MEETING BEFORE THE CALIFORNIA AIR RESOURCES BOARD BOARD HEARING ROOM 2020 L STREET SACRAMENTO, CALIFORNIA THURSDAY, JUNE 22, 2000 9:30 A.M. Vicki L. Ogelvie, C.S.R. License No. 7871 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 ii MEMBERS PRESENT Alan C. Lloyd, Ph.D., Chairman William Burke Joseph C. Calhoun Dee Dee D'Adamo Mark DeSaulnier C. Hugh Friedman Matt McKinnon Barbara Patrick Barbara Riordan Ron Roberts Staff: Michael Kenny, Executive Director Tom Cackette, Chief Deputy Executive Officer Mike Scheible, Deputy Executive Officer Lynn Terry, Deputy Executive Officer Kathleen Walsh, General Counsel Teruel Ferrari, Ombudsman PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iii I N D E X --o0o-- Page Proceedings 1 Call to Order 1 Pledge of Allegiance 1 Roll Call 1 Opening remarks by Chairman Lloyd 1 AGENDA ITEMS: 00-6-4 Public Meeting to Consider Research Proposals Introductory remarks by Chairman Lloyd 18 Staff Presentation: Mike Kenny 18 Jim Cross 19 00-6-1 Public Hearing to Consider Adoption of Proposed Amendments to the Regulation for Reducing Volatile Organic Compound Emissions from Aerosol Coating Products and Proposed Amendments to Method 310, "Determination of Volatile Organic Compounds in Consumer Products" Introductory remarks by Chairman Lloyd 23 Staff Presentation: Mike Kenny 25 Andrew Chew 27 Terrell Ferreria 53 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iv I N D E X (Continued) --o0o-- Page Public Comment: Heidi McAuliffe 55 Doug Raymond 63 Dennis Stein 67 Robert Graham 69 00-6-3 Public Meeting to Present Information to the Board on Federal Regional Haze Requirements Introductory remarks by Chairman Lloyd 77 Staff Presentation: Mike Kenny 79 Lucille Van Ommering 81 00-6-3 Public Meeting to Consider Approval of a Suggested Control Measure for Emissions of Volatile Organic Compounds from the Application of Architectural Coatings Introductory remarks by Chairman Lloyd 94 Staff Presentation: Mike Kenny 95 Jim Nyarady Public Comment: Jim Edwards 117 Afternoon Session 124 Jim Edwards 124 Jack Broadbent 126 Jim Sell 129 Larry Green 132 Ned B. Kisner 133 Madelyn Harding 159 Lloyd Haanstra 170 Kevin Worrall 172 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 v I N D E X (Continued) --o0o-- Page Carol Brophy 177 John Long 179 Open Session to Provide an Opportunity for Members of the Public to Address the Board on Subject Matters within the Jurisdiction of the Board 199 Adjournment 199 Certificate of Reporter 200 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 1 1 P R O C E E D I N G S 2 --o0o-- 3 CHAIRMAN LLOYD: Good morning. It could be a 4 long day, so I would like to get started today. 5 Good morning. The June 22, 2000 Public 6 Meeting of the Air Resources Board will come to order. 7 Would Ms. Riordan lead us in the Pledge of 8 Allegiance. 9 (Thereupon the Pledge of Allegiance was recited.) 10 CHAIRMAN LLOYD: Thank you very much. 11 Will the Clerk of the Board please call the 12 roll. 13 MS. HUTCHENS: Burke. 14 BOARD MEMBER BURKE: Here. 15 MS. HUTCHENS: Calhoun. 16 BOARD MEMBER CALHOUN: Here. 17 MS. HUTCHENS: D'Adamo. 18 BOARD MEMBER D'ADAMO: Here. 19 MS. HUTCHENS: DeSaulnier. 20 BOARD MEMBER DeSAULNIER: Here. 21 MS. HUTCHENS: Professor Friedman. 22 BOARD MEMBER C.H. FRIEDMAN: Here. 23 MS. HUTCHENS: Dr. Friedman. 24 McKinnon. 25 BOARD MEMBER McKINNON: Here. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 2 1 MS. HUTCHENS: Patrick. 2 BOARD MEMBER PATRICK: Here. 3 MS. HUTCHENS: Riordan. 4 BOARD MEMBER RIORDAN: Here. 5 MS. HUTCHENS: Roberts. 6 BOARD MEMBER ROBERTS: Here. 7 MS. HUTCHENS: Chairman Lloyd. 8 CHAIRMAN LLOYD: Here. 9 Thank you very much. 10 Before we get started, I would just like to 11 reflect on three events that took place this last 12 month, which I think is worth reflecting on. 13 The first one, we just returned, that is Mr. 14 McKinnon, Professor Friedman and myself and Mr. 15 Cackette, from a trip to the Engine Manufacturers 16 Association and also a visit to International and 17 Caterpillar and Cummins. That turned out to be a very 18 informative trip. 19 We explained to them the challenge that they 20 face in trying to reduce the diesel emissions from 21 on-going engines from on-road and off-road, so 22 significant challenges there. 23 And also we got to view some of the research 24 from the industries as they are trying to meet the 25 upcoming standards, both in the 2004 time frame as well PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 3 1 as 2007 time frame. 2 I thought it was very informative, and again 3 came away with a feeling that we have got a lot to do 4 in terms of addressing the existing fleet, and then 5 clearly the companies have a lot to do in addressing 6 the tighter standards that EPA is pushing and we are 7 pushing for in 2007 time frame for 1.1 particulates, 8 but also the .02 NOx. 9 I thought that was very good, and I think we 10 were able to convey to them the need as we have seen 11 based on their identification of this Board that these 12 are toxic contaminants, that they really have to 13 cleanup the existing fleet, and we are going to work 14 with them. 15 Unfortunately, we have a lot of incentives to 16 work in the area. 17 Again, my colleagues, Professor Friedman, and 18 Mr. Mc Kinnon, would you give your results? 19 BOARD MEMBER C.H. FRIEDMAN: I found it very 20 informative. 21 I was particularly impressed with the attitude 22 reflected by the two companies I was able to visit. I 23 was not able to continue on to Indianapolis and 24 Cummins. 25 International Truck and Engine and Caterpillar PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 4 1 officials and representatives were very, very much 2 focused on the objective. 3 They weren't griping about the need. 4 They understood that the public really needs 5 and wants cleaner air and cleaner emissions from their 6 equipment that they are developing, and they are really 7 throwing massive resources at the problem. 8 I was impressed with the advances they've got 9 in the research and development, their technology. 10 I came away very hopeful, and I am grateful 11 for the experience. 12 CHAIRMAN LLOYD: Thank you: 13 BOARD MEMBER McKINNON: I too really enjoyed 14 the trip. 15 It is always nice to kind of see things and go 16 look at the test cells and some of the work that is 17 going on. 18 I think it also, the trip showed once again 19 the respect and relationship that folks in the industry 20 working on these issues have for our staff. 21 Once again, on the trip, that came up again 22 and again. 23 So, I'm real proud of what we are doing and 24 Caterpillar and International, and Cummins, I'm sorry 25 that you missed it, because it was an incredible PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 5 1 research facility. 2 They have put a lot of money into trying to 3 work this stuff out. 4 So, I think it was a very, very valuable trip, 5 and I would like to thank the Chair for inviting me 6 along, and Tom for all the work setting it up. 7 CHAIRMAN LLOYD: I would endorse that. 8 Tom chaperoning us around and his guidance and 9 work is so great, and I know he is going to be doing 10 the same thing next week as a new delegation goes back 11 to Detroit, and I look forward to continued discussion 12 there. 13 Yes, Dr. Burke. 14 BOARD MEMBER BURKE: I still do not know how 15 to turn on the microphone. 16 I'm really pleased to hear that the Board had 17 such a good trip back to the Engine Manufacturers, 18 because I made such a trip just about a year ago and 19 also felt that they were both impressed by our mission 20 and worked well with our staffs. 21 But I must tell you that one of the engine 22 manufacturers that you did visit was extraordinarily 23 difficult in our 1190 series rule proposal that we did 24 last Friday, and I could only see it as a delaying 25 action. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 6 1 I would urge my fellow Board Members to be 2 very concerned about this pleasant attitude and what 3 the real performance is, because they all seem to have 4 pure milk in their mouth, but when it comes down to 5 pedal to the metal, sometimes it's not quite what they 6 say. 7 I think they want to spend a lot more money on 8 research facilities than putting the actual engines 9 into production and up for sale that meet our mission 10 goals. 11 So, I just wanted to make the Board aware that 12 our experience was not necessarily the same as yours. 13 CHAIRMAN LLOYD: Thank you. 14 BOARD MEMBER CALHOUN: I have a question, 15 Alan. 16 If you were encouraged by what you saw in 17 terms of what the engine manufacturers expected to do 18 in the year ahead? 19 CHAIRMAN LLOYD: Yes. 20 I would agree with my two colleagues back 21 there that I was impressed by the progress that was 22 being made. 23 I think that there are major challenges ahead, 24 particularly on the NOx side. 25 When you deal with new engines, when you deal PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 7 1 with the low sulfur diesel, that is a challenge, but I 2 think that they are trying to address that. 3 I agree with my colleagues that we were trying 4 to tell them, look, this Board identified diesel 5 particularly a toxic contaminant, we cannot have this 6 out being exposed to -- the People of California being 7 exposed to that, and that is a big difference there, 8 when you talk about the new engines, but then we have 9 to address the whole issue of what is out there now. 10 We understand that staff is working with them. 11 I think when we -- the way that Tom had set up 12 the tour, we got a glimpse of different aspects of what 13 they were doing. 14 At Cummins, we saw the significant commitment 15 that is being made in terms of looking at the research, 16 particularly when you look at the .2 NOx, when you look 17 at SCR and NOx absorbers. 18 From a technical viewpoint, I felt that they 19 have major challenges. They have made a significant 20 effort. 21 They realize if they don't, the point is that 22 they want to play in this arena, and we want them to 23 play in this arena as well. 24 I have sensed a difference, even in the last 25 year since I have been here, that at least, as you PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 8 1 said, they weren't talking about it, they were not 2 bemoaning the fact that these are particulates that 3 were identified as a toxic air contaminant. 4 They were recognizing that maybe that is a 5 losing battle for them, certainly in California, and 6 they better go down and cleanup emissions there. 7 BOARD MEMBER BURKE: In keeping with that, Mr. 8 Chairman, I know we have a long meeting today. 9 I know that we have been in touch with you 10 since last Friday. I would like to just -- I have a 11 little proposal here that I would like to pass out to 12 the Board Members for their consideration and for the 13 staff's consideration. 14 Because we have identified diesel exhaust as 15 a dominant toxic air contaminant in South Coast and in 16 other parts of the state have also been notified as a 17 major contaminant. 18 Protecting children from exposure to diesel 19 health threats should, I think, be a priority to 20 everyone, and I know that Governor Gray Davis shares 21 this concern, and it is proposed in the State budget 22 towards the replacement of dirty diesel school buses. 23 While we continue to pursue the conversion of 24 school bus fleets to cleaner alternative fuels, we are 25 also looking for other ways to address the health needs PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 9 1 in the near term. 2 One potential method is to use low sulfur 3 diesel fuel in combination with recently developed 4 retrofit technology. 5 Last week, the South Coast Board approved a 6 cosponsorship for a six-month, half a million dollar 7 demonstration for school buses retrofitted for PM traps 8 and using low sulfur fuel. 9 Our demonstration partners include three local 10 districts, equipment vendors and fuel producers. 11 The South Coast AQMD is very interested in 12 turning this into a joint effort with CARB to expedite 13 the certification of the approval process for these 14 traps and fuel control technologies and to build 15 consumer acceptance among these school districts. 16 I would like to mention that I did visit the 17 facility in Southern California this week and was just 18 blown away with their technical ability and mission. 19 CHAIRMAN LLOYD: This is the El Monte 20 facility? 21 BOARD MEMBER BURKE: Yes. 22 It was just -- it warmed my heart to see that 23 we have people that spend not only their time but their 24 effort, and also their spirit in this particular area. 25 But in particular, we would like for the South PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 10 1 Coast to serve as a beta test site for assessing these 2 and other tail pipe control technology, with the hopes 3 of pushing forward the State's evaluation time period, 4 and therefore, distributing a draft proposal calling 5 for a joint effort to expedite the formal assessment 6 approval of these control technologies for school 7 buses. 8 My proposal is different from others that the 9 Board may have seen. The emphasis is to accelerate 10 durability testing, durability which is critical for 11 the building fleet operator and school district. 12 I will be working, hopefully, with Dr. Lloyd 13 to see if the proposal can be implemented in the next 14 30 days. 15 Lastly, I would like to add a personal note. 16 On my way to the office every day, I see 17 crowds of kids lining up at bus stops waiting to board 18 these idling diesel buses and standing there choking in 19 clouds of exhaust to come to school. 20 I'm outraged that the day begins with this 21 known health risk. I am personally intent on finding a 22 solution as quick as humanly possible. 23 I hope that the Board shares my concern on the 24 topic. 25 When I bounced this off a number of staff PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 11 1 people, both in CARB and AQMD, their concern was 2 potential waste of money. 3 If you accelerate, it costs more money. 4 My answer to that, turn on the television. 5 Every day, Los Angeles County, State of California, 6 United States Government wastes more money in a day 7 than this program would cost in ten years. 8 What more valuable asset do we have than our 9 children to maybe take a risk with a few dollars and to 10 pursue it? 11 So, I'm going to ask the staff to pass out 12 this proposal with my request, humbly, that my 13 colleagues on the Board take a look at it, and you have 14 the staff look at it and see if it's something that we 15 can do. 16 CHAIRMAN LLOYD: Thank you, Dr. Burke. 17 I guess I didn't quite expect that at this 18 stage. I would like Mr. Kenny's comment on that. 19 I know you have been deeply involved with the 20 discussion on the school bus not only with South Coast 21 but with other areas. 22 MR. KENNY: Yes, I have been deeply involved 23 in the school bus discussions and actually a number of 24 the other discussions with regard to improvements in 25 diesel technology. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 12 1 We'd be happy to look at it. 2 Actually, I am not familiar with the 3 cooperative approach you're reading from right now, but 4 we actually have worked very cooperatively with the 5 South Coast over the years and generally been able to 6 pool our resources together and accomplish fairly 7 significant things. 8 So, we'd be happy to look at it. 9 BOARD MEMBER BURKE: That is what they said 10 and that is why I came to you. 11 CHAIRMAN LLOYD: Just closing up my opening 12 comments here, I wanted to reflect also on June 5, 13 Supervisor Patrick and I traveled to Fresno officially 14 to launch the Central California Ozone Study, with Ms. 15 Terry and Mr. Kenny and some of our closest friends. 16 This $40-million effort is unparalleled 17 anywhere in the world for it's depth and breadth. 18 In fact, it provides the technical database 19 that we need to understand and address the air quality 20 problems in the Central Valley. 21 We have seen how science has really paid off 22 in the South Coast in the efforts there in terms of 23 reducing air pollution. 24 The third event was on June 8, in Tulare, 25 where we conducted a day-long Agriculture and Air PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 13 1 Quality Forum, with participation from all aspects of 2 the agriculture industry, and with the support of the 3 Governor's Office, CalEPA and our Federal counterparts. 4 I think it was a tremendous learning 5 opportunity for all of us. It was a direct result of 6 the Governor's leadership going down into Central 7 Valley, understanding their issues, as evidenced in the 8 commitment of the Administration to work cooperatively 9 to accomplish the goals in the San Joaquin Valley. 10 We announced down there the formation of the 11 Air Quality and Agricultural Committee, Chaired by our 12 Executive Officer, Mr. Kenny. 13 We look forward to that being a very 14 productive initiative. 15 I also wanted to mention the poll that ran in 16 yesterday's newspaper, which was funded by the Packard 17 Foundation, and conducted by the Public Policy 18 Institute of California. 19 I thought maybe some of you saw this, but just 20 highlighting that, 70 percent of State residents see 21 environmental problems as a threat to their health and 22 well-being. 23 Air pollution tops the list of concerns, 24 followed respectively by runaway urban sprawl, general 25 pollution, water pollution, traffic congestion and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 14 1 inadequate or unsafe water supplies. 2 50 percent of adults said that State 3 Government is not doing enough to protect the 4 environment. 5 All of these concerns were greater in the 6 Latino community than in the general population, which 7 surprised the poll takers. 8 Again, Dr. Burke. 9 BOARD MEMBER BURKE: I was going to add on to 10 this and, in fact, announce the initiative of our own 11 view, which we talked about. 12 CHAIRMAN LLOYD: Again, what this tells me as 13 Chairman of the Board, is that we are doing important 14 work and exactly what the People of California expect. 15 However, we need to be doing much better, 16 since there is some sense out there that Government 17 isn't doing all it should. 18 We need to do more. 19 Therefore, I have asked the Executive Officer, 20 Mike Kenney, to come back to the Board next month, this 21 July, with a Comprehensive Overview, not just piece by 22 piece, but a Comprehensive Overview of all that we are 23 doing to address air pollution in local communities and 24 the associated risks to public health. 25 It's time we took stock of our new and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 15 1 continuing programs to protect cardiac patients, 2 children, asthmatics, other vulnerable populations, 3 such as the elderly and people living in relatively 4 worse air quality areas. 5 There is a lot going on, but I think perhaps 6 we need to strengthen an element or two. I know at the 7 Board we do tremendous work here, but we need to get 8 the message out, and also we need to understand better 9 so we can address the people's public health concerns. 10 So, I think this is something which we look 11 forward to. 12 I have already spoken to Mr. Kenny on this 13 issue, and again, since the Board has moved ahead on 14 the health theories, and we have this extensive health 15 network and health research out there, we need to pull 16 this together so we can understand all the interlocking 17 elements on that. 18 Anyway, a longer introduction than I thought. 19 If there are any comments by the Board 20 Members, other than those that we have, I guess we will 21 begin. 22 Supervisor Patrick, if you would like to say 23 something about the recent events down in the Valley? 24 BOARD MEMBER PATRICK: It was a great week for 25 us, and we do appreciate all the hard work that this PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 16 1 group, the California Air Resources Board is doing for 2 those of us in the San Joaquin Valley, where we have a 3 lot of unique challenges. 4 And last November, the Governor came to an 5 all day conference in Fresno, and air quality was one 6 of the major topics. He responded to the people in 7 that area by inaugurating this Air Quality and 8 Agricultural Task Force, and so it is really great to 9 be a part of this and representing the San Joaquin 10 Valley. 11 I appreciate all of your, the work of the 12 Board and the work of the staff there. 13 CHAIRMAN LLOYD: Thank you. 14 BOARD MEMBER D'ADAMO: I would like to echo 15 that. 16 I was not able to be present, but I really 17 wanted to thank the Chairman and staff for going down 18 to the Valley twice in one week. I appreciate it. 19 I would just like to say that I know that not 20 just me, myself, but all of us are really looking 21 forward to the results that come out of this major 22 undertaking with the study. 23 We need to get a better handle on some of the 24 issues that uniquely affect the Valley. 25 We have a very serious challenge before us, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 17 1 especially with the recent proposed bump up of the San 2 Joaquin Valley, and anxiously await some of the 3 scientific information that will come out on how we can 4 better grapple with the issue of particulates, ozone, 5 and we will also be looking at the transported air 6 pollution information that comes out from the study. 7 CHAIRMAN LLOYD: Thank you very much. 8 You were there in spirit, and many people 9 remarked favorably on your commitment to your work on 10 the Board. 11 Thank you. 12 BOARD MEMBER D'ADAMO: Thank you. 13 BOARD MEMBER BURKE: I don't know if everyone 14 knows about the 1190 series that we passed last week. 15 Is that worth mentioning? 16 CHAIRMAN LLOYD: Yes. 17 BOARD MEMBER BURKE: As I was asking the 18 Chairman, I don't know if everybody knows about the 19 1190 series that was passed by the South Coast last 20 Friday, which raised much furor, and many people never 21 thought we would be able to institute it, but it is a 22 requirement for public Fleets, 15 or more vehicles, to 23 go to CNG instead of just going and buying diesels. 24 We did, in fact, pass a resolution which 25 encouraged diesel to try to meet the standard of CNG, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 18 1 and they, too, will be allowed into the state. 2 Now, the question becomes, what will we do 3 with the school buses and what will we do with the 4 private fleets? 5 Those are things that we are looking at, that 6 because of that regulation, the day of our last Board 7 meeting, MTA changed their mind in buying 315 dirty 8 diesel buses, and they changed their mind on Board Day 9 and selected 315 CNG buses. 10 So, whether anything else comes from this 11 series of regulations, I'm sure it will, that decision 12 we thought was significant, and in a district that 13 needs attainment. 14 CHAIRMAN LLOYD: I think that the Board should 15 be applauded very much for moving ahead there, and 16 again, we look forward to working with you, of course, 17 grappling with the major issue of what do we do with 18 all the on-road vehicles that pose a greater challenge, 19 but we have more work ahead for us. 20 Just to announce, we will have a slight change 21 in the Agenda. We will put the research program first. 22 So, the reason that we are doing that, of 23 course, you can see, it is a short item and rather than 24 keeping some of the staff maybe around here. 25 I would like to remind everybody in the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 19 1 audience who wishes to speak on today's agenda items to 2 sign up with the clerk of the Board. 3 If you have a written statement, please give 4 30 copies of that statement to the Board Clerk. 5 The first business item is two research 6 proposals. 7 Mr. Croes, do you have anything you wish to 8 add on the proposals? 9 MR. CROES: Nothing to add. 10 I would like to make a brief statement to 11 discuss the proposal, unless you want to go ahead and 12 vote. 13 CHAIRMAN LLOYD: I think -- do you want to 14 make a statement? 15 MR. CROES: There are two research proposals. 16 The first of these will study the air 17 chemistry of volatile organic compounds or hydrocarbons 18 as they are commonly known. 19 We plan to focus the project on the chemical 20 reaction that contributes to ozone particulate matter 21 and toxic air contaminants. 22 Because of recent advancements and measurement 23 capabilities, the investigators will be able to study 24 the formations of compounds, that are believed to be 25 the cause of adverse health effects and particulate PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 20 1 matter in diesel exhaust. 2 The primary investigators for this project, 3 Professors Roger Atkinson and Janet Ares, are world 4 class researchers. 5 The results from this project will improve the 6 models used for State Implementation Plans and support 7 to Board's use of hydrocarbon activity in motor vehicle 8 and consumer product regulations, which is being 9 discussed on today's agenda. 10 Much of the laboratory infrastructure for the 11 project was paid for by the National Science 12 Foundation. 13 The second project builds on an in-house 14 effort we have to assess the economic value of air 15 pollution control. This project's focus is on the 16 hospitalization associated with exposure to particulate 17 matter and ozone, and this addresses a gap in economic 18 assessment that has not been filled anywhere in the 19 country. 20 We will be starting our in-house effort with 21 a new comprehensive model that was developed under EPA 22 funding for the national situation, and then use the 23 results of this and other efforts to modify it with 24 data specific for California. 25 We recommend that you approve both projects PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 21 1 for funding. 2 CHAIRMAN LLOYD: Thank you very much. 3 Any questions? 4 BOARD MEMBER C.H. FRIEDMAN: Quick question. 5 Why -- I'm curious about the phrase Economic 6 Value of Hospitalization. 7 I think of that in terms of cost, although 8 it's expressed in terms of what people would be willing 9 to pay to avoid the condition that requires 10 hospitalization -- is that sort of academic speak that 11 I should be more familiar with? 12 MR. CROES: No. 13 They are actually the current estimates to 14 assess the costs of hospitalization. 15 BOARD MEMBER C.H. FRIEDMAN: It is called -- 16 the title of this research proposal as stated is 17 entitled, I quote, Economic Value of Hospitalizations 18 Associated with Particulate and Ozone Air Pollution. 19 I just thought that was a curious way to put 20 it. 21 Is that what gets them the grant? 22 I want to do this if it works. 23 MR. FEIZOLLAHI: This is Fereidun Feizollahi 24 from the Economic Study section. 25 I think you are absolutely correct that the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 22 1 title needs to be changed. 2 BOARD MEMBER C.H. FRIEDMAN: Cost. 3 MR. FEIZOLLAHI: There are some academics in 4 that the cost, they look at the medical cost first, and 5 cost it out by looking up the accounts, but the 6 economic valuation comes where we do the survey for the 7 willingness to pay, that someone valuing their time, 8 their pain, the other factors, that is not necessarily 9 based on some cost that was paid by someone. 10 It's a valuation by -- 11 BOARD MEMBER C.H. FRIEDMAN: Damages. 12 MR. FIEZOLLAHI: Yes, exactly. 13 BOARD MEMBER C.H. FRIEDMAN: I got you. 14 I appreciate it. 15 CHAIRMAN LLOYD: Thank you. 16 Any questions from the Board? 17 Again, I just endorse both of those. I think 18 the more we will see the value of some of the 19 reactivity we're continuing at Riverside, I think is 20 fundamental to adding to the science and the economic 21 impacts here, I think is also very important as we move 22 ahead in these areas. 23 BOARD MEMBER RIORDAN: Mr. Chairman, there are 24 two resolutions in front of us. 25 There is 00-24 and 00-25. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 23 1 CHAIRMAN LLOYD: All in favor, say aye. 2 Thank you. Thank you very much. 3 Second item. I guess we'll give a minute here 4 for staff to turn over. 5 The second item of the agenda today is 00-6-1, 6 Public Hearing to Consider Amendments to the Board's 7 existing regulation for Aerosol Coatings. 8 The Aerosol Coatings rule was first adopted 9 back in 1995. It was initially expressed in terms of 10 conventional emission limits. 11 In November 1998, the Board revised some of 12 those limits and directed staff to develop a compliance 13 option based on the photochemical reactivity of each 14 compound used in the aerosol coatings. 15 Today we consider the fruit of those labors. 16 I think this is the very important step from 17 both the regulatory and technical perspective. 18 Staff is incorporating the latest scientific 19 thinking to frame a rule to recognize the different 20 ozone forming potential of individual compounds. 21 This effort will undoubtedly lead to more 22 reactivity-based regulations in the future, and that 23 will give us the ability to continue reducing ozone, 24 which we do while simultaneously providing new 25 flexibility to industry. