MEETING BEFORE THE CALIFORNIA AIR RESOURCES BOARD BOARD HEARING ROOM CALIFORNIA AIR RESOURCES BOARD 2020 L STREET SACRAMENTO, CALIFORNIA THURSDAY, JANUARY 23, 1997 9:40 A.M. Nadine J. Parks Shorthand Reporter PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 ii MEMBERS PRESENT John D. Dunlap, III, Chairman Joseph C. Calhoun Lynne T. Edgerton William Friedman, M.D. M. Patricia Hilligoss Jack C. Parnell Barbara Riordan Ron Roberts James W. Silva Staff: Michael Kenny, Executive Officer Mike Scheible, Deputy Executive Officer Kathleen Walsh, General Counsel Lynn Terry, Assistant Executive Officer Dean Saito, Manager, Liaison Section Jim Nyarady, Staff, Office of Air Quality and Transportation Planning Bruce Oulrey, Assistant Ombudsman John Holmes, Ph.D., Chief, Research Division Bob Barham, Assistant Chief, RD Manjit Ahuja, Emissions Control Technology Research Section, RD Bart Croes, RD Jack Kitowski, Chief, On-Road Controls Section, MSD Bob Jenne, Staff Counsel Fereidun Feizollahi, Staff, Economic Studies Section, RD Athena Chase, Economics Studies Section, RD Patricia Hutchens, Clerk of the Board Wendy Grandchamp, Secretary Bill Valdez, Administration Services Division Also Present: Dr. Jim Lents, SCAQMD PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iii I N D E X PAGE Call to Order 1 Pledge of Allegiance Led by Supervisor Roberts 1 Roll Call 1, 2 Opening Remarks by Chairman Dunlap 2 AGENDA ITEMS: 97-1-1 Public Meeting to Consider Approval of SCAQMD's 1997 Air Quality Management Plan Introductory Remarks by Chairman Dunlap 3 Staff Presentation: Michael Kenny Executive Officer 5 Jim Nyarady Staff Office of Air Quality and Transportation Planning 6 Questions/Comments 27 Dr. Jim Lents SCAQMD 37 Questions/Comments 50 Dr. Arnold Sherwood SCAG 62 Questions/Comments 67 PUBLIC COMMENTS Gail Ruderman Feuer NRDC 68 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iv INDEX, continued. . . PAGE 97-1-1 Questions/Comments 73 Continued Comments by Ms. Feuer 74 Questions/Comments 78 Continued Comments by Ms. Feuer 81 Questions/Comments 82 V. John White Sierra Club 85 Questions/Comments 94 Tim Carmichael Coalition for Clean Air 100 Questions/Comments 112 Ron Wilkniss WSPA 114 Questions/Comments 122 (Direction by Chair) 128 John Billheimer Private Consultant 130 Steven Douglas AAMA 135 Written Comments Entered into Record 139 Closing Comments by Mr. Kenny 141 Questions/Comments 143 Motion to Approve Resolution 97-1 by Supervisor Silva 157 Discussion 158 Roll Call Vote 161-162 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 v INDEX, continued. . . PAGE AGENDA ITEMS: 97-1-3 Research Items Introduction by Chairman Dunlap 162 Dr. John Holmes Chief, Research Division 163 Questions/Comments 163 Motion by Riordan to Approve Items 2, 3, 4, 5, 6, 7 and 9 166 Board Action 167 Item 8 Bob Barham Assistant Chief, Research Division 166 Questions/Comments 167 PUBLIC COMMENTS: Lara Diaz for Assemblyman Steve Baldwin 173 Questions/Comments 175 Jerry Smith for Senator Ray Haynes 176 Questions/Comments 179 Anita Mangels Californians Against Hidden Taxes 180 Questions/Comments 187 Motion by Edgerton to Approve Resolution 97-9 202 Roll Call Vote (with comments) 202-203 Luncheon Recess 203 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 vi INDEX, continued. . . PAGE Afternoon Session 204 Report by Mr. Kenny on new Federal standards Workshops 204 Questions/Comments 208 AGENDA ITEMS: 97-1-2 Public Meeting to Consider the Economics Assessment Program Introductory Comment by Chairman Dunlap 210 Staff Presentation: Mike Kenny Executive Officer 212 Fereidun Feizollahi Research Division Economics Unit 215 Questions/Comments 228 Adjournment 231 Certificate of Reporter 232 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 1 1 P R O C E E D I N G S 2 --o0o-- 3 CHAIRMAN DUNLAP: All right. Will this, the 4 January meeting of the California Air Resources please come 5 to order. 6 I've asked Supervisor Roberts, Supervisor from San 7 Diego County, to lead us in the Pledge of Allegiance. Ron? 8 SUPERVISOR ROBERTS: Would you please stand and 9 join me? 10 (Thereupon, all present recited the 11 Pledge of Allegiance.) 12 CHAIRMAN DUNLAP: Thank you, Ron. 13 Will the Board Clerk please call the roll. 14 MS. HUTCHENS: Calhoun? 15 MR. CALHOUN: Here. 16 MS. HUTCHENS: Edgerton? 17 MS. EDGERTON: Here. 18 MS. HUTCHENS: Friedman? 19 DR. FRIEDMAN: Here. 20 MS. HUTCHENS: Hilligoss? 21 MAYOR HILLIGOSS: Here. 22 MS. HUTCHENS: Parnell? 23 MR. PARNELL: Here. 24 MS. HUTCHENS: Riordan? 25 MRS. RIORDAN: Here. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 2 1 MS. HUTCHENS: Roberts? 2 SUPERVISOR ROBERTS: Here. 3 MS. HUTCHENS: Silva? 4 SUPERVISOR SILVA: Here. 5 MS. HUTCHENS: Chairman Dunlap. 6 CHAIRMAN DUNLAP: Here. Thank you. 7 I wanted to make a few opening remarks and welcome 8 our newest Board member. Lately, we've said goodbye to a 9 number of our colleagues on this Board who have left after a 10 number of years of service. But today, however, we have a 11 different announcement, and I'm pleased to be able to make 12 it. 13 We have a new Board member in our midst, Dr. 14 William Friedman, who sits to my left here, who is a highly 15 qualified member who will fill the position of physician and 16 surgeon on our Board. And we're appreciative of his 17 appointment and glad that he's joined us. 18 I'd like to say a few words about his background. 19 Dr. Friedman is a Nicholson Professor of Pediatrics at UCLA 20 and Senior Advisor for Clinical Affairs to the UCLA School 21 of Medicine. His leadership role and influence in 22 pediatrics is recognized by his serving as Chairman of the 23 SubBoard of Pediatric Cardiology of the American Board of 24 Pediatrics, Chairman of the Committee on Pediatric 25 Cardiology of the American College of Cardiology, and both PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 3 1 as Governor and California Chapter President of the American 2 College of Cardiology. 3 Dr. Friedman has served on various committees too 4 numerous to mention here, has received various honors and 5 recognition, is the author of some 300 articles in highly 6 respected scientific publications, and has authored or 7 edited some five books. 8 I could go on and on listing his achievements and 9 his credentials, but I will not. I'll just say that we're 10 pleased to have a true public health official on our Board, 11 and we'd like to welcome you, Dr. Friedman, to the 12 California Air Resources Board. 13 DR. FRIEDMAN: Thank you very much, Mr. Chairman. 14 I'll try to do the best I can. 15 CHAIRMAN DUNLAP: All right. 16 With that, I think we'll proceed and go into our 17 first agenda item. But before we do, I'd like to mention, 18 those in the audience that wish to present testimony to the 19 Board on any of today's agenda items to please check in with 20 the Board Clerk, Ms. Hutchens, and sign up with her. 21 If you have a written statement, please give 20 22 copies to the Clerk so they can be distributed to the Board 23 and the executive staff. 24 The first item on the agenda today is 97-1-1, a 25 public meeting to consider the approval of the South Coast PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 4 1 Air Quality Management District's 1997 Air Quality 2 Management Plan. This item is the consideration of approval 3 of that plan as a revision to the California State 4 Implementation Plan. 5 The plan being considered today represents a 6 significant effort by the district to understand and improve 7 PM10 air quality in the South Coast Air Basin. The Federal 8 Clean Air Act requires that a PM10 attainment demonstration 9 plan for the South Coast Basin be submitted to the 10 Environmental Protection Agency by February 8th, 1997. 11 As you know, the SIP process includes the Board's 12 consideration of district air quality plans before submittal 13 to the Federal Government. Today's plan is one of several 14 PM10 attainment plans due to U.S. EPA this year, and is the 15 first of these to be considered by our Board. 16 As with previous South Coast plans, the '97 AQMP 17 is a multipollutant strategy. In addition to the new PM10 18 element, it includes revisions to the adopted ozone and 19 carbon monoxide attainment demonstrations. The plan is the 20 first update to the district's 1994 AQMP, but it certainly 21 will not be the last. 22 Air quality plans must, by their nature, improve 23 with time. New information that helps us do a more 24 effective job of cleaning the air must be incorporated into 25 the process on an ongoing basis. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 5 1 The plan we have before us today is a snapshot in 2 time that has both short term and long term implications, 3 and I expect that staff's presentation will provide some 4 background on how this particular plan update fits into the 5 overall air quality planning process in our State. 6 At this point, I'd like to ask Mr. Kenny to 7 introduce the item and begin the staff's presentation. Good 8 morning, Mike. 9 MR. KENNY: Good morning. Thank you, Mr. 10 Chairman, members of the Board. 11 The South Coast 1997 AQMP, like all the district 12 plans, must be built on a strong technical foundation. As 13 staff will discuss in more detail, extensive efforts went 14 into the development of the new PM10 element of the plan. 15 This involved a number of technical work programs. 16 Our understanding of current PM10 exposures in the 17 South Coast was improved through enhancement in the air 18 monitoring networks. The contributions of various sources 19 of PM10 air pollution were studied. The control strategies 20 already in place were reevaluated. The projections for 21 future growth in population, vehicle travel, and the 22 region's economy were updated. 23 This process involved the joint efforts of the 24 district, ARB, transportation agencies, local governments, 25 as well as a broad group of stakeholders. I know ARB staff PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 6 1 has worked as closely as possible with the district to 2 ensure that the plan is based on the best available 3 technical information. 4 It is also important to recognize that the 1997 5 plan is by no means a new plan -- it is an update -- but not 6 a major change in the control strategies in the current SIP. 7 With the addition of the PM10 component, we are in the 8 fortunate position of being able to confirm that our control 9 strategies are headed in the right direction for both PM10 10 and ozone. 11 I will now ask Mr. Jim Nyarady of the Office of 12 Quality and Transportation Planning to begin the 13 presentation. Jim? 14 MR. NYARADY: Thank you, Mr. Kenny. Good morning, 15 Chairman Dunlap and members of the Board. 16 I'd like to first give a brief overview of what 17 I'll be presenting today. To set the stage, I'll first 18 present a brief background of the State Implementation Plan, 19 or SIP, process. I'll then discuss pollutant by pollutant 20 the four revisions to the SIP that would be made by 21 approving the South Coast District's 1997 air quality 22 management plan, or AQMP, as a SIP revision. 23 These include, for the first time, a PM10 24 attainment plan as well as ozone SIP revisions and carbon 25 monoxide and nitrogen dioxide SIP revisions. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 7 1 I'll next discuss the issues that have arisen 2 regarding the '97 AQMP. Finally, I'll present the ARB 3 staff's recommendations to the Board regarding the '97 plan. 4 I'll now begin with a brief background on the SIP 5 planning process. What is the State Implementation Plan, or 6 SIP? 7 The SIP is a statewide plan to attain all the 8 Federal ambient air quality standards. When a region 9 violates an air quality standard, it is designated as 10 nonattainment for that pollutant. Among other elements, the 11 SIP consists of adopted State and local rules and 12 regulations. It also consists of attainment plans which 13 contain control measures that are commitments to adopt rules 14 and regulations in the future. 15 The SIP is revises as required by the Federal 16 Clean Air Act or the U.S. EPA. The PM10 portion of the '97 17 AQMP is such a revision. The SIP can also be revised at the 18 State's discretion, either to reflect the most recent 19 amendments to rules, or the most recent updates to 20 attainment plans, based on improved technical information. 21 The ozone, carbon monoxide, and nitrogen dioxide portions of 22 the '97 plan are this type of revision. 23 What are the elements of an attainment plan? At a 24 minimum, an attainment plan usually contains the following 25 elements: an analysis of the ambient air quality data, an PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 8 1 emission inventory, a control strategy, and computer 2 modeling to demonstrate attainment of the applicable 3 standards. 4 The ambient air quality analysis usually describes 5 the historical and current air quality in the nonattainment 6 area. It documents the pollutants for which the area is 7 designated as nonattainment and how far above the standards 8 the recent measured concentrations are. 9 The next element is the emissions inventory. This 10 is simply an accounting of the emissions that are going into 11 the air from various sources, such as motor vehicles and 12 stationary sources. 13 The control strategy includes all existing control 14 programs as well as any new measures needed to reach 15 attainment. In California, control strategies generally 16 include local, State, and Federal elements so that sources 17 under each jurisdiction do their part to achieve clean air. 18 The strategy must be sufficient to accommodate future 19 growth, while still demonstrating that air quality standards 20 will be met. 21 Finally, the control strategy is incorporated into 22 a modeling analysis to show that predicted pollutant 23 concentrations in the attainment year do not exceed the 24 standards. 25 I'd like to expand a little on how attainment is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 9 1 demonstrated. First, the emissions for a starting year, or 2 base year, are estimated. In the '97 AQMP, the base year is 3 1993. The emissions in this year are then forecast into the 4 future by accounting for all the anticipated growth or 5 decline in emission sources, as well as by accounting for 6 all previously adopted rules and regulations that will be 7 implemented throughout the future years. 8 Then the emission reductions for the new control 9 strategies are incorporated into the future year emissions, 10 thereby reducing the future emissions. 11 Finally, the computer modeling analysis is 12 performed using these future emissions to predict what the 13 future pollutant levels will be. If the future levels are 14 below the standard, attainment has been demonstrated. If 15 not, further emission reductions are needed until the 16 modeling predicts future pollutant levels that meet the 17 standard. 18 What agencies are involved in the planning 19 process? Local air districts, in conjunction with local 20 transportation agencies and councils of government, develop 21 and adopt the attainment plans. These agencies provide 22 information on vehicle activity and economic growth that are 23 used in the plan. 24 For the South Coast, this role is carried out by 25 the Southern California Association of Governments, or SCAG. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 10 1 I'll discuss ARB's role in detail in the next slide. 2 Finally, the U.S. EPA is the Federal agency that 3 takes the final action on the plan, either by approving or 4 disapproving all or part of the plan. 5 What is ARB's role? ARB works closely with 6 districts to develop the technical information for the plan. 7 This includes assistance with ambient air quality data 8 collection and analysis, development and updating of the 9 current future year emissions inventory, assistance in 10 control measure development and rule adoption and review, 11 and performing or assisting with the air quality computer 12 modeling. 13 ARB also develops and adopts statewide control 14 measures, specifically those dealing with mobile sources, 15 fuels, and consumer products. We also work with the 16 districts in developing and reviewing the local plans. 17 Finally, we are the agency that submits SIP revisions to the 18 U.S. EPA for approval. 19 What is the status of the SIP elements for the 20 South Coast? The last major SIP revision for the South 21 Coast was submitted in 1994. The most important element of 22 this revision is the 1994 ozone SIP, which this Board 23 adopted in November, 1994. 24 It consists of State and Federal mobile source 25 control measures, State consumer product and pesticide PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 11 1 control measures, and local stationary, area, and 2 transportation control measures. 3 It is worth noting that the 1994 ozone SIP does 4 not contain the entire 1994 AQMP. Some AQMP measures were 5 not included in the ozone SIP, because all of the measures 6 were not necessary to demonstrate attainment of the Federal 7 ozone standard. 8 The 199 ozone SIP is the ARB's blueprint for the 9 development and adoption of control measures in the upcoming 10 years. As many of you know, the 1994 ozone SIP was approved 11 by the U.S. EPA in September of 1996. 12 The '94 AQMP also contained PM10 dust control 13 measures, called best available control measures, or BACM. 14 This BACM SIP was approved and submitted to the U.S. EPA by 15 ARB in 1994. 16 The 1994 AQMP also contained revisions to the 17 1992 carbon monoxide and nitrogen dioxide SIPs. These 18 revisions were approved and submitted to the U.S. EPA by ARB 19 in 1994 as well. 20 What is the Board considering today? the 1997 21 AQMP that the Board is considering is an update to the South 22 Coast's '94 SIP. The primary new element is an attainment 23 plan for the Federal PM10 standards. This plan is due to 24 the U.S. EPA by February 8th, 1997. The '97 AQMP also 25 updates the district's portions of the '94 ozone SIP, as PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 12 1 well as the district's 1994 carbon monoxide SIP. 2 Finally, since the district has attained the 3 Federal nitrogen dioxide standard, the district is 4 requesting Federal redesignation to attainment for nitrogen 5 dioxide. Accordingly, the '97 plan will serve as its 6 nitrogen dioxide maintenance plan. 7 Now I'll discuss the PM10 attainment contained as 8 part of the '97 AQMP. Before discussing the PM10 plan, I 9 thought it may be useful to briefly review just what makes 10 up particulate matter. 11 Particulate matter can include a mix of different 12 species as well as very small particles, such as dust. 13 Particulate matter can be emitted directly and it can be 14 formed in the atmosphere from gaseous pollutants or 15 precursors, such as oxides of nitrogen, or NOx. This second 16 type of particulate matter is called secondary particulate. 17 Particulate matter is defined by size. We have 18 been talking about PM10, which is particulate matter that is 19 10 microns or less in diameter. PM10 includes PM2.5, which 20 is particulate matter that is 2.5 microns or less in 21 diameter. PM2.5 is sometimes referred to as fine 22 particulate. I will talk more about PM2.5 in the discussion 23 of issues later. 24 What are the Federal requirements being met by the 25 PM10 plan? First is the attainment demonstration. The PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 13 1 Federal Clean Air Act requires that the South Coast Air 2 Basin attain the Federal PM10 standards by December of 2001. 3 However, after demonstrating that attainment by 2001 is 4 infeasible, the district is requesting a five-year extension 5 as allowed under the Federal Clean Air Act. Accordingly, 6 the proposed attainment for the South Coast is 2006, subject 7 to U.S. EPA approval. 8 The Act also requires the establishment of 9 milestone targets for reasonable further progress toward 10 PM10 attainment. These are to be achieved every three years 11 until the area is redesignated to attainment. For the South 12 Coast, these milestone targets are the estimated emissions 13 of PM10 and its precursors after implementation of the '97 14 AQMP in the future milestone years of 2000, 2003, and 2006. 15 In addition, the Act requires the establishment of 16 conformity emissions budgets. These, too, are estimated 17 emissions in the milestone years, but are for specific broad 18 source categories, such as on-road mobile sources, off-road 19 mobile sources, and stationary sources. 20 These emission budgets are used to determine if 21 future projects that receive Federal funds, such as freeway 22 improvements or airport expansions, can be accomplished 23 within the emissions budget for a broad source category. 24 How was the PM10 plan developed? In 1995 and 25 1996, the district undertook a $1.4 million joint government PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 14 1 and industry PM10 technical enhancement program, or PTEP. 2 This program's intention was to improve the district's PM10 3 and PM2.5 ambient air monitoring data, emissions inventory, 4 and modeling. 5 The program was very successful in improving the 6 technical basis for the PM10 plan and is, in fact, the 7 foundation for the PM10 portion of the '97 plan. 8 The enhanced monitoring program included daily 9 PM10 and PM2.5 monitoring for a period of the study, as 10 opposed to the one-in-six-day routine monitoring. Results 11 of the daily monitoring were used to establish the starting 12 point for the PM10 plan. 13 The PM2.5 data was used for a preliminary look 14 beyond current requirements to potential new Federal 15 standards. 16 The improved emissions inventory studies resulted 17 in more representative estimates for e missions from 18 livestock waste, road dust, and construction and demolition 19 operations, among others. These refinements greatly reduced 20 the emissions inventory for directly emitted PM10 and 21 ammonia. I'll discuss these improvements in more detail in 22 the next slide. 23 The PM10 modeling work pushed the envelope for the 24 state of the science modeling for PM10, which is in its 25 infancy. The ARB will continue to work with the district in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 15 1 the future to continue to improve PM10 modeling. 2 After the adoption of the 1994 AQMP, the district 3 board formed a PM10 task force, of which ARB was a member, 4 to review the PTEP, or PM10 technical enhancement program, 5 studies, and to review -- and to resolve technical issues. 6 The task force met as often as twice a month for 7 over a year, and represented a broad range of stakeholders, 8 including the district, ARB, U.S. EPA, local governments, 9 local transportation agencies, industry, environmental 10 groups, consultants, and researchers. 11 What improvements to the emissions inventory were 12 made? The '97 '97 AQMP improves upon the emissions inventory 13 contained in the '94 AQMP in several ways. The base year, 14 which previously was 1990, has been updated to 1993 in this 15 plan. In doing so, the base year now more accurately 16 reflects the level of economic activity in the region during 17 the recession of the early 1990s. This update significantly 18 reduces future forecasts of emissions which are based on 19 projected growth rates that are applied to the base year 20 level. 21 Also, in addition to the routine updates to base 22 year inventories and growth projections, there were several 23 important inventory improvements. 24 On the fugitive dust side, emissions estimates for 25 entrained paved road dust and construction and demolition PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 16 1 activities were improved. 2 To address the important secondary PM10 pollutant, 3 ammonium nitrate, the ammonia emissions inventory for 4 livestock waste at local dairies was improved as a result of 5 the special study. 6 Finally, a major emissions inventory improvement 7 in the '97 AQMP was the use of ARB's updated on-road motor 8 vehicle inventory. The update included improved ARB 9 emission factors as well as more recent vehicle activities 10 supplied by SCAG. 11 What improvements to the PM10 modeling were made? 12 To determine future year PM10 concentrations, the district 13 used two modeling methods. One method was based on a 14 version of the urban airshed model used for ozone modeling. 15 This version is called the urban airshed model with linear 16 chemistry, or UAM/LC, model. This model's a version of the 17 urban airshed model with simplified photochemistry. 18 The other method was based on a linear rollback 19 calculation. In the rollback procedure, PM10 concentrations 20 are reduced in proportion to reductions in emissions in the 21 region. The reductions are for individual species, such as 22 the nitrate component of PM10. Both methods demonstrated 23 attainment of both the 24-hour and annual average Federal 24 PM10 standards. 25 The PM10 modeling analyses that the district both PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 17 1 investigated and actually performed reflect recent 2 improvements in the state of the science. Nevertheless, 3 both district and ARB staff recognize that further work is 4 needed to continue to improve the performance of PM10 5 models. 6 What is the PM10 control strategy? The PM10 7 control strategy in the '97 AQMP relies in large part on the 8 ozone control strategy of the '94 ozone SIP as revised by 9 the district, which I'll discuss in a moment. The State and 10 Federal control strategies in the 1994 ozone SIP are 11 unchanged. 12 The PM10 control strategy also includes the 13 fugitive dust measures in the 1994 BACM SIP, with some 14 updates. In terms of new PM10 measures, the district has 15 added three local measures that address directly emitted 16 PM10 and two measures that address PM10 precursor emissions. 17 I should point out that four of the five -- of these five 18 new measures are new only in terms of the SIP. These four 19 measures were included in the '94 AQMP, but not in the ozone 20 SIP. The fifth measure is an additional fugitive dust or 21 BACM measure. 22 Next, I'll discuss how the '97 AQMP would revise 23 the '94 ozone SIP for the South Coast. 24 How is the 1994 ozone SIP being revised? First, 25 the attainment demonstrations for three areas under district PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 18 1 jurisdiction are being revised. One of these areas is the 2 South Coast Air Basin, which is to attain the Federal 3 standard by 2010. The other two nonattainment areas 4 currently under the district's jurisdiction are the 5 Coachella Valley, which is in the Salton Sea Air Basin, and 6 the Antelope Valley, which is in the Mojave Desert Air 7 Basin. Both of these areas are to attain by 2007. 8 In addition, post-1996 rate of progress 9 demonstrations for the three ozone areas under -- 10 nonattainment areas under the district's jurisdiction are 11 being revised. The post-1996 rate of progress 12 demonstrations require that the district achieve at least a 13 three percent per year reduction in volatile organic 14 compound, or VOC, emissions, averaged over three-year 15 periods from 1997 to 2010. 16 Finally, the conformity emission budgets, as I 17 mentioned before, for the three areas have been updated. 18 All of these revisions reflect updates to the emissions 19 inventory, district control strategy, and the ozone 20 attainment modeling. 21 What improvements to the ozone modeling were made? 22 The most significant change between the ozone modeling 23 performed for the '94 SIP and the '97 AQMP is the 24 elimination of a June, 1985 ozone episode. 25 An ozone episode is a series of days with high PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 19 1 ozone readings. In order to do modeling analyses, extensive 2 meteorological data must be collected for an ozone episode. 3 These data, along with emissions inventories for the 4 specific days of the episode, are used in ozone models to 5 try to recreate the ozone concentrations observed. If the 6 model can recreate the ozone episode reasonably well, then 7 the emissions in the model can be used to predict future 8 concentrations under different scenarios. 9 The ARB staff concurs with the district's 10 elimination of the June, 1985 episode because of its age and 11 the limitations of its associated meteorological data. 12 However, as with the ozone modeling in the '94 13 ozone SIP, both ARB and district staff recognize the 14 limitations of the available data and the need to improve 15 the model's performance. 16 Accordingly, the ARB and the district have 17 committed to work together to carry out the 1997 Southern 18 California ozone study as a means to improve the input data 19 and model performance. It is the intent of this study to 20 capture an updated ozone episode that is more representative 21 of current air quality and emissions in the South Coast Air 22 Basin. 23 What revisions were made to the district control 24 strategy? The district's strategy includes adopted rules 25 and near-term, mid-term, and long-term control measures. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 20 1 The Federal Clean Air Act allows the South Coast to include 2 long-term measures that rely on undefined new technologies 3 expected to be available in time to meet the 2010 attainment 4 deadline. 5 In the near term, several indirect source measures 6 were removed. These were measures intended to reduce 7 vehicle travel. The State Legislature has restricted the 8 district's authority to regulate these sources. Because of 9 this lack of public acceptance, these measures have been 10 removed. In addition to a lack of public acceptance, other 11 measures were removed or delayed based on one or more of the 12 following criteria -- technical infeasibility, poor cost- 13 effectiveness, low emission reduction potential, or 14 excessive administrative burden. In addition, some measures 15 were added, including two near-term NOx measures. 16 Finally, the district revised its estimates of 17 emission reductions for several measures based on updated 18 emission inventory or control effectiveness information. 19 I'll now briefly discuss how the 1997 plan would 20 revise the '94 carbon monoxide SIP. How is the 1994 carbon 21 monoxide SIP being revised? The Federal Act -- under the 22 Federal Act, the South Coast Air Basin is to attain the 23 Federal carbon monoxide standard by the year 2000. 24 The current carbon monoxide SIP for the South 25 Coast is being revised to take into account the improvements PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 21 1 to the district's emissions inventories and control strategy 2 that I described earlier. Thus, the '97 AQMP includes 3 revisions to the district's '94 carbon monoxide attainment 4 demonstration and conformity emissions budgets for the South 5 Coast Basin. 6 In addition, the '97 plan includes an update to 7 the district's carbon monoxide milestone demonstration 8 submitted in 1996. 9 Now I'll discuss how the '97 AQMP would revise the 10 1994 nitrogen dioxide SIP. Now that the Federal nitrogen 11 dioxide standard has been met, the primary element of the 12 SIP revision is a maintenance plan. The basin has not 13 exceeded the Federal standard since 1992. Accordingly, the 14 district is requesting redesignation to attainment for 15 nitrogen dioxide. 16 Under the Federal Act, there are several 17 requirements that must be met before the U.S. EPA can 18 redesignate an area. One of those requirements is that the 19 area must have a plan that will ensure maintenance of the 20 standard for at least ten years after redesignation. 21 The '97 AQMP will serve as the district's nitrogen 22 dioxide maintenance plan. Modeling in the '97 plan shows 23 that the Federal nitrogen dioxide standard can be maintained 24 through 2010 with already adopted measures. 25 Although the '97 plan meets the requirements for a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 22 1 maintenance plan, the other requirements of the Act 2 necessitate that additional documentation be compiled in 3 order to submit a formal redesignation request to the U.S. 4 EPA. The ARB staff is working with the district to compile 5 the additional documentation necessary. 6 I'll now discuss the issues that have emerged with 7 regard to the '97 AQMP. First, I'll discuss issues 8 regarding PM10, then I'll discuss issues regarding ozone. 9 The one primary issue raised regarding the PM10 10 portion of the '97 plan is, how does the plan address 11 potential new PM2.5 standards? While the plan discusses the 12 potential new standard, the plan addresses only the current 13 PM10 standards and requirements. 14 However, it is important to point out that 15 reducing PM2.5 is an important component of the PM10 16 strategy in this plan. PM2.5 emissions will be reduced as a 17 result of PM10 controls that reduce direct PM10 emissions 18 from combustion, or which reduce PM10 precursors such as 19 NOx. 20 The U.S. EPA is also proposing new ozone standards 21 along with the PM2.5 standards. The district has committed 22 to updating its AQMP in the year 2000, at which time it will 23 address any new standards promulgated. In the meantime, we 24 are continuing to work with the district to analyze the 25 impacts of the proposed standards on the district's planning PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 23 1 efforts. 2 What are the ozone issues? The issues relating to 3 the ozone portion of the AQMP -- 1997 AQMP -- include the 4 impacts from the changes to the modeling, the removal of the 5 1994 SIP measures, the changes to the control effectiveness 6 of some measures, and the district's delays in rule 7 adoptions. I'll talk about each one of these in more 8 detail. 9 The modeling changes resulted in an increased VOC 10 carrying capacity. The carrying capacity is the amount of a 11 pollutant or pollutant precursor that the basin can hold and 12 still attain an ambient air quality standard. In this case, 13 the VOC carrying capacity defines the allowable VOC 14 emissions level in the basin in 2010. This change was the 15 result of eliminating the 1985 ozone episode mentioned 16 earlier. 17 With the increased carrying capacity, the district 18 is able to plan for fewer emission reductions. There are a 19 number of factors involved in this change. These include 20 updates to the baseline emission inventory and revised 21 control effectiveness. 22 As I mentioned, ARB staff agree with the dropping 23 of the 1985 episode; but, again, it will be important to 24 improve the model's performance so that future plan updates 25 can more accurately identify the reductions needed for PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 24 1 attainment by 2010. 2 What impact -- what is the impact of the removal 3 of the '94 SIP measures? Because the State Legislature has 4 restricted the district's authority to regulate indirect 5 sources, the emission reductions from this component of the 6 '94 SIP have been foregone as they could not realistically 7 be expected to occur. 8 Also, some near-term VOC emission reductions were 9 foregone, although they were a relatively small percentage 10 of the reductions. 11 Finally, ARB staff evaluated the amount of 12 reductions from defined near-term measures removed from the 13 AQMP relative to the reductions from less well-defined long- 14 term VOC measures. 15 The percentage of reductions from the long-term 16 district measures is roughly equivalent between the two 17 plans. Both plans reflect the need for future new 18 technologies, although the '97 plan does contain long-term 19 emission reduction commitments for the district. 20 What is the impact of the revised control 21 effectiveness of some measures? There are several VOC 22 control measures that were retained in the '97 plan which 23 are anticipated to achieve significantly fewer emission 24 reductions than anticipated in the approved 1994 ozone SIP. 25 This is because the control effectiveness values for the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 25 1 measures have been revised based on recent technology 2 assessments performed by the district. 3 Several measures included in the approved ozone 4 SIP relied heavily on technology breakthroughs for VOC 5 controls. However, the district's recent technology 6 assessments for individual rule categories have resulted in 7 an adjustment to the control effectiveness for several of t 8 he proposed control measures included in the '97 plan. 9 It's important to point out, however, that not all 10 of the difference in emission reductions between the '94 SIP 11 and the '97 plan have been foregone. Most of the difference 12 has been shifted to new, better defined long-term measures. 13 Only a small portion, about 10 percent, of the difference 14 has been foregone. 15 In addition, recent district board resolutions for 16 rule revisions adopted to meet SIP commitments -- in recent 17 district board resolutions, the district has indicated that 18 it will continue to reassess technologies as future year 19 implementation dates approach. This is in order to confirm 20 or revise the control effectiveness for SIP measures. 21 How has the rule adoption been delayed? In April, 22 1996, the South Coast District board adopted a revised 23 control measure adoption schedule for the South Coast 24 portion of the '94 ozone SIP. 25 ARB submitted the revised schedule to the U.S. EPA PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 26 1 in July, 1996. It is this revised schedule that is 2 incorporated into U.S. EPA's September, '96 approval of 3 California's ozone SIP. 4 With the adoption of the 1997 AQMP, however, the 5 district's rule adoption schedule has been again revised, 6 adding further delay. The latest revision reflects the past 7 delays in rule adoption as well as delays related to the new 8 technology assessments. 9 The delays in VOC rule adoption are being 10 addressed to some degree with recent district actions. 11 District staff are also in the process of developing the 12 other near-term measures for consideration by the district 13 board. 14 The district needs to meet its new commitments 15 expeditiously and continue to reassess those commitments in 16 light of developing new technologies. 17 Although we have discussed several concerns raised 18 with the '97 plan, it's important to remember, as Chairman 19 Dunlap said, that the '97 plan represents a snapshot in 20 time. This plan will continue to be updated over time as 21 new information becomes available. 22 With that in mind, I'll now present staff's 23 recommendations. Staff recommends that the Board take the 24 following actions: 25 Approve the PM10 attainment plan, approve the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 27 1 revisions to the district's element of the 1994 ozone SIP, 2 approve the revisions to the district's 1994 carbon monoxide 3 SIP, approve the district's nitrogen dioxide maintenance 4 plan, and direct staff to work with the district to prepare 5 a formal redesignation request for nitrogen dioxide; and, 6 finally, direct the Executive Officer to forward the 7 appropriate sections of the 1997 AQMP to the U.S. EPA as a 8 SIP revision. 