. I think 6 it's very important. 7 I just wanted to -- when we had our briefing 8 earlier this week, I mentioned I wanted to say this at the 9 Board meeting, because I was so impressed with the report 10 and the thoroughness of the analysis of all of the early 11 action items that were suggested by stakeholder groups 12 that were brought forward, it was a phenomenal read, 13 number one, because I certainly -- many of the questions I 14 had answered through here and meeting with the staff as 15 they thoroughly have analyzed these areas. I felt 16 comfortable. 17 And when Board Member Berg was talking about the 18 future, when I read this, I thought we can tackle anything 19 as we move forward. The more aggressive we are, the 20 better, certainly as we move down this path. 21 But I wanted to thank the staff for an 22 outstanding job in bringing this forward. Thank you so 23 much. 24 CHAIRPERSON NICHOLS: Great. 25 Supervisor Case. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 64 1 BOARD MEMBER CASE: Just to join with my other 2 local elected colleagues, I think it's going to be really 3 important to look to the League of Cities and the 4 California Association of Counties as two partners, not 5 just because we want to look at their operations as very 6 large employers with a lot of other impacts, but also it 7 is our job as elected officials to speak to the public on 8 a daily basis. So we're out there in the public. 9 Because the other piece I think that's going to 10 be really important is an educational piece. The public 11 is excited about this. But it does get a little 12 distressing. Sometimes you hear single items kind of 13 tossed out that have a very different relevance if they're 14 looked at singlely or put in the big picture. Some might 15 be more relevant and some might be less relevant. I think 16 we all have a huge learning curve on this. 17 The breadth of these proposals really speaks to 18 that. Any one of us is going to be an expert possibly in 19 some, but certainly not all. That's going to be the 20 challenge. 21 The comment about trying to put them in segments 22 maybe where we do develop our expertise in segments. 23 The comment about methane digesters, our county 24 has had a great interest in dairy regulations and looking 25 at different elements. But I've also found there are road PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 65 1 blocks out there that maybe this Board can have some 2 influence to make sure when these best practices go in 3 there's actually an aftermarket and other opportunities. 4 So I'm happy to see this. I appreciate the 5 staff's work. I do believe we need to make sure we do all 6 of our due diligence. But I believe we have a large 7 challenge to make sure it's moving quickly, because it's 8 such a critical issue. 9 CHAIRPERSON NICHOLS: Thank you. 10 I'd like to just add a couple of thoughts. This 11 is my third meeting as your Chair. And I've been spending 12 well over full time working on these issues since I got 13 here. I'd like to share a couple of thoughts with you. 14 First of all, I want to emphasize that I do think 15 that the product that's in front of you today is the 16 result of some really thoughtful and careful analysis and 17 work. And I'm very pleased to see it here in such a good 18 shape. 19 Secondly, the task of having the lead in putting 20 together the Scoping Plan, the Early Action Measures, the 21 Voluntary Early Action Programs, which was given to the 22 Air Resources Board, is an absolutely awesome 23 responsibility. There's no question about it. The 24 Legislature came up with this decision, and the Governor 25 of course approved it based on a sense of confidence that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 66 1 the Board could do the job. And now it's entrusted to all 2 of us to make it a reality. 3 So each of you in your comments has indicated a 4 willingness to jump in and be involved. And you will not 5 be lacking for assignments in this area, believe me. If 6 you thought this was a part-time Board, you're going to be 7 surprised or perhaps pleased, I hope, at the level of 8 engagement that will be called for. 9 But I also do want to say that we're not doing 10 this alone. First of all, the statute itself recognized 11 the role of the Climate Action Team, which is chaired by 12 Cal/EPA. And Secretary Adams and her group of other 13 cabinet secretaries have really been doing a lot of work. 14 They have met and divided into sub-groups. There are 15 staff from all the agencies, including ARB, assigned to 16 these various work groups. They are looking at measures 17 that they can flush out and propose. And many of the 18 ideas that they're coming up with are not only 19 non-regulatory, they are just very different in their 20 approach to the way state government would go about doing 21 its businesses, including the relationship with local 22 government on land use activities and other areas that are 23 traditionally handled by other levels of government. So 24 there's a lot of ferment going on and creative thinking. 25 The other thing is there is a huge amount of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 67 1 involvement. And staff alluded to this. It may have 2 seemed less colorful than I would describe it. The level 3 of engagement of volunteerism in this area that's coming 4 from the not-for-profit sector, the foundation community, 5 from business organizations, not just in the usual levels 6 of participation that we would see in a rulemaking kind of 7 activity, but really coming forth with ideas about how to 8 re-regulate, de-regulate, change the way we approach 9 regulation. This issue about grouping, et cetera, is 10 coming up in many different places. So not to duplicate 11 the comments that were made earlier, but just to say these 12 things are really very much on the radar screen. 13 I just want to say one other thing about this 14 issue of regulation versus incentives and markets because 15 it keeps coming up constantly and, you know, to refer us 16 back statute. The Board was required to begin this 17 process with regulation and to spell out the things we 18 could get through regulation. And I think that this set 19 of measures that we've put out there now is a big bite. 20 But it shows there are things that we know about that are 21 out there that can be done. So it's important that we 22 take action on it today. 23 But the idea of folding some of these into a 24 different kind of cap system with trading, with rules, and 25 so forth, is very much alive. And it's part of our PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 68 1 responsibility to look at all the ways in which we could 2 be using markets as well. And the Market Advisory 3 Committee of course presented a report to us, but that was 4 really just the beginning stages of thinking about these 5 things. 6 And I'm hoping that as part of the regular 7 briefings we're going to be getting on progress on the 8 plan that one of the elements that we will be hearing 9 about is people's evolving thinking. Because this is an 10 area which is I think new to most of us. And so it will 11 be very illuminating and useful I think to hold some 12 public sessions where we really air some of these ideas in 13 more detail. 14 So that's my summation. I think we have a huge 15 task ahead of us, but it is one that we're well prepared 16 to do. And we've got all the help that we could hope for, 17 all the support coming from the Governor and the 18 Legislature to do the job. 19 I'm going to open this up now for public comment. 20 The first three people who we have on the list here are 21 Jill Whynot, Devra Wang from NRDC, and Norman Plotkin of 22 ARPI. If you'll come forward and be ready, We'd 23 appreciate it. 24 MS. WHYNOT: Good morning, Chairman Nichols and 25 members of the Board. My name is Jill Whynot, and I'm PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 69 1 with the staff of the South Coast Air Quality Management 2 District. Some very brief comments this morning. 3 First, we would like to also commend your staff 4 for an excellent job. They did a very good job. A lot of 5 hard work to include additional measures. We're very 6 pleased to see the number of early action measures 7 increase, especially like the fact that there is a 8 projected schedule for the other measures that helps with 9 our planning. 10 There's a lot of work remaining. And the staff 11 at the South Coast is committed to working in a 12 partnership with CARB and other stakeholders as we embark 13 on this important effort. Thank you. 14 MS. WANG: Good morning, Madam Chair and members 15 of the Board. My name is Devra Wang with the Natural 16 Resources Defense Council. We strongly support the 17 proposed additions to the early action measure list. We 18 believe it's critical that the State begin reducing 19 emissions as quickly as possible and these additional 20 measures will get the state off to a running start on 21 that. 22 We're particularly pleased that many of the 23 proposed additions to the list will reduce greenhouse gas 24 emissions and air and toxic pollution at the same time, 25 including measures like the green ports measure, the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 70 1 SmartWay trucks measure, and the cements energy efficiency 2 measure. We're very pleased to see those added to the 3 list. 4 I'd like to commend the staff for their great 5 work in analyzing all of the many measures that were 6 presented to the Board. And we urge you to adopt the 7 proposed additions. Thank you. 8 CHAIRPERSON NICHOLS: Thank you. 9 Mr. Plotkin. 10 MR. PLOTKIN: Madam Chair, Board members, Norman 11 Plotkin representing the Automotive Refrigeration Products 12 Institute, the Automotive Aftermarket Industry 13 Association, and the California Automotive Wholesalers' 14 Association. 15 We're glad to see there's a move towards real 16 volumes of emissions reductions. It was rather lonely 17 being one of only three in the first round. And given 18 that retail auto refrigerant accounts for only .04 million 19 metric tons of CO2 equivalent, it is great to see the 20 Board has focused on mitigation efforts that will yield 21 volumes of reductions. Hopefully these reductions will be 22 at a cost far below the $4,000 per metric ton cost of the 23 retail refrigerant ban, thus meeting the cost 24 effectiveness requirement of AB 32. 25 Be that as it may, the auto refrigerant industry, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 71 1 building on a history of cooperation, the most recent 2 example of which was the orderly transition from our R 12 3 to R 134a about a decade ago when R 12 was shown to be an 4 ozone depleting substance, we proposed an alternative to 5 the retail sales ban. This alternative has the potential 6 to yield real mitigation, as CARB staff has acknowledged, 7 by re-engineering the can tops to be one way or self 8 sealing, and establishing a recycling program for the 9 unused cans. We've worked with staff and continue to. 10 And in June, you, the Board, voted to work on the 11 alternative. 12 While we are a little bit disappointed in the 13 lack of progress to date on this alternative. We 14 understand you've been busy with these additional 15 measures. We're happy to report that we have a coming 16 working meeting with staff on the alternative, and staff 17 has been great to work with, by the way, Dr. Ayala, Mr. 18 Corey, and others. 19 Another area of concern for us is the fact that 20 the sales ban remains on the table and is periodically 21 made reference to. So long as the ban remains on the 22 table, it gives the appearance that CARB is not fully 23 committed to the alternative that we put on the table for 24 real mitigation. 25 Although we note in your resolution today there PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 72 1 is quite a bit of wiggle rooms in terms of things change, 2 you can adapt and adjust, so we recognize that. 3 Never the less, we remain optimistic we can make 4 strides towards the necessary details required to make the 5 alternative work as a viable mitigation program. 6 We thank the Board for your recognition of this 7 alternative in June and the staff's cooperative 8 disposition to date and look forward to a productive 9 meeting November 7th. 10 CHAIRPERSON NICHOLS: Thank you. 11 Next three are Thomas Jacob, Michael Hertel, and 12 Amisha Patel. 13 MR. JACOB: Thank you, Chair. I'm Tom Jacob, 14 Western Regional Government Affairs Manager for the DuPont 15 Company. 16 We appreciate the opportunity to comment. And 17 let me begin by commending staff for the substantially 18 more comprehensive report they turned around on such a 19 short time frame. 20 Let me also note DuPont and industries we work 21 with have a direct stake in the 13 of the 44 items that 22 are discussed in this report. And we have found staff to 23 be most professional and thorough in their assessment of 24 all these items. And we're very grateful for the time 25 they've given us. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 73 1 Let me begin by noting to follow up actually on 2 the discussion that Dr. Sperling initiated that we believe 3 that ultimately tackling climate change will require a mix 4 of market tools and regulatory tools. We believe that the 5 market can certainly compliment the kinds of regulations 6 that you have contemplated in this report. But we note 7 that there are by our count 19 of the 44 items in this 8 report -- we've iterated them in our comments -- that are 9 actually amenable to treatment under a market system and 10 we think the option to fold those in as was discussed 11 should be kept on the table and staff should be commended 12 to that end. 13 We'd also reiterate the points mentioned earlier 14 about voluntary action. We think that is crucial. We 15 think the recommendation in the staff report is a 16 necessary beginning, but not sufficient. We think 17 ultimately crediting in some formal sense will be required 18 in order to liberate the kinds of voluntary measures which 19 we think are out there. 20 With respect to the item discussed earlier 21 relating to health issues and co-benefits, we see that a 22 number of the items iterated here do in fact have positive 23 reinforcing co-benefits. We would note also though that 24 there are several of them that have the potential to be 25 conflicting in some manner at some level. And we think PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 74 1 that also should be noted and considered more expressly as 2 you consider these items. 3 One of these case in point is B5 relating to the 4 consumer products item. That regulation is pending. We 5 agree with the course of action suggested by staff, but we 6 would note that there is a potential for some tension 7 there between the greenhouse gas goals and the goals of 8 protecting the health interests under the VOC regulations. 9 In a similar vain, we'd call to your attention to 10 C 20, the alternative fire suppressive system. Here we 11 believe there is an interest and a stake in the area of 12 safety which needs to be attended to and looked at 13 expressly. We think that calling this out as an early 14 action item at this point is premature. 15 Finally, I just note item C18 with respect to 16 refrigerant tracking. We think it's very important to 17 recognize that CFCs are very relevant with respect to this 18 recovery issue. Yes, the CFCs are dealt with in the 19 Montreal protocol. But in that protocol the effect is 20 simply to stop the production of CFCs. All those which 21 are in use are assumed to be emitted to the atmosphere. 22 We think a recovery program should definitely extend to 23 CFCs and try to keep that from happening. There would be 24 significant climate change benefits if we were able to do 25 that. Thank you very much. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 75 1 CHAIRPERSON NICHOLS: Thank you very much. 2 Dr. Hertel. 3 DR. HERTEL: Good morning, Chair Nichols and 4 members of the Board. I'm Mike Hertel, Director of 5 Corporate Environmental Policy for Southern California 6 Edison. 7 I wanted to take this opportunity to really speak 8 to the second part of your resolution that deals with the 9 credit for voluntary early action. 10 When AB 32 passed, we began a team within the 11 company, as so many did, to try to figure out how to 12 respond and how to comply. Because we knew eventually of 13 course that serving 13 million people with electricity and 14 emitting a good deal of carbon dioxide in this process we 15 were going to be subject to those regulations. 16 We began a team to look at the rule makings. But 17 in addition we began a team looking at how to get rapid 18 reductions in CO2 greenhouse gases that were cost 19 effective in terms of dollars per ton reduced and that 20 would aid in giving co-benefits for criteria pollutants 21 reductions and especially in communities within our 22 service area and we'd hope throughout the state that are 23 under served. All items that are in AB 32 and there for 24 everybody to read. 25 So we've come up with a portfolio of about 12 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 76 1 projects, ten of which are within the state, all of which 2 deal with I hope significant co-benefits to the state of 3 California, all of which we believe that are relatively 4 and surprisingly cost effective dollar per ton reduced. 5 So this part of the resolution that the staff has 6 put forward to get people to start to focus on the 7 methodology by which the Board could ultimately grant 8 credit in compliance for those kinds of approaches is 9 really critical. There are many more of us than there are 10 of you. And we are thinking hard not just because we're 11 concerned about climate -- our company's first 12 pronouncements on this were in 1991 -- but also because 13 we're going to have a compliance obligation. We want to 14 figure out how to do this in the best possible ways to 15 meet the goals of AB 32. We will submit that portfolio to 16 the staff shortly. It will focus on the methodologies. 17 We hope that will give the staff and others who will 18 participate in this process an opportunity to think about 19 how to give credit for these reductions. 20 And that's pretty much the whole story. Thank 21 you very much. 22 CHAIRPERSON NICHOLS: Thank you. 23 Amisha Patel. 24 MR. PATEL: Good morning. Amisha Patel with the 25 California Chamber of Commerce. We represent over 16,000 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 77 1 businesses statewide. 2 I'm also here on behalf of the AB 32 3 implementation group, which is a coalition of nearly about 4 140 companies and associations in California that have 5 been actively engaged in the implementation of AB 32 since 6 its passage. 7 We have submitted written comments, so I'd like 8 to keep my comments to some of the more important key 9 points that I think are necessary for today's discussion, 10 specifically in regards to the voluntary early action 11 policy. 12 We are currently in a regulatory limbo where 13 businesses are wondering whether or not it may be 14 beneficial to wait until after regulations are in effect 15 to take action to become more energy efficient. AB 32 16 specifically recognizes the down side of this regulatory 17 uncertainty and orders CARB to overcome this problem and 18 to promote voluntary early actions to reduce emissions. 19 We recommend that CARB immediately adopt a policy 20 that businesses will not be discriminated against nor 21 disadvantaged by emission reduction actions they undertake 22 since AB 32 was passed. When and if regulations are 23 adopted in the future years that would impact that 24 business, CARB will ensure that businesses are being 25 treated fairly and not penalized for taking action early. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 78 1 This voluntary early action policy does not require CARB 2 to design laxer protocols, accept company applications, or 3 make any decisions in advance of regulations. Companies 4 remain fully at risk with regard to potential regulations. 5 We are particularly concerned about the companies 6 who want to increase their energy efficiency, probably for 7 reasons other than AB 32, but because of the bill are 8 thinking about waiting. They wonder whether installation 9 of new equipment will be recognized as a change in the 10 company's emission base line, whether an emission credit 11 might be available in the future, or whether some other 12 evaluation under the AB 32 scheme will make their 13 decisions look bad in hindsight. 14 CARB should simply state that they will be 15 treated the same on these questions as companies taking 16 the same energy efficient action after regulations are 17 adopted. The result is a strong message that encourages 18 businesses to act now. 19 The good news is that this policy is quick and 20 easy to adopt. CARB will have no responsibility to 21 approve company applications or otherwise take on an 22 additional workload to answer hard questions in advance of 23 regulations. 24 Businesses would simply need to keep track of 25 their emissions through mandatory reporting or the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 79 1 registry, keep basic information about the project, and 2 other data deemed appropriate by CARB. This will preserve 3 a record of emission reduction impacts from an early 4 project for future consideration if appropriate. We're 5 happy to discuss this concept in greater detail, but let 6 me leave you with the idea that if a voluntary early 7 action policy is to have the fullest impact, there is a 8 sense of urgency. The sooner you adopt the policy, the 9 sooner businesses will feel confident that the steps they 10 will take will be treated fairly and match the intent of 11 the legislation. 12 Thank you for your time and consideration. We 13 look forward to working with you on this concept. We will 14 be in touch with staff as we have been already on this 15 concept. And we hope we can be an added resource for you 16 in the near future. 17 BOARD MEMBER LOVERIDGE: Madam Chair, could staff 18 respond to that question? 19 OFFICE OF CLIMATE CHANGE CHIEF SHULOCK: The 20 portion of our recommendation that speaks to coming back 21 to you with the policy is precisely on this point. We 22 don't have language to give to you today. But I think 23 we're on the same page. 24 But this is something that needs to be done and 25 needs to be done rapidly. So we would want to work with PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 80 1 interested parties to figure out. I think everybody can 2 agree at the 30,000 foot level what we're trying to 3 accomplish. But to put that into words takes some careful 4 consideration. And that's really where we're at on this 5 is what would the actual language of such a policy be. 6 CHAIRPERSON NICHOLS: I think it might make sense 7 to do one thing right away, which is to make it clear the 8 Air Resources Board encourages companies to take measures 9 to improve energy efficiency. There are already plenty of 10 incentive programs out there on the books. But we would 11 like to make sure that people are aware of the fact this 12 is something that they should be pursuing. 13 And the other would be we have I think in the 14 past -- certainly at the staff level I know -- encouraged 15 anyone who's interested in participating in any kind of 16 voluntary emissions reduction to register with the Climate 17 Registry. That is the State's -- the State created this 18 entity for the purpose of collecting information. It's 19 not regulatory. It doesn't at this point have any role in 20 terms of administering credit programs. But the fact is 21 that that is the official place to get credit for things. 22 So I think we would like to in some formal way make it 23 clear that this is something we'd like to see people 24 doing. That would at least be a step in the right 25 direction I think. Thank you. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 81 1 Okay. We now have Carolyn Casavan from VICA, 2 followed by Don Anair, followed by Matthew Schrap. And 3 then we're going to take a brief break. 4 MS. CASAVAN: Good morning. I'm Carolyn Casavan, 5 and I'm with the Valley Industry and Commerce Association. 6 We're also a member of the AB 32 implementation group. We 7 represent over 300 businesses and government entities in 8 the greater Los Angeles region that are committed to the 9 mission of AB 32. These organizations are already 10 designed ways to reduce greenhouse gas emissions. 11 We support the recommendation that Amisha talked 12 about that CARB adopt a policy that businesses will not be 13 discriminated against for early actions. 14 And just what I have are some suggestions with 15 regard to some general policies that could be considered. 16 That if a company is permitting or construction 17 of a new facility begins prior to 2012, that the new 18 facility would still be eligible for the same benefits as 19 other new facilities post 2012. 20 That if the new facility replaces an existing 21 facility, that the existing facility emissions can be 22 chosen as a base line if they would have qualified for 23 such. 24 That new equipment purchased before 2012 that 25 reduces emissions would not be required to be replaced PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 82 1 prior to some reasonable lifetime. A lot of companies are 2 going to be making hefty equipment investments between now 3 and 2012, and it would be good to have some certainty 4 there. 5 That investment in projects today that become 6 eligible for credit in 2012 would still be eligible for 7 those credits. 8 That investment in new technology today will not 9 necessarily set a base line for the future. This is 10 important with regard to experimental technologies which 11 may turn out to not be technologically or economically 12 feasible. 13 And that actions that implement new technologies 14 or practices for a sector prior to the adoption of 15 regulations would still be considered additional with 16 regard to the regulatory tests. And this has to do with 17 credits. Once a regulation is passed, then a voluntary 18 action may not qualify with regards to additionality 19 tests. 20 Something to keep in mind is that between now and 21 2020, we have 13 years. And between now and 2012, that's 22 four years. So that's 30 percent of the time that 23 companies have to really address the requirement of the 24 regulation. It's substantial. So providing companies 25 with some assurances with regard to early actions prior to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 83 1 2012 is very important to companies. 2 I also think that we will be surprised at the 3 amount of reductions that we achieve as a result of those 4 incentives. So if you eliminate some of the uncertainty 5 in how actions taken today will be treated in 2012, you 6 will encourage emission reductions to happen sooner 7 resulting in a win-win for the process and for 8 Californians. Thank you. 9 CHAIRPERSON NICHOLS: Thank you. 10 Don Anair. 11 MR. ANAIR: Good morning. I'm Don Anair, a 12 vehicles analyst with the Union of Concerned Scientists. 13 I just wanted to express our support for the expanded list 14 of Early Action Measures that staff has presented today. 15 We believe this is a robust list of measures that 16 will result in cost effective emission reductions in the 17 near future and provide significant steps toward meeting 18 the 2020 climate change goals California has set. 19 We are especially encouraged by the inclusion of 20 the measures addressing diesel sources, which will not 21 only reduce greenhouse gas emissions but toxic pollutants 22 as well. 23 There are technologies available today off the 24 shelf that can reduce greenhouse gas emissions from 25 heavy-duty diesel trucks but had not yet been widely PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 84 1 adopted by the industry. We believe the truck efficiency 2 measure proposed by staff will help address the market 3 barriers that currently exist to widespread adoption. 4 Also just wanted to note as well the other 5 measures, the port measure for reducing emissions from 6 idling ships at ports is extremely important to port 7 communities and public health in those areas as well as 8 greenhouse gas emissions. We're also supportive of the 9 inclusion of a diesel idling enforcement measure to 10 enforce the measure that was adopted two years ago by this 11 Board. 12 I want to thank ARB for expanding their Early 13 Action List beyond the June measures and encourage you to 14 commit to developing the additional measures proposed 15 today and also to ensure that the appropriate level of 16 resources are devoted to implementing these measures. 17 Thank you very much. 18 CHAIRPERSON NICHOLS: Thank you. 19 Matthew Schrap. 20 MR. SCHRAP: Good morning, Madam Chair and Board 21 members. My name is Matthew Schrap. I'm Manager of 22 Environmental Affairs with the California Trucking 23 Association. 24 CTA members who operate many of the commercial 25 vehicles delivering goods throughout the state of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 85 1 California would like the opportunity to continue to work 2 with the State in developing a sensible program to improve 3 fuel efficiency, which in turn reduces greenhouse gas 4 emissions. 5 CTA is willing and able to offer operational 6 perspective that will assist CARB staff with the sensible 7 development of all measures effecting the trucking 8 industry. 9 I stand before you today to voice our concerns on 10 the reclassification of measure OE5, the SmartWay Truck 11 Efficiency Program as a mandatory regulation without 12 evaluating the practical and economic consequences of such 13 actions. Within the report, no indication of the number 14 of trucks and trailers CARB had assumed will be effected 15 has been provided. Based on the estimates provided by 16 CARB staff in 2005, 300,000 new Class A trucks operated in 17 California in addition to another 850,000 later model year 18 Class A trucks. Based on these numbers, it appears the 19 measure will cost several billion dollars by the year 2010 20 alone. 21 Furthermore, it is unclear how the trucking 22 industry's current efforts under the SmartWay program are 23 being accounted for in CARB's estimates of greenhouse gas 24 emissions and the benefits for the proposed measure. U.S. 25 EPA has provided estimates of GHG emission reductions PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 86 1 achieved in their existing program, as well as feature 2 commitments to achieve further reductions. 3 Although very little discussion is provided to 4 this existing program, which has already provided 5 quantifiable GHG reductions for nearly four years, it does 6 not appear CARB has accounted for nor indicates how these 7 early reductions will be addressed under the State's 8 program. 9 CTA and is member companies are not without 10 experience when it comes to working on efforts to improve 11 fuel efficiency and reduce greenhouse gas emissions. As 12 partner in the U.S. EPA SmartWay transport partnership, 13 many CTA members have taken steps to evaluate their GHG 14 emissions and implement actions to reduce these. While 15 trucking companies tend to operate under a variety of duty 16 cycles and operational considerations, the options 17 provided for under the SmartWay program provide companies 18 with the flexibility to choose those strategies which 19 provide the greatest benefits for each specific operation. 20 CTA applauds the actions of these companies in working 21 with the EPA to develop this program and recommends CARB 22 take the initiative to work with the trucking industry to 23 carefully consider this measure prior to committing to a 24 regulatory approach. 25 That being said, CTA supports the voluntary Early PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 87 1 Action Measures are created in order to support ongoing 2 efforts to reduce greenhouse gases emissions by approving 3 fuel efficiency through a wide vary of operational 4 initiatives. CTA is committed in assisting in the 5 formation of these measures. 6 This concludes my comments and I on behalf of the 7 entire California Trucking Association. I would like to 8 thank you for serious consideration of our request. We 9 stand ready to continue to work with the Board and staff 10 in addressing these and other issues associated with the 11 regulation of heavy-duty diesel trucks. Thank you. 12 CHAIRPERSON NICHOLS: Thank you, Mr. Schrap. 13 We're going to take a break right now. Our next 14 speaker after the ten minute break is Mike Tunnell from 15 the American Trucking Association. Maybe staff will be 16 prepared to comment on the truck issue briefly after that. 17 We'll see you back here in ten minutes. 18 (Thereupon a recess was taken.) 19 CHAIRPERSON NICHOLS: Okay, everybody, we had our 20 20 minute break. For those of you who are in the audience 21 waiting for other items, ladies and gentlemen, I want to 22 make an announcement about timing. This includes those of 23 you who are here on the forestry item. We are going to 24 resume our discussion on the Early Action Measures, and we 25 will take a lunch break immediately after. So we won't PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 88 1 start forestry until after we've taken our lunch break. 2 We'll tell you exactly what the timing will be when we get 3 closer to it. But we've got another dozen witnesses or 4 so, and then we'll be making our decision on the early 5 action item. 6 So I'd like to get started with Mike Tunnel, 7 followed by Gregory Knapp, and Anne McQueen. Thank you. 8 MR. TUNNELL: Good morning, Madam Chairman and 9 members of the Board. My name is Mike Tunnel. I'm with 10 the American Trucking Association. And I would like to 11 discuss just one specific measure, SmartWay truck 12 efficiency measure, which is proposed to be classified as 13 discrete early action measure. 14 I was very pleased to hear a couple themes 15 mentioned in your discussions earlier, and those were 16 leadership and flexibility. Earlier this week, ATA 17 received an award from the U.S. Environmental Protection 18 Agency the SmartWay Excellence Award for environmental 19 leadership in reducing fuel consumption and lowering 20 greenhouse gas emissions. ATA and several of our member 21 companies received that award. And we've been working 22 with EPA for several years now in the inception of the 23 SmartWay program and in implementing it and supporting it 24 in any way we can, because we realize that, you know, 25 saving fuel is a big focus of the industry. And getting PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 89 1 the reductions in greenhouse gas emission are very 2 positive measures. 