DOCUMENT ISSUE DATE: MARCH 23, 1995 MEETING BEFORE THE CALIFORNIA AIR RESOURCES BOARD BOARD HEARING ROOM CALIFORNIA AIR RESOURCES BOARD 2020 L STREET SACRAMENTO, CALIFORNIA THURSDAY, MARCH 23, 1995 9:30 A.M. Nadine J. Parks Shorthand Reporter PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 ii MEMBERS PRESENT John Dunlap, Chairman Eugene Boston, M.D. Joseph C. Calhoun Lynne T. Edgerton M. Patricia Hilligoss John Lagarias Jack C. Parnell Barbara Riordan Ron Roberts Jim Silva Doug Vagim Staff: Jim Boyd, Executive Officer Tom Cackette, Chief Deputy Executive Officer Mike Scheible, Deputy Executive Officer Michael Kenny, Chief Counsel Peter Venturini, Chief, Stationary Source Division Don Ames, Assistant Chief, Stationary Source Division Genevieve Shiroma, Chief, Toxic Air Contaminant Identification Branch Peggy Taricco, SSD Paul Milkey, Staff, SSD Bob Jenne, Staff Counsel Stephanie Trenck, Chief, Program Assessment and Assistance Branch, Compliance Division Mary Boyer, Chief, Training and Data Management Branch, Compliance Division Gary Hunter, Manager, Compliance Assistance Program, CD Victor Espinosa, Manager, Compliance Training Section, CD Dr. John Holmes, Chief, Research Division Patricia Hutchens, Board Secretary Wendy Grandchamp, Secretary Bill Valdez, Administrative Services Division Also Present: Jacqueline Schafer, Communications Advisor Former Chairwoman Harriett Wieder Retired Board Member PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iii I N D E X PAGE Proceedings 1 Call to Order and Roll Call 1, 2 Presentation of Resolution to Jacqueline Schafer 2 Acknowledgment by Ms. Schafer 4 Presentation of Resolution to Harriett Wieder 5 Acknowledgment by Ms. Wieder 7 Additional Preliminary Remarks by Chairman Dunlap 10 AGENDA ITEMS: 95-3-1 Public Hearing to Consider Adoption of Regulation for Reducing VOC Emissions from Aerosol Coating Products, and Amendments to Alternative Control Plan for Consumer Products Introductory Remarks by Chairman Dunlap 11 Staff Presentation: Jim Boyd Executive Officer 12 Paul Milkey Stationary Source Division 16 Questions/Comments 34 PUBLIC COMMENTS: Eve Blackburn Flecto 36 Questions/Comments 41 Ken Trautwein Flecto 47 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iv INDEX, continued. . . PAGE AGENDA ITEMS: 95-3-1 Questions/Comments 49 Randal Friedman U.S. Navy 58 Questions/Comments 59 Roger Vanderlaan Krylon 59 Questions/Comments 60 Ed Majkrzak Tru-Test Manufacturing Company and National Paint & Coatings Association 61 Questions/Comments 73 Continuation of Comments by Mr. Majkrzak 74 Questions/Comments 75 Heidi McAuliffe Counsel NPCA 77 Questions/Comments 77 Robert Graham Sherwin Williams 93 Doug Raymond Sherwin Williams 94 Questions/Comments 96 Continued Comments by Mr. Raymond 98 Questions/Comments 101 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 v INDEX, continued. . . PAGE AGENDA ITEMS: 95-3-1 Written Comments Summarized and Entered into the Record by Genevieve Shiroma 113 Closing Comments by Mr. Boyd 117 Official closing of record on Item 95-3-1 122 Deliberations 123 Motion to Approve Resolution 95-12 125 Discussion 126 (Direction to Staff) 127 Discussion 128 Roll Call Vote 130, 131 Request by Mr. Silva 131 Luncheon Recess 131 Afternoon Session 132 95-3-2 Public Meeting to Consider an Information Report on Air Resources Board's Compliance Outreach Programs Introductory Remarks by Chairman Duncan Staff Presentation: Jim Boyd 133 Stephanie Trenck, Chief Program Assessment & Assistant Branch Compliance Division 138 Mary Boyer, Chief Training & Data Management Branch Compliance Division 153 INDEX, continued. . . PAGE AGENDA ITEMS: PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 vi 95-3-2 Stephanie Trenck 168 Questions/Comments 169 Direction to Staff 172 Questions/Comments 172 95-3-3 Research Proposals Motion by Vagim to Approve Research Proposals 175 Board Action 176 Adjournment 177 Certificate of Reporter 178 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: Thank you, and good morning. 4 We'll call this, the March meeting of the Air Resources 5 Board, to order, and ask the Board Secretary to take the 6 roll. 7 MS. HUTCHENS: Boston? 8 DR. BOSTON: Here. 9 MS. HUTCHENS: Calhoun? 10 MR. CALHOUN: Here. 11 MS. HUTCHENS: Edgerton? 12 MS. EDGERTON: Here. 13 MS. HUTCHENS: Hilligoss? 14 MAYOR HILLIGOSS: Here. 15 MS. HUTCHENS: Lagarias? 16 MR. LAGARIAS: Here. 17 MS. HUTCHENS: Parnell? 18 MR. PARNELL: Here. 19 MS. HUTCHENS: Riordan? 20 SUPERVISOR RIORDAN: Here. 21 MS. HUTCHENS: Roberts? 22 SUPERVISOR ROBERTS: Here. 23 MS. HUTCHENS: Silva? 24 SUPERVISOR SILVA: Here. 25 MS. HUTCHENS: Vagim? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 2 1 SUPERVISOR VAGIM: Here. 2 MS. HUTCHENS: Chairman Dunlap. 3 CHAIRMAN DUNLAP: Here. 4 Thank you. Before we begin today, I would like to 5 ask Ms. Jacqueline Schafer to come up to the podium. The 6 Board would like to honor her for her distinguished service 7 as Chairwoman of the Air Resources Board. 8 In this regard, the Board would like to present a 9 resolution to Ms. Schafer in recognition of her role in 10 attaining air quality in California. 11 So, I'll join you down there. 12 Your colleagues have put together a resolution for 13 you, Jacqueline. We're grateful to be able to present it to 14 you. And I must say, before I read the resolution, how 15 pleased I am to have you as a key member of the team 16 supporting the Board. I'm very pleased that you were able 17 to stay on with us. Thank you very much for that. 18 This resolution is signed by the Board members, 19 and reads -- it's Resolution 95-10: 20 "Jacqueline E. Schafer has served as Chairwoman of 21 the Air Resources Board since November, 1993, after 22 demonstrating her environmental commitment and expertise as 23 Assistant Secretary of the Navy for Installations and 24 Environment, as a member of the White House Council on 25 Environmental Quality, and as EPA Region II Administrator. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 3 1 "WHEREAS, Jacqueline enthusiastically tok 2 personal responsibility for the Board's programs by 3 tirelessly meeting with interest groups throughout the State 4 to explain, absorb, refine, promote, and win consensus; 5 "WHEREAS, Jacqueline nurtured the Board's 6 fledgling zero-emission vehicle program, successfully 7 navigating past the reefs and shoals of controversy to lead 8 the country in ZEV commitment; 9 "WHEREAS, Jacqueline's ability to master complex 10 issues in record time, distill the essence from voluminous 11 data, achieve the elusive win-win in negotiations, and 12 comprehend the needs of diverse constituencies allowed her 13 to maintain steady progress towards clean air, despite a 14 severe economic recession; 15 "WHEREAS, Jacqueline proved herself an innovative 16 and dynamic leader and advanced the cause of market-based 17 incentives as a pollution control alternative; 18 "WHEREAS, Jacqueline's creative problem solving 19 and political expertise contributed to a State 20 Implementation Plan which could take the place of the 21 controversial federal plan without crippling industry and 22 transportation; 23 "WHEREAS, Jacqueline gained the respect of her 24 staff, as well as the regulated community, by dedicating 25 herself to unraveling complicated issues, staunchly PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 4 1 defending sound science as the ally of pollution control, 2 and approaching things in a direct, common-sense manner; 3 "WHEREAS, Jacqueline's holistic view towards 4 environmental protection is evidenced by her indefatigable 5 criss-crossing of California in pursuit of its varied 6 avifauna; 7 "NOW, THEREFORE, BE IT RESOLVED that the Board 8 conveys its highest respect to Jacqueline Schafer for her 9 strong and principled leadership during a difficult 10 transition period, and wishes her the utmost success in her 11 future endeavors. 12 "BE IT FURTHER RESOLVED that the Board sincerely 13 hopes that Jacqueline will continue to lend her substantial 14 efforts to attaining air quality and a healthy environment." 15 Thank you. 16 MS. SCHAFER: Thank you very much, Mr. Chairman. 17 (Applause.) 18 MS. SCHAFER: Thank you very much, Mr. Chairman. 19 And, as I mentioned earlier today, I have no intention of 20 making any aloha speeches. As anyone familiar with the 21 Hawaiian language knows, that means hello and goodbye. 22 I just want to thank you for the opportunity to 23 continue to be associated with the Air Resources Board and 24 the excellent staff, whose work, and friendship, and 25 collegiality I have enjoyed, and who have made me -- as they PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 5 1 will you -- look better than I am. 2 So, I want to say, congratulations on your 3 appointment. I know we all share the Governor's confidence 4 in you in continuing the fine tradition of this Board. And 5 I'd like to wish you and the other new members of the Board 6 and, of course, my old friends on the Board all the best in 7 the future. 8 Thank you so much for this particular honor. 9 (Applause.) 10 CHAIRMAN DUNLAP: At this time, I would like to 11 call Mrs. Harriett Wieder to the podium. Harriett served 12 here at this Board for ten years. And I had the opportunity 13 to work with her when I worked at the South Coast Air 14 Quality Management District, where she was a long-time Board 15 member there. And I'm very pleased that you were able to 16 join us today. Good morning. 17 Your colleagues on the Board, Harriett, also have 18 prepared, readied a resolution for you and, if I may, I'd 19 like to read it to you. 20 I apologize for the lengthy narrative here, but it 21 is important to cover these things. 22 MS. WIEDER: Don't apologize. Say it all. 23 CHAIRMAN DUNLAP: Okay, I will. 24 (Laughter.) 25 MS. WIEDER: Ten years! PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 6 1 CHAIRMAN DUNLAP: Resolution 95-9: 2 "WHEREAS, Harriett Wieder has served on the Air 3 Resources Board since 1985, and represented Orange County on 4 the South Coast Air Quality Management District Board; 5 "WHEREAS, she has been an early and strongly 6 principled advocate of public/private partnership, linking 7 government with private industry on projects for their 8 mutual benefit; 9 "WHEREAS, Harriett has been a shining example of 10 the advancement of women through persistence and dedication, 11 as evidenced by her unique position as the 'only' female 12 member of the Orange County Board of Supervisors in 100 13 years; 14 "WHEREAS, her dedication to public health spans 15 her creation of the State's largest countywide health care 16 program for Medi-Cal recipients to her unstinting service as 17 a Board member; 18 "WHEREAS, Harriett's many abilities have enabled 19 her to serve the public in the areas of air quality, 20 transportation, hazardous waste management, and water 21 quality and supply, for which she founded the eight-county 22 Southern California Water Committee; 23 "WHEREAS, after 30 years of public service with 24 government agencies in Southern California, Harriett has 25 retired from her position as Orange County Supervisor and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 7 1 has left the Board; 2 "NOW, THEREFORE, BE IT RESOLVED that the Board 3 thanks Harriett Wieder for her many years of service, and 4 cordially wishes her the best of luck as President Clinton's 5 appointee to the U.S. Advisory Committee on Western Water 6 Resources." 7 And, Harriett, this has been signed by all of the 8 Board members. 9 Thank you. Please share a few words with us. 10 MS. WIEDER: Thank you very much, John. 11 (Applause.) 12 MS. WIEDER: Thank you very much, John, and former 13 fellow Board members. And welcome, good luck to the Board 14 members, and certainly to my successor, Supervisor Jim 15 Silva. 16 Jim, I'll return your call when I get home. 17 This has been a very exciting, important trip for 18 Irv and I to make. In fact, we made it our business to want 19 to come up here to personally receive it and not just have 20 it in the mail, because I wanted to be able to have the 21 opportunity to say a few words, which you've afforded me, at 22 this time. 23 As I sat here, and I was trying to remember -- 24 thank you so much, John, for saying it was ten years. I was 25 trying to figure out back -- let me see, what year, what was PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 8 1 I doing, et cetera, et cetera. 2 And I've seen many changes, not only of the Board 3 members with whom I worked, but I've seen many changes in 4 the climate of opinion as it relates to air quality and the 5 economy, and the need to balance the two -- the environment 6 and the economy. 7 And I want to tell you one of the highlights of my 8 career on this Board, particularly, was the enactment that 9 this Board took of the 1990 -- and I had to ask Bill 10 Lockett, "Let me see. What year did we do that?" 11 And he said, "'90." 12 I said, "No, it was longer ago than that." 13 "No, it wasn't." 14 And I'm referring to the clean air/clean fuels 15 bill. It was momentous. In fact, my staff at the time took 16 an article that referred to it and had it framed for my 17 birthday, because she recognized the importance to us of 18 this act. Because, for those of you who were there at the 19 time with me, if you remember, Jack, it was the business of 20 making the two disciplines, if you will, that contribute, 21 have a stake in air quality to come down the path together, 22 and none of this business -- "Well, we can't build new 23 engines. . ." 24 I think, Joe, you were over there on that side at 25 the time (speaking of Mr. Calhoun). PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 9 1 (Laughter.) 2 MS. WIEDER: "We can't build new engines till we 3 know what kind of fuel is going to go in there." 4 And they said, "Well, we don't know what kind of 5 fuel to put, because we don't know what kind of engines 6 you're going to make."" 7 And so, that act really has forced the issue, and 8 I think pointed to what I so strongly believe in -- in my 30 9 years -- that sounds terrible -- but in my public career, 10 was the fact that when good people sit down together, 11 perceived adversaries -- and I say "perceived" -- but when 12 good people sit down together, there's always a win-win 13 solution. 14 And that action that the Board took is certainly 15 indicative of that. 16 And, lastly, Jim, I want to say to you and your 17 staff, I've served on lots of boards over these years, and 18 the bureaucracy can be daunting, frustrating, and 19 impossible. But this Board, the staff of the California Air 20 Resources Board -- and I'm not saying it because I'm here at 21 the time, but I've said it many times before --- is 22 undoubtedly the most professional and objective bureaucratic 23 board I have ever had the privilege to work with. 24 And I want to thank you for your guidance and your 25 advice in an area that I sometimes found boring. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 10 1 (Laughter.) 2 MS. WIEDER: But I was there to make the right 3 policy decisions, I hope. 4 So, thank you. And I would like to have you meet 5 my husband, who had the patience to drive up here with me -- 6 of course, we're going to visit our kids while we're up 7 here. Irv Wieder, who said, "Let me see, what's this all 8 about?" 9 (Applause.) 10 MS. WIEDER: Thank you. And good luck to all of 11 you. 12 (Applause.) 13 CHAIRMAN DUNLAP: What a delightful experience. 14 One thing, one characteristic I think that both of those 15 individuals we just recognized really represented was the 16 ability to bring people together, and to work for solutions 17 to thorny problems. 18 I'm grateful to have had the opportunity to work 19 with both of them and, again, pleased that Jackie's remained 20 with the Board. 21 All right. The first agenda item is 95-3-1. 22 I'd like to remind those of you in the audience 23 who would like to present testimony to the Board on any of 24 today's agenda items to please sign up with the Board 25 Secretary. If you have written statements, please provide PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 11 1 her with 20 copies. 2 The first item today is a public hearing to 3 consider adoption of the regulation for reducing volatile 4 organic compound emissions from aerosol coating products, 5 and amendments to the alternative control plan for consumer 6 products. 7 This item for our consideration is a regulation to 8 reduce volatile organic compound emissions from aerosol 9 paint products. Concurrently, we will also consider 10 amending the plan to include aerosol paints. 11 The reduction of emissions from consumer products 12 is a central element in California's strategy to attain 13 State and federal ambient air quality standards. Consumer 14 products account for about five percent of the VOC emissions 15 in California. 16 To date, the Board has taken action to reduce 17 these emissions from 27 categories of consumer products. 18 The further reduction of emissions from consumer products is 19 also a vital part of the State Implementation Plan. 20 In fact, the regulation before us today is the 21 first regulation we are considering to meet the commitments 22 we made in that plan. 23 Aerosol paints constitute one of the largest 24 consumer product categories in terms of emissions. They 25 were not considered earlier by the Board because the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 12 1 California Clean Air Act specifically excluded these 2 products from the Board's jurisdiction. 3 However, to avoid the complexity of dealing with a 4 variety of local district rules, industry supported 5 amendments to the California Clean Air Act to provide the 6 Air Resources Board with sole authority to regulate these 7 products. These amendments to the Act were made in 1992. 8 In today's hearing, we will also consider 9 including aerosol paints in the alternative control plan 10 rule, or ACP. The ACP rule provides manufacturers with the 11 flexibility to achieve equivalent emission reductions 12 through essentially an emissions-averaging concept. 13 It is a purely voluntary program as part of our 14 ongoing commitment to provide flexibility to industry. The 15 staff has proposed that the ACP rule be modified to include 16 aerosol paints. 17 At this point, I would like to ask Mr. Boyd to 18 introduce the item and begin the staff's presentation. 19 Mr. Boyd. 20 MR. BOYD: Thank you, Mr. Chair. Good morning to 21 you, good morning to the Board members. And I'd like to 22 reemphasize the staff's congratulations and appreciation to 23 today's two honored guests. It was indeed a pleasure for us 24 to work with two members of the Board who were so supportive 25 and put up with the bureaucrats for so long. And we PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 13 1 appreciate it very much. 2 As the Chairman indicated, the measure before us, 3 the proposed aerosol coating regulation, was indeed 4 developed in response to recent amendments to our California 5 Clean Air Act. 6 These amendments require the Board to adopt a 7 regulation that will achieve at least a 60 percent emissions 8 reduction by December 31st of the year 1999. 9 The amendments also require the Air Resources 10 Board to establish interim standards in the regulation that 11 will achieve emission reductions prior to the 1999 standards 12 deadline. 13 We're further required to conduct a public hearing 14 on the technological and commercial feasibility of these 15 1999 standards at least a year prior to the implementation. 16 We believe the proposed regulation that we've brought before 17 you today meets the requirements of the California Clean Air 18 Act and, more importantly, fulfills the emissions reductions 19 commitments for this source category, as the Chairman 20 mentioned, in our recently adopted State Implementation 21 Plan. 22 The proposed regulation specifies VOC content 23 limits for 35 categories of aerosol paint products and is 24 similar in structure to your Board's previously adopted 25 consumer products regulations. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 14 1 The initial 1996 VOC content limits are very 2 similar to those which have been in place in the Bay Area 3 Air Quality Management District's aerosol paint regulation 4 since the year 1991. 5 The 1999 future effective standards are designed 6 to achieve the minimum 60 percent emission reduction 7 required by the California Clean Air Act. And, as I 8 mentioned, we will return to your Board or to "the" Board by 9 the year end 1998 to review the technological and commercial 10 feasibility of these standards. Somebody will return to 11 some Board at that point in time. 12 We intend to work very closely with industry, as 13 we have in the past, to track their progress towards meeting 14 the 1999 standard. 15 I should also point out that the 1999 standards, 16 if they're found not to be technologically or commercially 17 feasible at that public hearing in 1998, they can be delayed 18 for up to five years, and alternate standards then proposed 19 and adopted by the Board. 20 Along with the proposed aerosol coating 21 regulation, we are also proposing -- as the Chairman 22 mentioned -- a so-called alternative control plan, or ACP. 23 We're amending our ACP to include aerosol paints under the 24 program. 25 As we have proposed it, the ACP for aerosol paints PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 15 1 would be limited to aerosol paints alone, and would not 2 allow averaging among other consumer product categories. 3 This proposal was developed in close cooperation 4 with industry and was designed to alleviate concerns by 5 particularly smaller manufacturers that the large 6 manufacturers could offset higher VOC content aerosol paints 7 with lower VOC consumer products in other regulated 8 categories. 9 Inclusion of aerosol paints in the ACP will 10 provide manufacturers with added flexibility that is 11 available to the manufacturers of other consumer product 12 categories that have been regulated in the past by your 13 Board. 14 During these very challenging economic times, 15 we're all concerned with the costs of achieving clean air. 16 In response to this challenge, we worked very closely with 17 the aerosol paint industry over these last two years to 18 develop a regulation that is both commercially and 19 technologically feasible, and which meets the statutory 20 requirements indicated, and our SIP commitment. 21 The proposed amendments to the ACP should also 22 provide additional flexibility to the aerosol paint 23 manufacturers in achieving compliance, hopefully in the most 24 cost-effective manner possible. 25 I'd like to close my comments by echoing something PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 16 1 Chairman Dunlap indicated, and that was that this proposal 2 is indeed the first regulation that you will be considering 3 under the new State Implementation Plan. Its adoption will 4 fulfill our SIP commitment for the source category, and 5 begin by taking a very large first step helping us on our 6 path towards cleaner air here in the State of California. 7 With that, now, I'll ask staff to make the 8 detailed staff presentation. 9 I'll call upon Mr. Paul Milkey of our Stationary 10 Source Division to present to you both the regulations and 11 the alternative control plan proposal. 12 Mr. Milkey. 13 MR. MILKEY: Thank you, Mr. Boyd. 14 Chairman Dunlap and members of the Board, as Mr. 15 Boyd mentioned, today, we are proposing for your 16 consideration a regulation to reduce SMOG forming emissions 17 from aerosol paints. 18 We are also proposing amendments to the 19 alternative control plan that was approved by the Board last 20 fall to provide the same compliance flexibility to aerosol 21 paint manufacturers that is provided to manufacturers of 22 other consumer products. 23 I will begin our presentation by providing you 24 with a brief summary of our consumer products program to 25 date, including the recently approved State Implementation PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 17 1 Plan. 2 I will then discuss the regulatory proposals 3 before you today. 4 A good place to start is by defining what consumer 5 products are. Consumer products were defined in the 6 California Clean Air Act as products used by household and 7 institutional consumers. 8 These include a wide variety of products, such as 9 household cleaners, personal care products, pesticides, and 10 automotive care products. 11 Recently, the definition was amended to also 12 include aerosol paints, and I will discuss that in more 13 detail later in the presentation. 14 Consumer products that are used in and around our 15 homes and businesses are a large source of volatile organic 16 compounds, or VOCs. 17 At first glance, the VOC emissions from an 18 individual can of hairspray or aerosol paint may seem small. 19 However, the combined use of consumer products by 30 million 20 people in California results in approximately 260 tons per 21 day of VOC emissions. 22 These VOCs from consumer products and other 23 sources can then react with oxides of nitrogen in the 24 presence of sunlight to form ground-level ozone and 25 contribute to the formation of PM10. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 18 1 Ozone and PM10, in turn, are major respiratory 2 irritants and are the source of much air pollution in 3 California. As this slide indicates, the majority of the 4 State's population lives in urban areas where California's 5 ambient air quality standards for ozone and PM10 are 6 frequently exceeded. 7 The Legislature recognized the contribution of 8 consumer products to the air quality problems in the State 9 and incorporated provisions specific to consumer products in 10 the California Clean Air Act of 1988. 11 Besides defining what consumer products are, as I 12 mentioned earlier, the Legislature also required that the 13 ARB adopt regulations to achieve the maximum feasible 14 reduction in VOC emissions from consumer products. 15 It further requires that such regulations be 16 technologically and commercially feasible, necessary to 17 achieve reductions, and be supported by adequate data. 18 The ARB has taken several steps to comply with the 19 California Clean Air Act's mandates. First, in 1989, the 20 Board adopted the consumer products control plan, which 21 outlined various control strategies to be investigated for 22 reducing VOC emissions from consumer products. 23 Later that year, the Board adopted the nation's 24 first consumer products VOC regulation for antiperspirants 25 and deodorants. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 19 1 Then, in 1990 and 1992, the Board adopted more 2 comprehensive regulations, commonly referred to as Phase I 3 and II, covering 26 additional consumer product categories. 4 And more recently, last fall, the Board adopted the 5 alternative control plan, a voluntary market-based 6 regulation designed to provide added flexibility to 7 manufacturers while achieving the same emission reductions. 8 Even with all these steps, however, more emission 9 reductions are needed. The bars on the left of this chart 10 show that the 27 categories of consumer products that have 11 been addressed account for about half of the emissions from 12 consumer products. 13 The bars on the right show that the other half of 14 the emissions from consumer products come from many other 15 consumer product categories which are not currently 16 addressed. 17 As the emissions from the regulated categories 18 shrink, the unregulated categories will become an 19 increasingly larger share of the overall emissions from 20 consumer products. 21 In addition, since the emissions from consumer 22 products are proportional to California's population, as our 23 population grows, so will the emissions from consumer 24 products. This, in turn, will erode the emissions 25 reductions achieved by existing regulations. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 20 1 This became very apparent as we developed the 2 State Implementation Plan, or SIP, last fall. And we 3 realized that, if we were to achieve our air quality goals, 4 additional significant emission reductions would be needed 5 from all sources, including consumer products. 6 The SIP that was approved by you last fall 7 included a consumer products element. This element was a 8 key component of the SIP and is an important contributor to 9 the overall emission reduction goals necessary to meet 10 federal air quality standards. 11 As a short refresher, the consumer products SIP 12 element is a multipronged program comprised of near-term, 13 midterm, and long-term measures to be implemented over the 14 next 15 years. 15 The regulation that you are considering today is a 16 component of the near-term measures and is the first 17 regulation to be considered by the Board as part of the SIP 18 commitment. 