9 That concludes staff's presentation. 10 MRS. RIORDAN: Let me ask if there are any 11 questions of the Board members now of the staff and their 12 presentation? 13 MAYOR HILLIGOSS: I have one. 14 MRS. RIORDAN: Yes, Mayor Hilligoss. 15 MAYOR HILLIGOSS: On page 7, it says, "No changes 16 to the State or Federal portion of the federally approved 17 1994 ozone SIP are proposed in the 1997 air quality 18 management plan." 19 Why don't those go on? 20 MR. NYARADY: I'm sorry. Page 7 of the slides? 21 MAYOR HILLIGOSS: No. Page 7 of our book. 22 MS. TERRY: That's an easy one. The major focus 23 of the '97 AQMP was to prepare a PM10 attainment plan. 24 However, the district did, in that process, discover a lot 25 of inventory changes that needed to be made as a result of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 28 1 revisions to modeling as well as technology assessment, and 2 a long list of improvements that we've discussed in the 3 staff presentation, propose to make changes to their 4 element. 5 I think that reflects to some degree the ambitious 6 district element that was included in the '94 SIP, and the 7 district has taken the opportunity to make -- propose some 8 changes based on new information that has become available 9 since the '94 plan was adopted. 10 On the State side, we're in a somewhat different 11 situation. We're very much in the midst of implementing our 12 portion of the '94 ozone SIP. So, there was no need to -- 13 for us to propose any changes at this point in time on the 14 State's element. So, today is really a focus only on some 15 modifications to the district's piece of the ozone plan. 16 CHAIRMAN DUNLAP: Any followup, Mayor Hilligoss? 17 MAYOR HILLIGOSS: I guess not. 18 CHAIRMAN DUNLAP: Okay. I have a question before 19 we get into the witness list. Could I ask you to turn to 20 the -- I guess it would be the staff report, page 13 and 14, 21 Tables 5 and 6, where you talk about '94 district measures 22 removed from the '97 AQMP; and in Table, when you talk about 23 new district measures, take a moment, if you would, and 24 characterize those measures removed from the '97 -- excuse 25 me -- from the '94 plan. I see the totals for VOCs and NOx, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 29 1 but can you characterize why these have been removed versus 2 other things? 3 MR. NYARADY: Okay. Well, the last five there are 4 the indirect source measures. As I mentioned, those were 5 removed primarily because the district's authority to 6 control indirect sources has been removed by the 7 Legislature. 8 The remaining measures were either removed because 9 of their very low emission reduction potentials as compared 10 to the amount of administrative tasks that would be involved 11 in going -- 12 CHAIRMAN DUNLAP: Right. 13 MR. NYARADY: -- after and controlling those 14 emissions. 15 CHAIRMAN DUNLAP: Okay. 16 MS. TERRY: It should be noted, in most of those 17 cases as well, that we're talking about amendments to 18 existing rules, and we're not talking about an absence of 19 rules on the books for those kinds of categories. 20 CHAIRMAN DUNLAP: All right. One final question 21 on the items removed. The non-RECLAIM internal combustion 22 engine item, can you give us any detail on that? The 23 RECLAIM? 24 MR. NYARADY: Well, those measures have been -- 25 the CMBO1F -- have been a Phase 2 of the NOx/SOx RECLAIM. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 30 1 During the plan revision process, it was determined that 2 going after the Phase 2 type RECLAIM sources, once again, 3 would be -- they were talking about a huge amount of 4 sources, a huge amount of administrative burden for what you 5 see as a -- 6 CHAIRMAN DUNLAP: Right. 7 MR. NYARADY: -- relatively small emission 8 reduction. 9 CHAIRMAN DUNLAP: Okay. All right. 10 MR. NYARADY: And it's important to point out 11 that, although those measures were reduced, as you mentioned 12 in Table 6, you see that there are -- that CMB02B and CMB06 13 add up to more than the NOx emission reductions from those 14 type of measures that were removed. 15 CHAIRMAN DUNLAP: Right. 16 Though we do appear on the new measures to have a 17 shortfall in the NOx area of what, four tons per day? 18 MR. NYARADY: Right. Due primarily to the ISR 19 type measures. 20 CHAIRMAN DUNLAP: Okay. And so, any other NOx, 21 there's no other -- we have a shortfall in NOx. 22 MR. NYARADY: Well, actually, with the -- with the 23 revised modeling and other emissions inventory improvements, 24 the carrying capacity for NOx has actually been decreased, 25 so that it actually has been able to reduce what we used to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 31 1 have as a black box for NOx. 2 CHAIRMAN DUNLAP: And that's been a source of 3 contention with some stakeholders. Right? That's what 4 we've heard about. 5 MR. NYARADY: Yes. I know primarily the VOC black 6 box is also a concern. 7 CHAIRMAN DUNLAP: All right. One final question 8 about the -- actually two items, the solvent degreasers and 9 solvent usage. Is this issue dealt with in part by the 10 recent regulatory action the South Coast board took in the 11 fall? 12 MR. NYARADY: No. Those actually are additional 13 measures. The recent district board actions show up on 14 Table 3 that's on page 11 in the staff report. There was a 15 solvent cleaning measure that was adopted that achieved a 16 large amount of reduction -- that was called CTS02C -- as 17 well as Phase 1 of the architectural coatings measure. 18 So, those two that you mentioned are actually 19 additional measures. 20 CHAIRMAN DUNLAP: Okay. A further move into what, 21 aqueous cleaners, degreasers? It's just the next generation 22 of that? 23 MR. NYARADY: Right. 24 CHAIRMAN DUNLAP: Okay. All right. That's all 25 that I have. I'd ask Joe or Lynne? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 32 1 Go ahead, Ms. Edgerton. 2 MS. EDGERTON: Thank you. I'm looking at your 3 slides, page 31, and this is the one for the audience, since 4 you probably don't have a copy of the slides, that has the 5 heading, "What is the Impact of Revised Control 6 Effectiveness?" 7 And there are four bullets. One is fewer VOC 8 reductions. And my question concerns 2, which is, most of 9 the difference shifted to long-term measures. 10 I recall during the presentation, a number of 10 11 percent. 12 MR. NYARADY: That was the number -- that was the 13 amount of emission reductions that were foregone; in other 14 words, that are no longer in the plan. It was about 10 15 percent of the difference between '94 and '97. It's not 10 16 percent of the whole emission reductions. 17 MS. EDGERTON: Can you say that again, please? 18 MR. NYARADY: Sure. There's a difference between 19 the 1994 plan and the 1997 plan due to these measures having 20 reduced control effectiveness. 21 Of that difference in emission reductions in tons, 22 about 10 percent of it was foregone or lost. The remaining 23 amount has either been adopted or has been shifted into more 24 specific long-term control measures. 25 MS. EDGERTON: So, just conceptually, if I PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 33 1 understand you correctly, hypothetically, if there were a 2 hundred tons fewer being reduced in 1997 over 1994, you'd 3 see 90 of them made up over the course of longer term 4 reductions. 5 MR. NYARADY: Uh-huh. 6 MS. EDGERTON: And you'd see 10 foregone. 7 MR. NYARADY: Right, that are no longer needed due 8 to the reduced control carrying capacity, the VOC carrying 9 capacity. 10 Table 8 in the staff report may help you with this 11 issue, because that lays out for some of the major rules 12 that were revised in this way the disposition of those 13 emission reductions. 14 MS. EDGERTON: Well, how many tons is that 10 15 percent? 16 MR. NYARADY: About 12. 17 MS. EDGERTON: And so, if I understand you 18 correctly, that is made up by a technical change in the 19 carrying capacity, which is a result of having taken out the 20 1985 episode? 21 MR. NYARADY: Right. The 19 -- by taking out the 22 1985 episode, the VOC carrying capacity for the basin has 23 increased by about 90 tons. In other words, they need 90 24 tons fewer reductions, or do the model predicts. And that 25 has been absorbed, if you will, by various changes between PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 34 1 the '94 and the '97 plan. 2 A small portion of it is because of actually 3 dropped measures. This portion of it is because of reduced 4 control effectiveness. A very big portion of it actually 5 has to do with the baseline being revised. In other words, 6 when I talked about earlier -- about the base year being 7 revised to 1993, which took into account the economic 8 recession of the early nineties, that makes future emissions 9 in 2010 lower than we thought it was going to be because we 10 don't believe it's going to be growing as large, and because 11 a lot of industrial activity in the region dropped quite a 12 bit. 13 So, you start at a lower point to grow it out. 14 MS. EDGERTON: So, if I understand you right, 15 then, when the Southern California really starts booming, 16 you going to have to have another revision. 17 MS. TERRY: We'll be back again. 18 MS. EDGERTON: Thank you. 19 MR. NYARADY: Well, that's why the plans are 20 revised every few years. And the activity data provided by 21 SCAG's incorporated in every revision. 22 MS. EDGERTON: Thank you. 23 CHAIRMAN DUNLAP: Mr. Calhoun, you wanted to do a 24 followup? 25 MR. CALHOUN: I want to follow up on what Ms. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 35 1 Edgerton just mentioned a few moments ago, about the 1985 2 inventory. You know, you make a statement that it's been 3 eliminated, but you don't give much reason for it. And so, 4 it kind of takes a leap of faith to go from 1985 to where we 5 are today. 6 So, that kind of bothered me a little bit. So, 7 I'm just seeking a little bit of an explanation for the 8 elimination of the 1985 inventory. 9 MR. NYARADY: What was eliminated was a 1985 ozone 10 episode, and that was a -- as I mentioned, ozone episodes 11 are periods of high ozone readings during which a lot of 12 meteorological data is obtained. And that's used in the 13 computer modeling to try to predict future ozone 14 concentrations. 15 For quite a while, both ARB and district staff 16 have felt that that particular ozone episode did not have 17 very good supporting meteorological data. 18 MR. CALHOUN: Why do you say that? 19 MR. NYARADY: Because it wasn't collected during 20 an intensive meteorological data collection as happened in 21 the 1987 episodes, the SCAG's episodes that were collected. 22 It just -- it doesn't have as many emission -- or it doesn't 23 have as much meteorological data. 24 MR. SCHEIBLE: Mr. Calhoun, for example, in 1987, 25 we have flights running aloft during the period. We had PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 36 1 special monitors out. We were doing both research and 2 collecting the data. 3 So, what the modelers are able to do is to 4 recreate with a lot more certainty the actual windflow, the 5 meteorology, what went up, and where it came down for that 6 type of episode. 7 For 1985, we have the normal monitoring data, 8 which are a couple of sites where we take soundings and then 9 all of the surface level. When you do a model from that, 10 you have a lot of uncertainty whether you've got it right. 11 You can get the -- and the problem is, you can get the ozone 12 answer right without necessarily getting all the parts of it 13 right. So, it's a more speculative forecast. 14 So, obviously, technically, we like to use the 15 thing that's most defensible within the 1987 episode. We 16 didn't get everything we wanted, so we're back there again 17 this summer trying to recreate that. It's just too 18 expensive to do year in and year out. So, that's the major 19 technical reason why it's not there. 20 Another reason would be that we don't see those 21 kind of levels like we did. That was a very adverse day, 22 and we really need to get something that's far closer to 23 what we're experiencing now so there's less speculation 24 between getting from '85 to current conditions, and then 25 going forward. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 37 1 If we can get current conditions going forward, 2 we'll just all be better off. 3 MR. CALHOUN: All right. Thank you. 4 CHAIRMAN DUNLAP: Any other questions before we 5 get into the witnesses? All right. 6 MS. TERRY: Madam Chairman? 7 CHAIRMAN DUNLAP: Yes. 8 MS. TERRY: Mr. Kenny is absent, but one of his 9 duties was to introduce -- before we started the testimony-- 10 Dr. Lents to say a few words, and then Dr. Arnie Sherwood of 11 SCAG as well. 12 CHAIRMAN DUNLAP: Okay. Very good. 13 MS. TERRY: So, would you like to start with Dr. 14 Lents? 15 CHAIRMAN DUNLAP: Sure. Jim, could I ask you to 16 come forward. And, Arnie, if you're back there, come on 17 forward and accompany of Jim, and we'll -- good morning. 18 DR. LENTS: Good morning, Mr. Chairman and 19 members of the Board. We came up in a wet winter. It's the 20 same in Los Angeles, though I know some of you live down 21 there. I think it's the wettest I've lived through here so 22 far. But it's good for particulates. I think we're going 23 to have low particulate levels in Los Angeles this year due 24 to the rain. 25 I'm here to basically ask you to support your PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 38 1 staff's recommendation. Our Board adopted a new 1997 air 2 quality management plan. We believe it will move the area 3 toward compliance, and will ultimately allow us to achieve 4 compliance with Federal air quality standards in Los Angeles 5 and meet Federal air quality deadlines. 6 I do want to talk about a number of issues. And 7 hopefully, as we talk to one another this morning, it'll 8 also serve as a little bit of an education of the work we've 9 got ahead of us. 10 Some questions came up earlier, you know, why do 11 we do this big comprehensive plan? Well, the easiest answer 12 is, State law requires that every three years we do a 13 comprehensive plan. And then, there's Federal requirements 14 that are woven in among that that weren't designed 15 necessarily to fit the State process, but it so happened 16 they have sort of corresponded. Back in '94, we needed an 17 ozone plan. That fit well with the State comprehensive 18 plan. This year, we needed a particulate plan; that fit 19 well. 20 But it's critical, I believe, that we move the 21 total plan forward. And the reason is, there's a huge 22 linkage between all the different pollutants. Ozone's 23 caused by VOCs and nitrogen oxides, but particulates are 24 caused also by VOCs, and nitrogen oxides, and sulfur oxides. 25 And when you play around with this part of the equation, you PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 39 1 start messing this part of the equation. So, you've got to 2 keep it all together or you find yourself making 3 contradictory decisions if we adopt separate plans. 4 So, we think it's very important to keep things 5 together. 6 Let's go with the first slide. Let's just skip 7 the first. It's just the title slide. Okay. 8 The next slide I want to show you just deals with 9 sort of the good side of the story. I know you take a lot 10 of pride and we take a lot of pride in what's happened with 11 air quality in the Los Angeles. This is a look at the ozone 12 levels. It didn't say it on the slide, but that's the hours 13 above the ozone Federal standard over about the last 20 14 years. 15 And, as you can see, we've gone from a high of 994 16 hours above the standard to around 261 hours above the 17 standard. So, the air pollution control programs in the 18 State of California are working, and I think that represents 19 a lot of work at the State level and at the local level. 20 Next slide, please. 21 The next slide gives you a look at the PM10. 22 Can't claim quite as much progress there. But you can see 23 there is progress over the last decade. PM10 levels are 24 going down. And if you'll move to the next slide, this is 25 one I just stuck in this morning, so it's not in color. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 40 1 I thought you might be curious why is it getting 2 better. And if you will look at the very bottom, the little 3 horizontal lines represent sulfates. As you can see, the 4 sulfates have gone down a little bit over the last decade. 5 That's due to the fact that both CARB has tightened fuel 6 specifications for fuels that has less sulfur in the fuels; 7 we've written regulations that caused sulfur levels to go 8 down in stationary sources in the basin. So, you can see a 9 little improvement there. 10 You'll see, if you really do an eagle's eye, that 11 the nitrogen oxides that were measured -- and these are 12 actual measurements, by the way, off of filter pads. You 13 can see the nitrogen oxides were measuring lower. You'll 14 see the organic carbon -- now, most of that organic carbon 15 we think represents emissions from tailpipes of vehicles and 16 diesels. You see, that has gone down in our measurements 17 over the last decade. That speaks there I think to some of 18 the automobile control plans that the State's adopted up 19 here at the level (sic). 20 And finally, the top area is particulates that 21 generally come from road dust and from construction 22 activities. You can see that's dropped quite a bit. We 23 think that's in response to some rules that we adopted that 24 impacted the construction industry and made them do a little 25 more watering and take some more care in the area. You see PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 41 1 that combination over the last decade has caused at least a 2 measurable significant drop in particulate levels in Los 3 Angeles. 4 So, again, the programs that we're putting in 5 place do seem to be working. 6 Let's go to the next slide. 7 This shouldn't cover up the fact that it's still 8 the worst air quality in the United States. There's still 9 116 days in 1995, the best year on record in Los Angeles. 10 Anybody else in any other city in the United States would be 11 shocked to have 116 days out of compliance. So, we still 12 have a very severe problem in Los Angeles that calls for 13 tough actions and it calls for us to stand by our guns and 14 the State to stand by our guns. 15 Next slide. 16 It's been mentioned to you that the AQMP process 17 is a very dynamic process, and it's going to have to stay 18 that way. I know the environmental groups here are 19 concerned that, you know, we've changed some things, and 20 some of the emission reductions have changed. They're 21 actually fairly slight. And I'm going to show you that as 22 we go through the process. 23 But it has to be dynamic. We're learning new 24 things every year. And this gives you an idea of the 25 revisions that we've had -- 1982, 1989, '91, '94, '97. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 42 1 We're already starting work, just like the Rose Parade every 2 year, we're starting work on the year 2000 revisions. We 3 intend to obey State law, so we'll do a year 2003, and we'll 4 do a year 2006 revision to the plan. 5 Each time, I expect, we will update the modeling 6 days. I think each time we will change the emissions 7 inventories, et cetera. That's just going to be part of the 8 process. 9 Next slide. 10 The predictions in our plan, we don't have, you 11 know, a lot of long-term experience, have been pretty good. 12 In the 1990 plan, we predicted we had attained the NO2 13 standard in 1996, and the Coachella PM10 attainment would 14 occur in 1996; it actually has. And part of our process 15 here is adopting a maintenance plan. We do believe that the 16 predictions came true, and we actually have met. And we're 17 predicting now that we should attain CO standards by year 18 2000. And we're predicting that there should be no more 19 stage one violations in Los Angeles after the year 2000, if 20 both the State programs and the local programs continue in 21 force. 22 Next slide. 23 The adoption of an air quality management plan 24 represents a tremendous public process. We formed a 56- 25 member committee that met for a couple of years -- included PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 43 1 the business community, the environmental community, EPA. 2 CARB came down to virtually every meeting set, and we tried 3 to design some testing and some new research that we 4 actually did to make this a better plan. 5 We also conducted workshops all over the basin, 6 where we took comments. We accepted written comments and 7 certainly, of course, ultimately had a public adoption, just 8 like you're having, on the plan. 9 Comments actually were fairly slight on this 10 program. The environmentalists raised some concern, and 11 they will today. But, overall, compared to past plans, this 12 was a relatively noncontroversial amendment in the basin. 13 Next slide. 14 This is an important slide, both just for talking 15 about the plan, but also for thinking about where we're 16 going, and what you're going to have to be doing, and what 17 I'm going to have to be doing over the next few years. 18 This shows what the emissions are going to look 19 like with the existing rules. In other words, if you quit 20 adopting rules and we quit adopting rules, but we keep the 21 ones in force, this is what emissions are going to look 22 (sic). And if you can see, there's a little black line 23 right about 400. That's where we think we need to get to 24 meet the present standards. 25 Now, you also might lock in your mind that the new PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 44 1 standard, the State standards are tighter than that, and the 2 new Federal standards will be tighter, so that black line 3 will probably be going down. 4 What we've got -- where you see the problem is, it 5 looks like, is in the red area. You notice that looks to be 6 growing. That's in what we call area sources. That's 7 things like architectural coatings, consumer products, some 8 types of solvent degreasing. You see the automobile part 9 going down. That's due to the ULEV, and the EV programs, 10 and all that you've got. You see the truck component's 11 fairly small actually of the VOCs. It's significant, but 12 not too small (sic). 13 The permitted sources isn't -- it grows a little 14 bit as we predict business grows without new rules. But 15 it's not huge. The really problem area, you have authority 16 in the consumer products area. You've going to have to be-- 17 you're going to be facing some issues in that area, and 18 we've got to address the architectural coatings and other 19 solvents if we're going to actually get VOCs down. 20 Probably, we're going to have to do some more VOC 21 rules on business as you can see from there. In fact, if 22 you go to the next slide, it shows you what we hope this 23 plan, the implementation of this plan, will cause to happen. 24 And you see it's pressing down on area sources, and some on 25 the business in our area, and a little bit on the trucks, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 45 1 and some further on automobiles. 2 But the primary are there, and you see the 3 decrease to get into attainments in the area source. It's 4 going to be a controversial area. It's an area that hasn't 5 been regulated. And anytime you deal in an area that hasn't 6 been regulated a lot, you stir up a lot of heat, I can 7 assure you. And I think you're going to see it as well as 8 us. 9 Let's go to the next slide. 10 The next slide tells us a totally different story. 11 This is nitrogen oxides down in the basin. This is what we 12 think's going to happen with the existing rules without 13 anything being done. Again, you see the black line is what 14 we think is attainment of the present standards. And that 15 line's going to go down with new standards. 16 If you look at that, you see area sources -- the 17 red line -- are actually almost insignificant. Even 18 stationary sources, with the adoption of RECLAIM, you see 19 that blue area shrinks a little bit at the first. That's 20 the RECLAIM program we adopted bringing that down. 21 If you look at it, where are the emissions? You 22 can see they're in the on-road and off-road area. That's 23 primarily your and EPA's purview. So, the attainment and 24 meeting standards -- a lot of the particulate stuff actually 25 depends more on your actions than it depends on our actions. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 46 1 The next slide shows what we hope will happen with 2 respect to meeting the standards; that is, rules addressing 3 off-road sources in the -- sort of the blue/gray area, as 4 well as on-road sources that's going to have to be tightened 5 up. That's where the prime control measures are. 6 And we've got even a harder row to hoe as we try 7 to address the State standards or tighter Federal 8 standards. 9 Let's go to the next slide. 10 We've talked a little bit about delay of things. 11 I think your staff already went through that with you, so I 12 won't spend a lot of time. The indirect source measures, 13 personally, I believe are feasible. But I'm in the minority 14 down in Southern California on that. I think most of the 15 people in the State Legislature think they're not practical. 16 And we pulled them out in the sense that the public -- I 17 think the sense is the public won't support them. 18 John may remember. He actually helped us design 19 most of those when he was with the agency. But public 20 support isn't there. They're generally small emission 21 reductions, and I think most people believe, based on some 22 new State laws that curtail their authority further, that 23 the best thing to do was to take them out of the plan. 24 There are 24 other measures that we thought were 25 either too cost-effective (sic) or they didn't get enough PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 47 1 emission reductions to be worth the trouble of doing. These 2 were generally measures of less than .3 tons a day of 3 emissions reductions, or they cost too much. 4 Let's go to the next slide. It just gives you -- 5 I think your staff walked these through to you, so I won't 6 spend a lot of time. This is our rationale for not 7 including those measures. More important is the next slide, 8 and let's just go on to it. 9 So you can understand that while it's taking 26 10 measures out, it all sounds like a lot, this is the effect 11 on the emissions. You can see it's pretty small in the 12 whole scheme of things. The predominant reductions in the 13 '94 plan are carrying over into the 1997 plan. 14 The next chart actually is a chart that was in the 15 CARB report. That's the one. I just pulled it out this 16 morning because of the questions I thought -- and your staff 17 actually produced this chart. But I think it's better than 18 some of the things we had brought to illustrate. And we can 19 look at the top. 20 The top is -- compares the VOC reductions between 21 now and the year 2010. And between present plan, which is 22 the plan that's dotted -- I mean is the dark plan. Okay. 23 Here's one that I think your staff had gotten together. 24 As you can see, the dotted line's the 1994 plan, 25 and the dark line is the 1997 plan. As you see, between now PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 48 1 and 2005, there's not hardly any difference between the two 2 plans. Most of the changes are in the out years. 3 And if you consider that we're committed to do a 4 revision in the year 2000 and the year 2003, the differences 5 actually almost in the noise projecting that far out into 6 the future. And so, while I, you know, I think -- I've been 7 sympathetic to the environmentalists' concerns, I don't 8 think it's a real concern, as we're going to look at the new 9 standards. If there's a need or technology develops, I 10 think we have plenty of opportunity to address that. 11 The next slide actually looks at the NOx. And, as 12 you can see, this plan actually tightened up some on the NOx 13 emissions. So, if we don't adopt this particular plan, 14 while maybe theoretically we can keep some VOC reductions in 15 the old plan, we actually lose some NOx reductions in this 16 plan. So, I think it's a bit of a tradeoff in that area. 17 And again, I think that's what that's pointing out to you. 18 Let's go to the next slide. That's back to my 19 regular slides. 20 We estimate the total benefits in this plan to be 21 about $4.5 billion in health and materials in the basin. We 22 think the total costs are about $1.7 billion. So, we think 23 it's just in the economic sense, it's cost-effective. 24 Next slide. 25 I guess, in summary, we think the '97 AQMP is sort PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 49 1 of a '94 AQMP with some adjustments that reflect the newest 2 data and the latest scientific information. It had an 3 impressive level of public involvement and development, and 4 we think it meets all the State and Federal requirements. 5 Next step. 6 We think it represents a fair share approach. 7 This is always a tough decision -- how much emissions should 8 we get from mobile source, off-road sources, how much should 9 EPA take care of, how much should come out of stationary 10 sources, permitted sources. We think it's about a fair 11 balance in that part, and represents probably a tough row to 12 hoe for yourself as well as ourselves. 13 Next slide. 14 The challenge to us all and to us in the basin is 15 maintaining our rule adoption commitment. As your staff 16 point out, we have been behind. I can give you reasons for 17 it, but the bottom line is we have been behind. We've made 18 up some of that recently. We've adopted some major rules. 19 And, as you know, rules come with tremendous opposition. 20 We're trying to consider the concerns of the 21 business community as much as we can. That tends to 22 lengthen the process a little bit to hear out and resolve 23 some of their differences. So, that's some of the reasons. 24 But we think that the air quality -- solving our air quality 25 problem is critical, and we believe we need to maintain our PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 50 1 schedule. And I believe our board feels strongly about 2 that. And we will be working hard to stay to our 3 commitments here. 4 About half of the emission reductions are in the 5 uncertain category; that is, the category where we don't 6 have defined control measures. That applies a lot, I think, 7 to CARB as well as us. In our area, we have worked hard and 8 are working hard t o maintain the connection between our 9 technology advancement effort and trying to bring forward 10 the new technologies that need to be put in place so that 11 our dollars are going in the right areas to help make plan 12 work. And we're going to continue to enhance the models, 13 take into consideration new standards. So, this isn't the 14 end-all plan. 15 Our recommendations are to support CARB's 16 evaluation, approve the submittal, and pass it on to EPA. 17 I'd be happy to answer any questions. 18 CHAIRMAN DUNLAP: Yeah, Jim. I have a question 19 about the economic slide you showed. I appreciated the neat 20 summary about the cost and the benefit. You had, what, 4.5 21 billion in savings; costs, 1.7 billion. 22 One of the things we strive to do here at the 23 State Board, as you well know, and throughout State 24 Government -- Governor Wilson's made it a priority as has 25 the Legislature -- for us to be able to assess the economic PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 51 1 impact of any regulatory program specifically. 2 Tell me how you're able to present, what seems to 3 me a high level of certainty, the absolute cost? What 4 secrets do you have? Because when we get it, Jim, from our 5 team -- and we think we have a capable team here -- we get a 6 little bit more discussion about the variables. How are you 7 so confident about those numbers? 8 DR. LENTS: Well, I don't think we know exactly 9 either. We hire economists from the outside as well, as 10 well as we have a very experienced staff ourselves, who use 11 the latest techniques in estimating. 12 There was some controversy over this plan, you may 13 have heard, over -- 14 CHAIRMAN DUNLAP: Right. 15 DR. LENTS: -- what you evaluate a life on, and 16 what you evaluate shortening of a life on. So, there's some 17 uncertainty. As I said before, if it's your life, you put a 18 different figure on than somebody you don't know's life. 19 So, there certainly is some uncertainty there. I don't -- 20 in presenting the figures, we didn't mean to imply there 21 isn't. 22 But we think they meet the test of standard 23 economic practices, and we use the numbers that are the most 24 accepted approaches to that, and we come to a bottom line 25 number. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 52 1 CHAIRMAN DUNLAP: Right. 2 DR. LENTS: And we think that's the best that can 3 be done. 4 CHAIRMAN DUNLAP: I'll maybe ask a question, Mike, 5 to your team on it. I mean the economic models that they 6 are using are the same ones we use? Can you say a word or 7 two on that? 8 MR. JENNE: We have some of our economists here 9 today who are going to be presenting some of that 10 information later. But I think that it's a different 11 situation, because in Southern California, they can use a 12 large computer model to simulate the effects on the economy 13 down there; whereas, we typically produce estimates for the 14 statewide effect of regulations, in which it isn't so easy 15 to do that. 16 But maybe that would be an appropriate question to 17 ask the economists in the second presentation today. 18 CHAIRMAN DUNLAP: Okay. We're going to hear from 19 a number of witnesses; so, what I'd like to do is have our 20 economists come up and say a word or two on that. I think 21 it'd be an educational moment for this Board to hear a 22 little bit more. 23 Yes, Dr. Friedman. 24 DR. FRIEDMAN: With respect to that slide you 25 showed on economic impact, you mentioned that incorporated PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 53 1 into those projections were health costs. 2 DR. LENTS: Yes. 3 DR. FRIEDMAN: Well, I'd like to ask a converse 4 kind of a question. Assuming you have access to that kind 5 of projection, have you estimated what the health effects or 6 health costs would be by changing the schedules? In other 7 words, there's an offset. By changing the dates and so 8 forth, there is a cost of lost days, a cost to health and so 9 forth and so on. Do you have those projections? 10 DR. LENTS: You know, I do not think we made that 11 projection. 12 (Thereupon, Dr. Lents conversed with his 13 group in the audience.) 14 DR. LENTS: We did not look at the difference in, 15 you know, changing some tons. Like you said, there's a 16 slight difference between the two curves. And I guess 17 you're saying is, what is the health cost difference between 18 those two curves. And we did not look at that. 19 CHAIRMAN DUNLAP: Okay. Supervisor Silva, then 20 Supervisor Roberts. 21 SUPERVISOR SILVA: Right. Thank you, Mr. 22 Chairman. 23 Jim, thank you very much for flying up here. I 24 know this has been a big issue down on our board in Southern 25 California, and I think that your presentation was very PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 54 1 direct, and it was easy to follow. 2 But perhaps we downplayed just a teeny bit the 3 effort and the work on your staff and the Board of trying to 4 get this solved. 5 We did conduct hearings outside the formal board, 6 and we went out into the community and took a lot of input, 7 which I think was very important. And I'm not sure if he's 8 explained how the vote went down, but I believe it was a 9 10-0 vote. 10 DR. LENTS: Yes. It was a unanimous vote. 11 SUPERVISOR SILVA: A unanimous vote that we 12 supported this, and I really feel that we're making a move 13 in the right direction. So, thank you very much. 14 CHAIRMAN DUNLAP: Go ahead, Ron. 15 SUPERVISOR ROBERTS: Yeah. Jim, could you go back 16 over the indirect source reduction measures. You said, 17 basically, they were being dropped out and there was no 18 public support, or there was a lack of public support. I 19 didn't hear you say "no" public support; a "lack" of public 20 support. 21 DR. LENTS: Yes. 22 SUPERVISOR ROBERTS: And you referred to the fact 23 that our distinguished Chairman had done some prior work in 24 this area. What kinds of -- for my benefit, what kinds of 25 things are we talking about? What were the things that were PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 55 1 so offensive? Because it sounds like there's an area in 2 which there could be some benefits, but there's -- 3 DR. LENTS: Probably the -- 4 SUPERVISOR ROBERTS: -- some problems. 5 DR. LENTS: -- most, you know, upfront 6 controversial was on our Reg. 15, which -- or it eventually 7 became our Reg. 2202, which requires employers to 8 incentivize their employees to carpool to work. There was a 9 concern in the business community that it cost too much 10 money for the value they got, particularly to smaller 11 companies. 12 And the State Legislature last year passed a law 13 that limited which companies we could apply it to, and 14 actually makes us go through the process slowly to take 15 other companies out of it if we can make a voluntary program 16 work. That's probably the largest one. And in that, we 17 simply have no choice. State law says you do it this way. 18 Some of the others that weren't at that kind of a 19 level yet involved, do we charge for parking on streets in 20 certain places; do we require shopping centers to do some 21 sort of incentives that would -- although I don't know that 22 it would have turned out to be charging, but, you know, 23 would you charge for people to park at shopping centers, or 24 would you do some other preferential parking or something in 25 shopping centers. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 56 1 It's those types of measures that predominantly 2 were taken out of the plan. 3 SUPERVISOR ROBERTS: So, most of these things 4 revolved around the car, and carpooling, and parking, and 5 those types of strategies? 6 DR. LENTS: Yes. Yes. 7 SUPERVISOR ROBERTS: Okay. Just wanted to know 8 for my own benefit. 9 CHAIRMAN DUNLAP: The Legislature has, Supervisor, 10 made -- had this as a priority in the air quality mix of 11 bills in 1995, and there was one or two, I think, bills last 12 session that dealt with this. 13 The primary concern was that the indirect source 14 control programs would be somehow treated in an 15 enforced-like, traditional command and control regulations. 16 And they felt that this was unfair in some ways, and that it 17 ignored the fact that many employers felt they had no 18 control over how their people got to the workplace and, to a 19 certain extent, where they parked, and some of the attendant 20 issues. 