3 With that, I would just like to mention our 4 concern is the interaction between what your staff is 5 proposing and that existing program which is receiving 6 wide industry support. 7 As it stands, we're unclear how the moving it 8 into the discrete early action category maintains the 9 flexibility to maximize the existing program that's in 10 place today. We would prefer to be kept in the early 11 action category. And, you know, maybe we end up at the 12 same place no matter what. But we believe that early 13 action category gives us the flexibility to work on that 14 program and employ the resources that EPA and ATA have 15 spent five years developing. 16 So with that, I'd just ask for your consideration 17 of that. And thank you. 18 CHAIRPERSON NICHOLS: Thank you. 19 Does anybody want to say anything about the 20 trucking issue, since this is two witnesses, the only two 21 I think on that item? 22 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: The 23 principle reason why the SmartWay program was moved up 24 into the discrete early actions was that we've tried to 25 do -- and this is an example of what we're trying to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 90 1 package things together as Dr. Sperling indicated. We 2 have the retrofit program for in-use trucks coming to the 3 Board in October. And we thought it made good sense to 4 try to include greenhouse gas aspect with that. And it is 5 regulatory, which is why it's being called a discrete 6 action. But we are seriously looking at economic tools to 7 try to soften any regulatory or any economic impact of it. 8 I do want to mention that virtually all of the 9 SmartWay technology do pay back to their owner within a 10 couple of years. So economically, the challenge is how 11 you get capital so you can apply the technology and then 12 wait for it to pay back in terms of fuel savings. 13 But in general, you know, I think we agree with 14 particularly Matt Schrap with the California Trucking 15 Association about all the comments he made about trying to 16 maintain flexibility and trying to do this in a logical 17 way. We're not there yet with a solid proposal. But we 18 do plan on bringing it to the Board in October as part of 19 the retrofit program. 20 CHAIRPERSON NICHOLS: Okay. We'll hear next from 21 Gregory Knapp followed by Anne McQueen and Tom Gibson. 22 MR. KNAPP: Chairman Nichols, members of the 23 Board, thank you. Good morning. Thanks for the 24 opportunity to comment. 25 My name is Greg Knapp. I'm representing TX1 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 91 1 Riverside Cement, a California cement producer, the 2 Portland Cement Association, and the California Cement 3 Manufacturers Environmental Coalition. 4 AB 32 implementation is very important to the 5 California cement industry. We've been participating to 6 date with ARB, Cal/EPA, Caltrans and others. We 7 appreciate the time and reception that we've received from 8 them. We think the interaction has been constructive. We 9 certainly want to continue that interaction. And we do 10 appreciate the commitment that all the future rulemaking 11 procedures will be taking place for early actions in the 12 Scoping Plan. 13 The California cement industry is comprised of 14 six companies that operate eleven plants that produce on 15 annual average about 60 to 70 percent of the cement 16 consumed and demanded in California. 17 California is the largest producer and consumer 18 of cement in the United States and will continue to be so 19 with the ever growing population and recommendations and 20 requests to re-build our infrastructure. The deficit 21 between production and consumption is going to continue to 22 grow unfortunately. 23 We think that several of the measures that are 24 being proposed today for early action will effect the 25 California cement producers in such a way that it may PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 92 1 cause some impact to the domestic or statewide production 2 capacity. 3 We have a few people here today that are going o 4 additionally speak about some of these measures. I'm 5 going to talk about a couple of them real quick, the 6 overview. 7 The energy efficiency measures do have some 8 potential. The industry over the last two decades has 9 made great improvements in energy efficiency. We think 10 that future energy Efficiency benefits are possible, but 11 they're likely to be very small and they're going to be 12 plant specific. The eleven plants are vastly different in 13 age and design. We don't think there's probably one shoe 14 fits all type of measure that could be passed, but there's 15 possibly some way to address that. 16 The other issue would be blended cements. The 17 industry cement and concrete uses blends of cements in 18 which that means adding secondary cementitious materials 19 into the cement or concrete. It's currently being used, 20 but it's not very well documented right now. And that's 21 one of the problems with predicting how much improvement 22 we can get, because we don't know where we are right now 23 accurately. 24 But we do think there is a possible benefit for 25 blended cements. We want to continue to work with ARB and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 93 1 EPA and Caltrans Cal/EPA and Caltrans to develop these 2 measures. And we think there's some benefit there. 3 Thank you again. And we have a couple more 4 speakers. 5 CHAIRPERSON NICHOLS: Very good. 6 We'll hear next from Anne McQueen and Tom Gibson 7 and Scott Isaacson. 8 MS. MCQUEEN: Good morning. My name is Anne 9 McQueen. Thank you very much for the opportunity to speak 10 today. I'm here representing the Mitsubishi Cement and 11 National Cement, both of whom manufacture cement in 12 California. 13 The purpose of our comments is to present the 14 legal framework for evaluating the cement early action 15 measures. 16 The Early Action Measure Report assigns two 17 cement measures to the Early Action List: Cement energy 18 efficiency and blended cements. These measures as 19 currently described in the report are not consistent with 20 AB 32 statutory requirements as yet. 21 Our primary concern with the cement early action 22 measures is the problem with leakage. The California 23 Legislature realized leakage is unacceptable and required 24 a requirement in AB 32 directing ARB to minimize leakage. 25 The unique features of the cement industry that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 94 1 make it susceptible to leakage are described in a detailed 2 report that was submitted to ARB today. Business 3 interests often express concern that increases in 4 compliance costs will adversely effect their 5 competitiveness. However, in this case, these concerns 6 are well documented and it is critical that ARB not ignore 7 these concerns. 8 In the case that AB 32 imposes a cost burden on 9 domestic cement manufacturers without imposing an 10 equivalent burden on cement imports, leakage will occur 11 and overall greenhouse gases emissions will increase 12 rather than decrease as a result of AB 32. 13 Before discussing the other AB 32 statutory 14 requirements, I would like to briefly address process. 15 Originally, we intended to ask that the two cement 16 measures be removed from the Early Action List and 17 reassigned to the Scoping Plan. We have recently been 18 assured by ARB counsel that the Early Action Measures are 19 subject to the same legal standards as Scoping Plan 20 measures and will be accorded the same legal protections. 21 With that assurance, we have re-focused our comments on 22 our evaluation of these measures as they relate to the AB 23 32 statutory requirements. 24 For further detail on these arguments I direct 25 you to the separate letter, another submittal that was PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 95 1 entered into today. 2 CHAIRPERSON SAWYER: Ms. McQueen, I'm not sure 3 if you are aware of the three-minute time limit, but 4 you've gotten there. If you can summarize your comments, 5 I'd appreciate it. 6 MS. MCQUEEN: Basically, the remainder of these 7 comments address concerns we have about the regulatory 8 development process. Basically, the statutory 9 requirements -- there are three of them. This is 10 discussed in the letter. And essentially what we're 11 saying is that we would like ARB to perform the additional 12 work necessary to meet those statutory requirements 13 relating to cost minimization, maximum technological 14 feasibility, and best available techniques for evaluation. 15 And we recognize that this will not be an easy task. And 16 we in the cement industry look forward to working with ARB 17 to complete it. Thank you. 18 CHAIRPERSON NICHOLS: Thank you. 19 Tom Gibson and then Scott Isaacson, and then 20 Muriel Strand. 21 MR. GIBSON: Thank you for the opportunity to 22 speak here today. I'm Tom Gibson, and I'm representing 23 Lehigh Southwest Cement who operates cement plants in 24 Redding and in Tehachapi and also Hanson Cement. 25 The purpose of my comments here is to address our PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 96 1 concerns on the cement energy efficiency early action 2 measure. Our industry, because of the nature of the 3 manufacturing process, has really strong incentives to 4 control energy costs and fuel costs. And we've made 5 significant investments over the past decade to reduce 6 energy use and become more efficient and a continuous 7 improvement all the time on that. 8 You know, we reduced our fuel consumption per ton 9 of cement by 14 percent since 1990, for example. And we 10 become energy efficiency leaders in the U.S. We have 11 cement plants in California use about 84 percent of the 12 national average of fuel per ton of cement as well. So 13 this has been documented by the Lawrence Berkeley study 14 and has been acknowledged by senior ARB staff. 15 The fact is that the low hanging fruit or energy 16 efficiency in the fueling systems has really been picked 17 and any further reductions are going to be specific to 18 certain plants and certain technologies. If I turn to 19 power consumption, one of the early action measures is to 20 replace old high horse power motors with new high 21 efficiency motors. 22 We did an estimate it would cost about $1200 per 23 ton of CO2 reduced to replace all those motors. That's in 24 line with staff's estimate as well. That $1200 per ton of 25 CO2 is very high compared to the $60 per ton that was PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 97 1 identified in recent Climate Action Team economic analysis 2 as kind of the threshold that you use in evaluating cost 3 effectiveness. Selecting that power and efficiency 4 measure as an early action so highlights an inequality 5 between applications for different sectors, we feel. 6 But we feel that the sector, because of the 7 import issues, is vulnerable to leakage. And we really 8 need long term security in knowing that we can increase 9 production in order to maintain the investment in the 10 industry to keep it viable. 11 We have other alternatives to call that we can 12 provide low cost greenhouse gas reduction. That's with 13 using biomass and other alternate biofuels. We're using 14 wood waste and sewage sludge and agricultural waste and 15 tires and pet coke are other ways we're also using. 16 There's many potential alternative fuels we could be using 17 to recover heat and reduce greenhouse gas emissions. But 18 we're really finding there's difficulty in the permitting 19 of those. And the state really could assist us in 20 switching to more appropriate fuels by giving us support 21 in the permitting of fuel changes. 22 CHAIRPERSON NICHOLS: Thank you. 23 BOARD MEMBER BERG: Madam Chair, I'm sorry. It's 24 Sandy. Could I make a comment? 25 CHAIRPERSON NICHOLS: Sorry. Yes, of course. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 98 1 BOARD MEMBER BERG: I do have some firsthand 2 experience about alternative fuels in the cement industry. 3 And I think it would be helpful if the stakeholders from 4 the environmental and the safety groups could also get 5 around the table to let us know what they could support. 6 Because what we find in these alternative fuel 7 options is that the communities and the environmental 8 groups are also concerned about other emissions or the 9 fact that they could be classified as hazardous waste and 10 alternative fuel. So then we have the rub of what is it 11 we really want to accomplish. 12 CHAIRPERSON NICHOLS: I think that's a very valid 13 point. I was going to underscore the fact we're at the 14 beginning -- the very, very beginning of a regulatory 15 process. ARB isn't going to do anything we don't normally 16 do when it comes to understanding an industry or getting 17 the stakeholders involved. 18 So I really want to assure you no decisions have 19 been taken as to how and for that matter at the end of the 20 day if we will end up adopting the regulations. It's 21 going to depend on if it meets the standard of AB 32. 22 Thank you for that. 23 MR. GIBSON: If I can just say this is very 24 important all the cement companies. We do fully support 25 getting stakeholders around the table on this really PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 99 1 important issue. 2 CHAIRPERSON NICHOLS: Thank you. 3 We have Scott Isaacson. 4 And I'd like to ask the clerk if you're keeping 5 time. Because if you're not, I'm going to have to. Okay. 6 Thanks. 7 MR. ISAACSON: Good morning, Madam Chair and 8 members of the Board. I'm with California Portland Cement 9 Company, providing construction materials for over 100 10 years here in California. 11 We are very encouraged to see the evolution of 12 the early action dealing with the blended cements, 13 particularly the discussion with respect to limestone 14 addition. I'll come back to that in a minute. 15 As an earlier speaker mentioned, the California 16 cement producers do support the practice of blending 17 supplemental cementitious material with cement, such as 18 fly ash, steel slag. But it's important to know we have 19 certain significant concerns regarding this aspect of the 20 early action. 21 Blending is already going on. It's going on down 22 stream so to speak with ready-mix concrete producers. 23 Cement producers supply this cement powder to glue or 24 concrete is added to water if you recall as well as 25 aggregates and other materials to produce the concrete. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 100 1 That's going on right now. 2 It is necessary to collect data in order to fully 3 understand the extent of that blending. We think it might 4 be in the neighborhood of ten percent already. But that 5 data needs to be collected. And we're encouraged to see 6 that as part of the early actions so we can better 7 understand just the full extent and the potential 8 greenhouse gas emission benefit that might be obtained by 9 this aspect of the early action. 10 It's also important to note that the supply of 11 these materials is questionable. There have been 12 shortages in the past regarding coal power plant fly ash 13 and other materials as not dependable. Current sourcing 14 is stretched. And we are concerned that this supply may 15 be difficult in the future. All of its imported from out 16 of state for these materials. 17 Also these cement blends or mix designs if you 18 will regarding concrete are in part the subject of both 19 state and local building codes. These codes would have to 20 change for expanded use of blended cement. That's a 21 concern also. That will take some time. 22 And although this aspect of the early action may 23 present feasibility and technical difficulties, the 24 limestone addition piece of the early action, we're 25 encouraged to see that there. We've been working with PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 101 1 Caltrans for some time to have allowable additional 2 limestone addition to our cements. They recently approved 3 2.5 percent. Been encouraging them to increase that to 5 4 percent. There's an ongoing study we've been working with 5 Caltrans to support that additional change. That would 6 bring about 300,000 additional metric tons in a time frame 7 that's appropriate for early action. It's a good target 8 and something that's out there. 9 This change with respect to the limestone 10 addition would bring California in line with 49 other 11 states, the ASTM standard that has been established at 5 12 percent. And this can be done without any reduction in 13 strength or quality of the final product. 14 Again, cement producers here in California will 15 work closely with Caltrans, with ARB staff, and others to 16 implement this early action. And we believe that if it 17 there, it could be significant greenhouse gas benefit 18 realized. 19 CHAIRPERSON NICHOLS: Thank you very much. 20 Appreciate that. 21 Muriel Strand, Bill Magavern, and Wendy James. 22 MS. STRAND: Madam Chair and Board members, thank 23 you for the opportunity to comment. My name is Muriel 24 Strand. I'm here as a private citizen. I'm also a former 25 ARB staff member. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 102 1 I had previously submitted to you some specific 2 suggestions about implementing the tire inflation measure 3 and also yesterday some more general comments about 4 supporting, you know, these early action measures and some 5 suggestions about expanding the environmental justice 6 aspect of things. And pursuant to that, I brought several 7 copies of this green handout that I put together recently. 8 I had heard from some sisters that there are a 9 disturbing number of youth who feel hopeless when they 10 face the future. So I put my thinking cap on. This is 11 what I came up with. 12 Another suggestion that I wanted to share with 13 you, when I was an engineering undergraduate for 14 mechanical engineering, one of the things I realized was 15 how much power there is in just plain old mechanisms 16 without motors. And so as we proceed, please think about 17 how human power with the leverage of mechanism and 18 chematics can improve our efficiency. 19 And lastly, I have one more suggestion for an 20 early action measure, which would be more bike racks for 21 both visitors and staff. Thank you. 22 CHAIRPERSON NICHOLS: Thank you very much. 23 Appreciate your coming. 24 Mr. Magavern, Wendy James, and Roy Perez. 25 MR. MAGAVERN: Good morning, Board members, Madam PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 103 1 Chair staff. I'm Bill Magavern with Sierra Club of 2 California speaking in support of the staff proposal for 3 the Early Action List. 4 I think that these measures proposed today are 5 exactly the kind of measures that were envisioned by the 6 Legislature when this section of AB 32 was written. 7 And when you had a workshop earlier this year on 8 early actions, there was a distinguished speaker I believe 9 from Germany who said about some of the measures he was 10 proposing, "These are not low hanging fruit. They're 11 lying on the ground waiting to be picked up." And I think 12 he envisioned some measures somewhat more aggressive than 13 are proposed today. And there's always some argument 14 about what's the low hanging fruit. 15 But these are concrete measures that you would 16 be, if you adopt this, committing to take before 2010 to 17 reduce emissions with enforceable rules. And that sends a 18 really important message to the rest of the country and 19 the world. What you're getting out of Washington, D.C., 20 on this issue is mostly talk. We see a lot of proposals 21 and schemes on paper to reduce emissions, but it's in 22 California where steps are being taken to actually put 23 rules in place to bring down global warming pollution. 24 And I join with those who have made the comment 25 in praise of those steps that will not only reduce PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 104 1 greenhouse pollution but also reduce air pollution. This 2 Board faces the two incredibly important tasks of 3 protecting public health and reducing global warming 4 pollution. And it absolutely is something that you should 5 do whenever possible to accomplish both of those at the 6 same time. And the measures particularly on port 7 electrification and truck efficiency would do exactly that 8 in reducing harmful diesel emissions that also are 9 greenhouse forcing pollutants. 10 So I think that if you take this step, and I 11 believe you will, of adopting the measures the staff has 12 proposed today, you will show that you've moved beyond the 13 fiasco of June and that the implementation of the Global 14 Warming Solutions Act, as some of us like to call it, is 15 very much on track. And I also want to offer that when in 16 the future you need more resources through your budget to 17 implement a number of these challenging measures that we 18 will absolutely be there in the Legislature to help you 19 obtain those resources. 20 Thank you. 21 CHAIRPERSON NICHOLS: Thank you for that. 22 Wendy James, followed by Lloyd Perez and Aubry 23 Stone. 24 MS. JAMES: Good morning, Chairman Nichols and 25 members of the Board. I'm here on behalf of a coalition PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 105 1 of environmental public health and public interest groups 2 in support of the additional Early Action Measure List. 3 We have provided a letter of support signed by a 4 number of environmental and public health and public 5 interest groups. And I will just summarize the points in 6 the letter. 7 The measures will be essential to begin emission 8 reductions as quickly as possible while the State works 9 toward developing the broader 2009 Scoping Plan to meet 10 the 2020 emission limit. 11 We strongly support the measures particularly 12 because they reduce global warming pollution, cut toxic 13 pollution, and improve air quality at the same time. It's 14 encouraging to see how many of them provide co-benefits to 15 the state. And it was great to hear the earlier dialog 16 about trying to find ways to highlight those that do 17 provide co-benefits to the State. 18 The letter does highlight a number of these 19 measures, including a number of the diesel measures, the 20 forest protocol measure, and those that are directed 21 toward high global warming potential sources. 22 So in conclusion, we commend the CARB staff on 23 their really very detailed analysis of each of the 24 recommended measures. Appreciate the hard work that's 25 gone into these analyses. We know it really took a lot of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 106 1 effort. And look forward to continuing to work with you 2 to cut global warming pollution and meet or exceed AB 32's 3 emission limit. 4 And this letter was signed by the American Lung 5 Association of California, Californians Against Waste, the 6 Center for Energy Efficiency and Renewable Technologies, 7 the Community Environmental Council, Environment 8 California, Environmental Defense, Friends of the Earth, 9 Global Green USA, Natural Resources Defense Council, 10 Pacific Forest Trust, Sierra Club California, the Nature 11 Conservancy, Trust for Public Land, and the Union of 12 Concerned Scientists. 13 CHAIRPERSON SAWYER: Thank you very much. 14 Roy Perez. 15 MR. PEREZ: Good morning, ladies and gentlemen. 16 My name is Roy Perez. I'm here on behalf of the American 17 GI forum which represents the Latino veterans here in 18 California. We also have a unit with our organization 19 that represents disabled and veterans small businesses as 20 well as on behalf of the California Hispanic Chamber of 21 Commerce that also have a 55 chambers throughout 22 California that have an alliance and members that 23 represent landscapers, construction workers, cement 24 producers, and what have you. 25 First of all, we'd like to share with you that, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 107 1 number one, we accept the concept of your AB 32 and have 2 appreciated the input that you allowed us a give to the 3 Board and your staff and work through and try to get a 4 balance and also be able to reach the goals that we have. 5 I don't need to reiterate anything. Because basically 6 it's the same thing that our sister chambers and 7 California chambers and others have iterated, that's the 8 long-term process that you have agreed to move with. 9 And basically one issue that we look at is 10 whatever we do, our small businesses that if they do 11 adhere to the voluntary process, what have you, the same 12 rules that apply here today that after you make the 13 rulemaking they pretty much are in sink with what they're 14 doing today. They are very active and want to meet the 15 goals that the State has put forth, and they are. But 16 they want some certainty moving forward. 17 And with that, I thank you for allowing our 18 organization to share their thoughts with you. 19 CHAIRPERSON NICHOLS: Thank you. And we 20 appreciate your continued involvement in this process. It 21 really is going to take everybody. So thank you. 22 Mr. Stone followed by Diane Wittenberg, and Karen 23 Douglas. 24 MR. STONE: Good morning, Madam Chair and Board. 25 I'm Aubry Stone, President of the California Black PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 108 1 Chamber. We're members of the AB 32 implementation group. 2 California Black Chamber represents over 6500 3 businesses throughout the state of California stimulating 4 jobs in communities. 5 Our concern again -- you know, not to berate and 6 wear out a subject, but we really do feel strongly about 7 the voluntary process. We hope that those businesses that 8 react as good citizens and on this voluntary end of the 9 process are treated fairly on the other side. And that 10 there are no hidden agendas and no secrets. 11 We think that we want to make sure that they do 12 get credit for reacting on the front side, which is where 13 I think we want everybody to react. 14 And with that, echo the comments of the other 15 chambers, we look forward to working with you and the full 16 community effort. And I know that we will reach a just 17 conclusion that will make California and keeping it in the 18 lead in the environmental arena throughout the world. 19 Thank you very much. 20 CHAIRPERSON NICHOLS: Thanks for being here. 21 MS. WITTENBERG: Madam Chair and Board, I'm Diane 22 Wittenberg, President of the California Climate Action 23 Registry. I have with me my colleague Gary Gero, who will 24 become the Acting President of the California Registry as 25 of November 1st when I move on to the North American PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 109 1 Registry. So I thought we would tag team together here 2 today. 3 I'd like to speak to support your approach to 4 solicit proposals for voluntary projects and to approve 5 quantification methodologies for voluntary offset 6 projects. And I wanted to make two points. 7 First of all, the voluntary offset market 8 worldwide is in kind of a mess because there are various 9 standards of quality. And CARB is really taking a 10 leadership position to step forward and put some order 11 into the voluntary market. And this will be noticed 12 worldwide, and I wanted to comment on it. It's very much 13 a valuable signal on offset quality. 14 Secondly, the voluntary market needs assurances 15 that the offsets generated have been verified and then 16 that there's ongoing integrity in the ongoing tracking of 17 the sale and the transfer and the retirement of every 18 voluntarily reduced ton. 19 And so we would like to offer the California 20 Registry to help register any additional methodologies 21 beyond any that the California Registry already uses on 22 its own and to do that tracking for the CARB voluntary 23 offset approvals. 24 What we do there is we assure that any offset 25 methodologies that are approved and carried out that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 110 1 there's real title to the ownership of those reduction 2 tons and then we assign each ton a number. And then we 3 track each subsequent sale or transfer or retirement of 4 those tons so that there's a permanent record of what 5 happens. So in addition to quantifying the methodologies, 6 you need to think through the how you track them to 7 retirement and we'd love to help with that process. So 8 thank you very much. 9 CHAIRPERSON NICHOLS: Thank you for that offer. 10 I'd like to put you and Mr. Gero on the spot for 11 a moment if I could. It's really the presence of the two 12 previous speakers that brought this to my mind. 13 I'm aware of the fact the California Climate 14 Action Registry was created by legislation as a nonprofit. 15 And then it was basically left to fund itself through 16 membership fees. I know you've been able to attract some 17 substantial support from nonprofit foundations to keep the 18 organization going. 19 But I understand that, you know, charging people 20 for registering is something which can be a deterrent, 21 especially to smaller businesses such as many of the 22 members of the Black and the Hispanic Chambers of 23 Commerce. And I'm wondering if you have any capacity to 24 work with them as organizations or to develop some sort of 25 especially track for small businesses that want to get PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 111 1 into the voluntary market. 2 Is this something you've given thought to? 3 MS. WITTENBERG: Well, no. 4 CHAIRPERSON NICHOLS: Thank you for that honest 5 answer. 6 MS. WITTENBERG: We've thought of it, but we 7 haven't thought of a solution. 8 MR. GERO: I think part of the solution -- and 9 then we're working at potential fee structure on how we 10 would actually register those offset tons, and the fee 11 structure could be set such that smaller projects, micro 12 projects if you will, come in under a flat rate or 13 something so there isn't the big hit initially on those 14 projects. 15 Our sense is that the fees are not a significant 16 component of the voluntary offset market. If you're 17 getting the 6 to $10 a ton and we're charging 20 or 30 18 cents for the ongoing transaction, that's probably not a 19 big piece of -- 20 CHAIRPERSON NICHOLS: You're probably right that 21 the cost of getting into a project and figuring out how to 22 do it would be greater than any registration fee that you 23 all might charge. 24 But I just want to plant this idea that -- I have 25 not conferred with our Environmental Justice Advisory PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 112 1 Committee on this point, and they may disagree with me. 2 But I'm hoping they would see this as an issue that really 3 is relevant to them as well to the extent their mission is 4 to make sure that the benefits of any kind of program 5 that's created by AB 32 are spread throughout the 6 community. 7 So I hope we can get moving on coming up with 8 some specific recommendations for how to deal with that 9 issue. And appreciate very much your being here and your 10 offer of help on the tracking. I think is very important. 11 Thanks a lot. 12 Okay. Our next speakers are Karen Douglas 13 followed by Bonnie Holmes-Gen and Tim Carmichael. That's 14 the end of the list. 15 MS. DOUGLAS: Thank you, Madam Chair and Board 16 members. Karen Douglas with Environmental Defense and 17 appreciate the opportunity to make a few brief comments on 18 the Early Action staff report. 19 We strongly support staff report on early action. 20 We greatly appreciate the hard work that the staff has put 21 into not only this item but across the board on meeting 22 the requirements of AB 32 throughout working on inventory, 23 reporting, and Scoping Plan, so on, as well as the Early 24 Action List. 25 As has been noted, this Early Action List PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 113 1 represents both the very significant step forward in 2 meeting our overall AB 32 goals for reducing pollution and 3 also for improving air quality and bringing other 4 co-benefits to Californians. So again, we greatly 5 appreciate this list. 6 A couple of other comments. We also appreciate 7 the effort in this staff report to put forward a time line 8 for implementation of measures that are here not as 9 discrete early actions but on the Early Action Measure 10 List. That's very helpful. 11 And finally, we also agree with a number of 12 commentors who have encouraged CARB to put forward some 13 rules and some guidelines for voluntary early action. We 14 agree that there's a very strong need to encourage 15 businesses to step forward now and do everything that can 16 be done and they can think of now. And finding ways to 17 ensure that early action is encouraged is I think going to 18 be very helpful in succeeding with our goals. So with 19 that again, thank you and we strongly support your list. 20 CHAIRPERSON NICHOLS: Thank you. 21 MS. HOLMES-GEN: Good morning, Madam Chair and 22 Board members. Bonnie Homes-Gen with the American Lung 23 Association of California. And we are here also to 24 applaud you for expanding the list of early action 25 measures and greatly appreciate the staff's hard work that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 114 1 has brought this expanded proposal before you. 2 And I also would like to make the point that my 3 colleague Bill Magavern made. We believe that this 4 commitment to the early action measures is important not 5 only to comply with the requirements of AB 32, but to 6 demonstrate a strong commitment to feasible and available 7 regulatory approaches to greenhouse gas reduction and to 8 give these regulatory approaches a priority attention by 9 the CARB staff. And we believe this key focus on 10 regulatory measures is an important part of the Air 11 Resources Board's leadership on global warming reduction 12 around the world. 13 And we are especially appreciative of your 14 additions to the Early Action Measures, especially the 15 diesel pollution control measures on the Early Action 16 List, including the SmartWay, the Green Ports Program, and 17 the diesel anti-idling enforcement early action measures. 18 And we have been strongly advocating for the addition of 19 these measures that will simultaneously reduce greenhouse 20 gases and air toxics and provide immediate health benefits 21 to communities throughout the state. 22 We are of course very appreciative that these 23 measures will reduce illnesses and hospitalizations, 24 asthma attacks, and premature deaths due to diesel exhaust 25 exposure while of course contributing to our global PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 115 1 warming reduction efforts. 