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 24 1 I feel it is a real win-win situation for 2 everybody. 3 A simple analogy to me on this is that, for my 4 fellow Board Members, reactivity, if you looked at all 5 the compounds with different reactivity factors, we 6 have the luxury now very often if you are on a diet and 7 looking for food, say 2000 calories, but that's fine, 8 but we want to know how much fat calories, how much 9 nonfat, and how much fiber, all that type of stuff in 10 there, this is that type of thing. 11 Also, for those people who may be allergic to 12 peanuts, we need to know if there was peanut oil or 13 what was in there. 14 This is the type of approach that is providing 15 us here, so that, in fact, working with the 16 manufacturers, staff has been able to come up with the 17 recipe. 18 We would have all of this information at our 19 disposal rather than just the total mass. 20 The other part of it is, when we look at 21 compliance with ozone with the air quality standards, 22 we need to take this mass and put them into a model. 23 When you put them into a model, you actually 24 take into account the activity, so you have all the 25 atmospheric reactions with the sunlight and NOx and the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 25 1 hydrocarbons taking place. 2 So, you have to make certain assumptions. You 3 do not know if you have this mass of emissions. 4 You don't know what the ingredients are. You 5 have to make certain assumptions before you put it in 6 the model. 7 This staff has been working with industry. I 8 think it is major step forward. 9 I know we may have some of our colleagues in 10 the regulatory community that may not agree with us. 11 I feel it is an indication whereby we are 12 definitely a step, if not many steps, ahead. I think 13 I am really delighted with the work that staff has 14 done, having read, not all, but most of the staff 15 report here. 16 I am very impressed with the amount of work 17 that is done, and the amount of workshops that you 18 have conducted here. 19 With that, I would like to turn it over to Mr. 20 Kenny to introduce the item. 21 MR. KENNY: Thank you Mr. Chairman and Members 22 of the Board. 23 The proposal before us today is the result of 24 your directive to develop a reactivity-based regulation 25 for Aerosol Coatings. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 26 1 The proposed amendments to the Aerosol 2 Coatings Regulation recognize that each VOC has a 3 different ability to induce ozone formation. 4 This concept is known as reactivity. 5 By understanding the differences in VOCs 6 potentials to form ozone, and by using that knowledge 7 in regulatory applications, an efficient control 8 strategy can be established that, rather than limiting 9 the total mass of VOCs, limits the amounts of ozone 10 produced by formulating products using VOCs that have 11 lower photochemical reactivity. 12 We believe this control approach has the 13 potential to provide more flexibility to the Aerosol 14 Coating manufacturers at less cost than traditional 15 mass-based VOC controls, while achieving equivalent air 16 quality benefits. 17 As the basis for the proposed reactivity 18 limits, staff is proposing to use the MIR scale 19 developed by Dr. William Carter, at the University of 20 California, Riverside. 21 To enforce the reactivity provisions, staff is 22 also proposing amendments to ARB Test Method 310. 23 Staff is proposing to extend the existing 24 effective date for the proposed limits from January 1, 25 2002, to June 1, 2002, for the general coating PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 27 1 categories, and to January 1, 2003, for the specialty 2 coating categories. 3 The short extension is needed to provide 4 sufficient time for manufacturers to develop 5 commercially viable products. 6 I would now call upon Andrew Chew, who will 7 now make the staff presentation. 8 MR. CHEW: Thank you, Mr. Kenny. 9 Good morning, Chairman Lloyd, and Members of 10 the Board. 11 As Mr. Kenney mentioned, today we are 12 proposing for your consideration amendments to the 13 Aerosol Coatings regulation. 14 To implement and enforce these amendments, we 15 are also proposing the adoption of the tables of MIR 16 values and amendments to ARB Test Method 310. 17 Today's presentation will follow this agenda. 18 First, I will provide an overview and synopsis 19 of the development of the amendments to the aerosol 20 coatings regulation. 21 Then, I will be discussing the proposed 22 amendments and the environmental and economic impacts. 23 Next I will discuss the changes to staff's original 24 proposal and related issues. 25 I'll close with the summary and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 28 1 recommendation. 2 Before I describe the staff's proposal, I'll 3 summarize the coating regulation and steps that led to 4 the proposal before you today. 5 The Statewide Regulation to Reduce Volatile 6 Organic Compound Emissions from Aerosol Coating 7 Products was adopted in 1995. It specified interim and 8 more stringent final VOC limits for 35 categories. 9 In general, the products subject to this 10 regulation are spray paints. The limits are mass-based 11 and specify the VOCs that can be contained in an 12 aerosol coating product. 13 In November 1998, a public hearing was 14 conducted on the final limits to consider the technical 15 and commercial feasibility. At that hearing, some 16 limits were revised. 17 Recognizing that some of the limits still 18 presented technological challenges, especially for 19 water-based products, the Board directed staff to 20 return with a voluntary reactivity-based regulation to 21 provide flexibility for aerosol coatings. 22 To fulfill the Board directive, we are now 23 proposing a new regulatory concept to regulate VOC 24 emissions from aerosol coatings based on reactivity. 25 If adopted, this would be the first PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 29 1 reactivity-based regulation for non-mobile sources. 2 We believe this approach achieves efficient 3 ozone reductions by limiting the ozone formed from 4 aerosol coating products rather than limiting the total 5 VOC content. 6 Compared to the current regulation, the 7 proposal preserves the air quality benefits, results in 8 cost savings and provides an additional compliance 9 flexibility. 10 What is reactivity? 11 Reactivity is the concept that each VOC has a 12 different ability to form ozone. The differences can 13 be quantified and compared to each other using a scale. 14 By understanding the differences in VOCs 15 reactivity, a control approach can be established that 16 leads to efficient ozone reductions. 17 As an example of the reactivities of different 18 compounds, one gram of propane, a common propellant, 19 will likely react to form about a half gram of ozone. 20 On the other hand, one gram of xylene isomers, 21 a commonly used solvent, will likely react to form 22 about 7.5 grams of ozone, 15 times more. 23 The ARB has a long history of commitment to 24 explore the use of reactivity in regulatory control 25 approaches. For example, the California Low Emission PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 30 1 Vehicle and Clean Fuels Regulation adopted in 1990, 2 already uses reactivity concepts as the basis for the 3 Reactivity Adjustment Factors, or RAFs. 4 To support this program and to ensure a sound 5 basis for additional programs, we have funded research, 6 and we continue to fund studies to further improve the 7 basis and our understanding of the science. 8 Our research results, along with industry 9 concurrence, led us to include a provision to explore 10 the incorporation of reactivity in the consumer 11 products element of the State Implementation Plan. 12 In 1996, the ARB further committed to evaluate 13 the use of reactivity when it formed the Reactivity 14 Scientific Advisory Committee, or RSAC, to provide 15 advice on the use of the science of reactivity. 16 The RSAC has concurred that using reactivity 17 is a viable regulatory strategy. 18 As I mentioned a moment ago, reactivities of 19 VOCs are compared using a scale. 20 We are proposing to use the maximum 21 incremental reactivity, or MIR, scale developed by Dr. 22 William Carter, at the University of California, at 23 Riverside. 24 Dr. Carter found the MIR scale to be 25 appropriate for applications requiring use of a single PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 31 1 reactivity scale, and the Board concurred when they 2 adopted the MIR scale for use in the Low Emission 3 Vehicle and Clean Fuels program. 4 To ensure that the proposed amendments to the 5 regulation are based on science, Dr. Carter's work has 6 been peer reviewed and approved by the RSAC. 7 The basis from which the MIR scale is derived 8 was found to represent state of the science. 9 Thus, with a sound scientific basis, we can 10 now use reactivity in a more detailed manner. 11 But why are we proposing a reactivity-based 12 regulation for aerosol coatings? 13 In addition to the Board's directive to 14 develop the first reactivity-based regulation for 15 consumer products, we needed a well-defined category 16 that lends itself to a reactivity approach. 17 The aerosol coatings category fits this need. 18 The speciated VOC data necessary to develop 19 this proposal are available from our industry survey of 20 1997 sales, and the VOCs used are well-characterized in 21 terms of reactivity. 22 It is also important that the aerosol coating 23 industry was willing to work with us to explore this 24 innovative regulatory concept. 25 Because this is a new regulatory concept, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 32 1 goals were established early. 2 Most importantly, the limits needed to 3 maintain the air quality benefit for the mass-based 4 limits have a sound scientific basis. 5 The limits must also be commercially and 6 technologically feasible and provide flexibility. 7 The program must also be enforced. 8 To fulfill your directive, we worked with 9 industry on development of a voluntary regulation, but 10 found it difficult to ensure equivalence with the mass 11 limits. 12 This is because by offering an option, we 13 could not predict how each manufacturer would 14 reformulate. 15 Thus, to achieve the emissions reduction 16 already claimed, reactivity limits had to be set so low 17 that they were not as feasible and did not provide the 18 flexibility. 19 Hence, we were not meeting our goals. 20 In light of this, staff and the majority of 21 the aerosol coating industry came to the conclusion 22 that it was preferable to pursue mandatory limits 23 because they would provide the flexibility but still 24 achieve the ozone reduction goal. 25 By requiring all products to comply with PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 33 1 reactivity limits rather than giving a choice, we can 2 better predict the ozone reductions and can ensure 3 equivalency. 4 This also gives manufacturers more choice in 5 the solvents available for reformulation. 6 Therefore, as I'll describe in a moment, we 7 are now proposing to replace the mass-based limits with 8 mandatory reactivity limits. 9 I'll next briefly discuss how we developed 10 this proposal. 11 Beginning in 1995, staff formed the Reactivity 12 Subgroup with the Consumer Products Working Group. The 13 group met nine times to discuss the science, improve 14 our understanding of the science through educational 15 seminars by experts in the field, conduct a pilot 16 project and discuss regulatory concepts. 17 Eight public workshops were held, with the 18 first one conducted in November 1997, and the last on 19 April 11, 2000, to discuss today's proposal. 20 We also established the Aerosol Coating 21 Workgroup to allow for rapid exchange and concerns. 22 This workgroup has six meetings since it was formed in 23 the fall of 1999. 24 The RSAC has also held four public meetings at 25 which various aspects of this program were discussed. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 34 1 Now I'll describe the proposed amendments. 2 We are proposing to replace the mass-based 3 limits with reactivity-based limits. To do this for 4 each of the mass-based VOC limits using the MIR scale 5 and the speciated survey data, we calculated the ozone 6 reduction that would be expected from compliance with 7 the mass limit. 8 We then established a reactivity limit that 9 would achieve the same ozone reduction as the mass 10 limits. 11 Our proposal is to set an equivalent 12 reactivity limit for all categories that reduces the 13 ozone forming abilities of the VOCs. 14 In other words, in this approach, 15 manufacturers are able to substitute lower reactive VOC 16 solvents for highly reactive VOC solvents and may not 17 have to reduce total VOC content. 18 This provides additional flexibility to the 19 manufacturers. 20 This slide shows the VOC reductions already 21 committed to from the mass limits adopted in 1998 and 22 the ozone reductions that would result. 23 Overall, mass limits would achieve 3.1 tpd in 24 VOC emission reductions. 25 This converts into an ozone reduction of 9.6 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 35 1 tpd. 2 Our proposal will achieve the 9.6 tpd ozone 3 reduction, therefore, providing the same air quality 4 benefit as the mass limit. 5 Even though the vast majority of the compounds 6 currently used in aerosol coatings are fairly 7 well-characterized, based on the recommendations of Dr. 8 Carter and the RSAC, we are proposing to apply 9 uncertainty adjustment factors to some MIR values 10 before calculating the limits. 11 The adjustment factors reflect the 12 understanding of the science. 13 However, because aerosol coatings VOCs are 14 well defined, adjustment factors are only necessary for 15 20 percent of the compounds used, eight percent would 16 require no adjustment. 17 By incorporating uncertainty factors into the 18 limits ensures preservation of the air quality benefit. 19 To allow adequate time to comply with the 20 proposed limits, we are proposing a short extension of 21 the effective date for the limits. 22 The current date is January 1, 2002. 23 We are proposing to extend the effective date 24 for the general coating categories for five months, 25 until June 1, 2002. This allows manufacturers to focus PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 36 1 first on the reformulations that will achieve the most 2 reductions. 3 We are proposing to extend the effective date 4 to January 1, 2003, for the specialty categories. 5 The following six categories are general 6 coating categories. 7 The following two slides list the 29 specialty 8 coating categories. 9 These are more of the specialty coating 10 categories. 11 A number of other amendments are proposed. 12 First of all, because we are going to 13 reactivity-based control approach, we no longer need 14 to have VOC exemptions for low reactive compounds. 15 At present, the ACP does not allow emission to 16 be average-based on reactivity. Therefore, this 17 compliance option would be suspended for aerosol 18 coatings until we update it to address reactivity. 19 In the staff report, we proposed a no new use 20 provision for methylene chloride. However, as I'll 21 describe in a few minutes, the changes that we proposed 22 today would prohibit the use of this and two other 23 toxic compounds. 24 Also, for aid in enforcing the regulation, 25 manufacturers would have to supply formulation data PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 37 1 within 10 working days for products selected for 2 compliance testing. 3 We are also proposing a number of amendments 4 to implement the reactivity limits, such as adding 5 definitions. 6 We are proposing amendments to ARB Test Method 7 310 to allow it to be used to verify formulation data 8 to determine compliance with the reactivity limits. 9 Currently, Test Method 310 is used to 10 determine total VOC content for consumer products, 11 including aerosol coatings. 12 We are also proposing to place the MIR values 13 in a new Subchapter of the California Code of 14 Regulations. This would allow current and future 15 reactivity-based regulations to refer to the same 16 tables of consistency. 17 In the aerosol coating regulations, 18 manufacturers would be required to use the MIR values 19 for hydrocarbon solvents. We are proposing to group 20 aliphatic and aromatic hydrocarbon solvents that have 21 similar characteristics and are assigning an MIR value 22 to each group. 23 Now, I'd like to discuss the environmental 24 and economic impacts of the proposal. 25 We have redesigned the reactivity limits such PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 38 1 that the benefits of the current regulation are 2 preserved. However, there would be a short delay in 3 achieving the ozone reductions because of the need to 4 extend the effective date. 5 We have evaluated the economic impacts of our 6 proposal and compared the results with the cost 7 estimates to comply with the mass limits. 8 Our analysis shows that by going to a 9 reactivity-based approach, the regulation is much more 10 cost effective. 11 Since release of the staff report, we have 12 continued to work with stakeholders on several issues. 13 To address these concerns, we have several changes we 14 are recommending. 15 We are proposing additional amendments to the 16 regulation and are also recommending a process to 17 update MIR values. 18 We are proposing to prohibit the use of 19 trichloroethylene, methylene chloride and 20 perchloroethylene in aerosol coating products. 21 We have continued to study the use of these 22 compounds in aerosol coatings since releasing the staff 23 report and believe prohibiting their use is appropriate 24 to reduce exposure to these toxic compounds. 25 The 1997 survey of the Aerosol Coating PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 39 1 Industry indicates that no trichloroethylene is 2 currently used. 3 We believe it is prudent to prohibit use of 4 this toxic compound, because it is a fairly low 5 reactive solvent that could be used in aerosol 6 coatings. 7 The 1997 survey also indicates that products 8 containing methylene chloride and perchloroethylene 9 represent three percent of all sales of aerosol 10 coatings. 11 We contacted every company that reported use 12 in the survey, and found that most companies had 13 already discontinued use or were no longer selling 14 products containing these compounds. 15 The remaining companies are in the process of 16 removing methylene chloride and perchloroethylene from 17 their products. 18 We also found that there are alternative 19 solvents available to replace these toxic compounds, 20 and determined that complying products that did not use 21 either chemical exist in all categories where methylene 22 chloride and perchloroethylene were reported. 23 Complying marketshares of products complying 24 with the reactivity limits in these categories range 25 from about 20 percent to over 70 percent. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 40 1 Although these products represent a very small 2 segment of the aerosol coating market, and almost all 3 manufacturers have already discontinued use of these 4 toxic compounds, we believe the prohibition is 5 appropriate. 6 We have a number of other proposed changes as 7 shown on the next two slides. 8 We are proposing to adjust the limits for four 9 categories and are adding a limit for one category, 10 polyolefin adhesion promoter. 11 These changes are necessary to ensure 12 technological feasibility of the limits. We have also 13 rounded off the limits for ease of reporting 14 formulation data for compliance purposes. 15 We are now proposing a 0.1 percent cut point. 16 This simplifies recordkeeping and does not compromise 17 our reductions. 18 We are proposing to add a default MIR value 19 for uncharacterized hydrocarbon solvents. 20 To provide aerosol coating manufacturers with 21 stability, we are proposing to lock in the MIR values 22 for aerosol coating manufacturers until June 2007. 23 We are also proposing other miscellaneous 24 changes to make the regulation easier to use. 25 I will be discussing a process we are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 41 1 recommending to update MIR values next. 2 To allow continuous improvement in the 3 science, we are recommending that MIR values be 4 reviewed and updated as appropriate every eighteen 5 months. 6 We believe that updating MIR values could be 7 handled most efficiently through an Executive Officer 8 hearing, because these types of changes are technical 9 in nature. 10 Therefore, we are specifically asking that the 11 Executive Officer be delegated the authority to conduct 12 these hearings and make any recommended changes to the 13 Tables of MIR Values. 14 As you know, however, this is still an open 15 public process. 16 These reviews and subsequent updates would 17 ensure that the best science is used as the basis for 18 additional reactivity-based regulations. 19 There are two primary issues that we are aware 20 of. 21 First of all, we have received a comment from 22 the National Paint and Coatings Association that 23 indicates they do not support the prohibition of 24 methylene chloride, because they are not convinced of 25 its toxicity. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 42 1 However, as mentioned earlier, alternatives 2 are available, and it has been identified by the ARB as 3 a toxic air contaminant and as a Federal hazardous air 4 pollutant. 5 Therefore, we believe prohibiting its use is 6 appropriate. 7 We have received comments from U.S. EPA and 8 the NRDC and Coalition for Clean Air that expressed 9 reservation on using reactivity as a control approach. 10 In particular, they have concerns with the 11 science, enforceability and the potential increased use 12 of toxics. 13 First of all, staff disagrees with the issue 14 related to the readiness of the science. As I said 15 earlier in my presentation, the basis for our proposed 16 amendments has been peer reviewed and approved by the 17 RSAC. 18 We also note that several of the RSAC members 19 are working with the U.S. EPA through their Reactivity 20 Research Working Group, and that there is a letter in 21 the record from the Chair of the RSAC, Dr. John 22 Seinfeld, at the California Institute of Technology, 23 which indicates that the RSAC endorses the use of the 24 chemical mechanism from which the MIR scale is derived 25 and found it to represent state-of-the-art. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 43 1 We believe the science is ready and applicable 2 for use in California control approaches. 3 Secondly, enforcing this regulation will be no 4 different than enforcing the existing regulation. 5 ARB is well-equipped and staffed to enforce 6 the proposed regulation and run the necessary testing 7 to determine compliance. 8 Finally, we expect that the use of toxics to 9 decrease as a result of these amendments. We expect 10 the use of highly reactive toxics to be reduced, and 11 furthermore, we are proposing to prohibit the use of 12 the low reactive toxic solvents, methylene chloride, 13 trichloroethylene, and perchloroethylene, that the U.S. 14 EPA has exempted, due to their low reactivity. 15 In summary, staff is proposing a new 16 regulatory concept that incorporates the latest 17 scientific thinking. 18 We believe the proposal will achieve the same 19 air quality benefit as the mass-based limits would but 20 provides manufacturers with additional reformulation 21 flexibility in a cost-effective manner. 22 Therefore, we view this proposal as a pilot 23 program which can serve as a model for future 24 reactivity-based regulations. 25 In closing, we recommend that the Board adopt PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 44 1 the staff's proposal with the changes described today. 2 This concludes the presentation. 3 CHAIRMAN LLOYD: Thank you, very much. 4 Any questions or comments from the Board? 5 BOARD MEMBER CALHOUN: The staff proposal 6 represents a change in policy. 7 You are going from a mass basis to a 8 reactivity basis. 9 Did I understand it correctly to say that EPA 10 is questioning the advisability of making the switch? 11 MR. VENTURINI: Mr. Calhoun, yes. 12 Basically, the EPA has raised some questions 13 about going to this approach. 14 As we indicated with the testimony that we 15 disagree. 16 BOARD MEMBER CALHOUN: My next question then 17 is, how are you going to handle the SIP? 18 MR. KENNY: When we adopted the -- when this 19 Board adopted the 1994 SIP, EPA disagreed with that 20 also, and they ultimately were convinced that in fact 21 it was an appropriate approach, and they did approve 22 it. 23 We think that, in fact, a very similar thing 24 will happen here. 25 We think with science it is quite apparent to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 45 1 justify what we are proposing to you today, and we 2 think that we can convince the U.S. EPA. 3 BOARD MEMBER CALHOUN: I hope so. 4 MR. KENNY: So do we, but we are pretty 5 confident. 6 BOARD MEMBER C.H. FRIEDMAN: If I understand 7 the proposal, we are moving to a much more specifically 8 focused approach, if you will, a rifle shot rather than 9 a shotgun approach to regulating these aerosol 10 coatings, based on the extent to which various VOCs 11 contribute in different degrees, different levels to 12 creation of ozone, and I gather that those who are 13 expressing these reservations, EPA and others, still 14 have some lingering reservation about the extent to 15 which one can identify validly and accurately the 16 respective level of contribution to ozone of these 17 various compounds? 18 Is there anything that you are building into 19 these regulations that would provide us with some 20 ongoing monitoring or testing, or is that all done and 21 the science is there and there is no need to prove it 22 again and again? 23 MR. VENTURINI: As with all of our regulations 24 and consumer products, we always track and monitor the 25 progress of our regulations. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 46 1 One of the reasons that we proposing to have a 2 process to update these MRI Values, in some cases the 3 science will change or there are some VOCs for which 4 there is no MRI value. 5 To the extent that those develop, we have a 6 process to keep defining the science. That doesn't, in 7 our view, diminish the confidence that we have in what 8 is being proposed today, and that is why we went to 9 some very extensive efforts to work with RSAC to have 10 an independent peer review done of the work. 11 So, we are very confident at the staff that 12 this proposal will in fact preserve and maybe even 13 enhance the benefits of the original regulations, and 14 we think it is an innovative and quite an elegant new 15 approach to dealing with some of the issues that we 16 have to deal with. 17 BOARD MEMBER C.H. FRIEDMAN: I agree. 18 I congratulate you and applaud the effort, 19 always, to make regulation itself incremental, and it's 20 precisely responsive to the objective and not over 21 regulated. 22 Obviously to the extent that it is much more 23 cost effective to those being regulated, I assume that 24 they are in the main supportive of this as it benefits 25 the industry as well as you defined it, benefitting the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 47 1 public, and I think it is an excellent change in 2 approach. 3 I am keeping my fingers crossed. I hope we 4 are right on this. 5 MR. VENTURINI: It is not new. We tried it in 6 mobile sources. 7 BOARD MEMBER CALHOUN: It is justified there. 8 BOARD MEMBER C.H. FRIEDMAN: Thank you. 9 CHAIRMAN LLOYD: Supervisor DeSaulnier. 10 BOARD MEMBER DeSAULNIER: I am a little 11 concerned, and I shared with Alan, and I know he has 12 some questions in this regard, so I won't try to 13 preempt you too much, Alan. 14 CHAIRMAN LLOYD: Now is the chance. 15 BOARD MEMBER DeSAULNIER: The letters dated 16 yesterday from Region 9 and from NRDC and the Coalition 17 for Clear Air, other than our pride and past history in 18 accuracy, how do we bring them on board, Mike, in the 19 next three to six months? 20 MR. KENNY: Actually, I had conversations 21 with the environmental community yesterday about their 22 letter, because it was a surprise to us, and we didn't 23 know it was coming. 24 As we walked through some of the issues, I 25 think there is an opportunity to bring them on board, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 48 1 because they do not have a full level of knowledge with 2 regard to everything that we are doing and a lot of 3 the benefits associated with going through a 4 reactivity-based approach. 5 So, I think there is an opportunity there. 6 With regard to the U.S. EPA, I think a lot of 7 what we are seeing in U.S. EPA letter, and again it was 8 a letter we received without a lot of notice, is a 9 reflection of the fact that U.S. EPA is also looking at 10 reactivity-based approaches with regard to consumer 11 products. 