21 But I, too, share a similar perspective with Jim 22 that, under the right circumstances, you can squeeze some 23 emission reductions out of indirect source controls, but 24 you've got to have the right kind of voluntary cooperation 25 with the companies. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 57 1 Any other questions before we get to Dr. Sherwood? 2 Yes, Ms. Edgerton, and then Mr. Parnell. 3 MS. EDGERTON: Dr. Lents, I'm following up on the 4 importance of Dr. Friedman's question. Most of the health 5 cost of polluted air was handled -- if I recall, in 6 connection with the 1994, there were a number of different 7 documents in the 1994 ozone SIP which had a number -- I 8 recall something like $9.5 billion of cost of having 9 polluted air in Southern California. 10 Is that the most recent number? 11 DR. LENTS: Yes. There's several things, though, 12 that are impacting that number. First, the air is getting 13 cleaner; so, you're always looking at increments, because 14 the air is cleaner now than when we did the last plan. The 15 next level of cleanup won't cost as much, but it also won't 16 give you as much health benefit. So, that's part of the 17 reason. It's just starting with cleaner air. I think 18 that's the prime reason. 19 There were some smaller reasons on what value, as 20 I said, you put on shortening lives. Those were some of the 21 other issues. 22 MS. EDGERTON: Well, I guess one of the things 23 that I find troubling -- and I'm not asking for an answer, 24 although I'm giving an opportunity to comment -- is that at 25 the same time that the air is getting cleaner, the reports PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 58 1 on deaths from particulates are going up. And I have -- 2 there's a little cognitive dissonance there. The air is 3 cleaner, and more people are dying. 4 So, how can you reconcile that? 5 DR. LENTS: Yeah, I don't think more people are 6 dying. I think less people are dying. It's just we didn't 7 realize how many people were dying a decade ago. And now, 8 as we get better epidemiological studies, as we look at 9 this, we're realizing that pollution is worse than we 10 thought before. 11 Maybe I should have added a point a minute ago 12 when we were talking about doing the health effects on 13 delayed rules. The reason we didn't choose that comparison 14 was that we didn't have, in our view, a set of additional 15 control strategies that we could have implemented that we 16 didn't, when we were -- we were deciding. 17 We put in this plan everything we knew how to do. 18 In fact, when some people -- some of the environmental 19 community criticized the fact that we were changing the 20 plan, we said, if you can give us some further control 21 measures that are feasible, we'll put them in the plan. 22 It's not that we're trying to leave control measures out of 23 the plan. 24 And we tried to react to their concern on 25 architectural coatings, which is a very controversial area, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 59 1 and actually did make a change between the draft plan and 2 the final plan to move 26 tons of the 80 so that we talk 3 about back into the regular plan, and make a commitment to 4 do a rule adoption in a few years. 5 So, we tried to respond. But the issue is -- and 6 we're still open. I mean, if there's some control measures 7 we left out we think that are cost-effective, they ought to 8 go in that plan and they ought to be done as soon as 9 possible. 10 MS. EDGERTON: Thank you. 11 CHAIRMAN DUNLAP: Mr. Parnell. 12 MR. PARNELL: This comes under the category, Dr. 13 Lents, of my never missing an opportunity to keep my mouth 14 shut. 15 (Laughter.) 16 MR. PARNELL: But it's something that's plagued 17 me, and we don't often get an opportunity to sit down and 18 visit with you. And the thing is fundamental, and I hope no 19 conclusions are mistakenly drawn from my questions or my 20 position on trying to attain clean air in the L.A. Basin. 21 But it strikes me as interesting, if nothing else, 22 to have heard historic comments about the L.A. Basin. I'm 23 talking about historically back to Indian times, where they 24 referred to it as the "Valley of the Smoke," because of its 25 geographic location, because of the character of the way the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 60 1 mountains surround it, and that sort of thing. 2 And then, because that seems then to make it more 3 vulnerable to transport air and all of that sort of thing -- 4 and I guess my question is, how do you view that? Are the 5 benchmarks that we're trying to attain really attainable? 6 Are we striving toward a goal that's totally unattainable, 7 or are we going to get there? Recognizing that we need to 8 do all that we can do, how do you view just the basic 9 geography? 10 DR. LENTS: I'll answer that last question, then 11 I'll back up. Yes, I think the goals are attainable. I 12 think that's what we've been trying to show with the '97 air 13 quality management plan, and with the '94 plan. They're 14 attainable, not easily attainable, but they're attainable. 15 But the issue of Valley of the Smokes (sic) and 16 all that comes up, Los Angeles Basin, because of its very 17 nature -- what gives us the wonderful climate down there is 18 the fact that airflow is somewhat restricted. So, it is 19 true that there is a tendency to build up air pollution in 20 the basin more so than there is out in Kansas where the 21 winds blow freely. 22 What that tells us is, we have to actually have a 23 lot more diligence in what we dump into the air down there 24 to keep the air health standards. You know, we can take the 25 attitude, well, it's more stagnant; therefore, we just have PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 61 1 to live with, you know, more air pollution. Or we can take 2 the viewpoint that it's more stagnant; therefore, we've got 3 to be more diligent. 4 That becomes a policy issue, I think, that this 5 State's going to wrestle with as to which path to choose. 6 CHAIRMAN DUNLAP: Mr. Parnell, did he catch all of 7 them? 8 MR. PARNELL: No. I think he did. I guess the 9 question -- this is probably a good conversation to have 10 over a cup of coffee outside of a public forum. But it 11 seems to me, yes, you said they're attainable, but at what 12 economic cost? I know we try to answer those questions. 13 And it just concerns me that, on balance, air 14 quality -- like all other things environmental -- you push a 15 balloon in here and it pokes out somewhere else, and I'm 16 often wondering, as you sit up here and try to make 17 decisions, whether they're good ones or are we erring in 18 some way? 19 DR. LENTS: That's why we try to do the economic 20 analysis. And, as Chairman Dunlap pointed out, there's 21 uncertainty in those economic analyses, but we still believe 22 that the value to society from meeting the standards 23 outweighs the cost to society. And it still appears to us 24 that that's the case. 25 We haven't come to that point in time yet where PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 62 1 it's not. 2 CHAIRMAN DUNLAP: And I think Jim's striving to 3 get a handle on that, like we all are. But the real 4 argument, and it has to do with your balloon analogy, too, 5 you know, to protect public health is important and why we 6 exist, and why we've been entrusted with this authority and 7 responsibility. 8 But at the same time, there's a lot of questions 9 about the economic impacts. And the Legislature, as I've 10 said, is very interested in this and asks us a lot of 11 questions. Who's going to lose economically? What's going 12 to be the impact and what time frame? And so, that's why I 13 surfaced it. 14 What I'd like to do -- we've had Jim up there a 15 long time. We have Arnie Sherwood from SCAG, who is a 16 partner of the South Coast District as they bring forward 17 this plan. And he's patiently waiting. I'd like to get him 18 on. 19 Jim, you and Barry and your team are going to 20 remain here for this issue, so we can bring you back up? 21 Okay. 22 Good morning, Dr. Sherwood. 23 DR. SHERWOOD: Good morning, Chairman Dunlap and 24 members of the Board. My name is Arnold Sherwood, and I am 25 Director of Forecasting, Analysis, and Monitoring at the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 63 1 Southern California Association of Governments. 2 On behalf of my board, I would like to urge you to 3 adopt the 1997 South Coast Air Quality Management Plan that 4 is before you for consideration today. SCAG's 5 responsibilities include preparing and approving the 6 demographic, employment, and transportation travel 7 projections as well as the transportation control measures 8 for the air quality plan. 9 A question arose before about the projections 10 being less in the '97 plan than the '94 plan. Not only did 11 we have a severe recession, which lowered the base year, but 12 the national projections of economic activity and 13 population, which our models use to project Southern 14 California employment and population growth in part, have 15 been reduced and the total reduction that that results in 16 between the '97 and '94 plans is about 5 percent by the year 17 2020. 18 And SCAG's public involvement process for input 19 and review was quite extensive. It included all the cities 20 in the basin, the counties, and subregions, as well as the 21 air and transportation agencies at the local, State, and 22 Federal levels. 23 Additionally, a major effort to improve and 24 enhance the modeling and analytic tools was undertaken. 25 This was approved and reviewed by the agencies through two PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 64 1 formal bodies -- the modeling task force and the 2 transportation conformity working group. 3 This effort will continue in order to maintain the 4 state of the art modeling and analytical capabilities. 5 Turning to the 1997 AQMP, we feel that it furthers 6 the direction set in the 1994 plan. It fosters 7 technological advancement, encourages implementation through 8 the marketplace, and enhances flexibility while maintaining 9 a solid pathway to attainment. 10 Affirming the State's commitment to this AQMP and 11 forwarding it to EPA is critical, because this plan presents 12 the most reasonable assessment of what is expected to be 13 accomplished by each source sector to clean up the air. 14 During the debate over the 1997 AQMP, SCAG's 15 regional council has voiced four main points -- costs, 16 commitments, flexibility, and funding. 17 First, a plan to reach attainment of the air 18 quality standards must attempt to achieve the goal in the 19 most cost-effective way possible. Through collaboration, 20 hard work, and significant new information we believe that 21 this plan brings the region closer to assessing the true 22 costs and benefits of improving the air when compared to 23 previous AQMPs. 24 Second, both the State and Federal Governments 25 must commit to do their fair share to reach attainment. It PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 65 1 is both unreasonable and unrealistic, given the slides that 2 we just saw from Dr. Lents, to expect local governments, 3 businesses, and people working and living in the South Coast 4 to meet this challenge alone. 5 Thus, we have been pleased with the strength and 6 steadfastness that the Air Resources Board has shown as the 7 region's partner. Further solidifying the partnership by 8 working with the Federal Government to obtain binding 9 commitments for reductions from federally regulated sources 10 should be viewed as a key objective arising from this plan. 11 Third, emphasizing market creation for new 12 technologies in consumer products is crucial to the success 13 of this plan. Our experience over the past several decades 14 shows us that traditional command and control regulatory 15 approaches can only go so far. 16 More flexible approaches which emphasize product 17 development and market creation are key as we move into the 18 21st Century. SCAG is committed to being a partner in this 19 effort through its support of the Southern California 20 economic partnership and other public/private collaborative 21 efforts to develop and enhance reliable marketplace 22 conditions. 23 Finally, it is important to continue to recognize 24 that several billions of dollars in current and future 25 transportation funding rely not only on implementing the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 66 1 right sort of projects that minimize emissions, but ever 2 more increasingly on maintaining and enhancing the State's 3 commitment to cleaner fueled and electric powered vehicles. 4 Mobile source emission budgets used to find (sic) 5 conformity for transportation projects are impossible to 6 meet based on changes in transportation infrastructure 7 alone. These budgets are based on both transportation 8 improvements and increased use of cleaner vehicles. As the 9 vehicle fleet becomes ever cleaner, the relative cost- 10 effectiveness of transportation infrastructure improvements 11 in cleaning up the air decreases. 12 Moreover, our current analysis to update the 13 regional transportation plan underscores the fact that 14 maintaining the existing transportation system, much less 15 improving upon it, is going to be far more difficult than 16 realized as traditional funding sources continue to 17 diminish. 18 Thus, maintaining progress toward a zero-emission 19 vehicle fleet by working together with both private and 20 public partners to enhance supporting market conditions is 21 critical to the sustained flow of transportation dollars to 22 the Southern California region. 23 SCAG is committed to work with all its partners, 24 agencies, and the public in continuing to refine the 25 strategy of cleaning the air. Thank you very much. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 67 1 CHAIRMAN DUNLAP: Thank you, Arnie. I appreciate 2 that. One comment I would make is really to thank you and 3 South Coast. It was an industry group that had done some of 4 their own analysis and modeling work and had come to us 5 about some of the local variables in the models. 6 I know you sat down with them and went over some 7 of their assertions. And I appreciate you doing that. I 8 also appreciated your comments there a moment ago about 9 working with private partners and finding a way for them to 10 loop in not only in the planning work that you do, but also 11 as markets are to develop, we need the private sector, 12 obviously. Appreciate that. 13 Any comments, questions of Dr. Sherwood from SCAG? 14 Thank you. 15 All right. Why don't we move into the witness 16 list. Mr. Kenny? 17 MR. KENNY: Mr. Chairman, you had asked previously 18 about the economic analyses on how the South Coast did it 19 and how we did it. And I've asked Mr. Bob Barham from the 20 Research Division to address the question as you desire. 21 CHAIRMAN DUNLAP: Bob, would you mind if we hold 22 you and get to the witness list, and we'll come at the end? 23 Because I'm sure we'll have some questions, and I know 24 you're up next anyway as I look at the agenda. 25 All right. I'm going to call three witnesses. We PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 68 1 have some time pressure, so the Chair reserves the right to 2 shuffle some of these names here. But I'd like to call Gail 3 Ruderman Feuer from NRDC, followed by V. John White of the 4 Sierra Club, followed by Tim Carmichael, Coalition for Clean 5 Air. If I could get you to come forward and take your 6 places, be happy to hear your comments. 7 MS. FEUER: Good morning, Chairman Dunlap, members 8 of the Board. 9 I am Gail Ruderman Feuer. I'm a senior attorney 10 with the Natural Resources Defense Council, and I'm one of 11 those environmentalists you've heard reference before. And 12 we do have some concerns with the plan, and you should 13 before you some comments which we have submitted. We wish 14 we had gotten them in earlier. It's been a busy time for 15 us. 16 We are here today to urge you to vote no to 17 approve the plan. We know that the AQMD and the ARB staff 18 have spent a lot of time on this plan. And we appreciate 19 those efforts. And much of the plan is salvageable. But 20 this plan moves us backwards, not forwards. 21 If you approve this plan today, we believe you are 22 sending a message to the public that even though our air is 23 still very dirty, it's okay to move backwards and to roll 24 back measures which you committed to in 1994. 25 We have come a long way in cleaning up our air, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 69 1 and you should be proud of that. But, please, do not 2 approve a plan which moves us backwards. 3 Let me move to some of the specifics. First, on 4 ozone, many in the environmental community, including 5 myself, supported ultimately the approval by EPA of the 1994 6 State Implementation Plan. That was a big move by the 7 environmental community. As many of you may know, 8 initially, we opposed the plan. But ultimately, we were 9 convinced that it was better to have an approved plan that 10 laid out a blueprint for where the State would go over time 11 to clean up our air so we would achieve clean air in the 12 year 2010. 13 We are concerned that today, if you approve a plan 14 which rolls back many of those measures that you committed 15 to in 1994 by a hundred tons per day in VOCs alone, you are 16 going to cause the public to question whether you, this 17 agency, and whether the district is truly committed to 18 cleaning up the air. 19 Now, today, we heard a lot about the numbers and 20 where does the hundred tons come from it, and how much is 21 truly deleted. And I've been doing some searching for the 22 numbers myself, and I just wanted to point out a few quick 23 things. 24 First of all, with respect to a hundred tons of 25 rollbacks, this is a combination of both some rules which PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 70 1 are moved from short-term rules to long-term rules, and 2 other rules which are dropped completely. But the 3 hundred-ton figure is supported by the ARB staff report, 4 which shows this. 5 First, with respect to deleted measures, I believe 6 it was shown earlier that, if you look at the staff report 7 on page 13, it shows that all these deleted measures add up 8 to a loss in this plan of ten tons per day of VOCs and 13 9 tons of NOx. 10 I would like to point out, also, that there's a 11 footnote. I always love footnotes. But there's a footnote 12 4, which says that there's an additional 12 tons per day 13 which has been lost. And I just want to point that out, 14 because the chart on page 13 is a list of the rules that 15 were totally deleted from the plan. That is different than 16 what's on page 20, which is a list of five key rules which 17 have been rolled back from 1994 to 1997. 18 There's both a rollback of movement in time, but 19 also 12 tons which are foregone in the 1997 plan. So, I 20 think it's important to realize that. 21 This chart also shows that there's more than 70 22 tons per day in emissions reductions which were moved from 23 short-term measures to mid- or long-term measures. And this 24 is what is particularly troubling to us. And you have heard 25 us describe this as the black box. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 71 1 What we don't like about -- what we initially 2 didn't like about the 1994 plan was that a lot of the 3 emissions reductions under some calculations, half of them 4 came from these long-term measures that are both implemented 5 after the year 2000, but also have very little definition in 6 the plan. 7 So, our concern in moving these 70-plus tons into 8 the future is twofold. First, Dr. Friedman, you had raised 9 earlier with Dr. Lents whether there was any data with 10 respect to increase in health costs from moving these 11 measures into the future. 12 I don't have those numbers. I'd be very 13 interested to see them. But I think we have to assume, if 14 people in the South Coast area are going to be breathing 15 this more polluted air for, you know, many more years, there 16 are going to be health costs. I'd be interested to see 17 those numbers. 18 But, second, I think --and equally as important-- 19 is that one impact is that you are moving a fairly defined 20 short-term measure, which is a bird in the hand so to speak, 21 and tells us what our problem is and how we're going to fix 22 it over the next number of years to a very undefined, long- 23 term measure. And a good example is architectural coatings, 24 which I hate to raise. I know that was always a very 25 controversial one. But that's one that was in the original PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 72 1 1994 plan for 60 tons -- actually for 59. But let's say 59 2 tons in the 1994 plan. 3 The rule that was adopted in the fall by the air 4 district got us 12 tons. That was a very hard-fought rule. 5 I mean, our understanding is that it was very close whether, 6 in fact, the board on the district level was going to 7 approve that 12 tons. And we are now led to believe that 8 somehow we're going to get 47 more tons of emissions 9 reductions without really having a path for how we're going 10 to get there. 11 And to us, that says to us, those 47 tons are 12 fairly unrealistic. We're not going to get there. Also, I 13 think there's a big policy issue that is here, which has not 14 been raised yet. Traditionally, the way that this Board and 15 the district have reached the point we are today -- and 16 we're certainly better off today than we were in the past -- 17 is by adopting technology forcing rules. 18 If you approve this plan today, we believe that 19 you are signaling a major policy shift for this agency and 20 for the district, which is saying we will not adopt 21 technology forcing rules. 22 These rollbacks and a lot of the measures that 23 were deleted were based on the fact that the technology 24 assessment says the technology is not there today. And we 25 say, if it's not there today, then you set deadlines of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 73 1 implementation into the future, but you still adopt the rule 2 today, so we have a blueprint which tells us how we're going 3 to get into the future. 4 And we are very concerned if we move to a policy-- 5 CHAIRMAN DUNLAP: If I may on that point, and 6 going back a few years when I worked in the planning 7 operation at South Coast, there was always -- or 8 conceptually we developed a Tier 3, which was -- some call a 9 lot of different things, a black box, a square box, 10 whatever; were undefined at the moment. Technology would be 11 employed with some reasonable assurance, not just wishing, 12 based upon discussions about technology transfer, 13 applications for new technologies to be demonstrated. 14 And we have had, it seems to me, both at the State 15 level and the South Coast area, focused technology programs. 16 We've had some successes there. So, the characterization, 17 while I understand the spirit in which you offer it, isn't 18 completely accurate from my experience about undefined 19 technology that we can reasonably count on to develop. 20 And sometimes there's a nudge that government 21 needs to provide. So, I just wanted to make that point from 22 my perspective. I don't know, perhaps Dr. Lents and maybe 23 even the technology team here at the Board could add to 24 that. But that's been my impression, Gail, that we have had 25 some success. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 74 1 I don't see it as, you know, a longshot. 2 MS. FEUER: I don't disagree with that. I think 3 there has been success, and I think that that Tier 3 is not 4 much different than the black box that we have today. I 5 mean, they're similar. They were both undefined. 6 I think the answer is, you will have some success, 7 and some of those technologies will come. But I think 8 there's a big difference between having rules today which 9 give you 80 tons of reductions and putting something in the 10 black box which says we hope the technologies will come. 11 I think that, yes, some of those will come. But I 12 think it's very different than having short-term measures 13 which say this is how we're going to do it. Here's our path 14 between now and 2010. 15 CHAIRMAN DUNLAP: Okay. I think we found common 16 ground there. Thank you. 17 MS. FEUER: Yeah. Thanks. Let me turn to 18 carrying capacity for a moment. And then I know we have a 19 lot of witnesses, and I'll return to particulates. 20 We are also concerned about the issue on carrying 21 capacity. Our understanding from the discussion today in 22 the staff report is, one of the reasons that the district 23 feels comfortable with these rollbacks is because of the 24 change in carrying capacity. I think it's important to note 25 that the only reason the carrying capacity has changed is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 75 1 because the 1985 episode has been dropped, or at least the 2 principal reason. 3 And that's troubling to us. It is not that we 4 have new, better data. It's that we've decided to take a 5 piece of data that was used in 1994 for the SIP, and to say 6 we don't want to use it this time. And we agree, it is not 7 perfect data. But we say, let's either replace it with 8 other data or let's make adjustments and figure out how 9 that's causing a change as opposed to just dropping it and 10 say that means we have 80 or 90 more tons to play with to 11 allow more pollution in the air. 12 And second, even if you go ahead and say, okay, 13 let's change the carrying capacity, what do you do as a 14 result of that? We say, if you change the carrying capacity 15 and you can justify it with your modeling, then take that 16 out of the long-term measures, but don't roll back the 17 short-term measures. That we think, as a matter of policy, 18 is not a good idea. 19 We also think you should know -- and I don't know 20 if this is in your materials -- but I think it's very 21 unlikely that EPA will approve this plan because of the 22 rollbacks. EPA sent a letter to the district -- I don't 23 know if many of you have seen this -- which made very clear 24 that a rollback plan would not be acceptable. 25 And that was made clear both in the approval of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 76 1 the 1994 SIP. And then, in this letter that was sent to the 2 district, EPA wrote, "In those cases where the district 3 finds it's necessary or desirable to amend the near-term 4 rule adoption schedule or approach, revisions to the SIP 5 must ensure that there will be no backsliding." 6 And we think it's hard to see this plan other than 7 backsliding. And that's taken from a November 7th letter 8 from EPA regarding the 1997 plan to the district. 9 Let me move briefly to particulates, if I may. We 10 are also concerned that the particulate part of the plan 11 totally ignores both the new proposed standards by EPA with 12 respect to PM2.5 and also a wealth of scientific evidence 13 which now is out there, which tells us that these tiny 14 particles do cause serious health impacts and premature 15 deaths. 16 As you may know, NRDC, last year, released a 17 report called "Breath Taking," which calculated the number 18 of premature deaths both nationally and in California that 19 are resulting currently as a result of these tiny particles, 20 and the numbers are startling. It's 65,000 people each year 21 nationally, and in the South Coast area alone, 8700 people 22 per year. 23 We think the time to act is now and not to wait to 24 the year 2000. When the district originally adopted the 25 plan, it did not have EPA's proposed standards in front of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 77 1 them. They came a month later. 2 We now have the proposed standards, and we at 3 least know the range within which that EPA will adopt these 4 new standards. And we think that it is fair, not only to 5 the public but to industry, to say today: What does the 6 future hold and how will we meet these standards? And it 7 may mean a shift in approach. 8 This ozone plan focuses on VOCs. And certainly, 9 once we start focusing on PM2.5, we're going to have to look 10 at combustion sources and reduce our NOx more significantly 11 than we're doing in this plan. 12 We also have some concerns about the PM modeling. 13 We've submitted some technical comments on that, which I 14 won't go into now. 15 In conclusion, we urge you to vote no on the plan. 16 We know that's a difficult decision, but we also think this 17 is a very important decision to send a message to the public 18 that we are going to hold firm, and we are going to move 19 forward aggressively. 20 On the ozone portion of the plan, there is no 21 deadline before you. This is a revision to the 1994 SIP. 22 There is no deadline which says that you have to get this 23 in. And we urge you to direct -- to send it back to the 24 district and direct them to modify the plan. 25 If they need to remove a technologically PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 78 1 infeasible measure, that's okay with us. We want to agree 2 that it's technologically infeasible. But if it is, and 3 there certainly are some. There are things like the 4 indirect source rules, which don't make sense right now. 5 That's okay with us. But replace it with something else. 6 We cannot afford to lose these tons. 7 On the particulate -- 8 CHAIRMAN DUNLAP: On that point, Gail, on that 9 Table 6 on page 14, which is an area I asked a question on, 10 we're talking about new measures being proposed. 11 I haven't heard you say a lot about the new ones 12 and about the tons and how that works in the math. What's 13 your take on these? 14 MS. FEUER: Well, I'd be interested to hear from 15 Dr. Lents. On the VOC side, my understanding is that these 16 are not actually additional tons, but rather these measures 17 are principally replacements for the VOC RECLAIM program. 18 CHAIRMAN DUNLAP: On that point, Ms. Terry, can 19 you comment? Is that the proper characterization? I'm just 20 trying to understand this hundred-ton math here. 21 MR. NYARADY: Right. In Table 6, those new 22 district measures, those are really -- there were some 23 general VOC measures in the '94 plan, and these have been 24 more better -- better defined from those. So, they're not 25 actually brand new measure reductions. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 79 1 CHAIRMAN DUNLAP: All right. So, help me with her 2 math. We've got a hundred tons, she's saying, that's lost. 3 MR. NYARADY: She's saying there's dropped were 4 ten tons from the measures that we talked about being 5 dropped. 6 CHAIRMAN DUNLAP: Right. 7 MR. NYARADY: In the reduced control effectiveness 8 category of measures, there's about 12 tons that were 9 completely foregone; in other words, from changing -- 10 CHAIRMAN DUNLAP: The footnote. 11 MR. NYARADY: Yeah, right. Changing how well the 12 retained measures are going to do. 13 The remaining, where she gets -- this is like -- 14 like there's Table 8 on page 20, we see the 36 tons there 15 that are near- or mid-term measures. I don't know if I 16 would characterize those necessarily as being foregone. 17 They are still near- or mid-term measures. It's more that 18 they've been -- architecturally coatings, in particular, 19 has been turned into two phases. 20 CHAIRMAN DUNLAP: But she asserts they have a 21 value relative to the time they'd be implemented. Tell me 22 about the time for a minute. Are we talking about things 23 that were three years out now are eight years out? What are 24 we talking about? 25 MR. NYARADY: Well, this portion's still -- any PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 80 1 near- or mid-term in the district's plan would be adopted 2 prior to 2000. 3 CHAIRMAN DUNLAP: Okay. How much of her hundred- 4 ton math do you agree with? Staff, what is the ton -- 5 MR. NYARADY: Well, the math is obviously correct. 6 it adds up. It's more the characterization of it. 7 CHAIRMAN DUNLAP: Right. 8 MR. NYARADY: If it's, you know, if it's something 9 that's been taken away from the '94 plan or recast into a -- 10 CHAIRMAN DUNLAP: Okay. Well, can you summarize 11 what we're talking about relative to her math. She's saying 12 there's a hundred-ton loss. 13 You're saying there's a problem with that 14 characterization. Characterize it for me then. 15 MR. NYARADY: Well, I'd say, of the ten tons that 16 were dropped, and the 12, and the control effectiveness ones 17 that were foregone, I would still think of the remaining 30 18 or so tons that were in near- or long-term measures are 19 still considered near -- I'm sorry -- near- or mid-term 20 measures are still considered near term. 21 CHAIRMAN DUNLAP: Right. 22 MR. NYARADY: And the remaining 30 or 40 tons that 23 went into the long-term measures I would characterize as 24 really better defining what the long-term measures were. 25 Before, there was a large chunk of about 180 tons in the '94 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 81 1 plan that were long-term measures. 2 So, I think that what we've actually in the 3 district has been to better define some of those long terms. 4 CHAIRMAN DUNLAP: Okay. Well, we'll probably come 5 back to this. 6 Do you have any summary comments? 7 MS. FEUER: I'm not sure I disagree with that, by 8 the way. We do have a little different characterization. I 9 think we're agreeing that 22 tons were lost, 73 were delayed 10 in some manner. 11 What he's suggesting is some of them were delayed 12 only a little bit, because near or mid-term. And some, like 13 the 37 tons, were delayed longer, because they're -- they're 14 a long-term. 15 Lastly, on the particulate -- let me just say -- 16 sum up on the particulate portion of the plan. You do have 17 to face the February, 1997, deadline to submit the plan. 18 We would support an extension of that deadline for 19 a reasonable period of time if the district could go back 20 and come up with a plan, with the help of ARB -- and we 21 think ARB is a central player in this -- to help fashion a 22 plan which truly protects lives and deals with that new 23 scientific evidence. 24 CHAIRMAN DUNLAP: Okay. 25 MS. FEUER: Thank you. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 82 1 CHAIRMAN DUNLAP: Good. I didn't mean to hog the 2 witness here. Ms. Edgerton? 3 MS. EDGERTON: As a former member of the same 4 organization you are in, I think I have an obligation to 5 respond so that you will know my reaction to what you said 6 so far. 7 I guess my conclusion is that when I go about 8 reviewing this South Coast plan, I -- based on what your 9 argument has been today and what's been submitted, I can't 10 say that changing the carrying capacity, based on what Mr. 11 Scheible has said and the staff has said, is unreasonable. 12 It seems that it is reasonable to use the best 13 available science. And I haven't heard anything that says 14 that that's incorrect science. Obviously -- or not 15 obviously, I will state, you know, personally I prefer the 16 most protective standard possible. But, as a member of this 17 Board, I can't say that that's an unreasonable approach. 18 Nor can I say that it's unreasonable to submit a 19 PM10 plan which is based on the existing PM10 standard. As 20 interested as I am in the proposed 2.5 particulate standard, 21 and as important as I think it is, and as sympathetic as I 22 am to your argument, and as impressed as I was by your 23 report on particulates, I still can't say that the South 24 Coast, as a matter of law, should be submitting a proposal-- 25 a plan based on a proposed standard instead of the existing PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 83 1 standard. It just has to be the existing standard. 2 And finally, I would like to make a comment that 3 the -- I've heard you make the argument that the plan -- 4 we're supposed to vote no, because the plan is involved in 5 backsliding. That has not -- I could not make a finding 6 that there's backsliding based on what I've seen. 7 There is change in the plan. There is not 8 backsliding in terms of the overall achievement of the 9 emissions reductions based on what I've seen. 10 I know you've just had a chance to get your 11 material in yesterday. I wish we'd had more time to discuss 12 it. But I don't think the EPA would have a basis for 13 rejecting the amendment, because I think these numbers, as 14 we've heard, don't bear out a real -- there's not a net 15 loss. 16 And finally, with respect to the near term versus 17 the long term, Dr. Lents presented a chart that showed 18 probably for the -- for the next six years, there is no -- 19 at least in their -- you know, in our report, the staff that 20 is excellent in advising us -- that there's no divergence in 21 air quality for that period. 22 Key to that is that within the next three years, 23 there will be a new plan. And presumably there may be a new 24 U.S. EPA standard. Let's work on that and get this in 25 place, move on this, and work on what's coming. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 84 1 And thank you very much for coming. 2 MS. FEUER: Okay. Thank you. 3 CHAIRMAN DUNLAP: Okay. I appreciate that 4 tutorial on the numbers. It was good. And it demonstrated 5 to me that you've obviously spent a lot of time on it. And 6 I appreciate the distance you've come. 7 One thing, a comment I'll make probably in 8 closing, but I'll make it at the outset: One thing we 9 appreciate here is to have all views represented before us. 10 That's important. But at the same time, we also appreciate 11 a lot of these issues, the detail work being worked out at 12 the local district level. 13 And I am sorry that more of this couldn't be 14 worked out so, you know, you wouldn't have had to come up 15 here and discuss this with us. And that's something I'll 16 talk about at the end when we hear from the public comments 17 in more detail. 18 MS. FEUER: I appreciate it. I should add that 19 both your staff and district staff have spent a lot of time 20 with us helping us to understand the numbers, so we can come 21 up here with an understanding. We may have a disagreement 22 about the characterization of them, but we appreciate that 23 effort. 24 CHAIRMAN DUNLAP: Mr. Kenny's been racking up a 25 lot of frequent flyer miles down to that region, and we're PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 85 1 glad he's been doing that. 2 Thank you. 3 MS. FEUER: Okay. thank you. 4 CHAIRMAN DUNLAP: Mr. White, please come forward. 5 MR. WHITE: Thank you, Mr. Chairman, members. 6 John White, representing the Sierra Club. 7 As some of you know, I'm a native of Pasadena and 8 a graduate of the University of California, Riverside. So, 9 I appreciate maybe more than most how far we've come from 10 the days of many, many hundreds of hours over the standard. 11 But I think that the focus of this effort needs to 12 be on where we need to go. We concur with NRDC's 13 recommendation that this plan be held. We anticipate that 14 EPA will not approve; we will certainly ask them not to 15 approve. And I think it's important to go back to what Ms. 16 Feuer said a minute ago about, you know, what we're now 17 doing. We're going back to the areas of conflict and 18 disagreement that we had gotten over in the 1994 AQMP. 19 The fact that Mr. Silva says there's 10 unanimous 20 votes, to disregard all the issues we've raised is 21 illustrative of what we think the problem is in the South 22 Coast. 