BOARD MEETING STATE OF CALIFORNIA AIR RESOURCES BOARD JOE SERNA JR., CAL/EPA HEADQUARTERS BUILDING 1001 I STREET BYRON SHER AUDITORIUM SACRAMENTO, CALIFORNIA THURSDAY, DECEMBER 8, 2005 9:00 A.M. JAMES F. PETERS, CSR, RPR CERTIFIED SHORTHAND REPORTER LICENSE NUMBER 10063 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 ii APPEARANCES BOARD MEMBERS Mrs. Barbara Riordan, Acting Chairperson Ms. Sandra Berg Ms. Dorene D'Adamo Supervisor Mark DeSaulnier Dr. Henry Gong Supervisor Barbara Patrick STAFF Ms. Catherine Witherspoon, Executive Officer Mr. Tom Cackette, Chief Deputy Executive Officer Mr. Michael Scheible, Deputy Executive Officer Ms. Lynn Terry, Deputy Executive Officer Mr. Tom Jennings, Acting Chief Counsel Ms. Kathleen Tschogl, Ombudsman Mr. Alberto Ayala, Manager, Emission Control Technology Research Section Mr. Richard Bode, Chief, Health and Exposure Assessment Branch Ms. Edie Chang, Manager, Carl Moyer Off-Road Section Mr. Richard Corey, Chief, Research and Economics Studies Branch Mr. Bart Croes, Chief, Research Division Mr. Bob Cross, Chief, Mobile Source Control Division PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iii APPEARANCES CONTINUED STAFF Ms. Victoria Davis, Staff Counsel Mr. Dan Donohoue, Chief, Emissions Assessment Branch Mr. Robert Fletcher, Chief, Stationary Source Division Ms. Annette Hebert, Chief, Heavy-Duty Diesel In-Use Strategies Branch Mr. John Kato, Manager, Project Support Section Mr. Jack Kitowski, Mobile Source Control Division Ms. Leslie Krinks, Senior Staff Counsel Ms. Sharon Lemieux, Manager, Emission Research Section Ms. Cynthia Marvin, Assistant Division Chief, Planning and Technical Support Division Ms. Kathleen Mead, Manager, Retrofit Implementation Section Mr. Paul Milkey, Staff Air Pollution Specialist Ms. Linda Murchison, Division Chief, Planning and Technical Support Division Ms. Lucina Negrete, Manager, Alternative Strategies Section Ms. Peggy Taricco, Manager, Technical Analysis Section Mr. Michael Terris, Senior Staff Counsel Mr. Floyd Vergara, Staff Counsel Dr. Barbara Weller, Manager, Population Studies Section Ms. Lisa Williams, Technical Analysis Section PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iv APPEARANCES CONTINUED ALSO PRESENT Mr. Tom Addison, Bay Area Air Quality Management District Mr. Don Anair, Union of Concerned Scientists Mr. Joe Angelo, Intertanko Dr. Ralph Appy, Port of Los Angeles Ms. Diane Bailey, Natural Resources Defense Council Mr. Gary Bigelow, United States Postal Service Mr. Todd Campbell, City of Burbank Mr. Frank Caponi, Los Angeles County Sanitation District/SCAP Mr. Michael Eaves, California NGV Coalition Mr. Douglas Fini, County of Humboldt Mr. Randall Friedman, United States Navy Mr. Dennis Gage, Placer County Mr. T.L. Garrett, Pacific Merchant Shopping Association Mr. Howard Gollay, Southern California Edison Mr. Alan Gordon, Senator Josephy Simitian's Office Ms. Elina Green, Long Beach Alliance Children with Asthma Mr. Larry Greene, Sacramento Air Quality Management District Ms. Deanna Haines, Southern California Gas Company and San Diego Gas & Electric Mr. Bob Hoffman, Dock Watts LLL Mr. Frank Holmes, Western States Petroleum Association Ms. Bonnie Holmes-Gen, American Lung Association PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 v APPEARANCES CONTINUED ALSO PRESENT Mr. Thomas Jelenie, Port of Long Beach Mr. Bob Johnson, Glenn County, North Counties Road Superintendant Majory Jeremy Jungreis, Department of Defense Region IX Ms. Candice Kim, Coalition for Clean Air Mr. Joe Kubsh, Manufacturers of Emission Controls Association Ms. Barbara Lee, California Air Pollution Control Officers Association Mr. Bob Lucas, California Council for Environmental and Economic Balance Mr. Joe Lyou, California Environmental Rights Alliance Mr. Bill Magavern, Sierra Club of California Mr. Lawrence Odle, Northern Sonoma County Air Pollution Control District Mr. Ernest Perry, County of Del Norte Ms. Mary Pitto, Regional Council of Rural Counties Ms. Evangelina Ramirez, Long Beach Alliance Children with Asthma Mr. Peter Rei, County of Tuolumne Mr. Bradley Rose, International Shopping Coalition Mr. Martin Schlageter, Coalition for Clean Air Ms. Teri Shore, Bluewater Network Mr. Rick Sikes, City of Santa Monica Mr. Dave Smith, BP Mr. Tim Taylor, Cleaire Advanced Emission Controls PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 vi APPEARANCES CONTINUED ALSO PRESENT Mr. Sven Thesen, Pacific Gas & Electric Company Mr. Richard Teebay Mr. Bryan Vogel, U.S. Maritime Administration Dr. Barry Wallerstein, South Coast Air Quality Management District Mr. David Wilson, City of Los Angeles Mr. Paul Wuebben, South Coast Air Quality Management District Mr. Bob Wyman, Maritime Goods Movement Coalition PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 vii INDEX PAGE Opening remarks by Acting Chairperson Riordan 1 Pledge of Allegiance 1 Roll Call 1 Item 05-12-1 Acting Chairperson Riordan 2 Executive Officer Witherspoon 3 Staff Presentation 3 Board Discussion and Q&A 8 Item 05-12-8 Acting Chairperson Riordan 9 Executive Officer Witherspoon 10 Board Discussion and Q&A 21 Mr. Campbell 24 Item 05-12-2 Acting Chairperson Riordan 26 Board Discussion and Q&A 26 Motion 28 Vote 28 Item 05-12-3 Acting Chairperson Riordan 28 Staff Presentation 29 Motion 30 Vote 31 Item 05-12-4 Acting Chairperson Riordan 31 Executive Officer Witherspoon 31 Staff Presentation 32 Board Discussion and Q&A 46 Mr. Gordon 52 Dr. Wallerstein 56 Mr. Garrett 65 Mr. Jelenie 70 Ms. Ramirez 71 Ms. Green 73 Mr. Campbell 74 Ms. Kim 80 Ms. Bailey 85 Mr. Kubsh 88 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 viii INDEX CONTINUED PAGE Item 05-12-4(continued) Mr. Eaves 90 Mr. Anair 93 Major Jungreis 95 Ms. Holmes-Gen 97 Mr. Addison 99 Mr. Lyou 100 Ms. Lee 104 Board Discussion and Q&A 107 Ex Parte Communications 108 Motion 111 Vote 115 Item 05-12-5 Acting Chairperson Riordan 116 Executive Officer Witherspoon 116 Staff Presentation 118 Board Discussion and Q&A 134 Ombudsman Tschogl 138 Mr. Gordon 138 Mr. Garrett 141 Mr. Holmes 150 Mr. Wyman 154 Ms. Green 159 Ms. Ramirez 160 Mr. Smith 163 Mr. Rose 171 Mr. Angelo 174 Mr. Hoffman 187 Mr. Vogel 191 Ms. Lee 193 Mr. Addison 193 Mr. Wuebben 195 Ms. Kim 198 Mr. Schlageter 200 Ms. Bailey 206 Ms. Holmes-Gen 209 Ms. Shore 213 Mr. Friedman 216 Mr. Campbell 218 Mr. Anair 222 Dr. Appy 225 Mr. Magavern 227 Board Discussion and Q&A 230 Ex Parte Communications 241 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 ix INDEX CONTINUED PAGE Item 05-12-5(continued) Motion 245 Vote 247 Item 05-12-6 Acting Chairperson Riordan 248 Chief Deputy Executive Officer Cackette 248 Staff Presentation 250 Ombudsman Tschogl 264 Mr. Friedman 267 Mr. Wilson 272 Mr. Sikes 276 Mr. Teebay 277 Ms. Pitto 281 Mr. Perry 284 Mr. Rei 290 Mr. Fini 296 Mr. Johnson 300 Mr. Gage 302 Mr. Odle 305 Ms. Lee 308 Mr. Addison 311 Major Jungreis 312 Mr. Bigelow 315 Mr. Gollay 316 Mr. Caponi 319 Ms. Haines 321 Mr. Thesen 325 Mr. Lucas 328 Mr. Campbell 331 Mr. Kubsh 333 Mr. Taylor 337 Mr. Schlageter 339 Ms. Bailey 340 Ms. Holmes-Gen 342 Mr. Anair 344 Mr. Magavern 346 Board Discussion and Q&A 346 Ex Parte Communications 359 Motion 362 Vote 364 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 x INDEX CONTINUED PAGE Item 05-12-7 Acting Chairperson Riordan 365 Executive Officer Witherspoon 365 Staff Presentation 366 Ms. Lee 369 Mr. Gage 370 Dr. Wallerstein 371 Mr. Addison 371 Mr. Greene 373 Mr. Campbell 374 Mr. Schlageter 377 Mr. Teebay 377 Mr. Johnson 379 Public Comment Dr. Wallerstein 382 Adjournment 385 Reporter's Certificate 386 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 1 1 PROCEEDINGS 2 ACTING CHAIRPERSON RIORDAN: Our agenda is a very 3 full one today, and so it behooves us to get started on 4 time. 5 So I am going to call the meeting of the Air 6 Resources Board for December 8th to order. 7 And I'd like you to join us in the Pledge to the 8 Flag. I've asked Supervisor Patrick to lead us. 9 So if you'd all rise please. 10 (Thereupon the Pledge of Allegiance was 11 Recited in unison.) 12 ACTING CHAIRPERSON RIORDAN: Thank you, 13 Supervisor Patrick. 14 Madam Clerk, would you please call the roll. 15 BOARD CLERK ANDREONI: Ms. Berg? 16 BOARD MEMBER BERG: Here. 17 BOARD CLERK ANDREONI: Ms. D'Adamo? 18 Supervisor DeSaulnier? 19 BOARD MEMBER DeSAULNIER: Here. 20 BOARD CLERK ANDREONI: Dr. Gong? 21 BOARD MEMBER GONG: Here. 22 BOARD CLERK ANDREONI: Ms. Kennard? 23 Mayor Loveridge? 24 Supervisor Patrick? 25 BOARD MEMBER PATRICK: Here. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 2 1 BOARD CLERK ANDREONI: Ms. Pineda? 2 Supervisor Roberts? 3 Madam Chairman Riordan? 4 ACTING CHAIRPERSON RIORDAN: Present. 5 Okay. Board Members, we'll go first to item 6 05-12-1. This is an update. 7 And before I begin that, I just -- let me take a 8 moment to remind anyone in the audience who wishes to 9 testify on today's agenda items, to please sign up with 10 our clerk to my left, your right. And also if you have a 11 written statement, to please provide 30 copies when you 12 sign up to testify. 13 Now, just a bit of a remind err. Because of our 14 very lengthy agenda and our wishing to finish it today, 15 I'm going to remind you that each and every one of you 16 have three minutes to speak. It's appropriate for you, 17 even as you submit written testimony, just to condense 18 that into your own words. You don't have to read the 19 written testimony that you have, but to put that in your 20 own words. Now, obviously it is appreciated by the Board 21 if you note the most important items first. I think 22 that's helpful to you and to your presentation. So you 23 will be timed and I will at the end of three minutes ask 24 you to conclude. 25 Now, this morning our informational health update PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 3 1 is an important one. And, Ms. Witherspoon, would you 2 please introduce this item. 3 EXECUTIVE OFFICER WITHERSPOON: Yes. Thank you, 4 Madam Chair. And good morning, everyone. 5 Today's health update concerns the first ever 6 study to find a gender-specific risk of fatal coronary 7 heart disease in association with particulate air 8 pollution. According to this study of 7th Day Adventists, 9 women are at greater risk than men for dying for dying 10 from fine particle exposure. 11 Today, Ms. Kate MacGregor from the Research 12 Division will present the results of this important study. 13 MS. MacGREGOR: Thank you, Ms. Witherspoon. And 14 good morning, Madam Chairwoman and members of the Board. 15 (Thereupon an overhead presentation was 16 Presented as follows.) 17 MS. MacGREGOR: In today's health update I will 18 discuss the results of an epidemiologic study that for the 19 first time shows gender-specific associations between fine 20 particle air pollution and fatal heart attacks. 21 --o0o-- 22 MS. MacGREGOR: The more than 3,000 healthy 23 middle-aged participants in this study were part of the 24 Adventist Health Study on the health effects of smog, or 25 Adventist Study, a study initiated by EPA and ARB and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 4 1 partially supported by the Board from the 1970s to the 2 1990s. 3 Study participants were non-smoking non-Hispanic 4 whites, who also abstained from alcohol, and lived at 5 their enrollment addresses for greater than ten years. 6 Monthly residences and work history were 7 available for the years 1966 through 1998. 8 Estimates of monthly pollutant for PM2.5, ozone, 9 Sulfur dioxide and nitrogen dioxide were assigned by zip 10 code for each participant. PM10 concentrations prior to 11 1987 were estimated using season-specific analysis of 12 total suspended particles. 13 Measures of visibility collected from airports 14 were used to estimate historic PM2.5 concentrations. 15 Therefore, the majority of the Adventist study 16 participants lived near major airports in the South Coast, 17 San Francisco, SAN DIEGO Air Basins. 18 Fatal heart attacks and other deaths attributed 19 to CHD were linked to the pollutant concentrations and 20 statistical analysis. The initial statistical model found 21 the gender was significant to the outcome of fatal CHD. 22 Therefore, all further analysis were gender specific. 23 --o0o-- 24 MS. MacGREGOR: This slide shows the estimated 25 monthly ambient concentrations of PM2.5 for participants PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 5 1 in two of the areas that were studied, Ontario and San 2 Diego. These are plotted against the averages for all of 3 the Adventist participants in the study. 4 As you can see, participants living in Ontario's 5 east basin were exposed to the highest concentrations of 6 pollutants, while those living in the San Diego Air Basin 7 were exposed to the lowest concentrations. Average 8 estimated values for all of the Adventist participants in 9 the study are between these two extremes. 10 Also apparent in this figure is the decline in 11 the PM2.5 concentrations over time, with the steepest 12 decline in most polluted area. A calendar time variable 13 was added to the statistical model to account for this 14 downward trend. 15 For females in the single pollutant PM2.5 models 16 there were significant associations between each 17 fractional increase of PM and the risk of fatal coronary 18 heart disease. The strongest association was for PM2.5, 19 with a 42 percent increased risk of fatal CHD for each ten 20 microgram per cubic meter incremental increase in PM2.5 21 concentrations. 22 In a two-pollutant model with PM 2.5 and ozone, 23 all of the associations between PM and risk of fatal CHD 24 were significant, reaching a nearly 100 percent increased 25 risk for females. No significant associations were found PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 6 1 between any of the gaseous pollutants and CHD and no 2 associations between fatal CHD and PM were found for 3 males. 4 --o0o-- 5 MS. MacGREGOR: Using a cumulative monthly 6 average pollution estimate and dividing the female 7 sub-cohort into three different groups, those exposed to 8 low, median or high concentrations of PM2.5, the 9 investigators found that the risk levels increased, with 10 the greatest risks seen in the two-pollutant model at 11 concentrations exceeding 38 micrograms per cubic meter. 12 After adjusting for ozone in the two-pollutant 13 model, the risk estimate for PM2.5 increased to nearly 14 five and a half times greater risk for those in the 15 highest exposure classification. 16 This enhanced risk for exposure or dose response 17 is further evidence of a causal association between fatal 18 CHD and PM2.5. 19 --o0o-- 20 MS. MacGREGOR: The positive association between 21 particle pollution and risk of death due to 22 cardiopulmonary disease has been known for some time. 23 Recent evidence indicates that heart disease is 24 responsible for the largest portion of these deaths. 25 This is the first study to find a gender-specific PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 7 1 effect between coronary heart disease deaths and PM. 2 However, at least one other long-term prospective cohort 3 study identified a larger but nonsignificant association 4 between risk of cardiopulmonary death and PM for women. 5 The results of this study are also consistent 6 with the results of a study we presented to you in 7 September that found an increase in the risk of 8 atherosclerosis among older women with increased PM2.5 9 exposure. 10 Further studies will be needed to fully 11 understand the differential risk experienced by women. It 12 has been demonstrated that fine particles deposit to a 13 greater extent an in a more localized fashion in females 14 versus males. Particles are known to have an inflammatory 15 effect on the lung. This inflammatory process may affect 16 blood viscosity. And blood viscosity has been associated 17 with the severity of heart disease. 18 In addition, women have fewer circulating red 19 blood cells, thereby making them more prone to these 20 effects. 21 From a regulatory standpoint, given the chronic 22 health effects of coarse PM observed in this study, U.S. 23 EPA's proposal to forego a coarse particle annual standard 24 could be detrimental for Californians. 25 Thank you for your attention. I'd be happy to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 8 1 answer any questions you have. 2 ACTING CHAIRPERSON RIORDAN: Board members, do 3 you have any questions? 4 Dr. Gong. 5 BOARD MEMBER GONG: Just a quick comment. I 6 thought that was an excellent presentation. 7 I just also wanted to point out to my fellow 8 Board members that this is a mortality study. And I 9 really must emphasize that even though deaths determined 10 from death certificates were the main endpoints here in 11 this study, that it's really the tip of the cardiovascular 12 disease iceberg, if you will. And that there's much more 13 morbidity that this study isn't telling us about, such as 14 heart attacks and surviving from that, chest pains and 15 other -- cardial strokes even. So there are many 16 cardiovascular events that happen when you're still alive 17 and that can also be very debilitating. 18 So this is I think one more piece of the evidence 19 that staff has nicely alerted us to. 20 Thank you. 21 MS. MacGREGOR: Thank you. 22 ACTING CHAIRPERSON RIORDAN: Thank you. 23 Any other questions, Board members? 24 Staff, thank you very much. An interesting 25 study. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 9 1 MS. MacGREGOR: Thank you. 2 ACTING CHAIRPERSON RIORDAN: Let me make a 3 suggestion. 4 Ms. D'Adamo, we well you. And while you're 5 getting ready, I think we'll go into Goods Movement, a 6 report by staff. And then we'll move back to ICAT and 7 research. 8 Pardon me? 9 EXECUTIVE OFFICER WITHERSPOON: You have some -- 10 ACTING CHAIRPERSON RIORDAN: You would like me to 11 say something, and I'm waiting for Ms. Witherspoon to 12 start. 13 EXECUTIVE OFFICER WITHERSPOON: You have a little 14 bit there. 15 ACTING CHAIRPERSON RIORDAN: This happens to be 16 Agenda Item 05-12-8, a staff update on goods movement. 17 Over the last several months I've had the 18 opportunity to attend some of the Cal EPA and Business 19 Transportation & Housing Agency's joint meetings on goods 20 movement. There's a tremendous amount of work going on 21 and equally intense public debate about how California 22 should address both the promise and the drawbacks of 23 ever-expanding international trade through our marine 24 ports. 25 And just as a subset to that introductory PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 10 1 sentence, let me just share with you: The staff has 2 worked so hard, and I want to express my appreciation to 3 everyone that has been a part of this study. They have 4 spent hours in discussion and then hours following the 5 discussion trying to sum up what has been said and 6 recommendations to move forward. So I am very impressed 7 and I want staff to know that. 8 Last week our staff issued a draft report on the 9 health effects of goods movement and a preliminary plan 10 for reducing those impacts substantially by 2020. 11 I've asked our Executive Officer to transmit that 12 report to you as soon as it was available. Today we're 13 going to hear a brief report on what the report says, how 14 it fits into the overall activities and related goods 15 movement and how it relates to regulatory items on our 16 agenda today. 17 Ms. Witherspoon. 18 EXECUTIVE OFFICER WITHERSPOON: Thank you, Madam 19 Chair. 20 If I could go to the next slide please. 21 (Thereupon an overhead presentation was 22 Presented as follows.) 23 EXECUTIVE OFFICER WITHERSPOON: If you think that 24 goods movement is all the rage, it's because it is. And 25 so I'm going to spend the beginning portion of this update PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 11 1 explaining to you how many different activities are going 2 on related to goods movement. Then I'll talk about where 3 the draft plan that staff has prepared fits into that. 4 And then, perhaps most importantly for today, how the 5 findings in the draft plan affect the two marine-related 6 regulations you'll be considering later on. 7 Next slide. 8 --o0o-- 9 EXECUTIVE OFFICER WITHERSPOON: The two biggest 10 efforts, but by no means the only, are, first, the 11 Administration's Goods Movement Action Plan, which began 12 in January of this year. The Phase 1 report was issued in 13 September 2005 and it laid out sort of the tremendous 14 challenge facing California. And on the air quality side 15 also expressed our goals to turn emissions growth around 16 by 2010, get back to no-net increase, to achieve our 17 attainment targets by 2020 and to cut toxic risk 85 18 percent also by 2020. 19 The Phase 2 report we were aiming initially at 20 this month, but it's become clear there's much more work 21 to do. And so that will be finished in June of next year. 22 But in the meantime an interim report is due to the 23 Governor to shape some of his decisions on budget issues, 24 bond matters, et cetera. 25 There is also a mandatory report required by PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 12 1 legislation and CALMITSAC is writing it. CALMITSAC stands 2 for the California Marine Intermodal Transportation 3 Systems Advisory Council. And that is an offshoot of a 4 national organization. It's a predominantly industry 5 constitu -- excuse me -- constituted primarily with 6 industry members, but also members from government 7 including the Air Resources Board which was recently asked 8 to join. And just like us, they were asked, among other 9 things, to look at the environmental challenges with goods 10 movement. And in their preliminary report, which will be 11 out for public review soon, they called diesel the 12 achilles heel of the goods movement system and it needs to 13 be addressed forthrightly. 14 Next slide. 15 --o0o-- 16 EXECUTIVE OFFICER WITHERSPOON: But that's not 17 all. The Port of L.A. On November 21st issued its Clean 18 Air Program. Previously under Mayor Hahn's Leadership, 19 the Port of L.A. had assembled a no-net increase plan, 20 which led into this next product. The Port of Long Beach 21 has its own Green Ports Policy. The Port of Oakland has 22 the Vision 2000. South Coast released a clean port 23 initiative last month. The Los Angeles Chamber and many 24 other business groups have a green freight initiative. 25 And then we are partners with U.S. EPA and South PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 13 1 Coast in hosting a Faster Freight/Cleaner Air Conference 2 coming up in January -- the end of January, beginning of 3 February. That will be in Long Beach. And that is a 4 continuation of the same conference that was held in the 5 Bay Area a year ago, which was widely attended. 6 Next slide. 7 --o0o-- 8 EXECUTIVE OFFICER WITHERSPOON: And although 9 there's not agreement in the goods movement sector, there 10 are some common themes: That congestion is a problem now 11 and must be dealt with. And the growth that is coming in 12 the 200 to 300 percent in some forecasts, we need to 13 anticipate that as we're making infrastructure decisions. 14 The public health imperative is obvious to everyone now, 15 and the emissions have to come down immediately and 16 continue to come down into the future. And then the 17 optimists amongst all of the stakeholders think that 18 working cooperatively will improve quality of life for 19 all. There are some people more fearful that we can't fix 20 what the system has already wrought and we should stop 21 growing. 22 Next slide. 23 --o0o-- 24 EXECUTIVE OFFICER WITHERSPOON: It's not all 25 headed to one place. Just like there are multiple players PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 14 1 and activities going on, there are multiple endpoints. 2 One of the biggest debates will be over infrastructure 3 bonds and what portion of them goes to the goods movement 4 sector and what kind of bonds they are. 5 There's also been work already on the federal 6 side. People tried to get their act together and go to 7 Congress on the last transportation bill and acquire funds 8 for the infrastructure and were only partially successful. 9 There is state legislation that was introduced 10 last year and held over, sort of pending more consensus 11 around the matter on how to address this problem. And 12 some of that has to do with container fees as a way of 13 funding necessary projects, environment mitigation and 14 security updates. 15 We're seeing changes in the way lease agreements 16 are written at the ports. There's been litigation on 17 that. And now there's a model of how future leases might 18 come together. 19 There are on-port and near-port activities -- 20 well, in rail yards as well -- where CEQA mitigation is 21 evolving rapidly, to include some of the new ideas and 22 anew control measures that are available. 23 Of course we're working on emission controls 24 where we have authority. And you'll hear two rules today. 25 Incentive programs are being talked about. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 15 1 And I'm missing one other item, which is market 2 approaches to the problem, where we might conceive 3 programs like Reclaim or other sorts of trading mechanisms 4 to accomplish what we're trying to do here on the 5 emissions slide. 6 Next slide. 7 --o0o-- 8 EXECUTIVE OFFICER WITHERSPOON: Back to the 9 Administration's efforts. This is what we've been working 10 on since January. It's a complicated structure. 11 The Cabinet Working Group is led by Dr. Lloyd for 12 Cal EPA, Sunne Wright McPeak for BT&H. 13 The Integrated Work Group, you could also think 14 of that as a steering committee, has representatives of 15 every stakeholder group on it. And they will be meeting 16 next Friday to sort of pause and reflect on what the 17 recommendations to the Governor should be at this point. 18 And then there are individual work groups on all 19 the topics identified below. 20 And we explained early on that before this even 21 began we are required by the state and federal law by this 22 State Implementation Planning Process to work on these 23 issues. And our product looked a little different than 24 the rest of what was being developed here. And so a 25 special box was created for us. But it feeds back through PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 16 1 this process so that it can inform what the rest of the 2 work groups are working on and so that we can have the 3 benefit of their comments back to us. 4 Next slide. 5 --o0o-- 6 EXECUTIVE OFFICER WITHERSPOON: Through this 7 process what came to the surface really quickly was that 8 we weren't moving fast enough to give the stakeholders 9 what they needed to make the decisions they're being asked 10 to make. And, in short, there were two primary issues: 11 One, that we didn't have a comprehensive health 12 analysis. We had pieces of an analysis of what the total 13 tonnage was, what the total health burden was. We had 14 done an outstanding state-of-the-art risk assessment at 15 Los Angeles and Long Beach, but we didn't have ozone in 16 it, we didn't have all the particulate mortality. It 17 didn't -- from the secondary PM. And it didn't go past 18 the fence lines or past the first drop of cargo. And so 19 we've gone back and expanded that substantially. And 20 we've also asked for peer review of the methods we 21 employed to do that analysis. 22 We were also asked to assemble all the strategies 23 we would need to meet our targets, to take the Port of Los 24 Angeles no-net increase as a starting point, because that 25 analysis had done it category by category, what should PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 17 1 happen for rail, what should happen for ships, what should 2 happen for trucks, et cetera. And we did that. Our plan 3 is also in a source category framework. 4 We weren't able at this juncture to fully 5 articulate how we'll accomplish all these measures. There 6 are still legal debates going on. There are negotiations 7 going on. There's sort of a people coming to terms with 8 what's necessary to do and talking through how we might 9 approach it. 10 But it will become more concrete as we reach the 11 SIP deadlines in the end of '07, beginning of '08 exactly 12 how we're going to pull this off. 13 Next slide. 14 --o0o-- 15 EXECUTIVE OFFICER WITHERSPOON: So I've already 16 covered most of what's here: The statewide health 17 assessment. The strategies, we've mapped them out on how 18 you would bring emissions down; not just to 2001 levels, 19 but we actually saw they could bring 20 percent below 20 that. We invented NOx reduction targets for the South 21 Coast. We won't know what they really are until we do the 22 modeling. But we invented targets of 30 percent 23 reductions by 2015 and 50 by 2020. And the plan that 24 we've laid out could accomplish those -- actually exceed 25 those. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 18 1 And then we have our diesel PM risk, where we're 2 not able to fully reach the ambitious target we set of 85 3 percent reductions, but instead a two-thirds reduction in 4 risk. And then we've talked about the mechanisms for 5 accomplishing it. 6 Next slide. 7 --o0o-- 8 EXECUTIVE OFFICER WITHERSPOON: This is sort of 9 the punch line of the health assessment -- and you saw 10 this in newspaper reports perhaps when the plan came 11 out -- that the system as we've defined it is responsible 12 for this number of premature deaths per year, also by the 13 methodology we employed. And if nothing is done to change 14 the emission trend line we're on, that we'll grow by 2020, 15 not shrink. And as Dr. Gong mentioned in the last health 16 item, it's just the tip of the iceberg. So we've also 17 quantified hospitalizations, respiratory disease, asthma 18 attacks, lost work days, lost school days, et cetera. And 19 then the plan doesn't bring those back to zero, but cuts 20 its 60 percent by 2020. 21 Next slide. 22 --o0o-- 23 EXECUTIVE OFFICER WITHERSPOON: We've also 24 analyzed the economics of what we're proposing to do and 25 have a range of 3 to 6 billion for implementing these PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 19 1 strategies. And there's some disagreement about how much 2 it's going to cost on the air quality side. We've seen 3 estimates as high as 20 billion. 4 And that would prevent 4,500 of the premature 5 deaths cumulatively between now and 2020. And if you've 6 put the valuation on lives saved -- I believe it's 7 somewhere between 8 and 9 million -- then we save 4 to $8, 8 depending on what it ultimately costs us, for each dollar 9 we spend on controls. And to put that in perspective, the 10 estimate of what we need to do to the infrastructure 11 system runs at 40 billion, maybe up to 50. 12 And then the estimates of the value of the whole 13 goods movement system to the California economy, 400 14 billion a year and growing. 15 Next slide. 16 --o0o-- 17 EXECUTIVE OFFICER WITHERSPOON: This slide is 18 pertinent to the regulations we're going to consider 19 today. The breakdown of diesel emissions on your left. 20 And then on your right sort of filtering that through how 21 close they are to human beings. And so the ship impact 22 goes down because of dispersion over water. And the 23 locomotive and cargo equipment and truck impacts go up. 24 But all of them are still substantial. 25 Next slide. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 20 1 --o0o-- 2 EXECUTIVE OFFICER WITHERSPOON: So ships are the 3 single largest source of emissions and a major risk 4 factor, even though some of the risk is reduced by 5 traversing the ocean. 6 Cargo-handling equipment impact exceeds the 7 relative share of its emissions due to proximity to 8 residents. And the draft plan that we released last week 9 counts on both rules being adopted and implemented. 10 Next slide. 11 Not to prejudge your decision today, but it's 12 entirely up to you. 13 --o0o-- 14 EXECUTIVE OFFICER WITHERSPOON: The next steps on 15 our draft plan. And it's out for public comment now. And 16 we will put some structure around when we want those 17 comments back. 18 Based on the next bullet, which is we need peer 19 review on the health risk assessment, and we haven't yet 20 talked to all our peer reviewers about how much time they 21 would like to have. And we'll sink those things up. 22 We'll take them around the state -- around the 23 state for public workshops. Sometime next spring we'll 24 bring it before you with amendments suggested by our 25 workshops, by our peer reviewers and other commenters. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 21 1 And as I indicated, ultimately it becomes part of 2 the SIP for the regions where goods movement is a crucial 3 part of the nonattainment problem. 4 And I think that's my final slide. 5 Yes, it is. 6 ACTING CHAIRPERSON RIORDAN: Thank you, Ms. 7 Witherspoon. An excellent summation for a lot of work 8 that was done. 9 Board members, are there any questions? 10 Dr. Gong. 11 BOARD MEMBER GONG: I find this plan very 12 ambitious and far reaching, to say the least. 13 One of my concerns is is that there's so many 14 players, so many groups, so many agenda items in this 15 process. Is there any -- is it being coordinated by the 16 Governor's office or how is it being coordinated? How do 17 all these pieces fit in? Are we going to be doing this 18 piece meal? And are we going to find we're going to have 19 conflicts down the line with other agencies or whatever? 20 EXECUTIVE OFFICER WITHERSPOON: Well, I actually 21 look at it a little differently. I think it's creative 22 confusion at the moment, but that people are engaged, that 23 people want to solve the problem. And what the Governor's 24 office was very much focused on and the two agencies that 25 are leading the effort was trying to find consensus on PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 22 1 financial investments and on prioritization of what needs 2 to be done when, because everything that we're talking 3 about requires multiple actors to implement. There are 4 few discrete actions that individual agencies, individual 5 players can take. But by and large most of it requires 6 people acting in concert. 7 Just one example. We've concluded that the older 8 high emitting trucks serving ports for drayage are in the 9 hands of economically not-well-situated players. And if 10 we wish to turn them over, we're going to need subsidies 11 on the order of a billion dollars to -- that's part of 12 that 3 to 6 billion. 13 We also might need a regulation to drive them 14 towards the incentive program. We also might need port 15 entry requirements from where their destination and 16 endpoints -- origination and endpoints are so that we 17 could have an enforcement mechanism. So you can see 18 already I'm talking about a number of players. And we 19 haven't decided how the financing mechanism will be done, 20 whether it would be a general obligation bond, whether it 21 would be partly fee supported. And if it's fees, who are 22 the fees on and how much are they and who collects them? 23 And so even a very straightforward -- and we have 24 complete consensus that the trucks are the top of the 25 priority list, and they have to be handled and could be PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 23 1 handled in the next three to five years. But we have to 2 work it out how. 3 So I actually am very encouraged that so many 4 people are willing to spend so much time sitting around 5 the table talking this through. 6 And some efforts will be compatible. You'll hear 7 when we bring up cargo handling, the rule is structured to 8 apply the best diesel technologies available. The Port of 9 L.A. in its plan that it released on November 21st has a 10 natural gas vision, and they want to convert as much of 11 that equipment as they can to natural gas. And the two 12 can live in concert. There's no conflict there. 13 BOARD MEMBER GONG: Thank you, 14 ACTING CHAIRPERSON RIORDAN: You're welcome. 15 It's not that easy, I mean. 16 BOARD MEMBER GONG: I'll probably still ask the 17 same question later. 18 Thank you. 19 EXECUTIVE OFFICER WITHERSPOON: And there will be 20 litigation. But if we can get people talking and 21 cooperating, there will be less litigation than more. 22 ACTING CHAIRPERSON RIORDAN: Well, I think as 23 people talk together, they realize the scope of the 24 problem and the different issues for the different 25 interests. And if you understand the issues that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 24 1 interests have, often times then you can craft the very 2 best solutions. So it is time consuming, but enlightening 3 at the same time. 4 Any other questions or comments? 5 We have one person wishing to comment. Todd 6 Campbell from the City of Burbank. 7 Welcome. 8 MR. CAMPBELL: Thank you. It's good to be here. 9 And this is the only time I will be speaking as a council 10 member from the City of Burbank. 11 I wanted to say that I had been a participant of 12 this process in the beginning more so, less now as I 13 changed my position in life. But I wanted to really 14 emphasize the importance of today in terms of putting 15 credibility in what the Business Transportation & Housing 16 Agency and Cal EPA is trying to achieve in the hearings. 17 I'm glad that Catherine Witherspoon raised the 18 issue with regards to the reduction plan. It is an 19 aggressive plan. But we fear it's not aggressive enough. 20 Seven hundred fifty premature deaths are the status today. 21 If nothing is done, 920 premature deaths. And I'm just 22 talking about premature deaths. Seventy billion dollars 23 in health care impacts. 24 The plan calls for, if fully implemented, 25 preventing 420 of those 920 lives. So you still have a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 25 1 balance of 500 people out there that unfortunately will 2 not be included in that final line in the executive 3 summary that says: "The staff's long-term vision is the 4 economically vibrant, environmentally sustainable 5 non-polluting goods movement industry that enhances the 6 quality of life for all Californians." And so what I ask 7 of you today when you consider the rules before you, even 8 though you are clearly one actor amongst many that must 9 act aggressively, that you do in fact act aggressively by 10 considering what is in the best interests of all parties 11 involved. 