19 I would now like to discuss the proposed aerosol 20 paint regulation and related amendments to the alternative 21 control plan, or ACP. 22 Aerosol coating products include aerosol paints 23 and related products such as aerosol clear coatings and 24 aerosol stains. There are many types of aerosol paints, 25 including general use coatings that can be used on a variety PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 21 1 of substrates, and specialty products which are designed for 2 specific uses, such as protecting artwork or resisting high 3 temperatures. 4 Aerosol paints are handheld coating products 5 dispensed from pressurized, disposable containers. We have 6 provided examples of different types of aerosol paints at 7 the table behind you. 8 There are several reasons why we are proposing an 9 aerosol paint regulation for your consideration. First, 10 recent legislation requires the Board to adopt a regulation 11 for this emission source. 12 Second, aerosol paints are a large source of 13 emissions relative to other consumer product categories. 14 And emission reductions from this category are necessary to 15 help us achieve our air quality goals. 16 Lastly, an aerosol paint regulation is an 17 important element of our SIP commitment. 18 Two Assembly bills, Assembly Bill 2783 and 1890, 19 amended the California Clean Air Act to require the ARB to 20 regulate aerosol paints, and outlined specific requirements 21 that must be followed when the Board adopts such a 22 regulation. 23 First, the legislation requires the ARB to adopt a 24 regulation designed to achieve at least a 60 percent 25 reduction in the VOC emissions from aerosol paints on or PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 22 1 before December 31, 1999. 2 Second, it further stipulates that the ARB is to 3 establish interim VOC limits that will achieve emission 4 reductions before the 1999 limits become effective. 5 To ensure that manufacturers are able to meet the 6 1999 standards, the legislation also requires the ARB to 7 conduct a public hearing to evaluate the technological and 8 commercial feasibility of the 1999 standards on or before 9 the end of 1998. If the standards are not found to be 10 feasible, they may be delayed for up to five years at that 11 time. 12 One of the goals of this legislation, which was 13 supported by some industry members and the districts in 14 California, was to provide uniformity throughout the State, 15 rather than having individual districts in California 16 develop different aerosol paint regulations. 17 As such, the legislation provides ARB with sole 18 authority to regulate aerosol paints, except in the case of 19 the Bay Area, which we will discuss next. 20 Prior to the enactment of AB 2783 and AB 1890, 21 both the Bay Area Air Quality Management District and South 22 Coast Air Quality Management District had adopted aerosol 23 paint regulations. 24 The Bay Area AQMD regulation, which became 25 effective in January, 1991, was adopted in response to a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 23 1 federal court order. Although AB 1890 provides the ARB with 2 sole authority to regulate aerosol paints, an exception was 3 provided for the Bay Area rule, since it was required by a 4 federal court order. 5 The South Coast AQMD regulation was adopted in 6 November, 1990, but was not implemented due to a court 7 challenge. 8 Although the district recently prevailed in an 9 appeals court decision, the regulation was nullified by AB 10 1890. 11 Another reason we are proposing to regulate 12 aerosol paints is that aerosol paints are a large source of 13 consumer product emissions. As you can see from this chart, 14 aerosol paints represent about 12 percent of the VOC 15 emissions from all consumer products. 16 It is the second largest consumer product category 17 in terms of emissions, the first being hairsprays. 18 This chart shows the emissions distribution of 19 different types of aerosol paints. As you can see, general 20 use nonflat, or glossy, paints contribute over half of the 21 emissions from consumer products (sic), with other general 22 use categories -- such as flat paints, primers, and clear 23 coatings -- collectively contributing another 23 percent. 24 The numerous specialty coating categories designed for 25 unique applications account for the remaining 25 percent of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 24 1 emissions. 2 As we mentioned before, the proposed aerosol paint 3 regulation is an important element of the SIP's near-term 4 control measures and the first regulation to be considered 5 by the Board from its SIP element -- commitment, that is. 6 After full implementation, the proposed aerosol 7 paint regulation would contribute nearly one-quarter of the 8 necessary emission reductions from the near-term consumer 9 products element in the SIP. 10 The proposed regulation will also help districts 11 designated in moderate to extreme nonattainment with federal 12 air quality standards fulfill their rate-of-progress plans 13 under the Federal Clean Air Act. 14 These areas are required to achieve a 15 percent 15 reduction in emissions by 1996, and three percent per year 16 thereafter until attainment is achieved. 17 The proposed regulation before you today was 18 developed with extensive public participation and is the 19 product of productive discussions with the regulated 20 community. 21 Over the last two years, we have held six 22 workshops and attended numerous meetings with the affected 23 industry and trade associations. We have also conducted 24 surveys of the industry to learn more about the products, 25 the affected companies, and the expected costs of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 25 1 proposed regulation. 2 Aerosol paint manufacturers, trade associations, 3 and regulatory agencies have all been active in the 4 development of the regulatory proposal before you today. We 5 have identified 58 companies that sell aerosol paints in 6 California and about 13 of these companies are based in 7 California. 8 Some of the trade associations that have 9 participated include the National Paint and Coatings 10 Association, the Western Aerosol Information Bureau, and the 11 California Paint Council. 12 These associations represent the aerosol paint 13 manufacturers as well as some of the supporting industries, 14 such as aerosol fillers and can manufacturers. 15 Regulatory agencies that have provided input 16 include the Bay Area and South Coast Air Quality Management 17 Districts, the United States Environmental Protection 18 Agency, and the California Department of Toxic Substances 19 Control. 20 It was our goal during the regulatory process to 21 develop a proposal that meets the legislative requirements 22 while minimizing the economic impact on manufacturers. We 23 endeavored to keep the regulation as simple as possible, 24 revising labeling, reporting, and other regulatory 25 requirements in response to industry concerns whenever PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 26 1 possible. 2 Finally, we have sought to keep the regulation as 3 fair as possible, minimizing economic advantages or 4 disadvantages created by the regulation. 5 We believe that the regulation before you reflects 6 these goals. And with that, I will now discuss the proposed 7 regulation. 8 The proposed regulation achieves emission 9 reductions by limiting the amount of VOCs that a 10 manufacturer can use in their aerosol paint formulas. To do 11 this and to meet the emission reduction requirements of the 12 law, the regulation contains two sets of VOC standards -- 13 one for January 1, 1996, and another for December 31, 1999. 14 As I mentioned earlier, there is a large variety 15 of aerosol paints, and the regulation accommodates this 16 variety by having standards for 35 different types of 17 aerosol paint. 18 It is important to note that, like the Bay Area's 19 aerosol paint rule, the VOC standards apply to the combined 20 weight percent of VOCs and methylene chloride. This was 21 done to remove the incentive to use methylene chloride to 22 comply with the regulation. 23 Methylene chloride, while not a VOC, is a toxic 24 air contaminant that is currently used in limited amounts in 25 aerosol paints. Methylene chloride was previously PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 27 1 identified by this Board as a toxic air contaminant in 1989. 2 Manufacturers have told us that if no provision 3 were included in the regulation limiting the use of 4 methylene chloride, methylene chloride use could increase 5 significantly. Such an increase in the use of a toxic air 6 contaminant would be considered a potential adverse 7 environmental impact under the California Environmental 8 Quality Act, or CEQA. 9 Under CEQA, we are required to mitigate such 10 impacts. 11 As required by the California Clean Air Act, any 12 consumer product regulation adopted by the Board must be 13 technologically and commercially feasible. The proposed 14 1996 standards clearly meet this requirement. 15 These standards, with a few exceptions, are 16 essentially the same as the standards that have been met by 17 manufacturers in the Bay Area Air Quality Management 18 District since 1991. 19 Because of this, some manufacturers have already 20 taken steps to reformulate their products. There are many 21 products currently on the market throughout the State that 22 meet these standards. 23 The products on display behind you today are all 24 products that meet the proposed 1996 standards. Methylene 25 chloride is not necessary to meet these standards and is not PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 28 1 used in these products. 2 As you can see from some of the product 3 literature, manufacturers believe these products have 4 excellent performance characteristics. We expect that those 5 manufacturers that will need to reformulate products will 6 meet the regulation relying upon the same technology used on 7 the paints behind you -- namely, high solids or water-based 8 technologies. 9 One area where there is a difference between the 10 Bay Area regulation and the proposed ARB regulation is the 11 VOC limit for lacquers. The proposed ARB regulation 12 provides a higher 80 percent VOC standard for general use 13 pigmented lacquers for two years beyond 1996. 14 Beginning in 1998, this provision would expire and 15 lacquers would be required to meet the same VOC standards as 16 other general use flat and nonflat paints. 17 While we believe that there are complying 18 nonlacquer paints that can perform the same basic function 19 as lacquers, we also understand that lacquers are preferred 20 by some customers and have always been available in many 21 manufacturers' lines of paint. 22 This temporary standard is designed to provide 23 lacquer manufacturers with additional time to develop an 24 alternative to their current lacquer formulations and to 25 lessen the economic impact on these manufacturers. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 29 1 While the 1996 standards are clearly 2 technologically and commercially feasible, the technology to 3 manufacture the 1999 standards is still evolving. 4 As required by the legislation, the technological 5 and commercial feasibility of the 1999 standards will be 6 evaluated by this Board at a public hearing on or before the 7 end of 1998, three years after this regulation takes effect. 8 At this time, the Board will be asked to determine 9 the feasibility of the standards and may delay the standards 10 for up to five years if necessary. 11 During any such delay, the Board will be required 12 to specify the most stringent interim limits which are 13 technologically and commercially feasible. 14 To assist the Board in determining the feasibility 15 of the 1999 standards, ARB staff will be working closely 16 with the industry on an ongoing basis to determine their 17 programs (sic) to develop new technologies. To facilitate 18 these efforts, the proposed regulation includes reporting 19 requirements that will help ARB staff track the progress of 20 the industry in meeting the 1999 standards. 21 To encourage the development of lower VOC 22 technology, we are also developing a special recognition 23 labeling program for aerosol paints. It is envisioned that, 24 under this program, a special label or seal would reward 25 manufacturers which develop and market lower VOC aerosol PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 30 1 paints. 2 There are also other provisions included in the 3 regulation to help with the implementation of the 4 regulation. These include the reporting requirements I just 5 mentioned and reporting provisions to maintain a current 6 emissions inventory and mailing list of manufacturers. 7 Labeling requirements have been included in the 8 regulation to aid compliance in enforcing the regulation and 9 to help retailers determine whether the products in their 10 inventory comply with the regulation. 11 Similar to our other consumer products 12 regulations, the proposed regulation includes a variance 13 provision, which provides temporary relief in cases of 14 extreme economic hardship, and various test methods to help 15 determine compliance with the regulation. 16 We are also proposing amendments to the 17 alternative control plan, or ACP, to allow aerosol paint 18 manufacturers the opportunity for a voluntary second 19 compliance option providing added flexibility. 20 With the proposed amendments to the ACP, a 21 manufacturer can choose to either meet the individual VOC 22 standards in the regulation or bubble emissions under the 23 ACP. 24 As a reminder, the ACP adopted by the Board last 25 fall is a voluntary, market-based program. It allows PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 31 1 manufacturers to place an emissions cap over the aggregate 2 VOC emissions from a group of products that are subject to 3 the consumer products regulation and achieve equivalent 4 emission reductions. 5 The emissions cap can shrink or grow to reflect 6 the actual market conditions, thereby accounting for growth 7 in product sales and market share. 8 This slide visually demonstrates the ACP concept. 9 Under the existing regulations, the manufacturer of two 10 noncomplying products would have to reformulate both 11 products to comply with each individual VOC standard, as 12 shown by the products on the left. 13 However, under the ACP, the manufacturer could 14 leave the first product alone and reformulate the second 15 product below the VOC standard, as shown on by the products 16 on the right. 17 The VOC emissions under the ACP would be 18 equivalent to the emissions under the existing regulation. 19 It is important to mention that in developing the 20 proposed amendments to include aerosol paints in the ACP, a 21 compromise was reached among most manufacturers. 22 Under this compromise, emissions averaging, or 23 bubbling, would be allowed only between different aerosol 24 paint categories and not among aerosol paints and other 25 consumer products. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 32 1 This compromise was reached to alleviate small 2 business concerns, since small businesses in the aerosol 3 paint industry typically do not manufacture other types of 4 consumer products. 5 We believe the proposed regulation strikes a 6 balance between not allowing aerosol paint manufacturers to 7 use the ACP at all, and allowing averaging among aerosol 8 paints and any other types of consumer products subject to 9 regulation. 10 Overall, we expect the aerosol paint regulation 11 will result in a positive environmental impact due to the 12 reduction in VOC emissions. The interim VOC limits in 1996 13 are expected to result in a three-ton-per-day emission 14 reduction. The 1999 future effective limits, as proposed, 15 are expected to result in an 18-ton-per-day emission 16 reduction, satisfying the 60 percent emission reduction 17 required by AB 1890 and our commitment in the SIP. 18 We have identified no adverse environmental 19 impacts that would result from the implementation of the 20 proposed aerosol paint regulation or the amendments to the 21 alternative control plan. 22 The cost-effectiveness of the proposed aerosol 23 paint regulation is in the range of other regulations 24 adopted by the Board and districts, and is expected to range 25 from 5700 to $6400 per ton of VOC emissions reduced. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 33 1 This estimate is based on cost figures supplied by 2 the industry in a recent survey conducted by staff. the 3 cost-effectiveness figure applies to the 1996 standards 4 only, since the technology to achieve the 1999 standards is 5 not yet known. 6 We believe that most aerosol paint companies will 7 be able to absorb the cost of the regulation without a 8 significant adverse impact on their profitability. 9 In the event that the cost of the regulation is 10 passed on to consumers, we estimate that the price increase 11 could potentially rise by as much as 10 percent on average. 12 For a typical $3.00 can of aerosol paint, this would be 13 about a zero to 30 percent (sic) increase in cost. This is 14 in line with a recent survey of aerosol paints subject to 15 similar VOC standards in the Bay Area, where products were 16 found to be six percent higher than products sold outside 17 the district. 18 Finally, we believe the alternative control plan 19 will lower overall costs to industry, since the program is 20 voluntary, and manufacturers will only enter into it if it 21 is beneficial to them. 22 In conclusion, we recommend that you approve the 23 proposed aerosol paint regulation and related amendments to 24 the alternative control plan. 25 We believe that this proposal, which was developed PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 34 1 over the past two years with full public participation, 2 satisfies both the legislative mandate and near-term 3 commitment in the SIP for aerosol paints. 4 This regulation represents a consensus reached 5 with the majority of the industry. And the emission 6 reductions achieved by this proposal will help to further 7 our progress in meeting California's air quality goals 8 while, at the same time, minimizing the impact on the 9 regulated industry. 10 It is our intention to continue to work closely 11 with the affected industry to monitor their progress in 12 developing technologies that will make the 1999 standards 13 possible, and to report back to you on our findings prior to 14 the end of 1998. 15 Thank you for your consideration. And now, we 16 would be happy to answer any questions that you may have. 17 CHAIRMAN DUNLAP: Mr. Boyd, do you have anything 18 to add? 19 MR. BOYD: No, Mr. Chair. Thank you. 20 CHAIRMAN DUNLAP: Okay. Do any of the Board 21 members have any questions for staff? 22 MR. LAGARIAS: I have one question. 23 CHAIRMAN DUNLAP: Mr. Lagarias. 24 MR. LAGARIAS: I have one question. In your 25 summary and conclusions, you indicate that it meets -- that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 35 1 this regulation meets the legislative mandate and it meets 2 SIP requirements. 3 Is it your conclusion that this regulation is 4 technologically and commercially feasible? 5 MR. BOYD: Yes, Mr. Lagarias. 6 MR. LAGARIAS: That should have been in your 7 conclusions, because that was one of the mandates that we 8 were addressing. 9 MR. BOYD: That's a good point. Thank you. 10 CHAIRMAN DUNLAP: Any other questions or comments 11 of staff? 12 Mr. Calhoun. 13 MR. CALHOUN: Yes, I'd like to follow up on that 14 question. 15 I'm sure we will hear testimony today regarding 16 the technology, and I'm also aware of the fact that the 17 Board will have an opportunity to review the status of the 18 technology in subsequent years. 19 But does that statement that we made about the 20 technological feasibility apply to all the products that are 21 on the market today? 22 MR. VENTURINI: Mr. Calhoun, maybe I can expand on 23 that. I think that from staff's position, we believe the 24 interim standards that we're proposing for '96 are 25 definitely technologically, commercially feasible, meet the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 36 1 requirements of the statute. 2 We do acknowledge in the report -- and I believe 3 in the presentation -- that the technology for the 1999 4 standards is still evolving. So, at this point, we're 5 looking forward to continue working with the industry and 6 reporting back to the Board on the technological and 7 commercial feasibility of those 1999 proposed standards. 8 CHAIRMAN DUNLAP: Anything else for our staff? 9 Okay. I would like now to call the first witness 10 who signed up to testify before the Board. 11 Let's see here. Eve Blackburn represents Flecto, 12 followed by Ken Trautwein, also representing Flecto. 13 Good morning. 14 MS. BLACKBURN: Good morning. Is there anywhere I 15 could use overhead transparencies? 16 CHAIRMAN DUNLAP: Sure. 17 MS. BLACKBURN: Great. 18 (Thereupon, the staff accommodated the 19 witness' request.) 20 MS. BLACKBURN: Good morning. My name is Eve 21 Blackburn, and I come to you from the Flecto Company. 22 I'd like to cover four points today. I'd like to 23 tell you -- the first point I'd like to tell you -- who the 24 Flecto Company is, who we are. I'd like to talk a little 25 bit about the Flecto/CARB relationship that we've had over a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 37 1 number of years. 2 I'd like to tell you why we are sure that the 3 proposed ACP is unfair. And my fourth point is I'd like to 4 tell you what we intend to do should you adopt the ACP. 5 So, my first point about the Flecto Company. The 6 Flecto Company is a manufacturer of Varathane brand 7 products. We make premium clear finishes for wood. We are 8 in a specialty market. We are a niche manufacturer. 9 In fact, we just celebrated an anniversary. We've 10 been manufacturing and employing in California for 60 years. 11 Our headquarters is in Oakland, California. 12 We are a market leader in technology and new 13 product development. We are known as innovators. We were 14 the first to introduce to the consumer market a lot of 15 products, among them the first to introduce polyurethane, a 16 high performance enamel, gelled stain, and a full line of 17 CARB compliant products. 18 The Flecto Company is the manufacturer of the only 19 clear finish that meets the 67 percent VOC level for clear 20 finishes for that particular category in the Bay Area. 21 My second point, I'd like to talk a little bit 22 about the relationship that Flecto has enjoyed with CARB 23 over the years. Flecto regularly attends workshops, and we 24 have always been willing to give constructive input for 25 proposed regulations. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 38 1 Flecto enjoys a good relationship with CARB staff, 2 a relationship we believe that is based on honesty, 3 credibility, and integrity. It is also a relationship based 4 upon a mutual goal -- forwarding the development of the 5 newest and least polluting technology. 6 Julie Billington, Paul Milkey, Peggy Taricco can 7 all attest to our full and cheerful support on a number of 8 issues. I'll thank you not to ask Floyd Vergara. 9 (Laughter.) 10 MS. BLACKBURN: Just kidding. Just kidding. 11 We have gladly provided technical support, 12 products for testing, anything we can do to further 13 understanding. 14 We have hosted visits by CARB staff members to our 15 facility and even to our R & D labs. We've opened the doors 16 to you. 17 Flecto has always complied with standard coatings 18 regulations, or the type of command and control wherein 19 limits are assigned to certain categories. We have always 20 complied. 21 In many instances, we have been first on the 22 market with innovative products to meet regulations. We 23 have a strong corporate commitment to spend as much as 24 anyone in the business on research and development based on 25 percentage of sales. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 39 1 No one spends more than we do to develop more 2 environmentally friendly products. This enables us to 3 comply with your regulations and compete in the marketplace. 4 Now, I'd like to go into why we think the ACP is 5 inherently unfair. Just to present a very simple scenario 6 for you, let's say Company X is a huge company with an 7 unlimited range of product lines, with the sales in the 8 billions of units. 9 Flecto, a small niche marketer, manufacturers VOC 10 compliant products only. Company X has enormous flexibility 11 to average their emissions and can compete against Flecto, 12 who enjoys no such flexibility. 13 I'd like to explain this scenario a little bit 14 more in detail. Maybe Company X is a company back East with 15 a huge range of product lines. They have a low VOC product 16 line, which sells in large volume, but yields small profits. 17 The volume makes up for it. 18 Under the ACP, they are able to accrue VOC credits 19 from this line and can decide how best to use them. They 20 can effectively target a market. Currently in the 21 marketplace, Flecto has a single product line with good 22 profit margins, and their product meets the stringent VOC 23 guidelines of their niche market, making it somewhat 24 inferior to the noncompliant product as well as more 25 expensive. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 40 1 Company X sees their opportunity to use their 2 credits. "Let's sell a product at high VOC levels. The 3 niche marketer can't compete with us." 4 Company X would then enjoy the higher profit 5 margin. Meanwhile, Flecto, working very hard to formulate a 6 better compliant product, sees their market share disappear 7 because they cannot compete with Company X. The ACP 8 guarantees and institutionalizes an unlevel playing field. 9 Since the market is now being easily dominated by 10 Company X, Flecto can no longer afford to develop better 11 compliant products. 12 Flecto cannot compete on the shelf, because they 13 must meet a whole different set of rules. 14 As I mentioned before, Flecto spends a significant 15 amount on research and development. The ACP discourages 16 anything new. The ACP lets the big boys keep technology the 17 same, and that means no progress. This is what they want. 18 They don't want to spend the money to develop new 19 products. All they want to do is juggle the books. Of 20 course, the beauty of being a small company is that you 21 enjoy the flexibility to explore new technologies and to 22 change with the times. 23 Now, I'd like to cover what the Flecto Company is 24 prepared to do should the ACP be adopted. We are prepared 25 to sell product that matches the VOC levels of any ACP PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 41 1 product that challenges us in the California market. We are 2 quite willing, I'm afraid, to challenge the fairness of the 3 plan in court. And we are also willing to enlist the help 4 of environmental groups in our struggle to see this plan 5 stopped. 6 It is commonly known that the involvement of 7 environmental groups sank a similar proposal in the South 8 Coast District. It is easy to show environmental groups 9 that no reduction in air pollutants will occur or can be 10 proven, that air pollutants may increase, and that the ACP 11 panders to big business. 12 In closing, I would like to reiterate that the 13 Flecto Company very much regrets having to take an 14 adversarial position the California Air Resources Board, 15 especially when one considers the long, productive, and 16 cooperative history between us. 17 We have always taken pride in our ability to 18 respond to regulations and provide products that will help 19 to safeguard our environment. 20 Thank you for your time. 21 CHAIRMAN DUNLAP: Thank you. If I may, could I 22 ask, actually staff, a question here? 23 Mr. Boyd, or your team that worked on this, could 24 you just spend a minute and talk about some of the flexible, 25 compromise-oriented components of this ACP effort as it PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 42 1 would relate to Flecto? Because it's my understanding there 2 had been some concessions made, some discussion? 3 MR. BOYD: Yes, I'd like Mr. Venturini and his 4 staff to elaborate on that, since they were directly 5 involved. 6 MR. VENTURINI: Okay. Be glad to, Mr. Boyd. 7 Actually, I'd just briefly start, and ask Ms. 8 Shiroma to in more detail. 9 I think one thing I'd just like to mention in the 10 beginning, to give you a little perspective, there's some 60 11 companies that are involved in marketing aerosol coatings, 12 aerosol paint coatings in California. And we worked with 13 all of those companies through the process, and I'll let Ms. 14 Shiroma discuss the details of the issues with the ACP and 15 our attempts to minimize, as much as possible, any adverse 16 impacts. 17 I'd also like to mention that, when the Board did 18 discuss the ACP and consider that -- I believe it was last 19 September -- there were these same considerations that were 20 considered. And I think that's one of the reasons why we 21 expressed to the Board that we were looking at the ACP in 22 the consumer products area as a kind of test bed for this 23 new type of market flexibility and type of approach. And we 24 were going to monitor the implementation of it very, very 25 carefully to assure it achieved what we wanted and what the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 43 1 majority of the industry would like as additional 2 flexibility in complying with our standards. 