2 And I want to just highlight for a moment the 3 anti-idling enforcement effort. We would like to see this 4 acted on as quickly as possible. So that end, we know 5 you're going to need additional resources. And we are 6 going to need to work together now to get those additional 7 resources in terms of the Legislature and the Governor's 8 office. To increase the field enforcement activities and 9 to reach out to the hundreds of thousands of diesel 10 vehicles and truck terminals, you're going to need an 11 expanded staff. And of course to work very closely with 12 the air districts, and we want to work with you on this 13 effort. And implementation of AB 233 (Jones) that 14 requires also a strategic plan for expanding enforcement. 15 We also wanted to encourage you to move forward 16 quickly to identify the greenhouse gas reduction 17 co-benefits from the SIP measures. This is another 18 important area I know you've mentioned, but we want to see 19 that integration between the work on criteria pollutants 20 and greenhouse gases. 21 We, of course, support voluntary action in the 22 development of these quantification methods. But I did 23 want to just check back with you that I'm understanding 24 that there hasn't been a policy determination yet as to 25 how these quantified reductions will be treated. This is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 116 1 something we want to incentivize early actions. But there 2 is going to need to be a public process to determine how 3 those quantified reductions will be treated or applied to 4 any regulatory or other greenhouse gas reduction 5 requirements the Board has. 6 So I just see you nodding, so I assume -- I just 7 want to clarify that. Thank you for your time. 8 CHAIRPERSON NICHOLS: Thank you. 9 Mr. Carmichael. 10 MR. CARMICHAEL: Good afternoon. Tim Carmichael 11 with the Coalition for Clean Air. Thank you for the 12 opportunity to share a few thoughts. 13 Coalition for Clean Air is in support of the 14 additional Early Action Measures and appreciate the 15 staff's work on that front. Just want to make a couple of 16 brief comments. 17 First, a clarification. It may have just been 18 shorthand, but the reference to green ports measure. It 19 looks to me that the content of that measure hasn't 20 changed. It's still plugging ships into shore power. And 21 I just want to caution the staff and Board to referring to 22 that as the green ports measure. Because though it's a 23 step towards greening ports in California, that action on 24 its own will not be enough to green our ports. And in 25 other forums, we're talking much more broadly about what PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 117 1 it takes to be a green port. That's point one. 2 Point two, I greatly appreciated the comments of 3 Mayor Loveridge, Supervisor Hill, and Ms. Berg and 4 Supervisor Case about the local government potential. But 5 to Mayor Loveridge's point, only 30 percent of the cities 6 in California so far have embraced climate goals or 7 climate commitments. And I think that is part of the 8 reason why the League of Cities led the opposition to what 9 we thought was one of the most important environmental 10 bills of the year, Senator Steinberg's SB 375, which has 11 to do with land use, reducing VMT, and meeting climate 12 goals at the local level. 13 And I just encourage all three of you as local 14 elected leaders to engage more in that process to the 15 extent that you haven't, because League of Cities needs to 16 hear more from people with your perspective. 17 And the last point is teed up by sharing a quote 18 on a banner downstairs. "We will only conserve what we 19 love. We will only love what we understand. And we will 20 only truly understand what we are taught." 21 One of the things that is striking about all of 22 this talk about what we're going to do in the next five 23 years is the absence of a commitment to a public education 24 program. And though it has been talked about in different 25 forums and people have made reference to the Flex Your PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 118 1 Power campaigns and the succeed of that in a very short 2 period of time to get Californians to conserve energy, 3 we're not hearing about that today. And we're not hearing 4 about it enough from this agency. And in my mind, we're 5 talking about a ten of millions of dollars per year 6 program, 15, 20, 25 million per year in this area. 7 If this agency isn't embracing that, isn't 8 committed to a program like that, we're going to have a 9 great difficulty convincing the Governor and the 10 Legislature to support it. We're not talking about 11 educating companies like Edison, who Mr. Hertel clearly 12 communicated they have a whole bunch of ideas and staff 13 working on this. We're talking about small and medium 14 size businesses and individuals. Even those have seen it 15 and watch public television and read the papers in many 16 cases don't really know what to do or don't know what to 17 do next. 18 So I strongly encourage this effort to make this 19 mantra part of the commitment to early action measures in 20 climate and frankly in achieving our SIP goals. We need a 21 much more robust public education program led by this 22 agency. Thank you very much. 23 CHAIRPERSON NICHOLS: Thank you, Tim. 24 I should perhaps take the opportunity -- I don't 25 think he's with us at the moment -- but to introduce our PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 119 1 new Climate Communications Director. One of the positions 2 that we did fill was for a person in communications who's 3 focus would be on communications, not that we think one 4 person can replace a 10 to $15 million public campaign. 5 But we do think he has the mandate and the capacity to 6 help figure out how we can leverage public and private 7 resources to do something approaching what you're talking 8 about. Because I fundamentally agree with you on the 9 basic premise. 10 His name is Stanley Young. And he just joined us 11 about a week ago. So I hope the people who are interested 12 in that will get in touch with him. 13 Supervisor Case. 14 BOARD MEMBER CASE: Just a comment. I 15 wholeheartedly agree with Tim Carmichael and his comments. 16 And I've worked with that issue on the San Joaquin Air 17 Pollution Board. We can regulate. But if we don't have a 18 public willing to be regulated or willing to participate, 19 we create a very divisive environment that is not as 20 productive as we are really looking for. 21 And we really need to start with many of the 22 small businesses and really garnering that support so we 23 have workable solutions, workable regulation, and we get 24 to the goal sooner. So I appreciate your comment. 25 I completely agree. And it's been kind of an PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 120 1 effort at the San Joaquin level, because there's always 2 demands on the funds available. But I think it's just 3 such an important issue. 4 CHAIRPERSON NICHOLS: Ms. D'Adamo. 5 BOARD MEMBER D'ADAMO: I'd like to thank Mr. 6 Carmichael for his comments and would just like to add 7 that I think we talked about this last month or the month 8 before about the confusion that's out there in the public 9 and people wanting to know what's the best way to offset 10 your carbon footprint. There are a lot of companies out 11 there. And is there some sort of seal of approval that we 12 can give. And I think that conversation coupled with 13 comments made by Mr. Carmichael I think it would be 14 helpful if we could agendize this item on sort of the 15 broad picture of communications outreach and what 16 information we can provide individual consumers, small 17 businesses. So I would just like -- 18 CHAIRPERSON NICHOLS: Let's do that. 19 BOARD MEMBER D'ADAMO: And then on the issue of 20 land use, I agree. I mean, I just think of where I live. 21 I can't picture many of those community embracing climate 22 change and taking on the responsibilities -- embracing 23 climate change is one thing. But taking on the 24 responsibility to actually deal with it, especially in 25 communities that somehow see a connection between more PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 121 1 housing developments and more retail malls and the 2 beneficial impact that will have on their budgets. 3 So I don't know what all we can do. But maybe in 4 the Scoping Plan I think we need to get very serious about 5 what role we have at this level as opposed to just 6 expecting or hoping the communities will take on this 7 challenge in more seriously. 8 We talked earlier today about the land use 9 guidance document and maybe getting a report in terms of 10 criteria pollutants. I think we should just expand that 11 when the staff comes back to include climate change. 12 CHAIRPERSON NICHOLS: Okay. Thank you. 13 Other comments at this point? I think it's time 14 to ask the staff if you have any wrap up comments and then 15 move to a decision. 16 OFFICE OF CLIMATE CHANGE CHIEF SHULOCK: I have 17 one of wrap up comment that I'd just like to make. 18 There's been a lot of statements from Board 19 members and the public regarding the quality of the work 20 on this early action report and Michael Roberts sitting 21 over here to my right was the major player in organizing 22 that. And he's going to be leaving us and going to 23 another position. I just wanted to take this opportunity 24 to publicly acknowledge everything that he did. 25 CHAIRPERSON NICHOLS: Can we lock the doors? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 122 1 OFFICE OF CLIMATE CHANGE CHIEF SHULOCK: We 2 tried. But I just wanted to acknowledge all his 3 assistance and pulling this to the condition that it's in. 4 CHAIRPERSON NICHOLS: Thank you. Appreciate 5 that. And we'd like to definitely commend you personally 6 for your role in putting this together. 7 We have a resolution. But before we take it up, 8 I think we are required to on this item, even though it's 9 not regulatory, given the public interest, I think it's 10 important that we disclose any ex parte communications 11 that people had. 12 I think everybody understands that Board members 13 have the ability to communicate and the right to 14 communicate with interested parties outside the Board 15 proceedings. But that we do require that everyone 16 disclose those contacts and the nature of them on the 17 record. And so this would be any meetings or telephone 18 conversations or exchanges that you may have had with any 19 of the parties who have appeared before us or any others 20 that you know of who are involved in this issue. 21 And I can start I guess with you, Professor 22 Sperling. 23 BOARD MEMBER SPERLING: I just one item. I met 24 in Davis with Devra Wang of NRDC and Diane Bailey. And we 25 discussed many of these items of course in general. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 123 1 BOARD MEMBER CASE: Nothing. 2 CHAIRPERSON NICHOLS: Ms. Kennard? 3 BOARD MEMBER KENNARD: Nothing. 4 SUPERVISOR HILL: On October 24th, I met in 5 Redwood City with Devra Wang and by telephone with Diane 6 Bailey from NRDC. Their conversation was consistent with 7 their testimony today. 8 BOARD MEMBER D'ADAMO: I, too, met on October 9 24th in Merced with Devra Wang and Diane Bailey on the 10 phone both with NRDC. And their comments were consistent 11 with the testimony presented by Ms. Wang. 12 BOARD MEMBER CASE: I have nothing to report, 13 Madam Chair. 14 CHAIRPERSON NICHOLS: I had several meetings. 15 I met with representatives of the cement 16 industry, including several of the companies that were 17 here today as a group. And they made the same basic 18 points that they made here today about the concerns the 19 cement industry has -- although they didn't frame it 20 quite specifically in terms of leakage issues. So that 21 actually is a something new that I heard here today. But 22 they did express their concerns about their industry and 23 the amount of regulation that they're facing, trouble they 24 might have meeting the demand for their product in this 25 state. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 124 1 I met with Mr. Hertel from Southern California 2 Edison to discuss the company's proposals for voluntary 3 early action programs and had a briefing on that. Very 4 interesting. And must say looking forward to hearing more 5 from them as we move forward with this. 6 And I had a meeting on the forestry protocols. 7 But it was really broader than just the specific 8 protocols, so I'm going to include it here, with Lewis 9 Blumberg of the Nature Conservancy and Andrea Tuttle with 10 the Pacific Forest Trust on the general issues of the role 11 for efforts potentially as voluntary offsets, which is a 12 topic that I'm extremely interested in. So we'll be 13 hearing more about that I'm sure. 14 And that is it. So now that we've gotten through 15 that piece, I think it's time to review Resolution 7-43. 16 BOARD MEMBER D'ADAMO: Madam Chair, I have a 17 motion that we adopt Resolution 07-43. 18 SUPERVISOR HILL: Second. 19 CHAIRPERSON NICHOLS: We have a second. 20 Any further discussion? 21 If not, I think we can do this as the voice vote. 22 All in favor say aye. 23 (Aye.) 24 CHAIRPERSON NICHOLS: Any opposed? 25 Great. This is just terrific. Really delighted PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 125 1 that we're able to move forward and that we've had an 2 opportunity to have such a full discussion of the progress 3 that we're making on AB 32 implementation. Having this 4 framework to keep in mind I think will help us all going 5 forward. 6 And with that, I think it would be sensible to 7 just take our lunch break now and to try to come back at 8 1:00 or as close to as we can. Thanks, everybody. 9 (Thereupon a lunch recess was taken.) 10 CHAIRPERSON NICHOLS: Ladies and gentlemen, we're 11 ready to start. I think our earlier conversation actually 12 teed this one up beautifully. 13 This next item, Agenda Item 07-10-03, is the 14 staff's proposal to adopt the California Climate Action 15 Registry's forestry greenhouse gas accounting protocols 16 for voluntary projects to save carbon. This is a 17 non-regulatory action which would represent the Board's 18 endorsement of a technically sound approach for carbon 19 accounting in forest projects. 20 The timing of this agenda item is quite 21 appropriate considering that the protocol is on our newly 22 approved AB 32 early action list. And while it's 23 non-regulatory, these protocols do represent an 24 opportunity to promote early voluntary actions. 25 I think it's really significant too that the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 126 1 first of these voluntary programs to come before us is 2 forestry, because in California we have a wonderful 3 opportunity because we have so much land that is forested 4 to take advantage of those forests and the role that they 5 play in the carbon cycle and to, in effect, reward 6 landowners for doing the right thing in managing their 7 trees. 8 So without further ado, I'm going to turn this 9 over to the staff for presentation. 10 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Thank 11 you, Chairman Nichols. 12 In today's presentation, staff will describe and 13 recommend adoption of the California Climate Registry's 14 greenhouse gas accounting protocols for forests. The 15 Climate Action Registry was mandated to develop the forest 16 protocols by Senate Bill 812 in 2002. The quantification 17 protocols developed by the registry provides standardized 18 accounting methodologies for greenhouse gas emissions and 19 reductions from forests. 20 Staff recognizes that the registry's protocols 21 address only certain project types and we are committed to 22 working with stakeholders on additional accounting 23 methods. In addition to proposing Board adoption of the 24 registry's current protocols, staff is also asking for 25 Board endorsement of this effort to further address PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 127 1 working forests and public lands. 2 Ms. Jeanne Panek will make the staff 3 presentation. 4 (Thereupon an overhead presentation was 5 presented as follows.) 6 DR. PANEK: Thank you, Mr. Cackette and members 7 of the Board. My name is Dr. Jeanne Panek of the planning 8 and technical support division, and I will be presenting 9 the staff's recommendations regarding the adoption of the 10 California Climate Action Registry forestry greenhouse gas 11 protocols. 12 --o0o-- 13 DR. PANEK: Here's an overview of today's 14 presentation: 15 First I will give a summary of the actions that 16 we are proposing to the Board today. 17 Next I will provide some background information 18 on California's forests and the opportunities they present 19 for addressing climate change. 20 I will then provide some context on how the 21 adoption of this protocol fits into the AB 32 process. 22 The largest portion of the presentation will be 23 devoted to a description of the CCAR forest protocols. 24 Finally, I will conclude with the staff's 25 proposal for the future and our recommendations to the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 128 1 Board. 2 --o0o-- 3 DR. PANEK: Staff proposes adoption of the 4 California Climate Action Registry, which I will refer to 5 as CCAR, forestry protocols as an accounting verification 6 method for voluntary forest projects that reduce 7 greenhouse gases. This is the first voluntary method we 8 are proposing for adoption pursuant to AB 32. Adoption of 9 this voluntary methodology is a non-regulatory action 10 which represents Board endorsement of a technically sound 11 approach for carbon accounting in forest projects. 12 We are also recommending Board endorsement of an 13 ongoing process to support development of further 14 greenhouse gas reduction approaches. 15 I want to emphasize this forestry protocol does 16 not establish rules for carbon markets, trading, or 17 offsets. It is a methodology for estimating carbon 18 emissions reductions from certain types of voluntary 19 forest projects. These protocols do not address all 20 potential types of forest projects and ARB staff is 21 proposing a process to additional quantification methods. 22 --o0o-- 23 DR. PANEK: Now I would like to provide some 24 background on the California forest sector. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 129 1 DR. PANEK: California has about 34 million acres 2 of forestlands that provide an exceptional opportunity to 3 address the state's climate challenge. 4 There is a large potential for sequestration 5 which varies with forest type, location, ownership, and 6 management. 7 The diversity of forest types includes a wide 8 range of conifer and broadleaf species. Conifer forests 9 here are shown in green, broadleaf in orange and yellow. 10 These forests, along with Oregon and 11 Washington's, are among the nation's most productive. The 12 greatest productivity, and thus carbon storage, is in the 13 state's northern region. 14 There is a diversity of forest ownership and 15 management including public, private, timberland, and 16 non-timberland. 17 --o0o-- 18 DR. PANEK: This chart shows a percentage 19 breakdown of forestland holdings in California. The 20 federal government administers the bulk of California's 21 forestlands (57 percent), with the remainder divided among 22 private land holders (40 percent) and state and local 23 government (3 percent). Collaborating with federal 24 agencies will be key to achieving the full mitigation 25 potential of California's forests. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 130 1 --o0o-- 2 DR. PANEK: Forests play a unique, complex, and 3 important role in the carbon cycle. They remove carbon 4 dioxide from the air and store (sequester) carbon long 5 term. The recent ARB emissions inventory estimates that 6 forests sequester roughly 14 metric tons of carbon dioxide 7 annually. The California Department of Forestry estimates 8 the total carbon stored in California forests to be on the 9 order of 1.7 billion tons. 10 --o0o-- 11 DR. PANEK: Forests are also a source of 12 greenhouse gas emissions. It is important to understand 13 that in the forest sector, decreases in standing carbon 14 stock are considered carbon dioxide emissions. 15 Forest emissions are primarily from harvesting 16 and wildfire. But land-use conversion from forest to 17 non-forest is an emission source as well. 18 Harvesting activity has associated emissions, 19 including: 20 Soil disturbance from equipment and road 21 building. 22 Burning debris such as branches and bark 23 remaining after log extraction. 24 The decay process of material left on-site and 25 fuel combustion from equipment. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 131 1 --o0o-- 2 DR. PANEK: Addressing the issues of the forest 3 sector presents a number of challenges. In addition to 4 carbon benefits, forests provide ecological, cultural, 5 recreational, and economic benefits, which can lead to a 6 variety of environmental issues such as: Air quality, 7 water quality, habitat preservation, and wildfire. 8 In addition to these issues, the forest sector 9 has a diverse stakeholder interest. As we work to address 10 climate change in the context of the wide-ranging issues 11 involved in forest management, we propose a broad-based 12 public process to explore the potential for this sector to 13 provide significant greenhouse gas reductions. 14 --o0o-- 15 DR. PANEK: I want to take a couple of minutes to 16 provide some background on how our recommendations fit 17 into the overall context of AB 32. 18 --o0o-- 19 DR. PANEK: AB 32 requires ARB to adopt 20 methodologies for the quantification of voluntary 21 greenhouse gas emission reductions. This is 22 non-regulatory. 23 However, AB 32 requires ARB to adopt regulations 24 to verify and enforce voluntary reductions if they are 25 used to meet state emission limits. Today's action is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 132 1 pursuant to the first requirement. The verification and 2 enforcement regulation will be a future action which will 3 involve a full public process of its own. 4 --o0o-- 5 DR. PANEK: AB 32 requires that reductions meet 6 certain standards: That is, that they are real; 7 quantifiable; permanent; verifiable; enforceable; and not 8 otherwise required and would not otherwise occur, that is, 9 additionality. 10 --o0o-- 11 DR. PANEK: The voluntary carbon standard, 12 released in July of this year, sets international criteria 13 for voluntary reductions. 14 Participating organizations include the 15 International Emissions Trading Association, the World 16 Business Council on Sustainable Development, World 17 Economic Forum, and the Climate Group. 18 AB 32 also includes an explicit requirement for 19 enforceability of emissions reductions used to meet the 20 2020 target. 21 --o0o-- 22 DR. PANEK: Now I'd like to turn our attention to 23 the CCAR protocols themselves. 24 --o0o-- 25 DR. PANEK: CCAR has developed a number of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 133 1 voluntary protocols including a set of forestry protocols 2 for rigorous carbon accounting from the forest sector. 3 These were the first protocols worldwide do recognize 4 forest management as a greenhouse gas reduction approach, 5 thus helping the international community move beyond 6 reforestation as the only opportunity for forestry 7 greenhouse gas reductions. 8 The forestry accounting protocols represent the 9 work of leading experts in the field of forestry and in 10 protocol development. The input of stakeholders and the 11 public over an extensive four-year, open public process, 12 including workshops and a formal public comment period. 13 The CCAR protocols reflect international 14 standards and meet the requirements of SB 812. I will 15 discuss SB 812 in more detail later in the presentation. 16 The protocols were supported by the Board of 17 Forestry in 2004 and adopted by the CCAR Board in 2005. 18 They were also the subject of a Green California award for 19 state achievement in environmental efforts in 2007. 20 --o0o-- 21 DR. PANEK: In 2002, SB 812 required CCAR to 22 develop forest protocols to create climate benefits using 23 conservation-based criteria which maintain California's 24 native forests, biodiversity, water quality, and species 25 habitat. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 134 1 SB 812 required CCAR to adopt procedures and 2 criteria for achieving carbon emissions reduction through 3 protection, restoration, and management of California's 4 native forests. 5 This bill also requires that registered forest 6 projects secure reductions with a permanent conservation 7 easement for long-term carbon security. 8 The bill requires the protocols recognize only 9 those practices that exceed all federal, state, and local 10 regulations, that is, regulatory additionality. 11 --o0o-- 12 DR. PANEK: CCAR developed three forest protocols 13 that are meant to be used together: 14 The sector protocol is used to report entity-wide 15 emissions. CCAR's official title for this protocol is the 16 Sector Protocol. However, for clarity purposes, we prefer 17 the term "entity" since the protocol does not provide 18 accounting methodologies for the entire forest sector, but 19 rather for the forest entity. 20 The project protocol is used for forest project 21 reductions, that is, stock increases. 22 The certification protocol is used to provide 23 guidance for forest certifiers. 24 --o0o-- 25 DR. PANEK: Geographic and organizational PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 135 1 boundaries must be defined for the forest entity and the 2 project. 3 Geographic boundaries may or may not be entirely 4 within California. But as of now, only California carbon 5 stocks and emission sources can be certificated. 6 Organizational boundaries refer to an entity's 7 share of ownership or control. 8 If an entity is also undertaking a forest 9 greenhouse gas emission reduction project, then the 10 boundaries of that must also be defined. A project may be 11 part or all of a forest entity. 12 --o0o-- 13 DR. PANEK: Entity-wide reporting is done by an 14 individual, corporation or agency owning at least 100 15 acres of forested land. 16 Baseline reporting is optional at the entity 17 level but strongly encouraged. 18 Greenhouse gas emissions and carbon stocks are 19 reported annually to get an overview of an entity's 20 emissions inventory and as a reference against which to 21 track future trends. 22 Specific projects designed to increase carbon 23 stocks are registered through the project protocol. 24 --o0o-- 25 DR. PANEK: The CCAR forest project protocol is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 136 1 used for accounting of planned activities to achieve 2 carbon reductions. The next few slides will elaborate on 3 each of the following: 4 The protocols cover three carbon reduction 5 project types. The baseline requirement are different for 6 each project type. 7 The protocol provides approaches for quantifying 8 carbon stock. 9 And elements of the protocol help ensure 10 permanence and additionality in carbon reductions. 11 --o0o-- 12 DR. PANEK: The three project types are 13 reforestation; conservation-based forest management, that 14 is, managing forests to increase carbon stocks; and 15 conservation (avoided forest conversion). These provide 16 an accounting framework for maximizing carbon 17 sequestration and minimizing carbon loss without 18 compromising other forest benefits. 19 --o0o-- 20 DR. PANEK: Additionality is measured relative to 21 a baseline, which is defined differently for each project 22 type. 23 Reforestation projects include lands that have 24 been out of tree cover for at least ten years. The 25 baseline for this project type is the carbon stock prior PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 137 1 to the project's start. Often this is zero or near zero. 2 The conservation baseline reflects data on 3 planned development or specific land conversion trends. 4 And the conservation-based management baseline 5 assumes land will be managed pursuant to specific criteria 6 in the California Forest Practice rules. 7 --o0o-- 8 DR. PANEK: The quantification methods described 9 here are common to sector and project protocols: The 10 protocols require measurement of carbon in live trees and 11 dead biomass. 12 The protocols use California biomass equations 13 from a nation-wide U.S. Forest Service study. However, 14 the protocols encourage the use of site-specific equations 15 and models. 16 Carbon stocks are calculated from biomass values 17 and are reported annually. 18 Measurements are optional in shrubs, soil, litter 19 and duff, and wood products. 20 --o0o-- 21 DR. PANEK: Additionality is required because 22 business-as-usual practices have no net greenhouse gas 23 benefit. It is the additional increment and storage of 24 carbon beyond business as usual that provides the benefit 25 to the atmosphere. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 138 1 Additionality is defined as practices that exceed 2 "business as usual," and is determined relative to a 3 baseline and to standing legal and other mandatory 4 requirements. 5 As mentioned earlier, additionality is required 6 by AB 32. It is also an internationally recognized 7 criterion for greenhouse gas reductions. 8 --o0o-- 9 DR. PANEK: Permanence is required to offset 10 emissions of greenhouse gases to the atmosphere, which 11 create a long-term warming effect, lasting in the 12 atmosphere from 5 to 50,000 years. 13 The project protocol requires the forestland be 14 secured with a permanent conservation easement, which is 15 the best available legal mechanism to ensure long-term 16 security of the carbon stocks. 17 A conservation easement attaches liability to the 18 land, not the owner. So if ownership changes, the 19 subsequent owner is bound by the terms of the easement. 20 We have received comments that this requirement is a 21 barrier to participation by a large fraction of private 22 landowners. So other and equally internationally realized 23 approaches to permanence will be considered as we move 24 forward. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 139 1 DR. PANEK: The final protocol, the forest 2 certification protocol, provides guidance for certifiers 3 of forest entity and project accounting. Independent 4 third party review ensures completeness, consistency, and 5 accuracy of the data. 6 Certifiers must include a registered professional 7 forester, which is the person qualified to assess whether 8 the reporting entity has made appropriate use of 9 methodologies, assumptions, models, and calculations. 10 Certifiers review annual reports to determine if 11 the reported data is free of material misstatements. 12 --o0o-- 13 DR. PANEK: Two forest projects have registered 14 and reported with CCAR and are currently in the 15 certification process: The Garcia River Forest and the 16 Van Eck Forest. 17 And these projects illustrate some concepts 18 regarding the conservation-based forest management project 19 type. 20 The management plans for both forests include 21 continued harvest. And the additional carbon stored in 22 increased forest stocks provide a new type of forest 23 product and an added incentive as well as a source of 24 ecological co-benefits. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 140 1 DR. PANEK: I would like to conclude this 2 presentation with the staff's proposed next steps and 3 recommendations for Board action. 4 --o0o-- 5 DR. PANEK: ARB staff's next steps will be to 6 convene an ARB and Resources Agency Forest Sector Work 7 Group to develop further approaches for voluntary forest 8 accounting methods and protocols. This group will 9 continue to work in conjunction with CCAR on additional 10 voluntary forest quantification methodologies. 11 ARB staff will work to encourage broad 12 participation from the forest sector in greenhouse gas 13 reduction projects that promote sound environmental 14 principles. 15 --o0o-- 16 DR. PANEK: CCAR has an established and well 17 defined process for developing protocols which will be a 18 great resource as the work group moves forward to develop 19 new project protocols. One of the challenges they will 20 take on is to expand the scope of the forest protocols 21 outside of California. 22 With the Forest Sector Work Group, CCAR will 23 continue to develop additional approaches for the forest 24 sector. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 141 1 DR. PANEK: We recognize that this diversity of 2 forestland holders and forest uses in the state does not 3 lend itself to a one-size-fits-all approach. Through the 4 Forest Work Group, ARB staff plans to continue its work in 5 the forestry sector by developing voluntary greenhouse gas 6 approaches that address issues related to forest 7 management, public lands, urban forests, biomass 8 utilization combined with wildfire avoidance. 9 --o0o-- 10 DR. PANEK: Staff recommends that the Board adopt 11 the California Climate Action Registry forestry protocols 12 for voluntary greenhouse gas accounting. 13 And, furthermore, staff proposes that the Board 14 endorse an ongoing process to support development of 15 further greenhouse gas reduction approaches. 16 Thank you very much. 17 CHAIRPERSON NICHOLS: Okay. Thank you for the 18 presentation. 19 Would Board members like to ask questions at this 20 time? 21 Yes. 22 BOARD MEMBER D'ADAMO: Thank you for the 23 presentation. It answered a lot of the questions that I 24 have. 25 I'm somewhat concerned about the permanence issue PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 142 1 solely being addressed by way of conservation easements -- 2 permanent conservation easements. The experience that I 3 have with landowners, albeit more so in the agricultural 4 sector, is that there's quite a lot of reluctance, and so 5 you have to give a big incentive in order to encourage a 6 landowner to enter into that sort of agreement. So I'm 7 encouraged with the recommendation that staff will be 8 working with the stakeholders on some other approaches. 9 And I would just like to see if we could have a 10 time certain where staff could come back, because what I 11 hate to see is all this work going into a product and then 12 ending up with low participation rates. I'd like to see, 13 you know, the highest possible participation. And I think 14 with other strategies hopefully we could get there. 