12 And when you want to consider economics, the 3 to 13 $6 billion that is mentioned in this plan will save $70 14 billion, or attempt to at least chip away at the $70 15 billion of impacts in health costs. And it uses a dollar 16 comparison. For every dollar you get $48 in terms of 17 returns in benefits. And that's just from those people 18 that you're saving, the 420. 19 I recommend that you even consider pulling out a 20 second dollar today. Because spending even $12 billion to 21 reduce even 75 percent of the impacts of the health out 22 there would be a tremendous improvement and it would 23 improve the quality of life for the State of California. 24 Thank you. 25 ACTING CHAIRPERSON RIORDAN: Thank you very much. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 26 1 We appreciate your comments. 2 Staff, again thank you for the excellent report. 3 Let's move back, colleagues, to the Item 05-12-2. 4 This is the Research Proposal. 5 There are eight research proposals before the 6 Board today. Board has had an opportunity to review them. 7 And in the interests of time, I've asked that there be no 8 presentation necessarily by staff but that they respond to 9 our questions. 10 And so now I'd like to open it up to any Board 11 members to ask any question they would like of our staff 12 regarding any of the research proposals. 13 Are there any questions, Board members? 14 Dr. Gong. 15 BOARD MEMBER GONG: Of course I have a question. 16 ACTING CHAIRPERSON RIORDAN: Of course. Well, 17 that's good. 18 BOARD MEMBER GONG: Really a comment again. 19 ACTING CHAIRPERSON RIORDAN: We rely on you for 20 your questions. Thank you. 21 BOARD MEMBER GONG: It's early in the morning and 22 I'm still getting my coffee levels up. 23 I wanted to compliment the staff for bringing 24 forth these research ideas, which have now culminated in 25 research proposals before the Board. I think it's a nice PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 27 1 distribution of different ideas. And that's I think 2 that's what we're all about in terms of trying to find new 3 solutions through research, so to speak. 4 I would like to just point out one of them, maybe 5 the first one on your list. And that's the technical 6 proposal regarding looking at the economic value of 7 reducing cardiovascular disease associated with air 8 pollution, from San Diego State University Research 9 Foundation. I think this points directly towards the 10 health update you've heard this morning and also to the 11 issues related to the ports. 12 And this particularly search proposal is 13 important in the sense that there have been a lot of 14 estimates of how much a human life costs, what does that 15 really mean? Everyone has their own definition and 16 reasons for that definition. But here is a very I think 17 capable group who can come up with some answers of how 18 much people will pay -- willingness to pay to prevent 19 cardiovascular disease related to air pollution. So I 20 think that's sort of a novel way of looking at this 21 puzzle, if you will. But again, give us some idea of the 22 economic impact, the benefits of that air pollution 23 control. 24 So I just wanted to put out that information. 25 ACTING CHAIRPERSON RIORDAN: Thank you very much, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 28 1 Dr. Gong. 2 Any other questions or comments by Board members? 3 Thank you. And I think that is due to a very 4 good staff report. 5 Let me indicate to the Board members, those 6 resolutions are before us right now. It's 05-69 through 7 05-76. And I would entertain a motion to approve. 8 BOARD MEMBER PATRICK: I would move approval. 9 BOARD MEMBER GONG: Second. 10 ACTING CHAIRPERSON RIORDAN: Moved by Supervisor 11 Patrick, seconded by Dr. Gong. 12 All those in favor of the motion signify by 13 saying aye. 14 (Ayes.) 15 ACTING CHAIRPERSON RIORDAN: Opposed, no. 16 Motion carries. 17 Thank you, staff, very much. 18 Moving on to the next item. It's item 05-12-3, 19 consideration of four proposals for innovative clean air 20 technology grants. 21 This is the 10th year of the program for grants 22 under the ICAT program. And it supports promising 23 advanced technologies that need just a little more help to 24 bring them to full commercialization. 25 As with the research proposals, there will no PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 29 1 presentation in the interests of time. But I would like 2 staff to just summarize the proposals. 3 Ms. Witherspoon, would you please introduce them. 4 EXECUTIVE OFFICER WITHERSPOON: I'll let the 5 Research staff do that. 6 ACTING CHAIRPERSON RIORDAN: Okay. 7 MR. CLEARY: Thank you. 8 A key feature of the proposals is the field -- 9 I'm Kevin Cleary. I work in the ARB Research Division. 10 ACTING CHAIRPERSON RIORDAN: Thank you. 11 MR. CLEARY: A key feature of the proposals is 12 the field demonstration of promising emission reduction 13 technologies. The recommendations have resulted from a 14 broad solicitation and subsequent evaluation by ARB staff, 15 academic technical experts and representatives of the 16 South Coast Air Quality Management District. 17 The first proposal is for a NOx absorber catalyst 18 system for use on stationary diesel engines by Catalytica 19 Energy Systems. 20 The second proposal is for a low NOx burner for 21 combined heat and power cogeneration systems by the Gas 22 Technology Institute. 23 The third proposal is for an innovative 24 energy-efficient lawn mower mulcher by O-Sage Power 25 Equipment. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 30 1 The fourth proposal is for an innovative approach 2 to reducing emissions from heavy-duty diesel engines by 3 attaching to the engine an air pump which significantly 4 reduces emissions by enleaning the combustion. This 5 proposal is by Rotec Design. 6 And all the requested ICAT funding is for about 7 $821,000. 8 For each of the four projects the requested 9 funding is less than 50 percent of the total project 10 costs. 11 And we will be happy to answer any questions that 12 you have on these proposals. 13 ACTING CHAIRPERSON RIORDAN: Thank you very much. 14 And let me open it up to my colleagues. 15 Board members, any questions on these particular 16 items? 17 No. 18 BOARD MEMBER PATRICK: Madam Chairman, seeing no 19 questions, I would move approval of Resolutions 05-65 20 through 05-68. 21 ACTING CHAIRPERSON RIORDAN: There's a motion. 22 Is there a second to that? 23 BOARD MEMBER GONG: Second. 24 ACTING CHAIRPERSON RIORDAN: Second by Dr. Gong. 25 Any further discussion? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 31 1 Seeing none. 2 All those in favor of the motion signify by 3 saying aye. 4 (Ayes.) 5 ACTING CHAIRPERSON RIORDAN: Opposed, no. 6 The motion carries. 7 Thank you very much. And thank you, staff. 8 And we'll give staff a moment to change places 9 and move on to our next item. 10 ACTING CHAIRPERSON RIORDAN: This next item is 11 Agenda Item 05-12-4, a proposed regulation for mobile 12 cargo-handling equipment at ports and intermodal rail 13 yards. 14 This is the first of two regulations on the 15 agenda today to address the emissions associated with 16 goods movement. 17 Ms. Witherspoon, would like to introduce this 18 item please. 19 EXECUTIVE OFFICER WITHERSPOON: Thank you, madam 20 Chairman. 21 Today we are proposing a regulation that will 22 significantly reduce emissions from cargo-handling 23 equipment at ports and intermodal rail yards. As you 24 know, these facilities are often located adjacent to 25 densely populated areas, exposing residents to unhealthy PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 32 1 levels of pollutants. 2 Staff recently completed a health risk analysis 3 of the Ports of Los Angeles and Long Beach. Diesel PM 4 emissions from cargo-handling equipment, although only 5 about 10 percent of the overall mass of emissions at those 6 ports, were found to result in significantly higher cancer 7 and noncancer effects than that proportion would indicate 8 in the communities near the ports. 9 Fortunately, there are already efforts underway 10 to reduce emissions from cargo-handling equipment. The 11 Tier 4 off-road engine standards the Board adopted last 12 year will result in significant reductions as the fleet 13 turns over. Many ports have also implemented voluntary 14 programs to install diesel particulate control devices on 15 port equipment. More needs to be done however, which is 16 why we're here today. 17 I would now like to have Ms. Lisa Williams of our 18 Stationary Source Division present the staff's proposal. 19 (Thereupon an overhead presentation was 20 Presented as follows.) 21 AIR POLLUTION SPECIALIST WILLIAMS: Thank you, 22 Ms. Witherspoon. 23 Good morning Madam Chairman and members of the 24 Board. 25 Today I'll be presenting staff's proposed PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 33 1 regulation for mobile cargo-handling equipment at ports 2 and intermodal rail yards. 3 --o0o-- 4 AIR POLLUTION SPECIALIST WILLIAMS: Shown here 5 are the items that I'll be discussing today. I'll begin 6 with a background, discuss the proposed regulation and its 7 impacts, and identify future activities planned for next 8 year and beyond. I'll conclude with a brief summary and 9 recommendation. 10 --o0o-- 11 AIR POLLUTION SPECIALIST WILLIAMS: First, the 12 Background. 13 --o0o-- 14 AIR POLLUTION SPECIALIST WILLIAMS: 15 Cargo-handling equipment is a diverse group of 16 motor vehicles used at ports and intermodal rail yards to 17 move cargo to and from ships, trains and trucks. There 18 are currently about 4,000 cargo-handling vehicles at 19 California's ports and intermodal rail yards. The 20 vehicles are mainly diesel-fueled and are a significant 21 source of exposures to diesel particulate matter, or PM. 22 For example, they account for about 10 percent of the 23 emissions from the Ports of Los Angeles and Long Beach. 24 --o0o-- 25 AIR POLLUTION SPECIALIST WILLIAMS: There are a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 34 1 variety of vehicles that handle cargo, and the most 2 prevalent are yard trucks. Yard trucks are used load, 3 unload and move cargo containers in a yard. Statewide, 4 they account for about 61 percent of all mobile 5 cargo-handling equipment at ports and intermodal rail 6 yards and about two-thirds of the emissions of diesel PM 7 and NOx. 8 --o0o-- 9 AIR POLLUTION SPECIALIST WILLIAMS: This video 10 shows yard trucks in operation. The first truck has just 11 unloaded a container and is going to pick up another. 12 This next yard truck is having its container 13 unloaded by a top handler. 14 --o0o-- 15 AIR POLLUTION SPECIALIST WILLIAMS: The non-yard 16 truck equipment are a diverse group of vehicles types. 17 Those that handle cargo containers include top handlers, 18 side handlers, rubber-tired gantry cranes and forklifts, 19 just to name a few. They account for almost a third of 20 the cargo-handling equipment population and emissions. 21 --o0o-- 22 AIR POLLUTION SPECIALIST WILLIAMS: This video 23 shows a top handler in operation. Top handlers are also 24 referred to as top picks. They have to be able to lift 25 loaded containers which weigh in excess of 40,000 pounds. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 35 1 This top pick is placing a container on to a rail car. 2 --o0o-- 3 AIR POLLUTION SPECIALIST WILLIAMS: Shown here is 4 a rubber-tired gantry crane in operation. Rubber-tired 5 gantry cranes can lift up to 50 tons, and they often 6 straddle multiple rows to allow for rapid movement of 7 containers. They usually cost in excess of $1 million. 8 --o0o-- 9 AIR POLLUTION SPECIALIST WILLIAMS: Another 10 category of non-yard truck equipment is the bulk 11 cargo-handling equipment, which consists of dozers, 12 loaders, excavators and many other types of vehicles that 13 are used to handle bulk and dry cargo. They account for 14 about 5 percent of the statewide cargo-handling equipment 15 population and about 3 percent of the emissions. 16 --o0o-- 17 AIR POLLUTION SPECIALIST WILLIAMS: Mobile 18 cargo-handling equipment emissions are a significant 19 contribution to community health risks. Staff recently 20 conducted an exposure assessment study for the Ports of 21 Los Angeles and Long Beach, which showed that this 22 equipment is the second highest category contributing to 23 high near-source risk and the area impacted exceeds 190 24 square miles. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 36 1 AIR POLLUTION SPECIALIST WILLIAMS: There are 2 many ports where mobile cargo-handling equipment operate. 3 Like the Ports of Los Angeles and Long Beach, the other 4 ports in the State are mostly located in densely populated 5 areas. 6 This map shows the 16 ports in California. 7 --o0o-- 8 AIR POLLUTION SPECIALIST WILLIAMS: Intermodal 9 rail yards in the state are shown on this map. The yards 10 are operated by BNSF Railway and Union Pacific Railroad 11 and, like the ports, are often located near communities. 12 --o0o-- 13 AIR POLLUTION SPECIALIST WILLIAMS: The proposed 14 regulation was developed with extensive outreach 15 activities. We conducted six public workshops and held 16 numerous public working group meetings and outreach 17 meetings. We also conducted a survey that provided 18 information on the equipment and engines. And we went on 19 several site visits to port and intermodal rail yard 20 terminals to get a better understanding of mobile 21 cargo-handling equipment operations and practices. 22 --o0o-- 23 AIR POLLUTION SPECIALIST WILLIAMS: Next I'll 24 discuss the proposed regulation. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 37 1 AIR POLLUTION SPECIALIST WILLIAMS: Our goals in 2 developing the regulation were to identify performance 3 standards that represent best available control 4 technology, or BACT, taking into consideration the diverse 5 nature of the equipment. 6 We also wanted to achieve significant near-term 7 reductions by accelerating the turnover and applying 8 retrofit emission controls where applicable and feasible. 9 Lastly, it was important to include flexibility 10 for compliance with the performance standards so that we 11 can achieve maximum emission reductions. 12 --o0o-- 13 AIR POLLUTION SPECIALIST WILLIAMS: As shown on 14 these charts, the new engine standards will achieve 15 significant reductions over time as the fleets turnover. 16 The proposal before you today is designed to accelerate 17 turnover and to realize the benefits from the new engine 18 standards far in advance of what would occur under normal 19 operation. 20 --o0o-- 21 AIR POLLUTION SPECIALIST WILLIAMS: The proposed 22 regulation would apply to anyone who owns, operates, 23 sells, leases or rents compression-ignition mobile 24 cargo-handling equipment for use at California's ports and 25 intermodal rail yards. It would not apply to portable PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 38 1 equipment. And the performance requirements would not 2 apply to cargo-handling equipment that is used only for 3 fuel delivery or transporting personnel. 4 --o0o-- 5 AIR POLLUTION SPECIALIST WILLIAMS: We'll start 6 with the requirements for yard trucks. 7 New yard trucks, those coming into the fleet 8 after January 1st, 2007, would be required to meet the 9 2007 or later certified on-road engine standard or final 10 Tier 4 off-road engine standard. The on-road engines will 11 be commercially available in 2007. While the final Tier 4 12 engines are expected to be available beginning in 2014. 13 --o0o-- 14 AIR POLLUTION SPECIALIST WILLIAMS: In-use yard 15 trucks would be required to meet the 2007 or later 16 certified on-road engine standard, which would include 17 using alternative fuels in diesel cycle engines, or the 18 final Tier 4 off-road engine standards when available. 19 Alternatively the yard trucks could install 20 verified controls that would result in emissions that are 21 equivalent to or less than the final Tier 4 off-road 22 standards. 23 --o0o-- 24 AIR POLLUTION SPECIALIST WILLIAMS: Compliance 25 begins for the oldest model years on December 31st, 2007. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 39 1 We've basically accelerated the turnover one to three 2 years based on a ten-year useful life. More time is given 3 for fleets of four or more and for yard trucks that are 4 already using on-road engines and/or verified controls. 5 The pre-2003 model year yard trucks are 6 responsible for about 88 percent of the total yard truck 7 emissions. And by the end of 2010 the regulation would be 8 fully implemented for most of those vehicles. 9 --o0o-- 10 AIR POLLUTION SPECIALIST WILLIAMS: The non-yard 11 truck equipment are extremely diverse in engine design and 12 application. They have long, useful lives, high capital 13 costs, and there are very few verified controls available. 14 However, the new Tier 4 engines, which will be 15 available beginning in 2011, will offer significant PM and 16 NOx benefits compared to the older engines. 17 The regulation is designed to maximize reductions 18 from this equipment by requiring emission controls now and 19 then accelerating the turnover to Tier 4 off-road 20 standards where retrofit devices are not sufficient to 21 provide maximum emission reductions. 22 --o0o-- 23 AIR POLLUTION SPECIALIST WILLIAMS: Beginning 24 January 1st, 2007, new non-yard truck equipment would be 25 required to meet the 2007 or later on-road engine standard PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 40 1 where available. Otherwise they must meet the Tier 4 2 off-road standard or the highest level off-road engine 3 with verified controls added within one year. 4 If no verified controls are available within the 5 first year, they would be required within six months of 6 becoming available. 7 --o0o-- 8 AIR POLLUTION SPECIALIST WILLIAMS: BACT at a 9 minimum would require in-use non-yard truck equipment to 10 apply the highest level verified control. Depending on 11 the category of equipment and the level of control, a 12 second step may be required to replace the engine to meet 13 Tier 4 off-road standards or apply a verified Level 3 14 control in 2015. 15 Owners and operators may elect to use certified 16 on-road engines or equipment including alternative fuel 17 diesel engines or Tier 4 off-road engines when they become 18 available. 19 --o0o-- 20 AIR POLLUTION SPECIALIST WILLIAMS: The 21 compliance schedule for in-use non-yard truck equipment is 22 based on engine model year so that the oldest engines 23 would be required to comply first beginning in 2007. 24 There is additional time for fleets of four or more. And 25 as I mentioned earlier, some equipment will be required to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 41 1 take a second compliance step in 2015. 2 By the end of 2010, a approximately 40 percent of 3 the in-use fleet will be required to apply BACT. 4 --o0o-- 5 AIR POLLUTION SPECIALIST WILLIAMS: We've 6 included compliance extension options to provide 7 flexibility for the diverse category of non-yard truck 8 equipment. For example, a two-year maximum extension may 9 be granted if there are no verified controls available. 10 The owner or operator can choose to use a 11 non-verified diesel PM emission control strategy until the 12 end of 2015 as long as they are able to provide data 13 proving the effectiveness of their control strategies. 14 Allowing the use of these technically sound but not yet 15 verified technologies is expected to lead to additional 16 verifications. And we intend to continue to review the 17 technologies as part of the implementation efforts. 18 The Alternative Compliance Plan would allow the 19 use of alternative strategies such as equipment or engine 20 replacement, engine modifications, use of alternative 21 fuels, et cetera, for those who can demonstrate equivalent 22 or better reductions. 23 --o0o-- 24 AIR POLLUTION SPECIALIST WILLIAMS: The 25 regulation also includes recordkeeping and reporting PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 42 1 requirements to help with implementation and monitoring of 2 the regulation. 3 --o0o-- 4 AIR POLLUTION SPECIALIST WILLIAMS: The Air 5 Resources Board would enforce the requirements of the 6 regulation through equipment inspections and reviews of 7 record keeping and reporting data. 8 --o0o-- 9 AIR POLLUTION SPECIALIST WILLIAMS: During the 10 development of the regulation questions were raised 11 regarding the ability of operators to apply for Carl Moyer 12 program funds or other incentive funding monies. We have 13 worked with our Moyer staff, and they agreed that Moyer 14 monies can be available provided compliance for the 15 applicable fleet occurs at least three years early or the 16 strategy goes above and beyond what is required by the 17 regulation. 18 In addition, funding may be provided by the 19 Federal Energy Act which was signed into law in August 20 2005. However, monies have not yet been appropriated. 21 But if appropriations do occur, guidance for how the 22 monies can be spent will be developed by the U.S. EPA. 23 It's important to note that neither program is 24 capable of fully funding the cost of the regulation and 25 would in fact only provide a small portion of the monies PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 43 1 required to comply with their requirements. 2 --o0o-- 3 AIR POLLUTION SPECIALIST WILLIAMS: Next I'll 4 discuss the expected impacts of the proposed regulation. 5 --o0o-- 6 AIR POLLUTION SPECIALIST WILLIAMS: The benefits 7 of the proposed regulation include reduced exposure to 8 diesel PM emissions for nearby communities. An estimated 9 870 tons of diesel PM would be reduced by 2020, resulting 10 in reductions in premature deaths and other noncancer 11 health effects. 12 Our air quality would benefit from the reduction 13 of an estimated 19,000 tons of NOx by 2020. In addition, 14 the regulation provides for a level playing field and 15 statewide consistency for all ports and intermodal rail 16 yard terminals. 17 --o0o-- 18 AIR POLLUTION SPECIALIST WILLIAMS: These charts 19 show the estimated diesel PM and NOx emission reductions 20 that would be realized by the regulation compared to the 21 2004 base line. By 2020, we expect to see diesel PM 22 reductions of about 81 percent and NOx reductions of about 23 77 percent, even though growth is expected to increase 24 approximately six percent annually during the same 25 timeframe. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 44 1 --o0o-- 2 AIR POLLUTION SPECIALIST WILLIAMS: The economic 3 impacts are shown on this slide. We expect the total 4 capital and recurring costs of the regulation to be 5 approximately $71 million, which corresponds to average 6 annual costs of about $5.1 million between 2007 and 2020. 7 The regulation would achieve very large emission 8 reductions compared to the cost of achieving those 9 reductions. Allocating half of the cost to each diesel PM 10 and NOx, the cost effectiveness would be approximately $21 11 per pound of diesel PM reduced and $1 per pound of NOx 12 reduced. 13 --o0o-- 14 AIR POLLUTION SPECIALIST WILLIAMS: Issues that 15 have been presented to staff are shown here. One terminal 16 operator has requested that the compliance schedules be 17 determined based on hours of operation instead of model 18 years. We do not feel this would be appropriate 19 considering the near-source risk of the equipment and the 20 fact that older off-road engines emit an order of 21 magnitude more diesel PM and NOx than newer off-road or 22 on-road engines. 23 Staff have been urged to require the use of 24 natural gas vehicles. The proposed regulation would 25 require certified engines, which would include those PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 45 1 fueled by natural gas. There is very limited availability 2 of natural gas cargo-handling equipment and at a very high 3 incremental cost. For example, a new LNG yard truck costs 4 about 66 percent more than a diesel yard truck. 5 Lastly, most CNG/LNG vehicles are considered to 6 be diesel cycle engines and are required to meet the same 7 standards as diesel fueled vehicles. 8 Any NOx benefits that might occur would be 9 minimal and only for 2007 through 2009 model years. 10 --o0o-- 11 AIR POLLUTION SPECIALIST WILLIAMS: To implement 12 the regulation further work will be required. 13 --o0o-- 14 AIR POLLUTION SPECIALIST WILLIAMS: We plan to 15 establish a technology working group that will monitor the 16 feasibility of retrofit emission controls and encourage 17 manufacturers to apply for ARB verification. 18 The Federal Clean Air Act Section 209(e) allows 19 California to request and receive authority from the U.S. 20 EPA to establish requirements for off-road mobile engines. 21 We will seek a waiver following adoption of the 22 regulation. 23 --o0o-- 24 AIR POLLUTION SPECIALIST WILLIAMS: The proposed 25 regulation would reduce emissions and the resulting risks PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 46 1 from cargo-handling equipment at ports and intermodal rail 2 yards. Therefore, ARB staff recommends that the Board 3 adopt the proposed regulation. 4 And this concludes my presentation at this time. 5 We'd be happy to answer any questions. 6 ACTING CHAIRPERSON RIORDAN: Thank you very much. 7 Good report. 8 Board members, questions? 9 Supervisor DeSaulnier. 10 BOARD MEMBER DeSAULNIER: Yes. Great report as 11 usual. 12 Can you tell me a little bit more about how, why 13 the Alternative Compliance Plan came about and how you 14 might enforce that and more clearly define it? 15 TECHNICAL ANALYSIS SECTION MANAGER TARICCO: We 16 don't expect the Alternative Compliance Plan to be used 17 extensively. But we have been approached. There are some 18 terminals that prefer to accelerate the turnover of all 19 their equipment. And that would be one way we can see 20 someone coming in with an alternative compliance plan. 21 We've set up restrictions in the reg on how it can be 22 used, how we will be implementing it. We will -- if 23 approved, we'll go ahead and we'll be developing guidance 24 in the full public process that would, you know, explain 25 to people how we will be reviewing ACPs and what we would PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 47 1 and would not accept. 2 BOARD MEMBER DeSAULNIER: So is part of the 3 resolution -- or as part of the 15 days we'd have outlined 4 a public view process as you go through it? 5 TECHNICAL ANALYSIS SECTION MANAGER TARICCO: I 6 don't believe it's in the resolution right now. But we 7 can put something in the resolution about the guidance 8 that we will be developing to govern the ACP process. 9 BOARD MEMBER DeSAULNIER: Okay. Thank you. 10 EMISSIONS ASSESSMENT BRANCH CHIEF DONOHOUE: 11 This is Dan Donohoue. 12 I mean basically the ACP process would require 13 that they be able to show that they are achieving an 14 equivalent or better emission reduction than they would 15 following the regulation. And another reason that we did 16 incorporate that is that this is a fairly diverse category 17 and there may well be opportunities for innovation in this 18 category, different ways of doing some things that may 19 involve electrification of certain things that potentially 20 may -- we had some testimony on the opportunity for 21 hybrids that might come in; that we would have to have 22 some type of system like that because they would be tested 23 under a different cycle and that type of thing to show 24 that equivalent emission reduction. 25 I think the one other thing that's really PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 48 1 important is, as Lisa talked about, the main regulation 2 here covers yard trucks and 65 percent of the emissions 3 come from yard trucks. Yard trucks cannot participate in 4 an alternative compliance plan. So it's only these 5 categories, the non-yard truck, construction-type 6 equipment, specialized cargo-handling equipment and 7 rubber-tired gantry cranes that would be allowed to 8 participate. And those take up about 35 percent of the 9 other emissions and are a very diverse group of equipment. 10 BOARD MEMBER DeSAULNIER: I don't think it's a 11 bad idea. I think it's a good idea. I think it's just a 12 question of equivalency and making sure that we get that. 13 EMISSIONS ASSESSMENT BRANCH CHIEF DONOHOUE: 14 Agree. 15 ACTING CHAIRPERSON RIORDAN: Thank you. 16 I appreciate the explanation, and the question 17 actually. I think it's a good one. 18 Other questions or comments? 19 Ms. D'Adamo. 20 BOARD MEMBER D'ADAMO: Just following up on 21 Supervisor DeSaulnier's comments. 22 Then it would be -- I understand that it would be 23 included in the resolution that there would be further 24 guidance in a public process on the Alternative Compliance 25 Plan? I actually was going to ask the question about PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 49 1 maybe bringing it back to the Board for a report. 2 EXECUTIVE OFFICER WITHERSPOON: I'm sorry. We 3 were you talking. 4 Absolutely it should be in the resolution. And 5 the extent to which we need to refine anything in the reg 6 itself talking about our criteria would be a 15-day 7 change. The guidance would be later than 15 days, because 8 it itself requires workshops and discussion. 9 BOARD MEMBER D'ADAMO: Okay. And then one other 10 question on the Energy Policy Act. What's the authorized 11 amount, the potential, for federal appropriations on this 12 category? 13 EXECUTIVE OFFICER WITHERSPOON: Two hundred 14 million a year for five years, of which California's share 15 would typically be 10 percent, unless we can land more. 16 BOARD MEMBER D'ADAMO: Thank you. 17 ACTING CHAIRPERSON RIORDAN: Any other questions? 18 All right. We'll go -- Oh, yes, Ms. Berg. 19 BOARD MEMBER BERG: If you could just -- first of 20 all, the report was great. Thank you very much. And if 21 you could just help me with the emissions. I'm little 22 confused between Table 1 of the ports and international 23 goods movement draft that we have, which states the cargo 24 handling is the least polluting of the categories, and the 25 statement in the report that it is the second most PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 50 1 polluting. So I'm just -- I'd just like clarification on 2 our numbers so that I understand where the savings is 3 going to come from. 4 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Okay. Let me 5 answer that, because I'm more familiar with the Goods 6 Movement Plan. 7 BOARD MEMBER BERG: Thank you. 8 DEPUTY EXECUTIVE OFFICER SCHEIBLE: The 9 assessment we did for the ports and the numbers we gave 10 you on cargo handling are emissions that occur at the 11 ports or come from vessels going to and from the ports in 12 the Los Angeles region. So those are the emissions that 13 most affect the nearby residents of the ports. 14 The statistics in the Goods Movement Plan, we 15 looked at not only the goods at the port but also what 16 happened when you put those on trucks and trains and you 17 moved them throughout the states. And when you do that 18 the trucks and train category goes up tremendously in 19 importance because they travel many more miles and they 20 tend to be located in -- completely in urban areas where 21 the population is and, therefore, you don't get the 22 dilution effect like you have at the port because 23 approximately half the time the wind moves the pollution 24 over water rather than over land. 25 So we actually have two different numbers here. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 51 1 One is a statewide perspective and the second is, if you 2 happen to live in the vicinity of the port, how important 3 are cargo handling. And cargo handling, because it occurs 4 on dock, relatively close to residents, is quite 5 important, more important than its emission percentage. 6 And the same will occur with the next rule that you'll 7 hear, which are the emissions associated with auxiliary 8 engines, since most of the emissions occur while the ship 9 is docked and relatively close to people. 10 BOARD MEMBER BERG: Okay. Just so that I 11 understand then. The emissions that are reported within 12 the Goods Movement Draft Plan specifically are measured 13 only what is going on at the ports? 14 DEPUTY EXECUTIVE OFFICER SCHEIBLE: No, no. 15 Statewide in the Goods Movement Plan. And when we talk 16 about emissions in our assessment we did for this 17 regulation, we are talking about emissions at the ports 18 themselves or from vessels going to and from the ports. 19 EXECUTIVE OFFICER WITHERSPOON: To say it another 20 way, for the port analysis it's 10 percent of the total, 21 for the statewide analysis it's much less. 22 BOARD MEMBER BERG: Okay. 23 ACTING CHAIRPERSON RIORDAN: Any other 24 questions -- 25 BOARD MEMBER BERG: Thank you. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 52 1 ACTING CHAIRPERSON RIORDAN: -- comments? Okay. 2 We'll move to our witness list. And let me begin 3 with Alan Gordon, who is representing Senator Simitian, 4 Senate Environmental Quality Commission; Barry 5 Wallerstein -- followed by Barry Wallerstein; and T.L. 6 Garrett. 7 So Alan Gordon. 8 Thank you very much for being here. 9 MR. GORDON: I want to thank the Board for having 10 me here. 11 I work for Senator Joe Simitian, who is the new 12 Chair of the Senate Committee on Environmental Quality. 13 And -- 14 ACTING CHAIRPERSON RIORDAN: Let me see -- just a 15 moment. I hate to interrupt you, Mr. Gordon. 16 I don't know if that microphone is picking your 17 comments up. So if you could maybe stand just a little 18 closer or move it a little closer to you. 19 MR. GORDON: Does that work? 20 ACTING CHAIRPERSON RIORDAN: Yes, that's much 21 better. I want you on the record. 22 MR. GORDON: Okay. The Senator believed as the 23 new Chair it was important that he be represented today 24 with regard to support for the adopted -- for the proposed 25 rules to be adopted. He unfortunately is out of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 53 1 country right now, so you get me and not the Senator. So 2 we'll go from there. 3 Anyway, I'm not going to go through the health 4 impacts of diesel. You folks are all very well aware of 5 that. That's why we're here. 6 I think the most critical aspect for him in 7 reviewing this is the risk analysis. And a risk analysis 8 showing cancer risks above a hundred in a million I think 9 we well understand that whether this -- Toxics or 10 Pesticides, or the Water Board, that would be a cry for 11 immediate action. And I think the Board to its credit 12 seems to be ready to heed that cry. 13 You know, the normal risk assessment is one in a 14 million is acceptable. This is obviously far in excess of 15 that and requires fairly dramatic action immediately. 16 When one looks at the potential for increased 17 trade volumes in the next 20 years, it becomes even more 18 important that we start ratcheting down pollutant levels. 19 As a whole, the Senator is in support of the 20 rules that are before the Board today and would like to 21 see them adopted for cargo-handling equipment. 22 He does have a few areas where he believes that 23 the compromises -- and I understand from the Board's 24 stand -- from the staff's standpoint, there's a very 25 tortuous long negotiation and decisions had to be made and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 54 1 a balance struck. There are a few places where he 2 believes maybe that the compromises struck came down a 3 little bit too much on a longer timeframe and less on the 4 side of dealing with immediate health impacts. And the 5 economic analysis of that he thinks needs to be reviewed. 6 When one looks at increased asthma and losses of 7 production at work and things like that, you can make a 8 very strong case for placing a burden on the entities 9 controlling the equipment and a shorter timeline. 10 As I said, we do support in general the rules. 11 And the concerns we have or we would like to see the Board 12 move in a little stronger direction would be, first of 13 all, with the Alternative Compliance Plan. He believes 14 that has been watered down a bit much. At a minimum the 15 Alternative Compliance Plan should be approved by the 16 executive -- the executive -- excuse me -- the proposal to 17 have them adopted by the Executive Officer without public 18 review he thinks is problematic, that these require 19 publicly review, and thinks this has the potential for a 20 substantial loophole that needs to be addressed. 21 Further suggestions for maximizing benefits of 22 the proposed rules, the Senator believes that the required 23 use of best available control technologies should be 24 enhanced, particularly in the direction of more protective 25 alternative fuels. He doesn't think it goes quite far PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 55 1 enough towards forcing that technology. 2 The idling limits proposed in the earlier drafts 3 he believes were stronger than the one that is before the 4 Board today and would like to see that issue reviewed. 5 He also believes that the rules should have 6 applied to similar equipment that is used at distribution 7 centers and airports. It is going to have the same 8 impact. The locations are in urban areas and, therefore, 9 have significant environmental justice concerns. And he 10 thinks leaving that out is another loophole. 11 ACTING CHAIRPERSON RIORDAN: Mr. Gordon? 12 MR. GORDON: Yes, ma'am. 13 ACTING CHAIRPERSON RIORDAN: I need to remind you 14 your time has drawn to the end. So if you'd like to make 15 a concluding remark. 16 MR. GORDON: Concluding, adopt the regulations. 17 The Senator will be looking at these very carefully, as 18 will the Committee, and reserves the right to move 19 legislation if he thinks that the compromise reaches are 20 not sufficiently protective of public health. 21 Thank you, ma'am. 22 ACTING CHAIRPERSON RIORDAN: Okay. Just a note. 23 I think that we -- in the question and response to 24 Supervisor DeSaulnier, sort of eliminates I believe one of 25 the Senator's concerns, which it seems to me we are going PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 56 1 to have some transparency as we look at that alternative 2 compliance. And I think staff is on the record for that. 3 So at least we've accomplished one of his issues 4 right away. 5 MR. GORDON. All right. I appreciate -- 6 ACTING CHAIRPERSON RIORDAN: Thank you very much 7 for being here. 8 MR. GORDON: Okay. 9 ACTING CHAIRPERSON RIORDAN: Barry Wallerstein 10 from South Coast Air Quality Management District, T. L. 11 Garrett, and then followed by Thomas Jelenie from the Port 12 of Long Beach. 