12 So, I think us going forward with a 13 reactivity-based approach with a consumer product is a 14 concern to them, because to some extent it sets the way 15 where they have to go. 16 So, I do think, if we basically sit down and 17 work with both the environmental community and the U.S. 18 EPA, they will see the value of essentially going to a 19 more precise approach, and they will probably 20 ultimately come on board. 21 But I think the opportunities do exist there. 22 BOARD MEMBER DeSAULNIER: I share your concern 23 of these letters and the similarity, the tone of the 24 letters is striking. 25 MR. KENNY: It was coincidental we thought. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 49 1 MR. SCHEIBLE: Staff also believes that with 2 time we can address each of the issues raised. 3 There was an issue of uncertainty, and in 4 reality there is an uncertainty with the mass-based 5 approach. 6 There is a presumption that when you use a 7 mass-based approach, that the average reactivity 8 doesn't change when reformulations occur. 9 There is no guarantee in the regulation that 10 you will get the ozone benefit that you've assumed in 11 the State Implementation Plan. 12 Your reactivity approach guarantees that you 13 will get at least that much reduction. 14 On enforceability, I think we can address the 15 issue. 16 The third issue is one of -- eventually we 17 hope to get even greater ozone reductions associated 18 with regulation of consumer products, and I think in 19 the mid and long-term, a reactivity approach greatly 20 increases the chances that we will find cost-effective 21 ways of doing that, especially with something like 22 aerosol coatings. 23 So, where they see problems, we see 24 opportunities. 25 CHAIRMAN LLOYD: I agree completely. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 50 1 I think the other part that staff mentioned in 2 the report is that as we are able to get the detailed 3 chemical composition, we can also look in the model, 4 the second aerosol formation, from some of these 5 compounds. 6 So, we are going to a whole greater level of 7 detail, and I feel strongly after reading the letter. 8 Well, the two parts on the letters, I think, 9 one, the EPA scientific staff and the research for 10 years, they've been working with our Technical staff 11 also on the whole issue of reactivity, and I think they 12 may have a different approach on the regulatory side. 13 Without belaboring the point, I think from the 14 environmental letter, I think, if we can educate them, 15 I think they will maybe regret that they were so 16 ill-informed when they sent the letter. 17 The other part that I would like to add on 18 that particular issue, again, it's always a concern, 19 and I jumped out of order here, so I will ask Terrel 20 Ferreria to highlight some of the process by which this 21 reports to the Board. 22 In particular, Terrel, I don't know if you can 23 you answer, maybe staff can answer, I know when we have 24 the letter from environmental groups there were many 25 opportunities for them to participate in the workshop. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 51 1 So, did they actually take part of that? 2 MS. FERRERIA: Mr. Chairman, and Members of 3 the Board, the proposal before you is a result of the 4 comprehensive coordinated and on-going effort brought 5 forward by ARB staff and interested stakeholders, 6 beginning in April 1995. 7 The effort began with the formation of the 8 reactive sub group within the consumer products working 9 group on April 11, 1995. Since that time, reactivity 10 sub group has met nine times to discuss the science and 11 application of reactivity of consumer products in 12 aerosol coatings. 13 In developing the proposed regulations, staff 14 conducted eight public workshops on the reactivity 15 concept and the reactivity regulations for aerosol 16 coatings. 17 The staff also formed a working group to 18 facilitate rapid exchange of information with many 19 members of the aerosol coating industry. 20 To summarize, staff has had over 30 meetings 21 and telephone conferences with the Subgroup of Aerosol 22 Coatings, Chemical Manufacturing and Aerosol Coatings 23 Workgroup. 24 The staff has also sought the advice of the 25 Reactivity Scientific Advisory Committee while PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 52 1 developing these proposals. 2 This proposal is developed based on results 3 and input from these meetings. Furthermore, during the 4 development process, ARB staff and several 5 representatives of the aerosol coatings industry came 6 to the conclusion that it was preferable to pursue 7 mandatory reactivity-based VOC limits. 8 Over 50 persons representing industry 9 associations, manufacturers, suppliers, air districts 10 scientists and U.S. EPA attended the workshop and 11 meetings. 12 ARB staff gave presentations at these meetings 13 and employed every type of communication medium 14 available in their effort to ensure an inclusive 15 outreach effort. 16 On May 5, staff mailed the public of 17 notification and the availability of staff report to 18 more than 300 stakeholders. These documents were also 19 posted on ARB's Website. 20 As you see from the outreach effort that I 21 outlined, ARB staff made a diligent and converted 22 effort to reach out to all effected stakeholder groups 23 and otherwise interested parties. 24 I hope that you will share in my conclusion 25 that there has been a more than adequate outreach PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 53 1 effort, and the proposed regulation that lies before 2 you is the result of a conclusive and thorough dialog 3 process. 4 Mr. Chairman, as far as your question 5 regarding the activity in the workshop, I defer to Mr. 6 Venturini. 7 CHAIRMAN LLOYD: Thank you. 8 MR. VENTURINI: Mr. Chairman, the Reactivity 9 Subgroup of the consumer product working group, is a 10 fairly extensive mailing group and in discussing with 11 my staff yesterday, there were no contacts made to us 12 regarding any concerns expressed by the groups. 13 They did get the notification of the report 14 when it was released, in 45 days. 15 As far as I recall, there was no participation 16 in the process which was over a two-year process. 17 CHAIRMAN LLOYD: So, to our knowledge there is 18 no oral or written communication until yesterday, the 19 time we got the EPA letter? 20 MR. VENTURINI: Yes. 21 BOARD MEMBER DeSAULNIER: They came from 22 different places. 23 CHAIRMAN LLOYD: With that, unless there are 24 more comments -- 25 BOARD MEMBER CALHOUN: At what stage did you PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 54 1 switch from making the decision to change from the mass 2 to reactivity basis, was that early? 3 MR. VENTURINI: About the beginning of the 4 year. 5 BOARD MEMBER CALHOUN: This year? 6 MR. VENTURINI: Yes. 7 CHAIRMAN LLOYD: Board directed, which was a 8 joint agreement. 9 MR. VENTURINI: That occurred about the 10 beginning of the year. 11 BOARD MEMBER CALHOUN: I'm somewhat surprised 12 that NRDV and none of the other environmental groups 13 testified, and I see they have not signed up to 14 testify. 15 CHAIRMAN LLOYD: I was waiting for the 16 opportunity for them to sign up, and they are not 17 availing themselves of the opportunity. 18 Thank you. 19 With that, I would like to call the 20 individuals that signed up to speak on the item and 21 remind the witnesses coming forward that there is a 22 five minute testimony before the Board. 23 We need to keep in the limits to complete the 24 items that we have today before the Board. 25 We have time constraints at the end of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 55 1 Board. 2 So, I would like to call up the first witness. 3 We have four witnesses on this, Heidi McAuliffe, Doug 4 Raymond, Dennis Stein and Robert Graham. 5 Heidi is with National Paint and Coatings 6 Association. 7 MS. McAULIFFE: Good morning, Chairman Lloyd 8 and Members of the Board. 9 I'm Heidi McAuliffe, Chairman of Governmental 10 Affairs, NPCA. NPCA is a voluntary, non-profit 11 industry association originally organized in 1888 and 12 comprised today of over 400 member companies, which 13 manufacture consumer paint products and industrial 14 coatings and the raw materials used in their 15 manufacture. 16 Our members collectively produce some 95 17 percent of the total dollar volume of architectural 18 paints and industrial coatings produced in the United 19 States. 20 NPCA represents approximately 95 percent of 21 the paint and coating manufacturers that produce spray 22 paint in the United States and globally. 23 NPCA and Spray Paint Manufacturers Committee 24 are well-known to CARB and its staff. We have 25 participated in regulations in aerosol coating, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 56 1 probably beginning, or maybe not, but at least with the 2 1995 rule and along with that, the amendments that were 3 made in 1998. 4 We actively participated in the South Coast, 5 when rule 1129 was a controversial issue, in the Bay 6 Area when rule 49 was congregated, and with the 7 California Legislature when the California Clean Air 8 Act was amended. 9 As you can see, our Committee and Spray Paint 10 Industry is very interested in making sure that 11 regulations of Legislation that effect our product are 12 reasonable, and we are committed to working with this 13 body to ensure that. 14 NPCA's Spray Paint Manufacturers Committee 15 wholeheartedly supports this regulation for mandatory 16 reactivity proposal for aerosol coatings. 17 We are pleased that CARB has taken this very 18 bold and very innovative step, moving from a mass-based 19 regulatory program for spray paint to a 20 reactivity-based program. 21 Due to the amount of effort and study that has 22 been poured into the reactivity research, we are 23 confident that this regulatory frame work is a win for 24 California, and a win for the spray paint industry. 25 It is a win for the people of California PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 57 1 because it will result in measurable better air 2 quality. 3 It's a win for the spray paint industry 4 because it gives formulators the maximum amount of 5 flexibility in creating and altering paint formulas. 6 Now, rather than just paying attention to the 7 amount of solvent in a product, regulators and 8 formulators alike are paying attention to the 9 quantifiable amount of ozone that is likely to form 10 from each individual ingredient. 11 While we wholeheartedly support the 12 regulation, there is one provision that we are opposed 13 to, and I wanted to mention that briefly. 14 It was already mentioned in your staff 15 comments, and that is the prohibition against the use 16 of methylene chloride. 17 Because this is a regulation dedicated to 18 reducing the use of highly reactive solvents, and 19 consequently the creation of harmful ozone formulation, 20 we object to using this regulation as the vehicle to 21 ban methylene chloride. 22 Methylene chloride is a low reactive solvent. 23 There is already a limited use in the industry 24 and there are recent findings in the scientific 25 community that indicate it is not immunotoxic. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 58 1 CHAIRMAN LLOYD: I should say that you 2 probably wouldn't be aware of this being based in 3 Washington, but the Board in the last several months 4 has been actually much tougher than the staff on 5 toxics. 6 MS. McAULIFFE: I am aware of that. 7 There are some other features in the proposal 8 that I want to discuss very briefly. 9 Mr. Chew, I think, was very diplomatic in his 10 comments when he said that the 1998 amendments resulted 11 in some technological challenges for certain portions 12 of the aerosol industry. 13 If you asked anybody in the industry their 14 response would be that the 1998 limits were 15 technologically and commercially infeasible for many of 16 the products produced by the spray paint manufacturers, 17 and in laymen's terms, what we think that means is they 18 were impossible. 19 The reactivity proposal was absolutely 20 essential from our point of view in supporting the 21 1998 amendment at the time. 22 The fundamental change from going from an 23 optional program to a mandatory program is very much 24 appreciated and supported by our industry. 25 CARB staff really should be commended for PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 59 1 responding to the industry wishes. 2 This in fact really marked a turning point in 3 the industry's confidence level. Up to that point, it 4 was clear that the reactivity option may not have been 5 much of an option, because the MIR values for final 6 product formulations were so stringent. 7 The industry was very disillusioned and the 8 discussion on the optional proposal did not appear to 9 be making much progress. 10 While CARB was surprised, I think, when the 11 Spray Paint Manufacturers Committee asked them to 12 consider a mandatory program, they are to be commended 13 for listening to the industry's concerns and working 14 toward a very reasonable and responsible regulation. 15 We also support the frame work for the table 16 of MIR Values and its update process. 17 We are very pleased that CARB has been 18 persuaded to freeze the MRI Values for a period of five 19 years rather than the three that had been previously 20 proposed. 21 Our industry appreciates the work and the 22 research necessary to create this frame work, and 23 particularly CARB's willingness to craft the program to 24 serve the needs of the suppliers of solvents, as well 25 as the paint formulators. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 60 1 Paint formulators, in this case, have very 2 unique needs with regards to this aspect of the 3 regulation. 4 Without at least a five year period of 5 stability for the MIR value, formulators would find 6 themselves in a situation where they would be endlessly 7 reformulated. 8 We are also very grateful that CARB responded 9 to our request for additional time in which to comply 10 with the standards. Again, this provision is critical 11 for the industry. 12 The Spray Paint Manufacturers Committee is 13 very appreciative for the extension of time for the 14 compliance until June 1, 2002 for the general 15 categories, and January 1, 2003 for the specialty 16 categories. 17 This extension of time was critical, because 18 it takes anywhere from 24 to 36 months to implement 19 full scale reformulations of products. 20 Without this extension of time, many 21 manufacturers would not have been able to market 22 products in many of the categories, merely because they 23 could not get all of the work done in time. 24 We appreciate the CARB's willingness to work 25 on a guidance document which will cross-reference CAS PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 61 1 numbers to the table of MIR values. 2 The table of MIR values is categorized 3 according to the chemical group. 4 The industry, however, commonly refers to CAS 5 numbers when they discuss solvents and other 6 ingredients. The effort to create some kind of a 7 document to cross-reference the CAS numbers, the table 8 of MIR values, that is going to be voted on today, will 9 greatly increase the user friendliness of the 10 regulation. 11 I would like to say that NPCA supports the 12 most recent changes to the proposed regulation, which 13 include the additions of a new specialty category 14 language, addressing the diminimous thresholds and the 15 slight adjustment to the aromatics hydrocarbon solvents 16 table. 17 Lastly, I want to thank the staff of the 18 Stationary Source Division for the diligence and hard 19 work that produced the reactivity proposal. 20 This proposal has been a work in progress for 21 almost three years. I know along the way we had 22 disagreements about the frame work and its contents, 23 but we certainly appreciate the staff's willingness to 24 listen to our perspective and respond with constructive 25 suggestions. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 62 1 CHAIRMAN LLOYD: Thank you very much. 2 By the way, for speakers, I would appreciate 3 it if the speakers would not unplug the timer before 4 they start. 5 BOARD MEMBER C.H. FRIEDMAN: Just a quick 6 question. 7 If I heard you correctly, you indicated with 8 respect to the extended time line, that you were 9 appreciative that it had been extended because, as I 10 heard you, you said it takes anywhere from 24 to 36 11 months to -- in the industry, to implement the 12 wholesale reformulations, but in the written 13 submission, you say anywhere from 18 to 24 months. 14 MS. McAULIFFE: I think that's a mistake. 15 BOARD MEMBER C.H. FRIEDMAN: The 18 to 24 is 16 the mistake? 17 MS. McAULIFFE: Well, I think it depends on 18 the kind of products you're reformulating, and how many 19 you have to reformulate, but when you are talking about 20 the wholesale reformulations for hundreds of skews that 21 a manufacturer is going to have to address, it could be 22 anywhere from up to three years or more. 23 BOARD MEMBER C.H. FRIEDMAN: One of the 24 questions was whether there is any way to implement 25 this more quickly, reasonably, and you are saying no? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 63 1 MS. McAULIFFE: Absolutely not. 2 It is an issue that we discussed for a long 3 time throughout the workshops and individual conference 4 calls with the staff, and quite frankly, there is just 5 so much work to be done with reformulations, that it 6 was just impossible. 7 That really was a compromise that we worked 8 out, I think with the staff, we tried to focus on the 9 general categories first, and pick up most of the 10 emissions that are committed from those categories, and 11 give the manufacturers additional time to focus on the 12 27 or so specialty categories. 13 BOARD MEMBER C.H. FRIEDMAN: We are looking at 14 24 months, a little short of 24 months on the general, 15 and 30 months on the -- 16 MS. McAULIFFE: That is correct. 17 CHAIRMAN LLOYD: Any other questions of the 18 Board? 19 Thank you very much indeed. 20 Next speaker is Doug Raymond, from Sherwin 21 Williams. 22 MR. RAYMOND: Good morning, Chairman Lloyd, 23 Members of the Board. 24 I promise not to take out the plug. 25 CHAIRMAN LLOYD: I realized the five minutes PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 64 1 was long, and I realized what happened. 2 MR. RAYMOND: My name is Doug Raymond, I am 3 Director of the Consumer Group of Sherwin Williams, and 4 I am just here to briefly highlight my comments that I 5 submitted to you in writing. 6 First of all, we are here to support the rule. 7 This proposal is a new realm of VOC 8 regulation. The regulation only uses the best 9 available science, and a point that was brought up 10 before and I think needs to be stressed, guarantees 11 reduction in ozone formation. 12 Every time there we lower one of the MIR 13 values of our product, we are guaranteed that there is 14 going to be a direct ozone formation reduction, this is 15 unlike the mass-based reductions that we currently see 16 today. 17 The next point that I would like to bring up 18 is, there is a general concern among the other consumer 19 product industry that this regulation will be a drop in 20 for all of the rest of the products. 21 We make other products other than aerosol 22 coatings, we make several in the consumer products 23 industry. What we're here to say is, while this worked 24 very well for aerosol coatings, this needs to be looked 25 at by a category basis. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 65 1 The next point, this regulation is not without 2 a draw back. The major draw back that we see to this 3 regulation is we lose the alternate control plan, the 4 ACP. 5 I was firstly involved in the development of 6 that regulation. We used that regulation for the sole 7 benefit of the State of California, and we would like 8 to see the staff and Board direct resources to getting 9 this done as soon as possible, so that we can go back 10 and use the option. 11 Your Board has kept us extremely busy over the 12 last six months. 13 First with the automotive toxic regulations, 14 which we are familiar with where the Board stands on 15 toxics, the aerosol rule we just heard last week, which 16 we did support, this aerosol coating rule, which we're 17 here to support, and the next issue that you will talk 18 about is Architectural Coating Reg, which someone from 19 our Committee will give you comments. 20 I am only here to comment on the first three, 21 and I will sum up the comments as two out of three 22 ain't bad for this year. 23 So, I'm doing fairly well. 24 Seriously though, I would like to say that 25 your staff has always worked very professionally with PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 66 1 us. They've always been very patient, which is 2 sometimes not easy for them to do. 3 And they have always been very cooperative. 4 I would like to say that we support Heidi's 5 comments, and we would like to thank the staff. They 6 have always been there ready to listen, whether they 7 have actually heard what we have said. 8 We doubt it sometimes, but they have always 9 been willing listen. 10 Thank you very much. 11 If you have any questions, I am willing to 12 answer. 13 CHAIRMAN LLOYD: Thank you. 14 Any questions of the Board Members? 15 BOARD MEMBER CALHOUN: Did I understand you to 16 say that we should look at this on a case by case 17 basis? 18 Will you elaborate on that a little bit? 19 MR. RAYMOND: For example, we make all kinds 20 of automotive products and several types of household 21 cleaners and stuff like that, and as each of the 22 categories comes up, it has to be looked at if it is 23 feasible for the products. 24 We know, for example, let me give you an 25 example of a glass cleaner that we make. We do not PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 67 1 believe that reactivity is probably going to be 2 feasible for that. 3 The reactivity for that product is low. There 4 is no way to go with reactivity on that product. 5 BOARD MEMBER CALHOUN: So, I gather that what 6 you are saying, in some cases the regulations are based 7 on mass and other cases based on reactivity? 8 MR. RAYMOND: Exactly. 9 CHAIRMAN LLOYD: Thank you very much. 10 Next speaker is Dennis Stein from 3M. 11 MR. STEIN: Chairman Lloyd, Members of the 12 Board. 13 I am Dennis Stein, representing 3M Company. 14 I'll be very brief. I'm here to support the 15 regulation. I support reactivity and here to 16 particularly support the Subcategory for Polyolefin 17 Adhesion Promoter. 18 It's a difficult area, and staff has worked 19 very hard with us in developing this Subcategory. 20 I would also like to take this opportunity, 21 and this is probably the last time I will appear before 22 the Board, before I retire. 23 This is the third trip, and I would like to 24 thank the staff and Board for all of the help over the 25 years. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 68 1 It's not been an easy task for any of us. 2 We've worked closely together, and I recognize 3 the problems established with the need of the 4 environment and industry and getting reductions. 5 It is not easy on any of us, but it has been 6 a great road and I appreciate everyone. 7 CHAIRMAN LLOYD: Thank you very much for the 8 kind comments, and best of luck on your retirement. 9 But I would also like to allow staff who 10 worked with you personally, to say a word. 11 MR. VENTURINI: I think that staff's 12 perspective, we've always enjoyed our working 13 relationship with Denny and his company. 14 In many cases, they have brought new and 15 innovative ideas to us which have helped us to 16 understand the issues and industry, and we have a very 17 good working relationship. 18 We'd also like to wish you well in your 19 retirement. 20 MR. STEIN: Thank you, very much. 21 CHAIRMAN LLOYD: Thank you. 22 Any questions from the Board? 23 Thank you very much. 24 Good luck. 25 Last speaker on this item is Robert Graham, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 69 1 with Sherwin Williams. 2 MR. GRAHAM: Chairman Lloyd, Members of the 3 Board, good morning. 4 My name is Bob Graham. I am the Technical 5 Director of the Specialty Products Group of the 6 Consumer Group of the Sherwin Williams Company. 7 A cumbersome title, but what it means is that 8 I'm responsible for the formulation of all of our 9 aerosol products, amongst other things. 10 That means that I am responsible for our 11 aerosol coating products, as well as all of the other 12 aerosol coatings that we fill for mass marketers and 13 other businesses. 14 And at the risk of being too redundant, I am 15 here to support this regulation. 16 I believe this regulation is a win-win 17 situation for everyone concerned. Certainly it is for 18 the Air Resources Board, and it is for the industry, 19 gives us flexibility that we will make use of, and 20 lastly, it is a win for the environment also. 21 I would further like to emphasize the points 22 made by CSFA, that this type of regulation just 23 discussed may not be feasible for every possible 24 product category in the consumer product area. 25 There will have to be assessments done on each PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 70 1 one, in each category to see if that works or not. 2 I would like to also reemphasize the needs, as 3 Doug pointed out, to look at ACP, because I believe 4 that would be great value to both the industry and the 5 Board. 6 I would like to end by extending my thanks to 7 Carla and the staff, John and Peter, for their patience 8 and cooperation with the industry, and in particular 9 for their patience with Doug Raymond. 10 Thank you very much. If you have questions, I 11 will try to answer them. 12 CHAIRMAN LLOYD: Thank you very much, indeed. 13 Questions from the Board? 14 BOARD MEMBER C.H. FRIEDMAN: Just a quick 15 question. 16 I understand, but I would like to hear the 17 staff confirm that you agree that you have to look at 18 it product by product. 19 MR. VENTURINI: One of the things that when we 20 were going through this on the reactivity for aerosol 21 coatings, we always look at things with an eye to the 22 future. 23 One of the things we kind of realized is that 24 each category may be kind of different. While 25 technically you could do a reactivity, but if you have PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 71 1 a product with one solvent in it there may not be 2 opportunity there, but other products where you have a 3 multitude of VOCs in it, may provide some opportunity. 4 So, we do probably have to take a look at this 5 case by case basis. 6 CHAIRMAN LLOYD: Thank you very much. 7 That concludes the public testimony. 8 Mr. Kenny, any other comments from the staff? 9 MR. KENNY: Nothing further. 10 CHAIRMAN LLOYD: Any comments from the Board? 11 BOARD MEMBER DeSAULNIER: I'm prepared to 12 support this, but I would, maybe ask you if there is 13 some way in terms of process and understanding the 14 frustration, when parties who are used to dealing with 15 the process come in at the twenty-fourth hour with some 16 comments, and I'm sure if you have not had the phone 17 conversations, you will in the near future, but it 18 would help me I think, with this leap of faith in terms 19 of the process of how you may bring some of the issues 20 that the environmentalists in Region 9 have brought up, 21 as soon as possible back to the Board so that you can 22 bring them on board and make sure we are confident as 23 we go through this that they are agreeing with the 24 science and your ability to enforce it. 25 MR. KENNY: That is an excellent idea. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 72 1 What will happen is that there will be further 2 conversations with the environmentalists. 3 Although I have tried to talk to U.S. EPA, I 4 haven't been able to reach them so far, and the 5 conversations will occur there also. 6 I would be happy just to summarize the 7 conversations and also the resolutions which I am 8 optimistic will be essentially positive. 9 BOARD MEMBER DeSAULNIER: So, can we formalize 10 that some way, perhaps, Mr. Chairman, before we go 11 ahead and move on this, and come back to us, in, say, 12 90 days, for written, or put it on the agenda just to 13 let us know the results of those discussions? 14 MR. KENNY: I'm happy to do that. 15 My only concern with the 90-day time frame is 16 there may not be a resolution within that 90-day time 17 frame, but I can at least update you and then change 18 the updates beyond that on a 90-day basis, to make sure 19 you are fully informed. 20 BOARD MEMBER DeSAULNIER: For me at least, Mr. 21 Chairman, I do not know how my colleagues feel, but I 22 would appreciate that. 23 CHAIRMAN LLOYD: Everyone agrees. 24 BOARD MEMBER C.H. FRIEDMAN: I was going to, 25 if no one else, I was going to move it. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 73 1 BOARD MEMBER CALHOUN: I guess I share the 2 same concern about the letter from EPA and NRDC, when I 3 raised the question about what time did you make the 4 change from decision to switch from the mass to 5 reactivity, I was concerned that maybe they did not 6 have enough time to really evaluate this. 7 And maybe they would conclude the same thing 8 that you have already concluded, and I am prepared to 9 support it, but I am concerned that perhaps they have 10 not had an adequate amount of time to fully assess the 11 implications of what you are proposing, and I'm not 12 quite sure what we will do about this. 13 MR. KENNY: I do doubt there is a lack of 14 adequate time, because in fact, the U.S. EPA 15 specifically did have at least a dialogue with staff. 16 And what they do is actually raise some of 17 these concerns, and we actually put together a fairly 18 substantial amount of material that we provided to U.S. 19 EPA that explained why. 20 We then were surprised to receive the letter 21 because we never got any kind of a response back from 22 the information that answered a lot of the questions 23 that we thought they were raising. 24 However, essentially in terms of the 25 discussion with them, I do think that there are other PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 74 1 factors here that probably resulted in the letter from 2 U.S. EPA. And I think they are factors that are 3 probably more referring to the National level, with 4 regard to what U.S. EPA is looking to do with regard to 5 reactivity. 6 And again, maybe not fully appreciating the 7 fact that this Board will be trailblazing the area of 8 reactivity in the category. 9 Now, if past history is any indication, they 10 should be happy with that, because in the past when we 11 have trailblazed, they have copied a lot of our things 12 and been very successful with that. 13 CHAIRMAN LLOYD: Thank you. 14 Any other comments from the Board? 15 If not -- 16 BOARD MEMBER D'ADAMO: I was listening in the 17 back, so I apologize if this was already discussed, but 18 there were no previous conversations with EPA, the 19 first you learned of the concerns was the letter? 20 MR. KENNY: No, there were previous 21 conversations with U.S. EPA. 22 They provided a draft of the letter sometime 23 back, and then we put together an amount of material 24 that responded to the questions that they raised in 25 their letter. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 75 1 The surprise to us was that they never got 2 back to us to let us know that we had not satisfied 3 their concerns and instead received a letter yesterday 4 afternoon, yesterday about noon. 5 BOARD MEMBER D'ADAMO: When did you provide 6 the materials to EPA? 7 MR. VENTURINI: It was June, I believe the 8 exact date was June 8. 9 CHAIRMAN LLOYD: Did the official letter that 10 they sent, did that vary much from the draft letter? 11 MR. VENTURINI: It was very close. 12 I just want to add, throughout part of this 13 process, we did engage U.S. EPA and some folks back 14 East to talk about this, and I was somewhat surprised 15 because at least my perception was that initially the 16 concept was being received favorably by some of the 17 scientific and personnel of U.S. EPA. 18 So, I, personally, was somewhat surprised that 19 there was this turn around. 20 CHAIRMAN LLOYD: Again, I want to reiterate 21 from the technical view point here, I feel this is 22 exactly the right way to go. 23 On the timing, time is on our side, and for 24 people to understand, they will appreciate the benefits 25 of this approach. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 76 1 Again, it is wonderful to hear the excellent 2 comments from industry on the staff's ability to work 3 with them and bring to us a regulation here that has 4 full support and yet is actually pioneering science. 5 It is very unusual to get a combination of 6 both things. 7 BOARD MEMBER RIORDAN: And Mr. Chairman, if I 8 might add, I am very pleased with the peer review. 9 I think the brief letter from John Seinfeld is 10 significant in that we have had some confirmation to 11 our staff and to the science that we are relying on. 12 I think that is a very critical part of this 13 whole item that's before us today. 14 I am very confident in what we are doing. 15 CHAIRMAN LLOYD: With that, I would like to 16 close the record on the Agenda item. 17 The record will be reopened when the 15-day 18 notice of public availability is issued. 19 Written or oral comments received after this 20 hearing date but before the 15-days notice is issued 21 will not be accepted prior to the official record on 22 this agenda item. 23 When the record is reopened for the 15-day 24 comment period, the public may submit written comments, 25 and proposed changes will be considered and responded PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 77 1 to in the final statement of reasons for the 2 regulation. 3 Again, since it is a regulatory item, do we 4 have any ex parte communications to disclose to the 5 Board Members? 6 Seeing none, then I guess we entertain a 7 motion on the resolution we have before us. 8 BOARD MEMBER C.H. FRIEDMAN: With the report 9 back. 10 BOARD MEMBER DeSAULNIER: Second. 11 CHAIRMAN LLOYD: So, we have a motion and a 12 second. 13 All in favor, say aye. 14 Any negatives? 15 No. 16 Thank you very much. 17 We will take a 10-minute break here and give 18 the court reporter a break. 19 Thank you. 20 We will also have a change of pace at that 21 time before going to the next item. 22 (Thereupon a brief recess was taken.) 23 CHAIRMAN LLOYD: The next item the Federal 24 Haze Requirements. 25 In 1991 the U.S. EPA created the Grand Canyon PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 78 1 Visibility Transport Commission to address the growing 2 concerns about regional haze in the Colorado plateau. 3 This area includes many of the National State 4 Parks. This includes the Grand Canyon, Zion, Bryce 5 Canyon and Canyonlands of the Petrified Forest, as well 6 as several important wilderness areas. 7 California and seven other Western States were 8 on the Commission, which also includes Indian Tribes, 9 Federal Land Managers, U.S. EPA, environmental 10 organizations, effected industries and local area 11 agencies. 12 As a local agency representative at that time, 13 South Coast AQMD, I was privileged to serve on the 14 Commission Public Advisory Committee. 15 In 1996, the Commission produced a vital 16 consensus report submitting its recommendation to the 17 U.S. EPA. This process set the stage for how Western 18 States intend to address visibility improvement along 19 the Colorado plateau over the next 60 years. 20 In 1998, the Western Regional Air Partnership, 21 or WRAP, was created by the Western Government 22 Association, to carry out the Commission's 23 recommendation. 24 California officially joined the WRAP in May 25 of this year, and Governor Davis has named me as his PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 79 1 designee. 2 Our collaboration with other Western States on 3 visibility issues not only protects California's 4 interest, but also provides significant opportunities 5 for regional cooperation on common air quality issues, 6 such as smoke management. 7 It has led also to improvements in technical 8 areas such as modeling, emissions inventory data 9 collection and air monitoring. 10 I must say this Agency provided much technical 11 support to the Commission over the years, and we were 12 heavily involved with that. 13 At this stage, I would like to turn it over to 14 Mr. Kenny to introduce the item. 15 MR. KENNY: Thank you, Mr. Chairman and 16 Members of the Board. 17 In July of last year, U.S. EPA promulgated 18 Regional Haze Regulations which recognize the special 19 circumstances that exist in the West and the benefits 20 that can accrue if this region and its stakeholders 21 work collaboratively to improve visibility to one of 22 our nation's most precious resources, our national 23 parks and wilderness areas. 24 I think that was the longest sentence I've 25 read this year. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 80 1 California's programs represent an important 2 jump start for this regional effort. Our continued 3 efforts to achieve health-based standards will have the 4 ancillary benefit of reducing regional haze in our 5 parks, not only along the Colorado plateau, but also in 6 our own parks and wilderness areas. 7 Because of our ongoing efforts to reduce the 8 adverse public health effects of flying particles, 9 industrial sources in California exceed 10 visibility-related Federal performance standards for 11 industrial sources of SOx, for particular matter and 12 NOx from both stationary and mobile sources will also 13 continue to see declines over the next several years, 14 and this will bring about continued visibility 15 improvement. 16 Our recent Board action in March to revamp 17 California's VOC management programs will also have 18 beneficial effects on Regional Haze. 19 In the next three years, we will be working 20 with other Western States to improve our knowledge of 21 Regional Haze sources, what they emit, how they are 22 disbursed over long distances and how to anticipate 23 reductions from upwind industrial sources, will 24 contribute to further improvements in our National 25 Parks in the West. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 81 1 Staff will provide a brief report of 2 preliminary planning efforts that are underway by 3 Western States to layout a long term strategy for 4 improving the regions visibility. 5 To describe the program in more detail, 6 Lucielle Van Ommering will make the presentation. 7 MS. VAN OMMERING: Thank you, Mr. Kenny. 8 Mr. Chairman and Members of the Board, by way 9 of introduction, I will describe what Regional Haze is 10 and summarize the history of Federal and Regional 11 efforts to address visibility impairments in the 12 Western States. 13 I will also describe how California's response 14 to Federal Regional Haze Requirements dovetails with 15 our efforts to reduce public health effects of 16 particulate matter and ozone. 17 Regional Haze is created by a complex mixture 18 of fine particles and gases. These compounds are 19 generated from a wide array of sources disbursed by 20 weather patterns over hundreds, even thousands of 21 miles, causing visibility impairment over broad regions 22 of the United States. 23 The main sources of this particulate matter 24 are attributable to gasoline and diesel fuel combustion 25 sources, such as passenger cars, trucks, and off-road PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 82 1 equipment and industrial processes. 2 Other major sources include residential wood 3 burning, forest and agricultural waste burning, and 4 fugitive dust from road construction, mining and 5 agricultural activities. 6 Many of the sources that contribute to 7 Regional Haze also contribute to smog and particle 8 pollution. 9 As a result of this overlap, our efforts to 10 reduce haze will naturally integrate with our ongoing 11 programs to reduce ozone and particle levels. 12 Haze obscures the clarity, color, texture and 13 form of what we see. Visiblility impairment occurs as 14 a result of a scattering and absorbine of light by 15 particles and gases in the atmosphere. 16 On hazy days, when visibility is reduced, the 17 human eye perceives a loss of color, contrast and 18 detail in the landscape. 19 This loss of visibility diminishes the unique 20 experience which millions of visitors come to expect in 21 our parks and wilderness areas. 22 The Clean Air Act recognized this when it set 23 a National Visibility goal. 24 The prevention of any future and any existing 25 impairment of disability in class 1 areas, from man PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 83 1 made pollution, class 1 areas include 156 National 2 Parks and Wilderness areas across the United States. 3 The map before you identifies the Class 1 4 areas in the Western United States, 16 of which are on 5 the Colorado plateau, and include the Grand Canyon, 6 Bryce Canyon, and Zion National Parks. 7 These are within the red borders you see on 8 the map. 9 There are also 29 Class 1 areas in California, 10 which include Lassen, Redwoods, Yosemite, Kings Canyon, 11 Sequoia and Joshua Tree National Parks, and Point 12 Reyes, San Gabriel National Wilderness areas. 13 The tan shaded area represents Western States 14 in the Grand Canyon Visibility Transport Regions, which 15 includes California, Colorado, New Mexico, Utah, 16 Wyoming, Arizona, Nevada, Idaho, and 211 tribes. 17 The cross hatch area represents a consortium 18 of states and tribes who are participating in a 19 regional effort to reduce the haze in the West. 20 In recognition of the growing concern about 21 diminishing visibility in the Grand Canyon, the 1990 22 Federal Clean Air Amendment called for the formation of 23 the Grand Canyon Visibility Transport Commission. 24 A multi-state Commission created to assess 25 ways to improve visibility at the Grand Canyon and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 84 1 other National Parks in the Colorado plateau. 2 Recognizing its contributions to the 3 visibility problem in Western parks, California was an 4 active participant in the work of the Commission. 5 In addition to ARB, many stakeholders 6 participated in the process, including the utilities 7 and oil industry and local air districts. 8 The Commission issued its recommendations in 9 the 1996 report to U.S. EPA. 10 The Regional Haze Regulation, adopted by U.S. 11 EPA last year, codifies the recommendations and allows 12 states the option of following this path. 13 The Commission's success to organization is a 14 Western Regional Air Partnership, otherwise called 15 WRAP, whose focus is to further develop the 16 Commission's recommendation. 17 Each participating State can consider these 18 recommendations as it develops the SIP and Visibility 19 programs. 20 The WRAP does not have regulatory authority. 21 It is simply a coordinating body. 22 The State of California officially joined the 23 WRAP in May 2000, and Governor Davis appointed Chairman 24 Lloyd as our official representative. 25 ARB staff has also participated in the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 85 1 technical work of the partnership from its offset, 2 serving as a resource on emissions inventory, modeling 3 trading programs and mobile sources. 4 As I mentioned earlier, the Clean Air Act sets 5 forth a National goal for improving visibility in areas 6 of great scenic importance. 7 The Act also calls upon U.S. EPA to issue 8 Regional Haze rules, including requiring SIPs to make 9 reasonable progress toward meeting the National goal. 10 U.S. EPA promulgated a Regional Haze 11 Regulation in July of last year. The regulation puts 12 in place a long range strategy aimed at meeting the 13 National Visibility goals in all Class 1 areas. 14 The regulation contains two key parts, a 15 National rule that applies to all states, and a Grand 16 Canyon carve out approach, that can be used by Western 17 States in the Grand Canyon Visibility Transport Region. 18 The National rule requires States to show how 19 they will make reasonable progress to reduce visibility 20 impacting emissions in Class 1 areas to national levels 21 in 10-year planning cycles with five-year milestones, 22 and a 64-year visibility improvement horizon in which 23 to meet the goal. 24 A major technical challenge will be for 25 stakeholders to define what constitutes natural PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 86 1 conditions and the role smoke from prescribed burnings 2 have historically played. 3 States must look at all sources that might 4 contribute to visibility impairment in downwind parks 5 and wilderness areas and implement control measures 6 where needed. 7 Certain major stationary sources that 8 contribute to visibility impairment, typically 9 fossil-fuel fired power plants and other large 10 facilities, must apply best available retrofit 11 technology, or BART. 12 The Grand Canyon carve out portion of the 13 regulation recognized emission inventory and modeling 14 work performed by the Grand Canyon Commission. 15 The regulation takes the Commission's 16 recommendation a step further by calling for specific 17 actions to assure continuing emission reductions to 18 meet the visibility goal in the Colorado plateau. 19 The first step is to address the impacts of 20 SOx emission, but other pollutants that attribute to 21 visibility impairment, such as NOx and PM, will also 22 have to be addressed in future SIPs. 23 The carve out portion of the National rule 24 requires states to address several elements in their 25 own SIPS. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 87 1 For California, this includes projecting 2 mobile source emissions into the future, based on our 3 adopted control strategy and ensuring those emission 4 levels are achieved. 5 Additionally, States must show what they are 6 doing to minimize emissions from prescribed fires used 7 to manage forest lands, what pollution prevention 8 efforts are in place to reduce demand for electrical 9 power generation, evaluate and limit emissions in and 10 near the National Parks themselves and preserve areas 11 in the Northwest that provide clean air to the Grand 12 Canyon. 13 The cornerstone of the Grand Canyon carve out 14 is an annex to the Grand Canyon Commission's 1996 15 report, which is due to EPA in October of this year. 16 The annex expands on the 1996 report, 17 identifying SOx emission reductions that will be 18 achieved from certain major stationary sources that 19 emit greater than 100 tons per year, including power 20 plants, refineries, smelters, cement kilns and glass 21 manufacturing plants. 22 California complies with BART, largely because 23 our industry switched from oil to gas over a decade ago 24 in order to meet the air quality standards for SOx. 25 In fact, fuel switching has made a dramatic PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 88 1 difference in SOx emissions for California, as compared 2 to other Western states who continue to rely primarily 3 on coal and oil because of its abundance and lower 4 cost. 5 Of the 305 BART eligible sources in the Grand 6 Canyon Visibility Transport Region, the 47 sources in 7 California accounted for just 6 percent of the total 8 emissions. 9 One of the largest uncontrolled power plants 10 in the West, the Mohave Generating Station in Nevada, 11 currently emits 40,000 tons per year of SOx, nearly as 12 much as all stationary source SOx emissions for the 13 entire State of California. 14 In stark contrast, the highest SOx emission 15 release by the power plants in California, is about 160 16 tons a year. 17 Because our major facilities are well below 18 BART control level, they will not be required to apply 19 new controls to meet this requirement. 20 Instead, the annex will simply identify those 21 reductions we are achieving from existing programs over 22 the next 18 years. 23 This slide identifies the elements which need 24 to be included in the annex. Stationary sources that 25 create more than 100 tons per year of SOx, 5 year PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 89 1 milestones based on BART reductions, a trading program 2 that would be triggered in the contingency a milestone 3 is not met and annual emissions reporting reductions 4 are on track. 5 We should note that if a trading program is 6 triggered, we do not expect that California will be a 7 participant since, one, our sources already achieve 8 reductions equivalent to BART and would not need to 9 purchase allowances for credits, and two, we do not 10 foresee that facilities in California will have surplus 11 reductions to sell, since any SOx allocation in a 12 market program are based on applicable Federal, State, 13 and Local District requirements. 14 I want to step back now and see how California 15 will comply with the regulation and improve visibility 16 in our own 29 Parks. 17 To do this we have to address all pollutants 18 that attribute to visibility impairment. 19 California's multi-pollutant programs to 20 achieve State and Federal Health-based standards for 21 ozone and PM, lay the ground work for reasonable 22 progress on visibility. 23 Our ozone program is significantly reducing 24 NOx emissions, which also reduce Haze forming nitrates 25 that are disbursed downwind in Class 1 areas. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 90 1 Our fuel standards have resulted in dramatic 2 reduction in SOx and sulfates, both for stationary and 3 mobile sources. 4 Technical work now underway will form the 5 basis for plans that will seek additional reduction to 6 achieve health based PM standards. 7 These reductions will provide exemplary 8 benefits for visibility, not only in our Class 1 areas 9 but also in our urban areas. 10 California will continue to share our 11 analytical tools with other Western states in the 12 interest of improving regional emissions inventory, 13 data collection and analysis. 14 We expect the data we derived from our 15 regional particulate study will also increase the 16 region's understanding of how particle formation and 17 dispersion effects visibility in the Class 1 areas. 18 We will continue to move ahead with the 19 technical work necessary to support our PM and 20 visibility SIP and address all pollutants that 21 contribute to visibility impairment. 22 There are several key dates by which various 23 elements of the visibility program must be completed. 24 The WRAP is currently holding two sets of 25 workshops across the West and will complete the work on PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 91 1 the annex next in October. 2 We expect to let U.S. EPA know that we will 3 use the carve out approach with a SIP in 2003. That 4 addresses Class 1 areas in the Colorado plateau. 5 In 2006, in conjunction with the PM 2.5 SIP, 6 we intend to use the National rule to address 7 California's Class 1 areas. 8 We will keep the Board informed of the 9 activity. 10 That concludes our presentation, and we will 11 be happy to take any questions. 12 CHAIRMAN LLOYD: Thank you very much. 13 I should say that I think the Deputy Executive 14 Officer, Lynn Terry, is also very active on the WRAP. 15 When I'm not there, she is there. 16 We are delighted that the Governor agreed, by 17 the way, to join the WRAP, because it gives us a seat 18 at the table, and we need to monitor what is going on. 19 You also may ask, what's relevant to some of 20 the stuff that we are doing, and having served on the 21 Visibility Commission, it is interesting that there was 22 a lot of, in fact, comments made of big brother to the 23 West, California, how come you guys are getting your 24 zero emission vehicles, according to them, and yet you 25 have the clean cars, and we have the dirty power plants PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 92 1 generating the power? 2 So, there is a relevance here, and there is a 3 relevance, in fact, to cleanup these power plants, and 4 I think the comments may help efforts to get it cleaned 5 up or shutdown. 6 My understanding is that now it will be 7 scrubbers will be put on that. It has been really a 8 course of major concern of the visibility there. 9 So there, I think, there is a relevance, 10 fortunately as we will hear in September, of the power 11 that we use for recharging electric vehicles, largely 12 comes from the California source which is much cleaner 13 than what we see in the West. 14 I appreciate the update and look forward to 15 going ahead there. 16 I guess the point that we look at there, I 17 think on the National level, Board was looking at the 18 visibility improvement, 2040 or 2060, certainly I am 19 not going to be around to see what the time frame. 20 MS. TERRY: Yes, actually I really hesitated 21 to bring into our presentation that it had a date like 22 2060. 23 So, I asked staff to be sure to talk about the 24 milestones. 25 I think that is an important point to be made, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 93 1 that the states do have an obligation to define and 2 submit to US EPA a progress milestone in terms of 3 visibility on a routine basis, so that continued 4 progress is made. 5 CHAIRMAN LLOYD: That is extremely important 6 issue in terms of tourism. 7 Those of you that have been to the Grand 8 Canyon on days of full visibility, it is very important 9 to understand what contributes to that. 10 Any questions from the Board or comments? 11 Thank you very much. 12 We do not have any witnesses signed up for the 13 item. 14 Mr. Kenny, any further comments? 15 MR. KENNY: Nothing further. 16 CHAIRMAN LLOYD: It is not a regulatory item. 17 I think what we will do, we will move onto the 18 item which was projected to be the longest item for the 19 day. 20 I would like to -- this is the agenda item 00- 21 6-3, Public Meeting to Consider Approval of the 22 Suggested Control Measure for Agricultural Coatings. 23 Again, this is just a control measure. 24 While staff is coming to the table, I just 25 wanted to say that what we're going to do, we're going PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 94 1 to work through lunch on this one. 2 We have lunch provided for the Members. 3 The Court Reporter didn't like that 4 suggestion. 5 We will take a break sometime, but we will not 6 take one just yet. 7 Anyway, we will try to keep going and moving 8 ahead here, and then we will take time. 9 For those you of in the audience, we keep 10 fully informed of that, and we will go back in orderly 11 fashion so that no one will be missing at a time. 12 We are expecting, I'm not sure how many are 13 assigned to testify at this stage, so it is difficult 14 for me to gauge just how long it may take, but this 15 item continues the process that began in 1997 when the 16 Air Resources Board approved the first Architectural 17 Coatings as a suggested control measure. 18 Since then, the Board has updated the SCM two 19 times, in 1985 and again in 1989. 20 Today will be the third update. 21 In developing this SCM approval, the staff was 22 greatly assisted by the expertise of previous work of 23 the South Coast Air Quality Management District. 24 So, we appreciate that, Dr. Burke. 25 I know that staff is very appreciative of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 95 1 their support, and on their behalf, I would like to 2 thank Jack and their staff who are here today. 3 I understand the staff is also working 4 extensively with the industry, the Air Quality Control 5 Districts and the U.S. EPA, in developing the proposed 6 SCM in the related program DIR. 7 These discussions continued after the release 8 of the staff report. 9 I understand that staff will be proposing some 10 changes in the staff report. 11 At this time, I would like to turn this item 12 over to Executive Officer, Mr. Kenny, to introduce the 13 item and staff. 14 Begin the presentation. 15 MR. KENNY: Thank you, Chairman and Members of 16 the Board. 17 The ARB has developed architectural coatings 18 suggested control measures, or SCMs, since 1997 to 19 promote uniformity among the district rules. 20 The proposed SCM that staff will present to 21 you today reflects this goal. The proposed SCM also 22 reflects advancements in coating technology that have 23 occurred since the last SCM was approved in 1989. 24 The proposed SCM is necessary to help 25 districts achieve their State Implementation Plan and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 96 1 California Clean Air Act requirements. 2 Consideration of SCM by the Board is also 3 necessary to fulfill an ARB commitment under our 4 lawsuit settlement agreement with the environmental 5 groups. 6 The development of the proposed SCM has been 7 a two-year effort. 8 During the development of the SCM, staff has 9 held eight public workshops and numerous meetings and 10 conference calls with the industry, the districts and 11 U.S. EPA. 12 Staff conducted an extensive survey of 13 Architectural Coatings sold in California, evaluated 14 the results of the performance testing, and evaluated 15 the existing district and U.S. EPA Architectural 16 Coating rules. 17 The Product of these efforts is the proposed 18 SCM. 19 As staff will explain in the presentation, the 20 SCM is similar to the interim VOC limits in the South 21 Coast Air Quality Management District Architectural 22 Coating Rule. 23 However, the SCM does contain some adjustments 24 in the VOC limits that reflect different climatic 25 conditions and enforcement concerns for districts in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 97 1 other parts of California. 2 Staff estimates that the proposed SCM will 3 result in the VOC emission reduction of about 10 tons 4 per day, or a 20 percent reduction in VOC emissions, if 5 implemented statewide, that would exclude the South 6 Coast, which already has its own rule. 7 ARB staff is also proposing a volunteering 8 averaging provision for SCM. The averaging provision 9 will be similar to the provision adopted by the South 10 Coast AQMD, but will include a sunset date. 11 Under the provisions, manufacturers will be 12 allows to meet the VOC limits by averaging the 13 emissions of noncomplying products with the emissions 14 of overcomplying products. 15 The staff is proposing to include a sunset 16 date for the averaging provisions to ensure that the 17 district meets the obligation. 