3 Ms. Shiroma? 4 MS. SHIROMA: Okay. Thank you, Mr. Venturini. Is 5 my microphone on? 6 There we go. Okay. 7 First of all, we are proposing to carry over a 8 number of the aspects in the original ACP, which was 9 approved by this Board in September, in that the regulation 10 will provide for the creation of the surplus reductions in 11 being able to use those surplus reductions between 12 companies. They would only be available to small 13 businesses. 14 CHAIRMAN DUNLAP: Is Flecto defined as a small 15 business for purposes -- 16 MS. BLACKBURN: No, we're not. We're not. We 17 employ too many people and we sell too much paint. 18 MS. SHIROMA: Okay. And I also wanted to mention 19 that in the overall effectiveness of the regulation, that we 20 placed the reporting safeguards to ensure that, in fact, the 21 equivalent emission reductions would be achieved, as through 22 the regular regulation. 23 But to cut right to the quick, as Ms. Blackburn 24 has indicated, they have worked with us very closely. We 25 have been listening to their concerns. And the main change PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 44 1 that we have made is that to restrict the alternative 2 control plan just to the aerosol paint categories. While 3 the ACP is in place for the other 27 categories for use by 4 aerosol paint companies, it would be restricted just to 5 those categories to try to address the competitiveness 6 issue. 7 MS. BLACKBURN: We do very much appreciate that 8 effort to accommodate us; however, we only make clear 9 finishes. We don't make latex house paints. We don't make 10 water reducible alkyds. We don't make anything with really 11 low emissions that we could possibly average. 12 CHAIRMAN DUNLAP: Okay. 13 MS. BLACKBURN: We're a niche marketer. But we do 14 appreciate very much -- CARB has really tried to work with 15 us. 16 CHAIRMAN DUNLAP: There's another half to this 17 presentation, right? Ken Trautwein? 18 MS. BLACKBURN: Ken Trautwein. 19 CHAIRMAN DUNLAP: Okay. 20 MS. BLACKBURN: Our technical director. 21 CHAIRMAN DUNLAP: Well, if it's okay, why don't we 22 have him come up -- 23 MS. BLACKBURN: Thank you for your time. 24 CHAIRMAN DUNLAP: -- and then we can follow up. 25 MS. EDGERTON: Can I ask a question? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 45 1 CHAIRMAN DUNLAP: Sure, Ms. Edgerton. 2 MS. EDGERTON: Yeah, I'd like to ask a question. 3 Does the staff agree with the scenario that was presented, 4 that it could occur? 5 Is it factually something that is consistent with 6 your understanding of how it might operate? And then, the 7 second piece of that is, is it likely to occur? 8 So, is it theoretically correct? And, as a 9 practical matter, is it likely -- and, then, the third piece 10 is, is there anything in the regulation -- did you give 11 thought to a variance or anything that would help out 12 Flecto? 13 MR. VENTURINI: Well, let me start with the impact 14 or the real world effect of the ACP. In terms of what it 15 means to different companies, I think, is yet to be 16 determined as we start seeing some of these plans come in. 17 Now, what we tried to do with this proposal is 18 minimize any of these competitiveness factors. I think 19 there are other things that will influence a person's 20 decision to buy a product more than price. There's brand 21 loyalty. There's niche markets. There's the performance of 22 the product. All of these factors come into play. 23 The other thing I recall, when we were looking at 24 the ACP regulation last fall, and taking a look at how much 25 you could really vary one product to compensate for another PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 46 1 and, practically speaking, we don't anticipate someone being 2 able to make dramatic changes in one product to offset no 3 change or a big increase in another product. 4 I think our estimate or projection is that these 5 factors will all come into play and would hopefully minimize 6 and maybe not even result in some of the concerns that are 7 being expressed by Flecto. 8 I might mention one other thing that we have begun 9 to explore that we think could be of a benefit for a company 10 like Flecto. And that is, we're looking at a special 11 recognition label program for those companies that have gone 12 beyond and have invested resources to develop low VOC 13 products. 14 We're looking into and we'll be workshopping and 15 discussing with industry such a program where companies -- 16 maybe such as Flecto -- could come in and given special 17 recognition, which we would think would help them in the 18 marketplace. 19 I guess there's just a lot of different factors 20 involved here. And I guess our best estimate -- and we've 21 done everything we can at this point to minimize these 22 effects. And realistically, I think our best view now is a 23 lot of these concerns will be minimized. But we will track 24 this and follow it closely. 25 CHAIRMAN DUNLAP: Mr. Trautwein. Following you, I PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 47 1 will ask Randal Friedman to come forward, who will be 2 followed by Roger Vanderlaan. 3 Good morning. 4 MR. TRAUTWEIN: Good morning, Chairman Dunlap, 5 California Air Resources Board members. I'm pleased to be 6 able to be here this morning. 7 I'd like to read to you the letter that is before 8 you. You've heard the testimony that explains the Flecto 9 Company position on the ACP. We understand that the Board 10 chose to allow the ACP use with other consumer products, and 11 that arguments like ours may have been put forth previously. 12 The small businesses involved with this control 13 will be forced to, one, comply; two, withdraw; or, three, 14 buy credits through the ACP. 15 Large companies with a broad product base will be 16 able to, one, comply; two, withdraw; three, comply through 17 the ACP; or, four, use ACP credits to sell to other 18 manufacturers. 19 Small companies need to comply. Large companies 20 would comply with smoke and mirrors. 21 We keep reading about the need to provide positive 22 opportunities to attract business in California. The ACP in 23 this legislation helps larger companies at the expense of 24 smaller ones. 25 Can't we develop rules that will support PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 48 1 California businesses and help grow State jobs and industry 2 instead of supporting larger Midwestern companies to the 3 detriment of our State businesses? 4 Flecto has been active in working with State and 5 local agencies to create workable regulations that, 6 hopefully, will help our environment. Indeed, we believe 7 the initial limits stated in this aerosol rule are doable, 8 and that the NPCA statement -- which I believe you will hear 9 later -- is a good one. 10 However, the ACP is unfair, as Ms. Blackburn has 11 clearly shown, no question. The only decision for the Board 12 to make is, is fairness an issue for CARB or for the courts? 13 I'd like to comment aside from this on a couple of 14 various -- in listening to the presentation about the rule 15 and the ACP specifically, a couple of points were made that 16 I think really support our position relative to the ACP. 17 Flecto has opposed averaging -- to address your 18 question -- from the outset in any regulation, because we 19 think it's unfair. It provides companies with a broader 20 base of products the ability to really supply products that 21 are not complying, while supplying other products that may 22 be complying. 23 Smaller companies have to comply with their 24 product lines. I think that the ACP will lend -- will 25 result in moderate reductions and it lends flexibility only PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 49 1 to those companies who were able to use the ACP. 2 One comment was made earlier that the limits 3 established in the rule are feasible, indeed are feasible. 4 We believe that to be the case. 5 If the 1996 limits are feasible and doable, then 6 what is the need for the ACP? 7 Another question that comes up or a point that was 8 made is that the rule is to be simple and fair. Of course, 9 Flecto believes that the ACP is neither. It's a fairly 10 complex rule that takes some good understanding of the 11 different parameters that are in the ACP in order to apply 12 it, first of all; and, secondly, that it is fair. 13 And, obviously, we don't believe that that is the 14 case. 15 Thank you very much. 16 MR. PARNELL: I have a question. 17 CHAIRMAN DUNLAP: Mr. Parnell. 18 MR. PARNELL: Mr. Trautwein, I believe that I 19 heard the staff say that, as you look at the fairness issue 20 and look at the multitude of products across the board that 21 larger companies may have and may use ultimately to cause a 22 disincentive for you to continue in the market, I think what 23 I heard them say is, as they look out there on the horizon, 24 that that simply is not within the realm. Even though the 25 possibility exists, it isn't in the realm of reasonableness PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 50 1 to assume that that would occur. 2 Did I express your thoughts correctly? 3 MR. VENTURINI: Yes. 4 MR. PARNELL: Because I want you to respond to 5 whether or not you think that's accurate or -- 6 MR. VENTURINI: Mr. Parnell, I can't tell you that 7 there will not be any impact. But I think what we have 8 tried to do is to take all the steps that we can to minimize 9 any of these effects. At this point, we don't have a sense 10 of even the number of companies in the aerosol paint area 11 that would even avail themselves of the ACP. 12 Largely drawing on the experience from September, 13 we think that any adverse impacts as to the degree that I 14 think Flecto's concerned about, we're not -- not certain 15 those will occur. 16 And that's why we intend to monitor this. That's 17 why we limited this ACP to only aerosol paints, to prevent a 18 company that markets a broad range of, say, paints and other 19 consumer products to take advantage of that. 20 MR. PARNELL: So, then, back to the question. 21 Staff believes that it probably would not occur. You have a 22 different view. 23 MR. TRAUTWEIN: Well, we do -- 24 MR. PARNELL: Well, I grant you -- I'd stipulate 25 that it could occur. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 51 1 MR. TRAUTWEIN: It could occur, absolutely. We 2 feel that it will occur. 3 MR. PARNELL: The likelihood of it occurring is 4 what I'm after. 5 MR. TRAUTWEIN: Right. 6 MR. PARNELL: In your view. 7 MR. TRAUTWEIN Well, we believe that it will occur 8 just from some of the history that we've seen, some of the 9 other testimony that we believe is out there. 10 But you take Mr. Milkey's example, where he had 11 the two cans of equal VOC aerosols -- one can with the large 12 VOC and another can with a small VOC. That kind of 13 averaging may get us to the same point. 14 But if the technology is here to achieve the 15 limits that are spelled out in the aerosol rule, then what's 16 the need for the ACP? 17 MR. PARNELL: Thank you. 18 MS. BLACKBURN: I have one more comment I'd like 19 to add. Ms. Edgerton, I think that you had asked the 20 question, "Jeez, do you really think people are going to 21 come after us here?" 22 Absolutely. Absolutely. Because we enjoy a large 23 profit margin, because we are dominant in that niche market. 24 Our competitors are huge corporations, and we're 25 small. We're a small firm, relatively speaking, out of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 52 1 Oakland, California. 2 Our competitors are Miniwax, Deft, Bear Process. 3 These guys are really big. And just averaging in general is 4 not a good thing for some of us who -- I believe very 5 strongly that we would be a target, a very attractive tar 6 get. 7 CHAIRMAN DUNLAP: Supervisor Silva. 8 SUPERVISOR SILVA: Yes. Ms. Blackburn, how many 9 people does your company employ that you cited? I missed 10 it. 11 MS. BLACKBURN: In Oakland, we employ, I think, 12 75. 13 MR. TRAUTWEIN: It's almost a hundred. 14 MS. BLACKBURN: Oh, it's almost a hundred. 15 SUPERVISOR SILVA: Okay. And what is the yearly 16 sales basically? 17 MS. BLACKBURN: I don't think we like to talk 18 about that. 19 SUPERVISOR SILVA: Okay. The -- 20 MS. BLACKBURN: We're privately held. We don't-- 21 SUPERVISOR SILVA: Okay. And I respect that. The 22 R & D that your company researches -- 23 MS. BLACKBURN: Right. 24 SUPERVISOR SILVA: -- how would that compare with 25 a larger company that has a lot of products, but just in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 53 1 your area? 2 MS. BLACKBURN: Well, think that if the Flecto 3 Company were to look at something like your proposed 1999 4 limits, we'd hit in the lab here pretty quickly. 5 Now, Ken's our technical director. He's going to 6 be cracking the whip. We would try to develop something to 7 meet those limits. 8 But if you have other things -- a common thing to 9 be sold in aerosol, water-based aerosol, is a water 10 reducible alkyd. In the Bay Area, it has to come in at 60 11 percent VOC. A common water reducible alkyd, fairly 12 inexpensive to make, comes in, oh, I think between 35 and 13 40. Right there, it's a pigment. It comes out like -- it 14 would be in a nonflat category. 15 Right there, that's a credit that could easily be 16 accrued. Then they come back and get us on our clears. 17 So, if you're the big company, you don't have to 18 worry about that research and development. We do. And 19 we're going to strive to come up with something new and 20 different. 21 SUPERVISOR SILVA: I do appreciate that. Thank 22 you. 23 MS. BLACKBURN: Sure. Thank you. 24 CHAIRMAN DUNLAP: Mr. Lagarias. 25 MR. LAGARIAS: Mr. Trautwein, I'm a long and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 54 1 faithful user of Varathane, and I'm very satisfied with your 2 product. 3 Is it sold only in California or nationwide? 4 MR. TRAUTWEIN: Varathane is sold nationwide. 5 MR. LAGARIAS: So, you compete nationwide with all 6 the big companies in your specialty market? 7 MR. TRAUTWEIN: Yes, we do. 8 MR. LAGARIAS: How would they -- if you can 9 compete competitively throughout the country, how come big 10 companies can't match you in other parts of the country? 11 MR. TRAUTWEIN: Well, we sell in a lot of 12 different ways, sir. And we don't sell the same product 13 throughout the country at all. 14 Our products are designed to meet the VOC rules, 15 wherever there are VOC rules, and we do sell the appropriate 16 products in those areas against products which are designed 17 to also be sold against those rules. 18 We have also done -- and we have excellent 19 products. We try to be a leader in our field as Mrs. 20 Blackburn has pointed out. 21 And so, so things -- 22 MR. LAGARIAS: So, as far -- 23 MR. TRAUTWEIN: -- as primary concerns. 24 MR. LAGARIAS: So, nationwide, then, you can hold 25 your own regardless of what happens; is this correct? It's PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 55 1 only in California that you're concerned? 2 MR. TRAUTWEIN: Well, this is where the rule is of 3 concern at this point, Mr. Lagarias. But I must point out 4 that, yes, we have some concerns about this type of 5 regulation going from West to East. California is known as 6 the leader in regulations and, certainly, we are concerned 7 about that. 8 MR. LAGARIAS: Well, certainly, I don't think 9 we're at all interested in giving anybody a commercial 10 advantage as a result of our rule. We're trying to see how 11 to address the environmental issues that we're charged with 12 addressing. 13 MR. TRAUTWEIN: Thank you. 14 CHAIRMAN DUNLAP: Ms. Edgerton. 15 MS. EDGERTON: So, if I understand you correctly, 16 you support the performance standard for 1996 and 1999. 17 MR. TRAUTWEIN: No, not the 1999 standards. We 18 have not reached that particular level yet. 19 MS. EDGERTON: Okay. If I understand you 20 correctly -- 21 MR. TRAUTWEIN: But we do believe that the -- 22 MS. EDGERTON: -- you support the 1996 -- 23 MR. TRAUTWEIN: -- 1996 -- 24 MS. EDGERTON: -- performance standard. 25 MR. TRAUTWEIN: That's correct. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 56 1 MS. EDGERTON: And you do not oppose the 1999 2 standard yet. 3 MR. TRAUTWEIN: We support the NPCA position on 4 that; that is, that many of those standards are not 5 reachable at this point and not doable at this point, and 6 that that review that is spoken about is definitely in 7 order. 8 MS. EDGERTON: Okay. But you support the 1996 9 performance standard. 10 MR. TRAUTWEIN: That's correct, we do. 11 MS. EDGERTON: And you oppose -- but it's the 12 trading that you oppose. 13 I'd like to make a comment that -- actually the 14 Board, and I know the staff, all of us, welcome your -- you 15 shouldn't feel awkward about having a different view after 16 all of the years of working with the staff. It's important 17 for you to come and speak openly about things that you're 18 concerned about. And I know everybody wants to hear those 19 things, and that's how we know what's going on is when you 20 participate. 21 And so, at all levels, I know that everybody 22 appreciates that very much. And it is a concern with 23 regulations when you find it may have a perverse effect, 24 where it might result in a disadvantage to the cleaner 25 products in your own State. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 57 1 So, thank you for speaking to it. 2 MR. TRAUTWEIN: Thank you. 3 CHAIRMAN DUNLAP: Thank you. 4 Mr. Friedman? 5 SUPERVISOR ROBERTS: Mr. Chairman? 6 Sure, Supervisor Roberts. 7 SUPERVISOR ROBERTS: I'm just wondering if it's 8 possible that staff might have or could take an existing 9 Brand X company -- we're talking about hypotheticals and 10 everybody seems to be talking about what might. And I'm 11 wondering, within the product line of one of the larger 12 competing companies, if it's actually possible to make the 13 kinds of shifts that they're talking about, and doesn't 14 that, in and of itself, then maybe penalize them in that 15 other line, if you will, for competing? 16 I mean, I'm sort of halfway between wondering if 17 this -- 18 CHAIRMAN DUNLAP: I think, Supervisor, later, when 19 we hear from some of the larger companies, I think we can 20 pose that question and ask how they plan to deal with it -- 21 SUPERVISOR ROBERTS: Okay. 22 CHAIRMAN DUNLAP: -- and we can hear it first 23 hand. 24 SUPERVISOR ROBERTS: Because it seemed like -- 25 CHAIRMAN DUNLAP: It's a very good point. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 58 1 SUPERVISOR ROBERTS: -- we might be able to get 2 something out of the existing situation -- 3 CHAIRMAN DUNLAP: Yes. 4 SUPERVISOR ROBERTS: -- with respect to the 5 companies and their product lines today. 6 CHAIRMAN DUNLAP: Yes. Why don't we address that 7 when we hear from some later on. 8 Thank you. 9 Mr. Friedman, good morning. 10 MR. FRIEDMAN: Good morning, Mr. Chairman. 11 My name is Randal Friedman. I'm with the 12 California Environmental Coordination Office of the United 13 States Navy. 14 We had one issue with these regulations. We did 15 send a letter and received a response from your staff 16 yesterday. That response does resolve the issues, and I 17 would just like to make sure both our letter and the 18 response are part of the record of this regulation. 19 I'd also like to thank the staff for working with 20 us to resolve this issue. And one final comment. As was 21 stated today, this is the first implementation of the SIP in 22 a new regulation. There will be a number of additional 23 regulations where the Navy and the Department of Defense 24 have some concerns, and we look forward to working with you 25 and your staff in the same cooperative manner that we did in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 59 1 this regulation. 2 Thank you. 3 CHAIRMAN DUNLAP: Thank you very much. 4 Mr. Vanderlaan. 5 SUPERVISOR VAGIM: Mr. Chairman? 6 CHAIRMAN DUNLAP: Yes, Supervisor Vagim. 7 SUPERVISOR VAGIM: Yes. Thank you. 8 We have the letter from the Department of the 9 Navy, but we don't have the response from CARB. Could we 10 just get a brief on what that response was? 11 MS. SHIROMA: Yes. The Navy requested that we 12 clarify whether or not the proposed regulation applies to 13 the application of aerosol paints aboard Navy ships. 14 And we provided a response which indicated that, 15 because they are a noncommercial use, they are exempt. 16 SUPERVISOR VAGIM: So, the import from one State 17 to another, then, does not apply here? 18 MS. SHIROMA: To the Navy. That's right. 19 SUPERVISOR VAGIM: Right. Understand, to the 20 Navy. 21 MS. SHIROMA: Yes. 22 SUPERVISOR VAGIM: Thank you. 23 CHAIRMAN DUNLAP: Okay. Thank you. Mr. 24 Vanderlaan, followed by Mr. Majkrzak. 25 MR. VANDERLAAN: Thank you. Good morning. My PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 60 1 name is Roger Vanderlaan. I'm operations manager for Spray 2 On Products in Anaheim California. Spray On Products has 3 had a manufacturing facility in Anaheim for 30 years, and I 4 am the plant manager. 5 I'm here to communicate to you that we support 6 this rule, and I'm also here to communicate to you, as has 7 already been pointed out, that the 1999 VOC limits are not 8 currently feasible. 9 We had hoped to have more explicit language in the 10 rule dealing with the commercially and technologically 11 feasibility statements. We have also been assured by staff 12 of the intent. The intent of the rule is to reduce VOC 13 emissions from aerosol coatings category to the maximum 14 feasible and also to support the continued existence of 15 quality, efficacious aerosol coatings. 16 Accordingly, we are looking forward to working 17 with staff to that end. 18 CHAIRMAN DUNLAP: Would you care -- Supervisor 19 Roberts stepped out for a moment. Do you consider yourself 20 one of the large companies? 21 MR. VANDERLAAN: Yes. 22 CHAIRMAN DUNLAP: Could you address -- 23 (Laughter.) 24 CHAIRMAN DUNLAP: Thank you. Thank you for that 25 concession. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 61 1 Could you address that averaging issue that 2 Supervisor Roberts brought up? Perhaps you could do it 3 better than the staff. 4 MR. VANDERLAAN: I'm going to defer to testimony 5 that's going to follow me addressing just that. 6 CHAIRMAN DUNLAP: Okay. Very good. Thank you. 7 MR. VANDERLAAN: Thank you. 8 CHAIRMAN DUNLAP: Mr. Majkrzak from Tru-Test 9 Manufacturing Company, also with the National Paint and 10 Coatings Association. 11 Following him will be Robert Graham from Sherwin 12 Williams, and Mr. Raymond, also from Sherwin Williams. 13 Thank you. 14 MR. MAJKRZAK: Good morning. 15 CHAIRMAN DUNLAP: Good morning. 16 MR. MAJKRZAK: I'm impressed that you pronounced 17 my last name properly. It took my daughter about six years. 18 (Laughter.) 19 MR. MAJKRZAK: Yes. My name is Ed Majkrzak. I'm 20 the technical director for Tru-Test Manufacturing Company. 21 Tru-Test Manufacturing is affiliated with Tru- 22 Value Hardware Stores, which has over 8,000 members across 23 the country, including several hundred in the State of 24 California. 25 I'm happy to submit the following comments on PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 62 1 behalf of the Spray Paint Manufacturers Committee of the 2 National Paint and Coatings Association. 3 The National Paint and Coatings Association is a 4 voluntary nonprofit industry association originally 5 organized in 1888, and comprised today of over 500 members 6 companies, which manufacture consumer paints, industrial 7 coatings, or the raw materials used in their manufacture. 8 The NPCA membership collectively produces some 80 9 percent of the total dollar volume of consumer paints and 10 industrial coatings produced in the United States. NPCA 11 represents approximately 50 percent of the paint and 12 coatings for sale and use in California, many of whom 13 manufacture aerosol spray coatings for sale and use in 14 California as well as the rest of the country. 15 In addition, many other members that are located 16 in various parts of the country manufacture aerosol coatings 17 for shipment to and use in California. 18 NPCA and the Spray Paint Manufacturers Committee 19 has been very active in the State of California since the 20 advent of regulatory activities specifically focusing on 21 aerosol spray coatings. 22 For instance, NPCA, through its Spray Paint 23 Manufacturers Committee, testified on several occasions 24 before the South Coast Air Quality Management District when 25 its Rule 1129 was being considered and drafted. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 63 1 Likewise, members of our Committee were very 2 active in maintaining the dialogue with the Bay Area Air 3 Quality Management District when it was forced by a court 4 order to promulgate its rule on aerosol paints. 5 Furthermore, NPCA and other industry 6 representatives actively supported that portion of the 7 legislation vesting the California Air Resources Board with 8 sole authority to regulate aerosols. 9 And, as you have seen through our members 10 participation in the series of meetings and workshops 11 surrounding this proposed aerosol regulation, we are 12 committed to working with the State environmental agencies 13 to promulgate regulations that are reasonable and 14 environmentally sound. 15 We are delighted to have the opportunity to make 16 comments on the proposed aerosol coatings rule. 17 Comment 1: NPCA supports the general format and 18 clarity of the proposed aerosol rule. 19 The proposed aerosol coating rule is organized in 20 a clear and logical fashion. It closely resembles the Bay 21 Area Air Quality Management District's rules, in that it 22 contains a definitions section relating to product 23 categories and a corresponding table of standards. 24 Anyone in attendance at the many workshops 25 conducted throughout the promulgation of this rule can PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 64 1 attest to the great pains that were taken by the ARB staff 2 to make sure that the definitions are accurate and 3 unambiguous. The same can also be said with regard to the 4 administrative requirements of the proposal. 5 Comment 2: The initial VOC limits contained in 6 the table of standards scheduled to become effective on 7 January 1, 1996, are, with some exceptions, an appropriate 8 set of standards, given the current state of aerosol 9 formulation technology. 10 As you are well aware, the Bay Area's aerosol 11 rule, as we know it today, has been in existence since 1991. 12 Therefore, any manufacturer or marketer who markets an 13 aerosol coatings product in Northern California must be able 14 to comply with the limits established in that rule. 15 Even four years later, however, there are still 16 certain specialty products that cannot be marketed in 17 Northern California because of the VOC limits in Rule 49. 18 Despite this fact, experience of the last four years also 19 indicates that the majority of the limits established in 20 Regulation 8, Rule 49 are appropriate, given the current 21 state of technology. 22 The VOC limits in the initial phase of this 23 proposal largely mirror the VOC limits of the Bay Area rule. 24 To the extent that this is true, NPCA believes that the 25 Phase I VOC limits are appropriate. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 65 1 Comment 3: The second set of VOC limits contained 2 in the table of standards scheduled to become effective 3 December 31st, 1999, pending the outcome of a hearing 4 conducted in 1998, are unachievable by any technology 5 currently known to the industry. 6 In the statement of reasons, ARB staff admit that 7 it is uncertain which reformulation options will be 8 available to achieve compliance with the final VOC limits, 9 and such compliance may largely depend on technological 10 advancements discovered in the next three years. This is 11 very easy for a regulatory agency to say. 12 It's quite a different story from the 13 manufacturer's point of view. It was only a few short years 14 ago when the South Coast Air Quality Management District 15 proposed and adopted Rule 1129. 16 Rule 1129 contained VOC limits for aerosol 17 coatings products similar to those in the CARB proposal for 18 the final phase in 1999. Then, as now,, the manufacturing 19 community protested loudly and strongly that these VOC 20 limits were unachievable and would result in a total ban of 21 spray paints produced in the South Coast area. 22 Despite the objections of manufacturers, the rule 23 was adopted. Local newspapers carried the following 24 stories: "Virtual Ban On Area Spray Paint Sales OK'd," and 25 "Move Could Lead to Aerosol Paint Ban." PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 66 1 The reality is that the industry was unable to 2 meet these standards in 19900. And now, five years later, 3 there is still no technology currently available or even on 4 the horizon which makes these limits feasible. 5 Point 4: The 1998 hearing,, which is designed to 6 gauge the commercial and technological feasibility of the 7 1999 VOC standards, fails to provide basic procedural 8 protections for the aerosol industry. 