15 So could staff give some -- include a time frame 16 in the resolution where we could expect to see some 17 additional approaches. 18 DEPUTY EXECUTIVE OFFICER TERRY: Yes. And 19 actually we had really kicking off our sector work group 20 meeting Tuesday of this week with a recognition we have so 21 much work to do on this sector. And our first full-blown 22 meeting will be on November 16th, with a goal of towards 23 the end of next year being able to come back to the Board 24 with additional work on this topic. 25 BOARD MEMBER D'ADAMO: So could we include that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 143 1 then in the -- recommendation in the picture? 2 DEPUTY EXECUTIVE OFFICER TERRY: Of course. 3 BOARD MEMBER D'ADAMO: Great. Thank you. 4 CHAIRPERSON NICHOLS: Okay. Great. 5 Any other comments before we hear -- yes. 6 BOARD MEMBER SPERLING: I just had one question. 7 I hadn't realized that almost all the land is 8 public land. And everything I've been hearing about is 9 from the private owners. 10 How is this being applied or used with respect to 11 the state and federal lands? Or will it or could it or 12 should it? 13 DR. PANEK: Yes. I'd just like to say that the 14 U.S. Forest Service, who is the major holder of more of 15 those federal lands, is a member of the Climate Action 16 Registry. They're very committed to working on climate 17 change issues. 18 The question of public lands, they aren't 19 included in the protocols right now because projects on 20 public lands raise a number of issues that are unresolved 21 at this point: 22 How to secure permanence, since conservation 23 easements typically aren't allowed on federal lands. 24 Ownership of the carbon reductions is another 25 issue. Are they public. Do they belong to the agency? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 144 1 And we'll need to work closely with the 2 appropriate state and federal agencies to develop 3 approaches as we move forward. Because clearly working 4 with public agencies is going to be key to achieving 5 mitigation -- the full mitigation potential of 6 California's forests. 7 CHAIRPERSON NICHOLS: I'd like to just mention, 8 although this isn't -- well, I do see a member of the 9 commission who's here. I've had conversations with the 10 Ruth Coleman, the Director of California State Parks, 11 about the Parks' interest in becoming a test case under 12 the voluntary early action program. 13 One of our most beloved state parks is Kweamucca 14 in San Diego County. And that park was burned in the 2003 15 fire disastrously; lost its whole vegetation cover and has 16 not been regenerating as it had been hoped. And so they 17 are actually looking at the idea of reforestation, not 18 just letting nature take its course but actively getting 19 involved in planting, and would be needing funding to do 20 that. And so they're interested in being a guinea pig for 21 a project that would work through the protocols on a 22 forestation project. 23 And some of the issues that were raised by our 24 staff are presented very starkly. They are -- I'm 25 speaking now out of my background as a former resources PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 145 1 secretary. But I feel that it's important that people 2 recognize that while public lands are always and 3 chronically short of funding to do proper management that 4 they would like to do for various factors, including 5 wildlife and carbon, for that matter, water and so forth, 6 that guaranteeing that funds that are given to a public 7 agency will be used for the purpose that they were 8 intended for, and if the source is a private entity that's 9 doing it because they want to obtain the credits, that 10 those credits will be real is a really serious issue 11 that's going to require some legal attention by attorneys 12 general and state finance experts and all the rest of it. 13 I don't think it's impossible. I certainly hope 14 it's not impossible. But it is definitely going to 15 present some unique challenges. 16 So, anyway, just a -- that one to me is kind of 17 an easy case, because there's nothing there now and there 18 will be trees there, we hope, if they can get the funding 19 to do it. 20 Anyway, any other thoughts or comments at this 21 point before we go to the public? 22 Yes. 23 BOARD MEMBER CASE: Madam Chair, you bring up 24 some really good issues with the reforestation issue. 25 Just thinking a recent trip through Yosemite, which is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 146 1 really in my background just about. But there was a big 2 fire there a few years ago, and it really has been left to 3 Mother Nature to reseed. 4 Could you give Board members a briefing as to 5 what those policies look like? Maybe there's a bigger 6 issue we really need to be attacking in that regard. You 7 know, you have one philosophy of allowing that to happen 8 over a period of time. But when we have large fires, 9 maybe there is an argument that there should be a look at 10 this other impact. 11 CHAIRPERSON NICHOLS: Well, I see we have Tony 12 Brunello, who's a former Forest Service employee who's now 13 at the Resources Agency, as one of the witnesses. So 14 maybe be we could ask him to speak to that when he comes 15 up and speaks. 16 BOARD MEMBER CASE: That would be helpful to 17 understand that better. 18 CHAIRPERSON NICHOLS: Let's start with Diane 19 Wittenberg then on behalf of the Registry again. 20 MS. WITTENBERG: Thank you, Madam Chair. And 21 again I'm Diane Wittenberg, the President of the 22 California Climate Action Registry, and accompanied by 23 Gary Jeral. 24 And I really just wanted to thank the Board again 25 for its leadership and for its consideration of adopting PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 147 1 our forestry protocols. We appreciate the 2 characterization of the quality and the integrity of these 3 protocols by the staff here today and in their report to 4 you. 5 We think the protocols are mostly reiterating 6 several of the point that were made just a minute ago to 7 you. Forests are vitally important to California and to 8 the world in terms of fighting climate change. 9 Our protocols were developed, Jeanne mentioned, 10 over a four-year time period but in a very open 11 stakeholder process that tried to include many types of 12 people. And I think they are another clear demonstration 13 of California leadership, and we feel very proud of it for 14 that reason. California has led in climate change and 15 this is another example of it. There are also models, as 16 was mentioned, for some international protocols in 17 forestry that are being developed. So they don't stand in 18 a vacuum but really are being used. 19 Accuracy, conservatism, integrity, and 20 transparency are the hallmarks that the California 21 Registry has used in developing these protocols. We think 22 that's demonstrated very clearly. 23 And that said, every time we develop a 24 protocol -- and this is neither the first nor the last 25 protocol we've developed -- the point of their being in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 148 1 the voluntary sector is that it's relatively easy to 2 fine-tune them, to get feedback as people use them, and to 3 change them. And certainly in the forestry sector there 4 have been comments by the private landowners that they 5 would like to see some of the issues looked at again; the 6 issues of public lands and could this possibly be a 7 vehicle for public lands has been raised. 8 We commit to you to work with CARB and to work 9 with other state agencies and with academics and with 10 landowners and environmental groups and others to continue 11 to refine and make these protocols better, come back to 12 you through the staff to report on them, and to have new 13 protocols or versions of what we currently have in place 14 in a relatively short order. And as mentioned, a working 15 group has -- a larger working group has gotten started. 16 And we will be convening as the Registry a smaller working 17 group to really just address these protocol issues. So I 18 just wanted to assure you of that. 19 We hope that these protocols will eventually be 20 applied both within and outside of California. Right now 21 they're California specific. And I thank you again for 22 considering their adoption and look forward to reporting 23 back to you as we continue. 24 Thank you. 25 CHAIRPERSON NICHOLS: Thank you. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 149 1 Tony Brunello. And he'll be followed by Laura 2 McLendon from the Sempervirens Fund and Devra Wang. 3 MR. BRUNELLO: Thank you for allowing me to 4 comment. I have to admit, one of the -- I found the first 5 negative of having your on-line web system. I was 6 actually sitting in my office when I was just questioned 7 by your staff to talk today. So not always remote is the 8 best option. 9 I wanted to say -- I'm the Deputy Secretary for 10 Climate Change and Energy in the Resources Agency. I 11 first wanted to say thanks to all the ARB staff. I think 12 one of the most impressive parts is we've all tried to 13 figure out where the protocols fit into the bigger 14 processes that your staff have worked very closely with 15 us, the Resources Agency, of figuring out the best 16 solutions. 17 I think also the important thing to remember in 18 all of this, what we're really working towards, is to 19 provide -- to figure out how all the pieces of the puzzle 20 fit together in the forest sector. And what's important 21 today is that ARB has taken the lead of elevating the 22 forestry topic in the overall AB 32 discussion. And it's 23 a challenging one that I think we can reach and provide 24 solutions for not just California, but outside, across the 25 country and internationally. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 150 1 So with that also, I was watching and heard the 2 discussions about some other key aspects. One is the 3 partnerships. That's going to be fundamental in figuring 4 out what the solutions are going to be in the forest 5 sector. The other is talking about incentives and how do 6 we use these voluntary mechanisms and how is it going to 7 fit into the eventual scoping plan that you will be 8 looking at. 9 All of these are what we hope to discuss and what 10 we're talking about this forest working group that met on 11 Tuesday. And I would just like to highlight to all of you 12 that that is really now where I think we have to roll up 13 our sleeves and deal with not only the forestry protocols, 14 which will be fundamental, but also how do we piece 15 together the forest inventory picture, adaptation, 16 incentives. All these things, we have to figure out how 17 we can piece them together in a comprehensive strategy. 18 So that's really the main thing I wanted to say. 19 I also just wanted to say that this is a great first step. 20 I had the opportunity to look at the Van Eck Forest, which 21 is actually applying these protocols, which, as Jeanne 22 mentioned, there's only two; and those two groups are to 23 be commended for even taking a stab at getting this off 24 the ground. 25 So with that, I appreciate the opportunity to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 151 1 talk. And as I said, now is really the time to roll up 2 our sleeves on the next part. 3 Thank you. 4 CHAIRPERSON NICHOLS: Before you leave, did you 5 get a chance to hear the question, or were you in transit, 6 about public lands and their suitability for these kinds 7 of projects? Just any thoughts you have at this point. 8 MR. BRUNELLO: For public lands, I think 9 that's -- again, that's going to be really where the 10 working group will pay attention to that. There are -- 11 our California Department of Forestry and Fire has been 12 looking into this as well as the U.S. Forest Service. 13 Many challenges, as Jeanne mentioned, in the 14 conservation easement topic. And I hope within the next 15 year, I've been told, that we can find these solutions. 16 And that's where the working group would come in. 17 The other major topic, which is why probably a 18 lot of our Department of Forestry and Fire folks are not 19 here, is fire. And that's on many of our minds. And how 20 do some of our fire goals blend in with carbon mitigation 21 and biomass management? That's a huge topic that across 22 the U.S. you can do a Googol search and realize that there 23 are many people looking into this. Here in California 24 there are some research projects that are already going on 25 right now that are trying to help us make that link PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 152 1 between fuel load reduction and climate change issues. So 2 I think we could really play a lead in that. But, again, 3 it's still going to take a lot of work. And I hope that 4 this working group that will be starting in November with 5 ARB staff will be a key place for that. 6 CHAIRPERSON NICHOLS: So just to clarify that 7 point that you just made. Are you saying that if we could 8 figure out how to reduce the loading of the most flammable 9 items in the forest, that that could be something that 10 would have a double benefit both in terms of reducing the 11 risk of fire and potentially making the forest more carbon 12 friendly? 13 MR. BRUNELLO: Correct. With many caveats 14 involved there. But, yes, there are many win-win 15 solutions that I think will definitely be part of the 16 discussions and will definitely be presented before you. 17 I know there's been already quotes of how much carbon 18 emissions are actually in the existing fires and how could 19 they be reduced over time. It's many challenges of 20 looking at really -- as you talk about base lines, think 21 about the fire picture and how would you draw a base line 22 for historical fire patterns over the last 5, 10, 50, 100 23 years? Very challenging topic. But there are some very 24 bright people within the state and outside of the state 25 trying to address this issue. And actually I could say PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 153 1 in -- Russia's the only place that I know where they are 2 already trying to do fuel load management projects that 3 actually would qualify for clean development mechanism and 4 joint implementation project money. 5 So there are other lessons to be drawn from the 6 international level and there are people looking at this. 7 This is really where the working group, the process that 8 we've established, will be able to pull in from all of 9 those different areas. 10 CHAIRPERSON NICHOLS: Thank you. 11 MR. BRUNELLO: Thank you. 12 BOARD MEMBER BERG: Madam Chair? 13 CHAIRPERSON NICHOLS: Yes. 14 BOARD MEMBER BERG: Could staff explain to me. 15 I'm confused on the conservation easement for the state 16 and federal lands; as I was under the impression that the 17 issue was forest held in private ownership could have the 18 option to do whatever they wanted with that land, meaning 19 if they wanted to sell the land for other uses. But I 20 thought in federal and state possession that it remains a 21 forest. 22 So what is the conservation easement issue there? 23 DEPUTY EXECUTIVE OFFICER TERRY: Actually what 24 we're saying is that conservation easement model doesn't 25 work for public lands in that direct fashion, and that's PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 154 1 what we need to come up with other mechanisms. 2 BOARD MEMBER BERG: Okay. Thank you very much 3 for clearing that up for me. 4 CHAIRPERSON NICHOLS: Okay. Laura McLendon, 5 followed by Devra Wang and Cynthia Cory. 6 MS. McLENDON: My name is Laura McLendon. I 7 represent Sempervirens Fund. Sempervirens is the species 8 name for the Coast Redwood. 9 Sempervirens Fund is the oldest conservation -- 10 or land conservation organization in California. We were 11 established in 1900. And we represent over 7,000 members. 12 I'm here in support of the protocols. We have 13 established a forest carbon project, following the 14 protocols to the letter; and are very excited about taking 15 active measures to really fight climate change on a new 16 level. This project has allowed us to not only protect 17 our forests and all the co-benefits that come with that 18 such as watershed protection, soil stability, wildlife 19 protection, but we have actually now established some 20 carbon credits. And although they're not as much as some 21 of the other forests, it's still significant in the sense 22 that we're already getting interest from utility 23 companies, water districts, and Silicon Valley tech 24 companies. And it's not just about that they're offsets. 25 It's that they're offsets that are based on these rigorous PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 155 1 standards. And they recognize how robust these credits 2 are, more so than any that they've heard of. 3 And we also have a strong relationship with the 4 State Parks system. And as you know, they have had many 5 problems with funding. And we hope that ARB will continue 6 to explore the relationship with public lands and make it 7 an integral part of these forest protocols, which can be 8 done at a later time. 9 So thank you. And I just wanted to express the 10 support the Sempervirens fund look and our members have 11 for the forest protocols and urge the adoption of them 12 today. 13 CHAIRPERSON NICHOLS: Thank you. 14 Devra. 15 MS. WANG: Thank you. Devra Wang with the 16 Natural Resources Defense Council. 17 NRDC also supports adoption of the forest 18 protocols. We participated in the Registry's stakeholder 19 process that led to the development of the protocols. We 20 believe that they're a very good starting point to 21 integrate the forest sector into the state's AB 32 22 activities. And we look forward to participating in the 23 stakeholder process that's been proposed to continue to 24 improve the protocols going forward. So we would urge you 25 to adopt them today. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 156 1 Thank you. 2 CHAIRPERSON NICHOLS: Thank you. 3 Cynthia Cory, followed by Dave Bischel. 4 I don't see Cynthia. 5 MR. BISCHEL: I believe unfortunately Cynthia I 6 think had to get a plane flight. 7 CHAIRPERSON NICHOLS: Oh, okay. Well, you can 8 represent both ag and forestry. How about that? 9 MR. BISCHEL: I don't know they would necessarily 10 approve of that. 11 CHAIRPERSON NICHOLS: No, they might not go for 12 that. 13 MR. BISCHEL: Madam Chairman and members of the 14 Board. I'm David Bischel, President of the California 15 Forestry Association. 16 I'd like to thank you for the opportunity to 17 comment today and thank the staff for all the input and 18 the positive interaction that we've had with them over the 19 last several months on this particulate issue. I think 20 they've been interactive and listened to what we've had to 21 say. 22 We have provided a lot of technical data and 23 input on this issue, which I don't want to spend a lot of 24 time discussing today; other than, first and foremost, I'd 25 like to recognize that our association, which is a trade PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 157 1 association, represents about four million acres of 2 private working forests here in the State of California. 3 All of our members are either family-owned business or 4 privately held companies. We don't have any publicly 5 traded companies. We manage forests. We produce wood 6 products. We produce biomass energy. 7 California has the most powerful environmental 8 protections of any state in the nation. We grow 150 9 percent more than we harvest. We plant seven trees for 10 each tree that we harvest. Ninety-seven percent of the 11 state's old growth forests have been preserved in public 12 ownership. And I think we have spent a lot of time and 13 have a lot of research on how to manage forests in a 14 sustainable and an environmentally sound manner. 15 Nothing that we would support or propose would 16 suggest that we are in any way diminishing those 17 environmental protections in an effort to improve carbon 18 sequestration and storage. And, in fact, we strongly 19 support I think nearly everything that was said here today 20 by staff and others. I think it's -- the forest sector 21 has a great opportunity to provide a significant 22 contribution to achieving the goals of AB 32 through 23 sequestration, which is really growth and photosynthesis 24 through storage both in terms of storage of wood in the 25 forest as well as storage in the wood products. The PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 158 1 homes, the floors, the furniture that each of us use every 2 day, 50 percent of that by weight is pure carbon. And 3 it's a long-term storage mechanism that no other building 4 product provides. 5 So we certainly in the management of our forests 6 want to recognize the importance of all of those carbon 7 pools over time. 8 I think we have expressed some of the difficult 9 issues that we had, certainly the prerequisite requirement 10 of a mandatory permanent conservation easement on working 11 forests, so the state does in fact preclude the largest 12 participation of landowners who don't have conservation 13 easements who haven't been compensated through some sort 14 willing seller/buyer method and would in fact be 15 problematic to landowner participation in this process. 16 So we are very supportive of the resolution that staff has 17 brought forward. I think they have in fact addressed our 18 concerns. 19 We have been, as Lynn had pointed out earlier, 20 involved in and participated in early the working groups 21 to try to develop alternative protocols, both for working 22 forests that we represent, as well as the public forests 23 which, as you've seen, are the largest landowner -- forest 24 landowner in the state. And probably the most significant 25 environmental challenge that we face in the State of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 159 1 California is a risk of catastrophic fire and the millions 2 of tons of carbon that are emitted as a result of that. 3 We're seeing that today. The hundreds of thousands of 4 people that are being evacuated, the really half a million 5 acres of land that has been incinerated. This is a huge 6 issue. And as Mr. Brunello pointed out earlier, there is 7 a real opportunity for a win-win here from a safety 8 perspective, from a forest health perspective, from an air 9 quality perspective. So we certainly look forward to 10 working with staff in seeing those issues addressed from a 11 public lands perspective. 12 And, finally, I think in trying to develop a 13 working forest protocol, we do believe, as was previously 14 suggested, that it would be important to identify a time 15 certain time frame to come back to you with some 16 alternatives. We think it might make sense -- I think 17 Secretary Adams had identified that sometime in August of 18 next year they're hoping to develop a platform for the 19 Western Climate Initiative, of which California is a major 20 partner. And we would encourage the Air Board to come 21 back with some alternatives that would be very helpful I 22 think in developing that process as well. 23 So from our perspective, we ask that you help us 24 help you achieve the lofty goals of AB 32, and we stand 25 ready to do exactly that. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 160 1 Thank you. 2 CHAIRPERSON NICHOLS: Thank you very much. 3 BOARD MEMBER LOVERIDGE: Mary, could I ask -- 4 CHAIRPERSON NICHOLS: Yes, please. 5 BOARD MEMBER LOVERIDGE: I appreciate your good 6 will and your overview and your nuances and your reasons 7 why this makes sense. But before us we have some who are 8 in favor, neutral, and opposed. And you're listed as 9 opposed. It seems to me what you're really saying is this 10 is a work in progress and we need to continue to cooperate 11 and you're ready to do so. Is that your position? 12 MR. BISCHEL: Absolutely. I think if the only 13 thing this Board were to adopt would be a narrow set of 14 protocols as brought forward by the California Registry, 15 that set of protocols does have a niche opportunity. 16 There are forest landowners that have conservation 17 easements and there are a couple of landowners, although 18 not many, who have signed up and -- but for the broadest 19 cross-section of the working forest in this state and the 20 public lands, those protocols really are problematic. And 21 so the proposal that included recognizing that and 22 recognizing that there are other alternatives -- certainly 23 the Chicago climate exchange has a very vigorous trading 24 mechanism to date. So we support the ongoing process to 25 come up with other alternatives that will ensure the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 161 1 broadest cross-section of landowners are incentivized to 2 participate. 3 BOARD MEMBER LOVERIDGE: Well, thank you for your 4 comments and your expressions of support. 5 MR. BISCHEL: Thank you. 6 CHAIRPERSON NICHOLS: Okay. Thank you, Dave. 7 John Middlebrook, followed by Robert Meacher, and 8 Steve Brink. 9 MR. MIDDLEBROOK: Madam Chairman and other 10 members of the Board. Thank you very much for this 11 opportunity to come before you. I am a forest landowner. 12 I own 428 acres in Yuba County. But I'm here not only 13 representing that but as a member of the group called the 14 Forest Landowners of California. 15 I just want to point out that our president wrote 16 a letter that I submitted when I signed up to speak. And 17 I think that has been distributed. My comments will -- 18 that was a letter signed by John Williams. 19 CHAIRPERSON NICHOLS: Um-hmm. We have it. 20 MR. MIDDLEBROOK: My comments will fairly closely 21 shadow that letter. 22 First of all, I want the Board to rest assured, 23 as a forest landowner, my forest is presently and silently 24 sequestering carbon. That could give us all a little 25 relief. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 162 1 As your staff pointed out, about 20 percent of 2 California forest landowners are of the non-industrial 3 family, forestlands owners such as myself. This category 4 is represented by FLC, the Forest Landowners of 5 California. And my comments with regards to the protocols 6 are as follows: 7 I don't think the protocols work from our 8 perspective. They offer no incentive for the real world 9 of the forest landowner. 10 Let's start with the first one, the conservation 11 easement in perpetuity. The word "perpetuity" just scares 12 me to death, even if perpetuity is as short as a hundred 13 years. 14 The next item is, why can't forest products be 15 considered as sequestering carbon? The wood that's 16 sitting in front of you on your desks, that's certainly 17 sequestered. The carbon's not going anywhere for quite a 18 while, I don't believe. 19 Thirdly, the force of the carbon accounting 20 associated with the protocols is what I would call 21 ongoing, continuous, and in that respect extremely 22 expensive in the long run, particularly when you add the 23 word "perpetuity" to the end of it. 24 Liability for the sequestered carbon 25 maintenance -- this is after you get your carbon in the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 163 1 ground and it's been sold as credits -- is just too risky 2 for the forest landowner. We have to assure and ensure 3 that that carbon's going to stay there. And you can't 4 tell me that for a hundred years from now I'm going to be 5 able to protect that. 6 The mainstream forest landowner's interest has 7 only developed for carbon sequestration since the advent 8 of AB 32. And all of a sudden the eyes and ears perk. 9 The forest landowners would like to have a seat on the 10 staff's proposed Forest Sector Work Group. We feel that 11 we might be able to add something to it. We also feel 12 that we don't want to stand and fight you. We've seen the 13 light. Carbon sequestration and the carbon in the 14 greenhouse gases are here to stay. Just look at AB 32. 15 So we might as well join forces and get these problem 16 areas ironed out. 17 And, finally, the protocols have to offer 18 benefits to the private family forest owners. Otherwise 19 they'll just be ignored. It's just that simple. 20 Thank you very much. 21 CHAIRPERSON NICHOLS: Thank you for coming and 22 for your comments. And I think we'll take you up on your 23 offer to participate. I see heads nodding. You'll get an 24 invitation or the association will. 25 MR. MIDDLEBROOK: Best offer I've had all day. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 164 1 Thank you. 2 CHAIRPERSON NICHOLS: There you go. 3 Okay. Is Bob Meacher here? I didn't -- there 4 you are. All right. 5 Excuse me, but I haven't seen Mr. Meacher for a 6 while. Hi. 7 MR. MEACHER: Hi. Chairman Nichols and members 8 of the Board. To start off with, I'm a county supervisor, 9 15 years, Plumas County Supervisor. Plumas County sits on 10 the head waters of the Feather River, which drains into 11 the State Water Project at Lake Oroville. 12 I also have had the distinction of sitting on the 13 California Bio-diversity Council, the Pacific Forest 14 Watershed Land Stewardship Council, and a member of the 15 Bay/Delta Public Advisory Committee representing the 16 Watershed Program with my Co-chair, Martha Davis, from the 17 Inland Empire Utility District. 18 I've also been charged by Secretary Chrisman to 19 start a watershed program for the State of California. 20 So I come to you with 15 years of experience in 21 dealing with resource management. And as Mayor Loveridge 22 pointed out earlier Mr. Bischel, you'll see a mark of a 23 yellow card under my name. When I got here I felt the 24 need to point out what we saw as the poison pills and 25 fatal flaws in CCAR's original protocol proposals. And by PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 165 1 that, I want to say that we -- early on Plumas County felt 2 a need to engage in this process and were early members -- 3 well, late last year joined CCAR as a county, one of the 4 first rural counties to join CCAR. And we look forward to 5 working with the staff. 6 So when I got here today, I was more or less of a 7 mushroom in this process, kind of clambering around trying 8 to get information. We had good staff from CSAC, the 9 League, and the Regional Council of Rural Counties 10 participating in this. So I filled out a yellow card. 11 And then when I picked up Dr. Panek's and staff's 12 executive summary and report to you all, I wanted to 13 change that to a blue card, because they did such 14 excellent work in explaining to you all and to the public 15 some of the concerns that we've raised in some of these 16 meetings over the last few months about a variety of 17 issues that were brought up earlier. And I really don't 18 want to belabor them. You'll hear about it more beyond 19 me. 20 But specifically the conservation easements and 21 the difficulty that plays in the Sierra counties where in 22 many cases 70 to 80 percent of our land base is federal. 23 And so I govern in a county where the Forest Service is 24 the primary landholder, and their hands are tied. 25 In my district this year, we burned up in two PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 166 1 fires in my supervisorial district 95,000 acres. Well, 2 the county's only a million acres. And the emissions from 3 those estimated conservatively is over a million cars for 4 a year. And it started on private land. And I know that 5 some folks in the environmental community will say, "Well, 6 forest fires are like acts of God and volcanoes. You 7 can't do anything about it." I will submit to the Air 8 Board that lightning might be an act of God, but how we 9 manage the landscape is definitely up to us. And I think 10 that's recognized now across the Board. 11 Mary, as you know, when you were -- or, Madam 12 Chair, when you were -- 13 (Laughter.) 14 MR. MEACHER: -- when you were Secretary, we all 15 educated ourselves in your tenure on that issue. 16 So I'm here to change my card to a green card 17 after reading the resolution that you all are about to 18 adopt. And the reason I went from neutral to supporting 19 on this is the resolve. And the resolve to move this 20 along with a variety of stakeholders and partnerships to 21 address this issue of the protocols, I think we can thank 22 CCAR for their efforts in this. But move this to a next 23 generation as we develop how to bring in the state lands 24 and the federal lands, I think it's imperative that we get 25 past this issue of permanence and whatever to tweak this PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 167 1 to make California the great state it has been and leader 2 in the world on this issue. 3 And I'll just leave you with sort of a 4 perspective. I made a presentation to the Urban Water 5 Institute in San Diego earlier this year. And they invite 6 me down on a regular basis to talk to them because, as I 7 said earlier, the Feather River watershed is the State 8 Water Project. That supplies under contract all of 9 southern California, most of it, with its State Water 10 Project water. Recognizing that the largest use of 11 electricity in the state is by the State Water Project 12 moving that water from north to south and the single 13 largest use of electricity in the state in total is moving 14 water, whether you're pumping out of the ground, moving it 15 in the State Water Project, waste water treatment; and 16 therefore one of the largest contributors to global 17 warming next to catastrophic wild fire is moving water. 18 So what I talked to the water districts in 19 southern California about is the future. Imagine 20 involving yourself with AB 32 and the protocols where you 21 offset your carbon footprint by doing carbon 22 sequestrations in the forested watershed lands of the 23 state. They liked that idea, because they can say they're 24 green while protecting their own investment in the upper 25 watersheds and providing reliable sources of water, thus PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 168 1 offsetting a footprint. 2 Just a concept, Madam Chair. But that's kind of 3 the conversations we're having at a 50,000-foot level. 4 CHAIRPERSON NICHOLS: Thank you. I was about to 5 tell you you'd run out of time. But I appreciate your 6 comments. 7 MR. MEACHER: I always do when I'm with you. 8 (Laughter.) 9 MR. MEACHER: Thank you. 10 CHAIRPERSON NICHOLS: Thank you. 11 All right. Steve Brink, followed by Robert 12 Callahan and Chris Kelly. 13 MR. BRINK: Thank you, Madam Chair and Board 14 members. I am Steve Brink. I'm Vice President of Public 15 Resources for the California Forestry Association. 