18 In addition, staff prepared an extensive 19 program Environmental Impact Report, to meet the 20 requirements of the California Environmental Quality 21 Act, or CEQA. 22 The program EIR is designed to assist 23 districts in adopting our Architectural Coating rules 24 based on the SCM. Each district may rely on the 25 program EIR, by incorporating it by referencing PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 98 1 whatever secret documents the district prepares for its 2 own Architectural Coatings rule. 3 Before approving the SCM, CEQA requires the 4 Board to certify the final program EIR and make various 5 findings. 6 CEQA requirements will be described in detail 7 in the staff presentation. 8 As mentioned by Chairman Lloyd, we would also 9 like to express our appreciation for the assistance 10 from the South Coast, especially Jack Broadbent and 11 Naveen Berry. 12 Also, we would like to thank Darren Stroud and 13 Bill Wong, who spent many hours working cooperatively 14 with us to bring this to you today. 15 With that said, what I would like to do now is 16 call upon Jim Nyarady, who will make the staff 17 presentation. 18 CHAIRMAN LLOYD: Mr. Kenney, just before staff 19 presentation, change of plan. 20 Having seen the witness list, I think we will 21 take a break. 22 We will have the staff presentation, right 23 after that, we will take a 30 minute break. 24 So, based on expectations, around 12:30, we 25 will break for half an hour, and continue after that. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 99 1 That will allow us to accomplish everything and give 2 the Court Reporter a break. 3 MR. NYARADY: Thank you Mr. Kenny. 4 Good morning Chairman Lloyd and Members of the 5 Board. 6 As Mr. Kenny mentioned, today we are proposing 7 for your consideration a proposed Suggested Control 8 Measure for architectural coatings. 9 In addition, we are proposing a Program 10 Environmental Impact Report that will assist the 11 districts in adopting the SCM. 12 As we will explain later in the presentation, 13 the proposed SCM will help districts fulfill their 14 State Implementation Plan and California Clean Air Act 15 commitment. 16 I will begin the presentation with a brief 17 background and overview of architectural coating 18 regulations. 19 I will then discuss our proposed Suggested 20 Control Measure. 21 This will be followed by a discussion of the 22 environmental benefits and economic impacts of the 23 proposed SCM. 24 I will also discuss the Program Environmental 25 Impact Report developed by staff and our planned future PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 100 1 activities. 2 Finally, I will end our presentation with a 3 summary and our recommendations. 4 I'll now begin with some background and an 5 overview of architectural coatings. 6 Architectural coatings, as defined in the SCM, 7 are coatings that are applied to stationary structures 8 or their appurtenances, as well as to pavements or 9 curbs. Appurtenances are attachments to stationary 10 structures, such as pipes, downspouts and railings. 11 Architectural coatings include a wide variety 12 of coatings, including household paints, stains, 13 industrial maintenance coatings and traffic marking 14 coatings. 15 Aerosol paints, which were discussed earlier 16 today, are not covered by architectural coatings rules. 17 Architectural coatings contain solvents which 18 evaporate when coatings are applied and when they dry. 19 Most of the solvents used in architectural coatings, 20 with the exception of water, are volatile organic 21 compounds, or VOCs. 22 ARB estimates the VOC emissions from 23 architectural coatings to be about 130 tons per day 24 based on ARB's 1995 emissions inventory. 25 This represents about 8 percent of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 101 1 non-mobile source VOC emissions. 2 Districts have the primary role in regulating 3 architectural coatings, and they adopt and enforce 4 their own regulations. 5 Most districts began regulating architectural 6 coatings in 1977, and currently, 17 of California's 35 7 districts have architectural coatings rules. 8 These 17 districts represent about 95 percent 9 of California's population. 10 The ARB has adopted SCMs for many source 11 categories in addition to architectural coatings over 12 the years. 13 SCMs serve as models for district rule 14 adoption. 15 SCMs promote uniformity among district rules, 16 which makes it easier for manufacturers to comply with 17 California rules. 18 SCMs are also an efficient use of State and 19 local resources, because they minimize the duplication 20 of district rulemaking efforts. 21 Finally, SCMs assist smaller districts with 22 fewer resources. 23 ARB's role in regulating architectural 24 coatings includes the approval of SCMs. ARB approved 25 the first SCM for architectural coatings in 1977, and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 102 1 the most recent major update was approved in 1989. 2 ARB has also conducted numerous statewide 3 surveys of architectural coatings to track VOC content 4 and sales, and to gather other technical data. 5 The most recent survey was conducted in 1998 6 and completed last year. 7 We are proposing the SCM to help districts 8 achieve their State Implementation Plan and California 9 Clean Air Act commitments. 10 Five districts in four Federal ozone 11 nonattainment areas included control measure 12 commitments for architectural coatings in their 1994 13 ozone SIPs. 14 We are also proposing the SCM to satisfy a 15 condition of a lawsuit settlement agreement. As part 16 of the settlement agreement, ARB committed to bring an 17 architectural coatings SCM to the Board. 18 We are also proposing the SCM to reflect 19 advances in technology that have occurred since the 20 last update in 1989. 21 Finally, we are proposing the SCM to assist 22 districts and promote uniformity among district rules. 23 In addition to local district architectural 24 coatings rules, the U.S. EPA recently developed a 25 national architectural coatings rule that became PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 103 1 effective on September 13, 1999. 2 However, the VOC limits in the National Rule 3 are generally less stringent than those in current 4 district rules and the proposed SCM. 5 Since the lower VOC limits in district rules 6 are not superceded by the National Rule, only the 7 districts without architectural coatings rules are 8 affected by the National Rule. 9 The South Coast Air Quality Management 10 District's Architectural Coatings Rule, Rule 1113, was 11 recently amended on May 14, 1999. The amendments added 12 interim VOC limits effective July 1, 2002, and future 13 VOC limits effective July 1, 2006. 14 The interim limits are very similar to those 15 in the proposed SCM, with some differences to account 16 for statewide climatic conditions, and district 17 enforcement resources. 18 The South Coast District has several 19 activities planned over the next few years related to 20 architectural coatings. 21 The District will expand on testing already 22 completed to compare and evaluate the performance of 23 low and higher VOC products. The District will also 24 evaluate industry's progress toward meeting upcoming 25 VOC limits prior to their effective dates. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 104 1 They have also committed to investigate 2 reactivity-based limits. 3 Finally, the latest South Coast attainment 4 plan amendment includes commitments for a third tier of 5 reductions to be adopted by 2003. 6 Now, I will discuss the proposed SCM. 7 Please note that since the staff Report was 8 released, we have continued to work with industry to 9 try to address remaining issues. 10 As a result, we are proposing some changes to 11 the original proposal in the staff Report, which I will 12 describe after I go through our original proposal. 13 The proposed architectural coatings SCM was 14 developed in cooperation with the local air pollution 15 control agencies, the industry, and U.S. EPA. 16 This slide summarizes the process we used to 17 develop the proposed SCM. 18 We conducted eight public workshops. 19 We conducted a comprehensive survey of the 20 architectural coatings industry and published a summary 21 of the results. 22 We conducted technology assessments for each 23 of the coatings categories in the SCM. 24 Finally, we held numerous meetings and 25 conference calls with interested parties. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 105 1 The SCM and the technology assessment were 2 released for public comment in February 2000, as part 3 of the Draft Program Environmental Impact Report. 4 The only substantive changes made to the SCM 5 since then have been to raise some VOC limits and to 6 provide additional flexibility, in response to industry 7 concerns. 8 The proposed SCM contains VOC limits for 47 9 different coatings categories. The VOC limits for 11 10 of these categories are lower than those in most 11 district rules, with the exception of the South Coast 12 District, and these 11 categories represent about 13 80percent of the emissions from architectural coatings. 14 Most of the remaining VOC limits are 15 consistent with current district rules. 16 The VOC limits are scheduled to become 17 effective on January 1, 2003, with the exception of 18 industrial maintenance coatings. 19 We are proposing to provide an extra year, 20 until January 1, 2004, to allow for reformulation of 21 these coatings. 22 ARB staff researched each of the 47 categories 23 in the SCM before proposing the VOC limits. 24 Although the factors considered in the 25 analyses for each category were different, staff PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 106 1 generally considered, the complying marketshares from 2 the 1998 ARB survey, the results of performance testing 3 comparing low VOC to higher VOC products, the South 4 Coast District's technical analysis, the current 5 district rules in California, and information in the 6 literature and as provided by the industry. 7 The VOC limits for the 11 categories shown in 8 the slide are lower than those in most current district 9 rules, again with the exception of the South Coast 10 District. 11 As mentioned earlier in the presentation, most 12 of the remaining VOC limits are generally consistent 13 with those in current district rules. 14 For 9 of the 11 categories with lower VOC 15 limits, these are significant complying marketshares 16 ranging from 13 to 74percent. 17 For the remaining two categories, Swimming 18 Pool Repair and Maintenance Coatings, and Quick Dry 19 Enamels, technology is currently available to produce 20 complying products. 21 The next three slides compare the proposed VOC 22 limits in the SCM with the most common district limits 23 for the 11 categories with lower VOC limits. 24 As mentioned previously, these VOC limits 25 parallel the interim VOC limits in the South Coast PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 107 1 District's rule. 2 The proposed VOC limits for these 11 3 categories are about 20 percent to 60 percent lower 4 than those in current district rules. 5 As shown here, there are a number of 6 provisions that are carryovers from the existing SCM. 7 New provisions added to the SCM include, 8 labeling requirements for higher VOC specialty coatings 9 to help prevent misuse, and reporting requirements to 10 track the usage and emissions of certain higher VOC 11 specialty coatings, and coatings containing methylene 12 chloride or perchloroethylene. 13 Another provision added to the SCM considers 14 climatic conditions for industrial maintenance coatings 15 applied in the coastal air basins listed in the slide. 16 The provisions would allow industrial 17 maintenance coatings normally subject to a 250 gram per 18 liter of VOC limit, to meet a 340 gram per liter limit, 19 if they are applied in areas with persistent fog and 20 cold temperatures. 21 An application must be submitted to the 22 applicable district and approved prior to use of the 23 higher VOC coatings. 24 A cap is also included to ensure that 25 95percent of the emission reductions from this category PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 108 1 are maintained in each district. 2 Next, I'll discuss some changes to the staff 3 proposal since the staff Report was released. These 4 changes to the original proposal reflect continued 5 dialogue with the industry. 6 The major change is that we are proposing to 7 add an averaging provision to the SCM. The averaging 8 provision will provide additional flexibility to 9 industry, and allows for statewide averaging so that 10 manufacturers will not need to apply to districts 11 individually. 12 The averaging provision parallels that in the 13 South Coast District's Rule 1113, except that it will 14 sunset on January 1, 2005. We are proposing to sunset 15 the provision to preserve the full emission reduction 16 benefits of the SCM, and to preserve district's 2005 17 SIP commitments. 18 We are also proposing to clarify that 19 industrial maintenance coatings allowed a higher 340 20 gram per liter of VOC limit are not to be available to 21 the general public. 22 We are also proposing some miscellaneous 23 changes, such as clarifications in some of the 24 definitions specified in the SCM. 25 I'll now discuss the impacts of the proposed PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 109 1 SCM. 2 The proposed SCM is estimated to result in 3 about a 10 tons per day reduction in VOC emissions. 4 This represents about a 20 percent reduction in VOC 5 emissions from architectural coatings. 6 The estimated emission reductions exclude the 7 South Coast District because they have already adopted 8 interim limits similar to those proposed in the SCM. 9 Based on responses to a cost survey which we 10 mailed to individual companies, ARB staff estimates 11 that the average cost-effectiveness of the proposed SCM 12 is $3.20 per pound of VOC reduced. 13 The cost-effectiveness is within the range of 14 other ARB and district VOC regulations, and is 15 conservative in that it does not reflect the cost 16 benefits provided by the averaging provision. 17 The cost impact to consumers will vary with 18 the coating category and individual product. 19 For products that currently comply with the 20 proposed VOC limits, which is more than 50percent of 21 the total volume of coatings in the 11 categories with 22 lower limits, we estimate no increase in the cost. 23 For products that will be reformulated, we 24 estimate an average increase of 12 percent, assuming 25 that all increased costs are passed on to the consumer. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 110 1 As with the cost-effectiveness estimates, this 2 estimate does not include the savings provided by the 3 averaging provision. 4 I'll now discuss the Program Environmental 5 Impact Report we have prepared. 6 In addition to the proposed SCM, the ARB staff 7 has prepared a Program Environmental Impact Report, or 8 program EIR, which analyzes the potential adverse 9 environmental impacts of the SCM. 10 The California Environmental Quality Act, or 11 CEQA, requires each district to consider the potential 12 environmental impacts of proposed district rules, such 13 as an architectural coatings rule based on the SCM, and 14 the Program EIR is designed to assist the districts by 15 providing a comprehensive environmental analysis that 16 they can rely on. 17 The Program EIR can be incorporated by 18 reference in whatever CEQA documents a district decides 19 to prepare for its own district rule. 20 This will minimize duplication of efforts by 21 the district. 22 CEQA allows a number of different formats to 23 be used for such an environmental analysis. The ARB 24 staff chose the Program EIR format because we believe 25 this format will be the most useful to the districts. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 111 1 The Draft Program EIR, which contained the SCM 2 and the ARB staff's technology assessment, was released 3 for comment in February. 4 In response to industry concerns, several VOC 5 limits were raised, and the averaging flexibility 6 option was added to the SCM. 7 This slide identifies the major elements of 8 the Program EIR. 9 ARB staff analyzed the potential impacts of 10 the proposed SCM for each of the environmental areas 11 listed in this slide. 12 For each of these areas, staff concluded that 13 the SCM would not result in any adverse environmental 14 impacts. 15 The analysis of the potential impacts on air 16 quality was the most extensive, and is discussed in 17 more detail in the next slide. 18 The first 7 issues in this slide have been 19 raised by industry for years. In essence, some members 20 of the paint industry believe that lower VOC products 21 will result in increased emissions because of 22 performance problems. 23 For example, it is claimed that lower VOC 24 products will result in thicker coats with lower 25 coverage, illegal thinning will be necessary to improve PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 112 1 performance, more priming will be necessary to 2 compensate for poor adhesion, etc. 3 It is also claimed that lower VOC coatings 4 contain more reactive VOCs, which create more ozone 5 than higher VOC coatings. 6 We also considered the assertion that some of 7 the VOCs in coatings do not create ozone because they 8 have low vapor pressures. 9 Finally, ARB staff analyzed the potential for 10 the proposed SCM to result in coatings with increased 11 odors. 12 ARB staff analyzed each of these issues in 13 detail in the Program EIR, including synergistic 14 effects, or combinations of the other potential 15 impacts. 16 Based on these analyses, we have concluded 17 that these problems will not occur. 18 We therefore concluded that the proposed SCM 19 will not result in adverse impacts to air quality, and 20 will in fact provide a substantial benefit to air 21 quality. 22 The South Coast District staff also prepared 23 CEQA documents as part of the District's May 1999 Rule 24 1113 amendments, and came to the same conclusion. 25 This slide summarizes the CEQA requirements PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 113 1 for certification of the Program EIR. 2 Before approving the SCM, CEQA requires the 3 Board to certify that the final EIR has been completed 4 in compliance with CEQA, that the final EIR reflects 5 the ARB's independent judgment and analysis, that the 6 final EIR was presented to the Board, and the Board 7 reviewed and considered the information in the final 8 EIR prior to approving the SCM. 9 The resolution for the SCM contains these 10 certifications and findings. 11 In summary, staff has thoroughly analyzed each 12 of the potential environmental impacts of the SCM, and 13 has concluded that no significant adverse environmental 14 impacts will occur. 15 Staff is recommending that the Board certify 16 the Program EIR, and approve the proposed SCM, with 17 averaging, as the best approach to achieve emission 18 reductions as expeditiously as possible. 19 I'll now briefly discuss staff's proposed 20 future activities with regard to architectural 21 coatings. 22 We are planning several activities related to 23 architectural coatings if the Board approves the SCM. 24 First, we will assist districts in adopting 25 the proposed SCM as expeditiously as possible. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 114 1 We will also be performing technology 2 assessments of industry's progress toward meeting the 3 proposed VOC limits that are lower than the current 4 district limits. 5 We will be continuing to work closely with the 6 South Coast District on these assessments. 7 We will work closely with the districts and 8 industry to develop the procedures necessary to 9 implement a statewide averaging program. 10 We will be conducting another comprehensive 11 architectural coating survey to track emissions and 12 industry's progress toward meeting the proposed VOC 13 limits. 14 Finally, we plan to begin work on Phase 2 15 limits for architectural coatings, including 16 consideration of a reactivity-based approach. 17 We think this type of approach has potential 18 for application to the regulation of architectural 19 coatings. 20 We plan to report to the Board on our progress 21 regarding reactivity considerations by December 2002. 22 I'll now summarize and give staff's 23 recommendation. 24 In summary, the proposed SCM and Program EIR 25 were developed with extensive consultation with all PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 115 1 interested parties. 2 We believe that each of the proposed 47 VOC 3 limits and other provisions in the SCM are 4 technologically feasible, and cost effective. 5 Finally, we believe the proposal is an 6 important step for districts in meeting their State 7 Implementation Plan and California Clean Air Act 8 commitments. 9 We therefore recommend that the Board certify 10 the Final Program Environmental Impact Report. 11 We also recommend that the Board approve the 12 proposed Suggested Control Measure. 13 Finally, we recommend that the Board direct 14 the staff to forward the SCM to districts for adoption 15 , providing assistance is necessary. 16 This concludes the staff's presentation. 17 CHAIRMAN LLOYD: Thank you very much. 18 Although this is not a regulatory item, I 19 would appreciate hearing from the Ombudsman's office in 20 the process, and whether you have any concerns related 21 to public participation. 22 Ms. Ferreria, will you comment on that 23 please. 24 MS. FERRERIA: Yes. 25 Mr. Chairman and Members of the Board, I am PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 116 1 pleased to discuss the outreach efforts for the 2 proposed SCM for architectural coatings. 3 The SCM before you reflects a thorough and 4 coordinated effort with the architectural coatings 5 industry, U.S. EPA, local air district, state agencies 6 and other interested parties. 7 In late 1997, staff initiated efforts to 8 update the SCM. 9 With input from stakeholders, staff developed 10 and conducted an architectural coatings survey in 1998. 11 More than 150 manufacturers completed the 12 survey. 13 As you have heard, 8 public workshops were 14 held. Staff conducted 5 workshops in Sacramento and 3 15 were conducted in Southern California. 16 Staff also had many tele-conferences and 17 meeting with trade associations, manufacturers, 18 marketers, users, and other state agencies. 19 Throughout the development of the SCM, staff 20 also had several meetings with air district personnel. 21 On June 6 of this year, staff mailed the 22 notice of the hearing and the availability of the staff 23 Report to approximately 2500 people. 24 These documents were also posted on ARB's 25 website. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 117 1 The draft Program EIR, staff Report, and Final 2 Program EIR, each went to approximately 400 3 stakeholders. 4 In conclusion, I believe that staff has 5 conducted an extensive outreach program. 6 Staff provided various opportunities for all 7 stakeholders and interested parties to assist in the 8 development of the proposal before you. 9 Thank you. 10 CHAIRMAN LLOYD: Thank you very much. 11 Board Members, questions of staff at this 12 time? 13 What we are going to do, with a slight 14 variation, we have one witness who has to leave early, 15 so I will take one witness before breaking for lunch. 16 At this time, Mr. Jim Edwards, of Dunn 17 Edwards, please. 18 MR. EDWARDS: First of all, I would like to 19 thank you for taking me early and making my connection 20 possible. 21 Thank you. 22 My name is Jim Edwards, part owner of the Dunn 23 Edwards Paint Corporation, headquartered in Los 24 Angeles, California, with approximately 1500 employees. 25 It pleases me to be here today to support the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 118 1 Suggested Control Measure on architectural coatings. 2 Last year we supported South Coast rule 1113 3 amendments, concerning VOC compounds and architectural 4 coatings. 5 Some of you may know, Dunn Edwards past 6 rapport with State regulatory bodies was something like 7 oil and water. 8 It did not mix. 9 Our relationship was built on distrust and the 10 only time we spoke to one another was when we were in 11 court, litigating over a rule. 12 It seems that those days are in fact behind 13 us. 14 Several months ago, the staff of Air Resources 15 Board was invited to join us in our factory based in 16 Los Angeles, so that we could educate them on the use 17 and importance of architectural coatings. 18 Paint is more than a just a decorative 19 feature, that one would place in their home, building, 20 etcetera. 21 Paint is designed to protect, like the 22 concrete that is used to build a bridge or building, 23 that concrete has certain strength requirements that 24 are applied for different uses. 25 One would never weaken concrete. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 119 1 Why should paint be treated any differently. 2 Paint when applied properly, protects against 3 rust and decay, leaving our products and result less 4 effected so it protects the substrate in the elements, 5 that can lead to higher maintenance cost, not to 6 mention possible bodily injuries. 7 It is the Air Resources Board role to balance 8 the concerns while maintaining the integrity. 9 For an individual buying a home, this may be 10 the single most important purchase that a person makes 11 in his or her lifetime. 12 The coating that is applied to the home should 13 first and foremost protect that home from the harsh 14 elements, and secondly be pleasing to the eye. 15 I personally believe that the American people 16 have the right to protect what is likely to be the 17 biggest investment that they ever make in their 18 lifetime. 19 I am confident that after our lengthy 20 discussion with the Air Resources Board staff and our 21 team at Dunn Edwards, that your staff now knows the 22 importance and difference in coatings, and how 23 essential they are to protect and preserve as well as 24 beautify a structure. 25 Therefore, once again, I come today before you PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 120 1 in support of the Suggested Control Measure for 2 architectural coatings. 3 This rule has proved that industry and 4 regulation can work together toward the goal of 5 ensuring a better environment for our children and us, 6 at the same time preserving jobs and the integrity of 7 our products. 8 Furthermore, I would like to say that I am 9 pleased that this rule has opened dialogue between Dunn 10 Edwards and the Air Resources Board staff, a dialogue 11 that does not need to be mediated in the presence of a 12 judge. 13 Although Dunn Edwards and the Air Resources 14 Board will not agree all the time, I am glad that we 15 are able to understand the differences and talk through 16 it as opposed to litigation. 17 Once again, I would like to thank you for this 18 opportunity, and good day. 19 CHAIRMAN LLOYD: Thank you very much. 20 I would like to comment on the courage that 21 you showed, and the ban thing, which was obviously not 22 a very productive approach to get out of science and 23 work cooperatively. 24 I would like to add that the staff's 25 presentation, I think we are going to work with you PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 121 1 cooperatively on getting more technical data in the 2 chamber in Riverside. 3 I think for those who didn't know, I think 4 that Dunn Edwards went out and sought funding through 5 Congress, through EPA to build a state of the art 6 chamber study, in Riverside, so jointly perhaps we can 7 better get data on reactivity. 8 So, I think your leadership with your 9 brothers, I think is going to be commendable. 10 MR. EDWARDS: Thank you for that comment. 11 I certainly would like science to dictate 12 future regulations. 13 I think we're all better off to have that 14 wisdom. 15 Thank you again. 16 BOARD MEMBER C.H. FRIEDMAN: Could I just 17 comment, Mr. Edwards? 18 I do not want you to lose the flight, but as a 19 lawyer -- 20 MR. EDWARDS: Now I am leaving, after 22 hours 21 of lawyers the last two days. 22 BOARD MEMBER C.H. FRIEDMAN: We used to 23 resolve our controversy in trial by combat, trial by 24 fire. 25 We got wise and sophisticated as a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 122 1 civilization, and we now litigate. 2 I believe in full employment for lawyers. 3 However, I do believe above that, mediate and 4 compromise, settlement between the constituent 5 stakeholders is certainly the infinitely preferable 6 solution to good faith disagreements. 7 And I am delighted to hear that you have taken 8 your place as a leader at the table to help fashion 9 these solutions is very difficult and sometimes almost 10 intractable problems, and I congratulate you for that. 11 MR. EDWARDS: Thank you for that. 12 And one of the things we did, maybe if I could 13 just comment briefly -- 14 How we got to this point was as we went back 15 to working with South Coast, Jack Broadbent and his 16 staff, that were trying to indicate that instead of 17 being from the corporate office and the South Coast 18 office, out to the project, take the perspective to 19 find out what is going on at the job. 20 What do the painting contractors have to do 21 every day, other professionals. 