9 In order for the industry to survive beyond the 10 1999 limits and trigger the extension period, we must be 11 able to demonstrate that the final phase VOC limits are 12 commercially and technologically infeasible. Yet, there is 13 no definition of this phrase anywhere in the aerosol 14 coatings proposal. 15 In the statement of reasons, ARB staff indicate 16 that technological feasibility is the ability to meet VOC 17 standards, while commercial feasibility depends upon meeting 18 basic market demand. 19 This rather loose explanation does not give the 20 industry any comfort when the very existence of their 21 products hangs in the balance. 22 Our fear is that the Board will be persuaded that 23 a VOC limit is technologically and commercially feasible 24 merely because one person can make it. 25 Throughout this rulemaking process, NPCA has PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 67 1 advocated a more thorough and definitive discussion of the 2 term "technologically and commercially feasible." It must 3 be clear that marketplace factors -- those characteristics 4 of the product that make it attractive to consumers --- will 5 be considered. 6 Generally, these characteristics include price, 7 quantities available, product capabilities, availability of 8 colors, et cetera. 9 Product capabilities or performance 10 characteristics of the product may include things like 11 viscosity, ease of application, hideability, durability, 12 texture, and scrubability, just to name a few. 13 The phrase "commercially feasible" must include a 14 discussion and specific findings regarding these issues: 15 A. Will the product continue to perform as 16 effectively and reliably as the original product and, thus, 17 continue to meet consumer demand? 18 B. Is the new product as easy to use as the 19 original product in performing the same functions? 20 C. Is the new product as safe in situations of 21 both use and storage as the original product; and 22 D. Price is also a factor. While consumers will 23 pay more for a product that meets more of their 24 expectations, they are unlikely to purchase a more expensive 25 product that is less effective, less convenient, or less PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 68 1 safe to use. 2 Reducing any of the first three factors could 3 destroy commercial feasibility, particularly if the price 4 also rises. 5 Commercial feasibility, therefore, requires some 6 regulatory analysis of consumer acceptance of the new 7 product. It also requires an analysis of the cost of 8 producing, packaging, promoting, and distributing the 9 product after imposition of the regulatory standard. 10 If consumers will pay more for a high level of 11 quality, they are unlikely to pay more for a product that is 12 less effective, less convenient, or less safe. 13 Will the cost of raw materials change? Will it be 14 necessary for industry to retool its operations? Will new 15 assembly line equipment or a new packaging design be 16 required? 17 What are the marketing problems and the costs 18 imposed on a new manufacturer who must promote a 19 significantly different product in California? Will 20 manufacturers be required to develop a separate marketing 21 strategy for California and limit national advertising to 22 the other 49 states? 23 Is it reasonable to expect that a manufacturer 24 will market a less effective product elsewhere in the 25 national simply because California has imposed a regulatory PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 69 1 standard that reduces efficacy? 2 Substantial resources are required to introduce a 3 new product into the market, and the manufacturer must 4 continue to maintain credibility in the marketplace with 5 distributors, retailers, and consumers. 6 Finally, commercial feasibility contemplates 7 performance of a standard cost/benefit analysis. Will the 8 benefits resulting from the regulatory standard outweigh the 9 cost imposed by the standard? 10 Balanced against any gain in terms of reduced VOC 11 emissions is not only the cost imposed upon manufacturers, 12 but also the cost imposed upon the consumers and society. 13 As less effective aerosol paint may need to be 14 applied in larger volume, this will increase the cost to 15 consumers on the one hand, and raise questions about the 16 emission benefits on the other. 17 Even if the regulatory standard reduces emissions 18 on a per-unit basis, having to use a greater number of units 19 to perform the same function may actually result in 20 increased emissions over time. 21 In light of the complex questions presented in the 22 consideration of technological and commercial feasibility of 23 formulations with the 1999 VOC standards, it is imperative 24 that individuals who make the difficult decisions regarding 25 reformulating, manufacturing, and marketing aerosol paint PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 70 1 products on a daily basis be integrally involved in the 2 debate over the 1999 standards. 3 While the members of this Air Resources Board have 4 a considerable amount of knowledge, expertise, and 5 experience in your respective fields, the aerosol coatings 6 industry is enigmatic. It is an animal unlike manufacturing 7 fields. 8 For instance, because of its relatively small 9 industry (sic), research and development efforts are, in 10 many ways, limited because of the scarce attention of the 11 raw material suppliers. Consequently, aerosol paint 12 manufacturers cannot always dictate accessibility to raw 13 materials. 14 Another factor which makes the aerosol coatings 15 industry unique is the relationship of the various 16 manufacturers, fillers, packagers, and distributors. These 17 intricate relationships evolved because of the nature of the 18 technology. 19 In order to properly evaluate all the operative 20 factors when considering the 1999 VOC standards, NPCA 21 suggests that the Air Resources Board formally convene a 22 committee of experts to act as a review panel for the 1998 23 hearing. This review panel should be comprised of industry 24 members and engineers or chemists from academia, or other 25 private sector community, along with the members of the Air PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 71 1 Resources Board. 2 The review panel would have the responsibility to 3 evaluate the evidence regarding the technological and 4 commercial feasibility of the 1999 standards, and to make a 5 recommendation to the Air Resources Board. 6 This process has several advantages. Not only 7 will the Air Resources Board have the benefit of additional 8 expertise specifically focusing on the aerosol coatings 9 industry, but this review panel will also carry a mantle of 10 independence to the decision-making process that is absent 11 otherwise. 12 Moreover, this suggestion is consistent with the 13 enabling legislation which requires the State Board to 14 conduct such a hearing on or before December 31st, 1998. 15 Comment 5: the use of methylene chloride in 16 aerosol coatings formulations should not be addressed in a 17 rule specifically designed to limit volatile organic 18 compounds. 19 Methylene chloride is not a volatile organic 20 compound and, as such, any effort to restrict or limit its 21 usage in this regulation is beyond the authority of a VOC 22 regulation. 23 ARB staff has correctly indicated that methylene 24 chloride has been declared a hazardous air pollutant and 25 toxic air contaminant. As such, usage of methylene chloride PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 72 1 is subject to the provisions of certain State and federal 2 air pollution laws. 3 Methylene chloride is not, however, considered a 4 human carcinogen. It is subject to the restrictions set 5 forth in California Proposition 65, the Safe Drinking Water 6 and Toxic Enforcement Act of 1986, only because certain 7 tests appear to have resulted in cancer in laboratory 8 animals. 9 Therefore, if a manufacturer decides to use 10 methylene chloride in a formulation, there is already a 11 hefty regulatory price to pay for this decision. 12 ARB staff argue that the provisions of the 13 California Environmental Quality Act, CEQA, require that the 14 use of methylene chloride be restricted in a VOC law because 15 of its potential adverse environmental impacts. 16 In this instance, however, any potential adverse 17 environmental impacts are anticipated and covered by 18 Proposition 65 and the various air pollution laws. If there 19 were no other regulations specifically addressing methylene 20 chloride, then the CEQA would certainly require some action. 21 ARB staff have correctly characterized methylene 22 chloride. It is a strong solvent that is inexpensive and is 23 not a VOC. Because there is no way to predict what avenues 24 will be available to manufacturers seeking to reformulate 25 products for the final phase of VOC reductions, it is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 73 1 important to maintain every possible option for compliance. 2 This is not to say that manufacturers will resort 3 to using methylene chloride without careful and prudent 4 consideration. After all, one must consider the other 5 regulatory restrictions on its use. 6 In addition, it is unclear if manufacturers would 7 increase the usage of methylene chloride. Many have 8 indicated that they do not use it now because of consumer 9 awareness of the health and environmental implications, a 10 fact that the ARB staff recognizes. 11 As such, NPCA recommends that the Air Resources 12 Board reject that part of the proposed regulation which 13 includes methylene chloride as part of the VOC calculation. 14 In its place, the Air Resources Board should add a provision 15 instructing manufacturers to track the usage of methylene 16 chloride and to report the amount and specific use of 17 methylene chloride on an annual basis. 18 In this way, ARB staff will be able to monitor the 19 use of the chemical and determine whether its usage has 20 increased, decreased, or remained constant under the 21 pressure of this VOC regulation. 22 CHAIRMAN DUNLAP: If I may, at that point -- 23 MR. MAJKRZAK: Yes. 24 CHAIRMAN DUNLAP: So, you're supporting 25 recordkeeping, right? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 74 1 MR. MAJKRZAK: Yes. 2 CHAIRMAN DUNLAP: Okay. 3 MR. MAJKRZAK: In this case. 4 CHAIRMAN DUNLAP: All right. Of methylene 5 chloride. Okay. Just wanted to be clear. 6 MR. MAJKRZAK: In conclusion, NPCA commends the 7 ARB staff for its efforts in attempting to understand the 8 aerosol coatings industry while working on this proposed 9 regulation. 10 Indeed, the industry is pleased that CARB has 11 undertaken this initiative so that there will be one uniform 12 aerosol coatings rule in the State of California, rather 13 than a different rule in each air district. 14 When voting on this regulation, the Association 15 asks the Commissioners (sic) to carefully consider this 16 discussion and make the following minor adjustments to the 17 rule before adopting it: 18 One, the 1999 VOC limits should be deleted. 19 Instead of establishing limits that are currently 20 unachievable, the rule should indicate that the 1998 hearing 21 will result in the establishment of Phase II standards that 22 are technologically and commercially feasible. 23 Two, the definition of "technologically and 24 commercially feasible" should be clearly articulated and 25 should include the elements of the discussion under section PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 75 1 four. 2 Three, a panel of industry members, engineers or 3 chemists from other private sector communities, and several 4 members of the Air Resources Board should be formally 5 convened to assist in the 1998 hearings. 6 This review board should evaluate the evidence 7 presented and make a recommendation as to the appropriate 8 technologically and commercially feasible VOC limits for 9 1999. 10 And fourth, methylene chloride should not be 11 included as an element in the calculation of VOCs in a 12 product. Instead, a provision requiring manufacturers to 13 monitor and report its usage should be inserted. 14 NPCA is pleased to submit its view on the proposed 15 aerosol regulation, and we hope to continue to work with the 16 ARB staff in the future on this and other matters affecting 17 the paint and coatings industry. 18 Thank you very much for your time. 19 CHAIRMAN DUNLAP: Thank you. I appreciate the 20 comprehensive nature of your presentation, and also your 21 challenge to try to represent your diverse membership. I 22 know that's difficult. 23 I think it was well worth our time to hear this. 24 Are there any questions of Mr. Majkrzak? 25 MR. PARNELL: We didn't hear a discussion of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 76 1 competitiveness issues. 2 CHAIRMAN DUNLAP: Yes. Supervisor Roberts 3 mentioned a while ago the point -- or brought up the point 4 about competitiveness and averaging. Can you speak to that? 5 MR. MAJKRZAK: No, I'm afraid I can't, not as 6 representing the industry as a whole. 7 The ACP was a subject that the industry spent a 8 great deal of time discussing. And as we have not had a 9 full -- we were not all in full agreement as an 10 association, we have not addressed that. 11 CHAIRMAN DUNLAP: Well, you're with Tru-Test 12 Manufacturing Company, though, right? 13 MR. MAJKRZAK: Yes, I am. 14 CHAIRMAN DUNLAP: Could you speak to it 15 representing your company? 16 MR. MAJKRZAK: I think the -- I think the concerns 17 of Flecto -- I think there's -- I think that sort of thing 18 could possibly occur. I don't know, and I couldn't possibly 19 guess would it likely occur, but I certainly -- in 20 discussions at our company with it, we discussed those sorts 21 of things among ourselves, what kind of latitude does it 22 give -- 23 CHAIRMAN DUNLAP: Sure. 24 MR. MAJKRZAK: -- one company to another. 25 CHAIRMAN DUNLAP: Let's talk about the membership. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 77 1 The Flecto's issue, as you understand it, would be of 2 concern to 20 percent of your members, 5 percent? Can you 3 give us a flavor? Can you do that? 4 MR. MAJKRZAK: No. I absolutely would not be able 5 to. 6 CHAIRMAN DUNLAP: Okay. 7 MS. MC AULIFFE: If I may interject for a moment. 8 My name is Heidi McAuliffe. I'm a counsel in the Government 9 Affairs Division for National Paint & Coatings Association. 10 I'd be happy to address any of your questions as it relates 11 to NPCA membership as a whole. 12 CHAIRMAN DUNLAP: Just wanted to get to the 13 averaging issue. Can you -- 14 MS. MC AULIFFE: Well, as Mr. Majkrzak --- 15 CHAIRMAN DUNLAP: Well, if you're saying your 16 association doesn't have consensus yet, I respect that. We 17 can go on with the rest of the testimony then. 18 MS. MC AULIFFE: Okay. I think that accurately -- 19 CHAIRMAN DUNLAP: Okay. 20 MS. MC AULIFFE: -- you know, indicates what the 21 situation is. 22 As Mr. Majkrzak said, it was a subject of some 23 discussion at our last Spray Paint Manufacturers Committee 24 meeting, which was held in January. 25 CHAIRMAN DUNLAP: Sure. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 78 1 MS. MC AULIFFE: Our membership contains, you 2 know, some very large companies and also some very small 3 niche marketers like Flecto and some other companies on the 4 West Coast. 5 CHAIRMAN DUNLAP: Understood. Understood. 6 Mr. Lagarias, did you have a question? 7 MR. LAGARIAS: Yes. In one of your comments, you 8 indicated that the industry would have to determine that the 9 '99 limits are technologically and commercially infeasible. 10 I don't think that's the case. I think it's up to 11 our staff to determine that the proposed regulations are 12 feasible, and not that you have to prove that they're 13 infeasible. 14 So, I think the burden of proof is on the staff to 15 demonstrate that achievement. 16 Secondly, I think your suggestion of an advisory 17 or a review board to work with the staff is excellent. 18 We've had workshops continuously. And if the staff feels 19 that it can make such an arrangement -- Genevieve? 20 MS. SHIROMA: Mr. Lagarias, this came up at the 21 last workshop. And it was our view that the consumer 22 product working group, which we are forming as part of our 23 commitment in the SIP, can work in this type of role. 24 There was concern that if a formal panel was 25 established of industry representatives and so forth, that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 79 1 some of the industries were concerned that their competitors 2 were going to be making judgments about their products. 3 But our thought was this consumer product working 4 group, which will meet for the first time on April 11th and 5 12th, can form some subgroups to follow this issue and work 6 with all of us closely. 7 MR. LAGARIAS: So, you would encourage advisory 8 groups working with you to the widest extent feasible. 9 MS. SHIROMA: Absolutely. 10 CHAIRMAN DUNLAP: That's very important beyond 11 just the symbolism. People need to be heard. And so, if we 12 were to look at the makeup of these working groups, I would 13 hope that staff would be particularly sensitive to those 14 California-based manufacturers; that they would have an 15 opportunity to be heard and to play some kind of leadership 16 advisory role. Okay. 17 Jack, if I might, on a point you made earlier. I 18 appreciate the fact that you offered this advisory 19 committee. I think it's a good idea. But, also, just to 20 remind you a bit. If you look at the composition of the Air 21 Resources Board, we do represent different disciplines and 22 different areas as well. 23 And we do pride ourselves on our ability as a 24 Board to be able to, you know, to comprehend and address 25 these issues. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 80 1 So, I wouldn't certainly be looking to duplicate 2 what the Board's about with an advisory committee. So, I 3 just perhaps want to point that out to you that the reason 4 this panel is set up as it is, is because of some very real 5 interest in the Legislature and elsewhere that we do reflect 6 various points of view. 7 Okay. Any other questions, Mr. Lagarias? Go 8 ahead, Jack. 9 MR. LAGARIAS: I think you recognize that even the 10 Legislature knew that the '99 proposed VOC reductions posed 11 difficulties. And that's why they suggested that the -- 12 there be a hearing to determine whether or not they could be 13 met. 14 And most of your arguments are against the '99 15 standards, which will be addressed at some subsequent Board 16 hearing. So, I don't think those are an issue today. 17 CHAIRMAN DUNLAP: Thank you. Mr. Parnell. 18 MR. PARNELL: I don't want to belabor it. The 19 competitiveness issue still concerns me and the testimony 20 continues to say that the performance standards are 21 appropriate. '96 performance standards are appropriate and 22 can be met. 23 And then, I go back to Flecto's testimony as to -- 24 if they can be met, why not meet them, as to these 25 individual clear-coating products, without the benefit of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 81 1 averaging? And that confuses me somehow. 2 Maybe staff could help me understand. 3 MR. SCHEIBLE: We incorporated the concept of 4 averaging because we're trying to meet dual goals here. 5 The first one is our explicit charge, which is to 6 achieve the environmental benefit that we have to achieve, 7 and get as much as we can that's reasonable from very 8 category. 9 The second is to do that with the least economic 10 impact on society in general. As most of the Board members 11 know and the new ones, I've spent a lot of time with the 12 South Coast District in RECLAIM. And this exact issue came 13 up. 14 Any sort of averaging provision is going to 15 provide some winners and lowers in terms of the particular 16 industries affected. The whole reason why it's here is the 17 belief -- and I think it's strongly founded -- that by 18 providing industry with flexibility, you will lower costs. 19 You will make it easier, on average, to comply. You will 20 lower the average cost of compliance. And those benefits 21 will be borne both by the industry in general and the 22 consumers who must buy the products and the cost will be 23 passed on to. 24 Secondly, there's also a strong argument that the 25 averaging, where you give an incentive to figure out ways of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 82 1 overcomplying for certain aspects of the regulations, give 2 an incentive to many people to figure out how to do things 3 even better than the reg requires, rather than saying, "How 4 do I get a 30 percent reduction," they say, "Well, are there 5 some places I can get a 50 percent reduction?" 6 And that, over time, those will pay dividends in 7 terms of, well, what can the whole industry do and how can 8 it catch up. 9 Unfortunately, there are always cases where the 10 averaging provisions offer more benefit to some than they do 11 to others. That's particularly true in the case of a 12 company like Flecto that, very commendably, decided -- as 13 part of their strategy -- to go for lower VOC coatings in a 14 certain area. 15 Currently, they're able to compete in that area 16 and provide products. And anyone can come in and sell 17 higher VOC products, except for the Bay Area, and compete 18 with them. The regulation removes -- takes away some of 19 that advantage. Adding the flexibility to the regulation 20 doesn't take away as much of the competitive ability that 21 people currently enjoy as leaving it out. 22 So, I don't -- it is clearly a policy decision 23 that you have to weigh in terms of what does the most good 24 for the most people, and what's in the best public interest. 25 The use of market mechanisms is something that we PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 83 1 incorporate as fundamental to every single rule or proposal 2 that we put together, saying, how can we use it? And we 3 always have this debate with every -- every sector that's 4 involved. 5 And it's fundamentally -- do we believe that 6 providing flexibility -- even in areas where it's 7 technically feasible to meet the standard, you achieve 8 another -- you do so at a lower cost, which is right up 9 there with achieving the environmental benefit so far as the 10 staff is concerned. 11 MR. PARNELL: Thank you for the overview. And 12 the concept, I understand, unless I'm the hundred people who 13 work for Flecto, who may be adversely affected. 14 And so, I guess what I'm driving at more than to 15 perfect my understanding of the whole concept of averaging, 16 which I appreciate and have voted for in the past, is have 17 we exhausted every possible potential correction in order to 18 address the issue? 19 And I don't have a good warm, fuzzy feeling at 20 this point that that has occurred; it may have, and I'm just 21 not aware of it. 22 CHAIRMAN DUNLAP: Okay. Thank you, Mr. Parnell. 23 Ms. Edgerton. 24 Oh, Mr. Scheible? 25 MR. SCHEIBLE: It's staff's position that we have PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 84 1 searched and worked hard to find as many ways of 2 accommodating the different concerns. And short of 3 eliminating the basic concept as an option, we don't know 4 how to do it better. 5 MS. EDGERTON: As a follow-on to that, did Flecto 6 have any suggestion as to how the regulation might be 7 improved to enable the trading to move forward without 8 anticompetitive -- 9 MS. SHIROMA: Right. We had discussions -- 10 MS. EDGERTON: There were no suggestions? 11 MS. SHIROMA: -- and they did go back and think 12 about ways that perhaps they could revise the language, but 13 came forth with this position of eliminate. 14 MS. EDGERTON: Well, it is interesting. The 15 special labeling holds some promise. And there is 16 discussion, I think, about the possibility of giving credits 17 in a special labeling, which -- from which would flow 18 credits. I know that's a fairly embryonic idea, something 19 I've heard discussed. 20 But I want to just comment a little bit with 21 respect to two of the arguments made. One was that we 22 should delete the 1999 VOC limits. I think, in my view, 23 that would fly directly in the face of the legislative 24 direction. I think we're required to adopt regulations 25 which would provide for a 60 percent reduction, and hold a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 85 1 hearing as we move forward. 2 Secondly, with respect to your -- I respectfully 3 mention with respect to your methylene chloride discussion, 4 that I likewise there feel that that is legally deficient. 5 I do think that CEQA requires us to be sensitive 6 to a host of environmental alternatives as we develop 7 regulations. 8 I think, if it were otherwise, it wouldn't make 9 common sense that we're supposed to adopt one set of 10 regulations, which then resulted in another toxic 11 contaminated to be increased in the -- in its emissions. 12 And I don't think Prop 65 is a legally sufficient 13 substitute. I don't think CEQA envisions an information 14 statute as substituting. 15 So, I wanted to make that comment with respect to 16 two of the legal points, with respect to my view of this 17 Board's obligation to the California Legislature. 18 Thank you. 19 CHAIRMAN DUNLAP: Mr. Calhoun. 20 MR. CALHOUN: I guess I'd just like to cite one 21 observation here, and that pertains to the technological 22 feasibility of the standards. 23 It's been sort of the history of the staff over 24 the years to propose technology forcing standards. And 25 there comes a time when you have to decide whether or not PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 86 1 these standards are technologically feasible. And that 2 would be the case here, when they have the year-end in 1988, 3 if it has been determined that the standards are not 4 technologically feasible, then the Board will end up 5 adopting something that is feasible. 6 So, that's something you ought to always keep in 7 the back of your mind. I keep hearing, and I expect we'll 8 hear again today, something about the technological 9 feasibility of the standards. But I think they ought to be 10 out there, that they should be there for the industry to 11 work toward. 12 MS. MC AULIFFE: Sir, if I could respond to that. 13 I think the issue of technological feasibility isn't really 14 disputed amongst the industry, or the ARB staff, or this 15 Board. 16 I think the real issue is the commercial 17 feasibility. And that takes into account aspects that go 18 beyond just the ability to -- for the technology to make 19 formulations at that VOC limit. 20 That takes into account a manufacturer's ability 21 to market its project -- its product. And those marketing 22 decisions made by businesses every day are extremely complex 23 decisions that have to do with, you know, who are their 24 customers. You know, what is the product designed to do? 25 How well does it do those things, the price, and many other PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 87 1 factors that I'm not even acquainted with. 2 And those types of decisions, as I indicated, are 3 very sensitive, and need to be given the consideration that 4 they deserve, particularly when the consequences will be to, 5 you know, basically make certain spray paint products 6 extinct in the State of California. 7 And that really is what our comment is designed to 8 do, is basically just -- you know, flesh out that term, 9 "commercial feasibility," and hopefully provide some kind of 10 a procedure to make sure that that aspect of the phrase 11 "technological and commercial feasibility" is given its due 12 consideration in those hearings in 1998. 13 CHAIRMAN DUNLAP: Sure. I think that's wise 14 counsel, and that certainly is our intent. 15 Supervisor Roberts. 16 SUPERVISOR ROBERTS: Thank you. I think in 17 reviewing all of these documents, the two things that at 18 least jumped out to me were the issues of fair competition 19 and the definition of "technologically and commercially 20 feasible." 21 And I'm not questioning the concept of setting 22 those standards, but some specific criteria regarding this 23 situation as to how -- what's the ground rules for making 24 those decisions. 25 And I haven't seen, either in the presentation PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 88 1 today or in the documents, that kind of background. And I 2 think it's what I hear them asking for. It leaves me a 3 little uncomfortable, I will tell you, because if somebody's 4 going to make a judgment, I could see easily coming to a 5 judgment that something is technologically and commercially 6 feasible, but devastating on the industry. 7 And I think there needs to be some type of 8 rounding out of that term. And I think that's a missing 9 ingredient that needs to be put in. 10 I will also tell you, I like the idea of the panel 11 of industry experts. And I know we get input from all sorts 12 of experts, and we need to limit it to one panel, but I like 13 the idea of designating a panel of experts, if you will, to 14 provide some assistance, or at least an advisory position. 