23 There is not a voice on the district board for 24 clean air particularly. Everybody is concerned about clean 25 air and expresses their support for it, much like people PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 86 1 support the balanced budget. Who's against a balanced 2 budget? 3 But the key with a balanced budget, just like the 4 key to this AQMP, is where are the tons? and are these 5 off-budget promises or are these real commitments? This is 6 the essence of the problem. 7 I want to focus first, though, on the modeling 8 issues a little bit. I'm not technically capable of saying 9 what date to substitute for the '85 episode, but I would be 10 worried, if I was you, about how robust the model is if it 11 flips the result when you pull out one day. Okay? 12 So, if, in fact, you make this change, know how 13 big a change this one variable had and what the plan 14 modeling is doing. 15 The South Coast and industry have historically 16 loved the idea of modeling attainment as their focal point 17 for the AQMP. I have come from the school that focus on the 18 tons, because I think that's the only thing that's relevant 19 for the regulatory agencies. 20 But I also think that monitoring and modeling is 21 important. And the other, I think, thing that's in between 22 the lines here is that while the ozone story is pretty good, 23 excellent in fact -- and we should be happy about that -- 24 the PM10 data is not so clear cut at all. In fact, it's 25 spotty. Some areas are up; some areas are down. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 87 1 But it's troubling in the extreme to me that at 2 the same time we are seeming to have inconsistencies in the 3 monitoring data for the component of the air that is, in 4 fact, the most troubling from a health standpoint -- and I 5 want to take a moment to compliment you and Mr. Kenny for 6 the presentation that your staff made last week on the EPA 7 standards, also grateful to you for having a forum, other 8 than Salt Lake City for us to be able to come and comment. 9 I didn't get to come, because I was doing other 10 things. But I think -- I just want to note that Mr. 11 Westerdahl's presentation was important. I'm sure it's 12 controversial. I appreciate the fact that it was made, 13 appreciate the fact that the Dunlap/Kenny era has begun, in 14 my opinion, in a way that we can really point to something 15 that's different, because I'm not sure that presentation 16 would have gotten made a while ago -- partly because of 17 internal connection. 18 So, this shows me that you guys are coming 19 together and maybe getting ready to provide some important 20 leadership. We are troubled by the EPA. A lot of the 21 enviros are for the standard unequivocally. 22 Your staff points out some of the weaknesses in 23 that standard and why we want to focus on the State ambient 24 standards even if the law gives more clout to Federal 25 standards. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 88 1 California has always been more right than the 2 Feds about these health standards. And I just appreciate 3 the leadership that your staff has shown and the Board's 4 shown by stepping up, because I think we have to always keep 5 in mind what are the health effects. And then we have to 6 weigh how to get there. 7 Mr. Parnell's point about balance, you know, so 8 forth, no question. But when we're doing health standards 9 and where the goals should be, we shouldn't fudge or trim 10 our sales. And so, I was very grateful for this 11 presentation, and I just wanted to mention it. 12 But in the South Coast, we have the situation on 13 the PM10 data where we're not -- maybe spatially difficult. 14 You know, different areas have different levels. 15 As I said, it doesn't seem like a good time to be 16 cutting back monitoring stations, but that's what we're 17 doing. We're going to have mobile monitors now instead of 18 as many stations as we used to have. It doesn't strike me 19 as the right thing to do. 20 And this is an occasion I think for raising that 21 issue. And I would also urge the Board to look within its 22 own budget. I noticed in your budget submitted to the 23 Governor, submitted by the Governor, that you're allowing 24 the stationary source fees under the California Clean Air 25 Act to sunset, which we think is a premature decision. And PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 89 1 we'd suggest maybe taking a look at what it would cost for a 2 cooperative State and local monitoring program expansion, 3 because our friends in industry are fond of telling us, 4 "Don't do control measures; more monitoring." 5 Well, let them -- have them help us pay for it 6 through this existing fee mechanism. It's not a fee 7 increase. It's just a fee continuance. And I think that 8 there might be some support for that in the Legislature. 9 These modeling issues I wanted to highlight, 10 because normally we wouldn't have delved into them. But the 11 disappointing response of the district to the -- to its own 12 scientific advisory committee, the events surrounding its 13 resignation trouble us, too, and have caused us to look more 14 closely at some of these issues. And we think that while 15 there's two sides to every story and nobody wants to prolong 16 a painful episode, we think that the expertise embodied in 17 that advisory committee -- if they're not going to be 18 available any more in the South Coast, you ought to take a 19 look at inviting some of those folks in to talk to you. 20 We're certainly going to encourage the Legislature 21 to talk with these folks. These are fine, upstanding, very 22 serious people, not partisan, not with a point of view or an 23 agenda. They're just good scientists. And they were 24 troubled by this AQMP. And they led us to be perhaps more 25 troubled than we would have been on some of these other PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 90 1 issues. 2 But the part that I wanted to focus on relating to 3 regulatory agencies' responsibility is the balanced budget 4 problem. We -- leaving aside the discussion Gail just had 5 with your staff about the hundred tons, I'd like to take 6 another chart -- which I didn't bring, but which you all 7 know what it is; it's the NOx chart. 8 On-road/off-road/marine NOx; it's in this plan, 9 nothing being done. We had legislation last year sponsored 10 by the environmental community, in some cases with the 11 trucking industry. Assemblyman Leonard, AB 780, tax credits 12 for natural gas vehicles. Opposition from WSPA. Governor's 13 Office, Cal-EPA, CARB, South Coast nowhere in sight. 14 We had a bill that the ARB opposed to mandate 15 replacement of engines in trucks by a date certain. Dead on 16 the floor. 17 Mr. Sherwood was eloquent talking about market 18 incentives and financial -- we can't do as much command and 19 control. And one of the things you'll find on this category 20 of sources on off-road, on-road, and marine is that, in 21 fact, as Dr. Lents said, it was not exactly our job. It's 22 probably your job or the EPA's job. 23 The fact is it's nobody's job that's getting done. 24 And, in fact, it's the environmental community right now 25 working on strategies that come forth with measures to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 91 1 implement these things. 2 But there's no mention of these as anything other 3 than things we're going to get somewhere, somehow, but 4 there's no action. There's no financial incentives being 5 proposed. There's no market transformation program being 6 proposed. These are all things we say we need to balance 7 our air quality budget. But they're just in the out years 8 and there's nobody committed to doing them. 9 And so, for our friends in the indirect source 10 community, who are so eloquent at resisting things that the 11 district has attempted to propose, I haven't seen them show 12 up to help us on smog check. So, I wouldn't take their 13 measures out of the SIP, because smog check is far from a 14 done deal. You know, that's another. I didn't even count 15 smog check on the tons, but there's a whole bunch of tons 16 attributed to enhanced I&M that we're nowhere in -- not in a 17 position of getting yet. Don't know how. 18 The program could blow up on us all. And so, one 19 of the things about this document that I urge you to think 20 about and why I think a pause, a hold -- you know, you guys 21 probably will move it along; EPA, we hope, will hold it. 22 But it doesn't change where we are. 23 We're out of balance, and we don't have within our 24 grasp the measures that we need. And so, therefore, what 25 are we doing other than another plan? I don't really need PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 92 1 to know about another 2000-2003 plan if we're not going to 2 get measures done. If we're not going to do the tons, the 3 planning exercise is hollow. 4 The truck working group is an institution that the 5 environmental community, and the trucking industry, and the 6 agencies have put a lot of energy into since the FIP 7 controversy. But there has been no real energy or support 8 from South Coast or from the other agencies. A lot of 9 meetings. Okay? But not the strategy to implement the 10 tons. 11 I think what we ought to do -- and I'm going -- 12 we're working on this today and the next few days, and 13 hopefully we'll be able to make a presentation to the South 14 Coast at their summit next week. 15 But it's time for us to gather up all those tons 16 and commit to a program of getting them implemented. 17 They're cost-effective, speaking for the NOx tons. $4,000 a 18 ton average. But they're going to require money. 19 Now, our friends in the oil industry have resisted 20 incentives for the natural gas trucks. They've emphasized a 21 lot of scrappage that I think is far more expensive than the 22 $4,000 a ton. 23 It may be time to contemplate an oil transfer fee 24 of some kind as a funding source. Because, in effect, what 25 Mr. Sherwood said is correct; that we need to do our next PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 93 1 round of tons differently than we have done most of the 2 things we've done in the past. We can't just go out there 3 and mandate the farmers to buy a new tractor. We can't 4 mandate -- in some cases, we're preempted on the small 5 engines that are in the South Coast. 6 But we need those tons, and those tons are 7 cost-effective, and the health effect payoff is clear. 8 There isn't any argument about this. These are promises we 9 have already made, and now we need to keep. 10 And lastly, Mr. Chairman, you know, everybody sort 11 of takes for granted that we're going to have these clean 12 fuel vehicle programs; that we're going to have the ZEVs; 13 we're going to have clean power that we need to power the 14 ZEVs. But, again, not a lot of followup. And the people 15 that are doing the followup are facing great challenges from 16 the opponents to all these rules. 17 And so, I think that part of the reason we would 18 urge a pause for reflection is that we think the PM2.5 19 standard ought to be the focus. It means the NOx tons are 20 even more important than they are for the ozone SIP. 21 We think that the monitoring cutbacks and the 22 nature of the PM2.5 exposure needs to be immediately be 23 gotten to work on. And whatever you do on this document, 24 maybe we need reform 3 and 4. You know, we have to get 25 these tons and we have to get contributions from everybody. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 94 1 And sometimes we seem to have a philosophy of don't tax him, 2 don't tax me. Tax the fellow behind the tree. 3 And yet, when you come to go and get that person 4 or that source of tons that are more cost-effective or more 5 available, the folks that are being let out of the AQMP are 6 not there to help. 7 So, part of why I think you need to urge how to do 8 this next period and how to really hold -- we're really 9 talking about accountability. Now, you are holding the 10 South Coast accountable for what they say they're going to 11 do. We are trying to hold you accountable. We'd really 12 rather not have to go to EPA to settle this matter. But 13 it's really about accountability. 14 And if we had seen some movement and some progress 15 on implementation of the things that are agreed, we'd feel a 16 little more sanguine about adjustments in conformity and 17 things that may otherwise make sense, because this is a 18 point where we have an approved plan that will get us a 19 large part of the way there. And giving pieces of it up and 20 what are we getting in exchange, and how are we doing in 21 meeting those goals? Those are questions I think you need 22 to ask, and we appreciate you taking some time to listen to 23 us today. 24 CHAIRMAN DUNLAP: All right. Thanks, Mr. White. 25 Any questions of the witness? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 95 1 MS. EDGERTON: I had one question. 2 CHAIRMAN DUNLAP: Sure. 3 MS. EDGERTON: I thought we had -- this is 4 relevant to maybe a colloquy here. I thought there were 5 more monitors going in for PM. I thought there was an 6 increased -- 7 CHAIRMAN DUNLAP: Are there any cutbacks in 8 monitoring I guess that -- 9 MS. EDGERTON: Yes, that's the question. 10 CHAIRMAN DUNLAP: -- the State's initiating? 11 MR. KENNY: ARB is not initiating cutbacks in 12 monitoring. 13 CHAIRMAN DUNLAP: Okay. Anything happen in our 14 budget that I'm unaware of? 15 MR. KENNY: No. In fact, our budget provides for 16 additional PM2.5 monitors. 17 MR. WHITE: It's not your monitoring's being cut. 18 It's the district's monitoring. I was suggesting you could 19 help them -- 20 CHAIRMAN DUNLAP: South Coast. 21 PRESIDENT CRIST: -- by substituting some of your 22 funding from the stationary sources. 23 MS. EDGERTON: Oh, good. I just wanted to 24 reassure you, because I thought I'd been very much on the 25 case. I know I've been talking with -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 96 1 MR. WHITE: (Interjecting) I apologize for-- 2 MS. EDGERTON: -- on our monitoring. Yeah, okay. 3 But I also from my conversations with Dr. John Holmes, my 4 impression is that we are clearly -- we have the best PM2.5 5 and 10 data probably in the country, and we've been working 6 real hard on it. 7 So, I just want to reassure you that we're not -- 8 MR. WHITE: (Interjecting) That's only because 9 everybody else in the country has none. 10 (Laughter.) 11 MS. EDGERTON: Well, sadly, that's true. But I 12 did want to respond on that. You know, we are -- I realize 13 this is the South Coast you're talking about. I hadn't made 14 the distinction. 15 The next point is, I want to be sure you 16 understand -- I'm sure all of the members of the Board here 17 very much appreciate your work on getting the truck -- 18 working with the truck issue and moving forward on that. I 19 mean the more you can get solved through your excellent 20 negotiations, the less we have to regulate. 21 MR. WHITE: Well, I'll just say, like Ray Charles 22 said, "Romance without finance is a nuisance." 23 (Laughter.) 24 MR. WHITE: All right. It takes money. Okay? 25 It takes money. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 97 1 MS. EDGERTON: Yeah. 2 MR. WHITE: $50 million a year statewide to do the 3 tons that we need on NOx. 4 MS. EDGERTON: Okay. 5 MR. WHITE: At a rate, an average rate of $4,000 a 6 ton. Okay? But I can't get it by adopting a rule. I have 7 to get it by spending some money. 8 MS. EDGERTON: Well, you know, you're in good 9 touch with folks over there. Maybe you can get it for us. 10 MR. WHITE: This is your job, too. Okay? This 11 Administration. It's much better that it doesn't come from 12 me frankly. Okay? It's easier. I'm just sort of filling a 13 vacuum. Okay? 14 It's better, and I think there's some legislators, 15 you know -- one of the things I want to make clear is the 16 days of pillorying in the South Coast and of the 17 environmental regulations I think have passed for the 18 moment. We have a different breed. We have 32 new Assembly 19 members that need to be educated about these programs. 20 We have, I think, more continuity in the Senate. 21 But I don't think this sort of atmosphere of intimidation 22 that we have had the last two or three years needs to be the 23 planning horizon that we're in right now. This is the next 24 three years we're trying to talk about. 25 But it needs to be a matter of stepping up and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 98 1 provide leadership. And that's what I'm looking for from 2 everyone, not just the environmental community, or the 3 truckers, or whoever else it is. 4 CHAIRMAN DUNLAP: Well -- 5 MR. WHITE: It needs to be a broad-based -- 6 CHAIRMAN DUNLAP: Right. 7 MR. WHITE: -- bipartisan. 8 MS. EDGERTON: I wanted to ask for some help on 9 one issue. 10 CHAIRMAN DUNLAP: Sure. 11 MS. EDGERTON: I know that I can tell the 12 Chairman's getting kind of antsy. We've gone on a long 13 time. 14 CHAIRMAN DUNLAP: Well, we've got a bunch of 15 witnesses here that we need to get through. 16 MS. EDGERTON: But I just would like one issue 17 with respect to the policy issue, which Ms. Feuer, Gail, 18 raised on the importance of having technology forcing rules. 19 I'd love to have more discussion with any of you 20 on that. I've reflected on that quite a bit, whether it 21 makes more sense to have a technology forcing rule that is 22 pretty unrealistic than it makes sense -- I mean it's a 23 delicate balance. I mean you have to believe that it 24 actually could occur, it seems to me. 25 MR. WHITE: You can also believe it could actually PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 99 1 be achieved. 2 MS. EDGERTON: Well, that's what I mean. Yeah, 3 thank you for the friendly amendment. 4 CHAIRMAN DUNLAP: Well -- 5 MS. EDGERTON: So, anyway, I'd love to hear more 6 discussion on that. I think that is -- I mean, to me, it's 7 been a central issue, and I wanted to -- I forgot to mention 8 that I agreed with that. 9 Thank you. 10 CHAIRMAN DUNLAP: Well, yes. The point I'll make 11 is that we've done a lot of pioneering work here in 12 technology forcing regulations. And we've also, you know, 13 in briefings that I've had in the time I've been Chairman, 14 and earlier than that, I'm aware that there's been a number 15 of times we've had to go in and modify rules because things 16 that we thought were technologically feasible three years, 17 five years earlier, didn't turn out that way. 18 We went through that issue with ZEVs here, and we 19 were fortunate enough -- I appreciated Arnie Sherwood's 20 framework about looking for a market and how a market can be 21 employed to help us with a goal. And that's where we are 22 now with ZEVs. And, you know, it's a modest start. 23 MR. WHITE: I really concur. And part of the 24 reason we have put so much effort into developing strategies 25 for financial incentives and market transformation is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 100 1 because are not persuaded that the command and control is 2 the only game in town. 3 CHAIRMAN DUNLAP: Yeah. 4 MR. WHITE: But that having been said, we have to 5 achieve results with these incentives. 6 CHAIRMAN DUNLAP: Right. 7 MR. WHITE: Not just talk about them. 8 CHAIRMAN DUNLAP: Right. Good point. I 9 appreciate that. 10 Okay. Let's move on to the witnesses. Tim 11 Carmichael, Scott Kuhn, Ron Wilkniss. 12 Mr. Carmichael, I know well your -- 13 MR. CARMICHAEL: Keep it brief. 14 CHAIRMAN DUNLAP: -- diplomatic skills. And I 15 know that you're always looking to focus your remarks, and 16 add value, and add commentary where needed. And I would be 17 grateful if you wouldn't go over ground that's been trod 18 recently. 19 MR. CARMICHAEL: Fair enough. 20 Tim Carmichael, Policy Director for the Coalition 21 for Clean Air. I must say, Mr. Chairman, I'm very glad you 22 brought up ZEVs, because I was hoping to spend a lot of time 23 talking about ZEVs today. 24 (Laughter.) 25 MR. CARMICHAEL: Let me first say that we PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 101 1 submitted joint comments with the NRDC. We strongly share 2 the points that were made by Gail Feuer. And I'm going to 3 only touch on a couple of those and focus on a few other 4 things that were raised in questions that I don't think have 5 been adequately addressed. 6 We identified the major problems that we see in 7 this revision as the rollback of a hundred tons, the heavy 8 reliance on long-term measures, the lack of progress in rule 9 adoption. That hasn't really come up. The district has 10 made pitiful progress in the last few years in adopting 11 rules -- 7 out of 46 that were scheduled to be adopted. 12 That's not good progress by anyone's standard. 13 Let me just touch on the rollback on the hundred 14 tons. I know it was raised a couple times already, but it 15 seemed to me accepted that it's okay if we make up 90, 95 of 16 those tons in the long term. 17 The '94 plan slated these hundred tons for near- 18 term emission reductions. The '97 plan moves the majority 19 of those into the long term. Some perspective on that. It 20 is not the same. It is not the same to achieve those tons 21 by 2010 as it is to achieve them today or in the next couple 22 of years. 23 Achieving emission reductions in 2006, 2007, 24 doesn't mean anything to someone breathing the air today. 25 We're talking about people that are breathing very polluted PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 102 1 air today. We need to do more today. Relative to your 2 concerns raised by Ms. Edgerton on the PM standard and the 3 fact that it's inappropriate to go to develop a plan based 4 on a proposed standard, would disagree (sic). But let's 5 take your position. Drop the PM2.5. Don't forget about the 6 State standard for PM10. We are a long ways from meeting 7 the State standard for PM10. And this plan is a -- if this 8 plan delivers on all its commitments, we're a long ways from 9 the meeting the State standards on PM10. And those were set 10 by some very capable doctors and scientists here within this 11 agency. 12 The final point on the perspective, the issue of 13 carrying capacity came up and the ability to modify carrying 14 capacity by dropping an episode or adding an episode. I 15 think it's very important that every member of this Board 16 realize that carrying capacity -- it's easy to get caught up 17 with the phrase and ignore what it really means. 18 What we're saying is, it's okay to put more air 19 pollution into the air. Nobody on this Board, nobody here 20 should be accepting that whether the model says it's okay or 21 not. We should not be saying it's okay to put more air 22 pollution into the air. 23 The bottom line is, we need more near-term 24 emission reductions. We need more technology pushing. We 25 are not going to get to the goal of health based -- meeting PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 103 1 the health-based standards in 2010 unless we have both of 2 those. We need more in the near term, and we need to push 3 technology. 4 Relative to VOC reductions, the South Coast -- let 5 me just say, I've been asked in the past to make some 6 constructive suggestions. And I've got a few today for the 7 Air Resources Board. 8 Clearly, we would prefer -- we feel strongly that 9 this plan should not be approved, and we will be going to 10 EPA with the same suggestion that this plan should not be 11 approved. But there are some things that this Board can do 12 as part of whatever action you take today. 13 Relative to VOC emission reductions, the South 14 Coast District has determined that many of the measures in 15 the '94 SIP are technologically infeasible. We disagree on 16 many of those measures. But even if you agree, the fact 17 remains that not enough has been done to find alternative 18 emission reductions in the near term. 19 We asked -- request of this -- of the Air 20 Resources to instruct your staff to enter into a cooperative 21 effort with the AQMD and with a limited number of technical 22 experts to identify alternative near-term VOC emission 23 reductions. 24 Nobody's really working on that right now. You 25 know, the district staff, yes, they have some people working PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 104 1 on it. But the fact is, not enough is being done to 2 identify alternative emission reductions. 3 We have a plan, the '97 plan. We don't know that 4 all of those measures are going to deliver. And so, we need 5 to be working on identifying other avenues to achieve the 6 same emission reductions. 7 Relative to NOx emission reductions, basically the 8 same point. But much of the shortfall we see coming at the 9 State level. This is a big year for the M measures, and 10 this Board is going to be adopting, we hope, numerous M 11 measures and moving the process along to control emissions 12 from the motor vehicle sector, the mobile sector. 13 However, we anticipate significant shortfalls in 14 at least in a couple of the M measures, and there's the 15 unpredictable progress of Smog Check II. We believe that it 16 is also essential that the Air Resources Board instruct your 17 staff to again enter into an analysis, a study of additional 18 NOx control strategies. Nobody's actively working on this. 19 We've got the M measures there, and everybody's, you know, 20 some people are leery, some people are excited about the M 21 measures. We don't know if they're going to deliver. 22 There's a lot of skepticism. 23 We need to be looking at other alternatives for 24 achieving the emission reductions if the M measures don't 25 deliver. And even if they do, if you accept that the PM2.5 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 105 1 standard is coming and is going to be promulgated in June, 2 it is absolutely clear that this State is going need 3 additional NOx controls to meet a PM2 -- PM2.5 standard set 4 at whatever level. 5 A couple other points. Implementation -- relative 6 to the new standards and combining it with this '97 plan, 7 the district staff have indicated to a number of people that 8 they're prepared to move ahead with in their next revision 9 with a plan that meets the new standards or designed to meet 10 the new standards. That is not a requirement by EPA yet. 11 We're hoping it will be. 12 We would encourage this Board to adopt that policy 13 for the State. For the districts that have the monitoring 14 capability, such as the South Coast, we should be moving 15 ahead as quickly as possible to develop plans, control 16 plans, to meet the new standards. 17 Clearly, that can be done in the South Coast by 18 the year 2000. EPA is currently proposing to allow them 19 till 2002. We don't need that much time. 20 Final point. A few people have addressed the 21 issue of where are emission reductions going to come from. 22 We have passed the day where we can point at refineries and 23 power plants and say that is the only problem in the air 24 pollution battle. We need to realize and accept that more 25 and more people are going to be involved in reducing PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 106 1 emissions, but we're not going to do it -- whether it's the 2 trucks, whether it's individuals driving their automobiles, 3 whether it's people buying consumer products, manufacturing 4 consumer products. 5 What is currently missing from this -- and it is 6 absolutely clear in what is happening to the smog check 7 program -- what is missing is an active education program. 8 Most Californians don't have a clue. They do not realize 9 that they are contributing to the problem. They don't 10 realize that there are things that they could be changing in 11 their life style that would be helping us progress towards 12 clean air. 13 I strongly encourage the Air Resources Board to 14 reinvigorate, to add to, to augment your education program 15 across the board, so that more people realize that the 16 future means everyone participating if we're going to 17 achieve clean air in the State. 18 That concludes my comments. Thank you. 19 CHAIRMAN DUNLAP: Thank you, Mr. Carmichael. Any 20 questions of the witness? 21 Tim, just to maybe give you a statistic you may 22 not be aware of. But I think South Coast published in the 23 early 1990s a pamphlet called "25 Things," or "25 Ways You 24 Can Help Improve Air Quality." And last time I heard, it 25 had been printed in four or five languages and distributed PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 107 1 to over two and a half million people. 2 And so, I appreciate the comment for us doing more 3 public education. I know that's necessary and relevant 4 certainly to the debate. But I want you to know about the 5 significant efforts underway through the local level and 6 here at the State Board to get the word out. 7 And you are an important partner in that as well 8 with the people you can reach, too. So, we'll look forward 9 to working with you on that. 10 MR. CARMICHAEL: Not ignoring the existence of 11 some very good pamphlets that have been produced, but I 12 believe there's a lot more that can be done than pamphlet 13 distribution. 14 Thank you. 15 CHAIRMAN DUNLAP: All right. Thank you. Mr. 16 Kuhn, followed by Ron Wilkniss from WSPA, and John 17 Billheimer from the County of Riverside. 18 Hold on just a moment for the court reporter. 19 (Thereupon, there was a brief pause in 20 the proceedings to allow the reporter to 21 replenish her paper.) 22 CHAIRMAN DUNLAP: For those witnesses who have 23 signed up, a number of you have submitted written comments, 24 and I have had a chance to read them, and I know my Board 25 member colleagues have as well. And the Chair would PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 108 1 certainly welcome anyone that would be willing to 2 voluntarily step aside for making the presentation in lieu 3 of their written comments. And I think we can get to the 4 core discussion that all of you who have come on this item 5 at least to expect from us. And then we'll take the action 6 we need to take to move up or down on this item. 7 So, that'll be something the Chair would certainly 8 appreciate seeing if anybody could step aside. 9 All right. Mr. Kuhn. 10 MR. KUHN: Thank you, Mr. Chairman. Good morning. 11 My name is Scott Kuhn, and I'm a legal research associate 12 with the Communities for a Better Environment, CBE. And I'm 13 here along with my supervisor, Richard Drury, CBE legal 14 director who might help assist me with questions you may 15 have. 16 As you've heard today, there's a lot of problems 17 with the proposed 1997 AQMP. The most important one is that 18 it represents a big step backwards in air protection. The 19 1997 AQMP rolls back several rules, over 20 rules, that were 20 included in the 1994 AQMP. 21 The bad public policy and bad science that this 22 proposed plan is -- foundation -- the foundation of this 23 plan is evidenced by the resignation of 10 of the 11 24 scientific advisors to the South Coast as has been discussed 25 by Mr. White. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 109 1 Furthermore, the 1997 plan violates numerous 2 provisions of both State and Federal law, and approval of 3 the plan would therefore violate CEQA, the California 4 Environmental Quality Act, most obviously because the plan 5 fails to include several measures that were deemed feasible 6 and included in the 1994 plan. 7 This plan does not meet the requirements of the 8 State Clean Air Act, which requires that we move forward as 9 expeditiously as practicable to attain clean air. 10 A lot of the discussion today has focused on 11 attainment of Federal standards, and there hasn't been a lot 12 of discussion on State standards. The plan must meet both 13 State and Federal requirements. There's no discussion of 14 the State PM10 standard. We've seen graphs, and charts, and 15 discussions on meeting the Federal requirements, but not on 16 meeting the State requirements. 17 The 1997 AQMP will violate the Clean Air Act then 18 in California because it fails to include all feasible 19 control measures. Under the California Clean Air Act, the 20 AQMP must show a five percent annual improvement in air 21 quality for each nonattainment air pollutant or provide for 22 expeditious adoption of all feasible control measures. 23 While the plan concedes it will not meet the five 24 percent reduction, it also abandons the over 20 rules that 25 were included in the 1994 plan. If these plans -- if these PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 110 1 rules were feasible in 1994, and now they're being taken 2 out, it seems like there's no way you can comply with both 3 prongs of the rule. 4 Some of the discussion has focused on the 5 Legislature requiring some of the rules be removed. But 6 those were a handful of rules, and there's still over 20 7 that were not required to be removed that have been removed. 8 The 1997 AQMP makes no attempt to comply with the 9 State ambient PM10 standard of 50 micrograms, but rather 10 focuses on 150 micrograms, the Federal requirement. 11 The shortcoming is not just a failure of good 12 faith by the by the air district. There's no -- no even 13 discussion of an attempt to meet the State standards. 14 They're just totally ignored as it was evidenced here by 15 discussion and the charts we've seen. Everything was 16 focused on the Federal requirements. 17 The AQMP slows down rather than speeds up the 18 process. While we're not required to meet standards until 19 the year 2010, there's nothing that says we have to wait 20 until the year 2010 to achieve those standards. 21 In contrast, both State law and Federal law 22 require us to move forward as expeditiously as possible. 23 And, as has been evidenced here today, it doesn't seem like 24 we're doing that by dropping measures and rolling back the 25 rules, changing what rules are called, you know, pushing PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 111 1 them back several years as far as attainment quality (sic). 2 And all of these violations, in addition to being 3 violations of the Clean Air Act, Federal Clean Air Act and 4 the State Clean Air Act, are also, therefore, violations of 5 the California Environmental Quality Act, CEQA, which, you 6 know, forbids the South Coast from adopting a plan that does 7 not comply with State or Federal law. 8 Some of the other CEQA violations include the plan 9 fails to -- the EIR for the plan fails to include an 10 adequate discussion of alternatives. It also fails to 11 include an adequate discussion of cumulative impacts of the 12 plan, and fails to discuss the dissonance between the 13 Federal and the State requirements. They're not complying 14 with the State -- they're not making an attempt to meet the 15 State requirements which were discussed in the '94 plan. 16 As Dr. Lents has told the Board, tough actions are 17 needed, and we need to stick by our guns. However, the 1997 18 plan seems to be a retreat and a step backward. Therefore, 19 CBE urges you to oppose the current plan and require the 20 South Coast to revise its plan to comply with State and 21 Federal laws so that we can move forward as expeditiously as 22 possible. 23 Thank you very much. 24 MRS. RIORDAN: Thank you, Mr. Kuhn. Are there any 25 questions for Mr. Kuhn at this time? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 112 1 MS. EDGERTON: I would like to make a comment. 2 MRS. RIORDAN: Ms. Edgerton. 3 MS. EDGERTON: Mr. Kuhn, what would you have the 4 Air Resources Board members do? The South Coast Board has 5 now adopted a plan that accepted their staff's 6 recommendations that 24 -- was it 24 -- measures are not 7 feasible. 8 It's hard to see. I mean, you said we violate -- 9 you know, the California law requires all feasible control 10 measures. That's correct. But we now have a more recent 11 finding that those are infeasible. It's just not the kind 12 of thing that, at this level, without, you know, an 13 incredible showing or without a support from the staff, ARB 14 staff, that challenges any of those findings that we can 15 address. 16 And I don't think -- while I share your concern, 17 you know, and I wish everything was feasible, it's just not 18 feasible. 19 MR. KUHN: And I think I have two responses to 20 that. The first is that the fact that 10 of the 11 21 scientific advisors resigned as a result of the plan shows 22 the negative foundation; a lot of those feasibility studies 23 were not adequate. 24 Secondly, to date, a lot of the discussion, as far 25 as feasibility, has focused, one, on the Legislature PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 113 1 changing the rules, which is true. But it was only for a 2 handful of rules. 3 And a lot of discussion has focused on 4 cost-effectiveness and, you know, cost/benefit analysis. 5 Now, the law does not require that we do the thing that's 6 most cost-effective. It requires that we proceed as 7 expeditiously as possible. 8 So, I think, you know, the way we set our 9 feasibility standards determines the outcome. 10 MS. EDGERTON: Well, I'll remind you the law 11 actually says that what we adopt has to be technologically 12 and economically feasible. 13 MR. KUHN: Well, there's a $4 billion surplus. 14 And, as far as we've seen the plan is going to save at over 15 $5 billion, and it's only going to cost $1.7 billion. Maybe 16 I'm off on the figures, but I mean there's a huge gap there 17 which some of the technology could fill. 18 MS. EDGERTON: Well, I'd also like to say that we 19 have not received anything from the scientific panel that 20 indicates that this is why they -- why they have resigned, 21 so, thank you. 22 MRS. RIORDAN: Let me make a suggestion here. 23 While we may have some interesting viewpoints, I think we 24 need to move along. And, Mr. Kuhn, I'm going to thank you 25 very much for your testimony and go on to Mr. Wilkniss -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 114 1 MR. KUHN: Thank you very much. 2 MRS. RIORDAN: -- from WSPA. 3 MS. WALSH: Mrs. Riordan, before you move on, I 4 wanted to make one quick clarification based on the comments 5 we received. 6 MRS. RIORDAN: Yes, Ms. Walsh. 7 MS. WALSH: Mr. Kuhn indicated that there were 8 some real concerns that none of the staff work or discussion 9 today addressed compliance with the State standards and 10 State law. The review that we're conducting today and your 11 approval today would be approving the plan for compliance 12 with Federal requirements and submission to the U.S. EPA as 13 a SIP submittal under Federal law. 14 So, we really have not looked at or addressed 15 those questions yet. That's something that will be coming 16 in the future. 17 MRS. RIORDAN: Thank you. And thank you for 18 making that a part of the record. Appreciate that. 19 MR. WILKNISS: Good afternoon, members of the 20 Board. My name is Ron Wilkniss. I'm with the Western 21 States Petroleum Association. 