13 DR. WALLERSTEIN: Good morning, Madam Chair, 14 members of the Board. I'm here representing the South 15 Coast Air Quality Management District. 16 First we want to recognize your staff's hard 17 efforts in developing the proposal that's before you 18 today. We do, however, have a number of concerns. The 19 first of which is, we believe that one size does not fit 20 all when we're talking about this source category. 21 For example, 70 percent of the emissions covered 22 by the rule occur in South Coast. The associated cancer 23 risk with those emissions, obviously the bulk of which is 24 also in South Coast. This is clearly an environmental 25 justice issue. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 57 1 BNSF Railroad has proposed a new yard in the Port 2 of L.A. They're proposing more aggressive controls than 3 are covered in this rule. 4 As the Board knows, stationary sources all use 5 best available control technology or best available 6 retrofit control technology. And Health & Safety Code 7 Section 43013(h), which is standards for control of air 8 contaminants, states that this Board should seek out as 9 expeditiously as is feasible the reduction of NOx 10 emissions from mobile sources. 11 We would also point out that the State Air 12 Resources Board is slipping behind in meeting its South 13 Coast ozone commitments relative to our last ozone plan. 14 And so we've submitted a letter to the Board that 15 identifies where we think this rule could be strengthened. 16 And I have some specific language I will hand out at the 17 conclusion of my comments. But I'd like to give you a 18 couple of examples. 19 Relative to the new equipment standards for yard 20 trucks, it requires a 2007 certified engine. We believe 21 that those standards are manufacturer average standards, 22 which means that the engines that actually end up in these 23 yards could be well above the average standard. In fact, 24 could be something like a 2.4 gram per brake horsepower 25 engine. We believe that there will be engines available PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 58 1 at 0.2. We think you ought to be requiring the lowest 2 level emission engines. 3 If we look at the non-yard truck equipment and 4 the new equipment requirement, as your staff mentioned it 5 requires Tier 4 off-road or highest available off-road 6 engine plus retrofit. But if we look at a category within 7 that, such as rubber-tired gantries, we actually see that 8 operators have begun the use of electrified equipment. 9 And to the degree that that wasn't feasible, there is 10 alternative fueled equipment that is available. 11 In addition in our letter we point out some 12 additions to the resolution that we think would be 13 important. One is to acknowledge and encourage the 14 development of effective local strategies, such as being 15 pursued in the Port of Los Angeles. It would frankly be a 16 shame if your rule somehow set the bar too low when the 17 port is aiming higher for emission reductions. 18 Secondly, we think you ought to develop a fleet 19 rule over the next year for the trucks that run between 20 the port and the intermodal yards. 21 And, third, we think you should develop an 22 enhancement in the short term to this rule to cover 23 locomotive switcher engines and line-haul engines when 24 they are at standby or under maintenance. That is, as 25 I've indicated in previous presentations to the Board, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 59 1 being done in France. 2 Lastly, we'd call to your attention on the staff 3 report, on page Roman number 1-3, which is super number 4 page 81 of your Board report, it says, "Districts are not 5 authorized to adopt requirements for equipment subject to 6 the proposed regulation." Our attorneys strongly disagree 7 with this statement, and we would ask that this be struck 8 from the staff report. If one looks at Vehicle Code 9 Section 670, definition of a vehicle, it clearly says, "A 10 device by which any person or property may be propelled, 11 moved or drawn upon highway." There are clearly types of 12 emission sources covered by this rule that we believe we 13 have authority under other provisions of the Health & 14 Safety Code. 15 ACTING CHAIRPERSON RIORDAN: Okay. Thank you 16 very much. I appreciate that. You're going to -- is that 17 something you've provided to the staff, the letter -- is 18 the letter in yellow there? 19 DR. WALLERSTEIN: Yes. My understanding is the 20 staff and Board has a copy of the letter. We submitted it 21 yesterday, and I provided copies this morning to the 22 clerk. 23 ACTING CHAIRPERSON RIORDAN: Thank you very much. 24 Staff, any comments at this time? 25 Maybe, Mr. Jennings, would you like to comment? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 60 1 ACTING GENERAL COUNSEL JENNINGS: Yes, I'd like 2 to comment on the applicability of the regulation to 3 vehicle sources versus non-vehicular sources. 4 The Air Resources Board has exclusive authority 5 over vehicular source emissions. And vehicular source 6 emissions are basically defined as emissions from motor 7 vehicles as defined in the Vehicle Code. It turns out 8 that there's quite a substantial body of law about what is 9 a motor vehicle and what isn't a motor vehicle. Because 10 you have insurance cases where injured parties are seeking 11 coverage under a motor vehicle insurance policy and 12 arguing that their particular piece of equipment is a 13 motor vehicle. And the cases have held very broadly that 14 equipment like mobile cranes, bulldozers, stuff like that 15 do meet the definition of motor vehicle and therefore they 16 are within the authority of ARB -- exclusive authority of 17 the ARB. 18 My understanding is staff has reviewed all of the 19 equipment used at this time at ports and has concluded 20 that the equipment falls within the definition of motor 21 vehicle. There's a question whether in the future there 22 could be equipment that would come under the rule, but 23 would not motor vehicles. But at this time there aren't 24 any such pieces of equipment. 25 EXECUTIVE OFFICER WITHERSPOON: Tom, could you PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 61 1 address whether that would preclude the Port of L.A. from 2 having its own requirements of lessee? Because they do 3 have a natural gas vision at the Port of L.A. 4 ACTING GENERAL COUNSEL JENNINGS: It would not. 5 This is a question of who can adopt regulations looking at 6 air quality control of the ARB versus local districts. It 7 doesn't constrain the Port of L.A. in a situation like 8 that. 9 ACTING CHAIRPERSON RIORDAN: Okay. I'm hoping 10 people could hear that, Tom. That microphone doesn't seem 11 to be projecting. But, in essence, what he has said, it 12 would not constrain the port or any port from adopting -- 13 ACTING GENERAL COUNSEL JENNINGS: Yeah, under the 14 market participant theory in particular. 15 ACTING CHAIRPERSON RIORDAN: Okay. Market 16 participant. Thank you. 17 Mr. Wallerstein, it isn't appropriate I think to 18 debate. We all have differing opinions and we allowed for 19 yours. We've given our counsel his opportunity to 20 respond. 21 I don't know if staff wishes to -- 22 EXECUTIVE OFFICER WITHERSPOON: Well, I'd like 23 Mr. Scheible to address the issue of BACT and the 24 standards, because at heart what we're talking about is 25 natural gas versus diesel. That's what the '07 debate is. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 62 1 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Yes. What we 2 have here is a requirement in the law that we have to 3 assess and require for sources of toxic air pollution, of 4 which diesel is one, the best available control 5 technology. It's not defined the same as the best 6 available control technology would be defined for a 7 stationary source. We think we've done that. 8 And also in the context what we're doing here is 9 we're dealing with: What do you do when you buy a source 10 and at what rate do you have to take your existing fleet 11 and either retrofit or retire it in order to meet those 12 new standards? So we think we have a very aggressive 13 program. 14 The area where we've been most aggressive is in 15 the area of: What do you do with the existing fleet of 16 yard trucks? I think you saw from the presentation, those 17 are the largest source of emissions. We have with the 18 2007 standards a PM control that is as good as it's going 19 to get, and we have an 80 percent reduction in NOx. And 20 we have designed our measure to require virtually all of 21 the 2002 and older yard trucks to turn over by about 2008, 22 and 2009 for some of them. 23 So we think that by going the way we've gone, 24 we've maximized the health protection in the area, we've 25 gotten full PM control, we've gotten an 80 percent PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 63 1 reduction in NOx. We looked at the issue over what might 2 happen should we incorporate this concept of: Well, what 3 if some engines do better than the others? The compliance 4 route for the diesel engines and the manufacturers will be 5 the engines will come out about 1.1 grams, 1.2 grams. 6 They will not be diesel engines that are available towards 7 the .2 level. 8 So if we were to require a .2 -- say, if someone 9 can achieve that, we're going to require it, we would 10 basically be saying you have to use a natural gas engine. 11 We looked at: How available are they? What's the 12 relative cost effectiveness of going that route? And we 13 found that we would increase the costs of the regulation 14 on the yard truck sector by a factor of four to five in 15 terms of what it would cost to achieve that. But the cost 16 effectiveness would be very high, in the order of $40,000 17 a ton of NOx. There would be no PM benefits achieved. 18 And we would do some things that we -- that the 19 industry would be strongly resistant to that and they 20 might do some buy-arounds and wait until 2010 when they 21 could buy what they want of the diesel. 22 So we think that both from a public health 23 protection and a cost standpoint that the proposal we put 24 before you does the job, does it as quickly as possible, 25 and does it at a lower cost. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 64 1 Natural gas would be a great compliance option. 2 If the ports choose to do that or certain of the 3 participants choose to take that route and get some 4 additional emission reductions early, that would be great. 5 There can be some cost sharing under Moyer for that 6 increment or other programs. 7 So we, one, strongly feel we've given you a very 8 aggressive, very protective proposal. It does spread the 9 cost out. Most of the reason for the spreading is because 10 people have a large investment in their current equipment; 11 and we are significantly accelerating when they must 12 retire or re-engine that, and we took those costs into 13 account. 14 ACTING CHAIRPERSON RIORDAN: Any questions? 15 Yes, Ms. D'Adamo. 16 BOARD MEMBER D'ADAMO: That was really helpful. 17 Thank you. Because I've talked with quite a few people on 18 this point that have raised concerns on both sides. 19 Just a point of clarification on Moyer. What 20 if -- the example you gave was an operator that chooses to 21 comply early. What if they choose to comply at the 22 deadline but they choose to go further with natural gas? 23 Would they be able to participate in Moyer for the -- 24 DEPUTY EXECUTIVE OFFICER SCHEIBLE: The increment 25 between what the base requirement is and what they achieve PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 65 1 would be eligible for Moyer funds. Because the cost 2 effectiveness, they'd have to provide most of the 3 investment to cover -- to bring the cost effectiveness 4 under Moyer to something that would pass that test though. 5 BOARD MEMBER D'ADAMO: And that would be a 6 challenge? 7 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Pardon? 8 BOARD MEMBER D'ADAMO: And that would be a 9 challenge? 10 DEPUTY EXECUTIVE OFFICER SCHEIBLE: It would just 11 be money. So to the extent that's a -- 12 BOARD MEMBER D'ADAMO: Oh, but not in terms of 13 the cost effectiveness test? 14 DEPUTY EXECUTIVE OFFICER SCHEIBLE: No, no, no, 15 because you can -- because if you only ask for -- the 16 grant would be -- it wouldn't cover -- if a normal Moyer 17 grant would cover 75 percent of the cost, this grant might 18 only cover 25 percent. 19 ACTING CHAIRPERSON RIORDAN: Any other questions 20 by Board members? 21 All right. Thank you very much. 22 T. L. Garrett, Thomas Jelenie. And then 23 Evangelina Ramirez, you're going to follow Mr. Jelenie. 24 MR. GARRETT: Good Morning. My name is T. L. 25 Garrett. I'm with the Pacific Merchant Shipping PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 66 1 Association. It's our members that operate this equipment 2 on the terminals at the ports of California. Thank you 3 very much for this opportunity to address the Board. 4 PMSA is generally supportive of this regulation. 5 We want to greatly commend staff and all their rigorous 6 efforts and working with us and the other interested 7 stakeholders to coming up with a regulation that we can 8 all basically agree to. I would defer to Mr. Scheible, 9 that we certainly agree that this is an aggressive 10 regulation. 11 And along those lines, our members have 12 recognized this as an issue and have proactively been 13 retrofitting and buying on-road technologies and 14 experimenting with alternative fuels going back to 1999. 15 And we think that for those companies that have 16 proactively gone forward with the technologies outlined in 17 this regulation, that they should get some consideration 18 of additional time to turn over those technologies. 19 There is some minor consideration that some of 20 our members are under contractual agreements with port 21 authorities under their various incentive programs, and 22 that there may be an extension of those port contracts 23 beyond when the regulatory requirements come into play. 24 We would like to make sure that there is not such a 25 conflict created by the implementation of this regulation. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 67 1 The lower hour use for equipment was brought up. 2 We do think that for some of our members that have some 3 equipment that they used only sporadically and for a very 4 low number of hours on an annual an basis, that that does 5 create a disproportionate cost impact to those companies, 6 and we'd like to see some consideration for that. 7 The recordkeeping we're generally okay with. The 8 big issue with the members is this requirement to have 9 stickers on the equipment. We can understand that 10 requirement, say, for an on-road piece of equipment. But 11 these pieces of equipment are actually captured on the 12 terminals. So we believe that the sticker requirement is 13 redundant, and simply having records on-site should be 14 adequate. 15 And, finally, there's been some discussion about 16 cost effectiveness. It's been brought up that the 17 allowable funds, because the regulation, the need to go in 18 front of or beyond the existing regulation, would be 19 significantly reduced, the federal funds are also coming 20 into play under the Energy Policy Acts, HR 6. We would 21 like to see some consideration for allowing more of the 22 incentive funds from both the state and the federal 23 program to be applied to these equipment in the hopes that 24 we'll turn over the equipment more aggressively and sooner 25 than we might otherwise do if we solely rely upon the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 68 1 regulation to turn over the equipment. 2 So, in general, we share the goals. We greatly 3 appreciate all the efforts of staff in working with us. 4 And we recommend support of the regulation. 5 Thank you. 6 ACTING CHAIRPERSON RIORDAN: Thank you, Mr. 7 Garrett. 8 Staff, are there any comments that you have to 9 his issues? 10 TECHNICAL ANALYSIS SECTION MANAGER TARICCO: Yes, 11 we'd like to respond to a couple items that Mr. Garrett 12 brought up. 13 First, the regulation does recognize that there 14 are some operators that have gone ahead. And in most all 15 cases we've given an additional one or two years for 16 compliance for those individuals that have, say, put on a 17 DOC or something like that. 18 Regarding the contractual agreements, we did look 19 into this issue during the development. What we found is 20 that most of them are for three years. And we looked at 21 our compliance dates against the bulk of the agreements 22 that are in place right now. And they should be able to 23 fulfill their agreements that they have and still comply 24 with the regulation too. 25 I think Lisa already addressed the lower use PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 69 1 requirement. 2 The stickers on equipment. This was an issue 3 that was brought up. We did put some language in the 4 regulation that allows for an alternative to be approved. 5 So that is -- you know, there is some wiggle room there if 6 they want to just provide the records at the terminal. 7 And, last, the incentive funds. As Lisa said in 8 her presentation, we believe there will be opportunity to 9 use Moyer funds and perhaps the federal monies when they 10 become available particularly in the outer years for the 11 non-yard truck equipment. 12 If you go with alternative fuels in the yard 13 trucks, there may be some opportunity there. 14 We were at one point asked to delay the 15 regulation. And we looked at the impacts if we were to do 16 that. And, one, we would lose almost -- if we were to 17 delay the regulation by two years, we would lose about 18 half of the impacts that -- the emission reductions that 19 we are predicting from the reg. 20 And, in addition, as Lisa said, that there really 21 isn't enough money in these incentive funding pots to get 22 the reductions that we're going to get from the reg. 23 ACTING CHAIRPERSON RIORDAN: Okay. Thank you 24 very much. 25 Mr. Jelenie. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 70 1 MR. JELENIE: Hi. My name is Thomas Jelenie. 2 I'm with the Port of Long Beach. 3 The Port of Long Beach appreciates the efforts of 4 the California Air Resources Board and its staff in this 5 endeavor. Over the course of the development of these 6 regulations the California Air Resources Board staff has 7 engaged the Board to craft a meaningful regulation that 8 will substantially reduce port related emissions. 9 Through this partnership between the port and 10 CARB, the port has developed a great deal of information 11 that CARB has come to rely on in the development of these 12 rule makings, both this and the auxiliary engine rule that 13 you'll be considering later today. 14 We hope that this partnership continues, and it 15 is currently as the port is updating its current -- its 16 2005 emissions inventory. 17 These regulations will substantially reduce the 18 amount of diesel particulate matter and nitrogen oxides 19 emitted within the port. The port understands the 20 difficulty in controlling emissions from goods 21 movement-related sources and applaud CARB for their 22 efforts. 23 We request that CARB staff continue to work with 24 the port to address other port-related air pollution 25 problems. In particular, an area that we feel CARB has an PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 71 1 opportunity to achieve significant emission reductions is 2 the on-road heavy-duty trucks, the dray cargo. These 3 vehicles represent a significant source that move cargo 4 from the ports through local adjacent communities. We ask 5 that CARB staff work with the port to develop solutions to 6 this problem. 7 And that's all I have. And these comments are 8 also applicable to the auxiliary engine rule you'll be 9 considering later today. 10 ACTING CHAIRPERSON RIORDAN: Thank you very much. 11 And I apologize for mispronouncing your name. 12 MR. JELENIE: Not a problem. 13 ACTING CHAIRPERSON RIORDAN: Evangelina Ramirez 14 and Elina Green, followed by Tom Campbell. 15 MS. RAMIREZ: Hi. My name is Evangelina Ramirez. 16 I do not speak English so well. I want to try to speak in 17 English. 18 ACTING CHAIRPERSON RIORDAN: You will do very 19 well, I'm sure. 20 MS. RAMIREZ: I'm a community leader and I'm a 21 health leader too. And I'm representing over 40 community 22 members participating in LBACA, it's Long Beach Alliance 23 for Children with Asthma activities. As each of them has 24 experience of living with the air pollution In Long Beach. 25 And think how it impacts our children who have asthma. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 72 1 And I'm here because I have a child with asthma. 2 And you know how it is to live with a child with asthma? 3 It's hard. It's hard, because you need to wake up in the 4 middle of the night. And they cannot be outside doing 5 exercises. We pass a lot of travels and every time is 6 because they cannot breathe the air that we have, because 7 it is not clean air. And we need a good strong rule to 8 protect our health and our families. We need -- I urge 9 you to create a strong rule with no loopholes. We need to 10 do something to change our lives. I don't went to the 11 school. I don't know a lot of things. But I know how it 12 is to live with a child with asthma. And that's why I'm 13 here. And maybe some people say, well, just let it what 14 it's doing. But some days when I wake up in the middle of 15 the night and I have to be in the emergency room and I 16 have to carry my other son with me, think how I feel. And 17 think how I feel these kind of kids when they get an 18 asthma attack. Try to think how it feels. And how the 19 man's feel when they have to lose job because they have to 20 take care for the kids. And how the kids feel when they 21 loss the school because they have an asthma attack and 22 they have to be at home. And they cannot -- the same way 23 the other kids. This is my concern. 24 And thanks to give me the opportunity to come 25 here and give you these comments. I'm sorry for my PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 73 1 English. I'm learning and I'm trying to be strong in 2 this. But I'm trying to learn everything and I try to 3 educate myself to help my kids in a better way. 4 Thank you. 5 ACTING CHAIRPERSON RIORDAN: Thank you very much. 6 And you did very well. And one of the things that you did 7 well is you spoke right into that microphone and were 8 heard very clearly. So we thank you for coming and making 9 the effort. 10 MS. GREEN: My name is Elina Green. I'm the 11 Project Manager for the Long Beach Alliance for Children 12 with Asthma. We're one of seven coalitions that was 13 funded by the Robert Wood Johnson Foundation. And LBACA's 14 working with parents like Evangelina, health care 15 providers, the school district, child care and after 16 school programs, managed care organizations, environmental 17 justice groups, and housing organizations, legislators, 18 among many other groups. Obviously we're trying to raise 19 awareness about asthma and improving the access to quality 20 asthma care. 21 We've been extremely successful in our work in 22 improving the indoor air quality with the over 200 23 families that we've enrolled in our program. We have five 24 community health workers that go out and do home visits 25 with our families. And we just recently did a cost PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 74 1 benefit analysis and an effectiveness analysis and 2 discovered that we are indeed decreasing the number of 3 symptom days, ER visits, days of missed school and missed 4 work for care giver through the indoor air quality 5 improvements that we've made. But now we realize that we 6 do need to focus our efforts on these outdoor air quality 7 issues. 8 So the Long Beach Alliance for Children with 9 Asthma is supportive of this rule, which would reduce 10 emissions from cargo-handling equipment. And we urge you 11 to strengthen this rule by changing the Alternative 12 Compliance Plan provision to include public review and 13 public comment, if possible, so that we can be sure to 14 maintain the comparable emission reductions. 15 Thank you so much. 16 ACTING CHAIRPERSON RIORDAN: Thank you so much, 17 and thank you for making the effort to be here today. 18 Todd Campbell, followed by Candice Kim, followed 19 by Diane Bailey, followed by Joe Kubsh. 20 Mr. Campbell -- 21 MR. CAMPBELL: Good morning, Madam Chair and 22 members of the Board. 23 ACTING CHAIRPERSON RIORDAN: -- from now Clean 24 Energy. 25 MR. CAMPBELL: Now from Clean Energy. My name is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 75 1 Todd Campbell. I'm the Public Policy Director for Clean 2 Energy. Thank you for the opportunity to comment today. 3 And I have to say I'm a little troubled by what 4 staff has mentioned this morning. Looking at the 5 Emissions Reduction Plan, it specifically states that 6 "Truck, rail, cargo handling and harborcraft emissions are 7 expected to decrease continuously but not at the rate fast 8 enough to meet public health goals." 9 And I also read in this plan that "Cleaner 10 technology and operational efficiencies must become the 11 industry standard." And what I was hearing from staff was 12 is that there's one application that's cleaner than the 13 rest and that should just -- be just counted based on 14 guesses in terms of whether are we available or not. 15 Now, I've heard this debate for quite sometime. 16 Are we fuel neutral, are we emissions driven, are we going 17 to do what is required by what the BTH and Cal EPA process 18 is moving forward? When you look at the principles that 19 are put forth in this effort, they state -- and it's not 20 debatable, it's in still a sense of urgency -- to 21 accelerate on a simultaneous basis both action, delivery 22 and public health and environmental protection. It's to 23 say that the environmental impacts from goods movement 24 activities must be reduced to ensure protection of public 25 health and must ensure fair treatment of people of all PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 76 1 races, cultures, and comes with respect to development, 2 implementation of the of Goods Movement Action Plan. 3 I guess my concern here is is that I don't know 4 if this is the symptom of the Zero Emission Vehicle 5 Program, which, you know, ultimately didn't succeed in 6 some degree, but actually promoted a lot of clean 7 technologies. We just rolled back a transit standard 8 because of this very issue. 9 You know, in my letter that I wrote to this 10 Board, I didn't for once say LNG in the letter. I said a 11 best available control technology. Does that mean that 12 natural gas is going to be the best application for every 13 application in this rule? Absolutely not. But in terms 14 of application and the need, the urgency to reduce 15 emissions, why are we picking winners? It just doesn't 16 make sense to me. Why don't we let the market pick the 17 winners? 18 If the emissions reductions are required, we 19 should be pursuing that policy. And I just am very 20 disturbed by it. 21 You know, furthermore, I was also disappointed 22 that this rule only applies to ports and intermodal rail 23 yards. Again, this needs to be fair to all parties 24 involved. When I'm involved with a BTH, Cal EPA process, 25 we're looking at everybody that's impacted by the goods PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 77 1 movement system, not just the people at the ports and the 2 intermodal rail yards. Although they need it extremely, 3 like they need it today. And when I hear issues or 4 debates about costs, I continually want to remind people 5 that there's $37.8 billion being left on the table if you 6 implement every single measure in that emissions reduction 7 plan, because you're leaving 500 people behind. 8 So if there's no urgency to get that little extra 9 increment in terms of emissions, whether it's PM or oxides 10 of nitrogen, then fine. But let's reflect that in your 11 plan, because this says leave no Californian behind. And 12 what I'm hearing is is we're picking strategies, we're 13 pooh-poohing things that may not be, you know, in large 14 bulk in terms of quantity. But we're also promoting 15 hybrid electric technology that is also equally 16 under-available, I guess, to some extent. 17 And so I just would ask that in the future, 18 staff, be a little bit more neutral, a little more fuel 19 neutral, a little bit more emissions driven and, you know, 20 support rules that make sense. 21 ACTING CHAIRPERSON RIORDAN: Mr. Campbell -- 22 MR. CAMPBELL: Push the limits here, because I 23 have to say -- 24 ACTING CHAIRPERSON RIORDAN: Mr. Campbell, we 25 need -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 78 1 MR. CAMPBELL: Madam Chairman, I'll wrap up. 2 You know, I've been involved in this process four 3 years ago, and it breaks my heart the fact that we are not 4 pushing hard as we can for the people in the front lines, 5 because you are there back lines, you're their backstop, 6 and they're counting on all of you. 7 ACTING CHAIRPERSON RIORDAN: Thank you very much. 8 Candice Kim, Diane Bailey. 9 BOARD MEMBER D'ADAMO: I have a question -- 10 ACTING CHAIRPERSON RIORDAN: Yes. 11 BOARD MEMBER D'ADAMO: -- question of staff. 12 ACTING CHAIRPERSON RIORDAN: Yes, Ms. D'Adamo. 13 BOARD MEMBER D'ADAMO: Regarding whether or not 14 this rule should stop at the ports or go beyond to, say, 15 just distribution centers and airports, which is something 16 that I'm very concerned about and wanted to ask staff 17 about plans to address those other facilities. 18 DEPUTY EXECUTIVE OFFICER SCHEIBLE: The reason 19 why we're at ports and intermodal rail yards is because of 20 community impacts. Those facilities have large numbers of 21 equipment and operate the equipment extensively. When you 22 look at airports, yes, they have equipment there that does 23 similar things. But the tonnage of goods handled at an 24 airport is 1/1000 of what we handle at the ports. So it's 25 just -- it doesn't present the same risk. The same thing PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 79 1 with commercial centers. 2 So we will come and address those as we address 3 off-road in general. We can look at it as part of the 4 goods movement effort and see whether that should be 5 accelerated. But I believe that this rule covers the vast 6 majority of the risk presented from this type of 7 equipment, and specially the higher risk. The others need 8 to be addressed, but we wanted to accelerate it at the 9 places where we knew the community impacts were the 10 greatest. 11 BOARD MEMBER D'ADAMO: Oh, absolutely. I'm not 12 questioning this rule, but just more next steps. 13 EXECUTIVE OFFICER WITHERSPOON: All of the 14 categories will be captured in three rules we have pending 15 for year. Forklifts is coming back as a generic rule in 16 March or April. The on-road privately owned truck rule is 17 scheduled for December. The off-road privately owned 18 truck rule -- where's Tom? -- Tom's not here? -- is about 19 the same timeframe, maybe a little bit later. 20 So when we took up goods movement we discussed 21 where should we draw the line and which regulatory team 22 should handle which classes of vehicles. But they are all 23 in our Diesel Risk Reduction Plan. 24 BOARD MEMBER D'ADAMO: So, going the approach 25 that you suggest as opposed to separate free-standing PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 80 1 rules for, say, distribution centers and airports, it 2 sounds like it would get there sooner with the approach 3 that staff has already pursuing. 4 EXECUTIVE OFFICER WITHERSPOON: Since we're 5 already in rule making and that process takes, you know, 6 two to three years on normal, if we started another one it 7 would happen later than the on-road/off-road rules we have 8 coming now. 9 ACTING CHAIRPERSON RIORDAN: Thank you very much. 10 Good question. 11 Candice Kim. 12 Only problem is Mr. Campbell left the room, so he 13 didn't hear that response. That's all right. We'll 14 remind him later. 15 MS. KIM: Good morning. Or is it afternoon? I 16 can't tell. 17 ACTING CHAIRPERSON RIORDAN: It's still morning, 18 still morning. We're moving right along. 19 MS. KIM: My name is Candice Kim and I'm here 20 testifying on behalf of the Coalition for Clean Air in 21 support of the proposed regulation for mobile 22 cargo-handling equipment at ports and rail yards, which 23 the ARB staff has estimated would prevent 32 premature 24 deaths and 820 asthma attacks by the year 2020. 25 We ask that you maintain the staff-proposed PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 81 1 compliance schedule for this rule in order to protect the 2 health of thousands of Californians. And although we 3 strongly support this rule today, our primary concern is 4 with the recently added Alternative Compliance Plan 5 provision which was added after the last workshop with 6 little opportunity for discussion or feedback. 7 And as has been mentioned previously, the concern 8 is that this could result in a substantial loophole. For 9 this reason we're glad to hear Board Member DeSaulnier's 10 suggestion for the addition of a public review process and 11 strongly support that as well. 12 Finally, there are a few remaining concerns which 13 we have raised throughout the process. And at this 14 juncture we ask you to direct ARB staff to report back no 15 later than six months from now on how to best address the 16 following concerns during rule Implementation: 17 First, how to require the use of best available 18 control technologies for all types of equipment 19 considering age and other technological feasibility 20 issues. 21 Second, how do appropriately offer incentives for 22 the use of cleaner, more protective alternative fuels. 23 Third, how to reinstate idling limits, as they 24 have been shown by staff in previous rule makings to 25 reduce exposure to harmful diesel emissions, reduce wear PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 82 1 and tear on engines, and reduce fuel consumption. 2 Also I would like to bring up the legal concern 3 raised by Mr. Wallerstein, and would suggest that you 4 strike the line regarding AQMD's authority, as he 5 requested, and let the lawyers fight it out and back to 6 you with their decisions. That shouldn't affect the 7 adoption of the rule. We encourage you to do that as soon 8 possible. But we do recommend that. 9 In closing, we urge you to modify the Alternative 10 Compliance Plan provision and then to adopt this important 11 rule. 12 And thank you to the staff that put so much hard 13 work into this rule. 14 ACTING CHAIRPERSON RIORDAN: Thank you. We 15 appreciate your comments 16 MS. KIM: I would just like to make one last 17 statement, which was that I came today with Ms. Ramirez, 18 the mother from the Long Beach Asthma Coalition who 19 testified today. And I would just like to express my 20 frustration that I had called to prearrange a translator 21 for her testimony and for her presence here today; and 22 when we arrived today, we were told that there was no 23 translator. So if there could be an improvement on access 24 to non-English speakers in the future, that would be 25 wonderful. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 83 1 ACTING CHAIRPERSON RIORDAN: Thank you very much. 2 However, let me just say to you, her testimony 3 was excellent, readily understood because she spoke so 4 clearly into the microphone. I agree we should be able 5 with notice to have somebody for you. She did not need 6 anyone, I assure you. She was excellent. 7 Thank you. 8 Ms. Witherspoon. 9 BOARD MEMBER BERG: Madam Chairman? 10 ACTING CHAIRPERSON RIORDAN: Yes. 11 BOARD MEMBER BERG: I would just like to second 12 that. You did an excellent job. And I'd like to 13 encourage you to continue to speak in English. You do a 14 beautiful job. So you're very blessed to have two 15 languages. 16 ACTING CHAIRPERSON RIORDAN: Ms. Witherspoon. 17 EXECUTIVE OFFICER WITHERSPOON: Yes, I just 18 wanted to go back to the Alternative Compliance Plan, 19 because, as we indicated, the 15-day if we need it will 20 have criteria. The development of guidance will be 21 through public workshop and then we'll issue it. But I 22 think the question still remains: On individual requests 23 for an alternative compliance plan, will we or won't we 24 have public review? And staff is quite willing to notify 25 the public that such proposals are under consideration and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 84 1 seek public comment before we render a decision on whether 2 they should be granted, if that would please the Board. I 3 think that would actually be a good process. 4 ACTING CHAIRPERSON RIORDAN: Well, as long as it 5 doesn't become cumbersome. I mean I think the criteria is 6 important. 7 EXECUTIVE OFFICER WITHERSPOON: Yeah, we're 8 talking about a notice and public comment. And then it 9 would be an internal decision, with the benefit of those 10 comments whether to approve the Alternative Compliance 11 Plan. 12 BOARD MEMBER DeSAULNIER: Madam Chair? 13 ACTING CHAIRPERSON RIORDAN: Yes, Supervisor 14 DeSaulnier. 15 BOARD MEMBER DeSAULNIER: Along this line, I just 16 think there's a very good opportunity, not only to assure 17 the public, but also to go beyond. And maybe we'd be able 18 to get more benefits by having a public process. So I'm 19 encouraged by your comments, Catherine. 20 ACTING CHAIRPERSON RIORDAN: Ms. D'Adamo. 21 BOARD MEMBER D'ADAMO: I support what you've 22 outlined. But I would just add that since we're entering 23 new territory on this one and the other rule that will be 24 coming up, I think it would be helpful to have a report 25 back just so we can see how it goes. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 85 1 EXECUTIVE OFFICER WITHERSPOON: Oh, absolutely. 