16 And, Ron, to start right off here, you have an 17 "oppose" card only because, as Dave Bischel pointed out, 18 within the narrow confines of the CCAR protocol as 19 currently written is why my name is under the "oppose" 20 side. 21 But as previously mentioned, the proposed 22 resolution we think is excellent. That's Resolution 23 07-44. We like it a lot. Let me just mention a few 24 things. 25 First, regarding the CCAR forestry protocol in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 169 1 its current form, CFA questions using the word "adopt". 2 "Adopt" has a lot of connotations. You've heard from 3 Diane Wittenberg today; we heard from Gary Jeral, the soon 4 to be acting president of the Registry, on Tuesday. They 5 fully intend to make changes to these protocols and make 6 them better. Well, "adopt," I would suggest, has the 7 connotation you're adopting the CCAR protocol in its 8 current form. Is the Board going to adopt every change 9 that the Registry and the ARB staff want to make to the 10 protocol as they occur? I doubt it. So we really 11 question the word "adopt" from that standpoint. 12 We're happy to hear the Registry say today they 13 are looking at making changes. We're happy to hear what 14 Jeanne Panek had to say from the ARB staff, because we 15 believe there are technical issues associated with the 16 protocol that can be resolved and can be easily resolved. 17 And then of course, as has been pointed out, the 18 barriers to participation has been sufficiently covered. 19 Obviously, the permanent easement issue simply takes the 20 public lands out of the equation. You simply solve that 21 problem and suddenly the public lands might be able to 22 become part of the equation. And I would submit, that is 23 extremely important in California, because our national 24 forests alone -- when we get the opportunity to do some 25 intensive carbon life cycle modeling of our national PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 170 1 forests in California, I'm quite sure we're going to find 2 that some of them are net emitters. They're not net 3 sinks. And it's because of wildfire. We simply are not 4 taking care of our national forests. 5 If there was a fivefold increase in their 6 thinning and fuels reduction program and we could clean up 7 the mess on the national forests and get them under 8 management again, they too would be large net sequesters. 9 It would greatly benefit AB 32 implementation. In fact, 10 I've calculated that if the Forest Service did that, a 11 fivefold increase in their commercial thinnings and fuels 12 reductions projects, there's 27 million tons potential 13 opportunity to be had to apply to the AB 32 equation. I'd 14 remind you that's 15 percent of the entire state need to 15 get back to 1990 levels. No easy task. 16 Last let me just say -- 17 CHAIRPERSON NICHOLS: I'm sorry. Could I ask you 18 to sum up, please. 19 MR. BRINK: Yes. 20 We applaud the second resolve of 07-44. We would 21 quickly suggest four things to consider. Dede mentioned 22 one of them, that it has to have a target date. We 23 suggest about June for the Board to adopt would make sense 24 to be in line with the Western Climate Initiative's August 25 '08 goal for a trading platform. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 171 1 We really request that you consider using the 2 term "incentive based," because of the huge opportunities 3 for AB 32 emissions reduction from managed forests. If we 4 have incentive based protocols, we can get millions of 5 acres of currently unmanaged forests in California under 6 management. 7 Then reap the benefit of the sequestration and 8 the stored wood products. 9 Thank you very much. 10 CHAIRPERSON NICHOLS: Thank you. 11 BOARD MEMBER BERG: Madam Chair? 12 CHAIRPERSON NICHOLS: Yes. 13 BOARD MEMBER BERG: Could you clear something up 14 for me. I was under the impression that we were going to 15 look at several protocols for several types of industries. 16 Are we looking to amend this later down the road? Are we 17 looking to set up a protocol, maybe it might be for public 18 lands or a protocol -- an additional protocol so you would 19 have several, not one that fits all? 20 DEPUTY EXECUTIVE OFFICER TERRY: There's 21 certainly not one approach that fits all. Whether there 22 is amendments to this protocol or separate ones, for 23 staff's perspective is that's a mechanism that isn't 24 really at issue. But the commitment is there to develop 25 the new approach, and whether we rename it or we just PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 172 1 expand what's there. 2 The other point that Steve raised about the 3 adoption. Quantification methods, we've done inventories 4 forever in this organization and they're always improved 5 on an ongoing basis. So we would fully expect to report 6 back to the Board once a year on updates to all the 7 protocols we will be developing over time for this 8 program. And so you will be seeing lots of updates on 9 protocol quantification. 10 CHAIRPERSON NICHOLS: Thank you. 11 Robert Callahan, followed by Chris Kelly and Eric 12 Holst. 13 MR. CALLAHAN: Good afternoon. My name is Robert 14 Callahan with the California Chamber of Commerce. We 15 represent over 16,000 large and small businesses across 16 the state as well several large and small forest 17 landowners. 18 And I believe we are as well listed on the 19 "oppose" on your sheet in front of you. And I would just 20 like to clarify that we would be in a "concern" category 21 maybe more accurately. We just believe endorsing or 22 adopting the CCAR protocols at this time are a bit 23 premature before going over the merits of all alternative 24 protocols. 25 We are very happy to see the resolution that was PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 173 1 released today saying that there would be a working group 2 and a comprehensive review of alternative protocols, and 3 we are fully in support of that. We're happy to see that. 4 And we have submitted comments and look forward to working 5 with you on this subject. 6 Thank you. 7 CHAIRPERSON NICHOLS: Thank you. We did receive 8 your comments. 9 Okay. Chris Kelly, Eric Holst, Nick Lapis. 10 MR. KELLY: Good afternoon, Chairwoman Nichols 11 and members of the Board. My name is Chris Kelly, and I'm 12 the California Program Director for The Conservation Fund. 13 We're the owner of the Garcia River Forest, which 14 is mentioned in your staff report. It's a 24,000 acre 15 redwood/Douglas fir forest in the Garcia River watershed. 16 It's registered with the CCAR registration program and we 17 are in the final certification process for the offsets 18 that we are generating for our ownership and management of 19 the forest. I'm here to speak in support of the adoption 20 of the protocols. 21 A quick background. Conservation Fund is a 22 national nonprofit land conservation organization with 23 offices around the county. And like other land trusts, we 24 do a lot of open space and park land acquisitions in 25 partnership with government. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 174 1 But our primary focus is on projects which 2 integrate the economic needs of communities with the 3 ecological needs of important natural resource lands. And 4 we believe that the working forest conservation concept in 5 California really provides an extraordinary opportunity to 6 achieve that kind of an integrated solution. Conserving 7 productive forestlands protects habitat for fish and 8 wildlife, enhances water quality, contributes to the local 9 economy, and combats climate change. And it's with these 10 objectives in mind that The Conservation Fund has focused 11 on conserving large cutover timber properties on the north 12 coast that are threatened by conversion to rural ranches 13 and vineyards. 14 Since 2003 we have acquired more than 63,000 15 acres of forestlands primarily in Mendocino County. Of 16 the properties we have acquired, the fund has chosen to 17 retain 40,000 acres of the commercial forestland in three 18 separate parcels on the Mendocino coast. One I just 19 mentioned is the Garcia River Forest. 20 And in connection with these properties, what we 21 intend is that through our ownership and management we 22 will seek to demonstrate a conservation alternative to 23 public ownership of forestlands and other important 24 natural resource lands. This approach keeps the 25 properties on the tax rolls, provides jobs in the woods PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 175 1 and in the mills, while at the same time fulfilling other 2 important public purposes such as permanently protecting 3 habitat for sensitive species, such as coho salmon, and 4 enhancing water quality. 5 We believe that the adoption and implementation 6 of a rigorous program for accounting for carbon stocks in 7 managed forests, such as the CCAR protocols before you 8 today, will enable the fund and other forest landowners to 9 verify their emissions and participate in the emerging 10 voluntary market for carbon offsets related to forest 11 protection and management. 12 In our case, the revenue generated by the sale of 13 verified carbon offsets will enhance our ability to 14 implement a range of forest management measures which will 15 increase forest inventory, increase habitat diversity, and 16 combat climate change. 17 As I mentioned, we are near the end of the 18 certification process. And we've had direct experience 19 with the voluntary market which these protocols will 20 stimulate. In July we signed a contract to sell 63,000 21 tons of greenhouse gas emissions associated with the 22 Garcia River Forest. And the sale will close upon 23 certification of the offsets under the CCAR protocols. 24 In closing, I just want to thank the Registry and 25 the Board for their leadership on this issue. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 176 1 Establishing a rigorous system for accounting for carbon 2 stocks on managed forests is critical to gaining public 3 confidence and the quality and permanence of forest-based 4 carbon sequestration and the forests' contributions to the 5 fight again global warming. 6 Thank you. 7 CHAIRPERSON NICHOLS: Thank you. 8 Eric Holst, and then Nick Lapis and Caryl Hart. 9 MR. HOLST: Madam Chair and members of the Board. 10 My name is Eric Holst. I'm a forest ecologist with 11 Environmental Defense. 12 Environmental defense strongly supports the 13 adoption of the CCAR forestry protocols and urges the 14 Board to continue to promote voluntary early action in the 15 forest sector. 16 A forest can and should play an important role in 17 meeting California's emission reduction targets. 18 California forests, as has been mentioned before, have the 19 potential to sequester significant amounts of CO2, thus 20 mitigating climate change, and providing the suite of 21 additional environmental benefits associated with enhanced 22 wildlife habitat, improved water quality, and expanded 23 recreational opportunities. 24 That said, if improperly managed forests can 25 serve as a source of emissions due to catastrophic wild PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 177 1 fire, decline in forest health, conversion and 2 unsustainable harvest levels. 3 The topic of today's discussion, the forestry 4 protocols, we believe should be held in the context of an 5 overall strategic vision for forests under AB 32 6 implementation. An environmental defense has submitted 7 detailed comments in the scoping plan, with 8 recommendations on the strategy for the forest sector. 9 Just briefly, we've recommended: 10 Number one, that the state should set an emission 11 target for the forest sector, a target based on a detailed 12 inventory, an ecological assessment of forest by subregion 13 and by type. 14 Number two, we support the creation of 15 opportunities to generate greenhouse gas offsets in the 16 forest sector as part of a multi-sector cap and trade 17 program. This offset program should be built upon strong 18 measurement and verification protocols and on a strong 19 understanding of forest dynamics. And I'll say more about 20 forest under a cap and trade program in one moment. 21 Third, we support the implementation of a suite 22 of additional incentive-based programs to encourage 23 private landowners to engage in forest management that 24 sequesters carbon and enhances the ecological integrity of 25 private forests. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 178 1 And, fourth, we encourage the ARB and other state 2 agencies to work closely with federal land managers to 3 improve the ecological integrity of forests under federal 4 ownership. 5 So in addition to these measures, we believe that 6 the Board should encourage voluntary early action in the 7 forest sector. And toward that end we support the staff 8 recommendation to adopt the CCAR forestry protocols, and 9 believe that it will be a positive first step in carving 10 out a positive role for forests. 11 We also support the staff's suggestion to work 12 with other state agencies to examine the need for other 13 forest carbon accounting methods or additional forestry 14 protocols to address the special needs of different types 15 of forest landholdings and for different policy 16 instruments. 17 I mentioned earlier that environmental defense 18 supports the creation of a multi-sector cap and trade as 19 the most cost-effective means of meeting AB 32's ambitious 20 emission reduction targets. As a part of that cap and 21 trade program, we support offsets. We believe that some 22 modifications of these forestry protocols, including 23 issues to address leakage, additionality and baseline, 24 will be necessary to ensure optimal outcomes in a 25 regulated offset market as opposed to a voluntary market. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 179 1 So we look forward to working with CARB staff, 2 Cal/EPA, and the Resources Agency to develop these ideas 3 going forward. 4 Thank you. 5 CHAIRPERSON NICHOLS: Thank you very much. 6 Appreciate your comments about the overall approach to 7 forests. I think we also need to be thinking bigger on 8 this front. 9 Nick Lapis and then Caryl Hart. 10 MR. LAPIS: Good afternoon, Madam Chair and Board 11 members. My name is Nick Lapis. I'm with Californians 12 Against Waste. We're a statewide environmental 13 organization mostly focusing on waste reduction and 14 recycling issues. 15 A lot has been said before me, so I'm going to 16 keep my comments really short. We strongly support this 17 protocol. We think it's a very rigorous quantification of 18 the greenhouse gas emissions and reductions from the 19 forest sector. Specifically, we want to support the -- or 20 applaud the staff for the effort they put into it, both at 21 CCAR and at ARB. 22 Furthermore, we want to say that we strongly 23 support the development of future protocols and we look 24 forward to working with CCAR on several different 25 protocols coming up. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 180 1 Thank you. 2 CHAIRPERSON NICHOLS: Great. Thank you. 3 Caryl Hart, who will be followed by Staci Heaton 4 from RCRC and Kurt Schuparra. 5 MS. HART: Thank you, Chairwoman Nichols, and 6 hello, and members of the Board. I'm speaking to you -- 7 I'm a member of the California State Parks Commission. 8 And I am also an academic. I'm in the process of final 9 months hopefully of obtaining my PhD on the topic of 10 climate change in public lands. 11 I have to say I'm not speaking to you in my 12 official capacity as commissioner. And I think that's 13 important that you note that. However, I do have some 14 opinions that I'd like to convey, after thanking Dr. Panek 15 and staff for all of their work on the protocols adoption 16 before you. 17 First of all, having reviewed the comments and 18 particularly the comments of Brian O'Neil, who is the 19 Superintendent of GGNRA, who of course wrote two letters 20 that I'm sure you've reviewed. And he describes many of 21 the problems that you've already heard from the public 22 lands perspective. And that what he expresses is 23 certainly true for state parks, that State Parks cannot 24 participate at this time in the offset program, although 25 we are in the process of registering with the Registry. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 181 1 What Brian O'Neil discusses is the potential of 2 a -- instead of just adopting the protocols with the 3 conservation easement language, he discusses the option of 4 saying conservation easement or legal equivalent. And I 5 do think that's something that's worth considering at this 6 time. And the reason I think it's worth considering is 7 because State Parks is in the process of moving forward 8 with projects under these protocols. Specifically, as 9 Chairwoman Nichols described, we have a project underway 10 at Kweamucca which is as a result of the 2003 fires where 11 there's no restoration of forestland there occurring 12 because the fire -- the intensity of the fire prevented 13 that from happening. 14 So whereas in the past State Parks has really had 15 sort of a -- we didn't replant trees. We basically waited 16 for the land to restore itself. Now, because of climate 17 change concerns, we're actively looking to reforest that 18 land. 19 Similarly, in the areas that have just been 20 burnt, I was just looking at an article today talking 21 about the results -- as a result of the intensity of the 22 fire, young native scrubs can't -- will likely not be able 23 to return, trees have been destroyed, seeds have been 24 lost, and endangered species, both plant and animal, will 25 not be able to recover without some kind of active PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 182 1 program. 2 So I think it's very important that public plans 3 be included. And I'm very -- I look forward to the 4 potential of establishing benchmarks. If there's no 5 possibility of doing that today and we do move forward 6 with a stakeholder group, I very much like the idea of 7 having benchmarks that are established as to when the 8 stakeholder group will meet, when we will -- when the 9 protocols will be presented. And I hope very much that 10 that occurs in a rapid period. 11 Thank you. 12 CHAIRPERSON NICHOLS: Thank you. Glad to have 13 you involved in this issue. 14 Staci Heaton, followed by Kurt Schuparra and 15 Betony Jones. 16 MS. HEATON: Good afternoon, Madam Chair and 17 members of the Board. I'm going to be brief today because 18 a lot of what I had to say has already been said. My name 19 is Staci Heaton and I'm the Director of Regulatory Affairs 20 for the Regional Council of Rural Counties. 21 Much of the land in our member counties is 22 comprised of forestland, so we are very interested in this 23 action today. And on behalf of our 31 member counties, I 24 appreciate the opportunity to comment today on your 25 proposed adoption of the protocols. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 183 1 We feel the carbon sequestration through 2 California's forested lands will play a vital part in 3 meeting the goals set forth in AB 32, and we're very 4 pleased that you and your staff are acknowledging that. 5 While we share many of the concerns regarding the forestry 6 protocols in their current form, and those are detailed in 7 our written comments which we submitted yesterday, and we 8 do feel this is a bit premature to adopt them at this 9 time, we do support staff's proposal to continue 10 developing additional protocols with the help of the 11 stakeholder working group and to also continue to look at 12 other methods to ensure permanence. We also would concur 13 on the need for a timeline. We feel that that's very 14 necessary at this time to make sure this work gets done. 15 And RCRC would be happy to participate in that stakeholder 16 working group. We'll volunteer our services for that. 17 And I would be happy to answer any questions you 18 have at this time. 19 CHAIRPERSON NICHOLS: Okay. Thank you. 20 MS. HEATON: Thank you. 21 CHAIRPERSON NICHOLS: Thanks for volunteering 22 Kurt Schuparra, Betony Jones, and then Laurie 23 Wayburn will be next from Pacific Forest Trust. 24 MR. SCHUPARRA: Madam Chair and ARB members and 25 staff. I'm here today -- and I'm going to be brief too, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 184 1 just like Staci was, because I think that much of what the 2 two companies that I represent, Sierra Pacific and Green 3 Diamond, much of what they have to say on this issue has 4 been reflected, I would say, particularly by Dave Bischel 5 but by others as well. It seems like even fairly strong 6 supporters or ardent supporters of the CCAR protocol, you 7 know, agree that this is a good starting point. And I 8 think that Sierra Pacific and Green Diamond share that 9 position. And these companies of course have their 10 concerns. They have detailed letters that have been 11 submitted. And again I'm not going to, you know, to avoid 12 being redundant, go over point by point what those 13 concerns are. 14 But I will say that, you know, Sierra Pacific is 15 the largest landowner in the State of California, with 16 over 1.7 million acres of land; Green Diamond resources 17 has 440,000 acres of land in California. So that's well 18 over two million acres. And that's a whole lot of carbon 19 obviously. And they very much want to participate in the 20 AB 32 regimen in terms of serving as a carbon sink to help 21 offset emissions in other sectors. But as I think Dave 22 made clear, under the CCAR protocol they really would be 23 unable to do that. 24 And I think that they're very enthused about 25 working with the stakeholder group. They're very pleased PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 185 1 that staff is making this recommendation to move forward 2 in this fashion. And by all appearances, the Board is 3 going to agree with that. 4 And I guess I just want to close with a couple of 5 things. One of them would be that Sierra Pacific and 6 Green Diamond would strongly agree with what Staci just 7 had to say, that we need a timeline. And I know others 8 have echoed that as well. And we need to keep this 9 process moving and not have it, you know, fade into the 10 kind of black hole that a lot of times these things do. 11 And I was actually reading -- well, I just 12 happened to be going through the Governor's press clips 13 not too long ago, which, you know, just sort of going back 14 to my days when I was in the Governor's office, I guess I 15 can't break some old habits. But in an August 2007 press 16 release from Governor Schwarzenegger on the Western 17 Climate Initiative declared, and I quote, "Regional and 18 international approaches require that parties work 19 together so that reporting, measuring, verifying, and 20 emissions markets have consistent protocols," end quote. 21 And I think Sierra Pacific and Green Diamond share that 22 sentiment. And I think we need to think big. This is a 23 governor who likes to think big. We need to think big if 24 we're going to tackle this problem. 25 The two companies that I'm representing here PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 186 1 today have a big chunk of land in California and we want 2 to make sure that they can contribute to the effort to 3 curtail global warming, and we look forward to working 4 with all the stakeholders in this process. 5 CHAIRPERSON NICHOLS: Thank you very much. 6 Betony Jones and then Laurie Wayburn and Chuck 7 Mills. 8 MS. JONES: Hi. I'm Betony Jones. I'm with the 9 Sierra Business Council, which is an organization based in 10 Truckee. We work on implementing integrated solutions for 11 economic and environmental well being in the Sierra 12 Nevada. And we have about 8 -- close to 800 members at 13 this point, made up of businesses, counties, local 14 government, nonprofits and individuals. 15 I'm here speaking in support of the staff 16 recommendation to adopt the protocols and form a work 17 group. 18 The Sierra Nevada has a vested interest, as I 19 guess everybody does, in solving the issue of climate 20 change. And toward that end I think there's an increasing 21 interest in the Sierra Nevada to take a lead in 22 implementing some of the solutions to deal with these 23 enormous challenges. 24 The forest protocols provide guidance for the 25 Sierra Nevada to do that. And they also provide the nexus PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 187 1 that we need to participate in climate solutions, given 2 that so much of our land is in forest cover and that's the 3 most significant contribution the region could make. 4 Already there's communities and businesses and 5 landowners looking at and using the forest protocols in 6 project development. And I think that will continue with 7 the state's support and endorsement. It will encourage 8 more participation. 9 There's a few points that everybody else really 10 has pointed out that still need to be fleshed out with the 11 protocols. Just to reiterate, looking at how public lands 12 can participate; and also reducing some of the regulatory 13 barriers for small and sustainably managed working forests 14 to participate, because they are -- they're strict and I 15 think that's positive. But they're extremely expensive to 16 follow. And when you're trying to practice forestry in 17 the state, there's already a lot of barriers to doing that 18 sustainably if you're a small landowner. 19 And then again just looking at the role that wood 20 products could play as substitution for more greenhouse 21 gas intensive materials. I'm not sure the forest 22 protocols are the area to address that. Maybe we should 23 start thinking about construction protocols or something 24 like that. But, in essence, the rigor and the stringency 25 of the protocols is exactly what we support, because PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 188 1 they're real -- they provide real solutions to actually 2 dealing with the problem of climate change, which is what 3 we're trying to address. And they support climate policy 4 in that way. 5 So definitely thank you for addressing this issue 6 so quickly and looking at implementing AB 32, looking at 7 the role forests can play. And I think the staff has done 8 an excellent job bringing the issues to your attention. 9 CHAIRPERSON NICHOLS: Thank you very much. And 10 right on time too. 11 Okay. Laurie Wayburn. 12 I see that there's a listing here of four that 13 have group slides. Are you all going to appear together? 14 MS. WAYBURN: We are. 15 CHAIRPERSON NICHOLS: Yes. Okay, great. 16 MS. WAYBURN: And I think you have us in line in 17 that way. 18 CHAIRPERSON NICHOLS: Perfect. 19 --o0o-- 20 MS. WAYBURN: Thank you, Chairman Nichols and 21 members of the Board for the opportunity to be here. I am 22 Laurie Wayburn, President of the Pacific Forest Trust, 23 whose mission is to sustain private forests for all the 24 public benefits that they provide. And today you are 25 addressing perhaps the most important and critical of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 189 1 those, which is their role in global warming. And I'm 2 here to speak in support of the staff's recommendation and 3 also to thank the staff for an extraordinary job and 4 effort that they have put in on this complex and 5 challenging problem. 6 I want to impart three thoughts today in adopting 7 these protocols. I believe you will continue to maintain 8 and, in fact, expand California's leadership in addressing 9 the climate challenge; that you are doing so in a way 10 which provides significant opportunity and is indeed 11 incentive based; and you are doing so in a way that sets a 12 quality marker that will be a global standard in this 13 arena. 14 This is a sector which is complex, as you have 15 heard. But I do believe you have in front of you a very 16 elegant solution to that. You are addressing the second 17 largest source of emissions globally. And as mentioned by 18 Diane Wittenberg, in doing so you will have the first 19 state-backed system globally to incorporate forest sector 20 and the portfolio of solutions to climate change. 21 --o0o-- 22 MS. WAYBURN: Forests are part of the problem. 23 They are the second largest source of CO2 emissions today. 24 Forest loss and depletion has led to between 40 and 25 50 percent of the excess CO2 in the atmosphere today. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 190 1 California is part of that problem. California has 2 already lost well over a third of its forests. All of 3 those were private forests, that are now in a non-forest 4 condition. 5 They also provide a very significant opportunity 6 of which you've heard a tremendous amount already today. 7 And in fulfilling that opportunity, you will also be doing 8 a number of other things: Providing co-benefits of 9 cleaner water and more sustainable water supplies, 10 restoring fish and wildlife habitat. 11 You will also be stepping down the pathway 12 towards adaptation. As we look towards what climate 13 change will bring us, we see increased catastrophic events 14 potentially. By working with forests not only can we help 15 prevent that likelihood, but restoring the natural carbon 16 capacity of our forests also is key to adaptation. For 17 the more natural our forests, the healthier and more 18 resilient they are. And as you've already heard today, 19 California's forests are amongst the most productive in 20 the world. 21 --o0o-- 22 MS. WAYBURN: I want to flag one last point, and 23 that is around quality and consistency. Forests are an 24 exceptional resource. You've heard a lot about that. One 25 of the beautiful elements, if you will, the elegant PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 191 1 elements of the CCAR approach, is while they recognize the 2 uniqueness and exceptional quality of forests, they do so 3 on a common platform. Forests are not treated 4 exceptionally as a special case. Rather they are held to 5 exactly the same strict standards as all other emission 6 sectors: That they have clear base lines; that they 7 demonstrate clear additionality; that we have permanent 8 reductions so that our children do not face this same 9 issue again; they address leakage; and they have 10 independent verification. All emission sectors have that. 11 And the outcome produces exactly what AB 32 called for, 12 which is real, permanent, quantifiable, verifiable, and 13 enforceable emissions reductions. 14 So I want to thank you for the opportunity to be 15 here. I want to thank you for the leadership which I 16 believe you will take in adopting the recommendation of 17 the staff. And I want to thank you for the opportunity to 18 work with all of you going forward to ensure that as we 19 continue to improve what I believe is already an excellent 20 product, we adhere to the quality that the initial product 21 has. 22 Thank you very much. 23 Oh, may I mention one other thing. Roughly two 24 million acres of California's private land is currently 25 protected under conservation easement. Between 2000 and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 192 1 2005 there was a rise of 40 percent in acreage under 2 easement. And the 2006 forestland, another year, has a 3 working forest conservation easement on their property. 4 Thank you. 5 CHAIRPERSON NICHOLS: Thank you. 6 Chuck Mills and Jeff Shellito and Louis Blumberg. 7 MR. MILLS: Good afternoon, Madam Chair, members 8 of the Board and staff. I am Chuck Mills, the Associate 9 Director for the California Council of Land Trusts, an 10 association representing more than 80 land trusts 11 statewide. We support the staff recommendation to adopt 12 the forest protocols. 13 There are many scientifically sound elements of 14 the CCAR protocols. I'd like to highlight three in the 15 next couple of minutes. 16 --o0o-- 17 MR. MILLS: One: Carbon quantification method 18 balances rigor and flexibility. This provides rigorous 19 standards and quantifications while simultaneously 20 providing flexibility to the landowners. 21 Two: Rigorous inventory requirements and sliding 22 scale discounting are designed to achieve high level 23 certainty. The inventory requirements discounting is 24 based on sampling error and also requires a 90 percent 25 confidence level minimum. If reductions from the forest PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 193 1 sector are going to serve as offsets for other sectors, 2 there must be comparable levels of certainty. 3 Number three: Provides peer-reviewed default 4 equations and models, while allowing flexibility to use 5 other models and equations. Project and entity protocols 6 provide default biomass equations and preapproved models 7 that landowners may use if they do not have their own 8 site-specific emissions. While standardized default 9 equations place everyone on equal footing and allow for 10 standardized checking of results, landowners may use other 11 models and equations in this process. 12 Academics and professionals that cannot be here 13 today have also weighed in on these issues. On default 14 equations, Professor Mark Harmon from Oregon State 15 University's College of Forestry has submitted a letter to 16 the Board that states: "I see nothing whatsoever 17 preventing landowners from developing site-specific 18 biomass equations that are more accurate than the default 19 ones. The only restriction is that the equations are 20 approved by a third party certifier, a step that is 21 essential to assure a credible program." On carbon store 22 estimates, Professor Harmon observes: "As projects are 23 likely to use a range of sampling methods, the forest 24 protocols correctly use the degree of statistical 25 confidence to modify the estimate of carbon stocks. It is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 194 1 a completely rigorous and technically sound way to factor 2 the quality of carbon store estimates." 3 And in summary on these points, finally, a letter 4 submitted to the Board by Dr. Andrea Tuttle, former 5 Director of the Department of Forestry, says it best: "It 6 makes little sense to delay or disable a sound accounting 7 structure that is available and can be used by landowners 8 now, with opportunities for expansion in the future. The 9 point of early action is to take advantage of these 10 opportunities now, not close them down." 11 Thank you. 12 CHAIRPERSON NICHOLS: Thank you. 13 Mr. Shellito. 14 MR. SHELLITO: Good afternoon, Madam Chair, Board 15 members. I'm Jeff Shellito. I'm here today representing 16 the fishery group California Trout. Many of you may know 17 it as Cal Trout. Our organization was founded in 1971 and 18 is dedicated to protecting and restoring wild trout in 19 steelhead waters throughout California. 