22 And so we have the opportunity to take it back 23 from the customer back to the boardroom. 24 The first day they met with Dunn Edwards, the 25 second day they met with the painting contractors to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 123 1 gain their perspective. 2 I think this dialogue gave us the ability to 3 come up meeting in the middle, and try to figure out, 4 what can we do now. And then tie science to it with 5 the Air Chamber, was a win-win situation with Dunn 6 Edwards, with the perspective in South Coast. 7 I hope to same is true for the California Air 8 Resources, so I appreciate your comments. 9 Thank you very much. 10 CHAIRMAN LLOYD: Thank you very much. 11 With that, again, I appreciate you keeping 12 within the five minute timeframe. 13 I realized that I didn't have to set you on 14 that since you have the plane to catch. 15 So, we will now take 30 minutes, break until 16 ten to one o'clock. 17 We will then come back and continue the 18 witness list. 19 We have about, close to 10 witnesses signed up 20 after lunch. 21 (Thereupon the lunch recess was taken.) 22 23 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 124 1 A F T E R N O O N S E S S I O N 2 --o0o-- 3 CHAIRMAN LLOYD: As a reminder, we will have a 4 five-minute time limit. 5 The next three witnesses will be Ed Edwards, 6 Jack Broadbent and Ned Kisner. 7 MR. EDWARDS: Good day, Dr. Lloyd, Board 8 Members, staff, and honored guests. 9 My name is Ed Edwards, part owner of Dunn 10 Edwards Corporation, which is headquartered in Los 11 Angeles, California. 12 I would like to thank the California Air 13 Resources Board for the opportunity to stand before you 14 today to discuss the Suggested Proposed Measure for 15 architectural coatings. 16 As you know, Dunn Edwards is no stranger, as 17 my brother said, to this ruling process. 18 In the past they have taken adversarial 19 positions that left the CARB, Dunn Edward and staff 20 distressful. 21 I am happy to stand here today to make sure 22 the stressful negotiations are behind us. 23 The SCM and the accompanied reactivity 24 commitment are in test mode, on the new and growing 25 relationship between Dunn Edwards and CARB. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 125 1 I stand here today to announce that Dunn 2 Edwards Corporation supports the adoption of SCM and 3 the reactivity commitment. 4 CARB staff should be commended for the hard 5 work and determination that seeks to protect California 6 health. 7 In the past and present, regulatory agencies 8 ask, how do you reduce peak air ozone starting with 9 polluted air. 10 Dunn Edwards proposed a new set of questions. 11 These questions would be, what would be the make up of 12 natural air in California? 13 How does nature clean the air of ozone and its 14 precursors? 15 How can we prevent the down wind 16 transportation of ozone and ozone causing precursors. 17 How do we prevent exceedence of the ozone 18 standard starting with nature, and CARB other air 19 districts have been essential to solving part of the 20 questions. 21 This SCM is the groundwork for incorporating 22 sound science. We hope that the future of SCM moves 23 away from mass-based approach and focuses on preventing 24 the exceedence of ozone standard. 25 CARB is in keeping with being innovative, and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 126 1 I hope bodies in the state and country follow the CARB 2 example. 3 We plan on working with the new air districts 4 and CARB to fight the longstanding ozone problem. 5 Thank you. 6 CHAIRMAN LLOYD: Thank you indeed. 7 Again, as I said before, thank you for the 8 contribution and leadership. 9 Comments from the Board? 10 Thank you, Mr. Edwards. 11 Next we have Jack Broadbent, and then Jim Sell 12 and Ned Kisner. 13 Welcome, Jack. 14 MR. BROADBENT: Members of the Board, Jack 15 Broadbent, Deputy Executive Officer. 16 And I'm here on behalf of the South Coast 17 staff to support adoption of the proposed Suggested 18 Control Measure for architectural coating use in the 19 South Coast, which represents the largest sources of 20 VOC, and it is not only largest stationary source in 21 South Coast but California. 22 AQMD Board adopted amendment to rule 1714 to 23 the air quality problem. These rule amendments are key 24 parts of the air quality containment strategy to 25 achieve ambient air quality by 2002. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 127 1 The SCM before you will achieve reductions. 2 The proposed limits are technologically 3 achievable and cost-effective and provide the 4 manufacturers the opportunity to reduce compliance 5 cost. 6 The staff is commended for their excellent 7 work in providing the proposal for your consideration, 8 and AQMD staff stands ready to implement the process. 9 Thank you for the opportunity to provide the 10 comments, and I will be glad to answer questions. 11 CHAIRMAN LLOYD: Thank you. 12 Any questions? 13 Mr. Calhoun. 14 BOARD MEMBER CALHOUN: Are these proposed new 15 limits the same as your district adopted? 16 MR. BROADBENT: There are slight differences 17 in the staff proposal and what South Coast Board 18 adopted in May of last year but it contains proposed 19 limits adopted by South Coast Governing Board. 20 It is a slight variation in climatic that the 21 staff indicated since a number of areas that have to be 22 addressed as part of the statewide SCM. 23 BOARD MEMBER CALHOUN: I would like to ask the 24 staff, this is a model set of control measures, is it 25 not? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 128 1 What obligation does the local district have? 2 It is just a guide? 3 Can they adopt these? 4 MR. KENNY: We have tried to get them to adopt 5 these measures as regulatory requirements. 6 We have had a number of discussions with the 7 districts over the last couple of years, and we would 8 work with them. 9 They do not have a legal requirement to adopt 10 as a regulatory requirement, however as SCM when we 11 review the California Clean Air Act plans there is the 12 opportunity. 13 We look for this to be incorporated into the 14 plans. 15 BOARD MEMBER CALHOUN: Thank you. 16 CHAIRMAN LLOYD: Jack, just one question. 17 I know it does not relate to this, but we had 18 the debate, but any comments from the South Coast 19 District on the South Coast aerosol? 20 MR. BROADBENT: Yes. 21 I related it back to this rule, in the sense, 22 we, with your staff are committed to look at reactivity 23 and incorporate that science needs to drive where to 24 get the additional VOC reduction. 25 We heard the comments by EPA and others, and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 129 1 we are actually in agreement with your staff but felt 2 that -- 3 CHAIRMAN LLOYD: Somewhat? 4 What do you mean by somewhat? 5 MR. BROADBENT: In large part, because I'm not 6 an attorney either, Mr. Chairman, we think frankly, 7 science needs to advance further before we incorporate. 8 CHAIRMAN LLOYD: I am comforted by your 9 response. 10 Thank you again. 11 We appreciate working with the South Coast on 12 this, Jack, and your colleagues help on this one. 13 Then we have Jim Sell. 14 Welcome. Glad you could make it. 15 MR. SELL: You have the statements and the 16 comments to the rulemaking. 17 The main thing is that you consider the 18 possibility of postponing consideration of SCM for 19 another six months to work with staff to work out 20 additional issues that we have in the key areas. 21 I would like to recognize that staff has put 22 time and effort into it and created quite a document 23 and done a lot of research looking into the issues. 24 It is a very complex technological area, and 25 we do not think that they have had the time to absorb PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 130 1 some of the information provided and some of the 2 information is misleading and would like additional six 3 months to work with them. 4 It is a very complex area and it has a 5 tremendous impact on the State of California. 6 We are going to be in the study in the area, 7 we guess agree that some are not technologically 8 feasible in the right meaning of the terms, and after 9 the study that we fully endorse that, and if the Board 10 passes the measure to continue the study but the posed 11 limit if we find out industrial coatings incorporate, 12 which is crucial, it does not do the job in ways that 13 they think it should be done. 14 It is difficult for the district to back away. 15 They have to find emission reductions that 16 they have committed to by result of adopting the 17 control measures in other means and other mechanism. 18 With that, I conclude the remarks and take any 19 questions that you have. 20 CHAIRMAN LLOYD: Thank you very much. 21 Any questions from the Board? 22 Thank you very much. 23 Professor Friedman wanted to see if there were 24 staff comments. 25 BOARD MEMBER C.H. FRIEDMAN: On the timing and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 131 1 deferring. 2 MR. VENTURINI: We have worked extensively on 3 this. 4 We have had numerous meetings, workshops, 5 considered, in our view we have adequately considered 6 all of the information. 7 We have also as a result of the dialogue made 8 adjustments particularly in the industrial maintenance 9 coatings, one of the reasons that we added the 10 provisions for high humidity and fog conditions in the 11 northern part of the state is as a result of the 12 discussions with the industry and discussions with 13 CalTrans and the Department Of Water Resources. 14 Our sister users of the coatings, they have 15 bridges to be painted and so forth, and with dialogue 16 with them, we made the adjustments for climatic 17 conditions, and we provided an extra year for 18 industrial maintenance coatings to comply, and we have 19 letters from CalTrans and Water Resources in the packet 20 that support and are confident that they will be able 21 to meet the limits. 22 The bottom line from staff's perspective, we 23 do not see the need for further delay. As always with 24 all the measures that we bring to you for adoption, 25 consumer products and so forth, we follow the progress PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 132 1 of the manufacturers to comply. 2 CHAIRMAN LLOYD: Thank you very much. 3 Next is Ned Kisner and Larry Green and Madelyn 4 Harding. 5 Is Ned Kisner not here? 6 We will move ahead to the next one, and we 7 will come back to Mr. Kisner. 8 Larry Green, with the California Air Pollution 9 Colorado officers association. 10 Welcome. 11 MR. GREEN: I'm here on behalf of the 12 California Air Pollution Control Officers Association 13 to support the SCM. 14 We have had meetings with district and staff. 15 Nearly two years ago we discussed the merits 16 of the statewide rule and suggested the control 17 measure. 18 We concluded that the SCM would be the most 19 appropriate way. 20 This meets all of these requirements that we 21 initially discussed when we worked in the process. 22 We are committed to see SCM adopted as quickly 23 as possible, and we will continue the work with the 24 staff to see that it happens in the district across the 25 state. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 133 1 Any questions? 2 CHAIRMAN LLOYD: Thanks, Larry. 3 Questions? 4 Thank you. 5 Is Mr. Kisner here now? 6 Thanks. 7 MR. KISNER: Chairman Lloyd, Members of the 8 Board, I'm Ned Kisner, President of Triangle Coatings 9 Manufacturer of Specialty Coatings Products, and I have 10 been involved in these proceedings since 1987. 11 It is an extremely frustrating experience and 12 costly and devastating to most of the friends in the 13 industry that I started in 1967. 14 I oppose the adoption of the Suggested Control 15 Measure, for the following reasons. 16 First of all, the limits are way too low and 17 restrictive and ban many of the new VOCs that we have 18 developed in response to the rules that have been 19 adopted. 20 The one's that are most devastating in my 21 company, industrial wash primer limits, quick dry 22 enamels and flats and non flats, the one more 23 restrictive than most places. 24 I was involved in the National Rule and I 25 spent years and time and money working on that one. It PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 134 1 came into effect less than a year ago, and I strongly 2 agree that those are the limits in the state. 3 There should be areas in the South Coast to 4 have a lower rules to match the South Coast that does 5 not make sense to me. 6 The real problem is that there is a lack of 7 understanding of people. 8 I have 3000 form last in my letters company. 9 The reason that we have so many form last is that there 10 are specialty things that need to be done. 11 The volumes of most of the colleagues is so 12 small you cannot reformulate them. If you have a rule 13 like industrial maintenance I have hundred coatings 14 that sell a couple hundred gallons a year. I cannot 15 reformulate those and I cannot afford those. 16 I ban those, you ban those and that is 17 personal property that I own and it is valuable to me. 18 They are in the category there maybe many formulas that 19 made for special purpose and they get banned. 20 One of the things I talked about, monkey cage 21 coating, that stood up but it was banned years ago. 22 Now they go to generic. Sometimes there is a 23 solution and some times it is high level of corrosion 24 that is not prevented. 25 The average does not work for a company like PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 135 1 mine. 2 I do not have the zero VOC coatings like 3 anyone else. I have to go into the business, give it 4 away to averages because nothing for clean air. It is 5 a bogus provisions in my opinion. 6 The rule of this is anti-competitive and 7 favors the large national companies and hurts us. 8 I work to get out of the architectural 9 coatings piece, I cannot survive. 10 I am trying to shift the business in a way, I 11 have put money and debt into this, and most people 12 wonder why I have not retired, but I have a couple 13 million bucks to pay back before I do that. 14 The second item that needs to be dealt with 15 VOC excluding water, but it is a calculation which we 16 have talked about for years and years and years, and 17 the staff in the EIR appendix, it is in all of the 18 district rules, and that is why they cannot change it. 19 This is to change the district rules. 20 That does not make sense. 21 The Suggested Control Measure has to do with 22 clean air. It was discussed it in workshops and 23 included in the National Rule, and it got ignored. 24 Relabeling by industry is too expensive. 25 It is nice to know that they care in one PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 136 1 category but the reason that we have asked for, as 2 industry for 20 years, is it is too expensive, district 3 have a problem with SIP approval because it is 4 difficult to claim emission reduction. 5 Difficult when you are actually getting real 6 one's, what reason is that? 7 That makes no sense. This has gone on for 8 years. 9 It is to the point where it makes me mad. We 10 have been ignored for a lot of things long time that 11 needs to be changed now. 12 The third item is, exempt Oxol 100 is not a 13 good solvent and then these limits are based on the 14 use. 15 Oxol is on an allocation this week, or late 16 last week, they are thinking about shutting the plants 17 down some of the limits are based on that, and the 18 thinking was including in workshops every single one 19 that I was there, it is being worked on, it was opposed 20 by one company, and it was Oxol who has a monopoly and 21 they do not want anything to do with it, and I talked 22 to them directly, why are you opposing it, and other 23 people should have to jump the hoops like we did. 24 What does that coating manufacturer who needs 25 exempt solvents set the limit, take it away and we are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 137 1 out. 2 I had the talk in 1989 and told the Board 3 then, that is not our problem. You deal with that at 4 the district level. 5 The district said that has not happened yet. 6 We will deal when it happens. 7 It happened. 8 I went back and they said, no, and they made 9 me shut it off. 10 They lied to me, and it's happened for years 11 and years. I have been dealing with rules four or five 12 years. 13 Okay. 14 Fourth, cost. The cost effectiveness, not the 15 cost of the property, the formulas I have. 16 Now, they are taken away and not included in 17 the cost. 18 The cost of reformulation, adding laboratory 19 space, I'm not talking about trying to do things. 20 They talk about the cost of material changes 21 not the cost of some of actually doing the 22 reformulating. 23 I almost went broke in '87 trying to 24 reformulate to stay in business, and I went from two 25 chemists to seven because I had no choice, and I PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 138 1 started to lose money. At that point in time, I never 2 made money, but I stayed at the break even level. 3 The cost of increased coating failures and the 4 consumer, generally lower quality, is not included. 5 For all these reasons and many others, I 6 oppose the adoption of the Suggested Control Measure. 7 It would be nice to get quarters. I suggested 8 if we have no place to park, I got smart enough to 9 bring change, but no one will give you change for 10 quarters. 11 I understand you are moving out in a year, so 12 it does not matter. 13 I feel like, Dunn Edwards found a way to quit 14 fighting, and my belief is that they think they are 15 going to win with the technology issue, and I hope we 16 will. 17 Do we have to fight the issue for a long time 18 trying to deal with science on what makes clean air and 19 that is where we have been. 20 I have been involved in the lawsuits because 21 that is where we can do something. 22 I do not have lawsuits in my business but with 23 the district on things like this. It is manipulated. 24 CHAIRMAN LLOYD: I think we have questions. 25 Mr. Friedman. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 139 1 BOARD MEMBER C.H. FRIEDMAN: Could I ask staff 2 if they could share the thinking on the issue of 3 solvents that are the basis or predicate, if that is 4 true, for some of the limits, and then the 5 unavailability of the solvents. 6 And also give any thought to small quantity 7 exemption or waiver. 8 I understand that there is additional time 9 period for specialty, but if you only have small 10 quantities, doesn't it get stale anyway? 11 I am interested in staff's response. 12 MR. VENTURINI: I will ask Mr. Nyardy of the 13 staff to address the solvents. 14 I have worked with Mr. Kisner for a while. 15 We did listen to some extent because we did 16 add a couple categories that were important to him that 17 are very low volume flow coatings and we -- 18 MR. KISNER: And Graphic Arts. 19 MR. VENTURINI: We tried where there was 20 technical certification. VOC less water that is issue 21 for 20 years. 22 That is one of the things on the list to look 23 at with the parties involved to see if we can deal with 24 it down the road, it is technical things that is with 25 us for a while. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 140 1 CHAIRMAN LLOYD: Can you just explain the full 2 implications of that? 3 MR. VENTURINI: I can't but -- 4 MR. KISNER: Madelyn can, too. 5 MR. NAYARADY: Oxol 100, we did not base the 6 entire or any limits entirely on Oxol 100 being the 7 only way to comply with the limits. 8 The limits that we set were not based on only 9 Oxol 100 being able to be used as the only complying 10 method there were other complying technology and today 11 there are products high market share of the categories. 12 With regard to less water conclusion and how 13 much time you want to go into this as opposed to 14 aerosol coatings that you heard today, those are based 15 on weight percent of VOC in the product. 16 Back in the mid 70's when U.S. EPA first 17 promulgated control for coatings, there was an attempt 18 to put the water born coating on the same basis of the 19 pollution from solvent born coating, and they presented 20 the standard of grams per weight of VOC per volume of a 21 coating minus the water and solvents, and being that 22 you could not comply by water base, because the water 23 would get subtracted from the denominator. 24 It is true that you have a very low solid 25 coating that has a lot of water. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 141 1 It there is a bigger number from the 2 denominator which makes the VOC bigger and bigger. 3 You cannot have low water coating VOC that is 4 actually coming out of the can. 5 One of the ways that we addressed that is that 6 we included low solid coatings in the regulation. That 7 was an attempt to address that. 8 In summary, we have committed to look further 9 as one of the future activities at this issue of less 10 water calculations for VOC because of U.S. EPA rules. 11 The National Rule they promulgated as well as 12 existing rules for architectural and other coatings. 13 MR. KISNER: We lead in a lot of ways but if 14 they want us not to lead. 15 CHAIRMAN LLOYD: I think I understand what you 16 are saying, and I am compelled, clearly, the discussion 17 of the numbers in that case, and all I urge is that in 18 this case we, together with EPA, accelerate that if we 19 talk about businesses on the line, they have this real 20 money and real commitment there. 21 We cannot sit back and say we will get to it 22 when we can't. 23 I would like to work with them and show the 24 leadership. 25 That is why I ask the staff to look at that in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 142 1 a more expedited manner. 2 MR. KISNER: The staff worked with me and they 3 tried in areas, I cannot go with hundreds they are too 4 small to waste the time. 5 BOARD MEMBER D'ADAMO: On that issue, impose a 6 deadline on ourselves. 7 I do not know what the phase out period here 8 is for the compounds that relates to the issue, but the 9 water calculations, if we impose a deadline and report 10 back with enough time to make the changes, if need be, 11 hopefully we would not have to. 12 BOARD MEMBER C.H. FRIEDMAN: I'm sorry. 13 MR. NYARADY: Oxol 100 product being phased 14 out and less water are two separate issues, and we are 15 committed to work on the less water calculation. 16 MR. KISNER: The Oxol 100 we do not know which 17 formulation caused what based on the survey, the 18 formulation limit is set at 60 percent of the stuff, 19 limit that is there. 20 That is the way that that functions. 21 BOARD MEMBER D'ADAMO: Oxol 100, is that the 22 compound which you were referring, Mr. Kisner that 23 apparently there is a petition before EPA for? 24 MR. KISNER: They got it -- there is a better 25 one that is cheaper before EPA for exemption, and there PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 143 1 may be a toxicity located at or something to put on 2 hold, but I have not read the record to say that 3 company Oxol is fighting them on the issue because Oxol 4 has a monopoly. 5 MR. KENNY: The other product is being -- it 6 is a very promising product that could have implication 7 in the consumer. 8 CHAIRMAN LLOYD: Okay. 9 BOARD MEMBER C.H. FRIEDMAN: Is it feasible to 10 have the small quantity or item or waiver, I am 11 concerned about small business people. 12 I do not know this should be allowed to stay 13 in business if there is some way that we can be 14 reasonably assured that they are not pumping out a lot 15 of VOCs. 16 I maybe misheard you, you talked about a 17 couple of gallons. 18 MR. KISNER: I have formulas -- 19 BOARD MEMBER C.H. FRIEDMAN: That less than 20 200 a year, this is not mass produced -- 21 MR. KENNY: We did not look at small volume 22 exemption. 23 It is something that can be done, but I cannot 24 tell you the implication of doing that. 25 MR. KISNER: It was laid out at the table. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 144 1 We found that the impact profitability was 2 maximum. 3 MS. FRY: Doing the cost analysis, we surveyed 4 the industry, and at that time we asked for all related 5 costs, and Mr. Kisner did not respond to the survey. 6 But a number of large and small businesses 7 did, and based on that information and information on 8 complying technology, we looked at what the impact 9 would be on small businesses, not only in California 10 based companies but companies outside of the state. 11 We found on the impact on profitability was 12 minimal to maximum, two percent impact, falls in the 13 range much lower than other regulations that have been 14 adopted at ARB when we looked at the impacts of 15 business profit. Ten percent is benchmark. 16 MR. KISNER: I submit a cost analysis, beating 17 your head against the wall, and did it for national 18 rule and made cost of reformulation and the cost as 19 verified by many of the larger companies and when I 20 started in the paint industry in 1967, there were 167. 21 We are about down to ten. 22 CHAIRMAN LLOYD: May I ask you what volume of 23 sales are based in South Coast? 24 MR. KISNER: Almost none. 25 CHAIRMAN LLOYD: California? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 145 1 MR. KISNER: 85 percent. 2 CHAIRMAN LLOYD: And the sales next to none in 3 the South Coast Basin, because of the rule? 4 MR. KISNER: The rules have been more 5 restricted down there, and so they would have to do 6 more reformulating. 7 There is a lot of paint companies down there. 8 It is harder to compete in Northern California 9 and Southern California. 10 BOARD MEMBER D'ADAMO: I would just like to 11 see where the analysis was prepared in the program EIR 12 regarding small volume. 13 MR. JENNE: It's on page 5, 142, exemption 14 number 5. 15 There will be a different name for it, but 16 it's basically the same idea where you allow a certain 17 amount of pounds of coatings to be sold without 18 complying with the VOC requirements. 19 MR. KISNER: I can tell you, we've had some 20 things like that happen in the past, where it gets down 21 to where there is a few of us making it, you cannot buy 22 the materials. 23 We had a great product sold to refineries, up 24 until the early 90's, when this last round, which was a 25 multi-million primer, and I made it so that it PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 146 1 complied, but the other people using it, it wasn't 2 enough volume, so it went away. 3 And that is what happens with many of them, 4 which is the reason they granted the higher limit on 5 Graphic Arts coatings. 6 Because that is for handpainting billboard 7 signs. 8 The volume is so low that if they did that, 9 they would just quit making the product. It is mostly 10 done with digital printing, and so it doesn't really 11 matter. It doesn't really effect the Clean Air. 12 By the same token, I think there are many 13 categories which we tried in the National Rule 14 unsucessfully, less than one percent of the total 15 thing. 16 Why bother? 17 It should be for everybody, not just a small 18 volume. 19 BOARD MEMBER D'ADAMO: I would like to get a 20 better understanding of how this proposal affects you 21 more so than say a company like Dunn Edwards. 22 Is it because you're not able to do the 23 averaging, or you're so specialized and these other 24 companies are not even engaged in that sort of 25 specialty? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 147 1 MR. KISNER: I think we're more specialized. 2 I think if you ask Sherwin Williams, or Dunn 3 Edwards for that matter, if they would sell the same 4 coatings they sell in California under this rule, and 5 other states, they would probably say no. 6 Because they couldn't compete in the other 7 states. 8 What I can't do is I cannot compete against 9 their volumes. 10 We all get down to approximately one market 11 when lowering the limits down to something that is 12 possible, which I could also do. I just wouldn't make 13 any money at it. 14 They can buy much cheaper than I can. 15 I'll make a 250 gallon batch, many of them 16 will not think about making less than 10,000 gallons. 17 So, my economies are scaled to where there's 18 no way that I can compete. 19 The way I used to be able to compete in the 20 architectural latex market for painting houses and the 21 like, I would make the top quality latex product 22 available. 23 Where the large guys have some of their 24 materials that are going in and a lot of the pigment, 25 they formulate using those, they buy in very large PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 148 1 volumes. 2 I go and hand pick the right pigment to make 3 the highest quality out of the materials. It costs a 4 little bit more, but then I charge more, and I can sell 5 it because I do have a pretty good product that will 6 outlast and perform better. 7 Then when it gets put down where I can't do 8 that, then I can't compete because my volume is too 9 small. 