2 Actually I talked to other Board members about something 3 similar. I think we probably ought to report to you 4 quarterly or semi-annually on if we've received any such 5 requests at all and how we handled them. And then you can 6 decide at any future time whether you do or don't like the 7 alternative compliance option. So that would be the 8 fourth piece of what we would do. 9 ACTING CHAIRPERSON RIORDAN: Thank you very much. 10 Diane Bailey, followed by Joe Kubsh, followed by 11 Michael Eaves Don Anair. 12 MS. BAILEY: Good morning, Chairwoman Riordan, 13 members of the Board and staff. And thank you for the 14 opportunity to comment. My name is Diane Bailey. I'm 15 with the Natural Resources Defense Council, and I'm here 16 today in strong support of this rule. 17 I want to note quickly that all three of the 18 diesel rules before you today, on cargo equipment, 19 auxiliary fuel for ships and public and utility fleets, 20 have very broad support from public health, environmental 21 and environmental justice groups throughout California. 22 About 1200 of our E activists in California sent you 23 letters supporting these rules. And about 20 24 organizations have signed on to support letters as well. 25 So this issue is very much in the public's mind and very PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 86 1 important to a large number of people throughout the 2 State. 3 Many activists from the Bay Area would like to be 4 here today and they could not due to overwhelming 5 workloads and commitments. But their absence should not 6 be mistaken for lack of interest. And I hope that the 7 Board recognizes that many of these people who are 8 impacted most by diesel sources want to be engaged in this 9 process, yet many of these same people are volunteers and 10 it's very difficult for them to travel to Sacramento. 11 Finally, I want to note that Carolina Simunovich 12 with Fresno Metro Ministries is also very supportive of 13 these three diesel rules today. And unfortunately she was 14 left off of those comment letters that you have in your 15 packets. 16 I'm mentioning that, and it's significant, 17 because although the port rules do not at first glance 18 appear to impact the Central Valley, diesel pollution has 19 become a priority issue for valley activists. And there 20 is a growing awareness that as California experiences a 21 tripling of trade that port-related diesel health impacts 22 which were once concentrated in coastal areas are now 23 heavily impacting the valley through goods movement and 24 the proliferation of distribution centers. 25 There's a critical need for this rule, as you've PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 87 1 already heard. Study after study shows that people living 2 near ports and rail yards -- what they already know, which 3 is that the health impacts that they're dealing with from 4 this diesel equipment are unbearable. And as more and 5 more cargo moves through California's ports and rail yards 6 over the coming year, these impacts will only grow more 7 unbearable. 8 Staff estimates conservatively that this rule 9 could prevent about 32 premature deaths and 820 asthma 10 attacks, as you've already heard. But what those numbers 11 don't convey is the amount of grief, worry, pain and 12 suffering borne by communities living near these 13 facilities. And you've already heard from one mother 14 with a child suffering from asthma today. There are 15 thousands of other people like her, and I hope that you 16 can think of them. 17 The financial strains on these families from 18 things like asthma medication and work days lost due to 19 illness with these financial losses, the families are 20 essentially subsidizing cheap goods that are moving 21 through California to Wall Mart shelves in the midwest and 22 other states. 23 So with that, we really urge you to adopt as 24 strong a rule as possible today. 25 And I won't go into detail over some of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 88 1 concerns that we've stated in our comments. You have our 2 written comments. I'm glad to hear that there was a lot 3 of discussion on the Alternative Compliance Plan today. 4 And I hope that the suggestions that were just discussed 5 can be part of the resolution today, to include a public 6 comment process, to report back to the Board on the 7 progress of those plans, and to also strengthen and be 8 more specific in the requirements of those plans. 9 ACTING CHAIRPERSON RIORDAN: Diane, I need a 10 conclusion. 11 MS. BAILEY: Okay. Lastly, I want to say that we 12 strongly support the comments that were submitted by the 13 South Coast Air Quality Management District. We hope that 14 those can be considered within the 15-day changes. And if 15 not, that all of the concerns submitted by the 16 stakeholders could be reported back to the Board by staff 17 within six months. 18 ACTING CHAIRPERSON RIORDAN: Thank you. 19 MS. BAILEY: I want to thank staff for their hard 20 work on this rule. 21 Thank you. 22 ACTING CHAIRPERSON RIORDAN: Thank you very much. 23 Joe. 24 MR. KUBSH: Good morning, Madam Chair, members of 25 the Board. Joe Kubsh, Executive Director of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 89 1 Manufacturers of Emission Controls Association. 2 I'm also here to add our strong support for the 3 proposal that's before you today to clean up 4 cargo-handling equipment in the State of California. 5 Our members are actively engaged in two areas 6 that have great impact on this rule. One is the rollout 7 of new diesel engines in 2007 that will be equipped with 8 actively regenerated filter systems. I'm happy to report 9 that that development effort is on track. Those engines 10 will be in the marketplace come 2007. 11 There are already hundreds of those kinds of 12 engines in the hands of engine manufacturers and some 13 truck manufacturers to ensure that they're going to be 14 durable and provide the performance that everyone hopes 15 that they will. 16 Also on the retrofit area, our members are 17 continuing to expand the retrofit options that are 18 available for all of the applications that are out here in 19 California. We all know that we'd like to see more 20 retrofit -- retrofit options available in the off-road. 21 We're trying to make that happen with our membership. 22 We're also trying to work with staff to find a way to 23 streamline the process for expanding -- or extending the 24 verification that's already there for technologies in the 25 on-road and the off-road. And we're going to continue to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 90 1 work with staff on making that happen. 2 We also plan to be a very active member of the 3 Technology Work Group that was mentioned in the staff 4 report today that will be following the rollout of 5 retrofit technologies for off-road equipment. 6 So, again, I also want to thank staff for their 7 efforts and putting together what we believe is a very 8 fair and balanced proposal before you. And we'd ask you 9 to adopt this proposal. 10 ACTING CHAIRPERSON RIORDAN: Thank you very much. 11 And congratulations on your new job. 12 Michael Eaves, followed by Don Anair, and 13 followed by Major Jeremy Jungreis. 14 MR. EAVES: Good morning, Madam Chair and Board 15 members. I'm Michael Eaves with the California Natural 16 Gas Vehicle Coalition. 17 And we appreciate the effort that's gone into 18 this regulation. And we think that -- and while it's 19 being cited as an aggressive rule making, we disagree that 20 it's as aggressive as the ports and the people of 21 California want and need. 22 I've been following the port activities for a 23 number of years in southern California with Long Beach and 24 Los Angeles, and some of the other initiatives that are 25 going on like the BTH/Cal EPA work under the Governor's PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 91 1 direction. And I've come to the conclusion that given 2 where those initiatives are going and given this 3 particular rule, that this particular rule may be one of 4 the least aggressive of the options that is being 5 proposed. You're defining BACT as in terms of diesel 6 only. We really support the concept that Dr. Wallerstein 7 presented for South Coast on the best available control 8 technology, going with the cleanest options. I've 9 submitted a letter where we were proposing a hierarchy of 10 emission compliance starting with the lowest emissions and 11 working backwards. 12 The cleanest options are going to be alternative 13 fuels certified to the optional low NOx standard of .2 14 grams in 2007. And what we're proposing is, that that 15 technology should be employed. If it's available and if 16 it's applicable to specific applications, then that is the 17 kind a technology that should be adopted. If it isn't 18 applicable, then certainly the diesel options to the 19 California certs at 1.2 gram. 20 We're also concerned that the Tier 4 standard 21 were holding up 2004 -- 2007 standards, and Tier 4 as 22 being equivalent. But Tier 4 standards don't come into 23 effect until 2011 and not fully compliant until 2014. And 24 we think that that's too long and too far away, especially 25 when some of the alternative fuels will beat 2000 -- beat PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 92 1 the Tier 4 standards in 2007. 2 We agree with what Todd was saying, was be fuel 3 neutral, be emissions oriented. 4 In regard to cost effectiveness, the staff is 5 right, cost effectiveness of alternative fuels is much 6 greater than other technologies as far as the emission 7 reduction. But I would like to point out that that 8 analysis does not consider any of the cost of operation 9 for alternative fuel. And given the fact that alternative 10 fuel for over the last year has been anywhere from 75 11 cents to a dollar a gallon less than it's diesel 12 counterpart, I think that operation costs will more than 13 offset the costs of the new technology. 14 ACTING CHAIRPERSON RIORDAN: I need a concluding 15 statement, Mr. Eaves. 16 MR. EAVES: Yes, Madam Chairman. 17 We do have similar comments regarding the 18 alternative compliance plan. The no-net increase task 19 force identifies 68 measures that they need, and all of 20 them are needed. And we think the Alternative Compliance 21 Plan takes some of the opportunities for emission 22 reductions off the table that we can't afford to give away 23 right now. 24 Thank you. 25 ACTING CHAIRPERSON RIORDAN: Thank you very much. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 93 1 Appreciate your comments. 2 Don Anair, then Major Jungreis, and then Bonnie 3 Holmes-Gen. 4 Don. 5 MR. ANAIR: Good morning members of the Board and 6 staff. My name is Don Anair. I am an engineer with the 7 Union of Concerned Scientists. And today I want to 8 express our strong support for ARB's effort to reduce 9 diesel emissions from port-related equipment. 10 This equipment represents a significant risk to 11 nearby communities. And it is important that we maximize 12 the emission reductions in the face of rapidly growing 13 trade in California. ARB staff has developed a regulation 14 that will go a long way towards achieving this goal. 15 However, there are some areas where the proposed 16 regulation could be strengthened, as you've heard in 17 previous testimony today, including accelerating 18 deadlines, strengthening the BACT definitions, and also 19 with regards to the Alternative Compliance Plan. 20 In general, we're supportive of allowing 21 flexibility to meet regulations that ARB is putting in 22 place. Our main concern is that the flexibility does not 23 result or come at the cost of public health. 24 One concern with the Alternative Compliance Plan 25 I believe is the -- there's no restriction on operational PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 94 1 controls. And the concern with operational controls is 2 that they may be difficult to enforce. So we just wanted 3 to make sure that there is public review. And we're 4 supportive of the resolution that has been discussed, 5 which would include public review and the development of 6 guidelines for the Alternative Compliance Plan. 7 The need for this regulation is urgent and I ask 8 the Board to adopt the proposed regulation today. 9 In addition, I believe it is important to explore 10 further opportunities too reduce emissions from this 11 equipment. 12 I also ask the Board to request of staff, as 13 previous commenters have, for the staff to come back to 14 the Board with recommendations. Some of the concerns 15 involve encouraging the use of alternatives to 16 diesel-powered equipment and yard equipment and non-yard 17 truck equipment; also, accelerating the turnover of this 18 equipment above and beyond what the regulation is 19 requiring; reducing idling emissions from this equipment. 20 And, as was noted before, the lack of the distribution 21 centers and airports in this regulation, I realize these 22 are probably going to be covered in future rules, but I 23 want to make sure that that is the case. And if it's 24 feasible, to apportion out these specific areas within the 25 upcoming rules, if it makes sense, to get the maximum PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 95 1 amount of emission reductions from these -- this 2 equipment. 3 And last thing to note, I just want to really 4 thank staff for the hard work on this regulation. We've 5 had many meetings and requested staff's time many times 6 throughout the year. And they've been very responsive and 7 helpful. So I just wanted to thank staff for moving 8 forward with this rule very quickly. 9 Thank you. 10 ACTING CHAIRPERSON RIORDAN: Thank you very much. 11 And I appreciate your comments about the staff and their 12 work. 13 Major. 14 Major, the reason I'm sort of dancing around your 15 last name is I know I'm mispronouncing it. So if you 16 would help me. 17 MAJOR JUNGREIS: I don't think anyone has ever 18 correctly pronounced my last name. So it's -- 19 ACTING CHAIRPERSON RIORDAN: So it's nothing new? 20 MAJOR JUNGREIS: No ma'am. It's pronounced 21 Youngerice. I'm Major Jeremy Jungreis. I'm here on 22 behalf of DOD installations in the western United States, 23 specifically in California. 24 Just some very short comments about this 25 particular rule. I will echo the comments of my PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 96 1 predecessor about the of work of staff. We appreciate it. 2 The staff here has been very willing to work with 3 Department of Defense. The things we do are somewhat 4 unique and they present unique challenges. And staff has 5 been very willing to try to look beyond some of the normal 6 things. So we appreciate that. 7 As to this particular rule, we previously 8 submitted some comments. We'd ask that you would consider 9 those comments and review them before taking your final 10 action. There were some technical comments we had 11 regarding low-use vehicles, also some record keeping 12 recommendations. 13 And the one thing we really did want to make a 14 point of is we have tactical equipment. Not very much. 15 We have a few pieces of tactical equipment that do deploy 16 to overseas theaters that could potentially be affected by 17 this rule. We've inserted some language in our written 18 comments that would address that. We'd ask you to 19 consider that, and hopefully that will take care of our 20 concerns. 21 ACTING CHAIRPERSON RIORDAN: Thank you very much. 22 MAJOR JUNGREIS: Thank you. 23 ACTING CHAIRPERSON RIORDAN: And I'm sure staff 24 will work with you. 25 Bonnie Holmes-Gen, followed by Tom Addison and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 97 1 Joe Lyou, and finally Barbara Lee. 2 MS. HOLMES-GEN: Good morning. My name is Bonnie 3 Holmes-Gen. I'm with the American Lung Association of 4 California. And we're pleased to be here today in support 5 of this regulation. 6 And I'm also here today to communicate the 7 support of the American Cancer Society, the California 8 Division, which is also very supportive of the Board's 9 efforts to reduce diesel risk, and is very concerned about 10 the serious health impacts of diesel particles from port 11 and rail sources. 12 We believe that -- we're very concerned that 13 cargo-handling equipment and other equipment at ports and 14 rail yards has been largely unregulated despite the fact 15 that they use extremely dirty fuels and have a wide range 16 in impact on the health and the quality of life of 17 communities that live near ports and on whole regions. 18 And we're very pleased that the Board is stepping forward 19 now to take a leadership on this important source of 20 diesel pollution. We appreciate also the staff's hard 21 work in bringing these regulations to you quickly. 22 I just wanted to mention that this rule and the 23 rule that you'll be considering next, the auxiliary engine 24 rule will have huge public health benefits. And the need 25 for these rules has been clearly laid out in the statewide PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 98 1 goods movement health assessment that you heard about 2 earlier this morning. 3 I always want to mention asthma, which is a 4 special concern to us. And in that goods movement health 5 assessment, in addition to the premature deaths and 6 increased hospitalizations and emergency room visits and 7 other effects, the assessment indicated that 15,000 asthma 8 attacks every year and 330,000 school absence days are 9 attributed to ports and goods movement in California. 10 These are huge effects. And these effects affect the 11 childrens' ability to learn. If they're missing school, 12 they're not able of course to succeed as well, to keep up. 13 So there's effects on health, effects on quality of life, 14 effects on learning of children, wide-ranging effects on 15 communities. And this rule and the auxiliary engine rule 16 especially will make a huge step forward. 17 Our bottom line is we believe these rules are 18 urgent to reduce toxic diesel pollution; protect the 19 health of Californians, especially sensitive individuals 20 such as children, the elderly and those with existing 21 respiratory illnesses such as asthma. These rules will 22 especially benefit those communities in nearby port -- 23 that are nearby port operations that are exposed to the 24 highest level of cancer causing pollution. We support the 25 rules. We also signed on to comments that you've heard PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 99 1 about earlier that were also signed on to by NRDC, Union 2 of Concerned Scientists and other groups. And we do think 3 there are some additional issues that you should request a 4 report back on regarding making sure that rules are 5 adopted quickly to address this kind of equipment in other 6 types of location and making sure that we are getting the 7 best possible technologies used in reducing emissions from 8 these types of sources. 9 ACTING CHAIRPERSON RIORDAN: Thank you very much, 10 Bonnie. Appreciate your comments and your testimony. 11 Tom Addison, followed Joe Lyou, followed by 12 Barbara Lee. 13 MR. ADDISON: Good morning, Chair and members. 14 I'm Tom Addison with the Bay Area Air Quality Management 15 District. And I'm here today to speak in support of the 16 proposed regulation before you. 17 In the Bay Area, this is a topic that is 18 important to us. We have substantial emissions from 19 cargo-handling equipment. Those emissions are not only 20 toxic. They're occurring in close proximity to tens of 21 thousands of people in the Bay Area. 22 Now, the emissions today from this equipment is 23 an issue and a concern. But when we see forecasts about 24 tripling of freight in to and out of the region, this is 25 an issue that just becomes more important in the future. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 100 1 So we are glad to see the regulation before you and 2 encourage you to adopt it. 3 I would just say that we're particularly 4 supportive of the reliance of the rule on accelerated 5 engine turnover. The older, dirtier engines, getting rid 6 of those is specially important to us since that's where 7 most of the emissions benefit comes from. 8 And with that, I'd conclude my saying we urge 9 your action. 10 ACTING CHAIRPERSON RIORDAN: Thank you very much. 11 We appreciate the fact that you're here and you've 12 testified today on behalf of the Bay Area. Thank you. 13 MR. LYOU: Hi, Madam Chair, members of the Board. 14 My name is Joe Lyou. I'm with the California 15 Environmental Rights Alliance. Thank you for allowing me 16 to present my position today. 17 Our constituents represent those communities who 18 are impacted by the diesel emissions from cargo-handling 19 equipment in various areas across the state. We support 20 this rule. We urge you to vote for its adoption. 21 We also support the proposed amendments that were 22 submitted by South Coast AQMD this morning. Having 23 reviewed them, we think that they would be very important 24 additions that would get additional public health benefits 25 and emission reductions. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 101 1 I have two things basically to address to you 2 today: One having to do with the economic costs and 3 public health dividends of this rule. But another on, you 4 guessed it, the alternative compliance provision. I've 5 got a little bit of a different take on one part of it 6 that I think really needs to be addressed. 7 With regard to economic costs and public health 8 benefits, the costs were presented in the staff 9 presentation at an estimate of 61 to $71 million, 10 depending if you believe page 7 of the public notice or 11 page 167 of the initial statement of reasons; and that 12 those costs could be less as add-on control technologies 13 become more readily available and more affordable. 14 Now, by preventing premature deaths, the staff 15 has estimated that this rule will save 160 to $220 16 million, and actually more because there are noncancer 17 health effects that aren't factored into that number. And 18 those are probably an underestimation because of those 19 noncancer health effects. So morality issues aside of 20 putting numbers on the cost of a life, if you invest $71 21 million and get more than $160 million back, I think this 22 is a good economic decision. 23 With regard to the alternative compliance 24 provision, there is a standard as to the emission 25 reductions have to be as good as or better than would have PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 102 1 happened for the non-yard truck equipment. There is, 2 however, no standard as to where those emissions have to 3 come from. So I'm afraid they can be interpreted as the 4 emissions coming from Oakland or Fresno, and actually they 5 should have come from somewhere in Long Beach or Los 6 Angeles. 7 So I would request that -- on page A-19 and A-20, 8 under sections HA-1 and HA-3 there's a clause that says, 9 "over the applicable calendar year." You can fix this -- 10 it's a simple fix by simply inserting after that "and at 11 the same facility." So those emission reductions actually 12 occur at the same facility where they would have had the 13 Alternative Compliance Plan not been approved. 14 ACTING CHAIRPERSON RIORDAN: And, Joe -- I won't 15 use your time. But let me just indicate the staff has 16 indicated, yes, they can do that. 17 MR. LYOU: Okay. It's not in the rule as 18 written. I would like it to be in the rule so it's very 19 clear to everyone involved. 20 ACTING CHAIRPERSON RIORDAN: We can put it in in 21 that 15-day comment period. 22 MR. LYOU: I would appreciate that. Thank you. 23 It's worth coming up here. 24 (Laughter.) 25 MR. LYOU: And also with regard to the public PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 103 1 participation provisions as are going to be developed, I 2 would like there to be a requirement that actually there 3 be a written response to comments provided by staff. And 4 it would be helpful if -- this is how fair I am. That no 5 matter what the decision, if it's to approve the 6 Alternative Compliance Plan or to disapproved it, to 7 reject it, I think that whoever has an interest should be 8 able to appeal that decision to the full Board. 9 Thank you. 10 ACTING CHAIRPERSON RIORDAN: Thank you, Joe. 11 DEPUTY EXECUTIVE OFFICER SCHEIBLE: If I could 12 just clarify the record. 13 ACTING CHAIRPERSON RIORDAN: Yes. 14 DEPUTY EXECUTIVE OFFICER SCHEIBLE: We believe 15 that the rule -- and we'd always proposed that any 16 alternative compliance plan, the emission reductions would 17 be at the same location as the rule would have obtained 18 them. 19 ACTING CHAIRPERSON RIORDAN: Okay. 20 DEPUTY EXECUTIVE OFFICER SCHEIBLE: And we can 21 make it clearer if need be. 22 ACTING CHAIRPERSON RIORDAN: All right. Well, I 23 don't think it hurts to make that very simple 24 clarification. 25 EXECUTIVE OFFICER WITHERSPOON: And then on the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 104 1 written response to comments received, I think in the 2 effort -- interests of efficiency, it would be a statement 3 of the basis of our decision rather than writing back to 4 every single commenter. But that would address the issues 5 that were raised. 6 ACTING CHAIRPERSON RIORDAN: Correct. I think 7 that would be appropriate. 8 EXECUTIVE OFFICER WITHERSPOON: Right. 9 ACTING CHAIRPERSON RIORDAN: I think that would 10 be appropriate. 11 Barbara Lee. 12 MS. LEE: Madam Chairwoman and members of the 13 Board. My name is Barbara Lee. I'm the Air Pollution 14 Control Officer in northern Sonoma County. And I am here 15 as President of the California Air Pollution Control 16 Officers Association. 17 I want to state that we're very happy to be here 18 in support of this important proposed regulation. We 19 believe that reducing public exposure to diesel 20 particulate exhaust is of the utmost importance for 21 California. We believe staff has done a good job putting 22 this proposal together, and we urge you to adopt it. 23 Thank you. 24 ACTING CHAIRPERSON RIORDAN: Thank you. I 25 appreciate your comments and also your letter. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 105 1 That concludes our witness list. 2 And so, staff, I don't know if you have any more 3 comments that you would like to make before I open it up 4 for my colleagues to ask questions. 5 DEPUTY EXECUTIVE OFFICER SCHEIBLE: I'd just like 6 to make a couple of remarks about, you know, the issues 7 are that we could have done this -- we could have had a 8 quicker schedule. And I guess that's a fair comment. You 9 could always do things a little bit quicker. We think 10 that we've -- we've designed this to maximize risk 11 reduction. 12 The comment that we should use the best certified 13 engines really relates back to NOx control. It doesn't 14 relate to PM control. Most of the risk reduction, 15 especially at the community level, from this rule comes 16 from PM control. The PM -- and I think that the approach 17 of saying you've got to use the best engine actually makes 18 it more difficult to implement the philosophy behind the 19 rule that says let's wait to 2007 when we have wide 20 availability of very good PM engines and then let's use 21 them to -- in combination of buy new, replace old strategy 22 to get emission reductions very quickly. 23 Also, you know, we've worked on the port 24 strategies. We worked on no-net increase as a technical 25 resource. We've clearly worked on the Governor's Goods PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 106 1 Movement Plan. This strategy is very aggressive. It's 2 very consistent with those approaches. We've maximized 3 early emission reductions. We've gone for the gold 4 standard so by 2015 engines basically have 99 percent PM 5 control and 99 percent NOx control. So I'll be happy sit 6 and debate with anybody how aggressive the proposal is and 7 how well it does in delivering health benefits. 8 ACTING CHAIRPERSON RIORDAN: Thank you, Mr. 9 Scheible. And I would just warn anybody you are an able 10 debater. So -- 11 (Laughter.) 12 ACTING CHAIRPERSON RIORDAN: -- you know, that's 13 a real challenge. 14 I want to express my concern about my own 15 omission, which was for the Ombudsman's statement. And I 16 would like our Ombudsman, if you wouldn't mind, making 17 this statement part of the record. And I will try to 18 remember to call on you at the appropriate time for the 19 next item. But I think we can make this part of the 20 record, a written statement from you. Is that all right? 21 OMBUDSMAN TSCHOGL: No problem at all. 22 ACTING CHAIRPERSON RIORDAN: No problem at all. 23 That's good. 24 OMBUDSMAN TSCHOGL: I'll hand it over to -- 25 ACTING CHAIRPERSON RIORDAN: Thank you. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 107 1 OMBUDSMAN TSCHOGL: Thank you. 2 ACTING CHAIRPERSON RIORDAN: Board members, 3 questions, comments? 4 Supervisor DeSaulnier. 5 BOARD MEMBER DeSAULNIER: Do we need ex parte on 6 this, Madam Chair? 7 ACTING CHAIRPERSON RIORDAN: Yes. And I was 8 coming to that. But I have to close the agenda item. But 9 I just thought if there were any general questions that 10 you wanted to ask before I close the record. 11 BOARD MEMBER DeSAULNIER: I'm sorry. I 12 truthfully never wanted to be Chair. So I don't want to 13 try to seem like am. And I am. 14 I did have one question. The comments from the 15 Department of Defense, are we including those? 16 EXECUTIVE OFFICER WITHERSPOON: Yes. I think 17 we'll deal with all of them, the tactical vehicles that go 18 overseas. The low usage comment applies to all equipment. 19 And so we've already been working on that. 20 BOARD MEMBER DeSAULNIER: Thank you. 21 ACTING CHAIRPERSON RIORDAN: Thank you. 22 Any other comments, Board members? 23 All right. Then I will officially close the 24 record on this agenda item. 25 However, the record will be reopened when the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 108 1 15-day notice of public availability is issued. Written 2 or oral comments received after this hearing date but 3 before the 15-day notice is issued will not be accepted as 4 part of the official record on this agenda item. 5 When the record is reopened for a 15-day comment 6 period, the public may submit written comments on the 7 proposed changes, which will be considered and responded 8 to in the final statement of reasons for the regulation. 9 And now, the ex parte. 10 Supervisor DeSaulnier. 11 BOARD MEMBER DeSAULNIER: Okay. Sorry about 12 that, Madam Chair. 13 ACTING CHAIRPERSON RIORDAN: No, no. That's all 14 right, because I forgot the Ombudsman. I might have 15 forgotten the ex parte too. 16 BOARD MEMBER DeSAULNIER: I have very little. 17 On November 30th I had a phone call with Diane 18 Bailey from NRDC, Bonnie Holmes-Gen from the American Lung 19 Association, Don Anair from the Union of Concerned 20 scientists, and from Candice Kim from the Coalition of 21 Clean Air. The conversation was consistent with their 22 testimony today. 23 ACTING CHAIRPERSON RIORDAN: Ms. D'Adamo. 24 BOARD MEMBER D'ADAMO: I have two phone calls to 25 disclose. On December 5th, phone call with Todd Campbell PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 109 1 from Clean Energy and Mike Eaves, California Natural Gas 2 Vehicle Coalition. And then on December 6th a phone call 3 with environmental stakeholders, Joe Lyou, California 4 Environmental Rights Alliance; Bonnie Holmes-Gen, American 5 Lung Association; Diane Bailey, NRDC; Don Anair, Union of 6 Concerned Scientists; Tom Plenys and Candice Kim, 7 Coalition for Clean Air. And the conversation mirrored 8 the testimony that those groups provided today. 9 ACTING CHAIRPERSON RIORDAN: Okay. Thank you. 10 Dr. Gong. 11 BOARD MEMBER GONG: This is a broken record. 12 I had -- 13 BOARD MEMBER DeSAULNIER: What's a record? 14 (Laughter.) 15 BOARD MEMBER GONG: -- two telephonic conference 16 calls: 17 On December 1 of this year I spoke with Bonnie 18 Holmes-Gen, American Lung Association of California; Diane 19 Bailey, NRDC; and Tom Plenys of the Coalition for Clean 20 Air. 21 On December 2 of this year I had a conference 22 call with Mike Eaves of California Natural Gas Vehicle 23 Coalition; and Todd Campbell, Clean Energy, I believe. 24 And their discussion -- our discussion mirrored 25 what they said today. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 110 1 ACTING CHAIRPERSON RIORDAN: Thank you, Dr. Gong. 2 I too had on December 5th a conversation with 3 Todd Campbell and Mike Eaves regarding this item. And 4 what was discussed on the phone was part of their 5 testimony today. 6 And I spoke on December 7th with Bonnie 7 Holmes-Gen, Joe Lyou, Tom Plenys. And their conversation 8 was mirrored in their testimony today. 9 Ms. Berg. 10 BOARD MEMBER BERG: I had a meeting at Ellis 11 Paint in Los Angeles with the Coalition for Clean Air, 12 Nidia Bautista and Tom Plenys, and also Joe Lyou of 13 California Environmental Rights Alliance. 14 BOARD MEMBER PATRICK: On December 5th I had a 15 phone call with Todd Campbell from Clean Energy and Mike 16 Eaves of the California Natural Gas Vehicle Coalition. 17 That conversation was consistent with the information that 18 they presented today. 19 And I had another conversation on December 7th 20 with Bonnie Holmes-Gen of the American Lung Association, 21 Joe Lyou of the Environmental -- California Environmental 22 Rights Alliance and Don Anair of the Union of Concerned 23 Scientists. And that was consistent with their testimony 24 as well. 25 ACTING CHAIRPERSON RIORDAN: Thank you, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 111 1 Supervisor Patrick. 2 Board members, there is a resolution before us. 3 BOARD MEMBER D'ADAMO: Madam Chair? 4 ACTING CHAIRPERSON RIORDAN: Yes. 5 BOARD MEMBER D'ADAMO: I'd make a motion that we 6 adopt Resolution 05-62 with the changes that we discussed. 7 I believe the one noted by Joe Lyou regarding the source 8 of emission reduction and then the alternative compliance 9 process, and also report back to the Board. 10 Did I miss anything? 11 ACTING CHAIRPERSON RIORDAN: I think that would 12 cover -- yes, Tom. 13 ACTING GENERAL COUNSEL JENNINGS: Madam Chairman, 14 I'd like to mention one thing. When the resolution was 15 prepared we were not envisioning 15-day changes. So it 16 doesn't have the 15-day change language. So my 17 understanding as part of Ms. D'Adamo's motion is that we 18 would substitute the normal 15-day change language for 19 what's in there now and then covering the three topics she 20 identified. 21 It might useful for the Executive Officer to go 22 over again the elements on ACP that we were suggesting as 23 a possible approach, just so we can have clarity on that. 24 EXECUTIVE OFFICER WITHERSPOON: We propose to 25 clarify in the regulation that the request for ACPs would PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 112 1 be subject to public comment, to engage in a guidance 2 development process involving public comment when 3 individual applications for ACPs were received and were 4 under consideration to solicit comment on those proposals 5 and our analysis of them, to provide a written response of 6 the basis of our decision, and to report to the Board -- I 7 wasn't sure if it was quarterly, semi-annually or whether 8 you'd leave that to our discretion -- on how many requests 9 we received and how they were handled. 10 And then there was a request Mr. Lyou made that 11 anyone be able to petition. That opportunity exists at 12 any time on anything germane to the Board. People can 13 petition for you to hear either a decision of ours or just 14 any issue they want to bring to you. And so that would be 15 the response on ACPs. 16 ACTING GENERAL COUNSEL JENNINGS: Just to add one 17 more thing. I think the motion would also include 18 addressing the DOD concerns that Mr. DeSaulnier -- 19 ACTING CHAIRPERSON RIORDAN: Yes. 20 EXECUTIVE OFFICER WITHERSPOON: Oh, and I missed 21 one, that the emissions would be at the facility. If the 22 reg doesn't already say that, we'll make sure that it 23 does. 24 BOARD MEMBER DeSAULNIER: It would be my 25 preference at least to begin with it would be semi-annual PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 113 1 so that we were certain. 2 EXECUTIVE OFFICER WITHERSPOON: I'm sorry. What? 3 BOARD MEMBER DeSAULNIER: It would at least be my 4 hope that it would be semi-annual at least to begin with. 5 EXECUTIVE OFFICER WITHERSPOON: Okay. 6 ACTING CHAIRPERSON RIORDAN: All right. 7 BOARD MEMBER PATRICK: Madam Chair? 8 ACTING CHAIRPERSON RIORDAN: We've added those. 9 Yes. 10 BOARD MEMBER PATRICK: I just wanted one point of 11 clarification. When Mr. Wallerstein was up here he was 12 asking about a sentence that is in the staff report. 13 ACTING CHAIRPERSON RIORDAN: Do you want to turn 14 your microphone on. Is it on? 15 BOARD MEMBER PATRICK: It's on. I just -- I 16 don't know. My voice today. I'm sorry. 17 EXECUTIVE OFFICER WITHERSPOON: He asked us to 18 strike the declaration that the Air Resources Board has 19 the sole authority to regulate vehicular cargo-handling 20 equipment. 21 BOARD MEMBER PATRICK: Is that a deal breaker? 22 ACTING GENERAL COUNSEL JENNINGS: No. 23 BOARD MEMBER PATRICK: And, you know, someone 24 said, you know, let's let the attorneys from South 25 Coast -- they can duke it out or, you know, whatever, with PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 114 1 the appropriate people. But wouldn't it be possible just 2 to take it out of ours and then -- then that way we would 3 not be on this -- 4 EXECUTIVE OFFICER WITHERSPOON: It's in the staff 5 report. It's not in the regulation. 6 BOARD MEMBER PATRICK: Right. I know. I know. 7 EXECUTIVE OFFICER WITHERSPOON: And we don't 8 republish staff reports. They're just part of the record. 9 BOARD MEMBER PATRICK: Oh, okay. 10 EXECUTIVE OFFICER WITHERSPOON: But, you know, 11 your -- well -- 12 BOARD MEMBER PATRICK: So it's -- what I'm 13 hearing is the cow's out of the barn. 14 EXECUTIVE OFFICER WITHERSPOON: Yeah, I think so. 15 BOARD MEMBER PATRICK: Thank you. 16 ACTING CHAIRPERSON RIORDAN: All right. 17 BOARD MEMBER PATRICK: We have a lot of cows in 18 the barn that left -- 19 BOARD MEMBER DeSAULNIER: That's part of the 20 problem, that's right. 21 (Laughter.) 22 BOARD MEMBER DeSAULNIER: You'd keep them in the 23 barn. 24 ACTING CHAIRPERSON RIORDAN: Okay. Is that clear 25 to everybody? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 115 1 I hope this last part hasn't become cumbersome. 