22 I can't help but noting that along with the change 23 from A.M. to P.M., I may be offering you a little different 24 perspective on the air quality management plan from the 25 testimony of previous speakers. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 115 1 I appreciate the opportunity to make these 2 comments on behalf of WSPA member companies. First off, I 3 would like to recognize another major effort on the part of 4 South Coast staff in the preparation of the draft AQMP, 5 which is before you this afternoon. 6 In our review, this plan is a significant 7 enhancement over previous air quality management plans, and 8 I would like to point out that actually WSPA did provide 9 funding for part of the particulate air quality study that 10 the district just went through. 11 However, to be perfectly candid with you, I must 12 admit that WSPA is not as pleased with some of the work on 13 the control measures, two in particular, and I intend to 14 discuss these two examples in my comments this morning. 15 Our concerns are found in really two areas. First 16 of all, we find that all too frequently, control measures 17 seem to be the product of overly optimistic thinking, which 18 is unconstrained by considerations of feasibility or 19 cost-effectiveness. And, of course, there have been quite a 20 few remarks this morning that measures need to be 21 cost-effective and cost-effective before the district really 22 ought to proceed with them. 23 WSPA fully realizes that in order to demonstrate 24 attainment, the district has to stretch their thinking; that 25 is, to identify and evaluate all reasonable emission control PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 116 1 strategies. However, the district is under obligation to 2 develop a plan comprised of realistic elements. We find 3 that some ideas, which have not been properly screened or 4 edited become embellished with sufficient description and 5 inventive details to make them sound plausible. 6 These ideas on occasion become control measures or 7 parts of control measures, and the control measures initiate 8 rule development. Dr. Lents mentioned early on in his 9 testimony about a commitment to developing rules. And all 10 of this concerns us. 11 The second shortcoming and possibly the most 12 serious in our view, for some of the proposed control 13 measures, is a lack of an assessment of cost-effectiveness. 14 Once again, several previous speakers commented on 15 cost-effectiveness as being really one of the criteria for 16 going forward with a control measure and ultimately a rule. 17 In our written comments to the district on this 18 plan, we noted this deficiency. And curiously, although the 19 district, in its response to WSPA's comments acknowledged 20 the requirements of the Health and Safety Code with respect 21 to cost-effectiveness, there are still several control 22 measures for which there is no assessment for 23 cost-effectiveness. 24 Effective the 1st of January of this year, any 25 emission inventory update must comply with the provisions of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 117 1 Senate Bill 2174. In passing that bill -- and the Governor 2 actually signed it in September -- the Legislature found and 3 declared that that -- I'm quoting -- inaccurate inventories 4 that do not reflect the actual emissions into the air can 5 lead to misdirected air quality measures resulting in 6 delayed attainment of standards and unnecessary and 7 significant costs. 8 Among the key provisions of SB 2174 are 9 requirements for best estimates of emissions from all 10 sources -- and this is also a quote -- a detailed 11 verification of the source category emission rate data with 12 available scientific data, including actual measurements of 13 pollutants. 14 We believe that these requirements apply to your 15 consideration -- excuse me -- to your consideration of the 16 AQMP before you this morning. 17 We submit that the best data has not been utilized 18 in all cases, and that the requirements, therefore, of SB 19 2174 have not been fulfilled. This is certainly the case we 20 feel with the first of the two examples that I would like to 21 discuss this morning. 22 The control measure with which we are most 23 concerned is 97CMB-09. And that measure is PM10 emission 24 reductions from refinery FCC units. Although this control 25 measure was included in previous air quality management PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 118 1 plans, there is still no assessment of cost-effectiveness. 2 WSPA believes that there is no justification for 3 the shortcoming. This measure has been on the books for at 4 least six years, and the district has a reasonable basis for 5 generating an estimate of control costs. And I'm referring 6 to some information that was submitted to the district back 7 in 1991. It was an estimate of control costs developed by a 8 third party, the engineering firm Bechtel. 9 There are also significant problems with the 10 emissions inventory and the potential emission reduction 11 attributable to this source category. The district has 12 exactly the type of scientifically emissions data required 13 by SB 2174. 14 In response to a request from the district, the 15 refineries conducted specific source testing for PM10. 16 Emissions data for four out of the six WSPA member 17 companies, and I do believe that it is only the six WSPA 18 member companies who are operating refinery FCC units, 19 emissions data for four of these refineries once again was 20 given to the staff at the end of September. And it seemed 21 reasonable for us to assume that staff would utilize this 22 data in reviewing their estimates of emissions and potential 23 emission reductions. 24 Well, staff did revise their emission reductions 25 at the end of October, but curiously they used an emission PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 119 1 factor -- which I hate to say came from the Air Resources 2 Board -- but, nevertheless, is still apparently so obscure 3 that no one has really been able to explain its basis. 4 Actual refinery FCC PM10 emissions are 5 approximately one-half of one ton a day. That is one-tenth 6 of one percent of the inventory. What's that equivalent to? 7 One penny in $10.00? A very, very insignificant source 8 category. 9 The potential emission reduction is about a 10 quarter of a ton a day, approximately half of the amount 11 contained in the revised staff estimate. These values were 12 based -- the values which I've quoted are based on the 13 source testing, which I just discussed. 14 We submit that the cost-effectiveness of this 15 control measure is in the range of $75,000 per ton at 16 minimum of value, which does not compare very favorably at 17 all with the four to five thousand dollar cost-effectiveness 18 for other PM10 control measures. 19 CHAIRMAN DUNLAP: On that point, you presented 20 this to the South Coast District, this data? 21 MR. WILKNISS: The district has actual source 22 testing data, and the district had cost-effectiveness -- or 23 excuse me, not cost-effectiveness -- but estimates of the 24 capital costs for controls five years ago. And we are -- 25 and we, the refining industry, has been asked to revise the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 120 1 capital cost estimates. And they're coming in now. But 2 they're still in the range of $75,000 a ton. 3 CHAIRMAN DUNLAP: Okay. 4 MR. WILKNISS: We believe that staff really knows 5 that this control measure very little environmental benefit 6 and is not cost-effective. And we think that these defects 7 really should not be ignored. We would therefore 8 respectfully request that your Board delete this control 9 measure from the SIP. 10 Eliminating this control measure will, in our 11 view, have no adverse impact on attainment at all, largely 12 because -- actually, two reasons. Number one is the 13 emissions contribution from this source category is 14 absolutely infinitesimal. One-tenth of one percent of the 15 inventory. 16 Further, emissions from this category occur in the 17 coastal area of the South Coast Air Basin, and we do not 18 believe will have any impact on the inland areas of 19 nonattainment. 20 On to my second example. The control measure 21 advanced fugitives is an example of creative but, in our 22 view, terribly unrealistic thinking. This measure appeared 23 in a draft AQMP that was published back in -- I think 24 August, if I remember correctly, as a line item with 25 literally two sentences of description. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 121 1 One week before the district's AQMP hearing, we 2 saw for the first time a fairly well articulated control 3 measure now three pages long. The target VOC reduction for 4 this control measure is, quote, "approximately 75 percent," 5 a target which really seems to have no basis. While that 6 target might not sound terribly unrealistic, I would like to 7 observe that the universe of sources which would be covered 8 by this measure are already very well controlled. 9 Further, this measure is duplicative of several 10 other specific control measures in the AQMP, which are 11 already looking for increased levels of VOC control from 12 these same sources. 13 Thus, in our view, it is virtually inconceivable 14 that emission reductions could be reduced by a further 75 15 percent. We would respectfully request that your Board 16 eliminate the specificity from this language, so that, in 17 the future, we will not be encumbered by this unrealistic 18 target. 19 I'd like to conclude my testimony with a comment 20 regarding future SIPs. As you may know, WSPA has done a lot 21 of work regarding future year emission inventories. 22 Specifically, we looked at whether and to what extent future 23 year projections of population growth, economic growth, and 24 vehicle miles traveled were consistent with the data from 25 local municipalities, university studies, and so forth. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 122 1 We were troubled to find that in many instances 2 there were errors and inconsistencies. In some instances, 3 the projections seemed to have been designed to support a 4 predetermined result. Some modeled outputs, for example, 5 were not even calibrated against existing data. 6 WSPA is very concerned that continued use of 7 incomplete and often faulty data will inflate emissions 8 projections and cause -- and this is really the very 9 undesirable end result -- cause the emission reduction task 10 to be increasingly more difficult to achieve. 11 CHAIRMAN DUNLAP: Ron, if I could interject there. 12 MR. WILKNISS: You may. 13 CHAIRMAN DUNLAP: I appreciated very much, and I 14 made reference earlier to both South Coast and SCAG for 15 their willingness to sit down with the WSPA team and go over 16 those numbers. And I commend your organization for going to 17 that level of detail and spending that amount of money. It 18 would be quite expensive to do that analysis. 19 The only thing I would ask in the future, when you 20 want to do that, we will entertain -- we will broker it a 21 discussion with you and your industry to talk about joint 22 research that might answer some questions that we may have 23 as well with you. And where we can coordinate and stretch 24 both of our limited resources, we're willing to do that. 25 Where we cannot, we will shake hands and go our PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 123 1 separate ways. But on the coordination for this study, I 2 think you could have gotten a little bit better reception 3 probably if the survey work and the modeling you used were 4 coordinated with us and the other regulators ahead of time. 5 It's in our interest to have the best numbers as well. 6 So, in the future, if you decide to do that, 7 please call on us and we'll find a way to work together on 8 it. 9 As it relates to your other questions about 10 cost-effectiveness, those numbers that you're citing cause 11 me great concern, because they're much greater than what 12 I've heard expressed by presenters from -- certainly from 13 South Coast. So, what I'd like to do is ask staff to 14 comment on that, if they can, and at least, you know, tell 15 me why he's right or tell him why he's wrong. 16 Ron, I didn't mean to preempt your conclusion. I 17 know your close. Want me to just step aside now and let you 18 finish, or do you want to get into this? 19 MR. WILKNISS: Mr. Chairman, you have stolen my 20 thunder. I was going to go on to express our appreciation 21 for your staff having listened to us on some of our 22 observations on these growth factors. And I was going to go 23 on to say that we look forward to working with you for 24 future SIPs. 25 CHAIRMAN DUNLAP: Okay. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 124 1 MR. WILKNISS: And your comments will be duly 2 noted, and I thank you for them. 3 And now on to this control measure. 4 CHAIRMAN DUNLAP: Sure. 5 MR. WILKNISS: If staff would care to respond. 6 CHAIRMAN DUNLAP: Well, let's try CARB staff first 7 and see. 8 MR. WILKNISS: Whatever your wishes are. 9 CHAIRMAN DUNLAP: Okay. 10 MS. TERRY: Yes, we did have a conversation with 11 Ron last week on this subject, and it was the first we were 12 aware of this information. 13 I think he did mention that some new information 14 is still in the process of being developed on their part, 15 and that it would ultimately be available to the district 16 for their rulemaking process. 17 CHAIRMAN DUNLAP: Well, let me jump on Ron for a 18 minute, if I may, on that point. 19 WSPA I know has certainly not unlimited resources, 20 but you have some resources available. And it would seem to 21 me that, to the extent you get an early lead on providing 22 this data to us, it would be appreciated. 23 Now, you did mention that you only had a week or 24 so before the first draft came out on the South Coast AQMP. 25 And that seems to me to be a problem, too. So, I respect PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 125 1 the late start, but it is important for you to get with us 2 as soon as you can and others so that we can get questions 3 answered. 4 Because today, I mean -- if I may paraphrase, we 5 were saying, "Hey, look it, John, we don't have all of the 6 information we need to assess the impact on us, the economic 7 impact certainly." 8 And right now, we have before us a discussion to 9 take a vote in a few minutes on this plan whether we forward 10 it to the Federal Government or not. So, we're in a tough 11 spot, too, Ron. Maybe it's of our own design. 12 MR. WILKNISS: Mr. Chairman, it was sort of 13 regretful that, sort of a puzzling situation with respect -- 14 we have certainly commented. I mean, again, I think that -- 15 let me just back up a second. 16 I think that, again, I'd like to focus your 17 attention on these two separate control measures: one, the 18 FCCU particulate control measure, is a measure for which we 19 have previously commented to the district. As a matter of 20 fact, this was in the 1990 AQMP, the '94 AQMP. I know we 21 commented in the '94 AQMP, because I was responsible for 22 producing the comments myself. 23 CHAIRMAN DUNLAP: Okay. 24 MR. WILKNISS: And our point is that, with the 25 district having been given credible cost estimates as long PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 126 1 as five years ago, it doesn't seem -- it's sort of a 2 puzzlement why they're still -- why they're still claiming 3 that they can produce a cost-effectiveness assessment. 4 And again, in our -- in their response to our 5 comments, which I actually have in front of me, they say 6 that what would rule out a control measure is technical 7 infeasibility, which is, quite honestly, not applicable 8 here, but low emission reduction potential less than a 9 quarter of a ton a day, and that's right in the range where 10 we are, high cost-effectiveness in the value that is cited 11 here as the cap is $50,000 a ton. And by any estimate, 12 we're at least 50 percent over that and probably double it. 13 CHAIRMAN DUNLAP: Okay. 14 MR. WILKNISS: And that's what's troubling. 15 CHAIRMAN DUNLAP: Okay. Ms. Terry. 16 MS. TERRY: I don't have much to add on this 17 subject. It's really not a new concept that all of this 18 detailed cost-effectiveness information is developed during 19 the district rulemaking process and not generally considered 20 at the planning process. 21 CHAIRMAN DUNLAP: Well, let me cut to the quick. 22 Do we have a control measure being imposed upon the oil 23 industry that's going to cost them $75,000 per ton? 24 MS. TERRY: Yes. My point was -- 25 CHAIRMAN DUNLAP: The cost of control, is that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 127 1 accurate? 2 MS. TERRY: No, because we're not to the 3 rulemaking stage. At this point, it's a measure in a plan. 4 And as the district goes through its process, it will 5 develop that information. We don't have that information at 6 hand. And certainly, you know, Ron expressed concern about 7 this measure being in the plan. But that's not the last 8 opportunity there is for the district to make it. 9 CHAIRMAN DUNLAP: But there were some measures in 10 the '94 plan that were removed -- we have a chart here that 11 was presented -- that were thought not to be cost-effective. 12 And they were removed because of that, or infeasible. 13 What I think he's saying is, hey, he's got a 14 couple, too. And so, the question I have is why did those 15 others get removed and not his? 16 MS. TERRY: We're going to have to ask the 17 district for their response to that, that question. 18 CHAIRMAN DUNLAP: Okay. Dr. Lents? 19 DR. LENTS: (From the audience.) We didn't agree 20 with him. 21 (Laughter.) 22 CHAIRMAN DUNLAP: Okay. 23 DR. LENTS: (From the audience.) We thought if 24 they weren't feasible -- if he turns out to be right, our 25 Board's not going to adopt a $75,000 a ton rule. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 128 1 CHAIRMAN DUNLAP: All right. That was Jim Lents, 2 Exec Officer of South Coast District for our court reporter. 3 Why don't we do this. I will ask South Coast and 4 our staff to coordinate a dialogue -- and I know you have 5 one, but I'll ask you to step it up, and focus it to talk to 6 the WSPA team about their specific concerns about 7 cost-effectiveness. 8 And if it is shown -- if their position is shown 9 to be the prevailing opinion, there should be proper 10 modification made to the plan, or they need to be told fully 11 why, or explain to them fully why they just need to do this, 12 and that their cost-effectiveness numbers are all wet. 13 But what I'm getting at is there's a judgment 14 that's been made. Some measures have been culled, not his. 15 He's standing up and saying he has some concerns; he can 16 demonstrate it. He's getting new data and people are 17 ignoring it. 18 I don't like to hear that. So, Dr. Lents, will 19 you commit, Board Member Silva, to some kind of process to 20 figure out the specifics of these two measures that the WSPA 21 team is concerned about? 22 DR. LENTS: (From the audience.) Sure. 23 CHAIRMAN DUNLAP: Okay. 24 DR. LENTS: (From the audience.) I mean we're 25 working with them now, I think. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 129 1 CHAIRMAN DUNLAP: All right. Ron, does that cause 2 you some comfort? 3 MR. WILKNISS: My comfort level is enhanced. And 4 in closing, I would just simply like to thank you again, but 5 perhaps also to suggest that for future work on AQMPs and 6 SIPs, that some estimate of cost-effectiveness does seem to 7 be a reasonable criteria for continued inclusion in a plan 8 or perhaps for dropping it. 9 And I think what I'd like to do is really just 10 simply stress the importance of having a number and again, 11 right now, my complaint is that there is no number. I think 12 there should have been. 13 But we will most certainly work with -- continue 14 to work with district staff. 15 CHAIRMAN DUNLAP: Okay. 16 MR. WILKNISS: And I thank you very much. 17 CHAIRMAN DUNLAP: Very good. I'll ask Supervisor 18 Silva to maybe spend a moment with you, and you can figure 19 out the next meeting or something to continue to discuss 20 this item. 21 Thank you. 22 MR. WILKNISS: Thank you. 23 CHAIRMAN DUNLAP: All right. Mr. Billheimer. 24 And, John, I noticed you submitted some comments that I've 25 had a chance to go through. Is there anything you wish to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 130 1 add? 2 MR. BILLHEIMER: Yes. 3 CHAIRMAN DUNLAP: Okay. 4 MR. BILLHEIMER: John Billheimer of the Small 5 Business Coalition. That's 6,000 permit holders, furniture, 6 printing, so forth. 7 Our viewpoint is from the individual proprietor's 8 viewpoint. I wish I'd submitted a proxy, so that I could 9 discuss the issue that has been so much on the table here. 10 But I'd just like to say that the question that has been 11 discussed very much this morning is fallback. Maybe it 12 should be relabeled as realization of reality. 13 If you can't fall back or revise a control 14 measure, they are not going to be proposed. They have to 15 have flexibility. To get technological forcing, you've got 16 to be able to then come back from it when you find out it 17 isn't real. 18 Let me, however, stick to my own script. The 1997 19 AQMP is probably the most reasonable technical document that 20 can be produced as a plan. The issue is, it commits 21 implementation that comes down in rulemaking for a major 22 element, PM10, as a real hit on cities and counties in the 23 paved and unpaved road element. We've been discussing 24 things very broadly, but we're also going to have to who is 25 affected. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 131 1 I'm going to stick to my props, if I may, so that 2 I don't digress and get through as quickly as possible. The 3 PM10 emission inventory, as it is usually put on board, tons 4 per day, fuel combustion, 13; petroleum operations, 5 industrial processes, 13; miscellaneous processes, 359, for 6 a total of 387. That asterisk for miscellaneous processes 7 is said to include entrained road dust. 8 Next slide, please. 9 Added to that previous slide is the mobile 10 sources, which you are well aware of. So, and they are very 11 secondary in PM10. 12 So, we'll go on to the next slide. 13 Since that's large miscellaneous, it needs to be 14 broken down. This AQMP has investigated through a year-long 15 work -- task group. And we have road dust-paved, 169 tons, 16 or 41 percent; windblown dust, road dust-unpaved; there's 17 construction, on-road, farming, industrial process, off- 18 road. As a matter of fact, the classical smokestacks don't 19 even show quantitatively on this list. 20 Now, obviously, I'm talking PM10. I'm not in the 21 PM2.5 business yet. I will hide from that one for the 22 moment. 23 Next slide. 24 All right. Now, if we take the unpaved roads by 25 county from the best effort that Mel (phonetic) has been PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 132 1 able to put the data together up to now, we see the miles of 2 road for Los Angeles, Orange, Riverside, San Bernardino. We 3 see the population in millions. And then we see that the 4 miles per thousand population. This is sort of interesting. 5 Between 200 and 600 miles per thousand population, whether 6 you're looking at Los Angeles, Orange, Riverside, or San 7 Berdu (sic). 8 Now, does that mean then that there is going to be 9 those miles in each cluster of a thousand population? 10 That's quite a -- we're looking at a rule that is going to 11 come up. 12 Next slide. 13 Now, the rule that's being proposed to implement 14 this -- and a plan, I assert, is only as good as whether and 15 how it can be implemented. 16 It's being proposed that paved roads, beginning 17 January, 1999 -- there's an error there -- any new purchase 18 of a street sweeper has to be an advanced vacuum type. If 19 they have unpaved roads, each jurisdiction must pave one 20 mile, or chemically stabilize two miles, or put a 15-mile 21 speed limit on three miles. These are assigned. The 22 individual jurisdiction can choose its own priority, 23 although they're supposed to take into account average daily 24 trips. And this is to go on for ten years. 25 Next slide. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 133 1 Now, this is pretty detailed compared to these 2 grand plans we've been doing, but we'll have a point here. 3 Responsibility to comply is the owners and operators of the 4 roads. They're the cities and counties. They're limited in 5 funds by Proposition 218 to get a vote of the people. 6 Is road dust a mobile or a stationary source? 7 Mobile generally is restricted to tailpipe. 8 Next slide. 9 Now, mobile source funds have the intent of 10 priority of clean fuels and transportation improvement. The 11 Coachella Valley project demonstration was very significant. 12 The funds were -- have now proven the measures. The doubt 13 is whether available funds will be for compliance to cities 14 and counties, not demonstration now for the basin, but 15 implementation. 16 Next slide. 17 This is a very unique situation. The usual target 18 of air quality rules has been industrial and commercial 19 operations. And they've been deemed cost-effective if they 20 reduce emissions $5,000 to $17,000 per ton as the previous 21 speaker made very strong emphasis on. 22 Road dust measures are considered qualified. They 23 come in about 5,000 and less. If a measure -- if in 24 stationary sources, in traditional rules and regulations, if 25 you're technologically and economically qualified, then the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 134 1 rule must be adopted and you must comply. 2 Next slide. 3 This may be a new experience for cities and 4 counties. Usually, they're allied with the 5 environmentalists for maximum protection of public health. 6 Faced with direct responsibility for 52 percent of the total 7 PM10 or 65 percent of the fugitive-nonindustrial -- next 8 slide -- the cities and counties are looking for who is 9 going to pay for this. 10 Industrial point sources have invested in control 11 equipment or process equipment for many years, and paid 12 permit fees for the privilege of being regulated. 13 Next slide. 14 I'm coming to the end. Environmentalists lobbied 15 very hard for tightening the AQMP; in fact, they still 16 believe that we should hold up -- it should be held up on so 17 it could be worked further through the ringer. 18 Now, if we discover that 65 percent of the 19 fugitive PM10 is the responsibility of the cities and 20 counties -- that is, the people -- the environmentalists, I 21 believe -- I hope I'm not talking out of turn -- are now in 22 a strange position. They're aligned with business for 23 wanting to tighten this rule. Why should business want to 24 tighten this rule? 25 The concern of local government pleading for soft PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 135 1 rule fail (sic) -- if the local government plea for soft 2 rule were to cause to fail in the PM10 attainment, and they 3 try to ring further reductions out of the 7 percent of 4 stationary source, business will be forced to interpret this 5 as a disavowal of clean air by the people. 6 Thank you. 7 CHAIRMAN DUNLAP: Okay. Thanks, John. I 8 appreciate it. Any comments, questions for the witness? 9 Very good. All right. We have one remaining 10 witness, Steven Douglas of AAMA. Mr. Douglas, we see that 11 you support both the plan and the process. 12 MR. DOUGLAS: Yes. Thank you, Chairman Dunlap. I 13 am Steven Douglas with the American Automobile Manufacturers 14 Association. And I intend to be very brief today. 15 AAMA and our member companies appreciate the 16 increased openness that has surrounded this process in the 17 development of this plan. The district should be commended 18 on this. 19 And for our part, we've actively participated and 20 provided significant technical resources to the PTEP working 21 group. 22 As such, we support the changes that are proposed 23 by the South Coast to the air quality management plan. The 24 plan incorporates many important improvements in both air 25 quality modeling and emissions modeling. The plan clearly PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 136 1 shows that the cars and trucks our member companies produce 2 are leading the way towards cleaner air. More specifically, 3 motor vehicle emissions are projected to be reduced from 4 1284 tons in 1990 to only 284 tons in 2010. 5 That's almost an 80 percent reduction, and is 6 substantially greater than the 50 percent reduction that you 7 see from all sources combined. 8 Much of the reductions that we see can be 9 attributed to the Air Resources Board's low-emission/clean 10 fuel vehicle program. That includes reformulated gasoline, 11 clean fuel requirements, LEV certification requirements, 12 enhanced evaporative emission requirements, and on-board 13 diagnostic requirements. 14 These requirements -- and they are the most 15 stringent in the world -- are projected to result in 16 vehicles that emit at near zero levels. And I'd like to put 17 this in real terms if I may. 18 If you were driving an old car from -- if you had 19 an old car, you would emit more emissions driving from here 20 to Old Town, Sacramento than you would driving from here to 21 San Francisco and back. That's how far we've come. 22 However, there's a downside to the tremendous 23 reductions we've made, and that is that you can only obtain 24 relatively minor reductions from making the standards even 25 more stringent. Control Measure M2, for example, calls for PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 137 1 ozone precursor emission reductions of 25 tons per day. 2 Now, this reduction was derived using the old emissions 3 model in 1994, assuming 35 percent electric vehicles and the 4 rest ULEVs. 5 I believe that's a very optimistic assumption. 6 But using the new emissions control model, the emission 7 reductions will only be 15 tons per day. So, we can 8 conclude from that that we need to revisit the tons per day 9 assigned to the control measure M2 as well as the assumption 10 that went into it. 11 Regarding meeting the Federal ozone standards, the 12 district has acknowledged that the plan goes beyond what's 13 needed to meet Federal standards. However, I don't feel 14 that this -- we don't believe that this fact is adequately 15 addressed in the air quality management plan. And 16 specifically, I'm talking about the carrying capacity. I 17 know it's been mentioned many times today what the carrying 18 capacity is. 19 And we're concerned that this -- the plan, as it's 20 put, the carrying capacity is going to lead to the incorrect 21 belief that all the control measures and the associated 22 reductions are needed just to meet the Federal standards. 23 And that's not the case. 24 If the emissions were reduced only enough to meet 25 Federal air quality standards for ozone, it may be possible PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 138 1 to eliminate or reduce many of the long-term measures. 2 Now, I'm not proposing the elimination of any 3 control measures obviously, but we do believe the plan 4 should clearly communicate what the -- that the plan 5 achieves more emission reductions than are necessary to meet 6 the Federal requirements. 7 Additionally, it seems prudent and appropriate to 8 calculate the actual carrying capacity needed to attain both 9 Federal and State standards for each pollutant, be it ozone 10 or PM10. 11 And we would request that the Air Resources Board 12 and the South Coast District conduct this analysis and, of 13 course, we offer our assistance in doing that. 14 That concludes my comments. 15 CHAIRMAN DUNLAP: Okay. Very good. Thank you, 16 Mr. Douglas? Any questions, comments for the witness? All 17 right. Very good. 18 The representative from El Rap, who was to speak, 19 indicated that he wanted us to know that the letter 20 represents their position, and that Dunn Edwards Corporation 21 has also signed on to the other El Rap members, and that is 22 represents a consensus of the El Rap group. 23 So, that concludes the public testimony. 24 Mr. Kenny, I'd like for you to take a moment and 25 summarize those written comments that we've received, and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 139 1 then make any closing comments that you have before the 2 Board discusses this item. 3 MR. KENNY: Dean? 4 MR. SAITO: Thank you, Mr. Kenny. We've received 5 four comment letters. The first comment letter is from Mr. 6 Stan Holm of the Mobil Business Resources Corporation. 7 Mobil is raising similar concerns that have been raised by 8 Mr. Wilkniss of WSPA regarding the cost-effectiveness of 9 CMB09, of which we've had thorough discussion of this 10 morning. 11 The second comment letter is from Mr. William 12 Smiland of the law office of Smiland and Khachigian, 13 representing architectural manufacturers, retail paint 14 dealers, and painting contractors doing business in the 15 South Coast AQMD. 16 Mr. Smiland is requesting that the Board defer 17 action on the three architectural coating measures included 18 in the '97 AQMP. He contends that the environmental and 19 economic analyses done by the district are inadequate, and 20 that the ARB should perform these analyses. 21 ARB staff disagrees with these contentions. The 22 district is the lead agency for the California Environmental 23 Quality Act, or CEQA, review. 24 The district board has completed the CEQA process 25 for the entire AQMP as well as separate CEQA analysis for PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 140 1 the recently adopted architectural coatings rule, 1113. 2 The district also adopted an economic analysis for 3 the plan as well as for Rule 1113. The ARB has reviewed 4 both analyses, and we believe that they adequately address 5 the environmental impacts of the rule revision and the plan. 6 The third comment letter is from a Mr. Robert 7 Herztein, formally a senior analyst of the business 8 retention unit at Southern Cal Edison. 9 He cited research showing that quality of life 10 factors are increasingly important in decisions to site 11 businesses and that regulatory uncertainty and red tape are 12 more of a burden to business than stringency of regulations. 13 He cites the AQMP socioeconomic report conclusion 14 that the quantified benefits exceed the costs of the draft 15 AQMP and acknowledges that many benefits are not accounted 16 for and would only increase the benefit/cost ratio even 17 further. For that reason, he questions why the plan is not 18 stronger. 19 As we've discussed in the staff presentation, we 20 have cited the reason for the amendments being proposed and 21 made in the '97 AQMP. 22 The fourth comment letter is from Mr. Lloyd Davis 23 of South Pasadena, California. And Mr. Davis contends that 24 the PM10 standard should be changed to exclude naturally 25 occurring sources of particulate matter. Mr. Davis also PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 141 1 contends that the district's modeling analysis included in 2 the '97 AQMP fails to recognize ozone concentrations aloft 3 in its UAM modeling analysis. 4 ARB staff supports the district's handling of 5 ozone aloft measurements through the development of input 6 factors for the four 1987 meteorological episodes. 7 Additionally, staff believes that the district's attainment 8 demonstration appropriately addresses naturally occurring 9 sources of particulate matter. 10 And that concludes the written comments. 11 CHAIRMAN DUNLAP: Thank you, Mr. Saito. Mr. 12 Kenny, you have any closing comments before the Board 13 discusses this item? 14 MR. KENNY: The only real comments I would have 15 with regard to this is that there's been a number of 16 comments about the hundred tons. And at least it seems to 17 me that I might offer a little bit of assistance there. 18 I think the primary reason why the debate occurs 19 around a hundred tons is that there are several measures -- 20 actually, let me rephrase that. There are three specific 21 measures that are in the '94 AQMP that are the focus of a 22 fair amount of attention. 23 And if you have your staff report before you, you 24 can see those on page 20. And those are the architectural 25 coatings rule, the solvent cleaning rule, and the adhesives PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 142 1 rule. 2 And those three rules account for a fairly 3 substantial amount of VOC tonnage that was to be achieved 4 through implementation in the '94 SIP. When the district 5 adopted the '97 SIP, what it did is it provided for 6 additional clarification with regard to how the tonnage 7 associated with those three particular measures would be 8 achieved. 9 And I think what you've heard today, at least from 10 a number of the witnesses, is concern about the fact that by 11 providing for that clarification, that what several of the 12 witnesses are concerned about is that the district is, in 13 effect, moving the emission reductions that were originally 14 associated with those measures from the immediate present to 15 a longer time frame within which they would occur. 16 It is very hard to basically disagree with 17 essentially what is happening. But at the same time, the 18 characterization that we would apply to this approach is 19 that, when you look at all the information that is 20 associated with why the '94 SIP was modified on these three 21 measures to allow for a near term, a midterm, and a long- 22 term approach for the emission reductions associated with 23 those measures, we think it's reasonable. 24 And I think that is really sort of the heart of 25 the debate that has been presented to you today. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 143 1 CHAIRMAN DUNLAP: Okay. Let me ask Mike a 2 question about the reasonableness. It's reasonable because 3 more time is needed for the technology to catch up; it's 4 reasonable because we've learned more about the inventory? 5 What makes you feel that it's reasonable? 6 MR. KENNY: I think it's reasonable in light of 7 basically additional information that we have, so that we 8 can provide more precision with regard to what is going to 9 happen. So, I think what you're doing is you're actually 10 seeing a more precise description of how those emission 11 reductions will be achieved. 12 CHAIRMAN DUNLAP: Ms. Terry. 13 MS. TERRY: Just to add some context to the 14 discussion. We're talking only about a hundred tons of 15 reductions. But in reality, what we care about are what are 16 the emissions in the air? And this sort of gets in a 17 particular year in the near term. And that gets to your 18 last question about the reasonableness. 