20 --o0o-- 21 MR. SHELLITO: Cal Trout strongly supports the 22 Air Resources Board adopting the forest protocols that 23 were initially developed by the Climate Registry pursuant 24 to 2002 legislation authored by former Senator Byron Sher, 25 SB 812. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 195 1 Cal Trout supports these protocols because 2 they're designed to not only help achieve greenhouse gas 3 reductions, but also because they will provide co-benefits 4 for wildlife habitat, biodiversity, water quality, and 5 promoting sustainable timber economies. The gentleman 6 that spoke from The Conservation Fund about the Garcia 7 River I think described some of those things. 8 We think this is important because the protocols 9 are designed to ensure that the forest activities 10 undertaken to achieve climate benefits are not undertaken 11 at the expense of other public benefits provided by the 12 forests. 13 In terms of process, the protocols before you 14 today were developed by the Registry over four years 15 through a rigorous multi-stakeholder public process. This 16 started with the legislation that provided the core 17 principles that are carried over to the protocols before 18 you today. That process surrounding the legislation also 19 included close participation and involvement by the forest 20 products industry, including some of the companies that 21 have had witnesses that spoke earlier today. 22 CDF and the Energy Commission were also involved 23 in the formulation of the legislation. As a result, the 24 final bill that was signed by the Governor in 2002 had 25 broad support. And I would note that that legislation had PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 196 1 no opposition for the forest products industry. And as 2 the Chair knows, that's not something that's always easy 3 to do. 4 I might note that I speak with some certainty on 5 this because I was the staff person for that legislation 6 for its author for whom I served for more than 20 years. 7 The protocols developed pursuant to this 8 legislation was drafted by an eight-member 9 multi-stakeholder group representing state agencies, the 10 NGO community, as well as the forest products industry. 11 And as such, they were also subject to state agency and 12 expert review that's been covered by the staff 13 presentation. 14 Might note that the Board -- the Registry Board 15 itself had three workshops and public meetings prior to 16 their eventual adoption. As a result, the protocols 17 before you have the backing of the Legislature, the 18 Registry, many state agencies and departments including 19 the Energy Commission and CDF. 20 Today California Trout joins with the diverse 21 array of businesses, foresters, landowners, and 22 environmental groups that have communicated with the ARB 23 and sent letters of support for adoption of the protocols. 24 I'd like to turn over the next part of the 25 presentation to Louis Blumberg. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 197 1 Thank you. 2 CHAIRPERSON NICHOLS: Thank you. 3 Mr. Blumberg. 4 MR. BLUMBERG: Thank you, Jeff. 5 --o0o-- 6 MR. BLUMBERG: Good afternoon, Madam Chair and 7 members of the Board. My name is Louis Blumberg. I'm the 8 Director of Forest and Climate Policy for the Nature 9 Conservancy of California. And I too would like to extend 10 my commendations to you for your leadership on this issue 11 and also for demonstrating the capacity to sit through 12 hours of public meetings in a windowless conference room. 13 And thank you for your dedicated public service here as 14 the hour grows late. 15 The Nature Conservancy participated in the CCAR 16 process to develop the protocols and we're here today to 17 speak in support of the staff recommendation for adoption 18 by your Board of the CCAR forest protocols. We'd also 19 like to commend the staff for doing an excellent job of 20 preparing a very cogent and easily understandable staff 21 report from what is really somewhat arcane and complex 22 material. 23 California forest protocols provide a great 24 opportunity for you here in California. We've heard a lot 25 about that today. But one of the things that I can add, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 198 1 that as California's redwood forests in particular store 2 more carbon per acre than any forest type on the planet, 3 it's a unique opportunity that we have here. And our 4 mixed conifer forests of the Sierra Nevada are not far 5 behind. 6 Also, by establishing the state-sanctioned 7 accounting system today, if you do adopt the protocols, 8 this will allow ARB to report real progress to the 9 Governor and to the Legislature and to the public towards 10 meeting the emissions levels required by AB 32. These 11 forest protocols are the first set of protocols developed 12 by CCAR to come before ARB. And the forest carbon project 13 certified to the standard that CCAR set is globally 14 precedential. California -- as we've heard, California is 15 leading the way in this new arena. AB 32 only became law 16 this January and the CCAR certification protocol was only 17 finally adopted in June. 18 Right now, we've heard today there are three 19 projects. When I wrote these comments, there were only 20 two. So people are using -- the forest landowners are 21 using the protocols. And companies like PG&E are creating 22 demand for more with their smart program. 23 Adoption of the protocols reduces uncertainty and 24 sends a signal to investors that forest products 25 conforming to these standards will yield high quality PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 199 1 emission reductions in the voluntary carbon market. 2 And as staff did an excellent job of describing 3 the protocols and your action today would be consistent 4 with the direction in AB 32 as well as the recommendation 5 of the Market Advisory Committee report. 6 Next slide. 7 --o0o-- 8 MR. BLUMBERG: So the time to act is now. You 9 know, the protocols are an excellent product. There is 10 good information that has been presented to you today. 11 And, in fact, we've seen a good demonstration today of 12 good will. And I'm really pleased to see that here today. 13 I'm quite struck by the different tone in this 14 room today, between September 5th when the public workshop 15 was held and what we're hearing today. I would commend 16 not only the staff but the leadership of ARB in working to 17 bring people together. And I think what we've heard is 18 there's consensus that we need to have a robust role for 19 the forest sector in California's climate policy. And 20 we're on our way to do that today. And I think this is 21 a -- it's become quite a positive experience here today. 22 This two-step process that ARB is proposing in 23 the staff report is a prudent way to go, it's a rational 24 way to go. It will build on the existing work and the 25 excellent work that CCAR has done, and allow for PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 200 1 refinements and other methodologies where appropriate. 2 CHAIRPERSON NICHOLS: I hate to interrupt anyone 3 who's saying nice things about us, but we are out of time. 4 MS. BLUMBERG: All right. One last point here. 5 And I think this is important. 6 --o0o-- 7 MR. BLUMBERG: So going forward, I think that 8 we -- well, there's been strong support. We've heard 9 that. But I think going forward it's important to 10 recognize that the goal here is to create genuine benefits 11 to the atmosphere. It's not to maximize financial 12 returns. So we have to keep that primary goal in mind. 13 We're here to deal with climate change as we go forward. 14 Thank you very much. 15 CHAIRPERSON NICHOLS: Thank you. And thanks for 16 a well organized presentation. 17 We have one last witness, Paul Mason of the 18 Sierra Club. And then we're going to move on this item. 19 MR. MASON: Good afternoon, Chairman Nichols, 20 members of the Board. Paul Mason for Sierra Club, 21 California. 22 There's an old adage that everything's been said 23 but not everybody has said it. 24 (Laughter.) 25 MR. MASON: But given the hour, I will gloss PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 201 1 right over that one and just note that we also support the 2 staff recommendations. And I think a couple of the really 3 critical points there are that it helps to bring 4 credibility and consistency to carbon accounting in 5 California's forests, and there's plenty of different sort 6 of nascent offsetting schemes out there in the private 7 sector that increasingly lack credibility. So I think any 8 time we can take steps to bring some consistency and 9 establish some credibility, that's very beneficial. 10 I also would agree that it's a good first step. 11 But the idea of having ongoing discussions to figure out 12 how to bring in more elements of the forest industry in 13 California and to better define California's role is a 14 very important thing for the Air Board to be involved in. 15 So we encourage the staff to keep working in that 16 direction. 17 Thank you. 18 CHAIRPERSON NICHOLS: Thank you very much. 19 Before we move the resolution, it is time to 20 disclose ex parte communications again. I seem to have -- 21 I filed mine earlier. But I do want to mention that I -- 22 as you might have guessed, I've had a lot of meetings with 23 people on all sides of this issue. I want to particularly 24 comment that I had a really good meeting with people from 25 the California Forestry Association. And I think that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 202 1 they made a number of important points, which were similar 2 to the ones that they've made here. But they have been 3 really open-minded and willing to engage and to move 4 forward on this issue. And I think that's extremely 5 helpful and important, and it does bode well for our 6 ability to really accomplish wonderful things with this 7 sector. 8 I've also met with a number of environmental 9 groups that are represented here today. I had a great 10 tour of the Van Eck Forest project with the Pacific Forest 11 Trust, which really opened my eyes to a lot of the very 12 technical issues about how the forest projects actually 13 work. I have to say I recommend it to others. It was 14 very worthwhile. The stuff isn't easy, which is one of 15 the reasons why it either hasn't been done or has been 16 done badly. But I think there really is great potential 17 here. 18 And I've also heard particularly from people who 19 are concerned about the public lands. In addition to the 20 conversation I mentioned with Ruth Coleman, I had a 21 conversation actually with an e-mail -- a voice mail 22 conversation with Chairwoman Lonni Hancock -- 23 Assemblywoman Lonni Hancock about her concerns on this 24 issue and her desire not to just see this buried in a work 25 group that would go on for years and never produce PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 203 1 anything. This is going to be a very hard working work 2 group, I know. And they've definitely been given a sense 3 of timing. I think the issue of meshing this with what's 4 going on with the Western Climate Initiative and making 5 sure that we have something from California to bring to 6 that process is really an important one. 7 So that's it for me. Are there other ex partes 8 that people want to mention? 9 Yes. 10 BOARD MEMBER SPERLING: I had two meetings, one 11 on October 3rd with Michelle Pisaro of the Pacific Forest 12 Trust and Louis Blumberg and Peter Miller, and reflecting 13 the discussions and the presentations; October 23rd with 14 Kurt Schuparra and Jarrett Ficker from Sierra Pacific and 15 Green Diamond. 16 BOARD MEMBER CASE: I had two meetings yesterday. 17 One was a teleconference call with Louis Blumberg 18 with the Nature Conservancy; Michelle Pisaro, Pacific 19 Forest Trust; Eric Holst, Environmental Defense; and Chuck 20 Mills with California Council of Land Trusts. 21 I also met personally in Fresno with Kent Dusem 22 with Sierra Forest Products; and on teleconference call at 23 the same time, Mark Poliky, Sierra Pacific Industries and 24 Kurt Schuparra representing Sierra Pacific and Green 25 Diamond, and they were on the conference call. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 204 1 And pretty much their testimony was what we have 2 heard today. 3 CHAIRPERSON NICHOLS: Okay. Thanks. 4 BOARD MEMBER LOVERIDGE: Could I just -- 5 CHAIRPERSON NICHOLS: Oh, sorry. Excuse me. 6 Didn't see you. 7 BOARD MEMBER LOVERIDGE: -- ditto the last -- 8 BOARD MEMBER CASE: Ditto those two calls? 9 BOARD MEMBER LOVERIDGE: Ditto the last one. 10 CHAIRPERSON NICHOLS: The last one. Okay. 11 SUPERVISOR HILL: Thank you, Madam Chair. 12 On October 11th I met in Redwood City with Louis 13 Blumberg, the Nature Conservancy; and Michelle Pisaro, 14 Pacific Forest Trust. And it was consistent with the 15 testimony today. 16 BOARD MEMBER D'ADAMO: On October 12th I met in 17 Modesto with Michelle Pisaro, Pacific Forest Trust; and 18 Eric Holst, Environmental Defense. And I have listed that 19 all these individuals were on a call, but I don't remember 20 that many. I believe -- Peter Miller was the only one on 21 the phone, with NRDC. 22 And then also that same day I met in Modesto with 23 Dave Bischel, President of the California Forestry 24 Association. 25 Yesterday I met in Merced with Devra Wang and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 205 1 Diane Bailey with NRDC. And then I had a telephone call 2 from Cynthia Cory representing California Farm Bureau. 3 And those conversations were consistent with the 4 testimony today. 5 I need to add though that Cynthia Cory wasn't 6 able to testify, and she raised the concerns that were 7 very similar to the concerns raised by the Forestry 8 Association today. 9 CHAIRPERSON NICHOLS: Thank you. 10 BOARD MEMBER BERG: Madam Chair, on October 18th 11 I had a phone call with David Bischel, President of the 12 California Forestry Association. There was another 13 individual on the call and I will get that name for the 14 record. 15 I had a follow-up call with Mr. Bischel on the 16 19th. 17 And the conversations were consistent with the 18 testimony today. And even more positive, I'm happy to 19 report. 20 CHAIRPERSON NICHOLS: Thank you. 21 Ms. Kennard, did you have a comment? 22 BOARD MEMBER KENNARD: Yes. Thank you very much, 23 Chairwoman Nichols. 24 First of all to staff. Very impressive work over 25 a long period of time. And I applaud you for continuing PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 206 1 kind of the stakeholder input going forward. But I 2 encourage you, as Chairwoman Nichols did and some of the 3 speakers, to put some target dates to finalize this so 4 that it does not drag on infinitely. 5 So that would be my only comment. And thank you 6 very much. 7 CHAIRPERSON NICHOLS: All right. We have a 8 resolution prepared for us. Would someone like to move 9 it? 10 BOARD MEMBER D'ADAMO: I'd like to move adoption 11 of Resolution 07-44, with the change that the staff report 12 back no later than December of 2008. I'm hoping that 13 would give staff enough time in the event that you get 14 completed sooner. 15 DEPUTY EXECUTIVE OFFICER TERRY: And we will do 16 our best to be sooner. 17 SUPERVISOR HILL: I'll second that. 18 CHAIRPERSON NICHOLS: All right. Any further 19 comments? 20 BOARD MEMBER CASE: And maybe just discussion in 21 our testimony today I heard August '08 and June '08 as two 22 dates that were really important. Could staff comment, if 23 December is not too far reaching for us, that we could 24 move that up. 25 DEPUTY EXECUTIVE OFFICER TERRY: Well, Yes. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 207 1 Actually, this work group as we envision it is tackling 2 not just the quantification protocols but much more 3 broadly the bigger picture view of how the forestry sector 4 will play into the scoping plan. So our current schedule 5 for the scoping plan is June. So my hope is that those 6 will be complementary exercises because it's the same 7 staff people involved. So obviously -- 8 CHAIRPERSON NICHOLS: So in other words the draft 9 scoping plan when it's released will contain the elements 10 for forestry? 11 DEPUTY EXECUTIVE OFFICER TERRY: -- will contain 12 elements of that. And whether or not we can tie down 13 every last aspect of a technical quantification protocol, 14 you know, in the summer, it might take us a bit longer. 15 But we would certainly have laid out the big picture and 16 where we are in the protocols. And I would hope to at 17 least have the drafts out for circulation in that time 18 frame. 19 BOARD MEMBER CASE: Maybe what we could have is 20 an agenda item that at least gives the presentation for us 21 even if it's not that decision. That would be really 22 helpful. 23 CHAIRPERSON NICHOLS: Thanks. Good point. 24 Any other comment? 25 If not, we can I think do this by a voice vote. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 208 1 All in favor say aye. 2 (Ayes) 3 CHAIRPERSON NICHOLS: Opposed? 4 Very good. Thank you very much, all. 5 We're going to take a five-minute break. Make it 6 a five-minute break, try anyway, while we just shift 7 presenters. 8 (Thereupon a recess was taken.) 9 CHAIRPERSON NICHOLS: We have a quorum. I'd like 10 to get started, because we have two more items ahead of us 11 today. As usual, my idea about how long these things are 12 going to take is a little exaggerated. 13 So we're going to move to the San Joaquin Valley 14 PM10 maintenance plan. And then our last item of the day 15 will be the revisions to the aftermarket catalytic 16 converter. I hope there aren't too many people who are 17 being held up by that. We'll do our best. 18 Okay, San Joaquin. 19 DEPUTY EXECUTIVE OFFICER TERRY: Do you want to 20 make your opening statement or -- 21 CHAIRPERSON NICHOLS: Oh, you're waiting for me 22 to say something? I have a script here. 23 The next item is, as I already said, the San 24 Joaquin Valley PM10 Maintenance Plan for 2007 and 25 re-designation request. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 209 1 I will say happily that we're pleased to be in 2 this situation where in fact we're considering this plan, 3 because what it means is that air quality as measured in 4 the San Joaquin valley has reached, has shown attainment 5 of the federal PM10 air quality standards ahead of the 6 2010 attainment deadline. 7 So while we still have serious problems with the 8 smaller particles, at least for the larger particles we 9 have made very significant progress. And this is really 10 an important milestone, and it's a credit to all of the 11 agencies who have been involved in doing it. It doesn't 12 mean there's been progress on the fine particles as well 13 since we know they're at least a major fraction of the 14 attainment story for PM10. 15 We think that the measures that enable attainment 16 of the PM10 standard have created a strong foundation. 17 These are not going to go away. They're part of the basis 18 for reaching this public health benchmark. And that means 19 that we have a place to build from to move on to the more 20 stringent PM2.5 standards. 21 So with that, I will turn it over to staff for 22 their presentation. 23 DEPUTY EXECUTIVE OFFICER TERRY: Just two 24 introductory remarks. What the Board will be considering 25 is approval of a Maintenance Plan for the federal PM10 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 210 1 standard that describes how the region will attain and 2 continue to maintain the PM10 standard for a ten-year 3 period going forward, which is a requirement. 4 The plan also includes updated transportation 5 conformity budgets which local transportation agencies 6 need by 2008. 7 I'll turn the staff presentation over to Dr. 8 Patricia Velasco. 9 (Thereupon an overhead presentation was 10 presented as follows.) 11 STAFF AIR POLLUTION SPECIALIST VELASCO: Thank 12 you, Ms. Terry. And good afternoon, Chairman Nichols and 13 members of the Board. 14 --o0o-- 15 STAFF AIR POLLUTION SPECIALIST VELASCO: During 16 today's presentation, I will provide an overview of the 17 valley's status with respect to the federal standards for 18 PM10 and describe the general characteristics of PM10 in 19 the valley. 20 I will then go over the district's plan for 21 maintaining attainment for the PM10 standards and 22 highlight updates made to transportation conformity 23 budgets. 24 Finally, I will summarize upcoming steps to 25 further reduce particulate matter in this region. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 211 1 --o0o-- 2 STAFF AIR POLLUTION SPECIALIST VELASCO: The San 3 Joaquin Valley was designated as a serious non-attainment 4 area for the federal 24-hour and annual average PM10 5 standards in 1993. 6 In June 2003, the district and ARB adopted the 7 2003 PM10 Attainment Plan setting forth the control 8 strategy for attaining both PM10 standards by 2010. 9 U.S. EPA approved the plan in 2004. The valley 10 now attains the PM10 standards. 11 In October 2006, U.S. EPA determined that the 12 valley attained the PM10 standard based on the 2003 to 13 2005 ambient monitoring data and followed with a proposed 14 re-affirmation of the attainment based on the evaluation 15 of 2006 monitoring data in August 2007. These actions 16 however do not constitute redesignation of the valley to 17 attainment since further Clean Air Act requirements need 18 to be met. 19 The district prepared the 2007 PM10 maintenance 20 plan to address these requirements and request official 21 redesignation to attainment. The district governing board 22 adopted the plan in September. The district's PM10 23 maintenance plan addresses both the 24-hour PM10 standard 24 and the revoked annual standard. 25 PM2.5 is a major component of PM10 in the valley, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 212 1 especially during the winter. PM2.5 is a complex mixture 2 of primarily or directly emitted particles, such as soot, 3 and secondary particles formed in the atmosphere from 4 pre-cursor gases. 5 Higher PM2.5 concentrations occur between late 6 November and January during extended periods of stagnant 7 weather with cold, damp, foggy conditions which are 8 conducive to the formation of secondary particles. At 9 these times, PM2.5 is dominated by ammonium nitrate formed 10 from nitrogen oxides or NOx and ammonium emissions. 11 Winter PM2.5 also contains wood smoke and other directly 12 emitted combustion particles. 13 Elevated PM10 concentrations also occur in the 14 fall between October and November during relatively stable 15 atmospheric conditions. PM10 at this time of the year is 16 driven by directly emitted particles including dust. 17 --o0o-- 18 STAFF AIR POLLUTION SPECIALIST VELASCO: The 19 results from multiple studies conducted over 15 years 20 during the fall and winter at locations throughout the 21 valley have shown that reducing NOx is the most effective 22 way to reduce the secondary ammonium nitrate component of 23 PM10. Therefore, ARB's extensive Mobile Source Control 24 Program and a range of district rules focusing on 25 controlling NOx emissions have been essential in reducing PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 213 1 PM10. 2 Reductions in smoke and dust emissions have also 3 been vital to PM10 attainment in the valley. In 2003, the 4 district adopted a residential wood burning rule that 5 includes a mandatory no burn provision for days when based 6 on forecasted weather conditions high PM levels are 7 expected to occur. 8 The district is looking into further reducing 9 wood smoke through enhancements to this program. The 10 district's conservation management practices have been 11 important in reducing fugitive dust emissions from 12 agricultural operations. District rules also require dust 13 controls at construction sites and other sources. 14 --o0o-- 15 STAFF AIR POLLUTION SPECIALIST VELASCO: Over the 16 past 20 years, the severity and frequency of PM10 episodes 17 have significantly decreased. PM10 air quality in the 18 value has improved as control measures in air quality 19 plans have been adopted and implemented. 20 Earlier on, the focus was on NOx controls. 21 District control measures for directly emitted PM 22 followed. 23 During the development of the 2003 PM10 plan, the 24 district adopted additional controls for directly emitted 25 PM, including the previously mentioned wood smoke and dust PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 214 1 measures. 2 In the late 1980s and early 1990s, maximum 3 24-hour concentrations surpassed 200 micrograms per cubic 4 meter. Over 40 estimated PM10 exceedances were common and 5 annual average concentrations were over 75 micrograms per 6 cubic meter. In comparison, from 2004 to 2006, there were 7 no violations of the 24-hour standard, and the maximum 8 three-year annual average concentrations was 47 micrograms 9 per cubic meter. 10 --o0o-- 11 STAFF AIR POLLUTION SPECIALIST VELASCO: The 12 valley has attained a PM standard during a period of rapid 13 economic growth and increases in population and vehicle 14 travel. Both directly emitted PM10 and PM10 precursor 15 emissions have been reduced. 16 For example, between 2000 and 2005, population 17 grew by 14 percent and vehicle miles traveled by 28 18 percent, yet PM10 emissions decreased by ten percent and 19 NOx emission by 12 percent as the result of ongoing 20 statewide local control programs. 21 --o0o-- 22 STAFF AIR POLLUTION SPECIALIST VELASCO: On four 23 days over the last three years, 2004 through 2006, the 24 24-hour standard was exceeded due to extreme wind 25 conditions. These exceedances are excluded under the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 215 1 federal rule for exceptional events. 2 The Federal Clean Air Act allows areas to exclude 3 approved exceptional events in determining compliance 4 since they are not reasonable, preventable, or 5 controllable. These four events were submitted by U.S. 6 EPA to be flagged as exceptional event. 7 U.S. EPA had previously approved the exclusion of 8 the 2004 event. They have also proposed concurrence with 9 the exclusion of the three exceptional events recorded in 10 2006. 11 --o0o-- 12 STAFF AIR POLLUTION SPECIALIST VELASCO: The 13 district's 2007 PM10 Maintenance Plan meets the federal 14 Clean Air Act requirement for an area to be re-designated 15 to attainment and includes the following components. 16 First, the plan includes the 2005 attainment 17 inventory which identifies the maximum emission level that 18 will allow the standard to be maintained. The 2005 19 inventory was selected since it was the third year of the 20 period when air quality first showed attainment. It is 21 the most stringent level because emissions are declining 22 each year. 23 The 2005 attainment inventory consists of annual 24 and winter emission estimates for directly emitted PM10 25 and NOx, the limiting precursor for secondary PM10 in the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 216 1 valley. 2 Second, the plan demonstrates that the PM10 3 standards will be maintained through 2020 at all 4 monitoring stations in the valley. The district used a 5 combination of receptor modeling and regional 6 photochemical modeling to demonstrate attainment for the 7 24-hour and the annual PM10 standards. 8 Third, the district commits to continue PM10 9 monitoring to verify sustained attainment of the PM10 10 standards and to complete annual reports including air 11 quality data showing continued PM10 attainment. 12 Finally, the plan includes contingency provisions 13 for prompt correction of any violation that might occur 14 after the value has been designated to attainment. The 15 Maintenance Plan establishes a process to ensure that 16 contingency measures are adopted once they are triggered. 17 Contingency measures would be drawn from applicable 18 measures in the district's reasonably adopted 2007 ozone 19 plan or the PM2.5 plan currently under development. 20 --o0o-- 21 STAFF AIR POLLUTION SPECIALIST VELASCO: Since 22 the adoption of the valley's 2003 PM10 Attainment Plan, 23 direct PM10 and NOx emissions that form PM10 have been 24 reduced significantly. 25 ARB adopt state measures for mobile sources PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 217 1 achieve the ARB commitment in the valley's 2003 PM10 2 Attainment Plan. This commitment is for emission 3 reductions of ten tons per day of NOx and .5 tons per day 4 of direct PM10 in 2010. 5 The district has also adopted all of the rules 6 committed to in the 2003 plan and will not remove, 7 replace, or suspend any emission reduction measure 8 commitments in the plan. 9 Air quality modeling based on these emission 10 reductions demonstrates that the valley will continue to 11 demonstrate attainment through 2020. 12 In addition, ARB and the district are on track to 13 achieve additional reductions in pollutants that form PM10 14 from the district's ozone and PM2.5 attainment plans. 15 --o0o-- 16 STAFF AIR POLLUTION SPECIALIST VELASCO: The 17 valley transportation agencies require new PM10 18 transportation conformity budgets based on ARB's latest 19 on-road mobile source emission factor model and EMFAC2007 20 to amend transportation improvement plans and implement 21 project changes. 22 During the development of the 2007 PM10 23 Maintenance Plan, the valley transportation agencies 24 provided updated transportation activity data for use in 25 calculating conformity budgets. This information was not PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 218 1 available in time for the district to incorporate it into 2 the adopted plan. 3 ARB staff worked with the transportation agencies 4 and the district to reflect the updated activity data in 5 conformity budgets and post the budgets for the required 6 30-day public review. ARB staff proposes ARB adoption of 7 the updated transportation conformity budgets for the 8 region. 9 The valley transportation agencies require 10 EMFAC2007 as the basis for conformity determination for 11 plan amendments schedule for winter 2008. We expect U.S. 12 EPA to make an adequacy finding by January 2008 in order 13 to allow the transportation planning process to remain on 14 schedule. 15 --o0o-- 16 STAFF AIR POLLUTION SPECIALIST VELASCO: Based on 17 our review, ARB staff concurs with the 2007 PM10 18 Maintenance Plan and request for re-designation and the 19 district's supporting technical analysis. ARB staff 20 recommends that the Board approve the San Joaquin Valley 21 2007 PM10 Maintenance Plan, including updated 22 transportation conformity budgets, emission inventory, and 23 maintenance demonstration as a revision to the California 24 SIP for submittal to U.S. EPA. 25 In addition, ARB staff recommends that the Board PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 219 1 approve the district's re-designation request from 2 non-attainment to attainment for the federal PM10 3 standard. 4 --o0o-- 5 STAFF AIR POLLUTION SPECIALIST VELASCO: 6 Attainment and continued maintenance of the PM10 standards 7 are important milestones in reducing the exposure of the 8 valley's residence to particulate pollution. These 9 efforts have also led to improvement in PM2.5, including 10 the compliance with the currently applicable 24-hour PM2.5 11 standard. The next goal will be to achieve the annual 12 PM2.5 standard. A SIP for that standard is due in 2008. 13 Recently, U.S. EPA strengthened the 24-hour PM2.5 14 standard and new designation by U.S. EPA are due next 15 year. As part of this process, ARB must submit 16 recommendations to U.S. EPA in December 2007. 17 The valley can be expected to be designated as 18 non-attainment based on the most recent monitoring data. 19 This concludes my presentation. 20 CHAIRPERSON NICHOLS: We have five witnesses that 21 signed up to speak, Don Hunsaker from San Joaquin Valley 22 APCD, Roger Ison with California Cotton Grower and 23 Jennifer Skondin. 24 MR. HUNSAKER: Good afternoon, Madam Chair and 25 members of the Board. My name is Don Hunsaker. I'm the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 220 1 Plan Development Supervisor for the San Joaquin Valley Air 2 Pollution Control District. And thank you for allowing us 3 to make comment here today. 4 We are here to support your approval of our PM10 5 Maintenance Plan. To us, the fact that we're even here 6 talking about a Maintenance Plan for PM10 is a reflection 7 of an historic achievement and accomplishment. Not just 8 the fact that we worked hard to put rules in place, but 9 since of the valley and businesses in valley worked very 10 hard to implement those rules. Every one from individuals 11 making decisions about whether or not burn wood in their 12 homes to farmers changing the way they grow their crops, 13 all working together to getting to this historic point of 14 being in attainment of the PM10 standard. 15 Dr. Velasco covered a lot of the points I was 16 going to make and did an excellent job so I won't belabor 17 those. 18 I did want to mention one other thing. The 19 maintenance date is 2020. That seems like it's kind of 20 far out in the future to you. We're not going to just sit 21 on our hands and not look at things until the year 2020. 22 In our 2007 Ozone Plan that was adopted earlier this year, 23 our EPCO put in that plan in Chapter 5, in fact, a 24 commitment that we will do an annual report and that 25 annual report will be public. It will be presented to our PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 221 1 board every year, and it will detail trends in ambient air 2 quality including PM and ozone as well as trends in 3 emissions. And we'll look at predictive reductions versus 4 what we actually got and do a year-by-year accounting and 5 monitoring of progress for the ozone PM10 and PM2.5. 6 And lastly, I just wanted to say that the fact 7 we're doing a Maintenance Plan to me is an overarching 8 success that transcends PM10. It shows to the public to 9 businesses that this stuff works. You reduce pollutant 10 emissions and air quality gets better. I think that goes 11 a long way to ensuring the success of future control 12 programs. 13 CHAIRPERSON NICHOLS: Thank you. And 14 congratulations. 15 Roger and then Jennifer. 16 MR. ISON: Good afternoon. For the record, My 17 name is Roger Ison. I'm with California Cotton Ginners 18 and Growers Association. Also here this afternoon 19 representing the Neisi Farmers League, California Citrus 20 Mutual, and California Grape and Tree Fruit League. I'll 21 do it all at once so you don't have to hear us four or 22 five times. 