15 But I think ahead of time, not in 1999 -- I don't 16 think you wait till 1999 and then define what 17 technologically and commercially feasible means. 18 CHAIRMAN DUNLAP: Well, on that point, may I ask 19 Mr. Boyd and his team maybe to talk a bit about current 20 thinking and the definition as staff understands it? 21 You might answer a lot of questions if you do 22 that. 23 MR. JENNE: I think I can address that question. 24 The terms "technologically and commercially 25 feasible," we've had general definitions of these terms that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 89 1 have been consistently followed by the Board ever since the 2 first consumer product regulation was adopted in 1990. 3 And we made a decision at that time that we did 4 not want to include those definitions in the regulation 5 itself, because, as you heard in the testimony today, the 6 actual determination about whether a particular standard is 7 feasible is a very fact-specific inquiry that has to be made 8 on a case-by-case basis after looking at all -- a whole lot 9 of factors. 10 There are two pages of factors listed in the 11 testimony of things that they believe should be looked at. 12 And our general definitions are not currently 13 phrased in a type of very specific regulatory language that 14 the Office of Administrative Law would like to see in 15 regulations. 16 If we try to make these definitions more specific, 17 we would need to include some very detailed criteria that 18 would almost certainly not work well for every standard, for 19 every consumer product, in every situation. 20 In fact, we think what would happen would be the 21 regulatory language could end up limiting the Board's 22 discretion to make an appropriate common-sense decision in a 23 particular case, simply because the particular fact 24 situation that arises did not fit into that language. 25 CHAIRMAN DUNLAP: I understood the problem with PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 90 1 "one size fits all." 2 Tell me how you would do it in this case? What 3 would be the process whereby you would solicit the input, 4 you know, we would come up with the definition? 5 MR. VENTURINI: Mr. Chairman, maybe I can address 6 this. Basically, it's' the process that we go about 7 developing programs and the process we followed with the 27 8 categories of consumer products to date, which is basically 9 to have a fully open process, numerous workshops -- 10 CHAIRMAN DUNLAP: But you define it at each time? 11 MR. VENTURINI: What we do is, for each of the 12 categories, we address those two questions and make a 13 determination category by category specific: Does it meet 14 the criteria in the discussions that we have at the 15 workshops and discussions with individual companies that 16 meet with us. 17 We also discuss those two criteria, what goes into 18 making those decisions, and so forth. 19 CHAIRMAN DUNLAP: Sure. 20 MR. VENTURINI: And we will continue that type of 21 dialogue. 22 MR. LAGARIAS: Mr. Chairman, in addressing 23 commercial feasibility, I think the staff can identify how 24 much it would change the cost or affect the performance of a 25 product. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 91 1 But the commercial feasibility is determined by 2 the marketing department of those people selling the 3 products, whether it's an Edsel or something else. But they 4 have to determine what the market will take and at what 5 price. 6 Ultimately, the commercial feasibility is a 7 manufacturer's decision. 8 We have to determine how we affect the commercial 9 feasibility or whether we are restricting it in such a way 10 that it can't be either made or the impact of the regulation 11 is so Draconian that it affects the commercial acceptance. 12 CHAIRMAN DUNLAP: Yes, Dr. Boston. 13 DR. BOSTON: I'd just like to back up a little bit 14 on this methylene chloride issue. I know that methylene 15 chloride is a definite toxic air contaminant and has been so 16 declared. 17 I know that it's a strong animal carcinogen. We 18 suspect it's a very strong human carcinogen, also. And I'm 19 a little disturbed to hear you say that you don't think 20 there should be any controls over your use of that compound, 21 and question our legal authority to limit it. 22 I think that we should not back off at all on the 23 use of methylene chloride. I think we should monitor its 24 use very closely. And even though it may only be under the 25 toxic air contaminant hot spot program right now, certainly, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 92 1 those companies that use it have to report its use to local 2 neighborhoods where it's being used and have to advise the 3 neighborhoods of its use. 4 And I think we need to do the same thing at this 5 level -- watch it very closely and not let its use statewide 6 be increased at all. 7 MS. MC AULIFFE: We certainly did not want to give 8 the impression that we are advocating a position that there 9 should be no controls over methylene chloride. 10 We recognize that it's a hazardous air pollutant; 11 that it is a toxic air contaminant; and that it is on the 12 list of chemicals under Proposition 65. 13 I think our argument is basically that these other 14 regulations already limit and restrict the use of methylene 15 chloride. And that restriction is properly placed in those 16 other regulations. 17 And a manufacturer's decision -- in the chance 18 that they decide methylene may be an option to try to 19 attempt to achieve the 1999 standards, if they decide to use 20 methylene chloride -- certainly has to take into account 21 every other regulation -- that includes methylene chloride-- 22 in making that decision. 23 And methylene chloride -- the use of the methylene 24 chloride comes with a very, very heavy regulatory price. 25 However, NPCA believes that that's a price -- that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 93 1 decision ought to be the manufacturer's decision. If they 2 want to put the Prop 65 labels on their chemical and all of 3 the other restrictions that go ahead -- that go along with 4 using methylene chloride, again, that's a manufacturer's 5 decision to undertake. 6 DR. BOSTON: Well, I would just hope that you 7 would use the public safety as part of your decision-making 8 and not try to circumvent our regulation. 9 Thank you. 10 CHAIRMAN DUNLAP: Okay. Any other questions? 11 Thank you very much. We'll call the last two 12 witnesses that have signed up. Robert Graham and Doug 13 Raymond. 14 Good morning. 15 MR. GRAHAM: Good morning, Mr. Chairman, members 16 of the Board. My name is Bob Graham. I'm Vice President 17 and Technical Director for the Specialty Division of the 18 Sherwin Williams Company. 19 And I'd just like to take one brief moment of your 20 time to extend my personal thanks to the members of the 21 staff that have worked with industry over these many years 22 and done a very admirable job of it, I feel -- Don Ames, 23 Peter Venturini, Genevieve Shiroma, Peggy Taricco, and Paul 24 Milkey particularly. 25 Without belaboring the issue, I would like to also PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 94 1 voice my concern about the 1999 VOC limits. At this point 2 in time, given all the testimony that's already been 3 presented, I would just like to ask the staff to pay close 4 attention to what industry is saying and listen carefully, 5 and use whatever methodology is determined to be feasible to 6 arrive at these 1999 VOC limits. 7 Notwithstanding that, I would like to urge the 8 Board to adopt the rule as it now stands, and to adopt the 9 amendment to the ACP. 10 Thank you very much. 11 CHAIRMAN DUNLAP: Thank you. Any questions? 12 Okay. Very good. Thank you very much. 13 Mr. Raymond, also from Sherwin Williams. 14 Good morning. 15 MR. RAYMOND: Good morning. Can you hear me? 16 My name is Doug Raymond. I'm the Divisional 17 Director of Regulatory Affairs of the Specialty Division of 18 Sherwin Williams. 19 Our division produces aerosol household, 20 industrial, pesticide, automotive, and coating products. We 21 are the largest producer of aerosol coating products in the 22 country. 23 Our division has worked with CARB on Phase I and 24 Phase II regulations as well as on the ACP. Our goal has 25 been simple -- to assist in the development of regulations PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 95 1 which are technologically feasible, while reducing VOC 2 emissions and maintaining a high quality and useful product 3 for the consumer. 4 We have been involved in the development of the 5 BAAQMD Rule 49 and the unenforceable SCAQMD Rule 1129, both 6 of which regulate VOC emissions in aerosol coatings. Our 7 division initiated and supported amendments AB 2783 and AB 8 1890, both sponsored by Assemblyman Sher. 9 These amendments made aerosol coatings (1) a 10 consumer product, and (2) provided sole authority to CARB to 11 regulate aerosol coatings, with the exception of the Bay 12 Area AQMD Rule 49, which was a court order. 13 These amendments were needed to provide the 14 industry with a uniform rule throughout the State. 15 With the adoption of this rule, it will be the 16 first statewide VOC aerosol coating rule in the country; 17 thus, a very large precedent is being set today. Our 18 company, and the industry, as well as your staff has put 19 many hours into this rulemaking effort. 20 At a quick glance, the rule seems to be identical 21 to the Bay Area. However, after closer inspection, it would 22 be noticed that the proposed rule has subtle differences, 23 which make it a more feasible rule than Rule 49. 24 The Bay Area rule was developed due to a court 25 order, which provided little flexibility to develop a truly PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 96 1 workable rule, as the CARB staff discovered in their own 2 rulemaking process under the same court order for consumer 3 products. 4 Some of the differences include exemptions for 5 chemicals that are not precursors to ozone formation, which 6 is provided in Section 94521(a)(62). 7 CHAIRMAN DUNLAP: We'll take a break for the 8 paper. 9 (Thereupon, there was a pause in the 10 proceedings to allow the reporter to 11 replenish her stenograph paper.) 12 [The following statements were transcribed by 13 the reporter from the tape recording:] 14 MR. PARNELL: With the Chairman's indulgence, 15 which he is providing me, because he doesn't know. 16 (Laughter.) 17 MR. PARNELL: Could the staff, while we're 18 changing paper, address the issue of the averaging concept? 19 It sunsets at some point, and I -- 20 (Thereupon, Mr. Parnell was informed by Chief 21 Counsel that all statements must be on the 22 record.) 23 MR. PARNELL: Oh, it does? Excuse me. And now 24 we're going to get the paper. 25 [Thereupon, the following portion of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 97 1 transcript was officially reported in shorthand 2 writing by the reporter:] 3 MR. PARNELL: Mr. Chairman, you're back. 4 CHAIRMAN DUNLAP: I turn my back for just a 5 moment. 6 (Laughter.) 7 CHAIRMAN DUNLAP: And you try to slip something 8 in, Jack. 9 (Laughter.) 10 MR. PARNELL: Well, unfortunately, it's my cohort 11 that put me up to this. 12 (Laughter.) 13 CHAIRMAN DUNLAP: We're going to have to move -- 14 we're going to have to move Mike Kenny to this end. 15 All right, (addressing the reporter), are you all 16 square? All right. 17 Mr. Parnell, if we might. 18 MR. PARNELL: This was a point of information in 19 terms of trying to balance this thing, and it really has 20 nothing to do with the testimony, or it does maybe 21 indirectly. 22 So, I apologize. 23 The whole concept of averaging, as we know it 24 today, does it -- does this continue into the foreseeable 25 future? It seems to me that I recall that it sunsets. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 98 1 MS. SHIROMA: It does continue into the future, 2 although we made the commitment to the Board in September to 3 monitor how the program is working. 4 MR. PARNELL: Okay. 5 MS. SHIROMA: But it does not have a sunset 6 clause. 7 MR. PARNELL: Thank you very much. Now, that's 8 your answer. I apologize. 9 CHAIRMAN DUNLAP: Very good. Continue. 10 MR. RAYMOND: Okay. To get back to some of the 11 exemptions and some of the changes, the inclusion of the 12 lacquer category in Section 94522(h) provides limited time 13 to reformulate this useful product and prevents banning of a 14 legitimate category as was done by the BAAQMD due to a court 15 order restriction. 16 One other change was the removal of onerous 17 quarterly reporting, which was replaced with Section 18 94524(c), which should provide the staff with much needed 19 information, while not creating a paper work burden for the 20 industry. 21 Thus, due to these changes and many others, our 22 goals have been met, and the division supports the rule, as 23 submitted, for the 1/1/96 limits. 24 Currently, the VOC limits for 12/31/99 are not 25 technologically and commercially feasible. But due to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 99 1 Section 94522(g), which provides industry an opportunity to 2 revisit these limits in 1998, I am confident that a workable 3 solution will be developed. 4 I would like to now talk about the ACP. The 5 inclusion of the ACP into this rule is very important. Our 6 division, along with many other companies; namely, the S. C. 7 Johnson Company, Reckitt & Colman, and 3M, helped develop 8 and support its adoption in September of 1994. 9 We again support the inclusion of this valuable 10 and innovative rule to provide flexibility and incentive to 11 increase emission reductions of our products. 12 As we testified in September, we believe the ACP 13 should be applicable to all VOC sources, not just consumer 14 products and aerosol coatings products. We believe it 15 should be granted to a much wider range of products. 16 However, given the fact that this is an innovative 17 concept, we are patient and will work with the staff to 18 further refine this concept. 19 The making of the aerosol coating rule has been 20 long and time consuming, with many meetings and significant 21 amounts of information provided to the staff. I would like 22 to thank Genevieve, and Peggy, and Paul for their patience 23 and understanding through this process. As well, the rest 24 of the staff and management, Peter and Don, were 25 accommodating to meet with us and discuss the issues. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 100 1 I do not believe this is the end of this rule, and 2 look forward to working with the staff in the years to come 3 to further refine this rule. 4 Again, we support the rule and the inclusion of 5 the ACP, and urge the Board to adopt as is. 6 And I can answer any questions about the ACP that 7 you would like to ask. 8 CHAIRMAN DUNLAP: Very well. Thank you. 9 Any questions? 10 SUPERVISOR RIORDAN: I don't have any questions. 11 CHAIRMAN DUNLAP: Okay. Any questions for the 12 witness? 13 MR. CALHOUN: I'd just like to ask one question. 14 CHAIRMAN DUNLAP: Supervisor Roberts, and then 15 you, Mr. Calhoun. 16 MR. CALHOUN: Okay. Fine. 17 SUPERVISOR ROBERTS: The offer to answer any 18 question, I thought -- the question we've been asking is 19 taking a known product line, product mix and applying it in 20 the situation that Flecto is worried about. 21 Is that something that is conceivable? Is it 22 remote? What does it do to the rest of your -- what are the 23 tradeoffs? Don't you then open yourself up to competition 24 at the other end? If you're gaining that advantage, I'm 25 just curious if anybody has actually looked at that with PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 101 1 respect to -- 2 MR. RAYMOND: The process of starting the ACP or 3 developing the ACP took us about three years. And all of 4 these issues were brought up. But I would like to clarify 5 some of the information that has been put before this Board. 6 For one, there are not billions of aerosol coating 7 products made in the United States. There's only 360 8 million. I know that sounds like a lot. But when you take 9 that and you reduce it down to what is made in the State, 10 okay, that's about 10 percent or 20 percent of that. You 11 can't get this huge amount of emission surplus that was 12 being stated. 13 Most of what we were looking at when the ACP was 14 being done was that you could go and reformulate product by 15 product to get into compliance. But, in the meantime, if 16 you could find someplace that you could overcomply, you 17 could use it somewhere else. 18 And we were talking about, at least as far as our 19 company is concerned -- we're very conservative -- is that 20 we were looking at a big offset to take up a little bit of 21 having to go over. 22 We would never, ever get in the situation where it 23 was a one-to-one emission tradeoff. Most of what we were 24 looking at was probably at 10 to 1 or 5 to 1. And I believe 25 Peggy -- and I think Floyd's here -- we even talked about PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 102 1 creating surpluses at the beginning. 2 But then, there were some companies that came in 3 and said that we didn't have to put a cushion or whatever. 4 But, as far as our company's concerned, we would provide 5 that cushion to ourselves. 6 There is not this great amount of emissions that 7 everybody's talking about. So, we would use it where we had 8 to, to make sure that we kept the product on the shelf. 9 For example, as was stated by NPCA, there are some 10 products in the Bay Area that still can't comply. 11 CHAIRMAN DUNLAP: Mr. Calhoun. 12 MR. CALHOUN: Mr. Raymond, I thought I heard you 13 say that you believe that the alternative control plan 14 should be available in any case where a VOC regulation is 15 being considered. Is that correct? 16 MR. RAYMOND: Yes. 17 MR. CALHOUN: If you were in Flecto's position, 18 would you be -- would you make the same statement? 19 MR. RAYMOND: I would be even more so for it, 20 because I could buy cars, I could buy buses. I could use my 21 coatings line, my bulk coating lines. I could use anything 22 else that was out there to trade -- stationary source 23 emissions if that was appropriate. 24 So, what I'm saying is, by opening it up, you 25 provide an even more and fairer field. Because anybody can PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 103 1 go purchase, you know, car emissions and crunch cars. 2 MR. CALHOUN: Let's just assume that there's no 3 emissions trading; this is just a case of your having to 4 take your own products that you produce and develop some 5 type of alternative formulation, would your statement be the 6 same in that case? 7 MR. RAYMOND: Well, I'm not intimately familiar 8 with what Flecto produces, but I think there's opportunities 9 to further their technology to use some of their own 10 products to get emission reductions. 11 MR. CALHOUN: Thank you. 12 I guess we all share the competitiveness concern. 13 But I guess I'd like to elaborate a little bit on something 14 that Mr. Lagarias said a few moments ago. 15 I don't see how this Board can specify what must 16 be done, specify some criteria that must be met in order to 17 decide what's commercially acceptable. 18 MR. LAGARIAS: Right. 19 MR. CALHOUN: It seems to me that's where 20 competitiveness comes in, and that's something that each 21 company has to face. 22 CHAIRMAN DUNLAP: Understanding that, it's 23 important, though, for industry to understand how we'll go 24 about defining that and what they can expect, what that 25 process is. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 104 1 And that's what I tried to get at earlier with my 2 question. So, good point. 3 Supervisor Riordan. 4 SUPERVISOR RIORDAN: This is really not a question 5 for the speaker, but a basic comment, because I think we've 6 had some discussions and I think I've been a strong advocate 7 of some alternatives to allow flexibility. 8 Do we have -- and this to staff -- do we have just 9 one -- I guess it's an aberration, or something that's of 10 concern to only one company? Do we have only one company 11 with Flecto's problem, or are there just a series of them 12 that we just haven't heard from? 13 Or is this an isolated one? 14 MS. SHIROMA: We do have a comment letter from 15 Rudd Company in Oregon, who expresses similar concerns. I 16 think, though, the Rudd Company and Flecto have been the two 17 vocal companies on this matter. Not to say that there might 18 not be other companies also concerned. But these are the 19 two that have been vocal with us. 20 SUPERVISOR RIORDAN: Conceivably, if it were a 21 very single issue, you could maybe modify slightly the 22 formula by which you would utilize that one very specific 23 product for credits, but that may not work if you've got 24 several out there. 25 I guess I still buy into and think I continue to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 105 1 support this flexibility that we've allowed. But I'm just 2 trying to think if there's any way you can craft an 3 accommodation without just ruining the entire thought 4 process behind allowing for flexibility. 5 I know it gets very complicated. But you could 6 isolate in one case maybe some sort of an accommodation. I 7 don't know. 8 MR. VENTURINI: Let me just mention -- because I 9 think you're trying to resolve this. And in the discussions 10 with Flecto and the other companies, we specifically asked, 11 "Are there other things we can do beyond what we already 12 have agreed to do," which was basically limit the ACP for 13 aerosol paints and only aerosol paints. 14 And I think I'd be correct in saying that Flecto 15 Company felt that they were just opposed to the concept of 16 averaging in any form. 17 And so, we weren't able to reach that other point. 18 SUPERVISOR RIORDAN: That's a different point, you 19 know. I mean, if you're just opposed to it, that's real 20 difficult to figure out some sort of an accommodation or 21 just a bit of an assist. 22 Thank you. 23 CHAIRMAN DUNLAP: Mr. Lagarias. 24 MR. LAGARIAS: Well, I support the alternative 25 control plan. I think it makes sense. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 106 1 But the suggestion that maybe it should be 2 broadened to encompass other things, my feeling goes the 3 other way. Perhaps it should be made narrower. And instead 4 of having one huge bubble to include everything under the 5 sun, we have a little bubbles and maybe make it more 6 specific to prevent a commercial advantage being taken. 7 And I think we'd look very closely at any effort 8 that targeted a competitor market using a bubble concept as 9 being totally against our objective, which is to reduce 10 total emissions and give the manufacturers flexibility to 11 mix and match among their products as a way of achieving 12 that, but not at the expense of a commercial advantage, 13 especially a targeting advantage. 14 Thank you. 15 CHAIRMAN DUNLAP: Supervisor Vagim. 16 SUPERVISOR VAGIM: Mr. Chairman, I don't know if 17 this is for the witness or for general discussion with 18 staff. 19 So, if we're going to have some opportunity to do 20 that, I'd like to. 21 CHAIRMAN DUNLAP: Sure. Any other questions for 22 the witness at this point? 23 Very good. Thank you for your time, Mr. Raymond. 24 Appreciate it. 25 MR. RAYMOND: Thank you. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 107 1 CHAIRMAN DUNLAP: Supervisor Vagim. 2 SUPERVISOR VAGIM: Thank you. To Mr. Lagarias' 3 point, which I've been thinking along, I guess, similar 4 lines, at least on the point of narrowing product in the 5 ACP. 6 Before we get to that, I want to step back and 7 look at ACP itself. If someone has products or groups of 8 products, and those who have a narrower group of products 9 with higher VOC end up with a proportionate higher bubble 10 for the amount of sales that they have in total -- isn't 11 that correct -- than someone that has a lot of products, a 12 lot of it mixed with lower VOCs in combination, have a less 13 proportionate bubble to the amount of product sold. Isn't 14 that correct? 15 MS. SHIROMA: Right. We wanted to make sure that 16 there were equivalent emission reductions. So, if there are 17 lesser sales of the lower VOC and further reformulation 18 occurs, then there could be, commensurately, a lesser amount 19 of -- 20 SUPERVISOR VAGIM: But somebody that has -- let me 21 just -- this is kind of refining that before you get into 22 that, Mr. Scheible. 23 That, if someone has more proportionate VOC in 24 their product line, gets -- if they get a reduced -- 25 actually get a bigger bang for the buck in the bubble PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 108 1 concept, then someone that has a lot of product and does not 2 have the ability to shift from a standpoint of shifting from 3 one point to another. Isn't that correct? You have a more 4 proportionate VOC content in that bubble. 5 MR. SCHEIBLE: I don't -- 6 SUPERVISOR VAGIM: Or would the reverse be true? 7 MR. SCHEIBLE: I don't think it works that way. 8 The way the ACP -- if a manufacturer has a preexisting 9 product that meets the standard, is lower than the standard, 10 the way our ACP is crafted, they don't get credit for that. 11 They have to do reformulations in every case to reduce 12 emissions to get the equivalent emission reduction. 13 So, we go in and we say, you're at where you're at 14 for whatever reason you got there, and that's your starting 15 point. 16 And then, we calculate how many emission 17 reductions you need if all your products were to comply. 18 And then you create an alternative plan to get that same 19 amount of emission reduction. 20 So, we don't have the situation where people have 21 big product lines that overcomply, and they go into this at 22 the start without doing anything, gaining a credit from 23 their preexisting practices. 24 In terms of everybody has to comply with the same 25 VOC limit, you get no credit for your reformulation that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 109 1 gets your product from 90 percent VOC down to 80 percent or 2 down to 66 percent. 3 Then, once you go beyond that through your 4 efforts, you start to generate credits. 5 So, where you are relative to the existing 6 standard doesn't help you or hurt you in the ACP. You have 7 to get all those emission reductions. Then, when you start 8 doing more than you otherwise would have done and you choose 9 to do more, you can trade that against choosing to do less 10 for some other product line. 11 SUPERVISOR VAGIM: Okay. But back to my question. 12 And let me get to the first question, then. That's that if, 13 indeed, you have more product to shift to within that 14 bubble, you have more abilities then to adjust your ratio 15 than someone that has a lot of product, for lack of a better 16 word, that is "hot" in total across a product line. 17 MR. SCHEIBLE: But the more products you control 18 and make, the more opportunities you will have to find a 19 place where you can overcontrol and create emission 20 reductions that you can use. 21 SUPERVISOR VAGIM: Okay. Then let's go to, then, 22 to what Mr. Lagarias discussed just a minute ago, and that 23 is, let's narrow it. 24 Let's say that, instead of saying all product that 25 is aerosol paint, we have many bubbles like for clear -- a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 110 1 bubble for clear, a bubble for flat, a bubble for something 2 else. 3 What happens there? 4 MR. SCHEIBLE: I believe you would remove the vast 5 majority of the flexibility afforded by the ACP. 6 SUPERVISOR VAGIM: But doesn't that give more of 7 an even playing field for that competitive marketplace? 8 MR. SCHEIBLE: It makes the regulation far more 9 like the straight performance standard regulation and 10 greatly diminishes it. 11 So, from the standpoint of, does everybody have to 12 do the same thing and the competition is run on their 13 ability to meet a certain standard, yes, it maes it more 14 equitable. 15 SUPERVISOR VAGIM: Okay. But those that have 16 niche markets obviously would be able to take advantage of 17 it, but those who have bigger markets could take advantage 18 someplace else. 19 So, it's going to play out somewhere else in the 20 bigger playing field, wouldn't it? I mean, isn't that what 21 we're really after? 22 MR. SCHEIBLE: You mean the concept where you 23 would be limited to what you can do within a category? 24 SUPERVISOR VAGIM: Multiple, many bubbles and 25 defined by what the aerosol is -- clear, flat, and what have PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 111 1 you. And in a bigger picture, someone with a bigger product 2 line would be able to take advantage of accumulating in a 3 cumulative way those many bubbles versus -- 4 MR. SCHEIBLE: Oh, then it would be an advantage 5 to manufacturers who -- or useful to manufacturers who have 6 multiple products in the same line, which would further 7 limit the -- 8 SUPERVISOR VAGIM: Okay. Well, then, that would 9 lead back to someone with a niche marketplace and would be 10 able to also take advantage of that. 11 But in the bigger picture, someone with a lot of 12 different products would accumulatively be able to take all 13 the bubbles and take advantage of it. 14 So, wouldn't you be kind of having the best of 15 both worlds? 