19 Because a combination of changes have been made, 20 one is the lowered estimate of future VOC emissions. I did 21 a quick calculation here, and in the -- as we showed in 22 those trend charts, that VOC actually in the year 2000 time 23 frame, when you compare the '94 and the '97 plan, with the 24 '97 plan, they're actually slightly lower VOC emissions in 25 total. In the 2001 and 2002 time frame, they're essentially PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 144 1 equivalent between the '94 and the '97 plan. 2 In the 2002 to 2005 time frame, very slight 3 increase in VOC emissions in total. And that's about at 2 4 percent. So, that's the emissions impact of the total 5 package of changes. 6 CHAIRMAN DUNLAP: Okay. Very well. Discussion. 7 Supervisor Roberts. 8 SUPERVISOR ROBERTS: Yeah, Mr. Chairman, because 9 it follows right on the heels of what you're into here, as 10 we went through this -- first, I was very impressed with the 11 work that the district's done to resolve a lot of issues for 12 something that is as comprehensive as this, to be boiling 13 down to such a few number of things I think is a real 14 positive. 15 But I think that was bothering me, as I looked at 16 and -- listened to this discussion and looked at the report 17 was Table 8. And that's exactly what we've been talking 18 about here. And it's -- let me just tell you it was -- my 19 discomfort was heightened rather than lessened with the 20 testimony of the director of the district. And I remember 21 distinctly his slides predicting here's the existing rules, 22 and we're not going to make it. And he had, I think it was 23 a red zone there that he called area changes. 24 And I thought in his testimony he said, among the 25 significant elements making that up was something called PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 145 1 architectural coatings. And then he showed out in the out 2 years sort of, you know, squeezing down. Something 3 miraculous is going to happen that isn't there. 4 And it seems to me that we're sort of exacerbating 5 that by pushing in our rule creation here and their rule 6 creation -- they're pushing more to those out years, where 7 his charts are predicting there's going to have to be a real 8 crunch coming. 9 CHAIRMAN DUNLAP: Right. 10 SUPERVISOR ROBERTS: And instead of getting 11 started earlier, it seems like we're getting started later. 12 It doesn't bode well for a successful program in the long 13 run. And I guess it gives me concern. I'm mixing a couple 14 of different things here that have been presented. But it's 15 leaving me with a feeling of uneasiness right now to see 16 that you're taking regulations that would have targeted 59 17 tons; you've moved that into an adoption of 12 -- near term 18 of 27, a long term of 20. And then, you're saying on top of 19 that 20, somehow it's already been identified for us. The 20 black box is going to have to contain some significant 21 increase in that number. 22 As a strategy, it just doesn't seem to -- it 23 doesn't make me comfortable. And it's one of the -- it's 24 probably the most significant part of what we're dealing 25 with right now. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 146 1 CHAIRMAN DUNLAP: Yeah. I can't pretend to speak 2 for industry on this one. But generally speaking, the folks 3 that are likely to be regulated will be regulated and would 4 probably like more time for new formulations, things kinds 5 of things to emerge before people jump into a grander 6 regulatory scheme. 7 So, from the community that's going to be 8 regulated, this would probably be acceptable. And that's 9 the key question, too, is what does midterm and near term 10 mean timing-wise, because there's been some definitional 11 changes. 12 And I think, Dean, maybe you or Lynn tried to 13 touch on that. Can you maybe focus on that for a minute for 14 Ron and I? 15 Under the '94 plan a near term measure meant what? 16 And in the '97 update, what does a near term, midterm, and 17 long term mean time-wise? 18 MR. SAITO: In the '94 AQMP, the near term 19 measures meant adoption of those measures within a two-year 20 time frame, two to three-year time frame. I think what 21 we're talking about in the '97 AQMP with midterm measures, 22 we're talking by the year 2000. So, it's a little extended 23 out. I mean it's further extended out to the year 2000. 24 CHAIRMAN DUNLAP: But then, there hasn't been the 25 near-term action, obviously, because we're three years -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 147 1 MR. SAITO: That's correct. 2 CHAIRMAN DUNLAP: -- past the adoption date. 3 MR. SAITO: That's correct. 4 CHAIRMAN DUNLAP: So, did I hear correctly? 5 Midterm means -- midterm -- 6 MR. SAITO: I believe we're talking about the 7 district's commitment to adopt the midterm by the year 2000. 8 CHAIRMAN DUNLAP: Okay. So, if I have this 9 correctly, Dean, is that right, that we're looking at, Ron, 10 39 of the tons within that original six year window, with 20 11 of the 59 coming later. 12 SUPERVISOR ROBERTS: I understand that. But 13 that's -- I guess what I see then further, you know, 14 somewhere, maybe in the range of where that 20 is occurring, 15 those charts are necessitating probably an addition on top 16 of that 20 that's some unspecified number. But it clearly 17 is a significant number, a very significant number that's 18 going to have to occur in that. An additional number that's 19 going to have to occur in that long term. 20 And that's where my concern is, is that we're 21 postponing something -- or at least that's what it appears 22 to me; that is even more difficult problems in the out 23 years. Those are the very charts I saw in one part of our 24 staff report. And it concerns me. And it's still not clear 25 to me -- and I guess it's for technological reasons, or PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 148 1 cost/benefit reasons, or something else -- why we are doing 2 such a shift. And I was hopeful maybe that could be stated 3 as clearly as possible. 4 CHAIRMAN DUNLAP: Okay. Mr. Kenny, and then we'll 5 go to Dr. Friedman. 6 DR. FRIEDMAN: Well, my comment is directly 7 related to Ron's observation, which I'm really glad he 8 raised, because there was a sharp change in the slope of 9 that decline. And the numbers don't jibe in my head. You 10 can't get a 39 ton reduction and have the initial portion of 11 that curve be the way it is, and then suddenly have another 12 major reduction over a relatively short course. I thought 13 it was only four years, maybe less, which is a 20 ton 14 reduction. Something else is going on. 15 And the curve, frankly, looked as though it wasn't 16 data driven; it was wish fulfillment driven. And it really 17 was bothersome. I'm glad you raised it. It bothered me for 18 most of this morning. 19 MR. KENNY: I think what you're seeing is a curve 20 that's actually black box driven. And that is at the heart 21 of some of the discussion we've been having here. At least 22 when we adopted the '94 SIP, there was a significant number 23 of emission reductions which we were unable to identify 24 specific measures with that we put into the advanced 25 technology category. That's permitted under the Federal PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 149 1 Clean Air Act. 2 But at the same time, it does provide for a lack 3 of specificity, which is always nice to have when you're 4 trying to figure out exactly where these emission reductions 5 are coming from. 6 Those kinds of black box emission reductions that 7 we are going to count on for the future are not currently 8 specified, and they are in the process right now or trying 9 to basically figure out how we are going to identify what 10 types of measures would be associated with those emission 11 reductions. 12 Those types of measures will not really be in 13 place until the 2006-2007 time frame, and even potentially a 14 little bit later than that. So, I think what you're seeing 15 is a curve that actually reflects the significant number of 16 emission reductions which are associated with the black box. 17 And again, I mean, some of the comments you heard 18 today tie into that directly, because to the extent that 19 that black box exists, any type of emission change -- for 20 example, moving from the '94 near-term measures to '97 near, 21 midterm, and long-term measures essentially exacerbates the 22 pressure that's going to be placed on that black box. 23 MS. TERRY: One other element of the trend is that 24 we do see the benefits of midterm measures roll in gradually 25 over time, so that they're also contributing to the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 150 1 declining slope. 2 CHAIRMAN DUNLAP: And, Ron, maybe this will help. 3 I tried to make the point earlier. There has been some 4 success, significant success, over time by punting, giving a 5 little bit more time in some cases. 6 The last thing you want to see occur is to force 7 regulation upon an industry that can't -- that isn't able to 8 absorb it, plan for it, and maintain market position and a 9 lot of other things. 10 So, what I'm getting at here is don't -- I don't 11 want to leave you with the impression that it's hopeless 12 that technology cannot improve or there can be breakthroughs 13 in this area, the coatings area, or other areas. 14 So, it's a concern that's noted, but that's gone 15 on in this business for a long time. 16 SUPERVISOR ROBERTS: I understand. But the basic 17 premise that you're shifting 20 tons more into an area where 18 you've got -- you're going to have to have some incredible 19 compression as it is. It just is a strategy that seems 20 questionable. 21 But, you know, you left unanswered the question 22 that I put on the table. I'd like somebody to be very 23 specific about what's really happening. Why are we doing 24 this? Why is the shift? Is it for technological reasons? 25 Is it for economic reasons? It's still not clear to me why PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 151 1 in this category we're seeing this shift into those years, 2 where I would have thought is exactly where you don't want 3 to put it, given the problems that you're going to confront 4 that you need to confront already. 5 CHAIRMAN DUNLAP: Ms. Edgerton. 6 MS. EDGERTON: I think the chart is page 19 of our 7 material? Or actually it's 19 of the report, and then it's 8 025. We have two different numbers on ours. 9 Is this the chart you're talking about? 10 SUPERVISOR ROBERTS: No. The chart was the chart 11 that was presented by the director of the district. 12 MS. EDGERTON: Dr. Lents got it out of our own 13 material. 14 SUPERVISOR ROBERTS: No. It wasn't our chart. 15 The ones he did in color? 16 MS. EDGERTON: Oh, his is in -- the one you're 17 talking about is in color? 18 SUPERVISOR ROBERTS: Yeah. There was a couple of 19 them, and he showed a black line where existing regulations 20 were and where we're going. And then he showed his guess as 21 to what had to happen to get underneath that line. 22 MS. EDGERTON: Okay. Well, I'll look at that 23 later. But this one is -- 24 SUPERVISOR ROBERTS: Why don't you put it up, if 25 you put it up for a second -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 152 1 MS. EDGERTON: Well, this one -- this one here on 2 this page, though, does show the problem, in that you would, 3 you know -- you hate to have a program that, when you look 4 at the chart, it achieves less. It appears to achieve less 5 air quality benefit than the former plan. 6 But, as I understand what Mike is saying -- Mr. 7 Kenny's saying, is he's saying that that is because more -- 8 there are more uncertain items and more things in the black 9 box. 10 And so, if I understand correctly, the concern 11 here, which is a legitimate one, is that we moved more items 12 into the black box. 13 But I was under the -- I think it's a good 14 question you raised, Supervisor Roberts, about -- did the 15 South Coast primarily make infeasibility findings based on 16 technology, or were they primarily based on economic 17 infeasibility? 18 CHAIRMAN DUNLAP: Mr. Kenny. 19 MR. KENNY: Let me go back to the charts 20 themselves first. With regard to the figures, the reason 21 that the charts basically show different lines there is that 22 the carrying capacity changed. And so, although there are 23 fewer emission reductions being achieved, the -- if there 24 was going to be a horizontal line across that Figure 1 25 chart, that horizontal line would essentially end up in 2010 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 153 1 under both the '94 plan and the '97 plan, showing 2 attainment. 3 So, there is the absence of that line, which would 4 probably be helpful had it been placed in here, because we 5 really have a different attainment demonstration and 6 approach now being taken in these particular plans. 7 The exact different basically is the carrying 8 capacity increased by approximately a hundred tons. And so, 9 which ended up that it was essentially the ability to show 10 attainment with more pollution in the air. 11 CHAIRMAN DUNLAP: Ron, Supervisor Roberts, does 12 that answer your question about the carrying capacity issue? 13 SUPERVISOR ROBERTS: Well, I -- the carrying 14 capacity always -- I mean that's also something that I've 15 been disturbed over. I mean it's like saying you found out 16 that you've got a little more capacity in a landfill, so 17 fill it. 18 CHAIRMAN DUNLAP: Yeah. 19 SUPERVISOR ROBERTS: It doesn't relate to there 20 being more healthier air. It just means we're using a 21 different statistical base that gives somebody some greater 22 degree of comfort. But that's not a real -- it's not an 23 improvement. I was going to try to avoid talking about 24 that, because that one bothers me a lot. 25 CHAIRMAN DUNLAP: Okay. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 154 1 SUPERVISOR ROBERTS: Both of these things. It's a 2 combination of these two things, Mr. Chairman, that is 3 causing me a lot of concern right now. And it's this chart. 4 And I think there was one other that was also making a 5 similar point. And look at -- basically, it looks like 6 there's a -- you know, a 15 percent reduction there in the 7 last -- a 50 percent reduction in the last four years. And 8 we're shifting another 20 tons into that same zone. 9 Now, I thought I understood that that area, that 10 red that was described as -- that these architectural 11 coatings, at least it was in the spoken testimony, was 12 referred to that they were a significant part of it; that 13 the local communities were going to have to do more in that 14 area. 15 You know, I don't want to be set up for failure 16 here, and it seems to me that overall strategy, given the 17 nature of this problem might have been not to shift so much 18 into those years. 19 MS. TERRY: If I could just make two quick 20 comments. 21 CHAIRMAN DUNLAP: Sure. 22 MS. TERRY: One is to say on a proportional basis, 23 we really kind of shifted more tons to the long term. So, 24 that relationship between short -- or near and midterm 25 reductions and long-term reductions is the same in the '94 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 155 1 and the '97 plan. The absolute number you get to at the end 2 is changed because of carrying capacity. 3 And secondly, as you look at a graphic and you see 4 between -- in those later years, that rapid decline, a large 5 portion of that rapid decline will occur because of measures 6 we've already got on the books or ones that are -- will be 7 adopted in the near term. 8 So, you can't assume that all of those reductions 9 in the last few years will occur just because of the long- 10 term measures. 11 CHAIRMAN DUNLAP: Well, one of the things, too, 12 that we need to examine here is to make sure -- you know, 13 Ron, I understand where you are conceptually. The thing I 14 look at in terms of what kind of regulatory outcome might 15 be, and what I hope you're saying is that we should be wary 16 of artful manipulation of models and data to make a problem 17 go away, not that we ought to push regulation before its 18 time and that we ought to push people, you know, to the 19 brink of having economic issues about their ability to 20 survive in a market. 21 Because I have seen close up what's happened here 22 with the California economy. And you know, as an elected 23 official in your area as well, we need to move carefully as 24 we develop new regulations and make sure they're well 25 thought out; that industry can deal with them. They see it PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 156 1 coming, and it makes sense. 2 But at the same time, I, too, am concerned about 3 artful manipulation of numbers and that, you know, misleads 4 all of us to feeling good a problem that really hasn't 5 changed. 6 SUPERVISOR ROBERTS: I just have to tell you at 7 this point, I don't have the comfort that I'd like to have 8 in this. 9 CHAIRMAN DUNLAP: Okay. All right. If I might 10 attempt to maybe summarize some things we've heard today. 11 We have heard a number of well-versed witnesses on these 12 issues. 13 Supervisor Silva serves on the board down there; 14 has personally been involved in the debate, the discussions, 15 hearings on this, and has first-hand knowledge about the 16 breadth of the outreach and the inclusiveness of the 17 process. 18 And I'm going to look for Jim to add a few 19 comments before we consider bringing this to a vote. 20 SUPERVISOR SILVA: Okay. Just a couple points, 21 Mr. Chairman. The air quality of the basin is more 22 healthful than ever before. Five years in a row we have 23 seen improvement. 24 And number two, last year's stage one episode days 25 were cut in half from 14 to 7, which shows that our programs PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 157 1 are working and are effective. 2 Number three, the plan balances air quality with 3 the economic prosperity of the basin. We're very concerned 4 about both of those areas. 5 The district has had extensive public 6 participation. I believe there were 21 PM10 task force 7 meetings. They were attended by 56 members from the 8 business, industry, government, and different environmental 9 groups. 10 There were nine public workshops and six public 11 hearings. I was present as the South Coast went through the 12 workshops and the hearing process for the 1997 air quality 13 management plan. I heard both the pros and cons expressed 14 about the plan. 15 Some people have expressed comments opposing the 16 plan, but I do believe that it's in the best interest of the 17 district, and this plan is consistent with t he 1994 ozone 18 SIP. 19 I move that the Board approve the South Coast 1997 20 Air Quality Management Plan, and direct the Executive 21 Officer to forward the plan to the U.S. Environmental 22 Protection Agency. 23 CHAIRMAN DUNLAP: All right. Thank you, 24 Supervisor Silva. We have a motion. Is there a second? 25 MRS. RIORDAN: Mr. Chairman, I'd like to second PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 158 1 the motion. And I'm somewhat more optimistic perhaps than 2 others, because I do know that there's a very dedicated 3 staff. There's a board that has to manage not only the 4 interests of regulation, but the interests of the economy, 5 and have some responsibility. And I think, Mr. Chairman, 6 you spoke best about that. 7 And that is, you can't require certain things of 8 certain industries when the technology is not quite there. 9 And we would make, I think, a terrible mistake if we moved 10 out too far ahead. 11 There's a delicate balance. At the same time, you 12 have to be technology forcing, but I think in reality the 13 overall plan that's before us is a plan. Yes, there's some 14 very optimistic opportunities there that we have to be sure 15 are met. But I believe they can be met. 16 So, I'm going to second the motion. 17 CHAIRMAN DUNLAP: Thank you. 18 SUPERVISOR SILVA: Thank you. 19 CHAIRMAN DUNLAP: Any other comments on this? I 20 appreciate the -- again, what the witnesses had to say and 21 the focused way in which the Board asked questions. 22 You know, it's not a perfect process by any means. 23 I'm pleased to hear again, you know, that our staff's gone 24 the extra miles, participated at the local level. It's good 25 to see some cooperative spirit between SCAG and South Coast, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 159 1 partners as this plan's developed. I appreciate that. 2 There's one thing that does trouble me, and that 3 is the controversy, you know, that's followed this plan's 4 development. And we had a number of witnesses come very 5 long ways to Sacramento to be heard. And I, too, share 6 Supervisor Riordan's perspective about the committed and 7 competent staff at South Coast. And the Board there I know 8 cares a lot. 9 But I can't help but wonder, you know, you had 10 some controversy surrounding the release of this report. 11 You had some advisory committees and others expressed 12 displeasure in -- there was a whole lot of stuff that 13 accompanied the development of this plan. And I would just 14 urge all of us involved, the district as well as us, to try 15 to do better in these areas to make sure that, you know, we 16 don't surprise stakeholder groups, and they don't walk out 17 of the process, because that doesn't serve any of us 18 positively. 19 And so, I think perhaps we've learned some things 20 here. But I do share the optimism, Supervisor Riordan, that 21 you have on this plan. 22 So, with that, if there's no other -- yes. 23 SUPERVISOR SILVA: Just one comment, Mr. Chairman. 24 I would like to remind this Board that when the vote was 25 taken, it was a unanimous vote. There's a lot of different PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 160 1 philosophies down there on that board, and they were all 2 together on this. 3 CHAIRMAN DUNLAP: Okay. Thank you for that 4 background. 5 Mr. Calhoun. 6 MR. CALHOUN: I share some of the comments 7 Supervisor Roberts has. And I think it would be helpful in 8 the staff report, when there are obvious questions about 9 certain things being done, if there'd be a little bit of an 10 explanation. For example, the question I raised about 11 shifting the base year from 1985 to, I guess, '93. And just 12 out of a clear blue sky, the statement made to that effect, 13 without much of an explanation, and it really kind of 14 bothered me. 15 And I can go through the staff report and show 16 where similar statements were made without much of an 17 explanation. And I'd appreciate more of an explanation for 18 some of the changes made. 19 CHAIRMAN DUNLAP: I have one final comment before 20 I call the question. I appreciate the environmental 21 community show today, and their commitment to try to work 22 this process. I also understand the very real threat that 23 they made to take this charge up at the Federal level. 24 And it is my hope that whatever emerges, that 25 we'll maintain the dialogue, work well with them. Mr. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 161 1 Kenny, they gave you high praise for working with them, and 2 that's important, too. 3 You need to continue to do that. So, with that, 4 I'll ask the Clerk of the Board to call the question. 5 We have before us a resolution, 97-1, we've had 6 for some time, which contains the staff recommendation. We 7 have a motion and a second. 8 We've had our discussion. With that, will you 9 call the question, Ms. Hutchens? 10 MS. HUTCHENS: Calhoun? 11 MR. CALHOUN: Aye. 12 MS. HUTCHENS: Edgerton? 13 MS. EDGERTON: Aye. 14 MS. HUTCHENS: Friedman? 15 DR. FRIEDMAN: Aye. 16 MS. HUTCHENS: Hilligoss? 17 MAYOR HILLIGOSS: Aye. 18 MS. HUTCHENS: Parnell? 19 MR. PARNELL: Aye. 20 MS. HUTCHENS: Riordan? 21 MRS. RIORDAN: Aye. 22 MS. HUTCHENS: Roberts? 23 SUPERVISOR ROBERTS: No. 24 MS. HUTCHENS: Silva? 25 SUPERVISOR SILVA: Aye. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 162 1 MS. HUTCHENS: Chairman Dunlap. 2 CHAIRMAN DUNLAP: Aye. 3 MS. HUTCHENS: The resolution passes 8 to 1. 4 CHAIRMAN DUNLAP: Okay. Very good. Thank you. 5 All right. What I'd like to do is ask staff to 6 change their places. I'd like to change the agenda 7 slightly. 8 I'd like to move up the research item. I'm 9 planning to run about another 15, 20 minutes before lunch 10 break. 11 We'll now take Agenda Item 97-1-3, research 12 proposals. We have before us 12 research proposals. We've 13 asked Dr. Holmes, Mr. Barham to join us. 14 In the interest of time, while not giving short 15 shrift to any of these important research proposals, I'd 16 like to ask you, Mr. Kenny and your team, to make a brief 17 overview of them. Try to limit it to -- in the five-minute 18 zone if you could. And then we'll have some Board 19 questions, and then we'll get to the witnesses. We have, it 20 appears, about four or five witnesses that have signed up on 21 the research proposals. 22 MR. KENNY: All right. What I'll do is, I'll just 23 turn it over immediately to Dr. Holmes and have him begin 24 the presentation. 25 DR. HOLMES: Thank you, Mr. Kenny. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 163 1 Chairman Dunlap, members of the Board, before we 2 start, I'd like to make a couple of -- propose a couple of 3 things. One is that we'd like to withdraw Item No. 1 and 4 the corresponding resolution 97-2. The reason for that is 5 that we've asked for more information from the proponent of 6 the costs of the overhead rates, and we haven't received the 7 information we asked. So, we're not ready to recommend them 8 to the Board. 9 We have public comments, comment letters on Item 10 No. 8. So, if it please the Board, we'd like to take a 11 little bit more time on that one. 12 CHAIRMAN DUNLAP: Okay. So, what I think I'd like 13 to do, unless the Board has any specific questions on any 14 item other than 8, I'd maybe like to split it, Ms. Walsh, if 15 that's okay, we'll vote on Item 2 through 7, and Items 9 16 through 12. Okay? 17 MRS. RIORDAN: Would you like a motion? 18 CHAIRMAN DUNLAP: Yes. I would entertain a motion 19 to do that very thing. 20 MAYOR HILLIGOSS: I have a question. 21 CHAIRMAN DUNLAP: Okay. 22 MAYOR HILLIGOSS: I'm concerned that there are so 23 many, and it's so expensive. It's over $2 million, almost 24 $2.5 million. And is this because we're not going to meet 25 next month, or why do we have so many? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 164 1 CHAIRMAN DUNLAP: Mr. Kenny, why did they all seem 2 to come in a large, certainly fiscal, quantity at this 3 juncture? 4 It is correct that we're not planning to meet in 5 February. John or Mike, was there a Research Screening 6 Committee conference or something? 7 DR. HOLMES: There's a couple of reasons for this 8 happening. It's not the first time it's happened, as you 9 know, Mayor Hilligoss. 10 This is about the time it takes us to go from when 11 the time the research plan is approved, to issue all the 12 RFPs, to get them reviewed, and so forth, and then to bring 13 them -- bring the ones that are recommended to you before 14 you for approval. 15 And also, there is another reason for the 16 additional load here. As you may recall, we're planning to 17 do our Southern California ozone study this summer, late 18 summer, early fall. So, we have a number of proposals that 19 we moved in ahead of others to allow us to get contracts and 20 interagency agreements in place before the starting gun on 21 some of our field studies. 22 CHAIRMAN DUNLAP: Mayor Hilligoss, I can assure 23 you, there isn't an end to the fiscal year rush here. This 24 is just -- it so happens -- Mr. Calhoun the Research 25 Screening Committee had a conference or big meeting in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 165 1 December, and that's why all these are emerging now. 2 MAYOR HILLIGOSS: How much do we set aside for 3 research? 4 CHAIRMAN DUNLAP: Generally, it varies year to 5 year as I understand. 6 DR. HOLMES: The budget over which -- under which 7 most of these proposals fall, the so-called baseline or 8 extramural budget is around $3.5 million currently. 9 There's another million dollars, plus or minus, 10 that is specifically targeted by the Legislature for kinds 11 of research, like indoor air quality, what we call the Clean 12 Air Act work on transport of pollution from one place to 13 another around the State, and the children's health study. 14 We go through the same process, although we do bring it to 15 the Research Screening Committee and we do bring them to 16 this Board for their approval. 17 MRS. RIORDAN: Well, Mr. Chairman, I think the 18 Board has had an opportunity to review those projects that 19 are before us. And it would seem to me, and I would be 20 happy to make the motion that we approve those proposals for 21 research that are before us, other than Item 1 and Item 8. 22 DR. FRIEDMAN: Seconded. 23 CHAIRMAN DUNLAP: Very good. Seconded by Dr. 24 Friedman. Any discussion on those items? 25 All right. We'll proceed then with a voice vote. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 166 1 All those in favor, say aye? 2 (Ayes.) 3 Any opposed? Okay. Very good. We've approved 4 all items except one, which has been pulled, continued, and 5 Item 8 where we have some people that have signed up to 6 testify. 7 Okay. Dr. Holmes, why don't we speak to Item 8, 8 the automatic charging system for electric vehicles, a 9 demonstration project, contract amount for about $483,000. 10 DR. HOLMES: Let me, if I may, ask Mr. Barham and 11 staff to go through that with you about what the project's 12 all about, and the comments that were received. 13 CHAIRMAN DUNLAP: Okay. 14 MR. BARHAM: Mr. Chairman and Board, this 15 particular proposal is designed to enhance the marketability 16 of EVs in the State. A number of questions have been raised 17 regarding whether or not this technology currently exists, 18 whether or not this should be a private sector project as 19 opposed to something that's being funded by the State. 20 It's our -- and also, there has been some question 21 about the impact of EVs on air quality. Generally, we 22 believe that it is appropriate for us to do this kind of 23 work. The technology currently does not exist. There are 24 some commercial applications where you have a situation 25 where you have wire driven or rail driven that can easily PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 167 1 move into a charging bay and operate correctly. 2 What this study is designed to do is really take 3 the typical driver kind of application that doesn't always 4 drive into the driveway quite straight, and have a system 5 that would allow that kind of situation -- or the car parked 6 in that kind of way to be charged without the operator 7 having to be involved at all. And this is brand new 8 technology that's being developed. 9 In the package of letters that you received, the 10 very last letter from BKI, goes through in some detail of 11 how this differs. But, in essence, it's what I've described 12 to you; that this technology does not exist, and it allows 13 us to have a more user friendly application of this 14 recharging technology. 15 If you have any more detailed questions, Manjit 16 Ahuja is here who can answer those for you. 17 CHAIRMAN DUNLAP: Sure. I'll kick it off. We're 18 really talking about the next generation of charging units, 19 right? Going away from the cord with the paddle on the end, 20 and the inductive/conductive charging systems that -- you 21 know, the automakers aren't agreeing on which system -- 22 MR. BARHAM: That's correct. 23 CHAIRMAN DUNLAP: -- at this juncture that they're 24 going to employ. 25 MR. BARHAM: In some respects, this is similar to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 168 1 where we were 20 years ago with vapor recovery nozzles. 2 What design works the best. 3 CHAIRMAN DUNLAP: Okay. So, the intent here is 4 for the Board, who has been a forceful voice in EV 5 technology development, to provide some leadership in 6 determining the next generation of charging systems that 7 ought to be developed and employed to help the launch of 8 ZEVs, thereby improving air quality as a result, right? 9 MR. BARHAM: That's correct, Mr. Chairman. 10 CHAIRMAN DUNLAP: Okay. What's the controversy? 11 We have a bunch of people that want to speak to it. We're 12 going to hear from them in a minute. What are you hearing, 13 as people are calling you up, what are they concerned about? 14 Are they suggesting that somehow staff's picked a winning 15 technology early or what? Can you characterize the -- 16 MR. BARHAM: I wouldn't characterize it exactly 17 that way. Generally, the comments that you have or that 18 we've received also, fall into some general categories; that 19 this is a duplication of effort that's already in place. As 20 I've said, this is new technology. 21 CHAIRMAN DUNLAP: Right. 22 MR. BARHAM: That there really is no air quality 23 benefit associated with electric vehicles overall. It's a 24 small impact. And there's a question about whether or not 25 this should be a taxpayer subsidized activity; that this PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 169 1 really may be more appropriately a private sect or activity 2 rather than taxpayers. 3 I think, in that regard, we have been on the 4 forefront on many occasions, as with the vapor recovery 5 nozzles, done similar kinds of testing and similar kinds of 6 equipment development. And this is just something that, in 7 order to move the technology along, which generally the 8 Board directs us to do. 9 CHAIRMAN DUNLAP: Okay. Where's BKI located? 10 MR. BARHAM: Manjit? 11 (Thereupon, the reporter could not hear 12 Mr. Ahuja's answer, and was unable to get 13 the attention of the speaker.) 14 CHAIRMAN DUNLAP: A California based company? 15 MR. AHUJA: California. 16 CHAIRMAN DUNLAP: Okay. Have we used them before 17 or have they ever done contract word for the Board before? 18 MR. AHUJA: The Air Resources Board has done work 19 with BKI previously. 20 CHAIRMAN DUNLAP: Okay. The $483,650 contract 21 amount, how much of that comes from us? One of the other 22 air districts is contributing 150,000. Is that in addition 23 to that amount or is that off? 24 MR. AHUJA: That's all of it. The total contract 25 is 400 -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 170 1 CHAIRMAN DUNLAP: So, our part is $333,000 2 approximately. Okay. So, we've partnered, right? Been 3 able to lengthen the reach of the dollars. All right. 4 Supervisor Roberts. 5 SUPERVISOR ROBERTS: Would you allow me -- if the 6 staff would -- I mean I've read the report here, and I've 7 heard your comments. But I think there's something here 8 that goes beyond what you've so far, and to help us to maybe 9 visualize where we're going. 10 General Motors, as many of us know, and have 11 driven and have charged their EV1; it has an induction 12 system. And you take a paddle off the wall. It's not clear 13 to me what we're doing that they're not already doing. 14 MR. AHUJA: The GM system is not an automatic 15 system. It's a manually operated system. This is -- the 16 purpose of this is it'll be an automatic system and it will 17 make it easier for the consumer to become more comfortable 18 with electric vehicles and therefore, hopefully, make it 19 easier for acceptance of EVs. 20 SUPERVISOR ROBERTS: Now, an automatic system. I 21 drive into the garage. I pull one of these things in. I 22 take something that's parked right there, and I stick it in 23 the front end of this car, and it charges up. 24 The next morning, I take it out and drive off. 25 What's -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 171 1 DR. HOLMES: That's not an automated -- automatic 2 system. 3 SUPERVISOR ROBERTS: No. I'm saying how does an 4 automatic system work? 5 MR. KITOWSKI: Supervisor Roberts, my name is Jack 6 Kitowski, and I'm the Chief of the On-Road Controls Section, 7 responsible for basically ZEV implementation. 8 And basically, an automated system would be as 9 easy as driving into your garage and pushing a button. And 10 the system would interface with the vehicle in some sort of 11 manner, which is why it's fairly new, fairly different from 12 what's done. 13 The whole idea of this is to broaden the base upon 14 which ZEVs, or electric vehicles, may appeal to the mass 15 public. And, as Chairman Dunlap said, too, to look at the 16 next generation of what might be available on electric 17 vehicles. 18 SUPERVISOR ROBERTS: Yeah. I'm just asking you to 19 help me visualize what that next -- 20 MR. KITOWSKI: (Interjecting) Visualize you go 21 into your garage and you push a button as opposed to -- 22 SUPERVISOR ROBERTS: Okay. So, there might be 23 something in the floor that starts this -- that takes care 24 of, and then inductively recharges those batteries? 25 MR. KITOWSKI: Yes. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 172 1 SUPERVISOR ROBERTS: So, I don't plug anything in. 2 I don't touch anything. I just -- I'm home. 3 MR. KITOWSKI: Correct. 4 SUPERVISOR ROBERTS: The car needs charging. 5 MR. KITOWSKI: And there would probably be time to 6 conduct that at a point where it's off peak for the utility 7 and less of a burden on them. There's a lot of options for 8 programming as well. 9 SUPERVISOR ROBERTS: Could this be extended? 10 Maybe I'm driving down the road and I can get a charge while 11 I'm driving along? Is that the third generation? 12 MR. KITOWSKI: We've had offers like that from a 13 few companies actually. Maybe that's the fifth generation. 14 SUPERVISOR ROBERTS: Okay. 15 MR. KITOWSKI: It's being tested out. 16 CHAIRMAN DUNLAP: Well, I know this, that one of 17 our colleagues, Mr. Parnell's been looking for a really long 18 extension cord for a pickup for his ranch, is what he 19 probably would need there to make it work around the ranch. 20 Mr. Kenny, do we need zero emission vehicles to 21 attain the Federal ozone standard? 22 MR. KENNY: The emission reductions that would be 23 associated with zero emission vehicles are part of the SIP. 24 So, the emission reductions would be necessary. At the same 25 time, those emission reductions I think total about 14 tons PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 173 1 per day. 2 CHAIRMAN DUNLAP: Okay. Can we attain the 3 standards without ZEVs as it's currently projected and 4 modeled? 5 MR. KENNY: Well, as the SIP is currently put 6 together, we would basically have to modify the SIP if ZEVs 7 were not part of the SIP. 8 CHAIRMAN DUNLAP: Okay. But the question is: 9 Presently, as the plan's constituted, we can't get there 10 without ZEVs, right? 11 MR. KENNY: Right. 12 CHAIRMAN DUNLAP: Okay. All right. Why don't we, 13 if there are no other questions at this juncture, why don't 14 we invite the witnesses to come forward. 15 Let me find my witness list here. Laura Diaz, 16 representing Assembly Steve Baldwin, followed by Jerry 17 Smith, representing Senator Ray Haynes; followed by 18 Assemblyman Rico Oller, my new Assemblyman from Placer 19 County and Mr. Parnell's. 20 Right over here. And if you have any written -- 21 Pat, maybe if you could go over and grab their written 22 comments and get them distributed. 23 Okay. Ms. Diaz. Assemblyman Baldwin's from the 24 San Diego County area, Ron? 25 SUPERVISOR ROBERTS: Yes. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 174 1 MS. DIAZ: I'm here on behalf of Assemblyman 2 Baldwin, who was not able to make it here today. But I'd 3 like to share with you a letter that he wrote. 