2 You know, I have some concerns -- I'll be honest with you, 3 I have some concerns, every time you kind of try to bring 4 things back to this Board on a too-often basis, you're 5 going to make for I think some delays in perhaps 6 accomplishing what we need to do. And I hope it doesn't 7 slow down the process. I'm going to be very careful to 8 watch that the process is not slowed down. 9 I think what sometimes happens with regulatory 10 agencies is that we get so caught up in trying to make 11 everything so perfect, that we forget we need to get 12 something accomplished. 13 So with that little reservation and that comment, 14 I'll ask for the question, which is: There's a motion on 15 the table. And we have, I believe -- 16 BOARD MEMBER DeSAULNIER: Second. 17 ACTING CHAIRPERSON RIORDAN: -- a second, 18 Supervisor DeSaulnier. 19 And I'll ask all those in favor of the motion 20 signify by saying aye. 21 (Ayes.) 22 ACTING CHAIRPERSON RIORDAN: Opposed, no. 23 The motion carries. 24 Now, what I'd like to do is the following: We 25 have a court reporter who needs a break. We may need a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 116 1 break too. It's approximately 11:25. Let's come back in 2 ten minutes. 3 Then I'd like to do the -- at least the staff 4 report for the next item. And we'll see how time is 5 going. And then we'll take a break for lunch. 6 But I do think we need at some point in time a 7 bit of a break. And I apologize to the court reporter, 8 because I went a little bit long. 9 Thank you. 10 (Thereupon a recess was taken.) 11 ACTING CHAIRPERSON RIORDAN: I'm going to ask 12 that you find a seat. And we kill continue our meeting. 13 This next item is Agenda Item 05-12-5, a proposed 14 regulation for diesel engines operated on ocean-going 15 vessels. 16 Ms. Witherspoon, would you like to introduce this 17 item. 18 EXECUTIVE OFFICER WITHERSPOON: Certainly. Thank 19 you, Madam Chair. 20 And as I do, on the table behind you where your 21 coffee and water and snacks typically are, there are two 22 bottles of the fuels we're talking about in this item. 23 The red is -- 24 (Laughter.) 25 ACTING CHAIRPERSON RIORDAN: -- from either one PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 117 1 of these containers. 2 EXECUTIVE OFFICER WITHERSPOON: You may look out 3 of the corner of your eye -- 4 BOARD MEMBER PATRICK: I love cherry flavored. 5 EXECUTIVE OFFICER WITHERSPOON: The red included 6 is marine gasoline oil and the dark tarry substance is 7 bunker. 8 And with that, the proposed regulation for 9 auxiliary diesel engines and diesel-electric engines on 10 ocean-going vessels would significantly reduce the 11 emissions of diesel particulate, NOx and SOx at ports 12 along the California coastline -- at ports and along the 13 California coast line. 14 This is an essential step toward meeting air 15 quality standards and reducing health risks to citizens 16 living or working in portside communities. 17 The engines covered by this proposal are subject 18 to relatively little control on the national and 19 international level. In fact, there are currently no 20 particulate matter standards in place for most of these 21 engines. 22 Mr. Paul Milkey of our Stationary Source Division 23 will present the proposal regulation. 24 Paul. 25 (Thereupon an overhead presentation was PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 118 1 Presented as follows.) 2 AIR POLLUTION SPECIALIST MILKEY: Thank you, Ms. 3 Witherspoon. 4 Madam Chairman and members of the Board. Today 5 I'll be presenting the staff's proposed regulation for 6 auxiliary on ocean-going vessels 7 --o0o-- 8 AIR POLLUTION SPECIALIST MILKEY: In my 9 presentation I'll provide you with a short course in 10 ocean-going vessels. Then discuss a proposal to reduce 11 the emissions from ship auxiliary engines. 12 First I'd like to start off with a little 13 background. 14 --o0o-- 15 AIR POLLUTION SPECIALIST MILKEY: The proposal we 16 are bringing to you today affects the large ocean-going 17 vessels that travel internationally and are primarily 18 foreign-flagged vessels. These vessels include container 19 ships, which make up over 50 percent of the ocean-going 20 vessels in California, as well as tankers, cruise ships 21 and the other types of vessels shown on the slide. 22 About 2,000 unique vessels currently visit 23 California ports annually, making about 10,000 port visits 24 each year. These vessels visit ports and terminals 25 throughout California, with the busiest being the ports of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 119 1 Los Angeles, Long Beach and Oakland. 2 --o0o-- 3 AIR POLLUTION SPECIALIST MILKEY: There is urgent 4 need to reduce emissions from ocean-going vessels because 5 they are such a large source of emissions, and these 6 emissions are expected to grow significantly along with 7 increases in trade over the next decade. 8 The impacts of these emissions are both localized 9 and regional in nature. Much of these emissions are 10 concentrated around heavily populated areas such as Los 11 Angeles and the Bay Area, resulting in a significant 12 potential risk of cancer and noncancer health impacts from 13 diesel PM. 14 Regionally these emissions also contribute to 15 higher levels of ozone and PM, making attainment of state 16 and federal ambient air quality standards more difficult. 17 --o0o-- 18 AIR POLLUTION SPECIALIST MILKEY: This slide puts 19 the diesel PM emissions for ocean-going vessels in a 20 perspective with the overall statewide emissions of diesel 21 PM. 22 As you can see, ocean-going vessel emissions 23 account for about 30 percent of the overall diesel PM 24 emissions. Ocean-going vessels also contribute a 25 significant percentage of California's overall SOx and NOx PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 120 1 emissions. Specifically, ships account for over 40 2 percent of the SOx emissions statewide, now the largest 3 contributor by far. They also account for about 7 percent 4 of the NOx. 5 --o0o-- 6 AIR POLLUTION SPECIALIST MILKEY: The proposal 7 under consideration today only affects the auxiliary 8 engines used in ocean-going vessels. Auxiliary engines 9 are generally coupled to generators to provide electrical 10 power on board the vessel for lighting, refrigeration of 11 cargo and operation of equipment. 12 These engines are operated at dockside while the 13 main engine is turned off and while the vessels are 14 transmitting or maneuvering at sea. Most vessels have one 15 very large main engine, used primarily for propulsion, and 16 a number of large auxiliary engines on board the vessel. 17 The main engine is typically from 10,000 to about a 18 hundred thousand horsepower, and the auxiliary engines are 19 typically in the range of 500 to 4,000 horsepower. 20 Diesel-electric vessels are unique in that there 21 are not separate engines used for propulsion and shipboard 22 electricity. Diesel-electric vessels use several 23 generator set engines that provide electrical power for 24 both propulsion and shipboard power. These engines are 25 very similar to the other auxiliary engines except that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 121 1 they are larger. 2 This configuration is common in cruise ships and 3 a small number of tankers. And these engines are covered 4 under the proposal the same as other auxiliary engines. 5 --o0o-- 6 AIR POLLUTION SPECIALIST MILKEY: This slide 7 shows the estimated growth in diesel PM emissions from 8 ocean-going vessel auxiliary engines without further 9 regulation. As you can see, the emissions are expected to 10 triple between 2004 and 2020. Unfortunately, existing 11 federal and international regulations will have little 12 impact on reducing these emissions. 13 Even at existing levels the emissions from 14 auxiliary engines on ocean-going vessels are a significant 15 contributor to community health risks. Staff recently 16 conducted an exposure assessment study for the Ports of 17 Los Angeles and Long Beach, which showed that these 18 engines are the highest contributors of near-source risk. 19 And the area subject to an increased cancer risk of ten in 20 a million or greater exceeds 250 square miles, as shown. 21 --o0o-- 22 AIR POLLUTION SPECIALIST MILKEY: Now I'd like to 23 briefly discuss the proposed regulation. 24 --o0o-- 25 AIR POLLUTION SPECIALIST MILKEY: First a little PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 122 1 about the regulatory process. We've been working with the 2 marine industry, environmental groups and air pollution 3 control districts on marine air quality issues over the 4 last four years. And over the last year we focused 5 specifically on the proposed regulation only five 6 workshops or work group meetings. During these meetings 7 the affected industry and environmental community groups 8 and other affected parties provided input that was used to 9 modify various draft proposals. In addition, ARB staff 10 have had numerous individual meetings and conference calls 11 with stakeholders. 12 --o0o-- 13 AIR POLLUTION SPECIALIST MILKEY: As mentioned 14 earlier, the proposal applies to the auxiliary engines and 15 the engines used on diesel-electric vessels. The majority 16 of vessels use the engine configuration on the left where 17 a single main engine is used for propulsion and a number 18 of auxiliary engines are used to generate electrical 19 power. For these vessels only the auxiliary engines are 20 covered by the proposal. However, we do plan to address 21 the main engines in the future. 22 The engines on diesel-electric vessels, as 23 mentioned earlier, are used for both propulsion and 24 shipboard electrical power. These engines are similar to 25 the auxiliary engines used on motor ships, except they are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 123 1 much larger and they are subject to the proposal. 2 --o0o-- 3 AIR POLLUTION SPECIALIST MILKEY: Under 4 international and federal law California has the authority 5 to regulate marine vessel emissions that impact our 6 shore-site air quality. The proposed regulation would 7 apply within the darkened region on the map, which is 8 within 24 nautical miles of the California coastline. We 9 are proposing this region because control of emissions 10 within this boundary will achieve the vast majority of 11 health benefits. It would control most of the NOx and SOx 12 emissions that could be transported on shore. It would 13 reduce the cost of the proposed regulation. And the 24 14 nautical mile boundary utilizes the outer boundary of the 15 contiguous zone which is an internationally recognized 16 boundary that appears in nautical charts. 17 --o0o-- 18 AIR POLLUTION SPECIALIST MILKEY: These are the 19 core requirements of the proposal. Ship operators would 20 be required to meet an emissions limit based on the use of 21 cleaner burning marine distillate fuels. These fuels are 22 similar to diesel fuel and used for land-site applications 23 and are much cleaner than the heavy fuel oil currently 24 used by most marine auxiliary engines. I think you've 25 already seen some examples. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 124 1 Vessel operators could comply either by using the 2 fuel specified in the regulation or by implementing 3 equally effective emission control strategies under the 4 Alternative Compliance Plan. For January 1st, 2007, the 5 emissions limit is based on the use of marine gas oil or 6 Marine diesel oil with no more than .5 percent sulfur. 7 For January 1st, 2010, the emissions limit is 8 based on the use of Marine gas oil with no more than .1 9 percent sulfur. And this level is consistent with the 10 European Union directive which specifies .1 percent sulfur 11 fuel for ships that dockside at EU ports. 12 Staff will conduct a study prior to 13 implementation of the 2010 emissions limit to ensure that 14 there is sufficient fuel supply available worldwide and to 15 investigate other technical issues. And the Executive 16 Officer shall propose changes to the Board prior to 17 January 1st, 2009, if necessary, based on the study. 18 --o0o-- 19 AIR POLLUTION SPECIALIST MILKEY: The Alternative 20 Compliance Plan, or ACP, provides flexibility to the 21 industry and in complying with the proposed regulation by 22 allowing alternative emission control strategies as long 23 as they achieve equivalent emission reductions. In 24 addition, ship operators are provided with the flexibility 25 to average emission reductions over their fleet of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 125 1 vessels. In other words, they could overcomply with some 2 vessels to compensate for undercomplying with others, so 3 long as the overall emission reduction is equivalent to 4 direct compliance with the proposal. 5 The ACP also contains special provisions to 6 encourage the use of shore-side electrical power in which 7 vessels would be able to completely turn off their 8 auxiliary engines at dockside. 9 --o0o-- 10 AIR POLLUTION SPECIALIST MILKEY: The proposal 11 also provides the option for ship operators to pay a fee 12 in lieu of compliance under certain specified conditions 13 as shown in this slide. This provision is an alternative 14 to a complicated set of exemptions that would otherwise be 15 required. 16 The funds collected under this provision would be 17 used to reduce emissions at the ports, as we will work 18 with the ports to establish agreements to accomplish this. 19 --o0o-- 20 AIR POLLUTION SPECIALIST MILKEY: These are the 21 fees that vessel operators would pay for each port visit 22 under the program. The fees were structured to encourage 23 direct compliance with the regulation and increase with 24 each subsequent visit. For example, the second port visit 25 would be twice as expensive as the first and the third, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 126 1 three times and so on. 2 The fees are higher for diesel-electric vessels 3 because their costs in direct compliance with the rule are 4 higher than for other vessels. And we will monitor the 5 participation in this program to ensure that it is not 6 overused. 7 --o0o-- 8 AIR POLLUTION SPECIALIST MILKEY: The ARB staff 9 will enforce the proposed Regulation to ensure statewide 10 consistency. To conduct these efforts, staff plan to 11 board vessels, inspect records, and sample fuels for 12 testing and analysis. If a vessel is found to be in 13 violation, ARB staff intends to issue fines. We do not 14 intend to deny port entry to vessels as part of the 15 enforcement activities. 16 --o0o-- 17 AIR POLLUTION SPECIALIST MILKEY: Now, I'd like 18 to briefly discuss the environmental and economic impacts 19 of the proposal. 20 --o0o-- 21 AIR POLLUTION SPECIALIST MILKEY: This slide 22 summarizes the benefits of the proposed regulation. There 23 will be substantial and immediate reductions in diesel PM, 24 NOx, and SOx emissions and in secondarily formed PM. The 25 diesel PM reductions will reduce the potential cancer and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 127 1 noncancer health risks to populations living in portside 2 communities. With respect to the cancer risk, the 3 proposed regulation would result in greater than a 70 4 percent reduction in the population-weighted average risk 5 from the source. And the NOx and SOx reductions would 6 achieve additional health benefits as well. 7 --o0o-- 8 AIR POLLUTION SPECIALIST MILKEY: The emission 9 reduction benefits of the proposed regulation are shown in 10 this slide for a vessel that switches from heavy fuel oil 11 at 2.5 percent sulfur to a marine gas oil at .5 percent 12 sulfur. 13 As you can see, the reductions in diesel PM and 14 SOx are dramatic. In addition, there is a smaller but 15 still significant reduction in NOx emissions. There would 16 also be a somewhat larger reduction in PM and SOx going to 17 the .1 percent sulfur MGO as specified in 2010. 18 Heavy fuel oil results in higher emissions 19 because it contains about five times the sulfur as 20 distillate fuels. And this sulfur is converted to SOx and 21 sulfate PM. It also contains higher levels of metals that 22 result in ash and nitrogen compounds that result in higher 23 NOx emissions. 24 --o0o-- 25 AIR POLLUTION SPECIALIST MILKEY: And this slide PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 128 1 graphically shows the estimated levels of diesel PM with 2 and without the implementation of the regulation. In 2007 3 when the proposed regulation is scheduled for 4 implementation, the lines diverge. 5 --o0o-- 6 AIR POLLUTION SPECIALIST MILKEY: This slide 7 summarizes the costs to the industry assuming that vessel 8 operators comply with the use of cleaner distillate fuels, 9 which are about 1.5 to 2 times as expensive as typical 10 heavy fuel oil. 11 For the industry overall we estimate the added 12 costs at about $40 million annually based on the current 13 industry structure. 14 The added costs for a typical cargo ship visit 15 would be about $3,500. For diesel-electric vessels, which 16 are primarily cruise ships, we would have somewhat higher 17 costs. We estimate that the added costs for a typical 18 cruise ship visit would be about $20,000. 19 And these fuel cost estimates may be somewhat 20 high, we should note, because the fuel price data used 21 were at peak prices compared to historic levels. 22 Most of the vessels would not require 23 modifications to comply with the proposed regulation. 24 However, for the minority of vessels that would need to 25 make some changes, such as adding a fuel tank to add PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 129 1 capacity for distillate fuel, we estimate the cost impacts 2 in the range of 100,000 to 500,000 per vessel. While 3 these costs are not trivial, they are much smaller than 4 the estimated value of the potential health benefits. 5 Looking only at the noncancer health effects, we estimate 6 a valuation of 200 to $300 million annually using EPA 7 estimates of the value of avoiding premature deaths and 8 other health impacts. 9 --o0o-- 10 AIR POLLUTION SPECIALIST MILKEY: The cost 11 effectiveness of the proposal is similar to that of other 12 control measures recently adopted by the Board. In 13 addition, the cost effectiveness may be overestimated 14 since all of the costs of the regulation are compared only 15 against reductions in diesel PM. We do not account for 16 reductions in NOx and SOx. If half of the proposed cost 17 is attributed to diesel PM and the other half to the NOx 18 and SOx emissions, then the cost effectiveness value shown 19 in this table would be half of the stated values. 20 --o0o-- 21 AIR POLLUTION SPECIALIST MILKEY: We do not 22 expect the proposed regulation to have an adverse impact 23 on typical companies that operate marine vessels or on 24 California's economy. To provide some perspective, a 25 typical trans-Pacific voyage we would estimate that the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 130 1 proposed regulation would result in added costs that 2 equate to about $1 extra per shipping container. And 3 that's out of total operating costs of around $500 per 4 container. 5 For passenger cruise ships we estimate the added 6 cost at about $8 per passenger for a typical L.A. To 7 Mexico cruise. 8 --o0o-- 9 AIR POLLUTION SPECIALIST MILKEY: In the next few 10 slides I'd like to discuss the remaining issues. 11 --o0o-- 12 AIR POLLUTION SPECIALIST MILKEY: Some members of 13 industry maintain that ARB lacks the authority to regulate 14 marine vessel emissions. We strongly disagree with these 15 commenters. ARB legal staff have extensively researched 16 this question and conclude that ARB has the authority to 17 regulate vessel emissions that cause adverse health and 18 environmental effects. This regulation reflects 19 California's valid exercise in its traditional powers to 20 protect human health, welfare, safety, and the 21 environment. 22 --o0o-- 23 AIR POLLUTION SPECIALIST MILKEY: Several members 24 of industry have stated that it is inappropriate to 25 regulate the engines on diesel-electric vessels because PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 131 1 they are used to supply power for propulsion as well as 2 shipboard electricity and because the cost impacts on 3 these vessels are much larger. 4 While we acknowledge the higher costs for these 5 vessels, we believe it is appropriate to regulate these 6 engines the same as other auxiliary engines. These 7 engines represent about 25 percent of the overall 8 emissions subject to this proposal. And, additionally, 9 these engines are technically very similar to the other 10 auxiliary engines covered under the rule. So there are no 11 additional technical barriers to controlling them. 12 --o0o-- 13 AIR POLLUTION SPECIALIST MILKEY: Some comments 14 have also stated that the proposed regulation would result 15 in fuel switching that is not safe. We disagree. First, 16 it is important to acknowledge that the proposed 17 regulation does not require fuel switching since the 18 regulation allows for the use of other control strategies 19 under the Alternative Compliance Plan. 20 For those vessels that elect to fuel switch as a 21 compliance option, there is clearly experience in the 22 industry in doing the fuel switches safety. For example, 23 fuel switching is currently conducted prior to routine 24 scheduled maintenance to flush the heavy fuel oil from the 25 engine components. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 132 1 In years past it was also common place to switch 2 fuels prior to coming into port to help engines operate 3 reliably and prevent stalling. 4 In addition, fuel switching is also conducted on 5 a routine basis by some vessels every time they visit a 6 California port. For example, some Princess and Carnival 7 Cruise Line vessels switch fuels prior to entering 8 California ports. 9 We also have confidence that vessel operators who 10 are highly trained in the operation of vessels at sea will 11 take every step needed to ensure that the fuel switching 12 process is done safely. 13 Last, if an operator wants to elect to use 14 cleaner distillate fuels as a compliance option and he has 15 concerns about fuel switching, they can always opt to use 16 distillate fuels in their subject engines at all times. 17 And from a survey we have conducted, we found that about 18 25 percent of auxiliary engines currently do this. 19 --o0o-- 20 AIR POLLUTION SPECIALIST MILKEY: We've 21 identified several proposed 15-day changes, and we would 22 like to use the 15-day public comment period to work out 23 the details. These are our suggested changes to the 24 proposed regulation: 25 We are proposing to add a provision that would PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 133 1 exempt the vessel operator from compliance with the 2 regulation if the master of the vessel determines that 3 there are overriding safety concerns. For example, 4 extreme weather conditions. 5 We are also proposing to modify the language of 6 the ACP to ensure that emission reduction strategies will 7 achieve emission reductions in the areas where ships 8 visit. In other words, we want to avoid strategies that 9 benefit one area at the expense of another. 10 We are proposing to specify that the 11 noncompliance fee provision funds also will be used to 12 achieve the reduction in pollutants controlled under 13 direct compliance with the proposed regulation. 14 And we were proposing to define noncompliance 15 incidents. 16 Finally, we are proposing a number of minor 17 clarifications and adjustments based on some of the 18 comments we received during the public comment period. 19 --o0o-- 20 AIR POLLUTION SPECIALIST MILKEY: In summary, the 21 proposed regulation will achieve substantial and immediate 22 reductions. It will improve regional air quality and 23 reduce the risk of cancer and noncancer health effects. 24 And it is cost effective. 25 We recommend that the Board approve the proposal PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 134 1 with the suggested 15-day changes. In doing so, the Board 2 will also grant expressed delegation to the Executive 3 Officer to conduct public hearings and amend the 4 regulation if changes to the test methods or nautical 5 charts aren't amendments to the regulation. 6 Thank you. I'd be happy to answer any questions 7 at this time. 8 ACTING CHAIRPERSON RIORDAN: Board members, are 9 there any questions for the presenter at this time? 10 Don't see any. 11 Oh, dr. Gong. 12 BOARD MEMBER GONG: Yes. That was an excellent 13 report. I just had a couple comments for clarification. 14 You may have told me this before, but -- the 15 proportion of ships that are motor ships versus 16 diesel-electric. I understand it's a very small 17 percentage that are diesel-electric and they're mostly 18 cruise ships; is that correct? 19 AIR POLLUTION SPECIALIST MILKEY: Correct. About 20 3 percent of the vessels are the diesel-electric, which 21 are primarily the cruise ships. And -- 22 BOARD MEMBER GONG: Okay. 23 AIR POLLUTION SPECIALIST MILKEY: In terms of 24 just the number of vessel visits though, it's somewhat 25 higher. It's more like 7 percent of the visits that would PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 135 1 be attributed to the diesel-electric. 2 BOARD MEMBER GONG: Right. And they're the 3 predominant source percentage-wise of all the diesel PM 4 emissions? 5 AIR POLLUTION SPECIALIST MILKEY: The largest 6 category is the container ships, which the primarily the 7 motor ships. But I think they're number two. 8 BOARD MEMBER GONG: Okay. And the Alternative 9 Compliance Plan, ACP, your slide showed the applicants may 10 average emission reductions over a fleet of vessels. So 11 you could theoretically have ships coming in with high 12 emissions then over -- well, the fuel that could be a high 13 sulfur fuel? 14 TECHNICAL ANALYSIS SECTION MANAGER TARICCO: Yes. 15 Under the ACP it would be allowed to within a given year 16 to average your emissions. And one example would be, 17 there could be a large ship that spends a lot of time at 18 dock, two, three days, that could overcontrol. They could 19 use the much cleaner fuel. And then there may be another 20 ship that maybe come in for a much shorter period. There 21 are times when ships can unload, be in and out in a day or 22 day and a half. Then that would offset those emissions. 23 But the end result would be that we would have 24 the same emission reductions that we are expecting under 25 the reg from a fleet of engines that would all be PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 136 1 complying. 2 DEPUTY EXECUTIVE OFFICER SCHEIBLE: And the vast 3 majority of the health benefits that accrue from this rule 4 are because of PM reductions and SOx reductions. And 5 those are things where we believe the -- most of the 6 impact is the chronic impact from longer term exposures. 7 So we don't have an instance here where we really have too 8 much concern that we'll somehow have some spikes in 9 pollution under the ACP that we wouldn't have without it. 10 But that's obviously a concern we have to look at. 11 BOARD MEMBER GONG: Yes. And actually my last 12 comment was about the SOx. You don't hear too much about 13 sulfur oxides. But I'm sure that -- I saw the significant 14 reduction of SOx from 2007 to 2010, 80 percent and 96 15 percent respectively, and I think that's a very important 16 result of the low sulfur fuel. 17 DEPUTY EXECUTIVE OFFICER SCHEIBLE: It is. And 18 the SOx is converted in the atmosphere often to sulfates, 19 and the sulfates is a PM. And we really -- we have not 20 yet found the right method to quantify how much reduction 21 in PM we will get. We're still trying to do that as part 22 of the goods movement effort. 23 But there will be significant health benefits 24 from that that are not currently quantified in the report. 25 All the health benefits you see in this report are coming PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 137 1 from the direct PM reduction. 2 BOARD MEMBER GONG: Question. Does that SOx 3 also, a part of it, become sulfur dioxide? 4 DEPUTY EXECUTIVE OFFICER SCHEIBLE: It is emitted 5 as sulfur dioxide. And then in the atmosphere it often 6 reacts to form sulfate particles. 7 BOARD MEMBER GONG: So if you could be jogging 8 around a cruise ship with high sulfur fuel emissions, you 9 could have an acute asthma attack just like that? 10 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Well, the 11 good news is the emission point's about 50 meters up and 12 it's usually pretty hot. So hopefully it's not coming 13 back down to get the people right next to the ship. But 14 it all goes inland. 15 BOARD MEMBER GONG: I guess it depends on the 16 wind. 17 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Yeah. And, 18 you know, it spreads out and affects a lot of people. 19 So the direct PM control benefits those that are 20 closest to the source. And then the SOx and NOx control 21 benefits everybody who lives in the basin. It doesn't 22 affect any one person quite as much, but it affects a 23 large number of people. 24 BOARD MEMBER GONG: Right. But there have been 25 instances of asthmatics jogging or running around PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 138 1 refineries and they have had peaks, accidents, flares? 2 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Yes. 3 BOARD MEMBER GONG: And there could be more 4 sulfur dioxide in those close proximity exposures than we 5 know about. And that's why you can have an acute asthma 6 attack at that point. Just a health issue right there. 7 Thank you. 8 ACTING CHAIRPERSON RIORDAN: Thank you, Dr. Gong. 9 Madam Ombudsman, would you describe the public 10 process for this item. 11 OMBUDSMAN TSCHOGL: Madam Chair and members of 12 the Board. The staff presentation included information on 13 the outreach activities and the different groups that were 14 involved in the development of this proposal. The only 15 thing I would like to add is that the staff report was 16 released on October 21st, 2005, and the notice was 17 published on ARB's website that same day. Additionally, 18 the notice was sent to more than 800 subscribers and 19 mailed to about 100 stakeholders. If you'd like more 20 information, I could give it you to you, but I'd keep it 21 brief. 22 Thank you. 23 ACTING CHAIRPERSON RIORDAN: Thank you, Madam 24 Ombudsman. Appreciate that. 25 All right. There's a witness list. It is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 139 1 substantial. So for anyone who has joined us in the last 2 hour or os, let me just share with you, we do have time 3 limits. Everybody has the same time limit. That will 4 allow everyone a fair opportunity to present their issues. 5 If you have written comments, obviously you've 6 turned those in, I hope by now, to our clerk. And I would 7 appreciate those of you who do make presentations to in 8 your own words share with us your ideas. Don't read from 9 a text. It is more important that you share your ideas. 10 And we'll begin with Alan Gordon, followed by T. 11 L. Garrett, followed by Frank Holmes. 12 And for T. L. Garrett and Frank Holmes, if you'd 13 come forward please and be ready. 14 MR. GORDON: Madam Chair and members of the 15 Board. Alan Gordon on behalf of Senator Simitian and the 16 Environmental Quality Committee of the California Senate. 17 I'd like to reiterate some of the earlier 18 comments with regard to the Committee looking at the 19 regulations when they're complete to determine whether 20 they are as protective of public health as the Committee 21 might be interested, specifically with regard to the 22 regulations having to do with auxiliary diesel engines. 23 This a particular interest based on the fact that 24 the Senator has worked on significant legislation over the 25 last number of years having to do with the cruise ship PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 140 1 industry. It is of major note that the fuel that is 2 burned by the marine industry bunker is about the dirtiest 3 stuff that is possible to be burned. We don't burn it on 4 shore. It is -- the stuff is contaminated with hazardous 5 waste. It is limited to very, very limited uses in 6 California. And the fact that it is used by ships while 7 they are docked right across the street from facilities 8 that would be prohibited from using this fuel, we think is 9 of interest and would urge the Board strongly to limit, if 10 not eliminate, the use of bunker fuel as soon as possible. 11 In general, the Senator is very supportive of 12 this regulation, thinks the Board has done excellent work 13 and commends the Board and would ask that these be 14 adopted. 15 Again, we have a few suggestions as to how we 16 would like to see it strengthened. We would like to see a 17 firm cap on sulfur content levels established. We think 18 it might be a little bit ambiguous under the existing 19 language. 20 The Alternative Compliance Plan again looks like 21 a possible loophole. I believe that clearly defined and a 22 limited number of viable strategies should be made 23 available by the Board that guarantee equivalent emissions 24 reductions, and this just can't by a willy-nilly approach. 25 We're deeply concerned that this could be a loophole. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 141 1 Finally, the mitigation fees should be allowed 2 only in unexpected circumstances. Again, guarantee 3 equivalent emission reductions and be subject to public 4 review. We think that's very, very critical. 5 We strongly urge ARB to implement strong 6 enforcement provisions so that the regulation that you 7 adopt actually does have an impact particularly on the 8 communities surrounding the ports. 9 And with that, I would just strongly urge an 10 adoption of the regulation, and look forward to working 11 with the Board and the staff in the coming years as the 12 new Chairman of the Committee in the Senate. 13 Thank you. 14 ACTING CHAIRPERSON RIORDAN: Thank you very much. 15 And we look forward to working with you and the Senator as 16 well. Appreciate your comments. 17 T. L. Garrett. 18 MR. GARRETT: Good afternoon. I am T. L. 19 Garrett. I'm with the Pacific Merchant Shipping 20 Association. Thank you very much for giving us the 21 opportunity to comment on this important regulation before 22 you. 23 Again, we want to say that working with the staff 24 has been a very productive process and we greatly 25 appreciate all their efforts. Unfortunately, in this case PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 142 1 we would like to ask the Board, that you withdraw this 2 regulation for consideration at this time and give the 3 industry and some of the other stakeholders in this 4 process additional time to work out other ways of 5 achieving these air quality benefits. 6 We do think there are substantial issues that are 7 unresolved in regards to safety. I'm glad to see that the 8 provision for safety has now been added into the 15-day 9 provision. That's a significant step in the right 10 direction. But the safety issue we think has been 11 under-evaluated to this point and deserves more attention. 12 The availability of fuels, the noncompliance 13 issues is great. Unintentional consequences of a ship 14 operator picking up fuels that either do not meet the 15 specs or they simply cannot purchase those fuels and then 16 being force to pay a fee is somewhat problematic for our 17 members. 18 But going back to the European Union concept, 19 which was cited here earlier, one of the reasons that that 20 was delayed until the 2010 timeframe is there is also a 21 requirement in the European Union that only compliant 22 fuels can be supplied. 23 So those things are tied together. In this case 24 there is no requirement that the State of California will 25 make sure that compliance fuels are indeed available. So PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 143 1 there is a big disconnect there. 2 The cost of compliance. We understand that the 3 cost of compliance is somewhat flexible on a 4 vessel-by-vessel basis. There is the provision for a 5 vessel that will indeed require retrofits. A lot of these 6 vessels are on a five-year retrofit cycle. If they have 7 to delay their retrofit for even one year and pay the 8 fees, and some of these vessels can come in -- while a 9 cruise ship can come in a hundred times in a year, a 10 container vessel may come in 20 or more times, that can 11 quickly get to 1.5 million. In the case of a cruise ship, 12 it could -- I believe the numbers were somewhere around 13 $16 million for one year. 14 So for vessels that do indeed require retrofit, 15 some provision for that retrofitting to be more in line 16 and more cost effective we think is appropriate. 17 In terms of the benefits, we commented previously 18 that some of the emission factors are very uncertain. The 19 use of the fuels, there are differences there that we 20 think disserve further scrutiny. We need to better 21 understand both the current impacts and the benefits of 22 this regulation before it moves forward. And probably 23 most importantly, we do believe, and respectfully disagree 24 with staff's assessment, that there are significant legal 25 authority issues here, both for the State of California to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 144 1 impose these requirements in international waters and on 2 foreign flag vessels, but also under preemption of various 3 federal statutes and legislation. 4 So, again, we would respectfully ask that the 5 Board withdraw consideration of this, that the industry 6 and the staff continue to do what we've done so well in 7 the past in terms of the voluntary speed reduction and 8 other measures that we worked together to come to 9 solutions that we can all live with. 10 And I thank you for your consideration. 11 ACTING CHAIRPERSON RIORDAN: Thank you, Mr. 12 Garrett. 13 Yes, Dr. Gong. 14 BOARD MEMBER GONG: I'd like to ask staff 15 regarding two issues that were brought up. One is about 16 safety. And I was wondering, have there been any 17 documentation or reports of problems, I guess, with 18 navigation or explosions or drownings or ships going down 19 when they do this type of fuel exchange? 20 And the second question -- okay. You answer the 21 first one first. 22 ACTING CHAIRPERSON RIORDAN: Yeah, let's have 23 them respond. And then you can pose the next question. 24 BOARD MEMBER GONG: Perhaps I'll remember. 