23 We have submitted written comments, so I'll be 24 very, very brief. But I do want to agree. I think we 25 should be here to congratulate the fact this we have PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 222 1 reached attainment. To us, it's a big deal. It's a 2 significant accomplishment. And to not recognize it is a 3 slap in the face to all of my members who have made 4 significant changes to the way that we operate in order to 5 get to this point. 6 My cotton gins are in the final year of a 7 three-year rule, the most stringent rule in the world, 8 controlling PM10 emissions from cotton gins. It costs 250 9 to $300,000 per gin. And that's a significant outlay of 10 money to get us to attainment. 11 Our farmers in 2004 set out, worked with the 12 district with EPA and ARB to adopt a conservation 13 management practice rule that ended up being the most 14 stringent rule in the country. And we were shooting for 15 32 tons of PM10 reductions and in the end achieved over 35 16 tons, a very significant accomplishment. 17 And again as Don said, I wanted you to be aware 18 and understand that we have not stopped as well from the 19 agriculture industry. Right now today we are in the third 20 week of a test of a new device called an optimizer which 21 reduces the number of passes in row crops particularly 22 cotton and wheat. EPA and the district put $100,000 each 23 into a study for us to compare that piece of equipment to 24 conventional tillage operations. We're conducting that 25 study today as we speak at one of my farmers in Los Banos. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 223 1 So we're still continuing to look for additional 2 control measures, things that we can do to help not only 3 improve air quality, but help us survive as we move 4 forward. 5 It's also important to note that these aren't the 6 only reductions. There are a lot of reductions out there 7 that have not yet been accounted for. Many of you are 8 aware of the ag ice program, the program that offers 9 reduced rate for farmers to convert diesel pump engines 10 over to electric. When it's all said and done, we're 11 going to have replaced over 2000 diesel engines over to 12 electric. And that's significant PM10 reductions that are 13 not accounted for by the district at this point. 14 Additionally, there was a representative here 15 earlier, but I guess he's gone now from USDA NRCS. And 16 they have an environmental quality incentive program. To 17 date, we have oiled over 1100 miles of unpaved roads on a 18 voluntary basis in the San Joaquin Valley. Again, all of 19 those reductions are unaccounted for in the district's 20 emission inventory. And that should be recognized as 21 well. 22 So with all that in mind, I would encourage you 23 to approve the Maintenance Plan and to approve the 24 re-designation to support that and submit that to EPA. 25 Thank you. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 224 1 CHAIRPERSON NICHOLS: Thank you. I'm guessing 2 Jennifer was here on the earlier item. 3 Is Paul Cort from Earth Justice here? And then 4 he'll be followed by Tim Carmichael. 5 MR. CORT: Good afternoon. My name is Paul Cort. 6 I'm here with Earth Justice. 7 I'm here to clarify in fact the valley is not 8 measuring attainment with the PM10 standard. What the 9 valley is doing is asking to ignore the data that shows 10 that the PM10 problem continues in the valley. 11 And this data shows that the problem is the same 12 problem that has plagued the valley from the outset. It 13 continue to be wind-derived dust in the southern portion 14 of the valley. It's the same number of days that occur 15 every fall that have occurred over the last three years. 16 The only difference is that the district, ARB, and EPA 17 have chosen to try to ignore those events this year. 18 And so the approval of the Maintenance Plan 19 really is premised on EPA's finding that the valley has in 20 fact attained. And if you want to talk about half-baked 21 determinations, this attainment finding that EPA made grew 22 out of the court-ordered deadline, which said that EPA 23 would either have to adopt control measures by that 24 court-ordered deadline or find that the valley had 25 attained. Lo and behold, by that deadline, EPA made the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 225 1 finding. 2 Unfortunately for EPA, in the weeks just before 3 EPA made the final determination, the valley measured 4 exceedances of the PM10 standard, which should be 5 precluded EPA from making the attainment findings. 6 Instead, they concluded in the final rule that not 7 withstanding that they had no support for any claim that 8 the violation must be the result of either wind or fire. 9 No explanation of which wind, what fire. It didn't 10 matter. EPA went ahead and made the attainment finding. 11 To make matters worse in the weeks that followed 12 the final determination, the valley measured exceedances 13 on several more days. That attainment finding is now 14 under litigation. 15 The subsequent determinations or exceedances have 16 not yet been finalized as excused by EPA. So it's a 17 little inappropriate I believe to say, you know, with any 18 certainty that the valley is attaining and we can assume 19 that the problem has been solved. 20 This Maintenance Plan is premature. At a 21 minimum, this Board should wait until these attainment 22 determinations by EPA are resolved. And we will be 23 submitting comments on Friday that will explain why EPA 24 cannot finalize that attainment determination. 25 For starters, we will show with the very model PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 226 1 that ARB and the district rely on that the winds they 2 point to were not blowing in the direction of the monitors 3 that were measuring exceedances. 4 It's also worth backing up a little bit and 5 giving you a little bit of the story on how the excuses 6 unfolded. As I mentioned, when EPA made its initial 7 determination, they pointed to unnamed wind or fire. The 8 fire excuse was eventually dropped. 9 And the original excuse was that it was wind from 10 the Sacramento area. The Sacramento district to their 11 credit said you can't blame it on wind from our area. 12 That excuse was then dropped. 13 They changed to wind from the Tracy area. EPA 14 said, well, we can't really buy this argument it was wind 15 from Tracy. So for a short period, it went back to fire. 16 I'm not sure who said the fire excuse is not going to 17 work. 18 They ended up pointing to winds from the Lemoore 19 area. And that's where using these models we can show you 20 that even if there were high winds that overcame 21 reasonable control, there is no way that they affected the 22 monitors, especially in the Bakersfield area. 23 Moreover, we can point to the fact there could 24 not have been reasonable controls in place. Because if 25 there were, the winds that were pointing to here, which PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 227 1 were upwards of 25 miles per hour, would not have led to 2 this dust storm. 3 CHAIRPERSON NICHOLS: Excuse me, you're out of 4 time. But I would ask you have you submitted those points 5 to the staff? 6 MR. CORT: We submitted comments to the Board 7 yesterday. And the more detailed technical comments will 8 be submitted to EPA by their comment deadline, which is 9 Friday, which is really at bottom the point here. All 10 these issues are still open. And it's premature to ask 11 for re-designation until these issues are resolved. 12 CHAIRPERSON NICHOLS: Thank you. 13 Tim Carmichael. 14 MR. CARMICHAEL: Good afternoon, again. Tim 15 Carmichael with the Coalition for Clean Air. 16 Just to echo that closing point by Mr. Cort, EPA 17 has not concluded the public comment process on this 18 issue. As Mr. Cort said, a number of organizations will 19 be submitting comments tomorrow on the technical details 20 that either support or undermine ARB reaching such a 21 conclusion or EPA reaching such a conclusion that the 22 district has in fact attained the PM10 standards and it's 23 appropriate to re-designate or shift to a Maintenance 24 Plan. 25 We understand the desire to recognize progress. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 228 1 We understand the desire to make that change. Especially 2 from the district's perspective and businesses in the 3 district, because frankly under a Maintenance Plan, less 4 is required. You don't have to show a rate of progress 5 continuing with the reductions of that PM10. 6 The slide that was shown with the graph of the 7 progress is quite misleading in that there really hasn't 8 been a change in violation days over the last several 9 years. What's changed in just the last couple of years is 10 what EPA allowed as an exceptional circumstance that would 11 allow the district to eliminate that violation day or not 12 count that violation day because of wind or some other 13 circumstance. 14 And as our technical comments are going to show, 15 if you really take a close look at this, the wind wasn't 16 blowing to the points where the violation days were 17 measured. For me, this comes down to an ARB credibility 18 issue. You really need to think twice about making a 19 significant adoption or significant shift like this while 20 the jury is still out, if you will, while the technical 21 information is still being assessed. 22 And we strongly urge you not to act today on 23 this. To give more time for EPA and those that are still 24 working on the technical aspects of this to have 25 discussions and then come back when there's more PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 229 1 information available to your staff and to this Board. So 2 the take away is you don't need to act today, and we urge 3 you not to. Thank you. 4 CHAIRPERSON NICHOLS: Thank you. I just wanted 5 to clarify, because I'm actually looking at the resolution 6 here as opposed to just the commentary. And there is 7 nothing in this resolution that has us making a finding or 8 requesting a finding of attainment. Is that correct? 9 DEPUTY EXECUTIVE OFFICER TERRY: That is correct. 10 Typically, what happens is a finding of attainment is 11 simply a mechanism that EPA may choose to use to recognize 12 when monitors show attainment. And that's typically done 13 before a Maintenance Plan is developed, because it takes 14 some months to go through that process. 15 So EPA made that finding of attainment initially 16 some time ago. And at the public request, they extended 17 the comment period. So that is true. 18 However, in terms of development of SIPS, the 19 process is really responsibility for the state and local 20 agencies to independently review the monitoring data and 21 follow EPA guidance, which is very clear on the 22 exceptional event, and make independent determinations as 23 to whether or not the rules have been complied with. 24 And so the district board has made that 25 assessment that EPA's guides with regards to exceptional PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 230 1 events has been met. 2 Our staff have done a thorough -- each time 3 there's one of these requests made by the district, they 4 do the technical analysis to see if that request from the 5 district meets the federal criteria and they have -- our 6 technical staff have agree with that. And that's how the 7 process works. 8 Now certainly now if the Board were to approve 9 the plan, it's EPA's job then to assess our Maintenance 10 Plan, our technical justification, and the monitored data 11 and decide whether they agree with the State of California 12 and the local district. 13 CHAIRPERSON NICHOLS: Okay. But the Maintenance 14 Plan itself, although it's premised on the idea you're 15 there, basically is just a way of assuring that you're not 16 backsliding from where you are today as opposed -- so the 17 difference is whether in effect we're submitting to EPA a 18 set of measures that if they find that there is compliance 19 or there is attainment, they could use that. We would be 20 making -- we would have given them our determination that 21 this is the right way to keep things where they are today. 22 That leaves open this issue of whether there still is a 23 need for further work to actually reach attainment. 24 I know this issue about naturally occurring 25 events or exceptional events is very contentious and is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 231 1 something people can argue about for a long time. I've 2 not independently reviewed the data myself, and I'm not in 3 a position to make a statement about that. But it does 4 seem to me that if this is now at the level where the 5 district and the state folks have agreed to it, it should 6 be up to EPA to do their job on that piece of it. 7 But I will be interested to hear from the people 8 who work at the district level about their views on how 9 this should be handled as well. Start with you. 10 BOARD MEMBER CASE: I would be happy to comment 11 on it. 12 And I do realize that we need to continue to work 13 on the issue for PM10. I do understand and I did ask ARB 14 staff yesterday in briefings about this subject. I talked 15 extensively with Dr. Hunsaker and other professionals on 16 the San Joaquin Board about meeting attainment. 17 The answer does still keep coming back to, yes, 18 we made it. But saying that, it is not time to relax. 19 And I think we can all agree with that. As a health care 20 professional, my eyes are removed to 2.5 which will also 21 improve potential emissions of PM10 along the way, because 22 PM2.5 has even greater significance for human health than 23 ten. 24 So I would absolutely agree. We're going to 25 continue to work on the issue. We're not going to sit PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 232 1 back. This is not a stopping point. I assure you this is 2 not a stopping point. But I do believe we need to be 3 moving forward. 4 There continues to be the issue of conformity 5 with local transportation boards to get through that 6 process so they can go through the conformity modeling. 7 And without that, they have the potential of being left 8 behind while these huge state bonds are moving forward for 9 transportation projects. 10 And in Fresno County, we actually have a self 11 help tax which is a transportation tax that's designated 12 to have 34 percent of it sent to public transportation, 13 which is a huge move forward. We have to get there with 14 public transportation as one of those pieces. 15 But again, in my discussions with staff, I've 16 been re-assured that these elements have been made and 17 natural occurring event or acts of God we don't have 18 control over. But as a member of both this Board and the 19 San Joaquin Board, I assure you we are going to continue 20 to work on this issue. Because it's too important for 21 public health to stand back and not do that. 22 But I do believe putting our resources and our 23 attention towards the 2.5 is really critical. And you 24 know, we're going to debate this one for a while longer. 25 But I still believe we have made that attainment to make PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 233 1 it a maintenance where there's no back sliding. We stay 2 moving forward. The regulations stay in place. And we 3 get on with our new plan which potentially can reduce the 4 PM10 even further. 5 Thank you. 6 CHAIRPERSON NICHOLS: Other Board members want to 7 weigh in on this? 8 SUPERVISOR HILL: I actually have a question, 9 Madam Chair. 10 The issues that were raised by Mr. Carmichael and 11 Mr. Cort regarding the timing of the issue and the comment 12 period has not ended and we're taking action. Is it a 13 relationship there that -- or the episodic events that 14 they were talking about, could these have some effect with 15 further analysis or hearing from them correct analysis and 16 correct factual basis for those decisions, could that make 17 a difference in terms of the attainment question we are 18 talking about? 19 DEPUTY EXECUTIVE OFFICER TERRY: I should have 20 added that. Of course, we've been following this closely. 21 And we will get the full package of comments from EPA 22 staff, and we will independently review the comments as 23 well. 24 And if we find something new that -- we won't 25 find anything new in terms of the days of violation. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 234 1 Nothing new has happened there. It's a matter of 2 interpretation of EPA's guidance relative to the measured 3 data. But if new questions are raised, we will certainly 4 explore them. And if we find something compelling and if 5 the Board desires, we can certainly report back on the 6 results of that analysis. 7 SUPERVISOR HILL: Mr. Carmichael made the comment 8 about credibility. It seems to me we should have that 9 information before we make a decision and take some action 10 on this. I mean, what's the time frame for the -- 11 DEPUTY EXECUTIVE OFFICER TERRY: Well, the issue 12 is really EPA's time frames are months if not longer 13 typically for reviewing these things. And we have 14 actually reviewed the data that is being subject to public 15 review in great detail. We have submitted that package to 16 U.S. EPA already with our technical staff's evaluation, 17 includes the district staff's analysis. So again, the 18 only thing we need to be responding to is public comment 19 and so -- 20 SUPERVISOR HILL: Sometimes that that's the best 21 information we get is in a meeting. 22 CHAIRPERSON NICHOLS: That's true. 23 I just want to clarify again if I can the 24 district is currently operating under a State 25 Implementation Plan for PM10, an approved Implementation PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 235 1 Plan. And their position is that having now followed that 2 plan, they've reached attainment. And that's what our 3 staff thinks too. 4 But if we were to approve a Maintenance Plan 5 today, that plan would never come into effect unless an 6 actual decision by EPA is made that they are in 7 attainment. And if additional information becomes 8 available that indicates that the finding is premature, as 9 Earth Justice and the Coalition are indicating, then that 10 Maintenance Plan just sits on a shelf. It doesn't do 11 anything unless the attainment finding is made. 12 So the question is are we somehow prejudging the 13 situation or pushing EPA to make a decision that they 14 might not otherwise make by giving them a Maintenance 15 Plan. To me, that's really the question that's before us 16 right now. 17 BOARD MEMBER KENNARD: Let me ask kind of a 18 tangential but different question. That is what's the 19 consequence of us putting this off for another month? 20 DEPUTY EXECUTIVE OFFICER TERRY: It has to do 21 with the conformity budget timing. Because even though 22 EPA will take a long time to act on the Maintenance Plan 23 per se, as long as the plan meets the completeness 24 criteria under federal law, they can go ahead and approve 25 the conformity budgets. That is essential because we have PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 236 1 this updated inventory. So the timing issue relates to 2 conformity. 3 But again one other thing I should mention 4 actually is this maintenance plan would be a strengthening 5 of the SIP, because the full Attainment Plan, all the 6 measures have been implemented. They are in place. And 7 so everything continues that was in the original 8 Attainment Plan with the addition of a contingency plan 9 that says if there are further violations more will be 10 done. So the result of the Board action really will be to 11 look in additional commitments by the State of California 12 to do more if violations were to occur down the road. 13 CHAIRPERSON NICHOLS: And this conformity budget 14 is premised on the notion that there is an approved plan 15 in place, whatever the plan is; right? 16 DEPUTY EXECUTIVE OFFICER TERRY: And it has to do 17 with its -- 18 CHAIRPERSON NICHOLS: Even I after all these 19 years of dealing with this can't see this straight. 20 DEPUTY EXECUTIVE OFFICER TERRY: We could survive 21 with the conformity budget in the previously approved 22 Attainment Plan were it not for the update to EMFAC. 23 That's the complication. We need to establish new 24 budgets. And it only in our views make our sense to use 25 the most updated information to replace the budgets. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 237 1 CHAIRPERSON NICHOLS: It's all about the 2 transportation money. 3 BOARD MEMBER D'ADAMO: I would just add as I 4 recall there was a request made by some of the 5 stakeholders when this item was before the local board 6 that it be delayed so that this very issue could be looked 7 into. 8 So there has been public comment periods through 9 the local district. We now have our public comment 10 period. I'm looking at the staff report. There's all 11 kinds of information in here on the staff analysis. 12 There's an appendix. So I think we've thoroughly reviewed 13 it. 14 I would probably have second thoughts if it 15 wasn't for two issues. One, the conformity. There's no 16 reason to penalize an area. I live there. I have seen 17 what people have gone through. I'm shocked that we've 18 been able to make the progress we have. And I think that 19 those who worked hard ought to be rewarded and not 20 penalized. 21 And then the other issue is that Ms. Terry is 22 saying, this actually strengthens an already positive 23 situation. And I just think a delay would be punitive in 24 this sense. If the information is forwarded to U.S. EPA 25 and as a result of further comment we have to re-think PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 238 1 things, I'm not concerned about our credibility. We're 2 sister agencies and I just think -- 3 BOARD MEMBER LOVERIDGE: Second the motion. 4 CHAIRPERSON NICHOLS: There's a motion and a 5 second. 6 I'm going to ask one more question before I call 7 for the question. If EPA were to decide that Earth 8 Justice is right and the attainment demonstration had not 9 been made, what would that do to the conformity finding? 10 DEPUTY EXECUTIVE OFFICER TERRY: I might have to 11 look at Dennis. Could we update -- what would we do with 12 the budget? 13 MR. WADE: Presuming EPA found the budgets 14 adequate or put them in place, I don't believe they would 15 go back and rescind the action. 16 DEPUTY EXECUTIVE OFFICER TERRY: You're asking if 17 we did not submit a new budget. 18 CHAIRPERSON NICHOLS: No. I was actually -- I'm 19 playing out every possible scenario here. And the 20 scenario I was focused on was the scenario that said we 21 submit this Maintenance Plan and the conformity budget. 22 EPA decides that Mr. Cort is right after all and 23 eventually they say you never did really achieve 24 attainment. Then what does that do to the conformity 25 budget? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 239 1 MR. WADE: I believe they stay in place. Or once 2 they are approved they would remain in place until the 3 district or the board would do whatever action. 4 CHAIRPERSON NICHOLS: So like the worst thing 5 that could happen from an air quality perspective is that 6 using this conformity budget, the State would allocate 7 some transportation money to the valley, which would get 8 spent on some project that would have been found 9 consistent as opposed to not. I mean, that's really what 10 it comes down to, right? It's about the transportation 11 money? 12 BOARD MEMBER CASE: Wouldn't that also be an 13 improvement because the conformity budget would be based 14 on new emission inventory versus the old one? 15 DEPUTY EXECUTIVE OFFICER TERRY: We certainly 16 think so. 17 BOARD MEMBER CASE: It actually improves the 18 conformity findings in terms of using more current data 19 versus past data in terms of how planning goes forward for 20 transportation projects. 21 CHAIRPERSON NICHOLS: I'm satisfied. 22 SUPERVISOR HILL: I will be voting no. I don't 23 feel comfortable. 24 CHAIRPERSON NICHOLS: I guess we better have a 25 roll call vote then. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 240 1 CHIEF COUNSEL JENNINGS: It would be appropriate 2 to have a formal motion to pass the resolution. 3 CHAIRPERSON NICHOLS: I think Mayor Loveridge 4 assumed he was seconding a motion by Ms. D'Adamo. So we 5 do have a motion and a second. 6 BOARD MEMBER D'ADAMO: Okay. 7 SECRETARY ANDREONI: Ms. Berg? 8 BOARD MEMBER BERG: Aye. 9 SECRETARY ANDREONI: Supervisor Case? 10 BOARD MEMBER CASE: Aye. 11 SECRETARY ANDREONI: Ms. D'Adamo? 12 BOARD MEMBER D'ADAMO: Aye. 13 SECRETARY ANDREONI: Supervisor Hill? 14 SUPERVISOR HILL: No. 15 SECRETARY ANDREONI: Ms. Kennard? 16 BOARD MEMBER KENNARD: Yes. 17 SECRETARY ANDREONI: Mayor Loveridge? 18 BOARD MEMBER LOVERIDGE: Aye. 19 SECRETARY ANDREONI: And Chairman Nichols? 20 CHAIRPERSON NICHOLS: Yes. 21 SECRETARY ANDREONI: Motion passes. 22 CHAIRPERSON NICHOLS: Okay. 23 Excuse me. Before we begin the next item, I'm 24 going to announce this in English and then the translator 25 will announce it in Spanish. There are translation PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 241 1 services available in Spanish for those who would like it. 2 The headsets are available in the back of the hearing 3 room. 4 (Thereupon the announcement was translated into 5 Spanish.) 6 CHAIRPERSON NICHOLS: Thank you. 7 Did everyone hear that announcement? 8 All right. This is our last item of the day. 9 And it's proposed amendments to regulations regarding new 10 aftermarket and used catalytic converters that are offered 11 for sale and use in California. 12 In 1988, the Board adopted regulations allowing 13 the sale and use of non-original equipment catalytic 14 converters as replacement parts in older California 15 vehicles if they meet certain criteria. 16 The staff is now proposing to update these 17 criteria to incorporate more stringent performance, 18 durability, and warranty requirements consistent with the 19 more stringent emission standards that apply to newer 20 light-duty and medium-duty vehicles. 21 Mr. Cackette, would you please introduce this 22 item. 23 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Thank 24 you, Chairman Nichols. As you indicated, we last 25 revisited this issue of used aftermarket and new PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 242 1 aftermarket catalytic converters in 1988. A lot has 2 changed since then with respect to the emission 3 performance of passenger cars and trucks. Vehicles now 4 are meeting much more stringent emission standards. In 5 fact, probably 90 percent lower than what the emission 6 standards were in 1988. And this is due in large part to 7 significant improvements in the catalytic converter 8 technology. 9 However, corresponding improvements in the 10 performance of the aftermarket replacement converters that 11 are often used to fix cars when they're not performing 12 well later in their life also need to be made so that when 13 they're installed on new vehicles, the vehicle will -- or 14 on used vehicles, the emissions will stay at low levels 15 for the rest of the vehicle's life. To this end, the 16 staff has worked closely with the aftermarket converter 17 manufacturers to craft a proposal to effectively and 18 efficiently ensure that aftermarket catalytic converters 19 are fully compatible with the vehicles that are on the 20 road today. 21 At this point I'll turn the presentation over to 22 Mr. Allen Lyons of the Mobile Source Control Division. 23 --o0o-- 24 AIR POLLUTION SPECIALIST LYONS: Thank you, Mr. 25 Cackette. And good afternoon Chairman Nichols and members PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 243 1 of the Board. 2 Today I will present to you staff's proposed 3 amendments to ARB's requirements for aftermarket catalytic 4 converters intended for use on California vehicles. 5 --o0o-- 6 AIR POLLUTION SPECIALIST LYONS: I'll begin with 7 some background on the importance of catalytic converters 8 in reducing emissions from motor vehicles and the need for 9 the availability of aftermarket replacement converters. 10 Next, I'll outline the requirements that 11 currently apply to aftermarket converters, followed by a 12 discussion regarding why amendments to these requirements 13 are needed at this time. 14 I'll then describe the amendments being proposed 15 today and will discuss the economic and air quality 16 impacts associated with the proposal. 17 In concluding the presentation, I'll summarize 18 key points regarding the proposal and will present staff's 19 recommendations to the Board. 20 --o0o-- 21 AIR POLLUTION SPECIALIST LYONS: Catalytic 22 converters are one of the most important emission control 23 devices used on gasoline vehicles. These devices are 24 located in the exhaust system and contain substrates that 25 direct the engine's exhaust through narrow channels. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 244 1 The channels within the substrate are coated with 2 precious metals, which initiate chemical reactions that 3 remove pollutants from the exhaust. 4 Hydrocarbons and carbon monoxide are converted to 5 water vapor and carbon dioxide and oxides of nitrogen are 6 reduced to nitrogen and oxygen. 7 Catalytic converters on today's vehicles are very 8 efficient, typically converting in excess of 95 percent of 9 the engine-out pollutants before they reach the 10 atmosphere. However, excess heat, vibration, or poisoning 11 over time can greatly reduce conversion efficiencies, 12 allowing higher levels of pollutants to be emitted. 13 --o0o-- 14 AIR POLLUTION SPECIALIST LYONS: Original 15 equipment manufacturer, or OEM, catalytic converters are 16 available when a replacement part is needed. However, 17 original equipment converters are typically expensive, 18 costing from approximately $500 to more than $1,000. 19 Further, the length of time that an OEM converter is 20 designed to last is often significantly longer than the 21 remaining expected life of a vehicle that needs a 22 replacement. Therefore, owners of older high mileage 23 vehicles that purchase new OEM converters as a replacement 24 part would often only be able to benefit from a portion of 25 the converter's expected life. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 245 1 In order to provide a more affordable alternative 2 for owners of older vehicles, the ARB adopted regulations 3 in 1988 that provide for the approval and sale of 4 aftermarket catalytic converters that meet less stringent 5 criteria than do the OEM converters. Manufacturers 6 wishing to offer new aftermarket or used original 7 equipment converters for sale in California must have 8 their products evaluated and approved by ARB staff. The 9 performance criteria established by the regulations for 10 these catalytic converters were designed to balance the 11 need for continued emission reductions from older vehicles 12 with their limited expected remaining life times. 13 --o0o-- 14 AIR POLLUTION SPECIALIST LYONS: The performance 15 requirements adopted in 1988 require new aftermarket 16 catalytic converters to achieve at least a 70 percent 17 conversion efficiency for hydrocarbons and carbon monoxide 18 and a 60 percent conversion efficiency for oxides of 19 nitrogen. These efficiencies must be maintained for a 20 minimum of 25,000 miles of use. 21 Used OEM catalytic converters, which are 22 typically removed from vehicles in salvage yards, must be 23 tested through an ARB-approved emission screening process 24 to determine what level of performance is still present. 25 Those that still perform at levels comparable to what's PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 246 1 required for new aftermarket converters may be offered for 2 sale for use on a similar vehicle model. 3 --o0o-- 4 AIR POLLUTION SPECIALIST LYONS: Improvements to 5 the current evaluation criteria and procedures are needed 6 to keep pace with the performance of newer cars and light 7 trucks. Emission controls for motor vehicles have 8 improved greatly since the 1980s and newer vehicles are 9 meeting extremely low emission standards under ARB's LEV I 10 and LEV II programs. Compliance with these standards 11 requires a catalytic converter efficiency that remains in 12 excess of 90 or even 95 percent, which is well above the 13 minimum specifications for current new aftermarket and 14 used catalytic converters. 15 --o0o-- 16 AIR POLLUTION SPECIALIST LYONS: Further, 1996 17 and newer model-year vehicles are equipped with second 18 generation on-board diagnostic systems known as OBD II 19 that specifically monitor the condition of the catalytic 20 converter as a vehicle is being driven. Aftermarket 21 catalytic converters meeting the requirements adopted in 22 1988 are not compatible with OBD II systems because the 23 minimum level of performance that the monitoring system 24 looks for is typically higher than what the aftermarket 25 converter is designed to achieve. Therefore, if installed PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 247 1 on an OBD II equipped vehicle, the monitoring system is 2 likely to illuminate the vehicle's malfunction indicator 3 light within a very short period of time. 4 The ARB staff is dealing with the current need 5 for replacement converters for OBD II equipped vehicles 6 through interim agreements with aftermarket catalytic 7 converter manufacturers. Through these agreements, 8 manufacturers are producing aftermarket converters that 9 will allow newer vehicles to continue meeting emission 10 standards for 50,000 miles of use after the OEM converter 11 has deteriorated. These converters are also designed so 12 that they will not prematurely be detected as 13 malfunctioning by vehicle OBD II systems. 14 For pre-OBD II vehicles, the staff has found that 15 additional emission reductions from this fleet can be 16 obtained through the use of higher performing and more 17 durable aftermarket catalytic converters. 