4 (Reading) Dear Chairman Dunlap: I wish to 5 express my strong opposition to the Air Resources Board's 6 request for proposal to design an automatic electric vehicle 7 recharging system. 8 Such technology already exists and does not 9 contribute to direct, quantifiable emission reduction. 10 Southern California Edison currently markets an electric 11 vehicle home recharging system for use with GM's EV1. Our 12 State is faced with a multitude of safety, health, and 13 education problems that will require more public funds than 14 its tax base can currently support. 15 Spending half a million dollars on reinventing 16 existing EV charging technology is a waste of money and a 17 direct blow to funding used on more effective programs that 18 address California's air quality problems. 19 I hope that the Air Resources Board would come to 20 the conclusion that EVs contribute little to real emission 21 reduction. EVs are fine as long as public dollars are not 22 used to support the electric car industry. 23 Thank you. 24 CHAIRMAN DUNLAP: Thank you. Any questions of the 25 witness? Very good. Thank you. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 175 1 Let the Assemblyman know how much we appreciate 2 him taking the time and getting involved in this issue. 3 MR. CALHOUN: Let me ask this. Can I ask the 4 staff a question? 5 CHAIRMAN DUNLAP: Sure. 6 MR. CALHOUN: She made a statement that the 7 technology already exists. And you want to comment on that? 8 MR. KITOWSKI: The technology, the basic concept 9 exists in some form; that is, there are systems that 10 automatically recharge. Those systems are things that might 11 be used on a certain type of assembly line. One example 12 that people have used is at Walt Disney Toon Town, the 13 vehicles that are on the track go off automatically and 14 automatically recharge. 15 Such a system is significantly different with a 16 whole new set of engineering challenges. When you're 17 talking about an electric vehicle, then you're talking about 18 doing it in someone's garage where it's not on a specified 19 track. But the basic answer is there is no similar system 20 at all being marketed. 21 CHAIRMAN DUNLAP: Okay. 22 MR. BARHAM: Could I add just one point? 23 CHAIRMAN DUNLAP: Sure. 24 MR. BARHAM: Part of the design of this study is 25 to come up with a system that is automated, but also, as I PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 176 1 said earlier, was user friendly, which would include things 2 that are not too intrusive to the owner of the home, where 3 you're not tripping over tracks or, you know, having some 4 raised rail in your garage floor that would be a nuisance 5 that way. 6 So, there's some real challenges associated with 7 doing this work. 8 CHAIRMAN DUNLAP: Okay. Mr. Smith from Senator 9 Ray Haynes' office from Riverside. 10 MR. SMITH: Yes, thank you. My name is Jerry 11 Smith, and unfortunately the Senator could not attend today, 12 and asked that I read this letter on his behalf. 13 (Reading) Dear Chairman Dunlap: I understand 14 that the Air Resources Board proposes to grant one-half 15 million dollars to automate home recharging systems for 16 electric vehicles. 17 This proposal by BKI is intended to help the 18 owners of an electric vehicle in case they forget to plug in 19 their car. This is a reach for even the most seasoned 20 government contractor or bureaucrat. Do either BKI or the 21 Air Resources Board really believe that a consumer who 22 forgets to plug in his electric car for recharging overnight 23 would be likely to remember to turn on the necessary 24 actuation signal to initiate automatic recharging? Or will 25 this contract be followed by a similar one requiring an PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 177 1 additional half-million to develop an automated actuation 2 signal to relieve EV owners of any responsibility at all for 3 fueling their cars? 4 Can we expect that the ARB will next direct public 5 funds to the installation of home refueling facilities for 6 users of cleaner burning gasoline, so that folks won't be 7 inclined to leave home with the fuel gauge on empty, and 8 thus increase traffic congestion by inundating the highways 9 with tow trucks? 10 I respectfully submit that one or two 20 cent 11 phone calls to a towing service would cure even the most 12 absent-minded EV driver of neglecting to recharge his 13 battery overnight. 14 $500,000 for this simple behavior modification is, 15 to say the least, overkill. It appears to be more than a 16 boondoggle. Absurdity factor aside, there are far more 17 disturbing aspects to this contract. For example, nowhere 18 does it even pretend to improve air quality in California, 19 except to imply that more convenient recharging would 20 enhance the marketability of EVs. Even if that were so, EVs 21 will not provide a fraction of the emissions reductions 22 necessary to meet Federal clean air standards. This fact 23 has been confirmed by a broad range of experts, beginning 24 with ARB staff itself, and including such impartial 25 institutions as MIT, Georgia Tech, and Carnegie Mellon PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 178 1 University, and even Dr. Paul MacCready, a respected pioneer 2 in electric vehicle technology. 3 If the ARB took seriously its mission of improving 4 California's air quality, while considering the economic 5 impacts of its programs, it would discontinue its practice 6 of bankrolling politically correct, but environmentally 7 worthless, projects such as the one in hand. 8 It is a well-established fact that the majority of 9 auto-related smog can be traced to a small number of older, 10 high-polluting vehicles. If a fraction of the funds 11 squandered on technology forcing electric vehicle subsidies 12 were directed to common sense programs, like giving 13 incentives to older, higher-polluting vehicle owners to 14 repair or retire their vehicle, we would see an immediate 15 and significant reduction in smog causing emissions. 16 Instead, the most effective means of pollution 17 reduction -- repair or retirement of gross polluting 18 vehicles -- is left to unfunded command and control 19 mandates, leaving the financial burden to citizens who can 20 least afford it. 21 Why is that mere pennies are allocated to fixing 22 gross polluters while admittedly ineffective electric car 23 schemes receive millions of taxpayer dollars? Is it any 24 wonder that rank and file citizens are increasingly losing 25 faith in the ability of their government to solve even the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 179 1 simplest of problems? 2 The evaluation of this contract should be simple. 3 It provides no benefit to the air or the consumer, and it 4 costs $500,000. The contract should be rejected. 5 I sincerely hope you will vote accordingly. 6 Sincerely, Senator Haynes. I didn't think I'd get through 7 that I was so nervous. 8 CHAIRMAN DUNLAP: Well, you did fine. You did 9 fine. Thank you. Any questions, comments for the witness? 10 Okay. One thing, just so we're clear. Did you 11 have something, Ron? 12 SUPERVISOR ROBERTS: I just, being from San Diego 13 County, I want to compliment Mr. Smith, and I'll let the 14 Senator know you did just fine. 15 MR. SMITH: Thank you very much. 16 CHAIRMAN DUNLAP: The dollar amount for the 17 contract from the State would be $330,000, not half a 18 million. 19 MR. SMITH: Thank you. 20 CHAIRMAN DUNLAP: Okay. Just so we're clear on 21 that. Thank you. 22 Assemblyman Oller or his designee. 23 SUPERVISOR ROBERTS: Mr. Smith, just so you know 24 when you take this back to the Senator, also, we do have a 25 program in San Diego County, an incentive program for fixing PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 180 1 up those older cars that you were talking about. In fact, I 2 think at one time I took the Chairman to show him. It's a 3 pretty successful program. We have actually have two 4 things. We offer people they can either crush their car or 5 they can have their car fixed and upgraded with some 6 systems. And the county is actually subsidizing that. 7 So, there is a program I think along the lines 8 that you're describing that exists in San Diego County. 9 MR. SMITH: Would it be possible for our office to 10 receive a copy of that? 11 SUPERVISOR ROBERTS: Sure. Absolutely. 12 MR. SMITH: Thank you very much. 13 CHAIRMAN DUNLAP: Great. Is there anyone here 14 from Assemblyman Oller's office? 15 Mark Stewart, representing Assemblyman Bill 16 Morrow. Anita Mangels, Californians Against Hidden Taxes. 17 I believe that's the last witness. 18 MS. MANGELS: Chairman Dunlap and members of the 19 Board, I was advised that someone from Assemblyman Morrow's 20 office is on the way. They were taken by surprise by the 21 agenda change, the order in the agenda. 22 CHAIRMAN DUNLAP: You were surprised about the 23 timing or the order in which the items came up? 24 MS. MANGELS: They were taken by surprise because 25 they thought it was going to come up later in the day. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 181 1 CHAIRMAN DUNLAP: Because I thought we would be 2 done with the entire agenda by 1:30 today. So, I was 3 surprised, too. 4 MS. MANGELS: You're an eternal optimist. 5 My name is Anita Mangels. I'm the Executive 6 Director of Californians Against Hidden Taxes. Among 7 others, our statewide coalition represents the California 8 Manufacturers Association, the National Tax Limitation 9 Committee, Americans for Tax Reform, National Federation of 10 Independent Business, Western States Petroleum Association, 11 and the California Farm Bureau Federation. 12 The members of our coalition urge you to reject 13 the EV recharger design contract before you today. This 14 $500,000 aggregate, since it's not all coming from ARB, New 15 Year's present to BKI constitutes a gift of public funds 16 that even Santa Claus himself would be hard-pressed to 17 justify. 18 Before you vote on whether or not to execute this 19 contract, we ask you to honestly consider the following 20 questions: 21 Is it necessary? According to your agency's RFP, 22 it says there are, quote, "currently no commercially 23 available automatic EV recharging systems, and the ARB is 24 not aware that any manufacturers are planning to develop any 25 such systems in the near term." PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 182 1 Yet, BKI, the recommended contractor, says in its 2 proposal that vehicles charged by automatic systems 3 developed by the project team are in operation around the 4 world, running up to 24 hours a day. Edison EV has already 5 positioned itself as the exclusive home recharger vendor 6 foor GM and Honda and is also the government contractor of 7 choice for a taxpayer financed public recharging stations 8 throughout Southern California. 9 Ford Motor Company has offered free home 10 recharging equipment to purchasers of its new electric cars 11 and other firms are sure to enter the market soon. 12 Surely, if customers demand an automatic feature 13 for their systems, these companies would gladly invest some 14 of their considerable shareholder capital to expand and 15 protect their market share. $500,00 in the grand scheme of 16 things, when you're talking about the world's seven largest 17 automakers and some of the largest utility providers in the 18 State, surely it would be much easier for their shareholders 19 to kick off than the taxpayers of California when they're 20 the folks that are going to profit. 21 As to the alleged technological challenges 22 associated with automatic home recharging, we already have 23 automatically activated garage door openers, car alarm 24 disablers, and coffee pots. Is it truly necessary to hand 25 out almost a half-million dollars to reinvent an existing PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 183 1 technology that has proven adaptable to a variety of 2 applications? 3 Now, ARB staff claims that this contract will help 4 ARB fulfill its commitment to the Big Seven automakers to 5 work with industry groups on the standardization of EV 6 infrastructure hardware, including charging systems, on the 7 standard -- under the terms of the memoranda of agreement 8 linked to last year's revised ZEV mandate. 9 We would remind the Board that at the time the 10 MOAs were debated as part of the ZEV rulemaking process, 11 many expressed concern that certain provisions could prove 12 costly to taxpayers. CARB staff and Board insisted at that 13 time that no financial strings were attached and that the 14 agency would merely -- and I quote -- "facilitate" the 15 development of ZEV infrastructure by assisting the 16 formulation of standardized building codes, safety 17 standards, and equipment specifications. 18 Now, surely the agency did not intentionally 19 mislead the public as to the true cost of these MOAs. 20 Perhaps during Board discussion, this apparent contradiction 21 can be explained or the implied provision requiring the 22 expenditure of these funds on a clearly unnecessary contract 23 might be identified for the public. 24 One thing the BKI contract doesn't do is promise a 25 significant emissions reductions. As a matter of fact, it PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 184 1 doesn't claim to reduce smog causing pollutants at all. 2 Considering that independent and objective experts 3 from ARB, MIT, Georgia Tech, Carnegie Mellon, and even 4 Consumer Reports magazine, and Paul MacCready whom Senator 5 Haynes' staff mentioned earlier, have publicly concluded 6 that electric vehicles will do virtually nothing to improve 7 air quality, this was probably a wise decision. 8 Now, I see that there was a question earlier 9 about, well, are ZEVs necessary and, if so, what are we 10 going to get? And the answer that was provided by staff was 11 we're going to get 14 tons a day. My recollection of the 12 air quality plan for our State is that we need an excess of 13 $2,000 -- I'm sorry -- 2,000 tons per day. So that, indeed, 14 would be less than one percent. 15 And again, you know, it's a question of how much 16 bang do we get for our buck? If we're only going to get 17 less than one percent, well, maybe we ought to be looking at 18 something else and something with a lot more emphasis than 19 just flogging away at a technology that's already out there. 20 In any event, it does beg the question. What 21 environmental return can the taxpayers expect on this 22 half-million dollar investment? And the answer is, a 23 resounding, indisputable zero. 24 Then why do it? According to BKI, it will make EV 25 ownership more convenient and help those EV drivers who just PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 185 1 can't seem to remember to plug their car in for recharging 2 every night. Does anybody seriously believe that the six- 3 figure income earners to qualify for EV1 ownership, for 4 example -- and ideally already have three other presumably 5 gasoline powered cars in their garages and have no trouble 6 heading for a gas station when the fuel gauge is on empty -- 7 are somehow incapable of remembering to charge their 8 batteries overnight? 9 Surely CARB staff can think of a more productive 10 use for half a million dollars. 11 And that brings us to the "$64,000 Question," or 12 in this case, the $500,000 question that unfortunately seems 13 to have been overlooked throughout this entire process. How 14 can we achieve the maximum possible emissions reductions at 15 the last cost to taxpayers? 16 Here's a suggestion: It is common knowledge that 17 a small number of older, higher-polluting cars are 18 responsible for the majority of mobile source pollution. 19 Even Consumer Reports magazine's concluded that the same 20 carbon dioxide emissions reductions associated with EVs 21 could be readily achieved at lower cost just by improving 22 the efficiency of gas-burning cars. 23 The Air Resources Board has estimated the cost per 24 ton of emissions reduced through scrappage programs at 25 $4,000. By contrast, the cost of EV subsidies is over PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 186 1 $225,000 per ton. In other words, half a million dollars 2 could eliminate 125 tons of emissions by retiring gross 3 polluters, or two tons by subsidizing electric vehicle 4 programs. 5 Why is there even a debate? EV subsidies and 6 other hidden costs to California taxpayers are 7 conservatively projected as at least $17 billion by the year 8 2010. Considering the minuscule environmental benefits, 9 even a fraction of that would be too much. 10 Taxpayers have been encouraged by recent CARB 11 acknowledgments that the State has limited resources and 12 cannot be counted upon to continue the subsidization of 13 electric vehicles, clearly recognizing that it will up to 14 stakeholders -- the automakers, and utility companies, and 15 consumers -- to determine the success or failure of EVs in 16 the free market. 17 The dynamic is already in motion. The 18 manufacturers have stepped up to the plate by producing and 19 selling electric vehicles as have utilities and others by 20 producing the recharging equipment. 21 The design and demonstration project is already 22 underway and should be permitted to proceed without second 23 guessing or interference by government agencies. 24 By rejecting the BKI contract today you will have 25 taken an important step towards allowing that to happen. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 187 1 And we thank you for considering our views. 2 CHAIRMAN DUNLAP: Thank you, Ms. Mangels. Ms. 3 Edgerton, you had a question or two? 4 MS. EDGERTON: Actually, I didn't have a question 5 of -- I did want to make a comment about the infrastructure 6 working group, which is working very hard -- I just wanted 7 to remind the members of the Board -- working very hard to 8 establish cost-effective networks to enable California to 9 reap the emissions benefits of ZEVs. 10 Now, I remember several years ago, one of the 11 proposals that I thought was very interesting was -- but I 12 thought it was a little far out -- but it was to have the 13 automated highways. This strikes me as something less than 14 that, but it does fall in the category of trying to give 15 some guidance to the cities and the counties, as they try to 16 develop -- try to choose what's the most cost-effective way 17 to set up this network. 18 Now, what I had thought this was about was not a 19 home charging facility. I thought it was about trying to 20 figure out how to make a drive-up and charge your own car, 21 your electric car, downtown work, where you would -- kind of 22 like a -- just like -- what do you call those things you 23 put money in? Meter. So, the meters that we currently put 24 money in and has been projected we'll be putting just a 25 charge card in, have been envisioned as the way that it will PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 188 1 be easiest for the cities to achieve those benefits of ZEVs. 2 And it has occurred to me in the past that one of 3 the difficulties from a crime standpoint might be the hose 4 connected. And so, I thought that the purpose of this or 5 one of the purposes of this would fit in with something I'd 6 heard about several years ago -- was that you could -- if 7 you had a certain number of these downtown, for example, in 8 Los Angeles, you'd drive up, and you'd have a sort of 9 parking meter you'd stick your card in, you'd get charged. 10 But there wouldn't be anything for anybody to vandalize. 11 That's what I thought that this was -- this was 12 about. I didn't think it was really doing everything for 13 folks in their own homes or anything. 14 MR. KITOWSKI: I'd like to comment. That's one of 15 the benefits of this system is that it can be used -- and 16 vandalism, you're right on. That is a key that this type of 17 system can address. 18 As a matter of fact, when we set up a 19 demonstration system for this, plan to do it at a facility. 20 It won't be in somebody's -- obviously, if it's a 21 demonstration, we want people to be able to see how it 22 works, it's not going to be in somebody's garage. It'll 23 probably be at someplace like Southern California Edison or 24 someplace that people can view that. 25 The reason I guess we've been focusing the way we PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 189 1 have is that the difficult -- the little more difficult 2 technological challenge is in somebody's house. We don't 3 want to confuse it with something that you might construe as 4 industrial or construction. We want to people to have the 5 difficulty of maybe there's alignment difficulties and other 6 issues. 7 And so, a little more generic we felt was the 8 focus on somebody's house. But, in fact, the application is 9 broad enough, and it's a general enough program, because 10 this is an early stage program, kind of proving out the 11 visibility that it can work. 12 CHAIRMAN DUNLAP: Right. If I might add a point 13 or two. Ms. Mangels, if there's no questions for her, I'll 14 let her take leave. Thank you. 15 MS. MANGELS: May I just interject something here, 16 since Ms. Edgerton had made the comment. First, I for one, 17 and I'm sure some other folks would like to hear a response 18 where you keep bringing up -- well, okay, if we're going to 19 get these ZEV benefits. . . and I just stood here and heard 20 14 tons a day. And I'm not hearing that disputed. I 21 believe that under the State's air quality management plan 22 we have to have over 2,000 tons a day. 23 CHAIRMAN DUNLAP: Well, I'm not -- your concerns 24 I've heard many times. You -- 25 MS. MANGELS: (Interjecting) But you're PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 190 1 justifying -- you're justifying the expenditure by saying 2 we've got to have the emissions. Now, we're spending all 3 this money on less -- 4 CHAIRMAN DUNLAP: No. 5 MS. MANGELS: -- than one percent. 6 CHAIRMAN DUNLAP: We're not saying that. Let me 7 just be very clear for your purposes. 8 We have a Research Screening Committee that's 9 appointed by this Administration, this Board. They work 10 with our technical staff. We have a limited research 11 budget. We're not sitting on millions of dollars we can 12 spend willy-nilly. We spend it in a very judicious, prudent 13 way and have been successful, have been world leaders at 14 that, very proud to say. 15 Dr. Holmes and his team do a fine job. We have an 16 issue here that you and others have said is problematic to 17 you. You don't like the idea of us spending money on a 18 research program to do something that doesn't make sense or 19 that is impractical, or it gives a benefit or a public 20 subsidy to somebody. 21 What we're trying to do here is get to the root of 22 the very questions you've asked. And the question I asked 23 of Mr. Kenny, which is how many tons we're counting on for 24 ZEVs, is important and relevant, because we cannot project 25 attaining the Federal ozone standard without ZEVs replacing PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 191 1 cars with internal combustion engines generating emissions. 2 Therefore, we're committed to that policy. And we 3 need to make sure that we move the ball down the field and 4 make sure that we provide the necessary support for that 5 program to be a success. It doesn't mean we spend 6 taxpayers' monies to subsidies; doesn't mean we spend 7 research dollars improperly. 8 But it doesn't mean we abandon it because a few 9 people don't like competition for petroleum. And I want you 10 to know this, this year, I went before the Legislature -- 11 some of the members that sent staff here today -- with my 12 Exec Officer and some of the technical staff and got 13 blistered because they said we didn't support alternatives 14 to gasoline. We were dependent because of the price runup. 15 And we were given a whole lot of encouragement to make sure 16 that we see small programs, small alternative programs 17 develop and emerge so that we can protect those very 18 consumers that you profess to represent. 19 So, for my own decision-making process, I'm 20 interested now in letting you take leave, return to your 21 seat, and I'll ask staff a few questions about the bang for 22 the buck and about not reinventing the wheel. 23 So, the bottom line is, are we going to fund 24 somebody to do something that's already being done, that 25 Edison and other utilities are working on? Is this money PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 192 1 going to be poorly spent by contracting with BKI? Dr. 2 Holmes. 3 DR. HOLMES: Well, the answer to the first 4 question is no, we're not. As we've explained, this is -- 5 the first step was just an ordinary plug with a heavy cable 6 on it with an ordinary battery charger. The next step was 7 the inductive system with a paddle. This is a third step, 8 where you can pull into a parking place like the ones we 9 have out here in Lot B or even in your garage, or whatever, 10 and your car will automatically begin to recharge. 11 So, it's not duplicative of anything as far as we 12 know. 13 CHAIRMAN DUNLAP: Okay. 14 DR. HOLMES: And as far as the 14 tons, I think 15 that's a red herring really, because I mean the time does 16 not stop -- air quality planning does not stop at 2002, or 17 2010, or whatever it is. 18 CHAIRMAN DUNLAP: Right. 19 DR. HOLMES: Some of the things that we, the 20 staff, have to think about are way, way out beyond that. 21 And it's like public transportation in L.A. They say nobody 22 will ride it. Well, if you look at it on a decadal scale, 23 you get a whole different answer. A lot of people will ride 24 it. And I think we'll have a lot more than 10 percent cars, 25 electric cars. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 193 1 CHAIRMAN DUNLAP: Okay. Dr. Friedman, you had -- 2 thank you, Dr. Holmes. I appreciate that perspective. 3 DR. FRIEDMAN: Well, you know, I've sort have been 4 listening to some passionate responses about this. And it's 5 remarkable to me. I mean there's some people here talking 6 about apples and oranges and trying to compare them, and 7 saying this exists because there are rechargers, but not 8 automatic rechargers. I think that whole issue is moot. 9 I think that, you know, I've heard a lot of 10 comments that EVs are no good. They're not going to produce 11 a big enough bang for the buck. And those people lack 12 imagination. I mean, I can envision, as John just 13 indicated, a time when perhaps the dominant automobile may 14 be EVs. It may long after I'm gone. But it also may be an 15 answer to the environment. 16 And I've heard all sorts of comments and read 17 comments about, oh, let's focus on old cars as though we're 18 not, which to me, you know, I mean give some credit to 19 people for knowing how important the focus is on attainable 20 objectives with old cars. I've read a lot of material the 21 last couple of weeks about that objective and the focus on 22 it. 23 Let me tell you the problem that I have with this 24 research proposal. It has nothing to do with all that 25 hocus-pocus and a little bit of -- excuse me. Let's start PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 194 1 again. 2 What concerns me is that we're about to spend 10 3 percent of our research budget on a proposal whose major 4 value is to make marketing more attractive for an electric 5 vehicle in the future. I mean, I can understand why people 6 would like to get in and out of their cars without fooling 7 around with a lot of things and why an enhanced percentage 8 of them would, in fact, like an automatic recharge. 9 But that is a marketing issue and, if it's 10 important enough to be a marketing advantage, then industry 11 is going to do this in half the time with four times the 12 effort that this research project is going to achieve. And 13 I have a problem in literally expending 10 percent of our 14 budget on what looks like something designed to enhance 15 marketability. And we're pretty far away from that. I 16 think we have plenty of time to do this. And frankly, I 17 think others may even do it better. 18 When it becomes a priority to sell more of these 19 cars because they're automatically recharged, it's going to 20 get done like that (snapping fingers) in a flash. 21 So, that's my problem with this proposal. I think 22 we can better spend the money, but not for all those other 23 reasons here that sound like a petroleum group wanting this 24 and that, and don't do anything to change the status quo. 25 CHAIRMAN DUNLAP: Well, said. Supervisor Roberts, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 195 1 then Ms. Edgerton. 2 SUPERVISOR ROBERTS: Thank you. 3 CHAIRMAN DUNLAP: And we need a lunch break at 4 some point. 5 SUPERVISOR ROBERTS: First of all, I can't help 6 but note that at least two of the Assemblymen represented 7 and the Senator were from San Diego County. So, I hope that 8 what I have to say doesn't offend anybody. 9 I think we need to put this in perspective. 10 There's all sorts of things that are being tested this year. 11 San Diego is going to be hosting an intelligent 12 highway demonstration in August, where we're going to have 13 these strips that the cars are going to follow automatically 14 down the road. And they're going to be of a separation of 15 far less than it's safe to drive in today's world. And it's 16 estimated that our freeway capacity could be expanded by -- 17 at a minimum one-third, but easily up to about 50 percent. 18 We're talking about sending about 4,000 cars per lane per 19 hour through on this test. 20 And it's going to test all types of vehicles, 21 sizes, and shapes, and what have you. And I think there's a 22 benefit to the whole problem of air pollution if that works, 23 and I suspect it will. 24 We're also involved, as some of you, in a number 25 of other tests. In San Diego, we have just funded a program PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 196 1 with clean air partners that's going to test diesel and 2 liquified natural gas combination that we think going to do 3 wonders for -- in reducing pollution from diesel engines, 4 and something that we've seen very resistant to major 5 improvements. 6 We also do provide a modest incentive for those 7 who want to purchase an EV. And I find it ironic that we 8 have those speaking out. And San Diego is, as you know, one 9 of the only two places in the State where EVs are being sold 10 right now. 11 This ARB also, if I'm not mistaken, when three of 12 us visited Detroit this year, we saw an experimental car 13 that was in the design stages at design center that we are 14 heavy contributors to. It's going to use -- I believe it 15 was a Zebra battery. And it's anticipated that it would 16 have a range in excess of 150 miles. 17 So, we've got a whole history not only in this 18 Board, but through air pollution control districts of 19 helping improve technologies with respect to autos of all 20 sorts of kinds, using all different kinds of fuels, 21 electric, nonelectric, what have you. 22 This certainly doesn't seem to be anything 23 different when I look at it from that perspective. I'm also 24 hearing all these predictions. There's a wonderful article, 25 I think it's Newsweek this week, of some wonderful PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 197 1 predictions that didn't turn true this century. 2 One of them's from Western Union as they turned 3 down Alexander Graham Bell and his useless little toy that, 4 you know, what interest would they have in that, you know, a 5 telephone is a toy. They were in the business of sending 6 telegrams. Another was by one of the Wright brothers, who 7 one or two years before they flew, was predicting it was 8 going to be 50 years before anybody could fly. 9 I'm not surprised when I hear Californians Against 10 Hidden Taxes or anyone else tell us none of this stuff makes 11 sense. But I think what this -- I think, Dr. Friedman, when 12 you started out, you talked about being creative and looking 13 ahead. If you look at this in the context of only being a 14 simple improvement for somebody to be able to charge up 15 their car in their garage, and the only thing it ever would 16 do is replace getting out, putting in that paddle or that 17 other type of physical connector, then I think it really is 18 questionable. 19 But I think that Lynne was really starting off in 20 the direction that this allows you to go. It does allow the 21 County of San Diego, shopping centers, or anyone else to put 22 a system in place where the hardware is probably all hidden 23 and you do nothing but drive over it, leave your car while 24 you're in shopping, leave your car while you're working, and 25 your car gets charged up. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 198 1 There is something significant in not having to 2 have that hardware that's required today in public places. 3 And I think that this offers something well beyond just a 4 marketing advantage. I think this offers a big step in the 5 feasibility ultimately, and the ultimate success of electric 6 cars. 7 So, I'm going to support this. I think the 8 300,000 is rather modest in comparison to some of the other 9 dollars we've spent. San Diego County on that diesel/LNG 10 proposal is spending $1.7 million. 11 (Thereupon, the reporter suddenly ran out 12 of paper and apologized, not expecting the 13 item to last so long.) 14 SUPERVISOR ROBERTS: I'm not going to take that in 15 any negative way. 16 (Laughter.) 17 CHAIRMAN DUNLAP: He's been a big supporter of 18 yours, I want you to know. 19 SUPERVISOR ROBERTS: And quite frankly, I was at 20 the end. I think that the characterization that's made that 21 this is simply a convenience for somebody who might forget 22 to plug in their car is really to be very shortsighted. And 23 I think that it perhaps is a step in being able to drive 24 over something and get a charge without getting out and 25 without ever stopping. There isn't any reason why those PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 199 1 little strips that we're putting on that freeway in San 2 Diego can't also be parallel with a little strip that 3 charges your car while you're driving along, and maybe gives 4 you a four or five-hundred mile range ultimately. 5 But we won't know unless we get some of these 6 basic technological issues squared away. 7 CHAIRMAN DUNLAP: Right. Ms. Edgerton, do you 8 yield to your colleague? 9 MS. EDGERTON: Yes. Mr. Parnell. 10 MR. PARNELL: I only wanted to second what 11 Supervisor Roberts said, and t hen to emphasize the fact 12 that human safety is an issue here that we haven't talked 13 about very much. And yet I think it's paramount in a part 14 of this whole equation. 15 I would think that, as we move forward into the 16 electric vehicle viability scenario and, as new battery 17 technology comes along, that automatic charging systems are 18 absolutely going to be paramount on our thinking. And it's 19 imperative for we, as a State agency, to support the 20 research that'll lead us down that path. 21 CHAIRMAN DUNLAP: Right. Ms. Edgerton. 22 MS. EDGERTON: He said it better than I could. 23 CHAIRMAN DUNLAP: Not that Dr. Friedman being a 24 new member, and I appreciate very much him venturing into 25 this discussion, and I appreciate his views very much. The PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 200 1 point about a limited research budget is key. And we should 2 never lose sight of that. And I know I tease Ron about 3 this. Ron's been after us on overhead rates as an 4 organization. And you heard Mayor Hilligoss say something 5 along those lines today. And now we have our newest member, 6 Dr. Friedman, talking about limited dollars. 7 We need to always be sensitive to that and make 8 sure we get as much as we can for the money. 9 I'm dismayed that this research item is drawing 10 some fire, not all together surprised. But again, I think 11 we need to come back to holding, you know, our staff 12 accountable. And by that I mean you need to make sure that, 13 you know -- we're going to vote on this in a minute -- you 14 need to make sure if the vote is up and we support it, that 15 we get all that we can for this; that we don't have a 16 duplicative contract, we don't have a failed effort here. 17 It needs to work. We need to learn something from it and we 18 need to have something that makes these -- this clean air 19 technology, which is the ZEV, more viable than it was 20 otherwise. 21 And so, I'm seeing some heads nodding that you 22 guys feel strongly that that's the case. And that needs to 23 be paramount in your minds. 24 DR. HOLMES: I don't think, Mr. Chairman, that we 25 want to promise the world here. I'm not an engineer, but I PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 201 1 would venture to say that the actual development of a 2 practical system to do this would cost much, much more than 3 $500,000. 4 What we're trying to do here, I think, and have 5 done successfully in the past, is to provide that little 6 nudge that gets the ball rolling a little bit, and shows 7 that it can be done. And then American ingenuity takes 8 over, and you're home free. 9 CHAIRMAN DUNLAP: Yeah. Which is another point 10 Dr. Friedman was making. 11 All right. With that, Supervisor Silva, South 12 Coast indicated they were going to partner in that. They 13 have in other items along these lines. 14 So, it would be my sense that that collaboration 15 is important, the cost sharing. And I would expect you -- 16 and I know you would anyway -- to hold that staff 17 accountable to a process like this, where the people that 18 have contrary views and supporters can show up and talk 19 about this type of research. 20 That's important. And I'm assuming that's 21 happened. Has this item already come before that board? 22 Dr. Holmes, do you know? 23 MR. BARHAM: It hasn't yet, Chairman Dunlap. It 24 will go after. They were waiting for your Board's decision. 25 CHAIRMAN DUNLAP: Okay. All right. Very good. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 202 1 All right, with that, if there's no other 2 discussion, I'll ask Ms. Hutchens to call the question on 3 the Resolution 97-1-3 that applies to research Item No. 8, 4 which is the -- I don't know if I have the proper name 5 before me, but the EV charging item. 6 MS. HUTCHENS: It's 97-9. 7 MS. WALSH: Excuse me, Chairman Dunlap, you 8 probably want a motion. 9 CHAIRMAN DUNLAP: Yes, we would need a motion. 10 Very good. Ms. Edgerton? 11 MS. EDGERTON: I move it. 12 MR. PARNELL: Second. 13 CHAIRMAN DUNLAP: Mr. Parnell seconded. Any 14 discussion? 15 Thank you, Ms. Walsh. Ms. Hutchens. 16 MS. HUTCHENS: Calhoun? 17 MR. CALHOUN: I'm going to support the resolution, 18 but I also want to acknowledge the fact that I'm in 19 agreement with Dr. Friedman here. I think that private 20 industry will step up and pull a lot of effort into 21 developing a system, also. 22 But I think the comment that John, Dr. Holmes, 23 made a few moments ago is really kind of the key. And that 24 is we've given them a nudge, and they will probably take 25 over from there. So, I'm prepared to vote aye on it. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 203 1 CHAIRMAN DUNLAP: Thank you. 2 MS. HUTCHENS: Edgerton? 