10 I have to make the choice on whether I want to 11 go head to head with those large volumes and build a 12 new factory, and do all those other things that make 13 small, which I'm not very good at, at making cheap 14 paint. 15 I'm good at making really good paint, but I'm 16 not good at making cheap paint. 17 That's why there are fewer companies in the 18 industry. 19 BOARD MEMBER D'ADAMO: If staff could respond 20 to this, I agree with Professor Friedman, that we need 21 to be specially mindful of the impact that this would 22 have on small businesses. 23 Is the averaging provisions such that if you 24 have a broad spectrum of products you will be able to 25 continue with some of the specialty items that Mr. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 149 1 Kisner sells? 2 And if so, is it that perhaps that might be an 3 unintended consequence of this averaging provision, 4 because he is not able to utilize that provision. 5 Is there some other way that we can be 6 creative, so that he could either utilize the averaging 7 provision with markets as a whole, or some exemption? 8 MR. KENNY: If I could answer that part 9 before the staff, maybe provide a more technical 10 answer. 11 The averaging provisions is only good for two 12 years. What we were trying to do there is essentially 13 allow for a little of the transition into the cleaner 14 coatings. 15 One of the difficulties is that if in fact we 16 provide some kind of a small volume manufacturer 17 exemption, we are going to have a very difficult time 18 trying to figure out, as you heard earlier, how to 19 enforce that particular provision. 20 The other difficulty is that, what we are 21 trying to do is go after the architectural coating 22 market in terms of trying to achieve better 23 reformulation and lower VOC products. 24 We have a real clear need in the state for VOC 25 reductions. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 150 1 As we are looking at essentially the next 2 generation of SIP generations, one of the things we are 3 finding is that we can not achieve VOC reductions. 4 Even this year we have an obligation to try 5 and achieve a 14 tons of VOC reductions, and we are 6 having a very difficult time trying to figure out where 7 to get the last 3 tons to bring to you this year. 8 And so the difficulty that I am having with 9 the idea of a small volume exemption is that, number 10 one, I don't know how to enforce it, and two, we're 11 going to lose VOC reductions. 12 And I think that is something that is very 13 significant. 14 BOARD MEMBER D'ADAMO: Well, in concept I 15 agree with you. 16 I think we need to do everything we can to 17 find ways to reduce. 18 But if the larger scale businesses are going 19 to be able to average and the smaller businesses are 20 not, it just seems unfair to me. 21 There ought to be a way that we can be 22 creative, so that they can take advantage of this phase 23 in period with something like averaging. 24 MR KENNY: Both can't average. 25 The difficulty I think, as Mr. Kisner was PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 151 1 saying, is that he has to reformulate if he wants to 2 average. And reformulation is going to be expensive 3 for him, and so therefore, it's not economically viable 4 for him to reformulate, and therefore take advantage of 5 the averaging provisions. 6 That is what I assume you were saying. 7 MR. KISNER: I have to put in a zero, a VOC 8 zero on the very low ones. 9 I have to give it away to make it work. 10 CHAIRMAN LLOYD: I get the impression that 11 there is some equation with what you are referring to 12 as pride as quality, or premium quality paint, and 13 VOCs. 14 I'm not an expert. 15 But what makes it last longer is the very 16 problem. 17 MR. KISNER: Part of that, you get better fill 18 former using solvents. 19 The technology has come a long way. 20 There is no doubt that we have a lot better 21 technology then 10 years ago. 22 And we can make better quality coatings than 23 10 years ago. 24 But there are still limits. 25 And there are some primers that I really wish PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 152 1 I had, that I could comply at 340 grams per liter, that 2 formed a decent film so you could have good corrosion 3 protection, or Latex. 4 You can rate close to those, but getting down 5 to 250, a lot of those brushable ones you can't -- you 6 know, there is a lot of ways that you can do different 7 things, but many of those things are for the customer. 8 MR. KENNY: One of the things that we would 9 add today is that we did the Program EIR, that is one 10 of the issues we tried to address. 11 We have heard for a number of years now about 12 the lower quality products that are associated with 13 lower VOC products. 14 We do not agree with that. 15 We think that in fact the quality in products 16 is equivalent. 17 And we have tried to do the Program EIR as 18 essential demonstrate that. 19 MR. KISNER: You will probably get more 20 comments from others on that issue. 21 BOARD MEMBER C.H. FRIEDMAN: The cigarettes 22 taste a lot better before the filters. 23 MR. KISNER: Before the filters? 24 But you still smoke, right? 25 BOARD MEMBER C.H. FRIEDMAN: Well, I think PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 153 1 they are trying to reduce some of the elements. 2 But I think that's to some extent what I would 3 refer to as quality taste. 4 Anyway, I think I'm getting the picture. 5 CHAIRMAN LLOYD: Dr. Burke. 6 BOARD MEMBER BURKE: Mr. Chairman. 7 This is like deja vu to me. 8 I have listened to the testimony twice, and I 9 have it memorized, and it is really a very difficult 10 decision. 11 Because I am a small business owner myself, so 12 I know what he is saying is true. 13 I know that. 14 The problem is I was charged by AQMD, by the 15 Speaker of the Assembly and charged by the Governor of 16 the State of California, between the balancing act 17 between commerce and the air quality. 18 The truth of the matter is, that he is right 19 on target. 20 You need volume to produce product which will 21 meet these regulations. 22 It does put the small guy at risk. 23 This is a difficult rule to live with, there 24 is no question about it. But when you are talking 25 about air quality, you are talking about what the staff PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 154 1 is recommending. 2 You are talking about economics. 3 You talk about what he is talking about. 4 MR. KISNER: There is a different between air 5 quality in my mind, and I believe in science, between 6 air quality and VOC reduction. 7 If it was air quality you are looking for, we 8 would change the water calculations. 9 As we can improve air quality by changing that 10 calculation. 11 If you take a look at some 30 percent solvent 12 coatings, and you replace solvent with water, solvents 13 are the same, the coverage is exactly the same, and the 14 emissions are lower. 15 And the second thing you have to believe, that 16 reducing VOCs, you have to believe that reducing VOCs 17 improves air quality, improves the ozone level. Which 18 most of the people here believe, and I am not one that 19 really believe, based upon the stuff that I've read. 20 And I hope that some of this scientific stuff 21 shows that to be true. 22 CHAIRMAN LLOYD: Thank you very much. 23 Unless we have other comments from the Board, 24 I'm sure we will get back to you. 25 And thank you very much. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 155 1 Oh, Mr. McKinnon, yes. 2 BOARD MEMBER McKINNON: I want to go back to 3 the monkey cage coating stuff. 4 How many very specialized products do you 5 make? 6 Let me ask you this. 7 Monkey cage coating, are you competing with 8 Dunn Edwards? 9 MR. KISNER: I used to supply the University 10 of California for the monkey cages. 11 BOARD MEMBER McKINNON: How much of your 12 business is that kind of specialized? 13 MR. KISNER: Well, back when I did that, that 14 was banned 10 or 15 years ago, that's why I quit using 15 the category, although it sounds good right now. 16 BOARD MEMBER McKINNON: So you're clear about 17 my question, I'm using that as an example. 18 MR. KISNER: I was using that as an example, 19 but I probably still have existing in those categories, 20 probably 300 products, that are just small little 21 things. 22 BOARD MEMBER McKINNON: Is that most of your 23 business? 24 MR. KISNER: Not any more. 25 It use to be, it use to be my primary thing. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 156 1 I had to categorize things, and one of the 2 ones with the less water calculations. 3 I have a good high quality water reducible 4 enamel, which we developed, which is lower VOCs than 5 other products that did not beat the new rule, and if 6 we change the water calculations. 7 That was one that I developed as a quality 8 product, we tried to get the VOCs down to meet these 9 new things. 10 And we haven't been able to do that as yet. 11 BOARD MEMBER McKINNON: So then other than 12 those specialty products, then your tendency is to 13 compete with Dunn Edwards or another paint 14 manufacturer? 15 MR. KISNER: I do not compete with them. 16 So I go to other states, I find myself a 17 manufacturer, I go making a product that you can paint 18 on a finish line. 19 I reduced the architectural coatings in my 20 business and increased OEM things. 21 And I searched outside of the state to get my 22 business to survive. 23 That is what some of my friends did. They had 24 to look for other ways to survive. 25 The original part of the rules I used to my PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 157 1 benefit. 2 We had 40 some odd districts in California 3 originally. 4 I went and took my specialty stuff, and went 5 to places where I could sell it. 6 The big guys could not compete with me in 7 those areas because they had to make the lower VOC 8 limits to go across the state. 9 And I could go pick places and sell. 10 And I didn't compete in places where it was 11 low. 12 That was my original footwork that I had to do 13 to survive. But now things keep changing, and I have 14 fast feet and have been able to survive. 15 BOARD MEMBER McKINNON: Thank you very much. 16 CHAIRMAN LLOYD: Mr. Burke, yes. 17 BOARD MEMBER BURKE: Perhaps you can recall 18 when we were both at South Coast and Chairman had his 19 Manufacturer of the Month Club. 20 If you did not attend, you got penalized. 21 So, we went to all those furniture 22 manufacturers and took all those tours, and quite 23 frankly, as a rule, came down a lot of them moved from 24 the South Coast and left. 25 But I will also tell you that there is a trend PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 158 1 now that they are coming back, and they are coming back 2 now under requirements of our new regulations. 3 I'm not a furniture architectural coatings 4 person of the month, but I will get one about every 5 other month now. 6 And some of the product is using the water 7 base. 8 That does not help a guy that was slammed up 9 against the wall, but historically people are 10 resourceful, and they find a way to work around this 11 that we find necessary. 12 CHAIRMAN LLOYD: I agree and I saw the same 13 observation. 14 But I do see here that he says he produces a 15 quality product, but we have a artificial way of 16 dealing with the water content. And if we put that in 17 a matter more on another basis, maybe you could compete 18 and yet have lower VOCs. 19 So that is what I may come back to staff to 20 take a look at that. 21 Thank you very much. 22 Our next speaker is Madelyn Harding, then 23 Lloyd Haanstra and Kevin Worrall. 24 We have do have five minutes. 25 I'm not sure if the timer is working. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 159 1 MS. HARDING: My name is Madelyn Harding, I am 2 administrator of product compliance for the Sherwin 3 Williams Company. 4 You keep mentioning us, and we are multi 5 national. 6 In fact, we are the largest American Paint 7 Company in this country, American owned. 8 And we are one of the top three manufacturers 9 in the world. 10 In addition to the Sherwin Williams Brand, we 11 also have some of the best recognized brands in this 12 country. You may have heard of a number of these, like 13 Minwax, Thompsons, Pratt and Lambert, Martin-Senour, 14 Dutch Boy, Rust Tough, Cuprinol, Ralph Lauren, and H&C. 15 You probably have recognized some of those, if 16 you haven't heard of Sherwin Williams. 17 We also have sales of over 5 billion dollars a 18 year. 19 We maintain manufacturing facilities 20 throughout the United States, including several within 21 the State of California. 22 We own our own stores but we also distribute 23 through warehouse types, do it yourself places, mass 24 merchandisers, wholesalers, etc. 25 We have participated in the Suggested Control PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 160 1 Measurement, actually since 1987 or so, and with South 2 Coast over many years and many rule developments. 3 And Jack and I are getting to be old friends 4 at this point. 5 Overall, we are satisfied and supportive of 6 the current regulation of the proposed SCM. 7 We have 2 remaining concerns that we would 8 like to address with you today. 9 The first is on the averaging proposal, which 10 we are supportive of, but which we are very 11 uncomfortable with the 2 year sunset. 12 The reason for that, I've actually passed 13 around, which I'm passing around is pretty obvious was 14 a product as it currently exists is flat, it is at 154 15 grams per liter, and we formulated at 100 grams per 16 liter. Which is not paint anymore, it is something 17 else, crackle finish or something else. 18 We can't reformulate ir any better than that. 19 The problem with a product like that, is it 20 losses it's differentiation. If you change it's resin 21 and additive combination. And that is the only way we 22 could reformulate it, to meet the 100 gram per liter. 23 What we are showing you there, is simply 24 reducing the VOCs, which obviously doesn't work. 25 However, if we reformulate it by changing the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 161 1 resin, we then loose the product differentiation that 2 made it a unique flat painting, not just another flat 3 painting. 4 And that is why we are so supportive of 5 averaging. 6 It is for this specific differentiations. For 7 us, at least, it is very useful in that way to take a 8 product that is truly differentiated in the market 9 place, and continue making it and selling it. 10 Which is somewhat supportive actually of what 11 Ned was talking about, because his products are so 12 differentiated, and there is so many of them. 13 The second issue we still have remaining, is 14 our exterior wood primers. And I don't know if you 15 have available to you, my letter which included a 16 significant number of data sheets, which I will run you 17 through very quickly. 18 But the issue here for all those data sheets 19 is simply on the exterior wood, hardboard, and wood 20 issue. 21 Our exterior latex top coats are all 22 recommending the use of product. That is a solvent 23 wood primer, and will not be allowed under the new 24 rule. 25 I am showing you examples, if you go directly PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 162 1 after our letter, the A-100. The flat, satin, gloss, 2 they all recommend the use of A-100 exterior wood 3 primer. 4 If you continue to attachment 12, is for the 5 duration series. This is the material that we 6 recommend generally as a self priming. 7 It is our newest exterior latex house paint. 8 It is a very high quality. 9 We have a significant warranty on this, I 10 believe it might be lifetime, or something really long. 11 It is a long warranty. 12 If you look on the second page, under surface 13 preparation, again, under composition board and 14 hardboard, we are recommending an exterior oil primer. 15 We have real problems in this one area and we 16 would like to continue to work with the staff on this 17 issue, and see if we can come to a resolution. 18 As well as continuing to work with staff on 19 the averaging issue, and see if we can't come to a 20 resolution for some type of flexibility, to allow us 21 this highly differentiated product to use the averaging 22 for. 23 We look forward to work with the staff and 24 hope to work on the two remaining issues. 25 You have questions, I am available. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 163 1 CHAIRMAN LLOYD: Okay, thank you very much. 2 BOARD MEMBER BURKE: Why is your position so 3 different than Dunn Edwards? 4 MS. HARDING: I cannot speak for Dunn Edwards. 5 So, I have no idea. 6 BOARD MEMBER BURKE: But they say no problem 7 and you say problem. 8 Do you think they know what they are talking 9 about? 10 MS. HARDING: I think they are putting their 11 bets someplace, where I can't bet my house. 12 BOARD MEMBER BURKE: So, you think this is an 13 economic decision, not a technology decision? 14 MS. HARDING: No, I think it is a technology 15 decision. 16 BOARD MEMBER BURKE: Do you think they are 17 betting they can comply, but you're not sure that they 18 can? 19 MS. HARDING: Yes. 20 BOARD MEMBER BURKE: If I were Dunn Edwards 21 I'd do the same thing. 22 I can't figure out why you're not doing this. 23 What I would do is bet on the technology, run 24 all the little guys out of business,and then take all 25 the business whether I could meet it or not. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 164 1 That is just from the business man's 2 perspective, what I would do. 3 Now the question is, you are a business woman, 4 you have a business bigger than Dunn Edwards, why 5 aren't you betting on that too? 6 MS. HARDING: We have invested incredible 7 amounts of money to produce water based technologies 8 that are equal to or superior to existing solvent base 9 technologies. 10 In doing that, we have tried to differentiate 11 from a standard latex product, and introduce 12 technologies in the latex area, that are superior to 13 what you are accustomed to seeing. 14 For example, interior Alkyd like enamels that 15 are water born and latex. However, they do not comply 16 with the 150 limit. And that's because they are higher 17 performing than the run of the mill interior gloss 18 latex. 19 They are latex paints, but they look like and 20 perform like an Alkyd. 21 So we have been betting our house on better 22 technologies under water, not just water. And we have 23 been very successful in theis way of approaching both 24 the regulatory environment and also the technology 25 environment. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 165 1 We do not consider it good enough, simply to 2 have a water base product and put it on the market. 3 But they should be able to perform the way we want it 4 to. 5 CHAIRMAN LLOYD: I also presume there is quire 6 a difference between your position and the corporate 7 decision makers, where I think in Dunn Edwards case, 8 you have hands on availability to react. 9 MS. HARDING: Well, we are owned by 10 Stockholders. 11 So we have responsible to our Stockholders. 12 I believe Dunn Edwards is privately owned. 13 BOARD MEMBER BURKE: I assume that my fellow 14 Board Members are much smarter than I am, because I 15 didn't understand a word she said. 16 Because you pass around a plaque and say this 17 is the differences between 154 and 150. You don't say 18 is that immediately when it dries. 19 Five days after it dries. 20 Five years after it dries. 21 That is immediately after it dries? 22 MS. HARDING: No, that's just what happens 23 when you apply it. 24 BOARD MEMBER BURKE: So that's immediately 25 after it dries? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 166 1 MS. HARDING: I produced it about, when, 2 about in April, May. 3 BOARD MEMBER BURKE: And what was our staff's 4 comments to that? 5 MS. HARDING: This is in support of averaging. 6 BOARD MEMBER BURKE: Well, if it's just going 7 to be phased out in 2 years. 8 MS. HARDING: That is my concern with the 9 phase out, is a product like that, and we need to do 10 something, so we can still sell that product. 11 Otherwise, California won't have it. 12 We will continue to make it for the rest of 13 the country. 14 BOARD MEMBER D'ADAMO: I would like staff to 15 comment, because as I understand it that's simply in 16 lowering the VOC content, and not in any reformulation. 17 Has staff done independent tests or research? 18 MR. VENTURINI: What I would like to do if I 19 may, is to respond to her question, because she was 20 commenting about the averaging and I do note in her 21 actual letter, she expressed the concern about sunset, 22 but then indicate request to the opportunity to 23 continue to work with staff on the alternative 24 flexibility provision, such as reactivity. 25 And we have committed to do that. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 167 1 So, I think what Madelyn, Ms. Harding is 2 indicating is, if there is going to be a sunset, we 3 need to work some flexibility such as reactivity. 4 And that is something that we agreed to work 5 on. 6 MS. HARDING: What we are trying to say is 7 that by 2005, we would like something to substitute if 8 it is going to sunset. 9 It is of course possible that by then you may 10 have done another survey and determined that emission 11 reductions that you are achieving with averaging are 12 sufficient so you do not have to sunset, is another 13 possibility. 14 Because if I understand correctly, it is for 15 the SIP commitments. 16 So if the reductions are what you want, at 17 that time, you might not need to sunset. 18 I would just like the issue not just dieing in 19 June of 2000. 20 I would like us to keep it in mind because of 21 things like that panel, that was a reformulation, by 22 the way. 23 There are not very many ways that you can 24 reformulate, to take out the VOC. 25 In that particular system, if you change the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 168 1 resin and additive package you don't have that product 2 any more. 3 You have a totally different product. 4 CHAIRMAN LLOYD: Professor Friedman. 5 BOARD MEMBER C.H. FRIEDMAN: I was going to 6 ask about reactivity. 7 How promising does that appear to be at this 8 point, I know you can't commit. 9 MR. VENTURINI: I think with our experience 10 that we had earlier with the aerosol coatings, I 11 personally, am somewhat optimistic that one of the 12 promising avenues for reactivity consideration is the 13 area of architectural coatings. 14 I think that is supported by some of the 15 company, particularly Dunn Edwards, who see that as a 16 real opportunity as well. 17 BOARD MEMBER C.H. FRIEDMAN: Is there any 18 encouraging word from, such as Mr. Kisner, with 19 reactivity? 20 With that likely, is there any way to *(4715) 21 his small business? 22 MR. KISNER: I believe so. 23 MR. VENTURINI: It could. 24 BOARD MEMBER C.H. FRIEDMAN: Is staff really 25 putting full court press on that since you just came PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 169 1 off of coatings, I mean aerosol? 2 MR. SCHEIBLE: We're very serious. 3 It's like we got the rebound, we have to start 4 up the other way. 5 CHAIRMAN LLOYD: I think closer to Professor 6 Friedman, as I mentioned earlier, we are permitted 7 actually to put money into the joint work, with Dr. 8 Clark in Riverside, with the industry to work on the 9 issue. 10 So, we're also putting money where our mouth 11 is. 12 BOARD MEMBER C.H. FRIEDMAN: If I may, there 13 is obviously more. 14 The differences between a publicly held 15 corporation that is traded by a Board of Directs, feels 16 they have the responsibility primarily if not 17 exclusively to Shareholders. 18 And the price earnings ration and the trading 19 market, in a closely held corporation that is perhaps 20 family owned is the difference between democracy, in a 21 sense and a dictatorship. 22 You can get an awful lot more done. 23 And that is just a fact of life. We spend 24 time in my world talking corporate responsibility and 25 what is the role of Boards and management to worst PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 170 1 about the bottom line. 2 I don't want to get into that but to extent 3 that the true the differences in ownership I understand 4 the different approach by Sherwin Williams. 5 MS. HARDING: Can I say one thing. 6 I really appreciate that you actually have 7 dialogue with the industry. South Coast, the Board 8 actually doesn't ask very many questions. 9 They tend to listen to the testimony, but they 10 don't actually respond, and this is really a pleasure 11 to actually have a dialogue going on. 12 BOARD MEMBER BURKE: That is because we are a 13 Dictatorship. 14 I want you to understand that my father taught 15 me, there is nothing wrong with a Dictatorship as long 16 as you are the Dictator. 17 MS. HARDING: Thank you. 18 CHAIRMAN LLOYD: Our next speaker is Lloyd 19 Haanstra with Deft Incorporated. 20 MR. HAANSTRA: My first name is Lloyd, not my 21 last name. 22 And to put this all in perspective, Sherwin 23 Williams sells more in one day, or even half a day, 24 than our company sells in the year. 25 Dunn Edwards sells some of our products also. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 171 1 Deft is a privately owned small company, 2 located in Irvine, California. And our largest volume 3 of sales is in one product, and that one product is 4 called clear wood finish, and it is brushing laquer. 5 And I want to thank the staff for making it 6 possible that we have now a category of clear brushing 7 laquer, of 680 VOC. 8 The biggest reason for that is that a brushing 9 lacquer a 100 percent transfer efficiency, while a 10 spray lacquer has only 65 percent transfer efficiency. 11 And this results in 20 percent less emissions, 12 when you brush 680 VOC laquer sprayer, versus providing 13 50. 14 Actually, the emission is reduced by 15 continuing to have the possibility for the clear 16 brushing laquer at 680. 17 I appreciate that the staff saw the reasoning 18 and agreed with it. 19 Unfortunately the South Coast District did not 20 see it that way, yet in rule 1113 we do not have such a 21 category and there we are limited by 50. 22 We are operating under a variance that will be 23 discontinued in April 2001. 24 Hopefully we will be an able to convince the 25 South Coast district that ARB had great wisdom in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 172 1 putting this special category in the Suggested Control 2 Measure. 3 Again, thank you very much for the opportunity 4 to address you on the issue. 5 Of course, you realize that I suggest that you 6 adopt the SCM as it is written. 7 Thank you. 8 CHAIRMAN LLOYD: Thank you. 9 Questions or comments from the Board? 10 Thank you very much. 11 Next is Kevin Worrall, Textured Coatings of 12 America. 13 MR. WORRALL: Good afternoon Board Members and 14 staff. 15 I think you all know me, particularly the 16 staff. 17 I am Chief Chemist with Textured Coatings of 18 America. 19 My company manufactures a line of products. 20 Basically sealers, water proofing systems, roof 21 coatings and primers. 22 The reason that I am here is two- fold, I 23 firmly believe that the specialty primer issue needs to 24 be expanded. 25 I want to relate to you two situations here PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 173 1 that are very powerful, especially in the field of 2 commercial application. 3 One is prevalent that water proofing systems, 4 consisting of silane, siloxane, silicone, that are put 5 on the masonry walls or substrates. Mainly to develop 6 a water pellant hydrophobic quality. 7 Later on, owners or architects may specify if 8 this needs to be painted, for whatever reason. On that 9 you find you did put a water based system on as a 10 primer, why, it's pretty obvious. 11 So you have to use a solvent system, and that 12 solvent system should have two natures about it. 13 It should be alkali resistant and deeply 14 penetrate. 15 And to do this you need a relatively high 16 solvent primer. 17 In our case I would go with 350 VOC. I know 18 we can do it because we have the products that do this. 19 It comes up time and time again. 20 I do believe that this situation, this 21 scenario, needs to be studied and put in to an addendum 22 of specialty products. 23 Another feature here, when we get into form 24 oils, and this one I'll be babbling for a while. 25 Form oils, I'm sure everybody knows is a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 174 1 system of putting a putting a release agent in forms, 2 so that when you form concrete, or pour it in place, 3 the forms can be pulled away as a clean break. 4 It's like baking a cake, and you put grease in 5 the pan, you pop the cake out. 6 But, you're going to have release agents 7 adhering to concrete. 8 That is natural. 9 You explore how to get rid of this. Now there 10 are many types of form oils, and the way things are 11 going today, the most popular one's as I understand are 12 hydrocarbon resins, they can be fatty acids. 13 Some even put silicone in them. 14 And there are other techniques, unbeknown to 15 me. 16 This constitutes form oil. 17 These manufactures say that if you let this 18 sit in the sun for 48 hours it starts to oxidize like 19 powder. 