25 AIR POLLUTION SPECIALIST MILKEY: Okay. Well, we PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 145 1 have worked with the Coast Guard in trying to look at the 2 existing -- for the existing incidents, how many of them 3 were related to fuel switching? And the way they have the 4 data set up, it's not really specified in that level of 5 detail. But we're not aware of, you know, significant 6 incidents occurring because of fuel switching. And in 7 California the Coast Guard does not have any, you know, 8 prohibition against fuel switching. 9 I don't know if that sort of begins to address 10 the question. 11 BOARD MEMBER GONG: That does help. 12 I imagine -- what about the cruise companies and 13 the -- they already, some of the lines do use the marine 14 oil distillate fuel. 15 AIR POLLUTION SPECIALIST MILKEY: That's right, 16 as well as others that currently do it, and for air 17 quality reasons. So there are examples of vessels out 18 there that are fuel switching right now, you know. And 19 we're not aware of any incidents with those fuel 20 switchers. 21 DEPUTY EXECUTIVE OFFICER SCHEIBLE: I think 22 formerly it was a common practice. Now it's not an 23 uncommon practice, but it's not perhaps common. 24 And when we've looked at it -- remember, we're 25 dealing with auxiliary engines. The ship still has power. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 146 1 If one of these engines fails and the -- you could lose 2 the power necessary to steer the ship and that type of 3 thing. But from the picture you saw before, there's 4 redundancy here. There's several engines on each ship. 5 They're turned on and off all the time. Some have 6 described fuel switching as pushing a button. Others, 7 it's more complicated. The crews have to be trained to do 8 it. That's the responsibility of the ship captain. We're 9 convinced that it can be done safely and that it can be 10 done routinely if that's the option that they choose. 11 Again, if for some reason the shipping company 12 doesn't want to do it, they can decide that -- they can 13 use the complying fuel or the distillate fuel in their 14 engines at all times. And that's a practice that is done 15 by others. The costs would go up. But if it's cost 16 versus safety and they don't think that they can operate 17 and train their crews correctly, they can do that. 18 So we're fairly convinced that the industry knows 19 how to do these types of things, they can do them safety. 20 And then we are agreeing to put in that safeguard -- if 21 there's something happening out there or my crew's 22 occupied because the seas are very rough and it's not safe 23 or there's some other issue related that the captain feels 24 that he can't perform that operation, he can at least 25 delay it until he gets into port. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 147 1 But I don't think many captains will want to use 2 that. 3 BOARD MEMBER GONG: And I bet you -- thank you. 4 I bet you thought I forgot the second question. 5 But, no, I didn't. 6 (Laughter.) 7 BOARD MEMBER GONG: It was mentioned that they 8 need more time to look at alternatives. But I thought you 9 had already been dialoguing with them for several years. 10 So my impression is is that's sort of a last minute list 11 of reasons to be concerned. But -- 12 EXECUTIVE OFFICER WITHERSPOON: Dr. Gong, I 13 believe that was a reference to entirely different 14 approaches to reducing the emissions. For example, a 15 trading scheme, and many have been proposed, where vessel 16 operators would enter into contracts or other kinds of 17 agreements with us and other parties to reduce emissions 18 over time, to trade credits amongst themselves to deal 19 with these emissions in a different way. And there is a 20 lot of interest in those proposals. 21 And what we would suggest that you do is proceed 22 with the regulation today. We have the opportunity to 23 roll it into any future market-based program that emerges 24 that is sound and to transition one to the other and 25 capture the main engines. And we're very interested in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 148 1 these proposals as well. We appended one of them to our 2 draft goods movement plan as an example of the dialogue 3 going on. But they will be long in their development, a 4 couple of probably, a full year at least, to work out all 5 the kinks and the details to build a constituency for it, 6 to figure out how it would be implemented to get buy-in. 7 And then we could talk about it seriously and how to 8 transition, if we're going to do it, from straightforward 9 regulations to a different kind of structure. 10 So we're not foreclosing that opportunity, but 11 we're also not betting today that it will come about 12 quickly. 13 BOARD MEMBER GONG: All right. 14 DEPUTY EXECUTIVE OFFICER SCHEIBLE: And when you 15 look at the overall -- the growth in emissions from ships 16 and the types of -- and the degree of control that we will 17 eventually need, moving as a first step to moderately 18 cleaner -- these are not clean fuels, these are moderately 19 cleaner fuels -- to reduce emissions by the amounts we 20 should, I can't imagine how that is not going to be a 21 primary point of anybody's ongoing strategy to lower 22 emissions from the ships. You know, maybe not every 23 single ship that comes to California will deploy that 24 strategy, but the vast majority will have to if we're to 25 ever make the kind of progress that we need to make over PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 149 1 the next 10 to 15 years to have this great growth in trade 2 and all the economic benefits without having the pollution 3 come along with it. 4 ACTING CHAIRPERSON RIORDAN: Okay. 5 BOARD MEMBER GONG: Third question. 6 ACTING CHAIRPERSON RIORDAN: Oh, a third one. 7 BOARD MEMBER GONG: I remembered another one. 8 (Laughter.) 9 BOARD MEMBER GONG: When the ARB inspector checks 10 the ship at ports and they sample the fuel, do the results 11 come back in timely fashion, or is it a week, month later, 12 checking for the sulfur and other content? 13 PLANNING AND TECHNICAL SUPPORT CHIEF FLETCHER: I 14 think that pretty much the test results can come back 15 pretty quickly. When we take a test in a refinery and 16 those sorts of things, we have vans that are -- or buses 17 basically that are equipped to do sampling and analysis 18 on-site. So we should be able to get screening level 19 analysis pretty quickly. 20 The other consideration is is that in the first 21 three years we're moving to basically a bunker fuel to a 22 distillate fuel. You can almost tell the difference 23 between the two by looking at them. So we'll know pretty 24 much whether or not they have actually switched to a 25 distillate fuel. And the sulfur content is important for PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 150 1 one of the fuels. The others, it is not; there's no limit 2 on that sulfur content. So it's only for the marine 3 diesel oil that we actually have a sulfur cap on it, 4 because it has a tendency to have higher sulfur levels 5 than marine gas oil. 6 BOARD MEMBER GONG: Thank you. 7 DEPUTY EXECUTIVE OFFICER SCHEIBLE: And in 2010 8 they will have to extensively manage their fuel supplies. 9 Because if you want to keep at the lower sulfur level, you 10 will have to make sure you don't contaminate it probably 11 any time that you're traveling around. 12 ACTING CHAIRPERSON RIORDAN: Frank Holmes, 13 followed by Bob Wyman. 14 MR. HOLMES: Good afternoon, Madam Chair, Board 15 members. My name is Frank Holmes and I'm the Manager for 16 the Northwest Region and Marine -- of the Western States 17 Petroleum Association. 18 WSPA understands the Board's interest in 19 controlling these emissions from the marine and port 20 environment. But we also believe that this rule contains 21 a number of problems that we've enumerated in detail in 22 the comments that we've submitted. 23 The two biggest comments and concerns that we 24 have involve the safety that's requiring these vessels to 25 switch while under transit and the jurisdiction that we PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 151 1 question CARB's ability to implement these rules offshore 2 California. If the rule is adopted in its current form, 3 there's a strong probability that this rule's going to be 4 tied up in court, and the health benefits and emission 5 reductions that is intended by this rule will not be 6 available to the citizens surrounding the ports. 7 But WSPA is proposing a three-part solution to 8 this program. The first part of this rule would be to go 9 ahead and adopt this rule, but only limit it to those 10 vessels while they are at dock or at anchor. And this 11 would substantially eliminate the safety concerns, because 12 the fuel switching would actually take place while the 13 vessel is at rest at the dock or at anchor. 14 This would also significantly reduce the 15 probability of legal challenges because it would apply 16 only within the port. 17 Secondly, I would encourage the Board to direct 18 staff to continue their active participation in the West 19 Coast Collaborative, which is taking the lead with EPA, 20 Environment Canada, and the IMO to implement a North 21 American Sulfur Emission Control Area, or SECA, in the 22 United States and Canada. 23 This IMO jurisdiction rule would require vessels 24 to burn a cleaner burning fuel while transiting within 25 North America. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 152 1 And, thirdly, WSPA is a member and supports the 2 Maritime Goods Movement Coalition, which is formed to 3 develop a long-term comprehensive goods movement plan that 4 would be able to achieve these emission reductions through 5 a market-based program. In order to have a successful 6 program in controlling these marine and port emissions, 7 you have to have all the parties working together in one 8 comprehensive plan. And we believe that this goods -- 9 Maritime Goods Movement Plan is a good vehicle to make 10 that happen. And I believe a further speaker will address 11 that in more detail. 12 So, in summary, WSPA requests the Board limit 13 this rule to vessels that are at the dock or at anchor. 14 And WSPA commits to work with staff to address the other 15 remaining concerns as we move forward. This proposal 16 would attain 90 percent of the health risk benefits to the 17 citizens near the port and reduce the safety and 18 jurisdictional concerns. And at a minimum, this rule 19 needs to be phased to allow time to work these issues as 20 we move forward with EPA studies to complete the IMO SECA 21 program. 22 Thank you. 23 ACTING CHAIRPERSON RIORDAN: Thank you, Mr. 24 Holmes, very much. 25 Yes, question, Ms. D'Adamo. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 153 1 BOARD MEMBER D'ADAMO: Well, I agree that we need 2 to continue to work at the national and international 3 level with the West Coast Collaborative. But I'm assuming 4 that we're still moving down that path. 5 EXECUTIVE OFFICER WITHERSPOON: Yes, we are. And 6 EPA has asked us to do the lead for all the technical work 7 supporting the SECA designation on the Pacific Coast. 8 BOARD MEMBER D'ADAMO: Okay. And on the issue of 9 legal jurisdiction, I want to thank WSPA for providing me 10 with information on its legal analysis. But I believe the 11 staff report also has a very detailed analysis that staff 12 has provided. And although I'm not an expert in this 13 area, by any stretch, I'm very comfortable with staff's 14 analysis. And would just like assurances that in the 15 event that we do get faced with a challenge, that this 16 regulation does have a severability clause depending on 17 what a later court determines in terms of the mileage. 18 STAFF COUNSEL VERGARA: That's correct. It does 19 have a severability clause. And some of the 15-day 20 changes will also address the potential for litigation and 21 to make sure that the regulation survives as much as 22 possible. 23 EXECUTIVE OFFICER WITHERSPOON: And just so all 24 the Board members are clear on what the clause says, if 25 our authority at 24 miles is not sustained, the first PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 154 1 severability clause takes it back to 12. And if that is 2 not sustained, it takes it back to 3, which are state 3 waters, not federal, where we think there's absolutely no 4 question with regard to our authority. 5 ACTING CHAIRPERSON RIORDAN: Thank you. 6 ACTING CHAIRPERSON RIORDAN: Thank you very much. 7 Mr. Wyman. Sort of an authority on things, legal 8 things in that -- it's good to see you. 9 MR. WYMAN: Nice to see you. Thank you very 10 much. 11 Good afternoon. My name is Bob Wyman. I'm with 12 the Law Firm of Latham & Watkins. And I'm here today to 13 speak on behalf of the Maritime Goods Movement Coalition, 14 which is a coalition of ports, terminal operators, fuel 15 and energy providers which has been formed to try to 16 develop a comprehensive plan which you've heard referred 17 to already twice today. And I thank the previous 18 references. 19 Our primary concern is that despite the best 20 intentions, rule making in a piecemeal fashion, whether 21 it's by your Board or by the Legislature or by other 22 jurisdictions in the state, could unintentionally thwart 23 both economic and environmental goals. And so we have 24 formed and have developed a plan which, as Catherine 25 mentioned, has been appended to your agencies' Goods PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 155 1 Movement Emission Reduction Plan as Attachment C, which we 2 think could address some of the concerns that a piecemeal 3 approach might create. And, as you've heard, it does 4 recommend the use of a market strategy and a master 5 planning approach which would allow the integration of 6 each aspect of the goods movement sector. 7 Our hope is that should the Board adopt this rule 8 today, that you would remain open to incorporating this 9 rule ultimately in to a comprehensive market should your 10 Board ultimately decide that that is in the interests of 11 the public. And we would want to come back to you and 12 give you more detail on our proposals at that time. 13 I would like, however, today just to give you a 14 brief overview of why we think a market approach and a 15 master integrated plan approach could be superior from an 16 environmental public health and economic perspective. 17 First of all, we think the goods movement 18 proposal we have made would be superior for the 19 environment for several reasons. First, it would help 20 bridge potentially significant gaps in legal authority. 21 Under our plan sources would have a material economic 22 incentive to opt into an emissions market, either to make 23 money by generating surplus credits or to save money. 24 I'll talk about the potential magnitude of those savings 25 later. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 156 1 The market would provide a declining balance of 2 emissions to deliver environmental and public health 3 gains. And for sources that chose not to meet those 4 targets, either directly or through the purchase of 5 credits, under our proposal they would be subject to an 6 emissions fee. This is a fee that could be entirely 7 avoided of course if sources met the performance targets 8 directly or through purchase of credits. But if not, the 9 fee would be used -- would be collected and used 10 selectively to mitigate impacts or to invest in 11 appropriate infrastructure with the environmental benefits 12 from that investment. 13 The MGM plan would also be good for the 14 environment because the market would provide -- and this 15 is really unique to a market -- an ongoing continuous 16 incentive for technology advancement, emission reductions, 17 and air quality improvement; an incentive for 18 conservation, and it doesn't exist any other way; and for 19 sources to find innovative ways to reduce emissions. 20 We believe the MGM plan, our proposal, would also 21 be particularly good for public health the way we have 22 designed it, because the market can accelerate investments 23 in the most highly impacted communities. And if you look 24 through the Attachment C in the plan, you'll see that we 25 do this by recommending that protocols be developed so PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 157 1 that the most -- the highest risk sources and the highest 2 risk communities be targeted first for accelerated 3 investment. And we'd also propose a restriction to 4 trading that would ensure one-way trading in those zones. 5 So you accelerate reductions, but you don't allow sources 6 that drive that risk in those zones in those communities 7 to defer or avoid emission reductions. And that way you 8 can harness the market to achieve this particular public 9 health goal in a way that you probably can't do it by any 10 other means. 11 ACTING CHAIRPERSON RIORDAN: Mr. Wyman, you have 12 run out of your three minutes. So I need a concluding 13 statement. 14 MR. WYMAN: Which is where I was. 15 I won't need to elaborate. But I think you know 16 from your experience that market programs can also save a 17 lot of money. In this case we're talking billions of 18 dollars. So there's a lot at stake in our view for the 19 environment, for public health, then for the economy. And 20 we look forward to returning to your Board when it's 21 timely to recommend a comprehensive market. 22 Thank you. 23 ACTING CHAIRPERSON RIORDAN: Thank you, Mr. 24 Wyman. You give us some interesting opportunities maybe. 25 Let me just share with you in the audience what PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 158 1 my goal is for the next, say, half hour. And, that is, 2 that we take a break. We will come back and accommodate 3 two people who need to leave, Elina Green and Evangelina 4 Ramirez. You'll be first when you come back. And then 5 Mr. Smith -- Dave Smith, we will begin -- you'll be third; 6 Bradley Rose, fourth; and Joe Angelo, fifth. So if you 7 could kind of be ready. 8 We will come back -- it's exactly 12:30. And so 9 I'm suggesting that we all be back in this room ready to 10 go at 5 after 1. 11 So let's take a break. And we'll see you back at 12 5 after 1. 13 (Thereupon a lunch break was taken.) 14 15 16 17 18 19 20 21 22 23 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 159 1 AFTERNOON SESSION 2 ACTING CHAIRPERSON RIORDAN: I think we need to 3 be true to our word of starting again. And Elina and 4 Evangelina, why don't you come forward. 5 And I'll ask as best we can for people to take 6 their seats. 7 MS. GREEN: Is this on? 8 ACTING CHAIRPERSON RIORDAN: Yes, it is. 9 Just one second. 10 MS. GREEN: Sure. 11 ACTING CHAIRPERSON RIORDAN: Get everybody kind 12 of where they need to be. 13 All right. Let's start. 14 MS. GREEN: Thank you for the opportunity to 15 speak again and for allowing us to speak early. 16 I've already explained what the Long Beach 17 Alliance for Children with Asthma does in our prior 18 testimony. 19 We are also in support of this regulation. One 20 of the only things that really concerns me in terms of the 21 constituents that I represent is the AC -- what's it, 22 ACP? -- in that consideration of having the fleet 23 averaging, in that one of the things that we -- one of the 24 programs -- part of our program that we have is we have a 25 flag that we put up at schools saying, you know, "Today is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 160 1 a bad air quality day" to let our kids know that it's not 2 a good day to do P.E. outside or any of those kinds of 3 things. And with the fleet averaging there's no way of us 4 knowing which days are the days that certain ships are 5 using the lower quality fuel versus the days that are 6 going to be higher quality fuel days. And obviously we're 7 already dealing with poor air quality. 8 And so we really support this standard and 9 keeping a cap and a limit on all of the fuel that's being 10 used in these ships because it does -- we are already 11 disproportionately affected by the poor outdoor air 12 quality in our area. 13 So thank you. 14 ACTING CHAIRPERSON RIORDAN: Thank you very much. 15 And thank for your testimony and making the effort to come 16 today. 17 Evangelina. 18 MS. RAMIREZ: Well, I'm here again. And I'm here 19 again to support this, because I was thinking a little 20 while. When I hear -- I need to get -- 21 That's all right. You think about the word. Not 22 a problem. 23 AIR POLLUTION SPECIALIST RAMALINGAM: Okay. 24 Somebody told me business are business. And doesn't 25 matter what you're doing. The business make the people do PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 161 1 whatever they want. And I ask this person, do you -- you 2 can negotiate the life of your kids? I was thinking in 3 that. And I was thinking we need to put limits to 4 everything. We have the port. We have the ships. We 5 have the refineries. We have the trucks. We have a lot 6 of things around our area. And I live in the middle of 7 this -- these things. 8 And it's hard to me go outside. And sometimes 9 when I'm playing outside with my daughter, say, "No, no, 10 no, no, we cannot be here because smells so bad." And 11 sometimes their refineries smell, you know. I don't know 12 if somebody here live in that area. But I live in there. 13 And that way I can say how -- if the things happen. 14 And we need to put limits. We need to put limits 15 on everything. That's why I'm here to support this. We 16 need to have our air more cleaner. And we need to have 17 our lungs more clean. Because it's not only the kids. 18 It's everybody. The older people, they need to take care 19 for them. And sometimes I'm doing some classes in the 20 community -- asthma classes. And I teach older people 21 like me to help control their asthma, how they control 22 their asthma for their kids. But how I can teach them how 23 to control the things that we have in the air? How can -- 24 just I want somebody can tell me how I can teach them to 25 control that. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 162 1 It's hard to me, because sometimes I say, when I 2 go to -- I'm going to make some exercise or do something 3 for my kids, they get started to get an asthma attack and 4 I need to bring inside of my home. And the only thing 5 that he can do is watching TV. I don't think that's 6 good -- it's not good thing for the kids. 7 And then that's why I'm here. Put limits. Don't 8 live -- get the -- or things like that. It's a limit. We 9 need limits. And I know you have the power to do the 10 things happen. And that's why I'm here, because I want a 11 change -- my life change, I want my daughter -- child's 12 life changed too. 13 And I want everybody -- when I go their homes and 14 I see how they feel, I want that their lives changed too. 15 But it's only the thing that I can tell you. 16 Thank you so much for giving me the time to make my 17 comments. And thank you so much for let us go early to 18 home, because the kids are waiting for me. And I have 19 three kids. 20 Thank you. 21 ACTING CHAIRPERSON RIORDAN: Thank you. And 22 thank you for coming today. We appreciate that very much. 23 All right. Mr. Smith. 24 (Thereupon an overhead presentation was 25 Presented as follows.) PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 163 1 MR. SMITH: Thank you, Madam Chairperson. I'm 2 Dave Smith. I work for BP. 3 I'd like to start my testimony by saying I'm not 4 a safety expert. I have had experience with water and 5 marine vessels, but I'm not an expert. So that's why I 6 went and talked to some folks about what the real issues 7 are. 8 --o0o-- 9 MR. SMITH: And as you remember, a couple months 10 ago I testified on refueling, and I had a problem with 11 that. 12 This is example of what BP is doing about safety. 13 This is one of our newest vessels that we just recently 14 brought on line. It was built in San Diego. Cost several 15 hundred millions of dollars. It's a double hull, double 16 propeller, double engine room, double everything. We are 17 building four of these vessels. Two of them are in the 18 water. One more is almost. Another one is coming on very 19 quickly. 20 The four vessels are I think the only crude 21 vessels that are diesel-electric that are going to be 22 covered by this rule. There's just four as far as I know 23 that are impacted by this rule. 24 Go ahead. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 164 1 MR. SMITH: But those vessels are the newest, the 2 most modern, the most sophisticated. And this is a chart 3 that shows back a year or so where these vessels come in, 4 the types of vessels that come in. Over the course of the 5 year we had 61 different vessels come in, 206 vessel culls 6 altogether. Forty of those 60 vessels only came in to our 7 berth only one or two times. So the vessels that we're 8 talking about, the ones that we're building, they're going 9 to come in 10, 12 times a year. But there's a lot of 10 other vessels that come into our berth that come in very 11 infrequently, once or twice, which presents a real, I 12 think, in my humble opinion, safety issue. 13 Next. 14 --o0o-- 15 MR. SMITH: We went to the experts. And 16 fortunately the experts had provided their comments to ARB 17 staff. The Office of Spill Prevention in response wrote a 18 letter, and this is what they said. They are the primary 19 authority to direct, prevent and response efforts for 20 spills. "We are tasked with reviewing regulations that 21 impact the safe navigation of vessels." 22 Next. 23 --o0o-- 24 MR. SMITH: This was their advice, their 25 conclusions. They're concerned about your proposed PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 165 1 regulations and that they may interfere with navigation 2 safety. 3 They talk about the problems with shifting fuels. 4 And then they conclude that "Prior to implementation we 5 recommend CARB sponsor a navigational risk and hazard 6 analysis." That wasn't me. That was somebody else. This 7 is the OSPR, the state agency that's specifically required 8 to do these kind of things, and saying, "You should 9 complete this before you implement this rule." 10 Go ahead. 11 --o0o-- 12 MR. SMITH: The next group that the ARB actually 13 talked to was the Bay Area Harbor Safety Committee. They 14 sent a letter on 11/20, I believe it was, that staff met 15 with them on October 25th. 16 This is another committee that's been set up by 17 the Legislature to look at maritime accidents in the 18 marine industry or the Bay Area. They met with the ARB 19 staff. And subsequently the full Harbor Safety Committee 20 voted unanimously on the following. This is made up of 21 the United States Coast Guard, harbor masters, ship 22 captains and other people. 23 Go ahead. Next slide. 24 --o0o-- 25 MR. SMITH: This is their two. And I'm pleased PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 166 1 to see that the staff has taken one of their two 2 recommendations, which is the first one about the safety 3 clause. 4 The second one was -- I think it was started by 5 the Coast Guard, which said really you need to include a 6 phase-in period. And in talking to the Coast Guard, I 7 think what they're really talking about is this idea that 8 WSPA has promoted, which is that you really should start 9 with hoteling first and then spend some more time looking 10 at the transiting issues because that's where the safety 11 issues is. 12 I'd note that when the staff made the 13 presentation to this Committee, the implementation of this 14 rule was still 1107. And this Committee was still saying 15 that you needed a further phase-in of the rule. 16 ACTING CHAIRPERSON RIORDAN: And I need -- 17 because you're out of time, I need you to kind of -- sort 18 of your last. 19 MR. SMITH: This is it. 20 These are the two things: The ARB should 21 cosponsor a navigational risk analysis with the state 22 agency who's charged to do this. 23 And then we also support the idea of phasing in 24 the rule first with hoteling in '07 and then doing the 25 transiting and maneuvering in '08 after you do the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 167 1 analysis. 2 Thanks. 3 ACTING CHAIRPERSON RIORDAN: Thank you, Mr. 4 Smith. 5 I'm sorry. I do have a quick question. On the 6 tanker that you showed us, where would that travel? What 7 waters are we talking about? 8 MR. SMITH: Those vessels, our practice is 9 they -- they travel from Alaska to North America -- or I 10 mean to our refinery in Washington and then come down to 11 California. 12 They go out -- from Long Beach they go out a 13 hundred miles straight out and then turn north. 14 ACTING CHAIRPERSON RIORDAN: Okay. Thank you. 15 MR. SMITH: Thank you. 16 ACTING CHAIRPERSON RIORDAN: Yes, Ms. Berg. 17 BOARD MEMBER BERG: This is a question for staff 18 and a follow-up from what Mr. Smith has said. 19 I'm not sure who made the statement, Mr. Garrett 20 or Mr. Holmes, but somebody made the statement that the 21 hoteling portion of the rule would give us 80 percent of 22 the emissions. What would the staff's -- 23 EXECUTIVE OFFICER WITHERSPOON: Actually they 24 said 90 percent. But -- 25 TECHNICAL ANALYSIS SECTION MANAGER TARICCO: No, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 168 1 of the benefits that -- just the direct diesel PM emission 2 benefits, it's about 70 percent. I think what they were 3 trying to refer to was the risk associated with those 4 emissions. And those emissions that do occur at berth, 5 the direct diesel PM, do have a bigger impact on the 6 people that live in the communities than those emissions 7 that occur further offshore. But as Mr. Scheible was 8 saying, that this regulation is not only designed to just 9 reduce emissions from direct diesel PM; we're trying to 10 reduce SOx, NOx, which, you know, those emissions that are 11 released oversea they have time to transform and then they 12 basically have PM impacts on shore. 13 And I'm not sure exactly where they got their 14 number of 90 percent. 15 MR. SMITH: Could I respond to that or -- because 16 I was the one who calculated the number. 17 ACTING CHAIRPERSON RIORDAN: Would you like Mr. 18 Smith to respond? 19 BOARD MEMBER BERG: Yes, please. 20 MR. SMITH: What I did was ARB put out a health 21 risk assessment for the Port of Long Beach and Los Angeles 22 here some time ago. It's attached to the staff report. 23 In that staff report they estimated the risk from diesel 24 PM from hoteling, maneuvering and transit. It was their 25 numbers. When you look at the those tables, it comes out PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 169 1 pretty straightforward that 90 percent of the risk from 2 the marine vessels from the diesel PM comes from the -- 3 while they're hoteling because of the proximity to the 4 localities. 5 I mean as you go from an emission source, the 6 dilutions effect is exponential. And so fortunately those 7 vessels that are far out at sea are not -- they're 8 contributing, but not as significant as when the vessel's 9 parked right at the hoteling. That's one of the reasons 10 why BP is actually -- with the Port of Long Beach those 11 four new vessels are going to be cold iron, at least two 12 of them. And hopefully the other two will be as well. 13 We're spending well over a million dollars for each of 14 those vessels to be cold iron. The Port of Long Beach is 15 spending a lot more money than that to help us with the 16 shore side power. 17 BOARD MEMBER BERG: Thank you very much. 18 ACTING CHAIRPERSON RIORDAN: Thank you. 19 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Okay. And 20 I'd like to point out that under a cold ironing situation 21 that that would likely relieve the vessel of the 22 obligation to start using the fuel switch outside the 23 zone, because the emission reductions associated with cold 24 ironing should be far greater on a net benefit basis. 25 The impact especially of the diesel PM on PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 170 1 exposure to people goes down as the vessel gets further 2 away. That why we have a 24-mile limit and not a 3 hundred-mile limit. We've also picked the 24-mile point 4 because it was easily readable on navigational charts and 5 also insured that those people who chose to fuel switch 6 would be doing it away from congested areas. In. 7 Terms of a phase-in period, the industry knows 8 this regulation is coming. A year should be sufficient 9 time for them to figure out how to train their crews and 10 do what's necessary to comply with the rules. So we think 11 that's there. 12 And, quite frankly, we don't really know what 13 Osprey meant by their assessment. We'd be happy to go 14 talk to them and see what their concerns are in more 15 detail than a paragraph in a letter, which it's pretty 16 hard to figure out exactly what they meant. It wasn't -- 17 didn't seem to be overly concerned -- it seemed to be a 18 concern, not a deal-breaking concern. 19 ACTING CHAIRPERSON RIORDAN: And I think a 20 face-to-face is very good to have. 21 Thank you. 22 Thank you, Mr. Smith. 23 MR. SMITH: Thank you. 24 Bradley Rose, followed by Joe Angelo, followed by 25 Bryan Vogel, followed by Bob Hoffman. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 171 1 Mr. Rose. 2 MR. ROSE: Good afternoon, Madam Commissioner, 3 members of the Board. How's everybody today? I am 4 Bradley Rose and I'm here today on behalf of the 5 International Shipping Coalition for Clean Air. 6 Our coalition is made up of international 7 shipping trade groups whose memberships are going to be 8 directly affected by the proposed regulations. 9 We have submitted -- the Coalition has submitted 10 comments, as well as each member of the Coalition has 11 submitted comments. They are quite voluminous. We tried 12 to make them as easy reading as possible, but they deal 13 with the many constitutional and legal issues that we feel 14 speak to this issue and are of concern for us. 15 I will point out some of those comments for you 16 during my comments. But let me first -- recognizing I am 17 limited in time, I would be remiss if I did not 18 acknowledge Ms. Tarrico and her staff, Floyd for his 19 excellent work in putting legal authorities together. The 20 dialogue between industry and your staff has been well 21 received and appreciated. 22 And also on behalf -- I'm a native of Los 23 Angeles. I remember the days when we were not allowed to 24 go outside and play on the school ground because there was 25 unhealthy air. We've come a long way, and that's due in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 172 1 no small feat to the work that this Board has done. And 2 so I thank you for that as well. 3 Our coalition is here today in opposition of this 4 proposed rule. But I think it's very important that we 5 make our position clear, that we are not in opposition to 6 doing our part in making our ships more environmentally 7 friendly. 8 The industry that we belong to has been looking 9 at air emissions for quite sometime at the International 10 Maritime Organization, which is a United Nations industry, 11 has been looking at air emissions. There has been a 12 recent very comprehensive regulatory scheme that has been 13 enacted dealing with sulfur content in fuel. It was -- it 14 became effective in May of '05. And it just goes to show 15 that, you know, our industry -- we want, you know, to 16 stress the point that clean oceans and clean air is not 17 only a human concern, but it's integrally important to the 18 industry in which we serve. 19 Our State Assembly has given us some guidelines 20 to take a look at when we look at a proposed rule and the 21 propriety of a proposed rule. And one of the criteria 22 that we are to look at is the necessity of whether or not 23 the rule is necessary, based on the record is there a 24 substantial evidence to suggest that this rule is 25 necessary? And we believe the answer to that question is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 173 1 no. 2 The International Maritime Organization has 3 adopted Annex 6 to an international convention for the 4 Prevention of Pollution from Ships, which is known as 5 MARPOL. And that Annex 6 not only deals with sulfur 6 limits on fuels, but also emissions of volatile organic 7 compounds, of NOx. It has a fuel quality assurance 8 program. It's very comprehensive in its scope. It's 9 presently pending before the United States Senate. There 10 was a recent Senate Foreign Relations Committee where this 11 subject was taken up. It received overwhelming support in 12 the Committee for ratification to become the law of the 13 United States. 14 There was not one senator that expressed 15 opposition to this protocol. Our good President Bush has 16 seen fit to say that the United States is going to sign 17 on, has recommended that the United States sign on to this 18 international environmental treaty -- 19 ACTING CHAIRPERSON RIORDAN: Mr. Rose? 20 MR. ROSE: Yes. 21 ACTING CHAIRPERSON RIORDAN: You're out of time, 22 so I need a concluding statement. 23 MR. ROSE: Well, I would just say that when it 24 comes to regulating international maritime commerce, we 25 believe that that is properly left for the federal PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 174 1 government. And when we're dealing with vessels that are 2 calling in multiple international ports, we need 3 uniformity in the standard of what fuels we're going to 4 burn and we need consistency. If we're calling from 5 Mexico and then coming into California and then off into 6 the Far East, uniformity is of paramount importance for 7 us. 8 ACTING CHAIRPERSON RIORDAN: Okay. Thank you 9 very much. 10 MR. ROSE: Thank you. 11 ACTING CHAIRPERSON RIORDAN: Joe Angelo. Bryan 12 Vogel follows. 13 MR. ANGELO: Thank you. My name is Joe Angelo. 14 I'm the Director of Regulatory Affairs for Intertanko, 15 which is the International Association of Independent 16 Tanker Owners. We represent approximately 70 percent of 17 the world's tanker owners that deliver the oil around the 18 world. 19 We've submitted our written comments last week. 20 What I'd like to focus on in the short time that I have 21 are three aspects -- two aspects: The legal issues and 22 the availability of fuel; one addressed at Appendix B, the 23 other addressed at Appendix I. 24 With regard to the legal aspects, there's four 25 points I'd like to bring to your attention which, frankly, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 175 1 I think some have been brought up already. 