16 MR. LAGARIAS: Well, I didn't want to suggest that 17 we have dozens of bubbles. I wanted to look at the 18 feasibility of possibly maybe two or three bubbles might 19 make sense. 20 If that doesn't make sense, the argument that Mr. 21 Scheible presents is feasible. But it was not my intent to 22 make a bubble over every specialized product. 23 But is there a division or possible division 24 within the broad concept that we have now? Have you 25 considered it or are you willing to look at it? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 112 1 MR. VENTURINI: I think, within a product 2 category, you face the situation where my understanding is 3 that most companies just have like one product in a 4 category. 5 MR. LAGARIAS: Well, we already have one bubble on 6 the aerosol products. 7 MR. VENTURINI: Aerosol paints. 8 MR. LAGARIAS: Aerosol paints. 9 MR. VENTURINI: In all the 35 categories. 10 MR. LAGARIAS: So, my question is, is it feasible 11 to look at more than one bubble within that 35 paint, 12 aerosol paint group? 13 MR. VENTURINI: You could look at multiple bubbles 14 within that 35. I don't, at this point, know what the -- 15 what that would do in terms of providing flexibility or just 16 removing the incentive for the ACP. 17 MR. LAGARIAS: Well, at the '98 hearings, 18 certainly we're going to look at the alternative control 19 plan as well. 20 Maybe it might make sense to look at that at that 21 time, too. 22 MR. VENTURINI: And we'll be monitoring the 23 implementation of this as well. 24 CHAIRMAN DUNLAP: Fine. If I may, there's a 25 couple of housekeeping things I'd like to do, and we can PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 113 1 come back and discuss this. So, defer to me just for a 2 moment, if you would. 3 Is there anyone else who would like to testify? 4 Okay. Very good. That'll conclude the public testimony on 5 this item. 6 I'd like to give staff a moment to, for the 7 record, to summarize those written comments that the Board 8 has received. And I'd ask you to do so at this time. And 9 then we'll come back to the discussion, and we can get into 10 this issue. 11 Mr. Boyd? 12 MS. SHIROMA: Thank you, Chair Dunlap. I'll be 13 summarizing the letters briefly. 14 First, we received a letter from Mr. Jim Hukill 15 with Forrest Paint. He asked for a two-year extension of 16 the limit for high-temperature paints to allow additional 17 time for research and development. 18 He also makes the comment about the 1999 standards 19 be eliminated at this point, and believes that reporting 20 requirements are unfair to small businesses. 21 We contacted Mr. Hukill by telephone recently. We 22 explained that it was our position it was not appropriate to 23 extend the high-temperature limit as there are many high- 24 temperature coatings that currently meet the standard. 25 We also informed him that Forrest Paint's product PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 114 1 does qualify as an exact match product and can therefore 2 meet the standards in the regulation under the exact match 3 category. 4 In addition, we explained the requirement for the 5 1999 standards, and we also noted that, based on comments at 6 our last workshop, the reporting requirements have been 7 reduced considerably. 8 In our discussion, he indicated to us that he felt 9 we had addressed his concerns. 10 The next letter is from Mr. Matthew Steele with 11 ZRC Products Company. 12 He expresses concern about the 1999 standards for 13 zinc rich primers, as his company believes that these 14 products cannot be reformulated. 15 He also notes that the -- he thinks ACP may not be 16 useful for his company as it makes no other products. As we 17 indicated, we discussed '99 standards earlier. We also 18 believe that Mr. Steele was not aware of the opportunities 19 in the ACP for companies like his, which is a small company, 20 to use the surplus reductions. 21 We also received a letter from Livingston and 22 Mattesich, representing Thompson Miniwax. They echo the 23 NPCA comments, and they indicate that they feel that they 24 have a number of coatings which would have difficulty with 25 the 1999 standards. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 115 1 We have the letter from the Rudd Company, where 2 they also echo the NPCA comments and acknowledge that while 3 the ARB staff has been helpful and willing to fully explore 4 the ACP, and appreciate our desire to provide alternative 5 methods for complying with the command-and-control types of 6 regulations, that they do recommend rejection of the ACP. 7 We received a letter from Kiwi Brands, 8 Incorporated, where they also express concerns about the 9 1999 standards for their products. We discussed that 10 earlier. 11 We received a letter from Aervoe-Pacific Company. 12 The president is David Williams. Overall, he expresses his 13 philosophical differences in any sort of regulation activity 14 in this category. 15 He brings up a concern about what is the 16 consideration of photochemical reactivity in regulations. 17 This is one of the areas that we have committed in the 18 State Implementation Plan to look at in the future as it 19 might affect these kinds of regulations. 20 We then also received comments from Spray 21 Products Corporation, the Ohio Polychemical Company, and 22 Yenkin-Majestic Paint Company, all expressing their support 23 for the regulation, with the inclusion of the lacquer 24 provision. 25 We received a letter from Mr. Milton Feldstein, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 116 1 the Air Pollution Control Officer with the Bay Area Air 2 Quality Management District. They express support for the 3 rule. They believe that they will obtain additional 4 reductions when the 1999 standards become effective. 5 The district applauds the methylene chloride 6 provision, also the prohibitions on the use of ozone 7 depleting compounds and toxic air contaminants. 8 The district finds the staff proposal for lacquers 9 acceptable and believes the two-year limitation on this 10 provision will minimize conversion of nonlacquer products to 11 lacquer products. 12 And finally, the district also agrees that the ACP 13 will give flexibility to manufacturers, and urges adoption 14 of the staff proposal. 15 We received a letter from Mr. David Howekamp, 16 Director of Air and Toxic Division at the U.S. EPA. 17 They expressed their appreciation for the ARB 18 moving to adopt the aerosol paint regulation as one of the 19 first SIP measures to be considered by the Board. 20 They identified several administrative 21 requirements that need to be addressed when the rule is 22 submitted to the SIP, and indicate that the administrative 23 requirements do not require language changes to the 24 regulation. 25 And we will be working with them on that. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 117 1 And finally, we received a letter from Janet 2 Hathaway with the Natural Resources Defense Council. She 3 expresses NRDC support for this regulation, which they 4 characterize as important. 5 They believe the adoption of this regulation is a 6 key step in fulfilling the State's Federal Clean Air Act and 7 SIP obligations. They note that the regulation is soundly 8 structured and provides flexibility to manufacturers through 9 the ACP and the 18-month sell-through. And they commend the 10 ARB staff for our meticulous work and are supporting this 11 regulation. 12 And that concludes my summary. 13 CHAIRMAN DUNLAP: Very good. Thank you. 14 Mr. Boyd, does staff have any further comments? 15 MR. BOYD: Thanks, Mr. Chairman. 16 I think, sitting here listening today, I do have a 17 couple of areas I want to address. 18 For the benefit of the members of the Board, 19 perhaps particularly newer members, and for the members of 20 the audience and the regulated community, I don't need to 21 remind either the Board or the audience of the uniqueness of 22 the California air quality problem. 23 But all of you, many of you having just sat 24 through the SIP debate of last year relative to, you know, 25 ozone, and the deadlines of the Federal Clean Air Act, and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 118 1 VOCs in this case being a major component of and one of the 2 major constituents of ozone, probably have a keen 3 appreciation of the tough job that faces the Board, and the 4 citizens, and the businesses of California as we try to 5 achieve the federal and State statutory mandates. 6 And you know the job that we had to do in defining 7 the problem and then allocating responsibility for the 8 problem for attaining the ozone standard that's represented 9 in that SIP. And you know painfully well, those of you who 10 sat through the three days and all the intervening period of 11 time, the difficulty in doing just that -- allocating the 12 responsibility to the various sectors of responsibility. 13 And naturally and understandably, everybody hopes 14 somebody else can solve the problem. And you have the most 15 difficult job of dividing that up and making the final 16 decisions, which you courageously did. But if we don't 17 strive to do what we said we would try to do in that plan, 18 then the target doesn't change and the responsibility will 19 get shifted to someone else. 20 Recognizing how difficult it was to reach the 21 consensus that was reached on that plan, I just urge that 22 we, at this point, at least stay the course and allow what 23 I'm going to address in the second point -- which is kind of 24 a tradition in process to carry on in the future for the 25 benefit of this industry, which probably feels like they're PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 119 1 not novices and new to this area of regulation. But sitting 2 from our perspective, and perhaps some of you from your 3 perspective, of many, many years in this business, they are 4 quite new as compared to auto, to oil, to utilities, and 5 hosts of other industries who would argue maybe they have 6 carried the brunt of the California program. 7 And, as we've moved into the consumer products 8 arena, as it became such a major slice of the emissions pie, 9 we certainly recognize the complexity of the issue because 10 of the huge variety of manufacturers and the number of 11 products. And we've approached the situation with full 12 knowledge of that. 13 And many of you sat through the ACP debate for 14 another arena of consumer products, and it was very familiar 15 to this discussion of trying to parcel out fairness and 16 equity amongst the folks, and whether or not there's general 17 support. And that is a policy call that we ultimately, 18 while making a recommendation, do leave to you. 19 But the tradition and process of the Board, of 20 course, is, number one, concern for the health of 21 California's public. 22 But, as mentioned a couple times here today, an 23 obvious concern for California's economy, we can't have a 24 strong program in one arena without a strong program in the 25 other. And I do remember Mr. Scheible making the point very PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 120 1 appropriately about cost-effectiveness very much guiding us 2 as we pursue the various approaches and taking things to the 3 limit and taking things in order as best you can. 4 Another point I want to make from the many years 5 here is the concern that, of course, we in the nation State 6 of California have for California business and, in 7 particular, California small business. And many of you 8 who've been here over the years have noticed that we've 9 taken a lot of heat for the concern we've had for small 10 business and the exceptions or the special provisions we've 11 put in our multiple regulations for small business. 12 So, again, another part of the difficult job of 13 going for equity. But we have, one might say, a bias for 14 seeing that small business does survive and is maintained as 15 one of the life's blood of our economy. 16 So, we very much take to heart what those people 17 who represent themselves as small business people have to 18 say, and we are concerned about their future and their 19 survival. 20 We're always concerned about the equity and 21 fairness amongst the regulated industries. 22 The process that the Board -- most on the Board 23 are familiar with that we follow in coming to a regulation, 24 I believe you know is extremely lengthy. It takes us a long 25 and deliberate time to bring a proposal forward, because we PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 121 1 involve as much as possible public input, input from the 2 regulated community, and other affected public. 3 The workshop process, which I think was pioneered 4 by the Air Resources Board, which is used not universally 5 but by large numbers of districts in California, is part of 6 that process. 7 There is, though, the tradition of technology 8 forcing regulation in California. It is what has gotten us 9 where we are today, I believe, and it involves some risk 10 taking. But your staff, as you know, does not put itself 11 out on the limb and put you, therefore, in harm's way often, 12 if ever, with regard to technological feasibility. 13 We go to great pains to make sure we don't 14 embarrass ourselves and you by proposing things that 15 ultimately prove to be infeasible, even when we're way out 16 on the edge of technological feasibility. 17 But we do have a reputation, I hope, of being open 18 and willing to change and changing our view on the control 19 strategy approaches to be taken as we get nearer and nearer 20 to the ultimate deadline. And there's a long litany of 21 things that have been modified, changed, or even delayed 22 when we finally agree that's the only way it can be done; 23 it's the only fair and equitable way for the folks that are 24 going to be affected by the regulation. 25 So, taking all of that in balance, I just indicate PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 122 1 that, as you heard, we try to divide the baby up here as 2 best we can. That's not to say that -- as Supervisor Vagim 3 indicated and perhaps the industry can possibly in the 4 future -- we can all find a better way to do it and a fair 5 and equitable way to do it, and we're certainly open to 6 that. 7 So, I just urge your consideration and new 8 consideration, in some cases, of the California tradition 9 and approach. You have my assurances that we do not -- we 10 are open to all suggestions, and we do not, I believe, don't 11 sit here either trying to perpetuate our bureaucracy or to 12 make life difficult for California business. 13 Unfortunately, the air is so dirty in this State 14 that we don't need to perpetuate the bureaucracy. It'll 15 take a while to get there. 16 CHAIRMAN DUNLAP: Thank you, Mr. Boyd. 17 Since all testimony, and written submissions, and 18 staff comments for this item have been entered into the 19 record, and the Board has not granted an extension of the 20 comment period, I'm officially closing the record on this 21 portion of Agenda Item No. 95-3-1. 22 Written or oral comments received after the 23 comment period has been closed will not be accepted as part 24 of the official record on this agenda item, which brings me 25 to the next item, which is ex parte communication. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 123 1 Just a reminder to the Board members of our policy 2 concerning ex parte communications. While we may 3 communicate off the record without outside persons regarding 4 Board rulemaking, we must disclose the names of our contacts 5 and the nature of the content of discussion for the record. 6 This requirement applies specifically to 7 communications which take place after notice of the Board 8 hearing has been published, which I believe is 45 days. 9 Are there any communications which you, as Board 10 members, need to disclose? Okay. Very good. Thank you. 11 We have before us a resolution. I know there are 12 still some issues that you want to discuss, members want to 13 discuss. 14 I would ask -- obviously, we've listened to the 15 discussion at this point, but also point an eye on this 16 proposed resolution so we might deal with it. 17 Mr. Vagim. 18 SUPERVISOR VAGIM: Thank you. 19 We dealt with this some months ago in L.A., if I 20 remember, when we were dealing with the consumer products 21 and the first cut of the ACP. And it was discussed -- much 22 of this was discussed then about a small company or a 23 medium-sized company can't compete with a guy with a lot of 24 product. 25 One of the issues that surfaced then, from staff's PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 124 1 point of view, as kind of a safety net, so to speak, was 2 this credit ability for one company -- a small company to be 3 able to buy the credits from a larger company. 4 And you were going to keep track of that. Can you 5 give us a quick update of where we are with that? Are those 6 credits readily available? Are they being bought at the 7 corner store or what? 8 MR. VENTURINI: It's a little early, Supervisor 9 Vagim. We haven't had any formal applications. I think we 10 have one company that's in the process of discussing with us 11 an ACP application prior to the regulation being formally 12 adopted. 13 MR. KENNY: If I could interject, also, 14 Supervisor Vagim. That regulation has not yet been formally 15 adopted. Although the Board has approved it, it still has 16 to go through the remainder of the legal process -- 17 SUPERVISOR VAGIM: I see. 18 MR. KENNY: -- and submitted to the Office of 19 Administrative Law. And that has not yet occurred. 20 SUPERVISOR VAGIM: I see. So, really, it's 21 premature, then, for anything. 22 Thank you. 23 CHAIRMAN DUNLAP: Yes, anymore questions? Yes, 24 Mayor. 25 MAYOR HILLIGOSS: Yes. I wanted to -- on page 3 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 125 1 of the resolution, down at the bottom, "Be it further 2 resolved," and then there are Items 1, 2, and 3. And under 3 3, there's "Identify any significant problems in the 4 implementation of the aerosol coatings regulation and the 5 ACP amendments, and propose any future regulatory 6 modifications that may be appropriate." 7 Does that mean it waits until '98, or are you 8 going to be watching it now and, if something comes up, will 9 it come back to us? 10 MR. VENTURINI: We will be monitoring it from 11 tomorrow on? 12 MAYOR HILLIGOSS: From tomorrow on? 13 MR. VENTURINI: If any problems occur that warrant 14 us bringing this back to you, we will certainly do that. 15 MAYOR HILLIGOSS: Okay. Thank you. 16 CHAIRMAN DUNLAP: Okay. 17 SUPERVISOR RIORDAN: Mr. Chairman? 18 CHAIRMAN DUNLAP: Supervisor Riordan. 19 SUPERVISOR RIORDAN: And I did note that, and I 20 feel that that entire "Therefore, be it further resolved" is 21 perhaps our answer to some of the concerns that we've heard 22 today. 23 With that notation of the staff's response to 24 Mayor Hilligoss, I would like to move for discussion then 25 the approval of Resolution 95-12. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 126 1 MS. EDGERTON: Second. 2 CHAIRMAN DUNLAP: Okay. Is there any other 3 discussion? 4 MR. PARNELL: Yes. 5 CHAIRMAN DUNLAP: Yes, Mr. Parnell. 6 MR. PARNELL: I only wanted to set the record 7 straight for my mind more than anyone else's. And that is, 8 the issues that Flecto raised are real concerns to me. And 9 the issue, succinctly -- as I understand it -- is the issue 10 of whether or not a larger company with a large product line 11 can reduce on one product and leave elevated or increase on 12 another product in order to come into a marketplace and 13 specifically target in a very competitive way that product, 14 which is understandable. And I sympathize with that. 15 But having said that, I believe that, as was 16 pointed out, the resolution accommodates a review sometime 17 prior to December, 1998, and it could -- that review could 18 happen as quick as six months from now. 19 And if it were found that that, even though it's 20 probably not feasible to do, if it were found that it, in 21 fact, did occur, that we could bring it back and would bring 22 it back to the Board. 23 Therefore, I take some comfort in that. And to 24 the extent that anything I may have said convoluted the 25 issue, I'm comfortable with it at this point. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 127 1 CHAIRMAN DUNLAP: That's a very good point. And I 2 think we have a commitment from staff. Or let me go a bit 3 further. I'll direct staff to monitor that very carefully 4 and report back to the Board anything that they see emerge. 5 I would also ask those that testified, and perhaps 6 others that are interested, to please keep us informed if 7 anything like that's going on so that we might be able to 8 take a look at that. 9 MR. SCHEIBLE: From our perspective, we will see 10 that well before it happens, because in the application 11 phase, when they put together their plan, they will have to 12 describe what they are proposing to overcontrol and 13 undercontrol. And we will know the types of products. 14 CHAIRMAN DUNLAP: Yes. I might just say a word or 15 two. 16 A couple things emerged during the testimony and 17 also the briefings that I had had from staff in advance and 18 what not. 19 I appreciate very much how seriously the staff 20 takes their role to go out and meet with those in industry 21 that will be affected. I was very pleased to hear the 22 compliments paid to staff for the outreach, and the 23 education work, and the time spent trying to come up with 24 reasonable compromises. 25 I know that's a difficult thing to do. I've done PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 128 1 that in my career. And I applaud you for that. 2 Also, at the same time, I'd also say to you, don't 3 be too thin-skinned with some of the criticism that you've 4 heard, because you're going to get that. You cannot make 5 everyone happy. I know that's a difficult job. 6 And so, certainly from my perspective -- and I'm 7 sure from my colleagues on the Board, you know, we applaud 8 you for those efforts. Do more of that. That's important 9 to do, despite what you may hear at the Board meetings. 10 So, with that, we have a motion and a second to 11 adopt the staff proposal. I'm sorry. Supervisor Silva. 12 SUPERVISOR SILVA: Yes. Mr. Chairman, one comment 13 before we vote. I do feel that small companies and one- 14 product businesses are at a disadvantage. And I appreciate 15 the fact that the staff will be, you know, trying to set up 16 safeguard where we won't see businesses having to close 17 down. 18 And I appreciate that very much, and I do trust 19 that the businesses will keep staff here informed of what's 20 going on. Okay. Thank you. 21 CHAIRMAN DUNLAP: Okay. 22 SUPERVISOR VAGIM: Mr. Chairman? 23 CHAIRMAN DUNLAP: Yes, Supervisor Vagim. 24 SUPERVISOR VAGIM: There was some discussion 25 earlier about a special committee or something like that. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 129 1 Any comment on that on where we are? 2 CHAIRMAN DUNLAP: Well, what I would -- I heard 3 very clearly from staff that there's a process that they're 4 engaged in right now. Rather than setting up another 5 committee, I would ask that they give a report back -- I 6 don't know. I want to make sure that we give them some time 7 to address it. 8 They know of the concern. They've heard it today. 9 I mentioned myself about having California companies 10 represented strongly there. But I also want us to, as a 11 Board, to reflect a bit upon the role that we play and the 12 positions. 13 You know, we have medical members, legal members, 14 et cetera, people with agricultural backgrounds, as well as 15 people representing different geographic regions in our 16 State. So, I don't want to jump to the conclusion that we 17 create yet another committee that, you know, might be 18 redundant in some ways. 19 So, that's my only caution. So, I would just ask 20 staff to take that very seriously; put together a good, 21 sound committee, report back to us. I don't know whether it 22 can be done via memo as an update versus a Board 23 presentation, but we certainly would want to know what's 24 going on in that area. 25 SUPERVISOR VAGIM: It's kind of like the Reform 2 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 130 1 model. 2 CHAIRMAN DUNLAP: Yeah, could be. Could be. 3 Well, we have a motion and a second. I don't see 4 that there's any more discussion that needs to take place. 5 I would ask the Board Secretary to call the roll 6 at this time. 7 MS. HUTCHENS: Boston? 8 DR. BOSTON: Yes. 9 MS. HUTCHENS: Calhoun? 10 MR. CALHOUN: Aye. 11 MS. HUTCHENS: Edgerton? 12 MS. EDGERTON: Yes. 13 MS. HUTCHENS: Hilligoss? 14 MAYOR HILLIGOSS: Aye. 15 MS. HUTCHENS: Lagarias? 16 MR. LAGARIAS: Aye. 17 MS. HUTCHENS: Parnell? 18 MR. PARNELL: Aye. 19 MS. HUTCHENS: Riordan? 20 SUPERVISOR RIORDAN: Aye. 21 MS. HUTCHENS: Roberts? 22 Silva? 23 SUPERVISOR SILVA: Aye. 24 MS. HUTCHENS: Vagim? 25 SUPERVISOR VAGIM: Aye. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 131 1 MS. HUTCHENS: Chairman Dunlap. 2 CHAIRMAN DUNLAP: Aye. 3 MS. HUTCHENS: Resolution 95-12 passes 10 to zero. 4 CHAIRMAN DUNLAP: Very well, thank you. 5 We seem to be proceeding on schedule. Why don't 6 we take a break for lunch. 7 SUPERVISOR SILVA: Mr. Chairman, before we take a 8 break, I'd like to ask that in future Board agendas, if it'd 9 be possible to include a notation if an item is mandated and 10 the source of that mandate. Would there be anyplace that we 11 could -- 12 CHAIRMAN DUNLAP: Our regulatory action, 13 Supervisor Silva, is reflected in the State Implementation 14 Plan. So, certainly we can, in the descriptor on the Board 15 agenda items, you know, the narrative, the italicized 16 portion, we'll make sure we point something out that 17 reflects that. I think it's a good suggestion. 18 SUPERVISOR SILVA: Thank you. 19 CHAIRMAN DUNLAP: Why don't we reconvene -- half- 20 hour for lunch long enough? We have it coming. We'll 21 reconvene about one o'clock, and we'll take a break until 22 then. Thank you. 23 (Thereupon, the luncheon recess was 24 taken.) 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 132 1 AFTERNOON SESSION 2 --o0o-- 3 CHAIRMAN DUNLAP: Good afternoon. I would like to 4 remind those of you in the audience who would like to 5 present testimony to the Board on any of today's items to 6 please sign up with the Board Secretary. If you have a 7 written statement, please give 20 copies to the Board 8 Secretary. 9 The second item on the agenda today is 95-3-2, 10 public meeting to consider an information report on the Air 11 Resources Board's compliance outreach programs. 12 During my first few weeks at the Board, I took the 13 opportunity to meet with staff to learn as much as I could 14 about the Board's programs. I found that that the Air 15 Resources Board was actively engaged in outreach to 16 industry, air district personnel, and the public to provide 17 them with the knowledge to understand and comply with air 18 quality regulations. 19 Today, I have invited staff of the Compliance 20 Division to tell the Board about the Compliance Division's 21 compliance outreach programs. 22 There are two key elements for effective 23 compliance outreach -- a compliance training program and 24 compliance assistance publications. These two programs 25 complement our regulatory programs and make compliance as PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 133 1 easy as possible. 2 As a former public advisor to the South Coast Air 3 Quality Management District, I know first hand how 4 challenging it can be for companies to comply with 5 environmental regulations. I'm pleased to know that the 6 Board has a world class program in compliance education and 7 outreach. And if the Board members haven't taken the 8 opportunity, there's an exhibit -- there's several exhibits 9 out in the entryway. You probably all walked past that on 10 the way in. I would ask you to take a moment, if you 11 haven't seen it, to see it as we conclude today. 12 So, with that, I would like to ask Mr. Boyd to 13 introduce his compliance education and outreach team. Mr. 14 Boyd. 15 MR. BOYD: Thank you, Mr. Chairman. 16 The Air Resources Board, both the Board and the 17 staff, have long, long believed that compliance with 18 environmental regulations and standards can be accomplished 19 both through a strong enforcement program and a strong 20 enforcement presence, and also by providing active 21 compliance outreach to the regulated community and to 22 industry. 23 As such, the Board has invested a great deal of 24 effort and significant resources to ensure that industry and 25 regulators have sufficient knowledge and understanding of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 134 1 what is expected of them. 2 Now, I'm particularly proud of the two activities 3 that we're presenting to you today, having been intimately 4 involved in both for quite a long time. The efforts were 5 begun quite a number of years ago in response to our own 6 concerns about a continually high rate of noncompliance we 7 found whenever we did our compliance enforcement review, 8 program reviews in the field. 