20 So, you power wash it, and that gets off the 21 lose material. Now you're ready to primer. 22 But that doesn't always work out, because if 23 you visualize your out in the field when it's being 24 power washed, then there are lots of delays, and now 25 what was clean is starting to oxidize, it's getting PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 175 1 back to how it was. 2 The paint contractor, he comes in, he primes 3 it and wonders why is it peeling off like a banana 4 peel. 5 This is hard for us to control. 6 But if we go in with a solvent system primer, 7 you have a wonderful chance of permeating through this 8 oxidized dust and anchoring in to the system. 9 And everybody's happy, and no one is screaming 10 at each other. 11 I think those 2 scenarios need to be 12 thoroughly looked at, and a decision made, is it valid 13 or not valid. 14 And I say valid, because we're getting too 15 many problems in the past that we had to address. 16 That is the saws of my coming here and 17 hopefully I got an audience. 18 CHAIRMAN LLOYD: Thank you very much. 19 Comments or questions from the Board? 20 Any comments from staff? 21 MR. VENTURINI: We'll be glad to give you our 22 perspective. 23 Ms. Fry, can you please respond? 24 MS. FRY: Yes, with regard to the form oils, 25 we spoke to the major manufactures of form release PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 176 1 compounds and they indicated that for the most part, 2 silicon is not used, because of problems with adhesion. 3 And in the specific instance where Mr. 4 Worrall, gave his technical information on, it turns 5 out that when they applied the coating, they didn't 6 prepare the surface as directed by the company. 7 And neither the Alkyd, the higher VOC solvent 8 base, or the water based coating was able to adhere. 9 And only when power washing as directed put 10 the surface is properly cleaned, was any coating able 11 to adhere. 12 They usually don't use silicon because of this 13 problem. And they usually have form release compounds 14 that biodegrade and can just be washed away with water. 15 With regard to silicon water proffers, they 16 have siloxane complying products that can be applied 17 directly to those waterproofers, and will adhere. 18 In this category we have a 74 percent market 19 share, it's the highest market share of any of the 20 categories we are proposing for regulation today. 21 Our limit is consistent with the South Coast, 22 and believe it is technically feasible. 23 MR. WORRALL: Can I respond to that. 24 I'm talking about, first of all, when we talk 25 about that being waterproof on walls. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 177 1 I accept that. 2 There are situations where they do comply with 3 VOC. 4 But I'm talking about later on, when later on 5 you need to prime and put paint on top it. That is 6 what you have to address. 7 The water repellency that is developed and 8 will not let a water based system attack the surface. 9 And that's what I'm concerned about. 10 You need a special primer for that. 11 That's the specialty primary. 12 Now on the form oil, I've got here a letter 13 from the big form oil manufacturer. It'll tell you 14 that there are provisions that you must watch out for 15 when you going to paint it. 16 I will be happy to pass that around and read 17 it. 18 CHAIRMAN LLOYD: Thank you very much. 19 Our next witness is Carol Brophy and then John 20 Long. 21 Carol Brophy from RPM. 22 MS. BROPHY: Good afternoon, Chairman Lloyd 23 and Board Members. 24 I'm Carol Brophy. I'm with the firm of Folley 25 and Lardner and feel pressed to tell you that before I PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 178 1 was a lawyer I was an engineer. 2 I am representing RPM Corporation. 3 To explain a little about RPM, RPM is a 4 holding company that owns 150 different coating 5 companies world wide, of which 40, which I have listed 6 for you, are subject to the rule that is before you 7 today. 8 They have manufactured some kind of coating 9 that would be covered in the architectural coating 10 rules. 11 And primarily, I was going to address a couple 12 of little things, but I was asked to pick up a special 13 comment on behalf of Rustolium. 14 Rustolium is one of RPMs companies, and one of 15 the very largest ones that would be subject to the 16 architectural coatings rule. 17 They primarily manufacture industrial 18 maintenance type of coatings. 19 You may have seen Rustolium, or used it around 20 the home. They have, we are fortunate to have a very 21 talented, long-term director of R and D at Rustolium. 22 And he has appeared before the staff, and he 23 has even come and had a day meeting with the staff to 24 discuss certain of the things that are of issue. 25 Similar to what Madelyn Harding of Sherwin PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 179 1 Williams did. 2 He has done, in talking with the staff about 3 the testing that he has done with the industrial 4 maintenance coatings. And he is the type of person 5 that gave me direction, he is my client, that he 6 believes very much in solving the problems through 7 science and he is very even tempered. 8 But, I must tell you, and he has written today 9 to you, and in answering his questions, he went through 10 the industrial maintenance coatings and discussed the 11 lack of technical feasibility. 12 The inability to make coatings that will 13 actually work in an industrial maintenance categories. 14 And he listed them all for staff and met with the 15 staff, he came in and suggested working with the staff 16 on industrial maintenance coatings. 17 And in response to his questions or his 18 comments, that he took the time, all he got basically, 19 was we disagree. 20 Now he is not like a lawyer, he gave technical 21 issues that he expected to have addressed, and he has 22 come back, I understand, in the last group of comments 23 and said he believe he needs a technical answer to the 24 questions before adoption of the rule. 25 I am hear to make you aware of that, and to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 180 1 ask you that if perhaps you have an interest, to look 2 at the kinds of comments. 3 I would like to differentiate and explain to 4 you one of the general comments that he did make. 5 We are looking at the industrial maintenance 6 primer section in the staff Report, where they are 7 talking about a test summary that they did. 8 And there are four, actually five that I see, 9 actually four various tests, and they say brushing 10 properties, wet test and they note that it has low VOC 11 coating, exhibited longer drying times to high VOC 12 coatings. 13 They say the dry time to dry hard, it took 14 longer drying times compared to high VOC coatings. 15 And in terms to contrast ratio, it had lower 16 performance characters compared to high VOC coatings. 17 And then down to the test for taper. 18 Abrasion resistance, it exhibited lower 19 performance, compared to high VOC coatings. 20 Yet when you turn around and look at the 21 conclusions, based on 7 tests, 4 of the tests had 22 exhibited, by the staff's own comments, less 23 satisfactory requirements. 24 The overall conclusion is that the low VOC 25 coatings exhibited similar performances compared to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 181 1 high VOC coatings. 2 That is why the National Paint Coatings 3 Association and RPM, and our sciences, believe that 4 that this is not ready to come before you, and there 5 are questions here that really need to be dealt with 6 through science. 7 We understand that you are asked to adopt a 8 rule now, that may not go into effect there are a lot 9 of extra things built in, like new VOC coatings and 10 maybe we're going to have some reactivity relief on our 11 solvents, and maybe are going to be able to go forward 12 and get relief at the individual districts. 13 But I happen, and my clients believe, that we 14 really need to do this kind of planning for rules this 15 important. 16 To get more certainty and a little bit more 17 completeness. 18 And on behalf of Mr. DeYoung, I wish to ask 19 the Board to at least answer in specificity, why they 20 rejected his technical comments. 21 I do not believe that an answer is too little. 22 Saying, we disagree, I do not believe nor does 23 my client, that it's enough. 24 One more point, and I will make this very 25 brief. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 182 1 I believe, we believe that this particular 2 Suggested Control Measure is indeed a regulation. And 3 I'm going to give you the reason you already heard what 4 Jim Sell said in terms, and it is true, that EPA, 5 you're making commitments to EPA and you're making 6 commitments to the District, but I give you a very 7 practical common sense reason, that this is a 8 regulation. 9 It is, because when you adopt the regulation 10 today you will be adopting a binding obligation on 11 coating manufactures throughout the world to report 12 annually, beginning in 2004, to the Board. 13 That reporting obligation is a duty, it does 14 not take any action by any state, any district, it is 15 completely separate. 16 It is a statewide reporting obligation. 17 The reason that this makes the entire SCM a 18 rule is because what they are reporting on are the 19 categories and VOC limits that are inherent throughout 20 this SCM. 21 I would ask the staff or their legal counsel 22 to explain why they do not believe that this action by 23 the Board creates a binding regulation. 24 Thank you very much. 25 CHAIRMAN LLOYD: Thank you very much. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 183 1 I guess maybe we can take the last one first. 2 MR. JENNE: Okay, Dr. Lloyd. 3 We are very familiar with this issue and we 4 can assure you that the SCM is not a regulation. 5 Probably the simplest way of explaining this 6 is to say that the Hallmark regulation is that it is 7 binding, and either requires someone to do something or 8 prohibit action. 9 However, the SCM is simply a model rule. 10 It's non binding. 11 If the Board adopts the SCM today, no one is 12 required to do anything or would be prohibited from 13 doing anything. 14 So I can assure you that your company will not 15 be required to report anything, and the only obligation 16 imposed on the company is if the district adopts this 17 SCM, then the reporting requirement would be imposed. 18 And not until then. 19 MS. BROPHY: It does not say that in the rule, 20 it says beginning. 21 MR. JENNE: I think you are talking about the 22 reporting requirements, and what the reporting 23 requirements say is that this manufacturers who sell 24 coatings have to report some information to the 25 Executive Officer of the Air Resources Board. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 184 1 The reason we put that in there is because it 2 really is something that we provided for manufacturers 3 so they wouldn't have to report to every separate 4 district, they could just give the information to us, 5 and we would serve as a clearinghouse. 6 But again, I can clearly state that's a non 7 binding requirement. 8 It is only imposed if the District adopts SCM. 9 There would be no requirement, whatsoever, to 10 do any reporting just based to the Boards action today. 11 CHAIRMAN LLOYD: Professor Friedman. 12 BOARD MEMBER C.H. FRIEDMAN: Just to clarify 13 that. 14 Are you saying unless and until a single first 15 district following any adoption by the Board of this 16 SCM, until a district adopts SCM, there would be no 17 reporting requirement to ARB? 18 MR. JENNE: Yes, that is correct. 19 BOARD MEMBER C.H. FRIEDMAN: Could you then 20 respond also to some of the last comments made in terms 21 of the apparent stated in consistency, or lack of 22 support for the conclusion that they are similar. When 23 in fact earlier a specific test indicators suggest they 24 are not similar, are you using similar in a very broad 25 range? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 185 1 MR. JENNE: Are you discussing the technical 2 issues? 3 BOARD MEMBER C.H. FRIEDMAN: I am looking at 4 the Rustolium. 5 He raises a number of points, they are 6 numerated, and the first 4 or the first 3 have to do 7 with specific attributes of comparative quality, or 8 lack of quality or performance. 9 As to those I understood her to say that the 10 record, the SCM is based on similar results, and yet as 11 to surface preparation and temperature they are 12 different between latex and the non. 13 MS. FRY: This is Barbara Fry. 14 In looking at the end test results, we find 15 that in some instances, lower VOC coatings have a 16 shorter dry time, higher VOC usually have a longer dry 17 time, but it varies by coating type. 18 We discussed extensively with Mr. DeYoung, his 19 concerns about the proposed limit for industrial 20 maintenance coatings, and his primary concerns were 21 with the light and medium duty uses of these coatings. 22 So, we have proposed a higher VOC limit for 23 rust preventative coatings for those types of uses, and 24 in fact Rustolium does currently formulate complying 25 coatings that can meet both the rust preventative PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 186 1 limits, and the industrial maintenance limit for light 2 and medium duty uses. 3 In response to his concerns about adverse 4 climatic conditions, we are proposing a climatic 5 provision for use in persistence fog in cold 6 temperature areas, to address his concerns with the use 7 of these coatings. 8 In our responses to his comments and in the 9 staff Report there is extensive discussion of rationale 10 for allow for rust preventative category as well as for 11 allowing for a special provisions to accommodate 12 certain climatic conditions. 13 So it is addressed. 14 BOARD MEMBER C.H. FRIEDMAN: Do you agree or 15 not with the comment that the temperature humidity 16 windows for the proper acrylic latex applications are 17 narrower. 18 MS. FRY: That is correct, that is why we look 19 at logical data, and established the areas of the state 20 where those conditions exist and included a provision 21 to include those areas of the state. 22 BOARD MEMBER C.H. FRIEDMAN: That is in the 23 staff material? 24 MS. FRY: That is correct. 25 BOARD MEMBER FRIEDMAN: Did you feel that you PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 187 1 responded in that form not directly, because you have 2 seen this letter? 3 MS. FRY: I discussed it with him. 4 BOARD MEMBER C.H. FRIEDMAN: Point to it the 5 response in here that satisfies me and I hope that it 6 satisfies him. He may not agree, but at least you 7 responded. 8 MS. FRY: Yes, I personally discussed this 9 with him since we received the letter. 10 CHAIRMAN LLOYD: How do you characterize his 11 response to your response? 12 MS. FRY: Well he was not totally satisfied, 13 he would still like to be able to sell his high VOC 14 rust preventative coatings for industrial maintenance 15 applications. 16 But many other manufactures of rust 17 preventative coatings asked us to specifically put the 18 language in to allow them to sell rust preventative 19 coating that met the lower IM limit, in industrial 20 settings. 21 Which tells me that they are making the rust 22 preventative coatings which they are currently 23 marketing in the, in the industrial settings that are 24 complying with the limit. And they wanted to have the 25 ability to sell those coatings there. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 188 1 And rustolium does sell complying products now 2 for industrial settings that meet the limit. 3 BOARD MEMBER C.H. FRIEDMAN: So you are 4 satisfied that you responded and that you covered these 5 questions? 6 MS. FRY: Yes that's correct. 7 BOARD MEMBER C.H. FRIEDMAN: Thank you. 8 CHAIRMAN LLOYD: Dr. Burke. 9 BOARD MEMBER BURKE: I would like to ask Ms. 10 Walsh, obviously I'm not an attorney, Ms. Brophy may 11 have a point and may not, but if we worded so that it 12 triggers -- it is almost a hundred percent guarantee 13 that it will trigger, isn't there a problem with intent 14 there? 15 MS. WALSH: I'm going to ask Mr. Jenne to 16 answer the question. 17 I believe the way the SCM is configured the 18 requirement would apply only in those districts or only 19 for those companies that sold products in the district 20 that actually adopted SCM as a regulation. 21 BOARD MEMBER BURKE: Right. I understand that, 22 but he knows the way he came about it he work for the 23 biggest district in the state who obviously is going to 24 adopt it. 25 So every product that is regulated throughout PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 189 1 the state I assume is in that district, so his even 2 though he did not say it, the intent of it is to have 3 product then report back. 4 MS. WALSH: If all of the products produced, 5 sold, it would trigger the reporting requirement. 6 BOARD MEMBER BURKE: Do you have a problem 7 with intent? 8 MR. JENNE: I hope to clear this up a bit. 9 One of the issues. 10 BOARD MEMBER BURKE: Are you a lawyer, too? 11 MS. WALSH: Yes, he is. 12 CHAIRMAN LLOYD: The legal sign in front of 13 him. 14 MR. JENNE: What the reporting requirements 15 that we are talking about are for certain categories, 16 they are for clear brush, brushing lacquers, and rust 17 preventative coatings. 18 We require manufacturers to report the amount 19 that they sell in the state, and the reason we put that 20 in there is because a lot of manufacturers have told 21 us, well we don't know how much we sell in each 22 district all we know is we can tell you what we ship 23 into the state. 24 We can tell you that, but we can't break it 25 down district by district sales. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 190 1 So we were trying to make it easy on 2 manufacturers by saying, you can just tell us what you 3 make in the state, you can give the information to us 4 at the ARB, and then you just have to do it once. 5 You don't have to try to figure out how much 6 you sell to each district, and you could get a rough 7 estimate, and then portion the amount by the population 8 in the district. 9 But the idea was to make it easy on the 10 manufacturers on the reporting requirement. But again, 11 these reporting requirements don't kick in unless the 12 district adopts the SCM. 13 Once district adopts the SCM, then 14 manufacturers have to report to us, and if no district 15 adopts this SCM, there would be no reporting 16 requirements that anyone has to do. 17 MR. KENNY: I think that if I understand the 18 thrust of the question, since we know that one district 19 is going to adopt the SCM, there is going to be a 20 reporting requirement. 21 We are aware of the fact that there is going 22 to be at least one district that adopts this SCM, and 23 so therefore we do know that the reporting requirement 24 will go into effect. 25 That still does not make the SCM a regulation PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 191 1 at this time, and it will never make it a regulation. 2 What will happen is that individual districts, 3 when they adopt, they actually are adopting a 4 regulation. 5 MS. WALSH: We have no legal authority. 6 The legislature has not provided it to us. 7 We do however have the ability to draft a 8 Suggested Control Measure for architectural coatings. 9 And to have the Board accept or approve it. 10 To approve the Program EIR that goes with 11 that, and then we can assist the local districts and 12 as sits consist the district in using the regulatory 13 authority to adopt. 14 CHAIRMAN LLOYD: Thank you very much. 15 BOARD MEMBER C.H. FRIEDMAN: One question, Mr. 16 Kenny, if a district does adopt the SCM, is it free to 17 modify it in any way? 18 MR. KENNY: Yes. 19 BOARD MEMBER C.H. FRIEDMAN: It could 20 eliminate the reporting requirement. 21 MR. KENNY: That's correct. 22 We have no legal authority to adopt and we 23 have had the discussion about the use of the resources 24 of the state to assist the districts to go forward. 25 BOARD MEMBER RIORDAN: Does it follow in from PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 192 1 the industry point of view for the industry to have a 2 uniform regulation throughout the state as opposed to 3 each and everyone creating their own which would be 4 real difficult for them? 5 MR. KENNY: Absolutely. 6 BOARD MEMBER RIORDAN: I think it is good. 7 MR. KENNY: Some of the witnesses agree with 8 you. 9 CHAIRMAN LLOYD: Last witness here is John 10 Long, General Manager with Smiland Paint Company. 11 MR. LONG: John Long, Mr. Chairman, Board. 12 I want to preface this I marked the card as 13 opposed and really because I think more time is needed. 14 Staff is wonderful as far as working with us. 15 They have listened and made a lot of changes, and I 16 think we are really close to having a good SCN. 17 We are down to minor points. The last several 18 conference calls are well received and staff responded 19 well to some of the small categories, and as we get 20 through the major areas and smaller check marks, we 21 will clean those up in three or six months maximum and 22 have it in place. 23 That will work in the state. I do not want to 24 write out checks from our company for failures. Kevin 25 brought into South Coast some pictures of walls that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 193 1 the paint came off in sheets. That was scary. 2 I would hate to write that check. 3 As we tighten down primers, the most important 4 part of the coating system is primer, and there are 5 certain characteristics that certain areas need more of 6 something than ours and not one size fits all. 7 I would like extension of a period of time or 8 very least instruct staff to continue to ramp up 9 talking about industry and fine tuning and do an 10 advisory so that by the time that the district starts 11 enacting the rules, the regulations will have the 12 smaller areas taken care of. 13 Thank you. 14 CHAIRMAN LLOYD: Thank you. 15 BOARD MEMBER C.H. FRIEDMAN: This is, I think, 16 a work in progress like most things in life. 17 The last suggestion is that feasible, assuming 18 that we adopt this today, is there any reason that 19 there can't be, that the staff can't continue to 20 receive input from the industry? 21 Put that into the computer and see what comes 22 out and modification of or about advisory for the 23 district, if it is significant, maybe some modification 24 in? 25 MR. KENNY: No reason to do that and practice PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 194 1 is to do that. 2 We continue to work with all of the parties to 3 make sure that we take advantage of the latest 4 technology and advancement. 5 If the Board adopts the SCM today, if there 6 are changes, we bring it back to you to hear the 7 changes that are made. 8 BOARD MEMBER C.H. FRIEDMAN: If reactivity, if 9 the science tells us more specifically which elements 10 in these compounds are the one's that're producing the 11 ozone and not and much less, that also can dramatically 12 change the approach. 13 MR. KENNY: Reactivity is going to change all 14 kinds of things in the future. 15 It is going to be back before you as we learn 16 more and more about it the aerosol coatings as time 17 goes on and we see the opportunities to reactivity and 18 including the other coatings and forms of many consumer 19 products. 20 MR. VENTURINI: Briefly, South Coast has 21 adopted a rule that has the same limits that we subject 22 the Board but the limits go into effect July first, and 23 we have the benefit of their experience before the SCN 24 kicks in, and South Coast District in adoption 25 committed to do technology assessment, and we will PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 195 1 follow the progress, and we will continue to work with 2 Jack and staff as they do this down the future. 3 BOARD MEMBER C.H. FRIEDMAN: But our does not 4 involve a second tier ramp up. 5 MR. VENTURINI: But we will look at second 6 tier as well. 7 CHAIRMAN LLOYD: Thank you. 8 Perhaps if we could have a report back to the 9 Board on some of these key issues, reactivity. 10 Are we finished with the witness? 11 Thank you very much. 12 This helps the SIP commitment, and that is 13 important, and I concur with staff. 14 We have to show leadership in California. We 15 can do that in this way. 16 BOARD MEMBER McKINNON: I support the 17 direction. 18 I have difficulty getting my arms around this 19 kind of specialty group and down the road I would like 20 to hear how that gets worked out. 21 Certainly it is some of what might be called 22 specialty is really high VOC paints competing in the 23 same market with low VOC paints to do the same job. 24 But there seems to be an area here where there 25 really are specialties, and I would be interested in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 196 1 how to deal with them. 2 California, one of the things that this is 3 outdoor, right, this is not if we have a new industrial 4 process in California because we are cutting edge, 5 manufacturing or Silicon Valley, it is not going to 6 limit what folks do indoors with good air systems, 7 there is architectural coatings, correct, so, it really 8 narrows it to me to what I am having difficulty getting 9 my arms around is the specialty coating where it is 10 unique circumstances where it is a hundred gallons or 11 two hundred was used a year, I am interested what those 12 are and how they are used and if they are thinking 13 about a way to deal with them as appropriate, and I do 14 not expect that to be resolved tomorrow. 15 It is complicated and probably ongoing. 16 Anyway, that is my concern. When we talk 17 about it again, I would like to hear about. 18 CHAIRMAN LLOYD: One suggestion, and I do not 19 know if it is appropriate or possible to visit a plant, 20 so we could see firsthand some of the issues. 21 BOARD MEMBER McKINNON: You bet. 22 CHAIRMAN LLOYD: Okay. Dr. Burke. 23 BOARD MEMBER BURKE: Two things, if you would 24 like to visit a bunch, we would host and set up tours 25 three or four or five facilities which are in the area PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 197 1 right around South Coast. 2 There is nothing right around South Coast, but 3 in the same general area. 4 CHAIRMAN LLOYD: Also I thought in us 5 preparing the EIR, is that a help to the districts to 6 save resources? 7 MR. KENNY: It was crucial. 8 There is a lot of history behind this. 9 So, essentially with the Board certifying EIR 10 and approving SCM, if that occurs today, the Board can 11 take advantage of both of the documents and move 12 forward. 13 BOARD MEMBER RIORDAN: For the smaller 14 districts, they do not have the staff nor the dollars 15 to hire the consultants. 16 There are little districts that I represent 17 that could not do this if we asked them to. 18 MR. KENNY: We understand. 19 CHAIRMAN LLOYD: It is a significant help if 20 you look at the EIR the amount of work that has gone 21 into that. 22 Any other comments for the Board? 23 It is not a regulatory item. 24 BOARD MEMBER D'ADAMO: I make the motion to 25 adopt the resolution. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 198 1 BOARD MEMBER RIORDAN: I second that. 2 CHAIRMAN LLOYD: With the comments that you 3 made earlier, in fact, I should ask staff what you 4 think an appropriate time frame would be. 5 MR. KENNY: Six months, one year is the 6 appropriate one. 7 Six months the minimum time, and if you are 8 comfortable with that range, we will regard it in the 9 range. 10 If you want it specified, you can give us -- 11 BOARD MEMBER D'ADAMO: I'm fine with that 12 range. 13 BOARD MEMBER McKINNON: Does the reactivity 14 direction take care of the water based problem? 15 MR. KENNY: No. 16 BOARD MEMBER McKINNON: You still have the 17 water based way of calculating. 18 MR. VENTURINI: We have to address that. 19 CHAIRMAN LLOYD: So, I'm not sure we have a 20 clear motion here. 21 BOARD MEMBER D'ADAMO: I am comfortable with 22 the six month to a year, if everyone else is. 23 BOARD MEMBER RIORDAN: That's okay with the 24 second. 25 CHAIRMAN LLOYD: Okay. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 199 1 All in favor, say aye. 2 Any negatives? 3 Thank you. 4 Thank you very much, staff. 5 We have the open comment period, and we do not 6 have any one signed up. 7 With that, I officially close the June 22 8 Board Meeting. 9 (Thereupon the Air Resources Board Meeting was 10 adjourned at 2:47 p.m.) 11 --o0o-- 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 200 1 CERTIFICATE OF SHORTHAND REPORTER 2 3 I, VICKI L. OGELVIE, a Certified Shorthand 4 Reporter of the State of California, do hereby certify: 5 That I am a disinterested person herein; that 6 the foregoing hearing was reported in shorthand by me, 7 Vicki L. Ogelvie, a Certified Shorthand Reporter of the 8 State of California, and thereafter transcribed into 9 typewriting. 10 I further certify that I am not of counsel or 11 attorney for any of the parties to said hearing nor in 12 any way interested in the outcome of said hearing. 13 IN WITNESS WHEREOF, I have hereunto set my 14 hand this fifth day of July, 2000. 15 16 17 VICKI L. OGELVIE 18 Certified Shorthand Reporter License No. 7871 19 20 21 22 23 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345