3 MS. EDGERTON: Yes. 4 MS. HUTCHENS: Friedman? 5 DR. FRIEDMAN: I'm going to abstain. 6 MS. HUTCHENS: Hilligoss? 7 MAYOR HILLIGOSS: I'm going to vote no, because I 8 think it's something that private industry should be doing. 9 MS. HUTCHENS: Parnell? 10 MR. PARNELL: Yes. 11 MS. HUTCHENS: Riordan? 12 MRS. RIORDAN: Aye. 13 MS. HUTCHENS: Roberts? 14 SUPERVISOR ROBERTS: Aye. 15 MS. HUTCHENS: Silva? 16 SUPERVISOR SILVA: I'll be voting yes, but I do 17 like Dr. Friedman's comments. I think he's right on target. 18 MS. HUTCHENS: Chairman Dunlap. 19 CHAIRMAN DUNLAP: Aye. 20 MS. HUTCHENS: Passes 7 to 1 with one abstention. 21 CHAIRMAN DUNLAP: Very good. We'll take a lunch 22 break at this juncture. We'll come back in about 30 23 minutes, and then we'll proceed with the last item. 24 Thank you, the research team. 25 (Thereupon, a luncheon recess was taken.) PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 204 1 AFTERNOON SESSION 2 --o0o-- 3 CHAIRMAN DUNLAP: Before I move to our last item, 4 Agenda Item 97-1-2, Mr. Kenny has asked to be able to give 5 the Board an update on the two workshops that the Board 6 staff had conducted on the new standards. 7 So, Mike needs to take a couple minutes of our 8 time, and I'd like to have the Board members pay particular 9 attention, because Mike has a view here that's important for 10 us to understand and appreciate. 11 Mr. Kenny. 12 MR. KENNY: Thank you, Mr. Chair. I do want to 13 give the Board members kind of a summary of what happened at 14 the two forums we held last week with regard to the proposed 15 standards by the U.S. EPA. 16 So, let me go through that. In order for the 17 State of California to better understand the proposed 18 Federal air quality standards and their implications and 19 impact on California, the ARB held two workshops, one in 20 Southern California and one in Northern California. 21 These were designed to gather input from 22 California stakeholders. Since proposing the new standards, 23 U.S. EPA's been holding public forums across the nation to 24 give people a chance to voice their concerns, but they 25 didn't schedule a hearing in California, surprisingly PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 205 1 enough. 2 So, our intent was to present basically factual 3 information at these forums and then to give our 4 stakeholders a chance to share their comments with us with 5 regard to their thoughts on the proposed standards. 6 What I'd like to do now is summarize for the Board 7 what we learned from the workshops. First, there's no 8 question that there's a lot of concern from the business 9 community over the cost of new regulations and over the 10 science used by U.S. EPA to determine the protection levels 11 of the new standards. 12 We heard this in the public workshops, in written 13 comments, and from the forums that U.S. EPA held in the 14 other States. As I mentioned, one of the concerns by the 15 business community is regarding the science that was used 16 and studied by U.S. EPA in regards to a new tighter PM2.5 17 standard. 18 Many in the business community have labeled this 19 as bad science, and I've asked our staff to identify any 20 gaps that may exist and help the Board to understand what 21 policy implications those gaps represent. This is a real 22 concern and issue for many stakeholder groups. 23 Second, we heard from the environmental community 24 that the new proposed standards are a step in the right 25 direction to protect public health, and that the new PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 206 1 proposed standards would reduce deaths caused by particulate 2 pollution. But these groups also stated that the proposed 3 regulations need to be strengthened to save more lives. 4 This was stated by the Environmental Working 5 Group, along with the American Lung Association, the Sierra 6 Club, the Union of Concerned Scientists, the NRDC, the 7 Planning and Conservation League, CALPIRG, and the 8 California League of Conservation Voters. 9 These groups not only called for the increased 10 protection of public health, but also noted the underlying 11 health care costs associated with reduction in medical 12 costs, fewer sick days, and lost productivity if tougher 13 standards are not adopted. 14 Third, our staff and the U.S. EPA made 15 presentations with the purposes of explaining the new 16 proposed standards. On ozone, ARB staff pointed out that 17 U.S. EPA has chosen to focus on an eight-hour standard to 18 reflect the health effects of human exposure to ozone over 19 the course of an entire day, rather than peak level 20 exposures during a one-hour period. 21 There is scientific evidence which suggests that 22 the current one-hour Federal standard does not sufficiently 23 protect public health. And from a health standpoint, the 24 Federal Government could provide additional health 25 protection with either a tighter one-hour standard or an PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 207 1 appropriate eight-hour standard. 2 With regard to the proposed PM standards, 3 California's existing air quality strategies are well 4 prepared to deal with a PM2.5 standard. We have reduced the 5 sulfur and nitrogen content in our motor vehicles and 6 industrial fuels, thereby reducing particulate emissions and 7 formation. 8 We have also reduced the emissions of oxides of 9 nitrogen, one of the most important precursors of airborne 10 particles. ARB staff preliminarily reported some scientific 11 studies reviewed by U.S. EPA could support a standard for 12 particulate matter that is stricter than the Federal 13 proposal. However, additional scientific work is valuable 14 and should continue to be conducted to expand our 15 understanding so that a broad consensus with regard to these 16 matters can be achieved. 17 ARB staff has been performing an analysis of the 18 Federal proposals and will continue to consider a full range 19 of issues. 20 We certainly feel that we have learned a lot over 21 the past month, but there is still much more work to be 22 done. Since concerns over the sufficiency of the science 23 and the breadth of the health-based studies used by U.S. EPA 24 need to be resolved before making sound policy decisions, 25 I've asked the staff to continue their analysis and to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 208 1 review these critical issues. 2 Also, the implementation of any new standards 3 presents challenges that must be addressed through a 4 thoughtful plan developed by California air quality leaders 5 and not East Coast planners. 6 Most importantly, implementation policies for any 7 new Federal standards must include California's approved 8 ozone SIP and also must provide for sufficient time to tune 9 up our clean air strategies to attain any approved new 10 standards. 11 Flexibility will be the key to success for any 12 clean air regulations in California, and also for the rest 13 of the nation. And with that summary of what occurred at 14 the forums, I'll be happy to take any questions. 15 CHAIRMAN DUNLAP: Any questions of Mike? Thank 16 you, Mike. Yes. 17 DR. FRIEDMAN: I'm just curious about the 18 attendance at the forums. Could you make a comment? 19 MR. KENNY: Sure. The attendance generally was a 20 little bit different. In the El Monte forum, we had I'd say 21 maybe -- approximately 100 people. But in the Sacramento 22 forum, I think this room was pretty full. So, there was a 23 little bit of a difference in terms of what we got in El 24 Monte and in Sacramento. 25 The number of witnesses, however, were about the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 209 1 same in both forums. In both El Monte and Sacramento, we 2 got about maybe 16 to 17 people who signed up to testify. 3 CHAIRMAN DUNLAP: Thank you, Mr. Kenny. I 4 appreciate that. 5 All right. 6 SUPERVISOR ROBERTS: Mr. Chairman, are we going to 7 have to respond to them in February prior to us having 8 another meeting? 9 CHAIRMAN DUNLAP: February 18th, I believe, is 10 when the Federal Government set a deadline for comments. 11 And so, what Mike has done and what he's reported is that he 12 had the two forums. Staff's doing the research, the 13 evaluative work to present essentially a technical 14 perspective to the Federal Government. And he's going to 15 couple that -- we're planning, at least at this point, to 16 couple that with the testimony and the written handouts of 17 the stakeholders that showed up. 18 And that'll be packaged from the Administration 19 and sent forward. 20 SUPERVISOR ROBERTS: I know there was some concern 21 in my own area for perhaps extending that date. 22 CHAIRMAN DUNLAP: The deadline? 23 SUPERVISOR ROBERTS: Yeah. So that additional 24 comment could be made. Not extend it, you know, unduly, but 25 at least extending it for perhaps 60 days. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 210 1 CHAIRMAN DUNLAP: I'll ask. 2 MR. KENNY: Supervisor Roberts, if I could, there 3 was essentially the same kind of comment made during the 4 forums, where some of the who were testifying were asking 5 for additional time frames to have public comment available. 6 The difficulty I think, from a U.S. EPA perspective, is that 7 they are under a court order to actually come out with the 8 PM standard on this. 9 The U.S. EPA is under a court order to come out 10 with a PM standard I believe by June 30th. And so, what 11 they're trying to do is essentially acquire all the comments 12 that they can within the time frame so they can meet that 13 court order. 14 CHAIRMAN DUNLAP: But what I'll do is I'll ask Ms. 15 Walsh to get information to you and any other Board member 16 that wants to know how your districts, your local districts, 17 can communicate to them directly. Or if you want to let 18 your stakeholders know about it, that way, you can make sure 19 that you're, you know, getting people funneled to the right 20 place. 21 SUPERVISOR ROBERTS: Okay. 22 CHAIRMAN DUNLAP: Okay. Yes, if you wouldn't 23 mind, Kathleen, maybe in the next week get something out. 24 Why don't we move to the last item then. 97-1-2, 25 a public meeting to consider the economic assessment PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 211 1 program. 2 Cal-EPA has established an economic analysis 3 program for all of the Cal-EPA boards, offices, and 4 departments, of which there are six. And I'm enthusiastic 5 about the Air Resources Board being asked to head up and 6 develop this program. And I'd like to welcome the new 7 members of this unit to the Board. 8 The Legislature over the past few years has 9 expanded and refined the laws requiring regulatory agencies 10 to assess economic impacts off proposed regulations. And 11 today, I've sounded a bit like a broken record on that 12 point, and perhaps some others that are part and parcel to 13 that. 14 Economic impact of any air quality regulation has 15 always been a concern of this Board and the staff, I'm 16 pleased to say. And the new economics analysis unit allows 17 ARB and Cal-EPA's sister boards and departments to do more 18 thorough economic assessments than in the past. 19 And as the Legislature changes, as term limits 20 kick in, you're going to see an increasing interest in 21 holding boards -- regulatory boards and departments 22 accountable for providing the economic impact information 23 for new regulations to those affected. 24 So with that, I'd like to ask Mr. Kenny to 25 introduce the item and begin the staff's presentation. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 212 1 Mike? 2 MR. KENNY: Thank you, Mr. Chairman and members of 3 the Board. Today, we will present for your information an 4 update of the ARB's economic analysis program. As you know, 5 the Board has always been interested in knowing the economic 6 impacts of its regulations. We have performed economic 7 analyses of the proposed regulations as far back as anyone 8 in this room can remember, certainly before my time. 9 We have had an economic study section with at 10 least three economists for about 20 years, and we recently 11 added three more to help all of Cal-EPA to comply with 12 legislative mandates that you'll hear about today. 13 We have done in-house and extramural research on 14 regulatory costs, cost-effective, and impacts of regulations 15 on jobs and businesses. We have conducted research by 16 outside experts to bring to you a complete assessment of 17 proposed regulations. 18 As you'll recall, the Governor asked the Board to 19 analyze the economic impacts of the 1994 State 20 Implementation Plan for ozone. In response, economists at 21 ARB and the Governor's Office of Planning and Research 22 conducted independent evaluations of the impacts of the SIP 23 on the State's economy. 24 We also asked an outside consulting firm, M-Cubed 25 to evaluate the SIP's impacts on the State's economy. All PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 213 1 three assessments reached similar conclusions; that the SIP 2 will have very modest economic impacts on California's 3 economy, but that it may have more impacts on some economic 4 sectors than on others. 5 We have also investigated the effects of our 6 regulations on business' decisions on whether to expand 7 within or locate in California. In addition, we have 8 sponsored research on and our economists have been involved 9 in gathering data on the costs and economic impacts of 10 reducing agricultural waste burning in the Sacramento 11 Valley. 12 Thus, we have been in the forefront of economic 13 impact analysis. These analyses have been part of our 14 reports to you on the economic assessment of the impacts of 15 air quality regulations for at least the past 15 years. In 16 1993, as an important part of Governor Wilson's regulatory 17 reform initiative, the California Legislature passed several 18 bills mandating more detailed economic analysis than had 19 been required in the past. 20 To ensure full implementation of the newly 21 required analyses, Cal-EPA has issued policy guidance to all 22 boards and departments that detail the mandates on the 23 agency's policies on overall economic assessment of 24 regulatory items. 25 The policy includes a six-element economic PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 214 1 analysis program. We have applied most of these analyses to 2 our proposed regulations in the past. We were instrumental 3 in the preparation of this guidance that came out. 4 ARB has been in the forefront of developing 5 workable economic assessment methodologies as part of our 6 regulatory evaluation program. The 96-97 Budget Act created 7 an economics unit in the ARB to develop methodologies, 8 guidelines, and handbooks for economic analysis and to 9 provide economic consultation and training to all Cal-EPA 10 boards and departments. 11 The staff of the unit is here and will make 12 today's presentation on the economic analysis program. Let 13 me introduce the members of the unit. Fereidun Feizollahi, 14 an economist, will make the presentation; Athena Chase, who 15 has degrees in microbiology, business administration, and 16 law; and Brad Cole, who has a degree in resource economics 17 and a degree in environmental sciences. 18 In the few months of the unit's existence, the 19 staff have already provided methodologies to the Cal-EPA 20 boards and departments, written guidelines, and held a 21 workshop with the stakeholders. 22 We plan to hold two more workshops soon. We also 23 have been funded by the Budget Act to contract with outside 24 consultants to perform additional economic analyses if 25 necessary. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 215 1 The unit's efforts will help implement the 2 requirements of the Cal-EPA policy document. In the last 3 several years of performing economic analyses, we have 4 learned a lot about the economics of our proposed 5 regulations. The unit will be proactive in taking part in 6 discussions with other boards and departments and with the 7 stakeholders to stay abreast of all concerns and suggestions 8 regarding inclusion of economic analyses in the regulatory 9 development process. 10 At this point, I'd like to introduce Mr. Fereidun 11 Feizollahi of the economics unit to present the update on 12 the economic analysis program. Fereidun, and I hope I got 13 your last name right. 14 MR. FEIZOLLAHI: You did. Thank you, Mr. Kenny. 15 My name is Fereidun Feizollahi of the economics unit. 16 My presentation focuses on the six elements of the 17 economic analysis program that Cal-EPA delineated in its 18 policy document, which you have a copy of. 19 The program is partly based on the bills that have 20 been passed by the Legislature since 1993, and partly on 21 Cal-EPA policy guidance. The economics unit, working with 22 Cal-EPA, the boards and departments, and in consultation 23 with the Trade and Commerce Department developed the 24 economic analysis program, which all boards and departments 25 are required to follow with assistance from the economics PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 216 1 unit. 2 One of the legislative bills that added new 3 requirements is SB 513 that was passed in 1993. Prior to 4 the adoption of SB 513, the law required assessment of the 5 potential adverse impacts on businesses and individuals. 6 SB 513 required all State agencies to assess the 7 extent to which a proposed regulation or amendment will 8 affect elimination, creation, or expansion of California 9 businesses. It also required that California job creation 10 or elimination due to proposed regulations be assessed. 11 The bill does not prescribe a methodology for 12 assessing the impacts on businesses and jobs; however, it 13 does say that information for the assessments can come from 14 existing State publications, and that there is no need to 15 initiate the difficult tasks of generating new economic 16 data. 17 Of course, to inform the public, the bill requires 18 that the results of the assessments be included in the 45- 19 day public notice of hearing for the proposed regulation. 20 While SB 513 expanded and specified more details for the 21 existing economic analysis requirements, AB 969, passed by 22 the Legislature also in 1993, added a new requirement of 23 assessing whether and to the extent a proposed regulation 24 may have adverse impacts on ability of California businesses 25 to compete with businesses in other States. Or stated in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 217 1 terms of outcomes, does the proposed regulation contribute 2 to businesses decisions to locate or expand outside of 3 California? 4 AB 969 specified that the proposing agency shall 5 consider but not be limited to information supplied by 6 interested parties. It did not prescribe any specific 7 methodology for the competitiveness impacts assessment. 8 The requirements of these two bills, which are now 9 a part of the Administrative Procedures Act, were put 10 together as one element of the Cal-EPA economic analysis 11 program. Because there was no methodology specified in the 12 legislation, and because there were no widely accepted 13 methodologies that all interested parties could agree to, 14 the Board took the lead and contracted with Professor Peter 15 Burke of U.C. Berkeley Department of Agricultural and 16 Resource Economics to review methodologies and make 17 recommendations. 18 Professor Burke recommended examining the impacts 19 of proposed regulations on labor productivity in the State 20 or on rate of return on invested capital by regulated 21 businesses as a measure of financial health, and on price 22 and quantity of goods or services affected by the 23 regulation. 24 And he recommended that if the proposed regulation 25 is a far-reaching one, complex economic models be used in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 218 1 the analysis. Staff has used some of his suggestions and 2 have applied them to proposed air quality regulations. 3 A few examples are regulations on consumer 4 products and paint sprays, and the hot spots fee program. 5 To refine the methodologies of the analytical 6 procedures further, the economics unit will hold a workshop 7 on February 7th of this year at which the stakeholders will 8 have an opportunity to discuss the economic analysis and 9 methodologies, and will be asked to comment and provide 10 input for further improvement of the methodologies and the 11 data used to estimate the impacts. 12 Another bill that was signed into law in 1993 is 13 SB 1082, which introduced new requirements for cost 14 analysis. The requirements of SB 1082 comprise another 15 element of the economic analysis program. SB 1082 provides 16 a window of opportunity to the public to submit alternatives 17 to major regulations. A major regulation is defined as one 18 costing $10 million or more. 19 Under this bill, any person can submit an 20 alternative to a proposed regulation at any time after the 21 public notice is sent out through the hearing itself. 22 If an alternative is submitted, the staff of the 23 proposing agency must evaluate it and present the results to 24 their board or department's decision makers. 25 The submitted alternative must meet certain PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 219 1 criteria to be acceptable. It must meet the purpose and the 2 time frame of the proposed regulation. It must be as 3 effective as the proposed regulation in protecting the 4 public health and safety and the environment. It must 5 technically be feasible and enforceable. 6 If the submitted alternative meets these criteria, 7 the staff will evaluate its cost or the cost of a 8 combination of the submitted alternatives to see if they are 9 more cost-effective than the proposed regulation. 10 The results of the regulations are presented to 11 the board for its consideration. 12 One of the provisions of SB 1082 requires the Cal- 13 EPA to issue guidelines on evaluation of the alternatives. 14 It has done so, and has included them in its recent policy 15 document, which you have a copy of. 16 Cal-EPA issued the guidelines to implement the SB 17 1082 requirements and plans to further refine them through a 18 series of workshops. The economics unit held a workshop for 19 Cal-EPA with stakeholders and experts this last December to 20 discuss the guidelines and to determine whether they can be 21 further improved. 22 The stakeholders raised a number of issues at the 23 workshop. One concern was over the definition of equally as 24 effective, equally as effective alternative. The 25 stakeholders suggested that often in pursuit of less PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 220 1 expensive alternatives, environmental protection is 2 neglected and compromised. They asked that the definition 3 of equally as effective be tightened to direct emphasis to 4 environmental protection rather than to costs. 5 Another concern was expressed regarding the time 6 frame in which an alternative would be considered equivalent 7 to the proposed regulation. The comments suggested that 8 alternatives with different compliance rates that meet the 9 same goal as the proposed regulation should qualify as 10 equivalent. That is, if two alternatives reach the same 11 target in the future, the timing of how we get to the target 12 should not matter. 13 The consequence of this would be to give 14 preference to those alternatives that postpone emissions 15 reductions into the future, because postponement usually 16 lowers costs by delaying interest costs of invested capital. 17 The stakeholders also expressed concern about -- 18 expressed concern about the definition of a major regulation 19 as is prescribed in the guidelines. The current definition 20 of major regulation considers costs in any one year to 21 qualify the proposed regulation as major. For example, if 22 compliance cost in the year two of the regulation is $10 23 million, and say $2 million in other years, it will qualify 24 as a major regulation. 25 But if the costs are say $9 million in year two PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 221 1 and $4 million in other years, it does not qualify as a 2 major regulation. 3 The stakeholders asked that the present value of 4 all costs during the regulatory horizon be considered in 5 qualifying a proposed regulation as major. This definition 6 would subject more regulations to SB 1082 requirements than 7 the current definition. 8 A fourth concern that was expressed at the 9 workshop was regarding the methodology for calculating cost- 10 effectiveness. The guidelines specify an annualized 11 approach to cost-effectiveness calculation. With this 12 method, all costs are spread equally over the life of the 13 equipment or investment, then the annualized cost is divided 14 by the annual emissions reductions to derive cost- 15 effectiveness in terms of dollars per pound or ton. 16 The stakeholders suggested that all costs be 17 adjusted to present value and summed up, and the total 18 present value of all costs be divided by the total of all 19 annual emission reductions to calculate cost-effectiveness. 20 Both the present value approach and the annualized 21 method are valid methodologies. But the present value 22 approach would result in cost-effectiveness calculations 23 that are not comparable to many of the cost-effectiveness 24 ratios calculated in the past. 25 There was much discussion and interest in the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 222 1 guidelines at the workshop. The stakeholders may submit 2 additional comments up to January 31st, 1997. The issues 3 and comments will be summarized and made available on the 4 Cal-EPA Internet Home Page before any revisions are made to 5 the guidelines. 6 The economic analysis requirements were further 7 expanded by AB 1144 in 1993. The analysis required by AB 8 1144 is a third element in the economic analysis program. 9 This bill addresses situations where State agencies are 10 proposing to adopt a regulation that is similar to Federal 11 regulation addressing the same issues. In this situation, 12 AB 1144 states that agencies may go ahead and adopt the 13 proposed regulation if the agency makes one of the two 14 possible findings. The first finding is that differing 15 State regulations are authorized by law; the second finding 16 is that the cost of differing State regulation is justified 17 by the benefit to human health, public safety, public 18 welfare, or the environment. 19 The approach for comparing costs and benefits is 20 not stated in this bill. 21 While only some regulations may be subject to AB 22 1144 requirements, all regulations must be analyzed for 23 impacts on costs or savings to the State and local 24 governments. This has been a requirement for many years, 25 but to ensure full implementation of all cost-related PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 223 1 requirements, the analysis of costs and savings of 2 regulations to State and local governments was included as 3 an element of the economic analysis program. 4 The procedure is an accounting of regulatory costs 5 and their impacts on Federal funding to the State and local 6 governments. The procedures can be found in the State 7 Administrative Manual. 8 Up to this point in my presentation, I have 9 presented the elements in the economic analysis program that 10 are required by legislative mandates. The Cal-EPA policy 11 guidance requires two additional economic analyses. These 12 analyses are required as a matter of policy and as a 13 complement to the legislative mandates. 14 Both of these analyses are performed before the 15 45-day public notice is posted, and apply only to major 16 regulations costing $10 million or more. 17 The first analysis is consideration of 18 alternatives that may be more cost-effective than a 19 regulation under development. This is usually referred as 20 incremental cost analysis. The analysis is similar to SB 21 1082 cost evaluation, except that there is no need for the 22 alternatives to be equally effective. The purpose is to 23 seek more cost-effective alternatives, either developed in- 24 house or submitted by the public in workshops that may be at 25 a different emissions reduction level than that contemplated PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 224 1 at the regulation development stage. 2 This provides opportunity for proposing 3 regulations that would cost less and also permits 4 stakeholders to submit alternatives early in the process 5 rather than waiting for the regulation to be publicly 6 proposed as is required by SB 1082. 7 I would like to give an example to explain 8 incremental cost analysis further. Suppose the staff is 9 developing a regulation that proposes to reduce emissions by 10 a hundred tons at an annualized cost of $1 million, and a 11 cost-effectiveness of 10,000 per ton. Through workshops and 12 additional internal efforts, alternatives one, two, and the 13 combination of one and two have been determined as possible 14 alternatives. 15 They reduce emissions by 50, 70, and 120 tons 16 respectively. The annualized costs are 400,000, 630,000, 17 and 1,030,000 for those three. 18 The corresponding cost-effectiveness numbers are 19 8,000 for alternative one, 9,000 for two, and about 8600 for 20 the combination. 21 In this example, both alternatives individually 22 and together are more cost-effective than the regulations 23 under development and jointly they lead to more emissions 24 reductions. 25 Let's say that another alternative three is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 225 1 submitted at an annual cost of $1.5 million; at $7500 of 2 cost per ton, alternative three reduces emissions by 200 3 tons and perhaps because of economies of scale, it is more 4 cost-effective than the regulation under development. 5 Of course, if we need 200 tons of emissions 6 reductions to attain the air quality standards, then the 7 most cost-effective option would be alternative three. 8 This type of analysis could provide valuable 9 information in regulatory decision-making. In fact, this 10 sort of analysis, along with the requirement that the 11 alternatives be feasible, have been the foundation of the 12 SIP process at the Board. 13 Other analyses of the economics program required 14 by Cal-EPA policy guidance as one element of the program are 15 risk comparisons and benefits of regulation. These analyses 16 are intended to ensure that proposed major regulations will 17 take into account overall environmental risk management 18 efforts. Once a regulation is selected to be proposed, 19 whenever feasible and if sufficient data exist, the risk 20 reductions of the regulations would be compared to the risk 21 reductions of three regulations adopted by the Board in the 22 past. 23 To put the regulation further in perspective, the 24 risk reduction will also be compared to three other risk 25 reductions that are from regulations not directly under the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 226 1 Board's control, but within the area of environmental risk 2 management. 3 This last element of the economics analysis 4 program also requires identification of the benefits of a 5 proposed regulation and clear presentation of them in a 6 matrix format. The benefits do not all have to be 7 quantitative. If they are quantified, then the matrix 8 should state a range for such numbers to represent the 9 uncertainty that may be associated with them. 10 If quantification is not feasible for some of the 11 items in the matrix, then the assessments of the benefits 12 can be qualitative. 13 The matrix of a regulation's benefits are provided 14 to the Board as an input into decision-making and for 15 comparison with costs of the proposed regulation. The 16 matrix of benefits and cost comparison would not be in 17 dollar of benefit to a dollar of cost most of the time. 18 However, the matrix does provide additional information to 19 justify the costs. 20 A third workshop is planned for April 18th, 1997, 21 to discuss and solicit comments from the stakeholders on 22 risk comparisons and benefits of regulation. We are working 23 with the Office of Environmental Health Hazard Assessment, 24 Department of Toxic Substance Control, and other agencies to 25 develop procedures for the risk comparisons and the cost of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 227 1 benefit justification. 2 My presentation has focused on the mandated 3 economic analyses and the analyses required by the Cal-EPA 4 policy document. Most of the analyses are relatively new; 5 some of them have already been performed for the Board's 6 regulations, but all of them, when applicable, will be 7 performed for the Board's future regulatory items. 8 Whereas, in the past, we analyzed adverse impacts 9 on business and individuals, and analyzed the impacts on 10 State and local governments, now we have to do more. We 11 have to analyze creation, elimination, or expansion of jobs 12 and businesses in California; analyze the impacts on ability 13 of California businesses to compete with out-of-state 14 businesses. 15 We are required to perform incremental cost 16 analysis and analyze alternatives to proposed regulations, 17 compare risks, and identify benefits of regulations, and 18 perform cost/benefit analysis of a proposed regulation if it 19 differs from a Federal regulation for the same purpose. 20 The economics unit is charged with coordinating 21 and facilitating compliance with the mandates. To help the 22 process, we are preparing a handbook that explains the 23 requirements and the methodologies that can be used to do 24 the analyses. The handbook will discuss many of the 25 concerns that the stakeholders have expressed and will PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 228 1 suggest when and how to address them. 2 Once the handbook is prepared, we plan to provide 3 training to the Cal-EPA boards and departments. The 4 handbook will be a valuable tool to use for the required 5 analyses, and it accomplishes the legislative intent of 6 implementing a systematic economic evaluation of 7 regulations, and Cal-EPA's goal of consistent implementation 8 of economic analyses within the boards and departments. 9 To summarize, my presentation covered the 10 legislative mandates and the Cal-EPA policies on economic 11 analyses, analyses that the Cal-EPA boards and departments 12 are required to perform, and how the economics unit will 13 facilitate the implementation of t he economic analysis 14 program. 15 This ends my presentation. 16 CHAIRMAN DUNLAP: Thank you very much for that 17 comprehensive overview. Any questions? 18 MR. PARNELL: It's a big job. 19 CHAIRMAN DUNLAP: It is a big job. 20 MS. EDGERTON: How many staff do we have? 21 MR. KENNY: Three. 22 CHAIRMAN DUNLAP: Three plus three. The three was 23 an augmentation, Mike? 24 MR. KENNY: Yes. 25 CHAIRMAN DUNLAP: Yeah. One comment, and I'm sure PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 229 1 it came through. Secretary Strock and his management team 2 have been very supportive of our Board to get -- to have 3 resources placed here that provide a service to the rest of 4 the Cal-EPA family. And I take a lot of pride in that. 5 I know Mike Kenny does. He doesn't always 6 appreciate the workload that comes with it, but the 7 Secretary, as you know, has a reputation of being a 8 demanding manager with high standards. And he thinks this 9 Board's staff is up to the challenges of providing economic 10 analysis. Also, the technology program is housed here, too. 11 And unless Mike convinces me otherwise, I'm' going to 12 continue to seek having those programs placed in our Board 13 whenever possible. 14 And so, again, my thanks to you, and I know my 15 colleagues here on the Board know it's a tough job, but 16 somebody's got to do it. And you are it. 17 A word or two about Bob Barham and John Holmes. 18 They wear many hats, and this program is housed in their 19 office. And I have a lot of confidence in them, and I know 20 Mike does, or it wouldn't be housed there. 21 Any other questions or comments? 22 Patty, anything -- while I think about, anything 23 going on at the Bay Area District Board on economic 24 evaluation that's new or different? 25 MAYOR HILLIGOSS: We always do want to know PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 230 1 exactly, you know, what the costs are before we pass 2 anything. 3 CHAIRMAN DUNLAP: Right. Okay. When you were at 4 Fish & Game, were you doing as much? 5 MR. PARNELL: We didn't do as much as we should 6 have. But I think this comes under the heading of 7 government finally recognizing that it needs to do complete, 8 in-depth, comprehensive economic analysis that encompasses t 9 he universe to the extent that we can. And it just allows 10 us to be more credible as we move forward in the regulatory 11 process. 12 And so, I really applaud not only the fact that 13 it's in your shop, Mike -- I know you have plenty to do. 14 But your people gave me a briefing, and they've done 15 wonderful work to date. They're going to continue to do so 16 through the public interactive process. And I just think 17 this kind of speaks to the issue of the bottom line of good 18 government. 19 And so, I really applaud the effort and support 20 it, and wish you well. And we'll monitor your public 21 gatherings from time to time, so that I can be more 22 conversant with that's going on. But I appreciate your 23 efforts thus far. 24 CHAIRMAN DUNLAP: And Jim Schoning I know has made 25 some contact with this group and has regular conversations. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 231 1 And Jim's the one that hears a lot of the real and imagined 2 criticisms about our regulatory programs and their economic 3 impact. 4 All right. With that, we'll say, thank you. We 5 have an open comment period on our Board agenda, which we 6 put in place after some public demand. And since we put it 7 in place, we've had to invite people to take advantage of 8 it. I think the last time it was used, wasn't it, Mike, 9 when GM came I think. 10 MR. KENNY: That's right. 11 CHAIRMAN DUNLAP: Yeah. So, is there anyone here 12 that would like to come and bring up any issue before the 13 Board? 14 All right. Mike, do you have anything to add? 15 MR. KENNY: Nothing more. 16 CHAIRMAN DUNLAP: All right. This January meeting 17 of the California Air Resources Board will now be adjourned. 18 (Thereupon, the meeting was adjourned 19 at 3:15 p.m.) 20 --o0o-- 21 22 23 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 232 CERTIFICATE OF SHORTHAND REPORTER I, Nadine J. Parks, a shorthand reporter of the State of California, do hereby certify that I am a disinterested person herein; that the foregoing meeting was reported by me in shorthand writing, and thereafter transcribed into typewriting. I further certify that I am not of counsel or attorney for any of the parties to said meeting, nor am I interested in the outcome of said meeting. In witness whereof, I have hereunto set my hand this 3rd day of February , 1997. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345