2 Number 1: We believe that going forward with 3 this rule making would be in conflict with the Supreme 4 Court decision in the U.S. versus Lock in 2000. The 5 unanimous decision of the Supreme Court in 2000 clearly 6 indicates that the supremacy clause of the United States 7 Constitution provides that federal laws and regulations 8 override any attempt by a state government to legislate or 9 regulate in the same area. 10 These regulations are going to require equipment 11 to be installed on board ships. It could be tanks, it 12 could be pipes, or it could be something to deal with the 13 engine. But it's going to require equipment. 14 That is where the -- the Coast Guard steps in and 15 regulates. And they are the ones that would be preempted 16 in anything that you would do here. Now, in all fairness, 17 the legal brief that is provided in Appendix B does 18 address the Lock case. But it takes you down the path of 19 the peculiarities of Local Waters Provision. And we 20 believe it's an appropriate way if you want to justify it. 21 But what the legal brief does not address is in fact -- 22 the fact that the Coast Guard requires equipment on ships 23 and, therefore, that would preempt the states. 24 We believe this conflicts with Annex 6 of MARPOL 25 that was briefly touched upon a little bit here. The U.S. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 176 1 is going to ratify this very shortly. When it ratifies 2 it, that means the United States is going to have an 3 international treaty, the law of the land that we're party 4 to. These regulations would conflict with those treaties 5 that the United States Senate has agreed we should become 6 party to. 7 We believe that this law conflicts with the Clean 8 Air Act in applying the regulations to foreign vessels. 9 We found no site within Appendix B, nor do we find any 10 site in the Clean Air Act that allows the regulations to 11 be applicable to foreign vessels. 12 And, fourth, with regard to illegal issues, as 13 has been mentioned already, we believe there is no 14 authority to extend this out to 24 miles. We see nothing 15 in Appendix B that refers to either national or 16 international regulations that gives California to extend 17 this beyond their immediate territorial waters. 18 Turning quickly to the availability of fuel, 19 Appendix I acknowledges that low sulfur fuel is not 20 reliably available in California or the vast majority of 21 foreign ports around the world that would bring ships to 22 California. The Notice of Public Hearing states that 23 California is expected to have the fuel available. But 24 when you look in Appendix I, it provides nothing about how 25 this is going to be done. Now, when you read the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 177 1 documents we assume the proposed solution is that ship 2 operator demand will force the refineries to produce the 3 fuel. That's the way we see you approaching it. But I 4 think if you learn from the European Union regulations, 5 you'll see they tried that and it did not work. 6 With regard to that same issue of noncompliance 7 with mitigation fee, we just feel it's unjust. The ship 8 owners should not be required to pay a penalty for not 9 complying with the requirement that they ultimately can't 10 control. 11 Now, not wanting to provide a problem without a 12 solution, we believe there is a way forward that addresses 13 all of these issues, and can probably get it done quicker 14 than what you're doing it now. And that would be a 15 parallel track of, number 1, through your regulations 16 requiring the refineries in California to produce the fuel 17 so it is available, not really relying on demand to do it, 18 because the ship owners are not going to be able to create 19 demand. 20 Secondly, as has been mentioned, Regulation 15 of 21 the treaty Annex 6 provides provisions for sulfur areas. 22 Working through EPA and the Coast Guard you can go to IMO 23 to their meeting next October, put a proposal on the 24 table, have it adopted in 2007, so that by 2009 you could 25 have in effect a sulfur emission control area for the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 178 1 State of California, or the whole West Coast if you 2 wanted, that would be in accordance legally and provide 3 the ability for all people to comply and everybody to be 4 more environmentally safe. 5 ACTING CHAIRPERSON RIORDAN: Thank you very much. 6 MR. ANGELO: Thank you. 7 ACTING CHAIRPERSON RIORDAN: Mr. Hoffman. 8 Oh, excuse me. Ms. Berg. 9 BOARD MEMBER BERG: I was just going to ask staff 10 a question in regards to Annex 6 international regulation 11 they're talking about. Have we reviewed that? 12 EXECUTIVE OFFICER WITHERSPOON: Yes, we have. We 13 actually are working on it in concert with U.S. EPA. 14 Congress needs to ratify it before we can take advantage 15 of the sulfur emission control annex clause -- sulfur 16 emission control area clause. And we're hopeful that will 17 happen soon. There's a lot of support for it in the whole 18 goods movement sector. 19 If we obtain a SECA designation for any of 20 California, that will require the sulfur fuel level to be 21 25,000 ppm -- is it 25? -- 15,000 ppm parts per million. 22 1-5-0-0-0. And the levels in this regulation are 5,000 23 and 1,000. So we're looking for even cleaner fuels for 24 vessels transiting to our ports. 25 But we find it helpful because it will cause -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 179 1 it's a bigger signal across the entire international 2 refining industry as countries around the world seek 3 cleaner and cleaner fuels for their ports. 4 BOARD MEMBER BERG: And then, finally, could you 5 comment on what we're hearing from the fuel producers 6 about availability of the fuel? 7 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Well, we 8 modified our approach so that in the -- until 2010 the 9 fuels that are currently available will be able to be used 10 to comply with the regulation. 11 The world is cleaning up its diesel fuel. And as 12 time goes on, more and more markets will have lower sulfur 13 fuels, and we are anticipating that trend. It is -- the 14 California demand is not a big draw. It's probably not 15 enough to push the marketplace around, but it's enough so 16 that if the fuels become reasonably available, the demand 17 could be met. And we have a review that we're obligated 18 to do under this process in a couple years from now to 19 assess that situation and make sure the regulation will 20 work as designed. And if it won't work as designed, we'll 21 bring it back to you with what we think -- either a better 22 regulation or modifications to make it work. 23 BOARD MEMBER BERG: And just so that I'm clear on 24 the implementation dates, could you just run that by me 25 real quick? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 180 1 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Okay. The 2 first implementation date is starting January 1st, 2007. 3 You have to switch to distillate fuel. That basically is 4 .5 sulfur, either by natural occurrence or by you make 5 sure that it is. 6 And then in 2010 the requirement drops to .1 7 percent or 1,000 ppm, so we get lower sulfur fuel. 8 So we get -- so we have designed it to get 9 very -- most of the benefit early and accepting the fact 10 that it's not as much as we want, but that the fuel isn't 11 available in enough places to comply earlier. 12 BOARD MEMBER BERG: And the .5 fuel exists today? 13 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Yes. Fuel 14 that meets the requirement. You can use what's called a 15 marine gas oil. And we didn't specify a sulfur limit to 16 that because it naturally will average at .5 or a little 17 below. And marine diesel oil, which if you use that fuel, 18 you have to assure that you get it at .5 percent. There 19 are many places in the world where you can get that. 20 BOARD MEMBER BERG: Thank you. 21 PLANNING AND TECHNICAL SUPPORT CHIEF FLETCHER: 22 If I could add just one other comment on the 23 SECA. There is a big difference between what the SECA is 24 doing and what we're doing. And that difference is is 25 while they're looking at lower sulfur, they're looking at PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 181 1 lower sulfur in still the bunker fuel, which is the real 2 heavy dirty fuel. So we're getting most of the benefits 3 here in the 2007 timeframe from switching from bunker fuel 4 to the much cleaner distillate fuel. So while the SECA 5 will certainly enable lower sulfur, it's lower sulfur for 6 bunker fuel and not for the distillate. 7 And we've calculated that that change from the 8 2.5 percent to the 1.5 percent sulfur in the bunker fuel 9 would result in only an 18 percent reduction in 10 particulate matter versus the, you know, roughly 75 11 percent we're getting from switching to the distillate 12 fuel. 13 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Quite 14 frankly, we're going to need both. We're going to need 15 this step and then we're going to need a process -- 16 hopefully it's an international action that cleans up the 17 main fuel for the main engines. And then we're going to 18 need to work with the ship operators to get emission 19 control systems on the engines that are at least, you 20 know, 80 or 90 percent as effective as those that we've 21 been able to get on the shore size engines. 22 So this is a first step in a long journey. We've 23 been working with U.S. EPA for a year and a half trying to 24 figure out the technical analysis and what to do next on 25 the SECA. I don't think it's going to happen real fast. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 182 1 It's not a process that we can control, and it naturally 2 doesn't move fast. 3 BOARD MEMBER BERG: But I do think it's important 4 that we review this regulation if it's passed, so that the 5 norm doesn't become the paying the fee. 6 DEPUTY EXECUTIVE OFFICER SCHEIBLE: That's 7 correct. 8 BOARD MEMBER BERG: In other words, I don't think 9 we're looking to penalize the shipping industry for 10 technology or fuels that aren't available. And so if the 11 regulation isn't working, I think it would be imperative 12 that this Board review that, not just collect fees for not 13 being in compliance. 14 DEPUTY EXECUTIVE OFFICER SCHEIBLE: And we are 15 convinced that the fuels needed to comply with the 2007 16 provisions are widely available in world markets where the 17 ships come here -- you know, where they called before 18 here, and they're available in the markets here. 19 BOARD MEMBER BERG: Okay. 20 BOARD MEMBER D'ADAMO: Question. 21 ACTING CHAIRPERSON RIORDAN: Yes. 22 BOARD MEMBER D'ADAMO: Just in follow-up to that. 23 It sounds like you've really thought this 24 through. But I'm just still a little confused. If the -- 25 you're saying the fuels are readily available for the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 183 1 2007. But for the 2010, what if we had a cap, wouldn't 2 that help to drive the market? 3 DEPUTY EXECUTIVE OFFICER SCHEIBLE: If we had a 4 cap now? 5 BOARD MEMBER D'ADAMO: No, in 2010. 6 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Well, in 2010 7 we have a .1 requirement. But we -- we could influence 8 fuel availability in California. But that doesn't solve 9 the problem, because you need fuel available in the ports 10 where the ships call before they come to California. 11 BOARD MEMBER D'ADAMO: Right. I guess -- I'm 12 just kind of following up on Ms. Berg's statement that 13 we -- she's saying we don't want to penalize if the fuel's 14 not available. But I'm just wondering if we're 15 undercutting ourselves if we've taken it as far as we can. 16 Because the concern I have about that mitigation fee is 17 that, you know, if the fuel's not available -- I mean 18 there's a whole list of things that could be done -- well, 19 there's a whole list of reasons why an operator would 20 choose the mitigation fee instead. And I'm not thinking 21 of it in terms of penalizing the company if the fuel's not 22 available; but if the fuel were available, getting them 23 down that path. I'm just wondering if we've pushed it as 24 far as we can. 25 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Well, we're PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 184 1 convinced that the fuel's available. And the ship 2 operator knows they're coming to California and they know 3 about the regulation. And they'll see it's cheaper to buy 4 the fuel and use the fuel than it is to pay the 5 noncompliance penalty. If the fuel's -- if they have 6 legitimate reasons why they didn't do that or the fuel was 7 contaminated and shouldn't be used, there's all these 8 special circumstances that we could have written 9 exemptions. Rather than have an exemption in the reg for 10 that type of thing, we said we'll have a noncompliance 11 penalty and let the economic marketplace determine what 12 happens and we'll monitor it closely. 13 I don't think given our knowledge of the 14 economics that that will be the way that ship operators 15 will choose to comply with the regulation. It doesn't -- 16 it's structured so that it's more expensive to pay the 17 noncompliance fee than it is to comply. 18 ACTING CHAIRPERSON RIORDAN: Okay. Thank you. 19 EMISSIONS ASSESSMENT BRANCH CHIEF DONOHOUE: Just 20 one other thing with respect to fuel availability. And, 21 you know, one of the reasons that we put in the provision 22 for noncompliance fees if the fuel was not available 23 really had to do with spot deliveries, barges and things 24 like that that came in. So one of the issues is we went 25 through the process. People said, yes, the fuel is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 185 1 available worldwide. It's a small drop, less than 1 2 percent of the marine -- gas oil, marine diesel oil that's 3 out there that would be required to be used here. But 4 there may be certain situations where the limiting factor 5 is barge delivery or storage capacity at the various 6 locations. And if beyond their reasonable control that 7 something happened, the barge didn't get delivered in time 8 and they had to leave port and go somewhere else, should 9 they have an option to be able to come in to here and pay 10 a noncompliance fee on a situation like that? And for 11 those special situations, that's where we were talking 12 about fuel availability. And not on the broad spectrum, 13 we believe this fuel's available. Some of it's higher 14 than .5, some of it's lower than .5 on the marine gas oil, 15 but it is available worldwide. 16 BOARD MEMBER D'ADAMO: But is the mitigation fee 17 worded in such a way that it's as tight as you just now 18 described? 19 EMISSIONS ASSESSMENT BRANCH CHIEF DONOHOUE: 20 Probably not as tight as that. But I mean that's 21 certainly the intent. I mean they are going to have to 22 provide documentation as to why the fuel wasn't -- you 23 know, wasn't available. You know, we're going to be able 24 to track and see if that's a reoccurring thing we're going 25 to be able to track. And the overall costs that the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 186 1 mitigation fee is as it's set up is two, two and a half 2 times what we think it would cost to purchase the existing 3 fuel. 4 BOARD MEMBER D'ADAMO: I'm just thinking on that 5 mitigation fee, I've talked with Mr. Scheible about this 6 earlier, I do have concerns about it. But just really am 7 anxious to see how it plays out. And I think it might be 8 helpful -- well, if you want to use this as an 9 opportunity. I know you explained the history of -- well, 10 its genesis anyway to me, which has helped. But I do 11 think that this would be something that we'd want to bring 12 back by way of a report so that we can see how it actually 13 plays out in terms of its usage. 14 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Well, since 15 there's money changing hands, we'll know exactly how many 16 times it's used, when and by whom. So we'll have a very 17 good tracking system of how this provision works out. 18 ACTING CHAIRPERSON RIORDAN: Okay. Mr. 19 DeSaulnier. 20 BOARD MEMBER DeSAULNIER: No, I was just going to 21 suggest, maybe you could put her in charge -- Board Member 22 D'Adamo -- Dede in charge of a committee to oversee this. 23 (Laughter.) 24 ACTING CHAIRPERSON RIORDAN: Well -- 25 BOARD MEMBER DeSAULNIER: Like you did to me last PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 187 1 time. 2 (Laughter.) 3 ACTING CHAIRPERSON RIORDAN: Let me give that 4 some thought. 5 Thank you, Supervisor DeSaulnier. 6 BOARD MEMBER DeSAULNIER: By the way, I didn't 7 ask if there was a per diem. 8 ACTING CHAIRPERSON RIORDAN: Yes, and we'll ask 9 for a report on your committee at the next meeting. Thank 10 you so much. 11 (Laughter.) 12 BOARD MEMBER DeSAULNIER: It won't be ready. 13 ACTING CHAIRPERSON RIORDAN: Now, we've had a 14 very patient speaker. 15 So next speaker, if you'd come forward please. 16 MR. HOFFMAN: Hi. My name is Bob Hoffman. I'm 17 with Dock Watts. We're a California company specializing 18 in shore power development. 19 And, first, I want to commend ARB staff. They've 20 done an incredible job in just gathering information. And 21 it's been just an education for me. And, reciprocal, I 22 hope we've also provided them with information that has 23 been helpful. 24 We generally -- as T. L. Garrett said earlier on 25 a prior rule, we generally support the rule. We think PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 188 1 it's the right direction. However, there's some 2 modifications that's been discussed that we hope will be 3 considered. 4 We believe that the marine aux engine rule should 5 focus on ocean-going vessels near port communities. The 6 health assessment study for Long Beach and L.A. really 7 focused and gave great data on the health impacts near 8 ports. Yet by going out 24 miles out to the ocean and 9 even up and down the coast, it's not clear to me how that 10 actually benefits, you know, the population health 11 impacts. It seems that the PM emissions, which is the 12 real health issue, drops off significantly when you get 13 removed from the port. 14 And to quote -- my comment that you see, mostly 15 what I did was -- it's an old trick. I borrowed your own 16 information and just re-quoted it. So I'll give you a few 17 quotes. One of the quotes is: "The communities closest 18 to the port operations face the greatest risk of impacts, 19 have the greatest localized risk due to high exposure 20 levels to PM." 21 A general comment I have is this is clearly a 22 fuel-driven regulation, and that's really the emphasize. 23 There are alternative compliance plan measures. And shore 24 power's certainly promoted, and we appreciate that. But I 25 think -- you know, we were hoping it would be actually -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 189 1 there'd be more emphasis on some of the alternatives in 2 the light of the integrated approach that the CEC is 3 looking at. One of the benefits of something like shore 4 power is you're actually reducing fuel consumption in the 5 State of California. So now you're hitting two regulatory 6 agencies at once. 7 So to summarize our recommendations -- and then 8 I'll maybe provide a few other quotes if I have time -- 9 marine auxiliary engine rules should be applicable within 10 reasonable proximity to the ports that are affected. 11 We believe the emissions from hoteling should be 12 highly emphasized. They're referenced. But that's really 13 the root cause of a lot of the emission sources. 14 And the emission reductions that are in excess of 15 what the rule would otherwise provide, particularly with 16 NOx, which is limited reduction, about 6 percent, those 17 should be treated as surplus emission reductions, surplus 18 to the SIP, and be allowed to be applicable to incentive 19 programs like Carl Moyer or ERCs or some type of market 20 approach. 21 The applicability of the diesel-electrics, to me 22 that -- there's just an unfairness there. There's a -- 23 you know, an inequity going on where it's a very small, 24 you know, volume or universe of ships. It's really the 25 cruise ships, because you only have four tankers that are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 190 1 going to do it and the rest will all cruise. And we've 2 suggested that you just focus or carve out what the load 3 is that's equivalent to hoteling. Just because they can 4 apply a BACT doesn't mean it's fair or should be done. 5 It's punitive to those diesel-electric ships. And I 6 disagree somewhat with the staff report that it's hard to 7 measure that. I come out of the utility industry. You 8 can meter and measure the kilowatt/hours produced while 9 it's in port, and that's the level, and it could be 10 prorated accordingly to know what the electric consumption 11 is. So it should be a hoteling focused or centric 12 approach. 13 One other thing that I -- and I kind of recommend 14 is to look at mooring or look at barges at mooring 15 facilities; that rather than have them be required to fuel 16 switch while offshore mooring, like an offshore tanker or 17 cruise ship in Monterey, let's say, you can have a barge 18 with barge-mounted diesel engines burning clean fuel and 19 that could provide -- it's not shore power. It's I guess 20 mooring power. But that's an alternative compliance that 21 we suggest be added. I know alternative compliance is 22 open. But that's one that, you know, we thought of. 23 One area on that that seems a little unfair is if 24 a cruise ship shore powers and they are exempt from the 25 requirement, would they go to, let's say, Catalina while PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 191 1 they're exempt, they still have to fuel switch, I 2 understand, to MDO or level burning fuel. I think there 3 needs to be a little work there, that if a ship calls on 4 L.A. and they go to Catalina, they shouldn't have to then 5 fuel switch. Otherwise they won't call on Catalina. 6 ACTING CHAIRPERSON RIORDAN: All right. Now 7 you're time is up. And you need a concluding statement 8 please. 9 MR. HOFFMAN: Well, the concluding statement is 10 that we should focus the effort on the port areas first 11 and place a lot of emphasis on hoteling. 12 Thank you. 13 ACTING CHAIRPERSON RIORDAN: Thank you very much. 14 Mr. Vogel. 15 And, Mr. Vogel, before you start let me indicate: 16 Barbara Lee, Tom Addison, Paul Wuebben, and Candice Kim, 17 you're in next. 18 Thank you. 19 MR. VOGEL: Yes. Good afternoon. My name's 20 Bryan Vogel. I'm a marine engineer for the United States 21 Maritime Administration. 22 The reason I came today was to talk to you more 23 as a neutral speaker in the sense that as a federal 24 agency, it's our responsibility to comply with whatever 25 environmental regulations it enacted. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 192 1 But I did have one problem with the proposal as 2 it's written. And it comes in the form of one of the 3 exemptions for military vessels as well as the definition 4 of a military vessel. 5 As the Maritime Administration is underneath the 6 Department of Transportation, we don't give the impression 7 as operating military vessels. But, in fact, our vessels 8 are turned over in federal emergencies to the direct 9 control of the military. What this leads to is kind of 10 eclectic discussions With inspectors, which I don't really 11 like to have; rather that the final law would be more 12 clear about who's entitled to exemptions. 13 So I would propose that you would actually 14 perhaps use the definition "public vessel" or include the 15 United States Maritime Administration vessels underneath 16 the exemption clause. 17 Thank you. 18 ACTING CHAIRPERSON RIORDAN: Thank you very much. 19 Staff response to his request? 20 EMISSIONS ASSESSMENT BRANCH CHIEF DONOHOUE: I 21 mean that's something that we can look at under the 15-day 22 notice and work with them on that. 23 ACTING CHAIRPERSON RIORDAN: All right. And 24 we'll keep in touch, Mr. Vogel. 25 Barbara Lee. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 193 1 MS. LEE: Madam Chairman, it's a pleasure to be 2 before you again today. My name again is Barbara Lee. 3 I'm here as the President of the California Air Pollution 4 Control Officer's Association, strongly supporting ARB 5 efforts to reduce public exposure to diesel particulate 6 exhaust. It's a critical effort. And we strongly support 7 the aggressive approach taken in this rule. 8 We do encourage the ARB to push harder if they 9 are able to to emphasize the earliest possible 10 introduction of 2010 compliant fuels. We believe there's 11 going to be some significant air quality benefits 12 associated with that. And we look forward to working with 13 them on the implementation of this regulation. 14 ACTING CHAIRPERSON RIORDAN: Thank you very much. 15 Appreciate your comments and assistance. 16 Tom Addison. 17 MR. ADDISON: Good afternoon, Chair and members. 18 Tom Addison with the Bay Area Air Quality Management 19 District. And I'm happy to be here today to speak in 20 support of this regulation. 21 One of the facts that I think was striking about 22 the staff presentation is that -- you know, generally I 23 think we're doing a good job. We look at inventories. 24 Inventories for most sources are shrinking. 25 Congratulations. I think that's, you know, a very PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 194 1 positive sign of effective regulatory programs. But when 2 we look at marine emissions, the picture is quite 3 different. And this I think really speaks of the 4 importance of this regulation before you. Here's a 5 category where emissions are actually increasing. And 6 that's one of the reasons that this is such an important 7 regulation. And we're pleased to see that the approach 8 that you're taking is a substantial, progressive and 9 aggressive approach, as it should be, for this category. 10 In the Bay Area we've got substantial emissions 11 from container ships, from oil tankers, from cruise ships. 12 The volume of those ship visits and their auxiliary engine 13 emissions are growing. That's of concern. Those 14 emissions are affecting the communities, not just 15 immediately adjacent; but also many of these vessels 16 within the 24-mile zone move up and down past the coast of 17 the Bay Area and those emissions move on shore and affect 18 a wide -- a substantial amount of our population. 19 So unlike others who have concerns about the 20 24-mile limit, we think that's absolutely a positive thing 21 to do. 22 You've heard that -- other jurisdictional issues: 23 Is California the right entity to be stepping up here? 24 Maybe we need some international and national action 25 first. From our perspective, we're delighted to see PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 195 1 California stepping up and trying to regulate these 2 sources. Our perspective is that if we wait for -- and, 3 you know, we're hopeful on Annex 6 of MARPOL. We're 4 hopeful that we'll see a SECA, a sulfur emissions control 5 area, on the West Coast. But if we have to wait for 6 international or national reductions, I think we're going 7 to be waiting a long time. 8 We strongly endorse including diesel-electrics in 9 the rule. We've got a new cruise terminal that's planned 10 for San Francisco. We're going to increase the number of 11 cruise ship visits and cruise ship emissions in the Bay 12 Area. We think that including those in this rule is an 13 excellent way of reducing their emissions. 14 So in conclusion, happy to be here in support and 15 urge you to adopt that. I think this is the right thing 16 to do. 17 ACTING CHAIRPERSON RIORDAN: Thank you very much. 18 Appreciate your comments. 19 Paul, followed by Candice Kim, Martin Schlageter, 20 Diane Bailey, and Bonnie Holmes-Gen. 21 MR. WUEBBEN: Good afternoon. I'm Paul Wuebben, 22 South Coast AQMD. And we certainly appreciate the 23 opportunity to be here. And, first, certainly commend 24 your staff for a tremendous amount of work on this very 25 important subject. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 196 1 We're here certainly to support the rule. It's a 2 very important step forward. And so we're very pleased to 3 urge your adoption. 4 At the same time, I think that there are several 5 areas that we do candidly believe that there can be some 6 enhancements. I think Mr. Scheible pointed out quite 7 succinctly that these are not clean fuels we're talking 8 about. They're moderately clean. And while there -- and 9 there was a recognition about the impact of sulfur on 10 health effects and need to drive the process in that 11 light. We would recommend, for example, that there be 12 some bringing forward or expediting of the study with 13 respect to the feasibility of having fuels utilized which 14 are lower than a thousand ppm. And that that study be 15 done on as expedited a basis as possible. We would be 16 willing to cosponsor that, co-fund that kind of effort 17 with you. 18 So it's an area that we believe that there are 19 examples, in fact, that lower than a thousand ppm sulfur 20 fuel is being used. BP, for example, is using 15 ppm 21 sulfur levels in their crude vessels, to our 22 understanding. There have been other demonstrations in 23 that regard. 24 So we think that that's an important area. And 25 in that regard that perhaps you could set your 2010 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 197 1 standard as an interim level, essentially to bring that 2 forward and to identify your intent that in 2007 you would 3 be then establishing the ultimate standard that would 4 apply after 2010. So that in a sense that you have your 5 process drive the international process rather than the 6 other way around. 7 One thing I also would want to point out is that 8 we fully agree -- and our legal staff has looked very 9 closely at your assessment of legal authority. We 10 completely concur with that assessment; and in the event 11 that there was a challenge, I've been told that our 12 executive officer will bring to the Board immediately upon 13 request from your staff. But we would request our board 14 then to file either an amicus or even file as an 15 intervenor in support of your defense of this rule in any 16 of its portion. So we want to make clear that we consider 17 ourselves a very strong partner with you in this whole 18 regard. 19 Two other very quick points have to do with the 20 cold ironing study that we know is continuing. And we'd 21 certainly like to see that brought forward, perhaps 22 expedited a little bit more. And also that -- just a 23 recognition, as was made by Supervisor Patrick in the 24 prior rule-making, and that being some importance of 25 looking at additional local controls that may be necessary PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 198 1 in addition to this. Because as you're staff noted, 70 2 percent of the South Coast Air Basin -- our air basin is 3 in effect the lungs for the nation. As you know, 44 4 percent of the U.S. containers move through those two 5 ports. So with that as a backdrop, it seems to perhaps 6 give additional urgency for even tighter controls at the 7 local level. 8 So with that, I appreciate the time. And thank 9 you for the efforts that your staff are doing in this 10 regard. 11 ACTING CHAIRPERSON RIORDAN: Thank you very much 12 for your positive comments and your offers of partnership. 13 Thank you. Appreciate that. 14 Candice Kim. 15 MS. KIM: Good afternoon. Again, my name is 16 Candice Kim and I'm here on behalf of the Coalition for 17 Clean Air, in support of CARB's proposed regulation for 18 ocean-going vessel auxiliary diesel engines and 19 diesel-electric engines. 20 Just last week Californians learned from you that 21 currently a shocking 750 people are dying prematurely each 22 year for no other reason than they've been exposed to air 23 pollution produced by ships, trucks and trains as 24 commercial products move about the state. 25 In October, we learned from you that people who PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 199 1 live within 15 miles of the ports, 2 million people, face 2 a cancer risk at least 50 times higher than what is safe 3 according to the EPA, and that ship auxiliary engines 4 alone comprise a significant part of this cancer risk. 5 Californians do not want to hear that industry 6 cannot afford to put health protective controls on ships. 7 The Public Policy Institute of California recently 8 reported that nearly three out of four Californians 9 support tougher pollution controls for cargo ships, trucks 10 and trains even if -- even if they raise the cost of 11 transporting goods. 12 The Coalition for Clean Air strongly supports the 13 auxiliary engine regulation. And we note that this 14 regulation is essential under California's Diesel Risk 15 Reduction Plan and State Implementation Plan. 16 This rule will effectively slash 3/4 of the 17 dangerous diesel particulate matter emissions that each 18 ship releases by reasonably requiring the ship to switch 19 from bunker fuel to a cleaner marine fuel. And by 20 adopting this regulation, you can save an estimated 500 21 lives and result in over 10,000 fewer asthma attacks in 22 the next 15 years. 23 In particular, CCA strongly supports the rule's 24 application to all ocean-going vessels, including foreign 25 flag ships, within a 24 nautical mile enforcement boundary PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 200 1 and the expectation that they be required to meet a 2 comprehensive fuel requirement by the January 1st, 2007, 3 deadline. 4 Further, we strongly support subjecting 5 diesel-electric engines used on cruise ships and tankers 6 as well to the requirements of this regulation. And I 7 think that if you asked anyone who is preparing to take a 8 luxury cruise if they would pay an $8 fee to ensure that 9 the public health of the community they are visiting would 10 be protected, anyone in their right mind would say, "Yes, 11 I would pay that $8 fee." So I think that's completely 12 feasible. 13 Thank you for all the hard work from the staff 14 that have worked on this regulation. And thank you for 15 allowing me this opportunity to present to you. 16 ACTING CHAIRPERSON RIORDAN: Thank you very much. 17 Appreciate your comments. 18 Martin. 19 MR. SCHLAGETER: Martin Schlageter with the 20 Coalition for Clean Air. 21 It is because of the strong support that we have 22 for the actions in front of you today that Candice 23 outlined that I wanted to take an extra moment here from 24 our organization to outline a few loopholes that I'm 25 afraid the ships might drive through. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 201 1 One is -- and some of the conversation today, I'm 2 going to seek your clarification for it in your dialogue 3 with the staff at some point today, I've heard that 4 there's a cap of 5,000 ppm on MGO or MDO. I'm not sure. 5 Is it on both of them? My understanding was that there 6 was not a cap and that this was an expected average. This 7 is something I believe we need to fix. We need to set the 8 limit of 5,000. If we're saying we believe it's 9 available -- and we're saying that, because we've already 10 compromised to 5,000 from 2,000, where it is also readily 11 available -- then we need to require that. It's not 12 enough for us to say, "We sort of hope that it will be 13 5,000 and we're going to base our estimations of benefits 14 for emission reductions on that number," because we also 15 need this to be enforceable. We need to be able to sample 16 that fuel. And if it's above the 5,000, how does that 17 fall within some sort of expected average? So we really 18 need to set that cap, be clear with the industry, "This is 19 what we're expecting, this is the fuel we're expecting, we 20 believe it's available, and this is what we're going to 21 test you on." 22 Similarly, in the alternative compliance plan, 23 this idea of fleet averaging is a big loophole. It 24 confuses the enforcement of what you're going to be 25 sampling, you know, if you're going to be doing some PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 202 1 sampling tests to try to enforce this. Well, which ship 2 is it? And if you're getting immediate results, do they 3 just call back in and say, "Well, we got caught with the 4 dirtier fuel, so go ahead and send in next week the 5 cleaner fuel ship." 6 So we really need clarity on this. We need the 7 limits. We're not satisfied with averaging this stuff. 8 Okay. 9 And there were some good questions here asked 10 about the mitigation fee. And I encourage you to continue 11 discussion of this, again to tighten up that language. We 12 have heard that we wanted to be on unexpected, very 13 defined, rare instances that the mitigation fee applies. 14 And we'd like a further definition of that. In the 15 presentation before you, it said that one of the 16 amendments that was attached to the agenda here today 17 was -- defined the mitigation instances. It defined one 18 of the mitigation instances, as I understood it. And I 19 think we need to get further definition of that so that 20 again this isn't just -- this just doesn't become the 21 status quo of "Well, we went into L.A. and we had to pay 22 this fee" or "We went into Oakland and we had to pay this 23 fee." We really want to understand where that mitigation 24 fee applies and to minimize its use, so that we can 25 maximize what we really want to achieve and, that is, the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 203 1 reduction. And that's what your plan is aimed at getting, 2 that's what this resolution's aimed at getting, and that's 3 what we're supporting here, the reductions that you've 4 identified from this. 5 And we appreciate the time on this strategy. We 6 appreciate the dialogue from the Board in trying to firm 7 up any of this language that's still loose and acting on 8 this immediately, because it's an urgent issue and one we 9 want to avoid any red herrings of legal authority or 10 safety issues that are out there that could delay our 11 action towards a cleaner environment around our ports. 12 ACTING CHAIRPERSON RIORDAN: Thank you, Martin. 13 MR. SCHLAGETER: Thank you very much. 14 ACTING CHAIRPERSON RIORDAN: Thank you very much. 15 BOARD MEMBER D'ADAMO: Could staff respond? 