9 And in response to concerns of the administration 10 and of California business, the need for more and more rules 11 and regulations for us to get to the ambient air quality -- 12 to meet the ambient air quality standards, while finding we 13 don't have good compliance with the existing regulations, we 14 felt it was both cost-effective and frankly necessary to see 15 that existing laws and rules were carried out to the extent 16 that was envisioned on their passage, and that the emissions 17 reductions that were anticipated at the time regulations 18 were passed -- that they be realized. 19 And to that extent that they were realized and 20 should be realized, then maybe could offset the need for 21 additional future regulation, as we kept measuring the 22 quality of air and it didn't quite get there, and it didn't 23 quite get there. And frankly, it was Governor Deukmejian 24 who was intimately interested in this issue and with whom we 25 worked originally to kick this off. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 135 1 And we got some resources and reallocated 2 resources, and commenced on a very significant effort to 3 reach out to the regulated industry and to the enforcement 4 authorities in California. And that is really the local air 5 districts. We found, also, that rules weren't properly 6 interpreted, rules weren't properly carried out and 7 enforced. And even in some cases, the enforcement personnel 8 had trouble understanding the rules or interpreting them. 9 And some of it was the rules themselves were not written in 10 plain speak. So, we really undertook a three-phase process, 11 one of which wasn't in Compliance. We also worked to get 12 rules written better at the local level so they could be 13 understood by the regulated community. 14 So, the compliance assistance program, which is 15 one of the two we're highlighting here today, assists the 16 regulated businesses and the enforcement agencies to better 17 understand air quality regulations, based on the idea that 18 sources will comply if they can understand what is required 19 of them. 20 The compliance assistance program develops 21 practical, rule-specific publications, which clarify rule 22 requirements, which identify compliance issues, and very 23 definitely promote self-regulation for the greatest degree 24 of compliance. 25 The materials are carefully researched. They're PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 136 1 drafted in conjunction with the affected industry and with 2 the field inspectors who will have to carry out the program. 3 The technical manuals, which you'll see described, 4 serve as a foundation for many of our compliance training 5 courses then. 6 The focus of compliance training itself has always 7 been to meet the need for uniform training of the compliance 8 inspectors in order to provide a level playing field for the 9 industry in California. 10 The training program is quite old and we had going 11 for quite some time. Training began in the early 1970s with 12 our visible emission evaluation school, and progressed into 13 the eighties and through the mid-eighties with training and 14 programs developed in cooperation with the Air Pollution 15 Control Officers Association of the State, and with the U.S. 16 EPA. 17 Our training program now has matured to the point 18 it is recognized as the standard training for inspectors 19 throughout the United States. 20 Recently, we included other environmental media in 21 our training program at the request of CalEPA, training that 22 helps ensure that our program plays a leading role, along 23 with the programs of the other media. And our program helps 24 develop the training of environmental inspectors and 25 industry personnel in a host of other media. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 137 1 We've received many compliments on our compliance 2 outreach programs, on the two of them. Our training courses 3 and publications are widely used for industry and by 4 industry in their own inspector education. And they've 5 certainly proved their worth in assisting stationary sources 6 in monitoring themselves and conducting their own daily 7 compliance inspections. 8 By increasing their own daily compliance rates, 9 costly violations and excess emissions have been reduced. 10 I want to emphasize how important feedback has 11 played, feedback from industry and districts relative to our 12 compliance outreach program. We strive, of course, to 13 produce training courses and materials that are needed, that 14 are useful, and that are persuasive. 15 We want everyone involved in the process and in 16 protecting California's air quality to have a working 17 knowledge of the air pollution problem and the control of 18 the program. 19 We want everyone who can benefit from the 20 compliance assistance program, and the publications, and our 21 training to have access to both. And we have large numbers 22 of industry personnel now in the training courses which were 23 once the purview of just the regulators. 24 With that, I would like to turn the program over 25 to the staff who will give you the presentation on both PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 138 1 training and compliance assistance. Stephanie Trenck, Chief 2 of the Program Assessment and Assistance Branch, and Mary 3 Boyer, Chief of the Training and Data Management Branch will 4 make the staff presentation in the two areas. 5 With that, I'll turn it over to them. I believe 6 Stephanie is first. 7 MS. TRENCK: Thank you, Jim. 8 Thank you very much, Mr. Chairman and members of 9 the Board. I'm happy to be here this morning to talk to you 10 about our compliance assistance program. 11 Before I begin that, what I'd like to do is tell 12 you about the guiding principle behind CAP. Basically, we 13 believe that if people understand what's expected of them, 14 they will comply with the regulations. 15 And so, CAP, in essence, is an extension of that 16 principle. What we attempt to do is to create easily 17 understood publications that are well researched, and we 18 produce these for business and also for the air pollution 19 control districts. 20 Now, obviously, the premise that I just posed to 21 you -- that people will comply if they know what to do -- 22 doesn't apply to everyone. Obviously, there are some bad 23 actors out there. And for those individuals, we have an 24 enforcement program statewide that deals more effectively 25 with them. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 139 1 However, for today, we will be talking about the 2 programs that we believe interest the majority of California 3 businesses. 4 As Mr. Boyd pointed out, the program began a 5 number of years ago -- in fact, in 1988 -- and what we were 6 finding at that time were that there were a large number of 7 regulations that were being adopted, many of which affected 8 small business. It was clear to us that the small 9 businesses themselves and the district staff really didn't 10 fully understand what they were getting into or what the 11 regulations were. 12 And so, again, we wanted to create something that 13 would be very helpful to them to meet our objective. 14 Essentially, when we first began the program, what we did 15 was to send out survey forms to the districts and ask them, 16 "What do you think we should write about?" 17 And they, in turn, would canvass their industries 18 in their particular districts and get information from them. 19 So, that was the way we selected the publications that we 20 wanted to produce, and that continues today. 21 We produce publications in three formats. Those 22 that are on the left of your picture, the blue ones, those 23 are ones that are the most detailed and most complex. 24 Generally speaking, they are most suitable for the 25 plant managers, environmental managers, and obviously the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 140 1 district staff. 2 The handbooks, those in the center, as you can 3 see, they're highly illustrated publications, almost like 4 comic books. And they're designed principally for the line 5 operators or for those who have on-the-ground responsibility 6 for compliance. 7 We also produce a number of brochures, one of 8 which is in the handout that we provided to you. I believe 9 we provided a packet of materials. 10 And one of those describes the CAP program. There 11 are also a couple more that contain a checklist that 12 industry can use to verify that they're in compliance. 13 This is a publication that we just got back last 14 week. We're very pleased with the quality of the 15 publication and we wanted to take this opportunity to show 16 it to you. It is designed for the dry cleaning industry, 17 and like all of the handbooks that we produce, it tells 18 people why they need to comply, what they have to do to 19 comply, and it points out some of the benefits to them -- 20 obviously, reduced exposure to dirty air. 21 But, in addition to that, they're able to avoid 22 penalties by following the guidance in the handbooks, and 23 they're also able to save money, particularly if we're 24 talking about solvent control, where simple ideas like 25 keeping the covers on solvents is extremely helpful in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 141 1 reducing their expenditures. 2 Our handbook design objectives basically are to 3 make it as simple as we can. Basically, we want the message 4 to be communicated quickly and painlessly. And we do this 5 through our pictures. We try to stick with one message per 6 page. We make it convenient for people. In the particular 7 case of the dry cleaning handbook we have and several 8 others, we have a packet -- a folder on the back page of 9 that document where people can easily insert recordkeeping 10 forms or the rules of the district. 11 We also want it to be read in about 20 minutes. 12 And if it can be read in 20 minutes, we feel it will be 13 consulted regularly and be reread so that the ideas 14 presented are reinforced. 15 Not all of the people that receive our handbooks 16 speak English as their primary language. And so, one of the 17 things that we do is we produce our handbooks in Spanish as 18 necessary. This is one for the automotive refinishing 19 industry. 20 It was interesting. I was looking over some data 21 with respect to the publications that we send out. And I 22 found that as many as 25 percent of our publications are 23 requested by Spanish-speaking individuals or for Spanish- 24 speaking individuals in this particular category. 25 Another category for which we have a Spanish- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 142 1 speaking publication is the metal parts coatings and also 2 agricultural burning. 3 The dry cleaning handbook, which I showed you 4 earlier, is one in which we intend to publish in Korean. 5 Apparently, a very large number of those people who own 6 these particular operations are Korean descent. 7 All right. These are our brochures, which I spoke 8 to you about earlier. The two that are opened, you can see 9 what they really have here are checklists, which help 10 companies maintain their equipment like bag houses and IC 11 engines. 12 Here is a picture of two Teichert Company 13 employees here in the Sacramento area. And, as you can see, 14 they've taken one of our checklists and they've adhered it 15 to a bag house in this particular case. 16 Now, of course, with the weather we've been 17 having, obviously, this publication wouldn't stand up very 18 long in this kind of weather. 19 But what they can do is take publications like 20 this and they can turn it into a piece of material that 21 would not degrade in the weather. So, it is extremely 22 helpful for them. 23 This is our dry cleaning technical manual. And, 24 again, as Mr. Boyd pointed out, it's principally for our 25 plant manager, environmental managers, and district PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 143 1 inspectors. It provides the most detailed information about 2 the particular regulation under discussion. 3 We discuss the process and control of the 4 particular substance of concern and the legal requirements 5 that must be met. 6 I'd like to point out to you on the table behind 7 you, we have listed or set all 22 of our technical manuals. 8 So, if you'd like to take a look at them, you're most 9 welcome to do that. 10 All right. This is a picture of both the 11 technical manual and the handbook. And the point here that, 12 in some particular cases, it makes a lot of sense to have 13 system where you're educating all levels of personnel. In 14 this particular case, the owner of a dry cleaning shop might 15 be very interested in the technical manual, and his or her 16 sales personnel may be more interested in the handbook. 17 Basically, the message here is that we try to 18 satisfy a range of needs. 19 Talking about dry cleaning assistance once more, 20 small business assistance is a priority for us. It has 21 always been the case. And I know you're all aware of 22 legislation that's passed over the year that supports 23 assistance to small business. 24 In this particular case, the Board adopted a 25 measure in late 1993, which control emissions of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 144 1 perchloroethylene as an air toxic control measure. 2 That particular requirement calls for the 3 development of a training program to help people in that 4 business comply with the regulations. And so, what we've 5 done, as a forerunner of that, is develop the training 6 materials for that. 7 Mary Boyer and her staff will be working with the 8 Stationary Source Control Division and the industry to put 9 together a training program. 10 Now, this is the table of contents of our 11 technical manual, and we recognize this isn't normally 12 something we put on the screen. But what we want to 13 illustrate here is that it contains a glossary of 14 information. It's very helpful for those who don't have a 15 very high level of understanding of the process you're 16 speaking about. 17 Our appendix also includes the test measures, and 18 it's very well indexed. So, it's a good introduction for 19 people. 20 Here's a typical page in the manual. Our point 21 here is to illustrate to you that we have good computer line 22 drawings that we use in all of our publications. In this 23 particular case on the right, you'll see a carbon adsorber. 24 In the text itself, what we try to do is give as 25 much white space as we can and, of course, still provide PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 145 1 information. We also tab the margins so that the 2 environmental manager, who's a very busy person I'm sure and 3 has a number of regulations to deal with, will be able to 4 quickly find the information that he or she is looking for. 5 Here is a technical manual in use. I believe this 6 individual also works as a plant manager at Teichert, and 7 he's looking at our bag house manual. 8 Besides the personal indicators of interest in our 9 manuals that I just showed, our distribution over the years 10 is well over 400,000 for handbooks and pamphlets. We expect 11 to reach about a half a million this summer. 12 And our technical manuals, we have distributed 13 about 17,000 of those. 14 I might point out that the best sellers have been 15 our vapor recovery handbook, which was the first one, and 16 one would expect that to be the case. 17 Our other publications that are very big sellers 18 are the visible emissions evaluation publication, and we 19 also have a handbook on wood-burning stoves. 20 And I might point out -- this is something we 21 haven't really emphasized, but some of our publications are 22 extremely useful for people who are just members of the 23 public, like the wood-burning stove. They really want to 24 know how they can reduce smoke from their fireplace, 25 whether, you know, there might be another method that they PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 146 1 can use to have the same aesthetic effect. 2 So, in any event, if any of the members of the 3 Board would like any of our publications, please feel free 4 to let Mr. Boyd know or, if you'd like, you can visit our 5 booth out in the lobby and talk to some of our staff out 6 there. They would be more than happy to provide you with 7 the information you would like. 8 By the way, our publications are distributed 9 principally in California. However, we also have 10 distributed them to half a dozen foreign countries. So, 11 when the Chairman mentioned this was a world class program, 12 he meant at the very least that we were distributing them 13 outside the country. 14 We also have distributed these publications in 15 more than 20 states. 16 All right. Now, when we produce a quality 17 publication, it's very important that that be received by 18 the audiences that are interested in it. And so, what we've 19 done is developed an aggressive marketing program in 20 coordination with our Stationary Source Control Division -- 21 they have the small business assistance program -- and also 22 with our Executive Office. 23 Basically, what we do is attend as many relevant 24 trade shows as we can. We also work with the Business 25 Assistance Centers that the Department of Commerce has PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 147 1 established. And we're now working with the CalEPA one-stop 2 permit centers to make sure that our literature is 3 distributed there. 4 Additionally, besides that, we're working with the 5 trade associations. As soon as we decide to develop a 6 publication, what we do is we identify what those trade 7 associations are, and they provide us with assistance in 8 developing the category and also provide us with their 9 mailing lists so we can reach the right people. 10 Now, I've described an aggressive marketing 11 program to you, but I want you to realize that we don't 12 distribute these materials indiscriminately. What we do is 13 we insert a tracking card in our publications. And, if 14 people are interested in receiving updates to our technical 15 manuals, then they must turn in a tracking card. And once 16 they do that, we're able to cull our mailing list to those 17 people that are particularly interested in our information. 18 We're also able to keep a computer database that 19 way. 20 These are our technical manuals in production for 21 1995. I might point out that, of course, as we begin to 22 produce or we produce more and more of these documents, 23 there's a greater need for updating them. For example, this 24 year, we're planning to update the metal parts and products 25 publication. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 148 1 Basically, there's some new technology -- like 2 HVLP application guns that we don't have in there now, and 3 we feel it's important to include. 4 I believe there's also some toxic-related 5 regulations that have been adopted that we want to let 6 people know about. 7 The other update that you'll notice down there is 8 one on motor vehicle fuels. It's my understanding that the 9 Board now regulates eight different properties of motor 10 vehicle fuels. Not all of those were discussed in the prior 11 manual, so we felt it was essential to get this information 12 out to those people that needed it. 13 Our solvent recovery manual basically is a 14 revamping of one we did on degreasing and will be a much 15 broader publication than it presently is. 16 These are all of our technical manuals -- 17 actually, not all of them. There's another slide indicating 18 the rest of them. 19 As I indicated to you earlier, we have 22 manuals. 20 This shows the synergy between our CAP program and our 21 training program. This is one of our trainers, Terone 22 Preston, and you can see that he's using both the handbook 23 and the manual as text in the training program that Mary's 24 staff conducts. 25 Obviously, we think the training enhances PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 149 1 learning. Our publications are meant to stand by 2 themselves. But if we can provide this information in a 3 controlled setting, we think that makes things even better. 4 All right. Again, stepping back to the reason why 5 we started the program, basically we found that industry did 6 not understand the rules. There were a lot of rules coming 7 down they were unfamiliar with. They were all coming at the 8 same time. And we were finding -- as the next slide will 9 show -- high noncompliance rates. 10 One of the things that the Compliance Division 11 does is audits of air pollution control districts. And in 12 doing these audits, we go out in the field and we look at 13 sources along with the district personnel. 14 And just to take one example, the metal parts 15 category up there, we found when the rule was initially 16 adopted -- or at least in 1987 -- that there was a 17 noncompliance rate of 41 percent. Well, this is emissions 18 related compliance rates. 19 We were very concerned about that, and we figured 20 out, well, what can we do to help the situation? Surely, an 21 inspector going by once a year to verify compliance was not 22 sufficient. And so, what we did is we conceived the idea of 23 these publications. 24 I might mention that in the unidentified "District 25 A," we were back there two years ago, and we found that the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 150 1 rate for those facilities that we had inspected had dropped 2 to five percent. 3 Now, we recognize that not all of this is due to 4 CAP. Obviously, some people have the publications and some 5 people don't. But I think what the CAP program has done is 6 really raise the awareness of people about how successful 7 education can be. I'm sure you recognize that many 8 districts in the State have their own education and training 9 programs now. 10 So, it all helps solve the problem that we want to 11 solve. 12 Another thing that we did shortly after the 13 program was instigated is try to test how successful this 14 program had been. And with the first handbook that we came 15 out with, we approached a gasoline marketer and we asked for 16 their cooperation for distributing these materials within 17 their facilities. 18 They were in agreement to do that. In fact, what 19 they did is they took our publications, they trained some of 20 their staff; in other cases, they allowed the staff to have 21 the publications in their facility, and required that they 22 follow the maintenance schedule that was given there. 23 And so, basically, that was a daily maintenance 24 schedule. The results of that particular study was that the 25 notices of violation dropped by 73 percent in one marketing PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 151 1 district and 90 percent in another. So, it seemed to us 2 that in a program that where management shows it's really 3 serious about reducing emissions, CAP makes a very good 4 contribution. 5 This is a partial list of the many companies that 6 participate in the CAP programs. I think that, of the 7 larger companies, we must have helped well over a hundred 8 firms. Obviously, the small businesses -- I mentioned that 9 there are 5,000 small business dry cleaning companies. And 10 if you look at all the other range of small businesses, you 11 can see that this reaches almost every crevice and corner of 12 California. 13 This particular slide also notes that McClellan 14 Air Force Base and the U.S. Navy have been assisted. We 15 have a lot of programs with the military. They are 16 enthusiastic about the literature that we provide, and they 17 use it in maintaining compliance. 18 This is a typical testimonial that's made about 19 the CAP program. This is only one of many. I just thought 20 we'd take the time to show you one. 21 This is another kind of testimonial. I'm sure 22 you've all heard that imitation is the sincerest form of 23 flattery. Well, this is a publication that Broward County 24 in the State of Florida adapted. 25 And what they did is they said to us, they said, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 152 1 "We want to adopt a Phase II regulation like you have in 2 California, and we need to have literature which explains 3 how to comply." 4 And so, they asked for permission to use our 5 publications. And what we do in cases like this is we 6 provide the information to them, with the request that they 7 list us as the originator of the material and they not sell 8 it for a profit. 9 And so, this is one case where that's happened. I 10 believe Clark County in Nevada has also made a similar 11 request. And we've had just a number of requests by 12 training departments in various businesses to make 13 adaptations such as this. 14 Well, I think I've explained to you why we 15 consider this to be a quality program. I want to point out, 16 in closing, that the quality of the program has been 17 recognized. This is a certificate, which hangs outside the 18 Board's Chairman's office, I understand. 19 And what it is, it's an award from the Ford 20 Foundation and the JFK School of Government. And it awards 21 us or we were a semifinalist among 10,000 other different 22 applicants for innovations in state and local governments. 23 So, we're pleased to show you that. 24 We also received an award from the Council of 25 State Governments. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 153 1 Finally, just in summation, I'd like to tell you 2 that we think the program is extremely helpful in reducing 3 excess emissions and improving relations between the 4 regulators and those companies that they regulate. 5 Thank you. 6 Mary? 7 MS. BOYER: Good afternoon, Chairman Dunlap and 8 members of the Board. I'm Mary Boyer. I'm Chief of the 9 Compliance Training and Data Management Section. 10 To my right here, I have Victor Espinosa, who is 11 the manager of the training section. And I'm going to take 12 the next 20 minutes to talk to you about the Air Resources 13 Board's training program. 14 First of all, I'd like to first start out with why 15 does the Air Resources Board offer compliance training? 16 As Jim Boyd's already mentioned, the main reason 17 that we offer this is to have an even playing field. And 18 this is to offer training equally amongst all the districts 19 regardless if they're from the real small areas, like Amador 20 and Colusa County, all the way down to the big districts, 21 like South Coast and the Bay Area. 22 With this program, everybody's offered the same 23 equal opportunity to have this training in their back yard 24 as well as the industry groups that are in those areas as 25 well. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 154 1 The second point is to assist industry in 2 understanding the different enforcement practices and 3 policies that are available in all of the different 4 districts. 5 How did the compliance training program get 6 developed? 7 As we mentioned earlier, I'll take you a little 8 bit back in the history of the training program, it did 9 start back in the early 1970s with our visible emission 10 evaluation program. That was an EPA mandated program. 11 Every state had to have a visible emission program back 12 there. 13 So, back in 1972, as a matter of fact, Jim 14 Morgester, who is the Chief of the Compliance Division, was 15 the main one that drove over to Nevada, as a matter of fact, 16 to pick up the generator, bring it back to California. 17 That was the very beginning of our training 18 program. We started doing -- in those days we called them 19 "smoke schools." And that was the basic core of the 20 training program for quite a long time. 21 It still is a very valuable training program, and 22 we have it as the core of our training program. But we've 23 embellished that. Along in the mid-eighties, we developed 24 the uniform air quality training program as a way to add 25 some uniformity to the various training that was going on in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 155 1 California, and to where we are today with conducting over 2 275 training courses and training over 6,500 student days. 3 As Jim mentioned, our program, as well as the CAP 4 program, has been nationally recognized. And in 1992, we 5 started the national air compliance delivery training 6 program. EPA recognized this program, instead of 7 reinventing the wheel, the Air Resources Board training 8 documents. 9 The material is then transported outside of 10 California and other different states across the United 11 States. 12 The question is, why statewide standardized 13 training? Basically, back to the same principle, is to 14 offer an even playing field. We have 34 different local 15 districts in California and all different sizes and shapes. 16 And this would provide, like I said, the same opportunity to 17 all the different districts. 18 The second point was a high turnover rate amongst 19 district staff. This we've seen a lot less in the last 20 couple years, but we still have turnover, and everybody 21 needs to get trained. 