18 --o0o-- 19 AIR POLLUTION SPECIALIST LYONS: The amendments 20 proposed by staff would replace the current fixed 21 efficiency requirements for new aftermarket catalytic 22 converters with performance criteria that are based on 23 bringing vehicles back into compliance with the emission 24 standard they were certified to meet. 25 The durability requirements for new converters PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 248 1 would be increased to five years or 50,000 miles from the 2 current 25,000 mile requirement in light of the fact that 3 the overall life of motor vehicles is greater than in the 4 past. 5 --o0o-- 6 AIR POLLUTION SPECIALIST LYONS: For OBD II 7 equipped vehicles, the proposed procedures would require 8 aftermarket catalytic converter manufacturers to 9 demonstrate that vehicle OBD II systems are fully 10 compatible with their products. That is, the converters 11 must be formulated such that vehicle OBD II systems will 12 be able to distinguish between a properly operating and a 13 malfunctioning aftermarket converter. This is an 14 important provision to ensure that vehicles have properly 15 functioning catalytic converters in place for as long as 16 they are on the road. 17 The proposed evaluation procedures also contain 18 other improvement to ensure the success of ARB's 19 replacement catalytic converter strategy. For example, 20 manufacturers would be required to implement quality 21 control procedures to ensure that production components 22 perform at the same levels as the test converters used 23 during the approval process. Each converter must carry a 24 five-year or 50,000-mile warranty. And for enforcement 25 purposes, the staff is proposing more detailed converter PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 249 1 labeling requirements so that smog check technicians can 2 verify that the approval for a catalytic converter design 3 applies to the vehicle model on which it has been 4 installed. 5 The proposed amendments would apply to all 6 aftermarket converters offered for sale or installed on or 7 after January 1st, 2009. 8 --o0o-- 9 AIR POLLUTION SPECIALIST LYONS: For used OEM 10 catalytic converters, ensuring that a converter is still 11 good enough to bring a vehicle into compliance with its 12 emission standards has not been shown to be practical. 13 The process of reintroducing used converters into the 14 fleet requires each piece to be individually emission 15 tested because its condition is unknown when it is removed 16 from a salvaged vehicle. 17 As such, the entire cost to run the test must be 18 included in the price to the purchaser. Unless the 19 screening test is inexpensive relative to the value of the 20 converter, its impact on the price of the converter will 21 be beyond what is marketable. 22 Screening for steady-state conversion 23 efficiencies in the range of 70 to 80 percent can 24 currently be accomplished using a procedure that lasts 25 about 60 seconds and uses relatively inexpensive test PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 250 1 equipment. However, the test procedures ARB staff and 2 vehicle manufacturers use to determine compliance with 3 emission standards are much more complicated because they 4 take into account cold start emissions, transient vehicle 5 operation and other factors. This testing takes a minimum 6 of two days to complete and costs $1,500 or more per test 7 to conduct. 8 The staff is not aware of any way to simplify and 9 shorten this testing process enough to make it 10 economically feasible for the screening of used OEM 11 converters. 12 Further, screening tests do not provide 13 definitive information on how much longer a used converter 14 will continue to perform at its tested level. 15 --o0o-- 16 AIR POLLUTION SPECIALIST LYONS: Settling for a 17 screening procedure that is less capable in order to 18 manage testing costs would have a significant impact on 19 in-use vehicle emission levels. 20 To illustrate, this slide provides an example for 21 a vehicle meeting the ARB's LEV I emission standard that 22 was introduced in the late 1990s. 23 A catalytic converter that is at least 95 percent 24 efficient is needed in order for a vehicle to comply with 25 the established emission standard. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 251 1 Installing a used OEM catalytic converter that 2 could only be screened to ensure a 90 percent conversion 3 efficiency would more than double emission levels coming 4 from the tailpipe relative to the standard. If the 5 converter could only be cost effectively screened for 85 6 percent efficiency, emissions would be more than triple 7 the emission standard. 8 --o0o-- 9 AIR POLLUTION SPECIALIST LYONS: Because of the 10 importance of ensuring that replacement catalytic 11 converters are capable of bringing vehicles into 12 compliance with emission standards for the length of time 13 required, the staff believes adequately stringent and 14 effective screening must take place in order for the 15 availability of used converters to make continued sense 16 from an air quality perspective. Therefore, in light of 17 the fact that an economically viable screening test has 18 not been identified and the development of one does not 19 appear to be on the horizon, the staff is proposing to 20 sunset the regulatory provisions that provide for the sale 21 of used catalytic converters. After July 1st, 2008, used 22 catalytic converters would not be sold in California. 23 The proposal would negatively impact companies 24 that sell used catalytic converters in California. The 25 staff has identified three such companies that currently PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 252 1 market used converters for California vehicles. Their 2 volume represents less than 2 percent of the total non-OEM 3 converters sold in California. The staff's proposal would 4 eliminate their market for used catalytic converters in 5 California. However, the sale of used converters would 6 still be legal in other states under federal regulation. 7 The proposal could also impact converter 8 replacement options available to owners of low volume 9 vehicles. New aftermarket catalytic converters may not be 10 available for certain vehicle applications due to their 11 low volume or because some element of the vehicle's design 12 makes it difficult to produce a less expensive replacement 13 converter. Without the availability of used OEM 14 converters, the owners of such vehicles may not have any 15 option other than purchasing a relatively expensive new 16 OEM converter when a replacement is needed. However, this 17 situation often occurs even today because the availability 18 of a used OEM converter for a given vehicle is dependant 19 on how many similar vehicles have recently been scrapped. 20 --o0o-- 21 AIR POLLUTION SPECIALIST LYONS: The staff 22 estimates that the proposal to improve aftermarket 23 catalytic converter performance requirements for pre-OBD 24 II vehicles would result in significant emission benefits 25 for California. Specifically, emissions of hydrocarbons PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 253 1 and oxides of nitrogen would be reduced by more than 36 2 tons per day statewide by calendar year 2012. 3 --o0o-- 4 AIR POLLUTION SPECIALIST LYONS: Catalytic 5 converters produced under the proposed amendments are 6 expected to cost up to $200 more on average than those 7 produced to comply with existing requirements. However, 8 because the converters would be designed to last twice as 9 long, the impact on cost when amortized over the life of a 10 converter is relatively small, ranging from about 10 cents 11 to 28 cents per every 100 miles of vehicle operation. 12 Staff estimates that the cost effectiveness of 13 the proposed amendments would be very good, at less than 14 $2 per pound of hydrocarbons and NOx that are eliminated. 15 --o0o-- 16 AIR POLLUTION SPECIALIST LYONS: In summary, the 17 amendments proposed by staff would provide for needed 18 improvements to the evaluation procedures used by ARB 19 staff to approve new aftermarket catalytic converters. 20 Conversion efficiency requirements that are tied to 21 vehicle emission standards, improved durability, and OBD 22 II compatibility will bring aftermarket replacement 23 converter performance up to par with the emission control 24 advances that have been applied to motor vehicles since 25 1988. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 254 1 The staff's proposal would also provide for 2 significant additional emission benefits from older 3 vehicles in a cost effective manner. 4 Therefore, the staff recommends the Board to 5 adopt the proposed amendments. 6 This concludes my presentation. Thank you. 7 CHAIRPERSON NICHOLS: Thank you. 8 Are there questions from Board members about the 9 proposal? 10 If not, we'll proceed to the witnesses. We have 11 four who have signed up. 12 The first is Jim Mattesich from DEC/Tested 13 products. He'll be followed by Kelly Boyd and then David 14 Miller and then Rasto Brezny. 15 MR. MATTESICH: Thank you, Madam Chair and 16 members. Jim Mattesich with the Law Firm of Greenberg 17 Toureg on behalf of DEC products, as you mentioned. 18 I know that the stop red light is now on. 19 CHAIRPERSON NICHOLS: Oh. Well, we'll get you 20 started. 21 MR. MATTESICH: But it reminds me to try to 22 explain this in a way that my client explained it to me. 23 When the red "check engine" light comes on in my car, I 24 have three lawful choices today. I can buy a product 25 original equipment manufactured, the most expensive PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 255 1 traditionally; aftermarket, less expensive; or as my 2 client is in business to do based upon an executive order, 3 a process that exists in the current regulation. And this 4 proposal would eliminate the Executive Officer's 5 discretion to continue to utilize a process where 6 companies could come in and verify to his or her 7 satisfaction that their testing process is sufficient 8 under current standards. 9 And I want to thank, by the way, Mr. Cackette and 10 his staff for having spent some time with us. And we're 11 disappointed that we haven't been able to reach some sort 12 of accommodation here. But the numbers that I want to 13 relate to you are numbers involving the total OBD II 14 marketplace. We are not concerned, DEC, my client, about 15 pre-OBD II, but simply maintaining an opportunity by the 16 Board amending this proposal to eliminate the Executive 17 Officer's discretion, to no longer have the discretion to 18 allow testing pursuant to a protocol that the Executive 19 Officer could ultimately agree to. 20 This proposal ends the marketplace. We think the 21 marketplace is important not just for my clients but also 22 for people who at lower economic income levels have a way 23 to lawfully put a new catalytic converter on their car. 24 By the numbers that we have tallied, there are 25 11,677 OBD II catalytic converter models or applications. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 256 1 There are only 2,000 of 11,000. 2226 currently 2 CARB-approved OBD II aftermarket applications, or 19 3 percent. In other words, 81 percent of the OBD II 4 California marketplace doesn't have an approved 5 aftermarket catalytic converter option. Those numbers are 6 based upon the survey of the marketplace and CARB's data 7 as we understand it. And we provided that data to staff. 8 They haven't had time to analyze it. But we believe that 9 those numbers are accurate. 10 We want you to understand that we think that the 11 staff rationale, for example, in the staff report that 12 says, "Raising the screening requirements to test used 13 converters for comparable levels of performance regardless 14 of cost is a regulatory possibility. However, staff 15 believes the used converter provisions would be 16 economically infeasible. Moreover, merely having such 17 requirements might mislead the public that a used OEM 18 converter business is viable in California." In all my 19 years of working with the Air Resources Board, I have 20 always seen the Board say to industry, "Be creative, be 21 inventive. We know we've got difficult standards for you 22 to meet commercially and technologically. But we think 23 they are feasible and we think you can go out and you can 24 invent." Here the staff is saying there ain't no way, 25 there's no way to maintain this particular pathway for a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 257 1 business and California consumers and drivers to have an 2 opportunity to lawfully retrofit their cars with a piece 3 of equipment that has been tested according to a standard 4 that would have to be agreed upon by the Executive Officer 5 and ultimately meet the needs of both air quality and 6 California consumers and the Board. 7 CHAIRPERSON NICHOLS: You know, you actually 8 managed to break our timer. I don't know how you did it. 9 But it's a -- this could mean you have -- 10 MR. MATTESICH: For next time I'm going to have 11 to figure it out. But you're telling me the time is up? 12 CHAIRPERSON NICHOLS: Well, you're moving in that 13 direction. And we appreciate the comments. But if you 14 can wrap it up, that would be great. 15 MR. MATTESICH: Thank you for your time. We do 16 have written comments and I'm going to submit. 17 But, again, the bottom line is we think that 18 pathway ought to be kept open by way of amending it rather 19 than closing it off. 20 CHAIRPERSON NICHOLS: Right. And you would 21 propose to keep it an Executive Officer discretion type of 22 thing, is that your idea? 23 MR. MATTESICH: Yes, Madam Chair. 24 CHAIRPERSON NICHOLS: Okay. 25 BOARD MEMBER BERG: Madam Chair, may I ask a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 258 1 question? 2 CHAIRPERSON NICHOLS: Yes, please. 3 BOARD MEMBER BERG: My understanding is that we 4 are currently having some issues with the used catalytic 5 converters on the market as to whether they meet the 6 current standard. Is that correct? 7 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yes. 8 The market has been flooded, so to speak, with what we 9 call the 99 dollar catalyst. That's not what Mr. 10 Mattesich is talking about. But that is one of the 11 reasons why we propose this regulation, is to get rid of 12 that product; because our data showed that you put it on a 13 car that's failed smog check, it passes smog check and it 14 doesn't even make it to the next smog check before it's 15 worn out it's such an inferior product. So that's one of 16 the reasons that we've proposed this. 17 The second reason is is that we think the 18 catalysts have to be much more likely OEM or the original 19 one that was on the car in order to maintain emission 20 performance of the newer vehicles. "Newer" in this case 21 is now 1996. So that's a what, an eleven-year-old car 22 already. And to do that it needs to have more of the 23 noble metals on it. It needs to be shown to be more 24 durable, and that's why it's going to cost a couple 25 hundred dollars more. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 259 1 The issue with the used catalyst is we just don't 2 think that the used catalysts will ever make it up to that 3 criteria of being 90 some percent efficient. And we 4 cannot figure out how you could do a practical test to 5 screen out those that still are 95 percent and used from 6 those that are much more like the market requires right 7 now, which is only a 70 or 80 percent at the most 8 efficiency. 9 So those are the three things that are kind of 10 going on here. 11 BOARD MEMBER BERG: Thank you. 12 CHAIRPERSON NICHOLS: Okay. Thanks, Mr. 13 Mattesich. 14 MR. MATTESICH: Thank you. 15 CHAIRPERSON NICHOLS: We'll next hear from Kelly 16 Boyd and then David Miller. 17 MS. BOYD: Good afternoon, Chairman Nichols and 18 Board members. I'm Kelly Boyd representing Brown 19 Recycling, major provider of used catalytic converters in 20 California. The sale of converters in California is 45 21 percent of all of our business. So it's a huge concern to 22 the company. 23 I would echo the comments of my predecessor, but 24 also point out that the products that we sell in 25 California are currently warrantied already for either PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 260 1 two years and 24,000 miles or five years and 50,000 miles. 2 And we feel we'd be able to meet the five-year, 3 50,000-mile standard going forward on all products. 4 We don't believe that testing is a cost issue. 5 If it was, we wouldn't be selling the used converters. We 6 think that if there's a performance standard, we will be 7 able to meet or exceed it. 8 Again, we're a niche market. The products that 9 we sell, there's not an aftermarket available in 10 California currently. It's a high volume. We believe 11 it's significantly more than 2 percent. 12 Included in our end-use customers in California 13 are California state fleet vehicles. They choose our 14 product over using the new manufactured product some of 15 the time. We're significantly lower cost. We do have the 16 longer warranties than many of the new product. We will 17 meet the emission standards. And we just don't see a 18 public policy benefit to eliminating the existing process 19 that we have gone through to prove the adaptability of the 20 product to the new standards. 21 Thank you very much. And we hope that you will 22 stay the sunset. Thanks. 23 CHAIRPERSON NICHOLS: Thank you. 24 All right. David Miller. 25 MR. MILLER: Hello. I'm David Miller with Miller PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 261 1 Catalyzer Corporation. And we manufacture new aftermarket 2 catalytic converters, including the new OBD II ones, and 3 we also do the recertifying of the used original equipment 4 ones. 5 But I'm going to raise the same objection that 6 the first speaker had, which was that at this time we 7 don't have an adequate coverage by the OBD II aftermarket 8 yet. He had more precise numbers than I did at 19 9 percent. But part of the problem is that it takes quite a 10 bit of time to develop the new OBD II stuff and it's 11 expensive. 12 So, anyway, we recommend postponing elimination 13 of the recertified units for at least another two years to 14 give the aftermarket time to develop a wide enough 15 application to replace what's going to be swept away by 16 getting rid of the recertified units. 17 And we also believe that more people will lose 18 employment than were currently estimated by ARB. We think 19 that it might be as many as 500 people and probably about 20 ten other companies who distribute the product, and the 21 installers and the people that get it out to and market to 22 the consumers. 23 The other problem is that the OE works better and 24 is tuned to the computer and sensors better than the 25 universal converters that we have today. We began PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 262 1 developing the OBD II stuff to replace it about four years 2 ago. And some of it has only come into effect may be -- 3 or been given an executive order in the last six months or 4 a year. And we don't have enough data back yet to 5 determine how it's working in the market or in the real 6 world. We did the testing as the Board required. But 7 always there is things that can go wrong. 8 So, again, that's why we're asking for another 9 two years to get the feedback and the data to make sure 10 that everything is working correctly on what we do have. 11 And I do believe it's only about 19 or 20 percent of the 12 potential applications. 13 Right now they're only certifying up to the low 14 emission level -- low emission vehicle level. And there 15 are many vehicles out there that are ultra-low and super 16 ultra-low emissions, which there are nothing for the 17 aftermarket at this time. 18 And the other thing that we wanted to have was we 19 didn't want to have to retest and recertify catalytic 20 converter OBD II's that have already been certified to 21 show that the MIL light comes on. The proposal was to 22 give us three years. But right now, as I say, we're 23 trying to develop more applications. And if we wanted to 24 adopt those on the newer applications to test for the MIL 25 light coming on at a certain point would make better sense PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 263 1 than to make us back up and buy the test vehicles again 2 and go back through. It's just going to slow us down and 3 it's going to be more expensive. But rather going forward 4 and doing it on the newer ones that we're going to be 5 certifying. 6 The latest models we have certified now in the 7 aftermarket for OBD II is a 2003. Most of them only go up 8 to about a 2001. So by doing that, we would be getting 9 the newer and newer vehicles to show when the light comes 10 on. 11 CHAIRPERSON NICHOLS: And your light has come on. 12 MR. MILLER: Okay. Thank you very much. 13 CHAIRPERSON NICHOLS: Thank you very much. 14 Our final witness is Rasto Brezny from MECA. 15 DR. BREZNY: Thank you, Chair Nichols and members 16 of the Board for giving me this opportunity to speak today 17 in support of the staff proposal. My name is Dr. Rasto 18 Brezny and I'm the Deputy Director of the Manufacturers of 19 Emission Controls Association. 20 MECA is a nonprofit association made up of the 21 world's leading manufacturers of emission control 22 technologies for motor vehicles. Our members have over 30 23 years of experience in developing and manufacturing 24 emission control technologies for a wide variety of 25 vehicles including supplying reliable aftermarket PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 264 1 converters in California and across the country. 2 MECA and our members have supported ARB's 3 aftermarket regulatory developments for over 20 years. In 4 developing the most recent proposal, we've participated 5 actively in the regulatory process for over two years, 6 both through supplying our comments as well as converter 7 parts in order to facilitate ARB's understanding of the 8 durability and performance of these aftermarket 9 technologies. 10 We believe that an important opportunity exists 11 to significantly reduce emissions from the existing 12 passenger car and truck fleets. The requirements outlined 13 in this proposal would ensure that aftermarket converters 14 are fully compliant with the OBD II systems on newer 15 vehicles as well as put additional requirements on 16 aftermarket converters for the older vehicles to deliver 17 an estimated 36 tons per day of hydrocarbon and NOx 18 emissions from this oldest fleet. And this will 19 significantly contribute to California's air quality 20 commitments for ozone and PM2.5, particularly in southern 21 California. 22 We believe that the stringent requirements 23 outlined in this proposal will ensure that only 24 aftermarket technologies that can achieve the quality and 25 performance requirements to meet these standards are sold PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 265 1 in this state. By adopting this proposal ARB will 2 establish a level playing field for all replacement 3 converters sold in the state. 4 MECA member companies have already begun 5 developing and certifying aftermarket technologies for 6 applications where they may not currently be available, 7 and they're going to continue in that process to ensure 8 that technologies are available to deliver the emission 9 reductions. 10 And, finally, I just wish to thank the staff for 11 its willingness to work with all the stakeholders 12 throughout the regulatory process and also for -- I guess 13 pledge our industry's commitment to ensure that the 14 technologies are available to deliver the emission 15 reductions outlined in this proposal. 16 Thank you. 17 CHAIRPERSON NICHOLS: Thank you. 18 I want to follow up on that point, if I may, for 19 just a moment, because I'm reminded of the fact that when 20 we dealt with the off-road diesel construction equipment 21 rule we heard a lot of concerns about capacity for testing 22 and verification of devices. Now we've got a whole new 23 group of devices that are going to have to get through the 24 process. And I'd like to hear something from the staff 25 about their feelings about how realistic it is that people PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 266 1 are going to be able to make it through this. 2 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Well, I 3 think since we're dealing with gasoline passenger cars, 4 it's a lot less complicated than it is -- to certify a 5 catalyst than it is to try to certify a particulate 6 filter. And the diversity of types of vehicles are so 7 much greater and less is known about the off-road than it 8 is on-road. So I think it's -- it's still a challenge, 9 but it's not nearly at the same order of magnitude as the 10 off-road rule was. And the company's that are developing 11 these, there's quite a few of them, they're all equipped 12 to do this kind of testing. 13 CHAIRPERSON NICHOLS: So the companies will do 14 the testing themselves -- 15 DR. BREZNY: Yes. 16 CHAIRPERSON NICHOLS: -- and submit the data. 17 Other questions from Board members? 18 Yes, Ms. Berg. 19 BOARD MEMBER BERG: I just want to confirm that 20 we're comfortable with the time frame. I appreciate the 21 information that you just gave us. But looking at the 22 sunset clause, that's going to be effective July 1st, 23 2008. And then the new standards are going to be 24 effective January 1st 2009. So really we're in the 25 13-month time frame here and about eight months on the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 267 1 sunset provision. 2 Are we comfortable on that time frame? 3 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yes, I 4 think we are. And, again, I could contrast it again the 5 retrofit rules, for example. In that case, you know, we 6 have hard deadlines where if there's not a retrofit 7 device, it's going to create a significant problem with 8 implementing the rule. In this case, what does exist is 9 there are new OEM, meaning Ford, Mazda, Nissan, provided 10 catalysts available for virtually all these vehicles. So 11 the net impact is that someone who has to replace the 12 catalyst and there's not an aftermarket one available for 13 300 might have to spend 500 by going to the dealership to 14 get the catalyst. But there's something there that will 15 do the job. 16 And as far as the, you know, very low income 17 people, there's some repair assistance available through 18 VAR for these kinds of programs. And for the very few 19 that there's just nothing available, there's a system that 20 allows them to go for another two years until -- to see if 21 the actual part will become available. But we think that 22 is a very unlikely situation, that you can't find an 23 aftermarket and you can't find what we call an OEM 24 catalyst from the manufacturer to get the car fixed. 25 BOARD MEMBER BERG: Thank you very much. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 268 1 CHAIRPERSON NICHOLS: Yes, Ms. D'Adamo. 2 BOARD MEMBER D'ADAMO: Can you talk a little more 3 about the repair assistance program through VAR. 4 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yes, I 5 can. If you're a certain multiple or less of the poverty 6 level -- and I think it's now up to almost 200 -- now it's 7 225 percent of that -- and you go in and fail a smog 8 check, that the state will pick up the repair costs of the 9 car up to some limit. It's a fairly high limit, 5 to 10 $600. And the -- oh, and there's a small co-pay which 11 varies. I think it's as low as $20. 12 So for very low income people, they get protected 13 through the smog check. For people that are over that 14 level, then they're facing the price of the catalytic 15 converter or the other repairs that may be needed. 16 BOARD MEMBER D'ADAMO: I don't want to take up a 17 lot of time on this now, but I know in the valley there's 18 this, you know, big disparity in income levels. And I was 19 unaware of that. 20 Do you know if individuals are notified when they 21 go to a smog check and they fail or maybe people figure 22 they're going to fail so they don't even bother anyway, 23 which is think is a different -- 24 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yes, 25 they are notified. And I think that the -- the practical PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 269 1 thing is that not everybody even chooses to use it. So 2 it's not fully utilized. Many of the repairs are just, 3 you know, a hundred dollars; and I think the paperwork 4 castle isn't worth that even to lower it some low income 5 people. They'd rather just pay it and get on with it. 6 But for those in a need and with the higher 7 values, they can use this assistance program. 8 BOARD MEMBER D'ADAMO: Interesting. And it might 9 be helpful to do some outreach with the districts to get 10 that information out, to try to target people that don't 11 even bother to get their cars smogged because they know 12 they're not going to pass anyway. 13 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yes. 14 Well, that certainly -- that is a problem. Although we've 15 identified I think that as being a fairly low percentage 16 of cars. What worries us of course is it might be a low 17 percentage of the absolutely dirtiest cars, which then 18 means there's a bigger impact. But The only thing we 19 definitely have on that of course is if you don't have a 20 tag -- but you can't get a tag without this smog check -- 21 then eventually -- 22 BOARD MEMBER D'ADAMO: -- you'll get pulled over 23 and -- 24 -- you get pulled over and get a ticket. But 25 it's not foolproof or 100 percent by any means. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 270 1 CHAIRPERSON NICHOLS: You know, I would just like 2 to clarify one issue about the used catalysts. As the 3 program exists today, there are businesses, at least a 4 couple of them out there, who basically buy catalysts, I 5 guess, from used vehicles that are otherwise upgrading 6 their catalysts or -- 7 DR. BREZNY: -- from junkyards. 8 CHAIRPERSON NICHOLS: -- from junkyards, right. 9 And without testing of any kind particularly. They just 10 give them a warranty and then sell them? 11 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: No, 12 they do a test now. And the problem is is that the test 13 is -- well, I guess the advantage is the test is a very 14 simple test and the screening point is very low. It's 15 either 60 or 70 percent efficiency. And so they buy these 16 catalysts and sort them into two bins. One passes the 17 test and can be sold as a used catalyst, typically for a 18 couple hundreds dollars. The other ones go into another 19 bin and they get sold for 10 to $50 for reclaiming their 20 noble metals out of them. 21 And so that's what the market is now structured 22 on for used catalysts. But the difficulty is that 60 and 23 70 percent efficiency criteria was based back when cars 24 didn't have to have that high of an efficiency catalyst. 25 The new car you buy today has one that's, you know, 99.5 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 271 1 percent, as we showed. Typically even for these older 2 LEVS it's over 95 percent. 3 And so the situation we find ourselves facing is, 4 do we want to allow any more -- a catalyst that is far 5 less efficient than the ones that you can buy as new 6 replacement items to be put on cars. Do we want 85 7 percent efficiency catalyst to be put on a car rather than 8 a new 95 percent one that are actually roughly the same 9 price? And so our answer I guess was, no, unless we could 10 elevate the screening criteria up to the point where we 11 knew that the catalyst was 90 or 95 percent efficient. 12 And the test that is used now does not do that. 13 What is most important about the catalyst today 14 is not -- it's a warm test. You just put it on the back 15 of an engine and see what its efficiency is, measure 16 emissions up and downstream. What's critical to emission 17 control today is how the catalyst warms up and how many 18 seconds or minutes it take to warm up. That's the part 19 that is most important. And there's no way of doing that 20 sort of cold-conditioned test that we're aware of that, 21 you know, could be low enough cost to still support the 22 sale of two or three hundred dollar catalyst. It has to 23 be done on every single one they buy from the junkyard. 24 And so that's why we've kind of just said, well, 25 we just don't see how this can happen. And so we need to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 272 1 just end the sale of used catalysts next July. 2 If we had any hope, I would agree with, you know, 3 Mr. Mattesich that, fine, we'll leave it open in some way. 4 And if a test becomes available in the next six or seven 5 months, then, you know, maybe you could delegate out to us 6 to say that's okay. But I have zero hope of that. And 7 he's more optimistic and thinks there is some hope. But I 8 just don't see it happening. And so there just doesn't 9 seem to be any way of a realistic test at those 10 efficiencies, to screen out the good from the bad when the 11 criteria is -- 12 CHAIRPERSON NICHOLS: But in any event, there's 13 an alternative. 14 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: And 15 there's -- yeah there's two alternatives. There's the 16 aftermarket ones at the 300 and then there's the Ford, GM, 17 Chrysler ones that, you know, might be 5, 6, $700 or more 18 on some exotic cars of course that have to be used. And 19 the market will adjust of course as people buy -- or if 20 they're forced to buy the 6 or $700 ones, then MECA's 21 members are going to come in and say, "Well, we've got 22 more and more that we can offer at $300." 23 CHAIRPERSON NICHOLS: Yes, Mr. Loveridge. 24 BOARD MEMBER LOVERIDGE: I just find this 25 perspective very persuasive and I'm prepared to move. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 273 1 CHAIRPERSON NICHOLS: Okay. We're prepared to 2 move this resolution at this time. 3 Do we have a second? 4 SUPERVISOR HILL: Second. 5 CHAIRPERSON NICHOLS: Any further comment on the 6 part of the Board members. 7 If not, all in favor say aye. 8 (Aye.) 9 CHAIRPERSON NICHOLS: None. 10 No none. Okay. 11 Thank you. It's unanimously passed. Thank you 12 very much. 13 Good work. It's a big step forward. It's going 14 to capture a lot of emissions. 15 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yeah, 16 it was an amazing amount of emissions in the calculations. 17 CHAIRPERSON NICHOLS: Thank you. 18 BOARD MEMBER BERG: Madam Chair? 19 CHAIRPERSON NICHOLS: Yes. 20 BOARD MEMBER BERG: Even though I didn't have any 21 ex parte, did we need to do any ex partes? 22 CHAIRPERSON NICHOLS: Oh, you know, I'm sorry. I 23 didn't call for them because I didn't have any either. 24 Did anyone have any ex partes? 25 All right, good. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 274 1 BOARD MEMBER BERG: I just wanted it for the 2 record. 3 CHAIRPERSON NICHOLS: No, I appreciate your 4 reminding us. Thank you very much. 5 All right. I think that is our agenda for today. 6 And we will be adjourned until tomorrow morning. 7 (Thereupon the California Air Resources Board 8 recessed at 4:44 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 275 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 2nd day of November, 2007. 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