22 The ARB audits also showed that there was unequal 23 enforcement practices. And the way to try to even this out 24 was to provide training to all the different districts on 25 the enforcement practices and the various types of equipment PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 156 1 and other policies. 2 And lastly, there was some concern from the 3 regulatory agencies that they were going to have to rely on 4 some of the private companies to receive their training for 5 their staff. And this was just too costly of a venture. 6 You know, many of the courses go for four or five hundred 7 dollars a day, and there's no way they can conceivably pay 8 for this for all their staff in California. 9 So, they looked at the Air Resources Board to 10 offer them the standardized training. 11 So, back, like I said, in the mid-eighties, we 12 formed the uniform air quality training program. This was 13 developed through a training task force, which was composed 14 of various members from the districts, CAPCOA, EPA, and the 15 Air Resources Board. 16 We wanted to try to centralize our training. We 17 all got together and found out we had little resources, 18 little money, and if we pooled it all together, we'd have 19 even more resources and maybe more money would go further. 20 So, we came up with this concept of the uniform 21 training and also to offer everybody the same types of 22 courses. And we came up with six objectives and, of course, 23 that ARB would be the main provider of this training. 24 The six objectives you can see there on the screen 25 were to set the minimum levels of training, establish a core PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 157 1 group of classes that would be provided. And the training 2 task force was the main ones that came up with, like I said, 3 these objectives, And then, in fact, they helped develop 4 the courses that were in the first core 15 courses. 5 We wanted them to be video based so that, when 6 they were presented, the same type of information would be 7 delivered regardless of where it was being delivered across 8 California. 9 We wanted them to be coordinated with local air 10 pollution control districts' training programs and also with 11 the federal training program, because EPA was developing a 12 program for their inspectors, and we wanted to make sure 13 that whatever we were developing would mesh with theirs and 14 with this program as well. 15 And also, we wanted to develop training programs 16 that were not only for entry level but for any type of 17 inspector that was out there, and a permit writer or rule 18 writer that could benefit from this program. 19 Here's an example, and all of you have this in 20 your packet. It's our training catalog that we have put 21 together, which outlines all the different courses that we 22 do during the year. 23 This process starts in July and August of each 24 year, and we go out and we survey our clients. Our clients 25 are the districts and some of the industry representatives, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 158 1 and we find out from them what they like and what they want 2 us to train in the following year. 3 Then we put together the catalog and go with that 4 for the next year. The other additional thing that we've 5 developed is the compliance assistance pamphlet. That's on 6 your right, and it's also in your packet, and it kind of 7 outlines the different programs. 8 We've sent out over 2,000 of these, both the 9 catalogs and the pamphlets to try to reach out to industry 10 so that they are aware of the programs that we have, and 11 they can take advantage of that by sending their personnel 12 to that. 13 We also take both of these publications that 14 Stephanie had talked about earlier and market them at the 15 different trade shows and other events that we have 16 opportunities to participate in. 17 Okay. What does our program look like? I'd like 18 to break it down to three different areas -- the curriculum, 19 the instructors, and the participants. 20 First of all, the curriculum. When we were 21 developing this program back in the mid-eighties, we decided 22 to develop the curriculum kind of on a college-type basis. 23 We have a 100 level series that would be kind of like a 24 freshman in college; your 200, maybe your sophomore/junior. 25 And then you get up to your 300 series, which is your PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 159 1 seniors. And this is how we developed our curriculum. 2 The 100 level series, as it connotates, is for the 3 introductory field level type inspector. We have 15 core 4 courses in our 100 series, and they're outlined for you in 5 the course catalog. 6 In addition to those 15 core courses, which take 7 one week for the instructors to complete, we have our smoke 8 school and our fundamentals of enforcement class. Those are 9 the two core groups that make up this 100 series, and they 10 are video and slide based with real live inspectors -- live 11 instructors. We ought to have live inspectors, too. 12 (Laughter.) 13 MS. BOYER: But the videos were developed, and we 14 learned early on that you just don't put a video in and 15 watch it, and hope that learning will happen. They always 16 come with a live instructor. 17 I'd like to show you also a little snip. But this 18 is the book that goes with the video package. And I'd like 19 to show you today an example of one of the videos that we 20 use during -- for one of the 100 level series. This one is 21 on basic chemistry. 22 (Thereupon, a brief video clip was played 23 for the Board.) 24 MS. BOYER: All right. That can give you an 25 example of just a little snippet of the videos. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 160 1 Many of the videos are 20 minutes to 45 minutes in 2 length, but they're broken up with instructor participation. 3 So, you just don't see the whole video at one time. 4 Okay. Moving on to our 200 level series, like 5 these are more source specific. And many of the manuals 6 that go with it are the compliance assistance manuals that 7 Stephanie has told you about earlier. 8 The unique thing about this class is we divide it 9 up into a half hour -- a half-day class. In the morning is 10 where we concentrate in the classroom portion, where you 11 learn about the rules, the type of process, description, how 12 to inspect it, the inspection points. That takes place in 13 the morning. 14 And then, in the afternoon, there's a field visit 15 with each and every one of these courses. So that an 16 inspector or the industry person gets to go out and touch 17 and feel, smell, and look at the equipment and figure out 18 what happens. And those mock inspections in the afternoon 19 are a very valuable part of the instruction. And they found 20 that the mixture of the classroom and the mock inspections 21 has been a very good teaching technique. 22 We have 38 courses currently in our 200 series, 23 and those are also outlined for you in our course catalog to 24 take a look at. 25 Here's an example, a picture of one of our PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 161 1 inspectors in the classroom portion, Randy Opfer, teaching 2 the course, and then followed up with a field visit with one 3 of our other people, Kathy Mead. That's out in an oil field 4 conducting a class. 5 The last series is the 300 series, which, of 6 course, is our more advanced enforcement subject courses. 7 And these are taught by a variety of people, not only ARB 8 staff, but we rely on industry representatives, attorneys, 9 academia, and other representatives of industry to help us 10 put on some of these courses. 11 The one main one that we have in here is our 12 enforcement symposium, the cross-media training. This is 13 going to be -- this coming is our 17th one. And last year, 14 was the first time we did it on a cross-media basis at the 15 request of CalEPA. And so, we're going for our second year. 16 Last year was very successful, so we thought we'd 17 bring it back again as a cross-media training course. 18 We also have hearing board workshops in this 19 particular series as well. 20 Here's a slide of our books that go with the 21 symposium, a manual; it's a two-volume set that we have. 22 And they're valuable resource manuals. Many of these you'll 23 see on library shelves to be used in further use after the 24 symposium's over with. 25 At the symposium, we do a mixture of lectures and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 162 1 also case development. For part of the case development, we 2 actually take the people and the participants on a field 3 visit. We do this through a video, in which we actually 4 have a mock inspection of the inspection (sic) that this 5 inspector goes out on. 6 And we're going to show you a snippet of that as 7 well. This video is from last year's symposium. And I'd 8 like to let everybody to know we did this in-house. 9 (Thereupon, a short sample of a videotape was 10 played for the Board.) 11 MS. BOYER: That gives you a little taste of what 12 that one is about. 13 This video lasts about 20 minutes in length. But 14 after the inspectors and participants see the video, then 15 they actually have to write their own inspection report as a 16 result of the video based on all the information that they 17 extracted from the video, and also from the reference 18 material that's in the symposium binders. 19 And then, the case goes to trial. We start out 20 with a mock general -- a settlement conference. We move on 21 to depositions, and then we have a trial. We have a judge, 22 we have a jury, we have witnesses, witness boxes. It's a 23 real live type of action-type setting. 24 So, this has been found to be a very, very good 25 training tool with them actually having to do the case and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 163 1 become their own witnesses. 2 It's a lot better than having somebody come up and 3 give you an hour's lecture on what is a general witness or 4 what is a deposition. 5 So, it's a lot of fund. We have a lot of fund on 6 creating the case as well as seeing how it unfolds during 7 the symposium. 8 This year's symposium is going to be held on May 9 22nd through the 25th in San Diego. And all of you have an 10 announcement with that in your pamphlet, and all of you, of 11 course, are invited to attend. Just let us know. It's a 12 real interesting and informative course. 13 Next, a little bit about our instructors. Our 14 instructors come from a wide variety of backgrounds, but all 15 of them have some -- a lot of information and knowledge in 16 compliance, inspection, and enforcement. Many of them are 17 teachers as well as people that we get from local air 18 pollution control districts. 19 The experience of our staff ranges anywhere from 20 six years to 36 years. The ones that have the 30-plus years 21 are a lot of our instructors that teach in our national 22 program. They're retired enforcement directors, and we use 23 them in this program quite effectively, and they have a lot 24 of good communication and facilitating experience. 25 Who participates? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 164 1 This is kind of a partial list. Like Jim said -- 2 Jim Boyd said earlier, at the very beginning, when we 3 developed these training courses, they were primarily for 4 the purpose of the local air pollution control inspectors. 5 There's over 600 of them in California, and that was our 6 main focus for many years. 7 Now, we've expanded out and there's a lot of need 8 for industry staff to attend. And we are seeing a growing 9 enrollment for industry people to attend our training 10 courses. I think, as we aggressively market more in this 11 area, I think we're going to see a lot more of those types 12 of people come to our courses when they find the value that 13 the training does provide to them. 14 Of course, we train a lot of EPA and military 15 people. And a new category that we're seeing is the last 16 group on the slide, and that's the Indian -- American Indian 17 tribes. As many of you know, now they're considered 18 sovereign states under the U.S. Clean Air Act, and they are 19 trying to catch up to speed with all the air pollution 20 regulations. And so, they're attending our courses as well. 21 As I stated earlier, this slide kind of represents 22 the growth that we've seen in the program. And currently, 23 last year, we had over 6,500 student days of training. And 24 the main reason why I think that we've seen the growth is 25 mainly demand. There's a huge demand for training, and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 165 1 we're barely trying to keep up with that with the resources 2 that we have, to keep up with this demand for people wanting 3 our different training courses. 4 Likewise, you can see by this chart the demand and 5 the courses that we do offer. Last year, we held over 275 6 courses. 7 Why has the compliance training program been so 8 successful? 9 I think, number one, like I mentioned before, it 10 provides that level playing field to everybody -- both 11 industry and local air pollution control people. 12 It's very cost-effective for people to attend this 13 training, whether from the industry or from the districts. 14 Flexibility -- we've been told by many, many 15 different individuals -- is also a reason why it's become so 16 popular and so successful. We basically bring the training 17 to the people. And so, thus, they have minimal cost to put 18 out. All they have to do is come to the class and, you 19 know, basically they give up that one day for training or 20 two days for training. 21 We have our training offered throughout the State 22 from the very north to the very south, all the way out to 23 both, you know, the coast and to the desert. So, it's very, 24 very amenable to them. 25 Also, we will provide courses to individual PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 166 1 industries at their facilities if they so want that. And 2 we've done that in the past and are planning on doing one, 3 as a matter of fact, in May. We got a special request from 4 the Atcheson, Topeka, and the Santa Fe Railroad, and they 5 want a special class. So, we're bringing that out to them 6 on one of their railroad yards. 7 Practical -- that's also one of the main reasons 8 it's been successful. We give the people, the students, 9 what they want. And the courses were designed with input 10 from the districts and from industry, and we're always 11 constantly updating that, so that we provide quality 12 training and quality training that they really need and they 13 can use. 14 Here again, as in the compliance assistance, we 15 have a few testimonials as to the value of our training. 16 This one is from one of the retired majors from Camp 17 Pendleton, and next is another testimonial from one of the 18 States that we have trained out of California. And they 19 find that the experience has been very helpful that they 20 brought to the class. 21 Where's the program going? 22 I can see it expanding for a number of reasons, 23 and mainly is the complexity of the new regulations. We're 24 going to be adding more and more courses in that area and 25 trying to get the word out to the regulated community and to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 167 1 the local air pollution control districts about these new 2 regulations. 3 The National Air Compliance Training Delivery 4 Project -- that's been very successful. It's in its third 5 year and, hopefully, that will be continued as well, in 6 which we train other states with the same type of 7 information that we are able to provide in California. 8 Cross-media training, also. I think that this is 9 an area that we're going to see more development as we try 10 to train all our sister agencies in some of the basic 11 principles of enforcement. 12 The future of the program? 13 I think it's going to be a real busy one for the 14 staff of the training section in the Air Resources Board. I 15 think with the continued demand, that industry's going to 16 want some of these courses and programs. I think that's 17 going to be a real interesting segment that we're going to 18 see. 19 Also, with the CAP courses that Stephanie 20 described, they create four to five new CAP manuals every 21 year. That means to us that we have four to five new 22 training manuals every year and new training courses every 23 year that we develop. 24 So, that's always a never-ending way of expanding 25 our program. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 168 1 And then, lastly, as I said, the special requests 2 of the industry. I think, once more and more industries get 3 knowledge of our program, the special requests will come in, 4 and we'll be doing tailor-made courses for them, which we 5 have in the past. And our staff is eager to do that as 6 well. 7 Lastly, I'd like to leave you with one last slide, 8 that "Knowledge is the key to compliance." And we believe 9 in the Compliance Division that that can be done through two 10 different programs -- the compliance training and the 11 compliance assistance program. 12 Thank you. 13 MS. TRENCK: Before we close finally, we'd like to 14 take a moment of your time to acknowledge the staff that 15 participated in the development of our program. 16 As you can see, it takes a lot of teamwork to put 17 a program, both programs like this together. The most 18 visible part of our staff assistance is provided by our 19 manager, Gary Hunter with CAP, Victor Espinosa with 20 Training. 21 We also have people who write our manuals, who 22 instruct our courses, and also market our programs. But, in 23 addition to them, we'd like to thank the people from the 24 Administrative Services Division in the Mail Room and in the 25 Reproductions that our publications get out in time and are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 169 1 of good quality. 2 Finally, there's one person we would specifically 3 like to acknowledge. See if he's here today. Eric, would 4 you stand up? 5 Very good. Eric Decetis. 6 (Applause.) 7 MS. TRENCK: Everybody's giving Eric a hand, 8 because he's been associated with the program since 1988. 9 And what Eric does is all those wonderful drawings you see 10 in the compliance assistance handbook. 11 Mary and I reviewed and tried to figure out if we 12 could think of any that he hasn't been involved in, and we 13 really couldn't. So, we really thank Eric and we sure 14 appreciate working with him and everybody else in the 15 program. 16 Thank you. 17 CHAIRMAN DUNLAP: Thank you. 18 When I was taking my tour, I found Eric down here. 19 We're in his territory I might add. His office is not too 20 from here. He has a little studio down there. 21 Thank you for an excellent presentation. I 22 appreciate the time and effort that went into that. 23 Mr. Boyd, do you have anything else to add? 24 MR. BOYD: No, Mr. Chairman, on this subject. As 25 I said in the beginning, we're very proud of this program, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 170 1 and it has far exceeded our expectations. And that's been a 2 very positive thing, we think, for the California program. 3 Just one last footnote, it's indicated we train 4 other states. My peers in the other states asked U.S. EPA 5 to design a training program for them several years ago. 6 They did. They made it a college-based program that cost -- 7 the tuition cost was about what it costs you and I send our 8 children to college these days. And they then came to us 9 and asked the Air Resources Board to take over and do the 10 training for them on a national basis -- they, the other 11 states -- because of their knowledge of our program and the 12 low cost per student. 13 And although we do a fair amount of that, only to 14 the extent that the resources are available. And they do 15 pay. It's no profit but no cost to us. But it has worked 16 out extremely well and furthered the understanding of the 17 California program. 18 CHAIRMAN DUNLAP: Very good. Any questions? 19 Supervisor Vagim. 20 SUPERVISOR VAGIM: Thank you, Mr. Chairman. 21 Recently, the Valley District just enacted 22 something -- I believe it is required by law -- what's 23 called an air quality consultant of some type. And it's a 24 voluntary certificate requirement. Someone can come in, be 25 voluntary to sit in front of this review and get a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 171 1 certificate as a consultant. 2 The questions I had, is that duplicating something 3 that we're already doing at the State level, and wouldn't it 4 be more proper to be at a statewide basis than a district- 5 by-district basis? And, two, does the -- just like lawyers, 6 accountants, architects, what have you, sit in front of 7 independent review panels or districts if they're going to 8 be giving certificates for consultants, are they kind of 9 having a conflict of interest, since they're the ones that 10 are going to review their work. 11 And if someone doesn't decide to come in and 12 participate voluntarily, maybe the might have a tougher time 13 getting their work through, you know those type of things. 14 Have we ever looked at taking that on? Can you 15 explain that law? I mean, evidently, there is something 16 called the certificate requirement under State law? 17 MR. TRENCK: Supervisor Vagim, I'm not really 18 familiar with that. In terms of -- one thing we do, I think 19 in our training courses -- and correct me if I'm wrong, 20 Mary-- but we give certificates of completion in courses 21 that are taken, so that people can show the amount of 22 training that they've received. 23 CHAIRMAN DUNLAP: Is this like for an 24 environmental auditor of some type or -- 25 SUPERVISOR VAGIM: This is someone that would take PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 172 1 on clients and represent them in front of district boards, 2 or district staff, or CARB staff. And my concern was, why 3 shouldn't that be a statewide certificate? Why would that 4 be a district-by-district? 5 I understand the law is specific to a district, 6 and it's something that maybe we could look into. Because 7 it seems to me that this is an extension of what we're 8 already doing here. 9 CHAIRMAN DUNLAP: Mr. Boyd, will you look into 10 that? 11 MR. BOYD: We've got to look into it. I'm not 12 immediately familiar with the law in question, at least a 13 tape hasn't gone by and reminded me of it in my mind's eye. 14 But I can think of -- there's a fairly old program of -- 15 that's environmental auditor oriented. There's a 16 certification program that used to be administered out of 17 CalEPA, and I do know -- although I didn't know it was a 18 product of law -- that there's more and more effort at 19 various levels to privatize permitting processes and get 20 people certified to do some of the permit work, such that 21 the regulatory agencies would accept the work as certified 22 work. 23 We can look into it. 24 CHAIRMAN DUNLAP: I know there's one -- I know 25 South Coast has it for their ride-sharing coordinators. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 173 1 They have to be certified. There was some certificate that 2 they go through there. That's the only one I can think of. 3 SUPERVISOR VAGIM: Well, I guess this is something 4 that industry has asked for, because if someone is out there 5 selling themselves as an air quality specialist or 6 consultant, and they show up to a business who really is 7 groping for answers, and they say, well, I'll be your 8 consultant, and I'll represent you. 9 And they go in to the district staff not knowing 10 too much more than the guy that hired them. There tends to 11 be some real problems generated out of that. So, even 12 though it's voluntary, it's one in which someone can get a 13 sheepskin, I guess and say, "I stood the test." 14 And then industry can ask, "Do you have that 15 certificate?" 16 The first question that comes to mind is one, when 17 the fox is watching the hen house, how do you make sure that 18 there isn't a conflict of interest between those giving the 19 certificate versus the same people who are going to review 20 that person's work. 21 I think that's something that every screener of 22 anybody's qualifications always wants to ask. And it's 23 something that I think we could look at through statewide 24 issues. 25 MR. BOYD: We'd be glad to look at. We do certify PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 174 1 laboratories and we do certify source testing personnel as 2 well. But this one doesn't strike me at the moment. 3 CHAIRMAN DUNLAP: Any other questions or comments 4 of staff? 5 SUPERVISOR RIORDAN: Mr. Chairman? 6 CHAIRMAN DUNLAP: Yes, Supervisor Riordan. 7 SUPERVISOR RIORDAN: Just a comment, because a 8 number of us at the local level are always looking for 9 opportunities to generate additional revenues for our 10 programs. 11 And it occurred to me, not only do you have the 12 other states that you might charge -- and I recognize that 13 there are tremendous advantages to offering programs to 14 people within the State of California and the affected 15 individuals, and we may, as a result of good common sense in 16 government, that may be free. But there are times when I 17 think it's appropriate to charge. And I hope we're looking 18 at that. 19 And I'm thinking, you mentioned, for instance, the 20 Indian tribes. And they're now more interested in 21 complying. Well, let me just share with you -- a lot of our 22 tribes are becoming very wealthy, very quickly. And this is 23 a source, and I think legitimately so, for a time when we 24 can charge. I really do believe that. 25 And I think we need to always keep that in the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 175 1 back of our minds. 2 MR. BOYD: Supervisor Riordan, we do charge for 3 the course. It's a good bargain, but we do charge, and 4 there is a graduated fee schedule. We do everything in our 5 power to make it as reasonable as possible for local 6 government. They, like we, are straining for resources, and 7 other participants may pay a little higher scale to help 8 subsidize the cost for all. 9 But we do recover the lion's share of our costs 10 that way already. 11 SUPERVISOR RIORDAN: I appreciate that. And 12 you're to be commended. I'm very impressed with your 13 program. And I'm going to go off and befriend my local dry 14 cleaner with this new book. That should get me a few 15 "percs," right? 16 CHAIRMAN DUNLAP: No pun intended. 17 Any other questions or comments? 18 All right. Very good. Thank you again. 19 I guess we don't have anyone that signed up to 20 speak on that item, and since it isn't a regulatory item, 21 we'll move along. 22 Which brings us to the final item of our agenda, 23 final business item for the Board today are the six research 24 proposals. 25 We'll ask the staff to change their seating. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 176 1 Have all members of the Board had an opportunity 2 to review the proposals? 3 Are there any additional concerns or comments by 4 members of the Board on those that we need to deal with? 5 Okay. Do we have any brief comments -- and in the 6 interest of time, I would suggest they be brief -- before we 7 take up this item? 8 DR. HOLMES: I think we've had several questions 9 from members of the Board over the past couple of weeks; 10 we've been able to answer them. I don't think there's 11 anything we need to do further on these today. 12 CHAIRMAN DUNLAP: Okay. Very good. Do I have a 13 motion and a second to adopt these proposals? 14 SUPERVISOR VAGIM: So move, Mr. Chairman. 15 MS. EDGERTON: Second. 16 CHAIRMAN DUNLAP: Very good. Thank you. 17 Are there any questions or discussion on this 18 item? Very good. I guess we can do a voice vote. All 19 those in favor of adopting the research proposals, say aye? 20 (Ayes.) 21 Any opposed? Very good. Thank you. Motion 22 carries. 23 Mr. Boyd, is there any further business for the 24 Board to conduct today? 25 MR. BOYD: Mr. Chairman, we have no further PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 177 1 business for the Board. 2 CHAIRMAN DUNLAP: Well, any other items that need 3 to come up from the members of the Board? Very good. 4 Thank you. This will conclude the March Board 5 meeting of the State Air Resources Board. 6 Thank you very much. 7 (Thereupon, the meeting was adjourned 8 at 2:30 p.m.) 9 --o0o-- 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 178 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 in shorthand writing by me, 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 2nd day of April, 1995. Nadine J. Parks Shorthand Reporter PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 Please select one of the following: A ... July 21-22,1994 Part 1 B ... July 21-22,1994 Part 2 C ... August 5, 1994 D ... November 9, 1994 E ... November 10, 1994 F ... November 15, 1994 G ... November 29, 1994 H ... December 9, 1994 I ... December 22, 1994 J ... January 26, 1995 K ... February 23, 1995 L ... March 23, 1995 M ... April 27, 1995 (MEETINGTRANSCRI) Make your selection (A,B,C,D,E,F,G,H,I,J,K,L,M,? for help, or X to exit):