16 ACTING CHAIRPERSON RIORDAN: Yes. 17 AIR POLLUTION SPECIALIST MILKEY: With regard to 18 why we set the -- why we do not have a sulfur limit for 19 marine gas oil. We originally in our drafts had various 20 levels. And for a while we did have a .2 percent sulfur 21 level. What we found in looking at it more detailed is 22 that if you look at all the ports, we couldn't be assured 23 that even at the .5 percent that it would be available at 24 all ports. But we did find that from our survey average 25 that the level would average .5 percent. So in some PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 204 1 cases, at some ports it will be higher, at some, lower. 2 But overall MGO is widely available, as you know, as long 3 as we don't set some sort of limit at this point in time. 4 That may be changing as the European Union rule comes into 5 play. We've got a .1 percent sulfur limit in 2010, coming 6 out later. But for right now we could not be assured that 7 the .5 percent MGO would be available. 8 BOARD MEMBER D'ADAMO: The witness does raise 9 some good points about enforcement. If in testing it's 10 over the average, how can you even tell what that average 11 is? 12 DEPUTY EXECUTIVE OFFICER SCHEIBLE: If they have 13 an alternative compliance plan, they're going to have to 14 submit it to us. I presume we will follow the practice we 15 accepted last time and have a public display of it. And 16 that will say, "Vessel Henry Q will be using the following 17 fuel as part of its Alternative Compliance Plan. And the 18 fuel on that vessel will meet the following sulfur limit." 19 And so it's not really that hard for us to do it. All we 20 have is a specific under the plan what the vessel must do. 21 Our inspectors will have access to that information. 22 BOARD MEMBER D'ADAMO: Maybe I don't understand 23 it then. What if they don't have an alternative 24 compliance plan and they're just seeking to -- 25 DEPUTY EXECUTIVE OFFICER SCHEIBLE: And they PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 205 1 violate the rule? Then there's a violation. 2 BOARD MEMBER D'ADAMO: But I thought that we were 3 looking at an average. 4 EXECUTIVE OFFICER WITHERSPOON: The fleet 5 averaging only applies within an alternative compliance 6 plan. 7 BOARD MEMBER D'ADAMO: Okay. Good. 8 Thank you. 9 TECHNICAL ANALYSIS SECTION MANAGER TARICCO: If I 10 could just add. I think -- there's no limit on MGOs, so 11 we're not looking for specific sulfur content, other than 12 it has to meet the MGO specs, which I believe is like 1. 13 DEPUTY EXECUTIVE OFFICER SCHEIBLE: And -- 14 TECHNICAL ANALYSIS SECTION MANAGER TARICCO: But 15 if it's an MDO, they would have to demonstrate that it 16 meets a .5 percent sulfur. So we can test for that on the 17 MD -- 18 DEPUTY EXECUTIVE OFFICER SCHEIBLE: We started 19 out more ambitious. We found out that you couldn't 20 reliably get any specified sulfur limit at ports that 21 frequently are the port where the ship is one or two ports 22 before they come to California. We knew that if we went 23 with a rule that said the MGO is a complying fuel, that 24 that would average a 75 percent emission reduction and 25 virtually everybody could comply and that we could do it PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 206 1 very quickly and garner very large emission benefits very 2 fast. So our philosophy was let's figure out what works, 3 what works pretty well. It's not the ultimate. It's not, 4 you know, where we're going to eventually end up, but we 5 can deliver an awful lot of benefit. 6 And we would have probably preferred to have a 7 limit on sulfur and this and that. But it would have 8 complicated things and probably slowed things down and 9 made the rule deliver less reliably the reductions we 10 expect. 11 I mean we're pretty convinced that if the 12 naturally occurring averages of a fuel, you know, in the 13 marketplace are .5, or a little bit below actually, that 14 that's what we're going to get on average, and that that 15 will provide benefits reliably. And as time goes by we'll 16 monitor the fuel supply and we'll see whether that's true. 17 Okay? 18 BOARD MEMBER D'ADAMO: Okay. 19 DEPUTY EXECUTIVE OFFICER SCHEIBLE: But in the 20 three years we'll get a lot of emission reductions. 21 ACTING CHAIRPERSON RIORDAN: Thank you. 22 Diane Bailey, followed by Bonnie Holmes-Gen, 23 followed by Teri Shore, and followed by Randal Friedman. 24 MS. BAILEY: Good afternoon. My name is Diane 25 Bailey and I'm a scientist with the Natural Resources PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 207 1 Defense Council. And I'm here today again in very strong 2 support of this important diesel regulation. 3 This rule is the most important item before you 4 today, both in terms of the amount of pollution that will 5 be reduced, as well as the health impacts that will be 6 avoided by it. It is also a much needed first step to 7 curb the ever-growing emissions from international 8 ocean-going vessels. 9 Pollution from large ships has become a major 10 problem in California, as you know. With the Ports of Los 11 Angeles and Long Beach now the third largest port complex 12 in the world, the expected tripling of trade over the next 13 few decades will only increase the substantial pollution 14 impacting portside and coastal communities. 15 This rule is a very important cornerstone in this 16 agency's plan to control emissions from goods movement and 17 we, therefore, urge you to adopt this rule right away 18 without any delays. 19 We urge you to resist industry legal threats and 20 last minute complaints about safety. Our legal staff has 21 full confidence that ARB has clear legal authority to 22 adopt this rule. 23 As for last minute objections raised over safety 24 concerns, this issue is really a red herring, and I think 25 you'll hear more about that from my colleagues. However, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 208 1 I do want to note that the proposed safety exemption that 2 was added as a modification today appears to put this 3 issue to rest. 4 The only thing that I would add is that I would 5 hope that that modification would include some language 6 that documenting evidence be provided to approve an 7 emergency situation. 8 In our written comments we raised several 9 concerns about various provisions. And I won't go into 10 detail because you have those comments. I think my 11 colleague Martin covered those well. But I do want to 12 reiterate a few points that I think are important. 13 Specifically we urge the Board to require firm 14 sulfur caps for both 2007 and 2010. Currently ships are 15 allowed to burn the dirtiest fuel available, the bunker 16 fuel that you've already heard about. This bunker fuel 17 often contains hazardous wastes from recycled oil as well 18 as refinery bottoms, which is the very thick tar-like 19 substance that's left over from the refining process after 20 all of the other useful products are removed. 21 Clearly the marine distillate and gas oil 22 requirements beginning in 2007 offer substantial 23 improvements over bunker fuel. However, the sulfur levels 24 in these lighter fuels can be as high as 15,000 ppm. And 25 that's about a thousand times higher -- dirtier than PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 209 1 comparable land-based fuels will be in 2007. So there is 2 a significant difference. And for that reason we ask that 3 ARB require a fixed 5,000 ppm cap on both the distillates 4 and the gas oil fuel. And we believe that the state 5 really does have the market power to demand this. 6 We're also concerned that fuel providers will not 7 produce a 1,000 ppm fuel prior to or beginning in 2010 8 without a firm commitment for this standard. The EU has 9 already mandated these standards of 1,000 ppm sulfur for 10 marine fuel beginning in 2010. And so this would be in 11 line with existing standards -- international standards. 12 ACTING CHAIRPERSON RIORDAN: Diane, your time has 13 finished. So would you conclude. 14 MS. BAILEY: Sure. 15 I want to thank staff for their hard work and 16 bringing this very critical rule to the Board so quickly. 17 And I want to urge you to adopt this rule as quickly as 18 possible. But please do consider the modifications that 19 we are requesting. 20 Thank you. 21 ACTING CHAIRPERSON RIORDAN: Thank you very much. 22 Bonnie. 23 MS. HOLMES-GEN: Good afternoon, Madam Chair, 24 Board members. I'm Bonnie Holmes-Gen with the American 25 Lung Association of California. And we are testifying PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 210 1 today in support of this very important regulation. 2 And, as before, I also want to communicate the 3 support of some additional organizations. And one is the 4 American Cancer Society, the California Division, and the 5 other organization is the American Academy of Pediatrics. 6 And both of these are members of our Health Network for 7 Clean Air and are very supportive of this regulation and 8 other efforts to reduce diesel exhaust emissions. And I 9 did submit a letter that has their signatures on it for 10 the record. 11 We are at a critical point in time as we face 12 tremendous impending growth in goods movement and ports 13 activity. And we are in a situation where pollution 14 related illnesses are already clearly at unacceptable 15 levels, especially in communities nearby ports. And you 16 know this from the health statistics, from your own 17 analyses, and from the community testimony that you've 18 heard today. 19 So we are depending on you today to take 20 leadership again, to adopt this important rule to reduce 21 port emissions and to reject the arguments of the Western 22 States Petroleum Association and others that are asking 23 you to delay or phase in or somehow wait for some 24 market-based strategy. So we're asking you to reject 25 those arguments and move forward with this regulation. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 211 1 You have the authority. The case has been clearly laid 2 out by staff. The health need is critical. And you need 3 to take action today. 4 We do have -- I wanted to emphasize that the 5 health benefits are incredible in terms of not only 6 premature deaths that would be prevented by this 7 regulation, but 10,000 asthma attacks and many other 8 thousands of hospitalizations and emergency room visits 9 that would be prevented by this regulation. 10 We do still think the rule needs some tightening 11 to ensure that the proposed emission reductions are 12 achieved. You've heard from my colleagues about our 13 concern to establish firm emission limits in the 14 regulation for the 5,000 and 1,000 ppm fuels. And there's 15 been a lot of discussion about the .5 for the 5,000 ppm, 16 now as much discussion about the 1,000 ppm and that later 17 deadline. So I just would encourage you to take another 18 look at that, because again we want to drive the 19 production of complying fuels and we think that firm limit 20 would help to do that. 21 We also want to express our concern about the 22 Alternative Compliance Plan. We would ask you to please 23 urge -- request the staff to provide specific criteria on 24 what should be included in the Alternative Compliance 25 Plan. We think it's too open-ended. It's very open-ended PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 212 1 at this point. 2 And the idea of including strategies such as 3 fleet-wide averaging is a great concern to us. There was 4 some discussion of this at the beginning of this item. 5 But we have significant concerns about short-term 6 exposures to elevated levels of particulates. And if 7 you're allowing fleet-wide averaging and you have ships 8 coming in with high sulfur fuel and high levels of 9 particulate emissions, we are very concerned about those 10 short-term exposures and the premature deaths, asthma 11 attacks, hospitalizations and other health effects that 12 can result, and would remind you that we strongly 13 advocated for a 24 hour PM2.5 standard and that was 14 something that the staff is continuing to look at. So 15 there -- I think there is a firm health basis to be 16 concerned about those fleet averaging types of provisions. 17 ACTING CHAIRPERSON RIORDAN: And, Bonnie, I need 18 kind of a concluding statement please. 19 MS. HOLMES-GEN: Right. 20 So, in addition, I'm assuming you're going to 21 go -- take the public notice and public input provisions 22 as you crafted them for the cargo handling rule and put 23 those kinds of provisions into the Alternative Compliance 24 Plan for this regulation. 25 The bottom line is we believe this rule is urgent PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 213 1 to reduce toxic diesel pollution and protect the health of 2 millions of Californians. And we urge you to move forward 3 today. And we thank you for this opportunity to speak. 4 ACTING CHAIRPERSON RIORDAN: Thank you very much. 5 MS. SHORE: Yes, good afternoon, Madam Chair, 6 Board members, ARB staff members. I'm Teri Shore. I'm 7 Clean Vessel's Campaign Director for Bluewater Network. 8 We're a Division of Friends of the Earth. 9 And on behalf of our 10,000 members and 10 supporters in the State of California, we urge you to 11 adopt this rule as proposed by staff, with modifications 12 proposed by staff earlier today and those of my colleagues 13 and to move on this immediately. 14 As we know, this is a cost-effective rule. It 15 will provide immediate air emissions and public health 16 benefits. It's doable, it's feasible, and we need to do 17 it. 18 We particularly support the 24-mile boundary 19 based on the scientific studies done by the staff, because 20 these impacts are not limited to the ports. There are 21 people up and down the coast of California who also suffer 22 from the impacts of emissions from these ships. A good 23 example is Santa Barbara. They don't even have a port and 24 they experience huge NOx emissions, greater than their own 25 mobile sources, from these ships. So it's important to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 214 1 have a coast-wide approach to this. 2 In addition, we specifically support the 3 diesel-electric engine component of that. Mostly cruise 4 ships are affected. Cruise ships, there are fewer ships 5 but they make a lot of port calls. They also produce a 6 large amount of emissions per ship because their power 7 demands are so much greater. When they're in port they 8 require ten megawatts of power to power the -- you know, 9 the air conditioning, the restaurants, the casinos, 10 whatever else they have on board. So they use a lot of 11 power. It's like having a small powerplant at the port. 12 And they also produce larger emissions when they're out to 13 sea. So we really believe it makes a lot of sense. It's 14 feasible. 15 Also, the cruise industry's already stepping up 16 to the plate. Princess Cruise Lines, Crystal Cruise 17 Lines, Celebrity are already switching to marine 18 distillate fuel in California waters on their own and also 19 as part of an incentive program through the Port of San 20 Francisco and U.S. EPA. 21 So we know we can do it. If the whole industry 22 does it, it's only $8 a passenger. It's not a lot of 23 money. And I would like to remind you that the cruise 24 industry is exceedingly profitable and in the last 25 quarter, even with high fuel prices, are reporting record PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 215 1 billion dollar profits. So we think they can afford to 2 protect air quality in California. 3 I'd like to touch on the legal authority and 4 safety issues. We support staff's analysis of the legal 5 authority to regulate these ships out to 24 miles. 6 We do agree that, you know, international 7 regulation is the way to go ultimately. But unfortunately 8 the shipping industry has been successful in blocking any 9 meaningful regulations at the international and the 10 federal level. So as a result it's been put on the 11 shoulders of California to do the job here for our people 12 in California. And unfortunately I think the industry's 13 using the legal authority question just to avoid 14 regulation entirely. 15 Safety. I also believe that the industry brought 16 up safety very late in the game. We've been working on 17 this rule since 2001. Our organization, Blue Water 18 Network, introduced a bill in 2003, AB 471, that would 19 have required fuel switching in the main engines out to 90 20 miles. And that was defeated by industry also on safety 21 issues. However, they've never provided any documented 22 evidence that fuel switching has caused an accident, a 23 spill, an injury or anything along these lines. So I mean 24 we respect that safety is very important on the seas and 25 we should look at it. But we don't believe it's any PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 216 1 reason to delay the rule. 2 ACTING CHAIRPERSON RIORDAN: Teri, I'm afraid 3 your time is up, so I need a concluding sentence. 4 MS. SHORE: Okay. I do have -- I have submitted 5 late yesterday a whole outline of different safety issues 6 I hope you consider. And I just urge you to stay the 7 course, stand strong for the rule. 8 Thank you very much. 9 ACTING CHAIRPERSON RIORDAN: Thank you. 10 Randal Friedman, followed by Todd Campbell, Don 11 Anair, Dr. Appy and Bill Magavern. 12 MR. FRIEDMAN: Good afternoon. I'm Randal 13 Friedman representing the United States Navy. I'd like to 14 thank your staff for taking the international sovereignty 15 issues, not just of military vessels but of vessels 16 operated by governments for noncommercial purposes, into 17 account in this rule. 18 Having said that, I do want to make sure that 19 both you and the public understand that we are not under 20 the cloak of sovereignty bringing ships into California 21 into ports and exposing the public to these diesel 22 particulates. Our ships when they come into our ports, 23 the engines are shut down. We use exclusively shore power 24 at our facilities. We've done this for decades. We have 25 a great deal of expertise in this. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 217 1 And, in fact, several months ago we hosted a team 2 from your staff in San Diego and showed them the whole 3 process, from a ship coming in, to the engine powering 4 down, in the control rooms, the cabling that's done, and 5 walked them through the whole process of how we do the 6 cold ironing in San Diego. And certainly we would like to 7 extend that invitation to the Board members or the senior 8 staff if you have interest in seeing how we've been doing 9 it. 10 And, again, we've been doing this for decades. 11 We do -- we understand very well -- and I've been sort of 12 amused listening to this discussion today about the 13 primary benefits from this coming from the immediate shore 14 area, because that is something that, you know, we 15 certainly have recognized and that's one of reasons why 16 we're doing this. 17 And in sum, I once again thank your staff for 18 working with us. And I'm available for any questions. 19 Thank you. 20 ACTING CHAIRPERSON RIORDAN: Thank you. 21 I don't know that there are any questions. But 22 maybe some of us will take you up on your offer for a 23 tour. Thank you. 24 EMISSIONS ASSESSMENT BRANCH CHIEF DONOHOUE: But 25 two of our staff never came back. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 218 1 (Laughter.) 2 ACTING CHAIRPERSON RIORDAN: Well, what can I 3 say. 4 BOARD MEMBER DeSAULNIER: Maybe we should send 5 more. 6 (Laughter.) 7 ACTING CHAIRPERSON RIORDAN: Oh, Supervisor 8 DeSaulnier -- 9 (Laughter.) 10 ACTING CHAIRPERSON RIORDAN: -- where's your 11 Christmas spirit. 12 Mr. Campbell. 13 MR. CAMPBELL: Thank you, Madam Chair. Good 14 afternoon. 15 I love the fact that that speaker was right 16 before me. You know, with the China Shipping lawsuit when 17 I was with the Coalition for Clean Air, the very reason 18 why we pressed for cold ironing was because -- my friend 19 was in the Navy and he told me he'd go everywhere, from 20 port to port to port, and they'd just plug in and it 21 was -- I figured if warships could do it, container ships 22 could do it too. 23 I'm here for Clean Energy. I'm the Policy 24 Director. And I want to just express strong support for 25 this rule. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 219 1 I wanted to say that we also think that firm caps 2 should be put on each sulfur limits. The main reason for 3 me is its SIPable. If you're going to include it as a SIP 4 measure, we have to make sure that we get those emissions 5 done -- reduced. And so anything less of having a cap 6 would be problematic for more reasons than one. 7 The other thing is is that we are concerned about 8 fleet averaging just because of shell games. And not 9 saying that the industry would do shell games. But the 10 key for this measure is enforceability, and we have to 11 make sure that it's enforceable, for also SIP reasons. 12 In terms of alternative compliance plans, we're 13 very concerned about this. I think that it's very clear 14 from looking at -- I love this little sheet that -- I mean 15 this study that the Air Resources Board staff pulled 16 together, just because I think it's very informative. I 17 mean when you look at marine vessels and harbor craft were 18 not anticipated in ARB's original thinking and, therefore, 19 we're not going to reach those 85 percent targets like he 20 hoped to. We're only going to get to 44 percent in terms 21 of mass reduction in goods movement related diesel PM. 22 So clearly this is a very important rule. And we 23 have to make sure that we also realize that in the no-net 24 increase process, we need every measure to get to 2001. I 25 think cold ironing is such a straightforward measure, it PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 220 1 should be a rule of its own. So that's something that 2 the Board should seriously consider. It shouldn't be 3 another alternate for this program. It should actually be 4 something that we come back to the Board and adopt maybe 5 next year. 6 And then, finally, with regards to a mitigation 7 fee, I was somewhat concerned by the fee structure. Five 8 vessel -- or five vessel visits, $160,000, does that -- or 9 has staff done the analysis to compare what the emissions 10 reductions would be if they use the lower sulfur? And how 11 much would it cost in terms of, I guess, mitigation 12 programs to achieve the same emissions reductions? And I 13 guess that would be helpful to understand, because we want 14 to make sure that for those who are -- even though it may 15 be more costly, we want to make sure that we're achieving 16 the same emissions reductions at the end result. 17 So with that, I appreciate your time and thank 18 you. And I hope you pass this rule. 19 ACTING CHAIRPERSON RIORDAN: Thank you, Mr. 20 Campbell. 21 Staff, maybe could respond on that. 22 AIR POLLUTION SPECIALIST MILKEY: Yeah, we did 23 look at the cost of direct compliance with the rule in 24 determining the amount of the fees in the noncompliance 25 fee structure. And the amount of the noncompliance fees PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 221 1 start out at twice the cost -- the extra cost of using the 2 cleaner fuels to comply with the rule. And from there 3 each subsequent visit goes up. So originally it's two 4 times. And then the next time that ship comes in it's 5 three times, four times, five times. So it starts out at 6 twice as expensive and goes up from there. 7 EXECUTIVE OFFICER WITHERSPOON: But I think the 8 question was, Paul, could you take that same amount of 9 money and accomplish equivalent reductions on shore? Are 10 there available measures in that price range on shore to 11 make up the loss? 12 EMISSIONS ASSESSMENT BRANCH CHIEF DONOHOUE: 13 Well, the price range would then be $54 per pound 14 of PM. And can we find emission reduction options in the 15 near term at that thing? Yes, we can. We can probably do 16 a lot better than that. 17 ACTING CHAIRPERSON RIORDAN: Okay. Very good. 18 DEPUTY EXECUTIVE OFFICER SCHEIBLE: And also just 19 a perspective to the Board on our view on shore power of 20 cold ironing. The draft plan that we released last week 21 has a heavy cold ironing component. And by 2020 we said 22 in order to get the emission to the degree we got them, we 23 assumed 80 percent of vessel visits would use shore power 24 or an equivalent technique. They may not be hooked up to 25 the grid, but that means that they've got an SCR or other PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 222 1 unit on the ship or there's a different technology use. 2 So I think I -- we agree with Mr. Campbell that that needs 3 to be done on its own and may in the short term provide an 4 alternative to this rule, but probably won't in the long 5 term because we'll be pursuing that measure on its own 6 merits. 7 ACTING CHAIRPERSON RIORDAN: Okay. Don Anair. 8 MR. ANAIR: Thank you. Hi. My name's Don Anair. 9 Again, I'm with the Union of Concerned Scientists. 10 But I would like to take this opportunity to 11 present testimony on behalf of Margaret Gordon, a resident 12 of West Oakland. And I would like to read her testimony 13 if that's okay. It's very brief. 14 ACTING CHAIRPERSON RIORDAN: That's fine. But 15 it's in your three minutes. 16 MR. ANAIR: Right. 17 Margaret Gordon's a Co-Chair of the West Oakland 18 Environmental Indicators Project. She's also a member of 19 the Goods Movement Action Plan and a resident of West 20 Oakland. 21 To quote Margaret: 22 "The problems are as follows: People are getting 23 sick. West Oakland is disproportionately burdened with 24 three freeways, an Army base and the Port of Oakland. 25 Average diesel emissions in West Oakland are over 90 times PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 223 1 higher per square mile than the average per square mile 2 emissions in the rest of California. 3 "Asthma is a silent epidemic in West Oakland. 4 Children in West Oakland are seven times more likely to be 5 hospitalized for asthma than the average child in 6 California. I have five grandchildren with asthma and I 7 myself have asthma. This means without the proposed 8 regulation on diesel engines and diesel-electric engines 9 operating on ocean vessels, West Oakland residents that 10 are already affected by diesel pollution and its negative 11 health effects will be even more heavily impacted. 12 "What are the solutions impacted communities are 13 demanding? That the cleanest possible equipment should be 14 used in the maritime businesses. The maritime business 15 industry must pay their fair share of the health care 16 costs through container fees. There must be more public 17 participation with public health officers of the impacted 18 communities. Create a buffer zone between residential 19 areas and the maritime business industry, paid by 20 industry, to keep the communities healthy and free of air 21 pollution. 22 "The State of California will pay now or will pay 23 later in the form of health and lives. 24 "Thank you." 25 So that was on behalf of Margaret. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 224 1 I have one comment on behalf of the Union of 2 Concerned Scientists in regards to the fee that may be 3 collected as part of this plan. 4 The current proposed regulation doesn't specify 5 where that fee actually goes. And I was wondering if -- 6 TECHNICAL ANALYSIS SECTION MANAGER TARICCO: The 7 way it's set up right now is that if the ports are willing 8 to enter into an agreement with us, then the money would 9 go to them and they would use that to do mitigation at the 10 port. If there's a mitigation fee that goes -- from 11 vessels that go to a port that doesn't want to enter into 12 agreement, it would go into the Air Pollution Control 13 Fund. 14 MR. ANAIR: And that's specified in the current 15 form of the regulation or that's -- 16 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Our intent is 17 to use that money at the -- in the area where it was 18 generated, where the noncompliance occurred to reduce 19 pollution from similar sources. It won't be contemporous. 20 But hopefully over time it will be -- it should be enough 21 funding so that we can actually do more emission 22 reductions with the money than the emissions from the 23 noncompliance. 24 ACTING CHAIRPERSON RIORDAN: Right. 25 And realistically I would think the ports would PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 225 1 welcome the opportunity to have some money to do some of 2 the needed work there at the port to reduce emissions. 3 We've talked a lot about costs of this and there's -- you 4 know, I can think of a lot of good ways to spend that 5 money at the port. 6 Thank you. 7 MR. ANAIR: Thank you. 8 ACTING CHAIRPERSON RIORDAN: Thank you very much. 9 Dr. Appy, Bill Magavern. 10 DR. APPY: Board members, ladies and gentlemen, a 11 pleasure to be here. I'm Ralph Appy. I'm Director of the 12 Environmental Management Division at the Port of Los 13 Angeles. And I'm here representing the port in support of 14 the proposed rule. 15 As you're aware, the Port of Los Angeles together 16 with the Port of Long Beach represent the largest port 17 complex in the Americas; and over 40 percent of all 18 containerized cargo enter and leave the nation at this 19 location. 20 In 1998 the world of goods movement at the port 21 really changed when diesel was identified as an air toxic. 22 And since that time we've been struggling under our title 23 and trust mandate with how to carry out the promotion of 24 maritime commerce while advancing protection of public 25 health in our local communities. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 226 1 Absent regulation we have accomplished many 2 successes in reduction of emissions through voluntary 3 incentive programs. Some of these include the Vessel 4 Speed Reduction Program, Tugboat Retrofit Program, and 5 particularly the shore-side electrical power, which was 6 pioneered at the port and which is indirectly advanced by 7 the proposed regulation. 8 However, reducing all emissions through incentive 9 programs would quickly drain the harbor revenue funds, 10 which are not a public fund. This is monies generated by 11 our customers. 12 The control of such a diverse rate of emission 13 sources as are related to goods movement must include well 14 thought-out goods movement strategies and a wide array of 15 air emission reductions implementation strategies, 16 including practical regulation. 17 While we support the rule, we think there are 18 some issues that deserve your consideration which have 19 been expressed by the regulated community. One size 20 certainly doesn't fit all. There's an amazingly complex 21 and wide array of vessel configuration operations far more 22 significant than cargo-handling equipment, which was 23 pointed out earlier as a complex situation. Therefore, 24 the rule should have flexibility, especially in the 25 beginning. I think also the synchronization of ship PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 227 1 maintenance schedules for retrofits should be a 2 consideration in the rule. 3 Obviously the complicated framework for 4 regulation of ships is a potent argument for not moving 5 forward. Failure to act, however, on a geographically 6 broad framework at least at the state level will continue 7 to force local decisions on to goods movement processes, 8 predominantly through the CEQA process. 9 This has a potential to stifle port 10 infrastructure improvements, create uneven playing fields 11 between port customers and between ports, and forcing 12 growth restriction decisions down to the local level. We, 13 therefore, support the proposed rule with consideration 14 for some of the practical realities of ship configuration 15 operations, and perhaps allowing for implementation of 16 other better control strategies that might appear in the 17 future. 18 Thank you. 19 ACTING CHAIRPERSON RIORDAN: Thank you very much. 20 Appreciate your comments. 21 And, Randal Friedman, I apologize. I called your 22 name and then didn't -- I'm going to ask Bill Magavern to 23 go ahead. But, Randal Friedman, you're the last and final 24 witness today. 25 MR. MAGAVERN: Actually he already spoke. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 228 1 ACTING CHAIRPERSON RIORDAN: He did? Oh, I'm 2 sorry. Oh, he was so quick that I forgot. I apologize. 3 MR. MAGAVERN: Good afternoon. I'm Bill Magavern 4 representing Sierra Club California, in support of this 5 rule you're considering today. 6 International trade is up. Cruising is up. And 7 dirty bunker fuel is leading to hazardous emissions of 8 particulates, SOx and NOx. And the impacts on our health 9 and on environmental justice are really not justifiable. 10 It seems like we've had a double standard where 11 we've been able to gradually reduce emissions from many of 12 the vehicles on land, and appropriately so, and there's 13 still work to do there, but meanwhile this whole marine 14 segment has been largely untouched. And let's hope that 15 we're beginning to end that double standard today. 16 And certainly we cannot rely on the International 17 Maritime Organization or the federal government to take 18 action. This Board has often needed to act in advance of 19 national and international bodies. And certainly this is 20 an instance where again you need to take the lead. 21 The rule proposes a performance standard which 22 makes sense, it's flexible, and emphasizes the emission 23 limits, which are really the goal here. And I don't think 24 this is really one of the more difficult rules for this 25 Board to adapt, because you're not really pushing PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 229 1 technology here. We're talking about fuels that are 2 already available and your requirements are similar to 3 those in the European Union. 4 Echoing the contents of some of my colleagues, I 5 also think that the sulfur content should have a hard cap 6 at 5,000 parts per million, and that by the year 2000 we 7 should be certain that we're getting down to a thousand 8 parts per million so that the companies know now that they 9 need to meet that standard. 10 When it comes to alternative compliance, I urge 11 you to include a great deal of specificity to assure that 12 we're getting enforceable emission reductions, and to 13 require limits across the Board rather than using the 14 fleet averaging concept. 15 The mitigation fee, I think we need to be careful 16 that it doesn't become a means to pay to pollute rather 17 than complying with the standards. And also we need to 18 watch where that money goes. If it's going to go to the 19 ports, let's make sure that they're spending it in the 20 most cost-effective ways to clean up the air around those 21 ports. 22 And, finally, let's pay a lot of attention to 23 enforcement. The Governor ran on a platform of strict 24 enforcement of existing law and Cal EPA has been carrying 25 out an enforcement initiative. And as you implement this PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 230 1 law, I urge you to make sure that it is strictly enforced. 2 Thank you very much. 3 ACTING CHAIRPERSON RIORDAN: Thank you very much. 4 Staff, we've come to the close of the witnesses. 5 Do you have any further comments before I open it up to 6 any questions from the Board members? 7 EXECUTIVE OFFICER WITHERSPOON: I don't believe 8 so. 9 ACTING CHAIRPERSON RIORDAN: Okay. Board 10 members, any further comments or questions? 11 Yes, Dr. Gong. 12 BOARD MEMBER GONG: After hearing the testimony 13 and questions from my colleagues on the Board, I'm still a 14 little concerned about the use of the word "average". And 15 again I think several of us have called your attention to 16 that. 17 Could you reclarify that for me, put my mind at 18 ease a little bit more that we're not letting the high end 19 come in with high emissions. 20 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Well, the 21 proposal before you says if you use marine gas oil, which 22 is the cleaner of the two options if you'd picked the fuel 23 option, we didn't specify a sulfur limit. We didn't 24 specify a sulfur limit because we can't specify one and be 25 sure that it will be widely available in the ports that it PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 231 1 needs to be. But the -- the fleet averaging -- are you 2 referring to fleet averaging the ACP or the averaging of 3 the sulfur? 4 BOARD MEMBER GONG: Both. 5 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Okay. 6 BOARD MEMBER GONG: When the word "average" is 7 used. 8 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Right, right. 9 So we assured ourselves based on what the fuel is 10 out there that without specifying a limit we were quite 11 sure we would get an average of .5 or below and we 12 wouldn't know what it was on any one load. But if we set 13 a specification for that particular fuel, we would be 14 risking, you know, the ability of the ship operators to 15 comply. And they need a regulation that's feasible to 16 comply with. So we thought that that would be the right 17 compromise. It gave them something that they could always 18 comply. They would never have an excuse why they couldn't 19 comply because fuel wasn't available in the previous port, 20 and we would get the emission reductions. 21 The second fuel, the marine diesel oil, you've 22 got to be more careful with that. We weren't assured that 23 we couldn't get pretty high sulfur and that the average 24 would work out. So we set a -- so we said, fine, they can 25 get that. But if they get it, they have to go through the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 232 1 mechanism of showing it's a .5. 2 So we think that the regulation will provide the 3 benefits. We can claim the credit will occur. If we had 4 a strict sulfur limit on the others, we would -- we don't 5 know exactly what would happen. But we in the process 6 couldn't assure ourselves that there would be sufficient 7 availability, that there wouldn't be routine problems with 8 the ships just not being able to get what they needed 9 before they came to California. 10 ACTING GENERAL COUNSEL JENNINGS: And also recall 11 that that's just for the first three years starting. In 12 2010 we have a firm cap on it. 13 BOARD MEMBER GONG: For both? 14 EMISSIONS ASSESSMENT BRANCH CHIEF DONOHOUE: That 15 .1 is a firm cap in 2010. 16 BOARD MEMBER GONG: Oh, okay. So -- 17 DEPUTY EXECUTIVE OFFICER SCHEIBLE: And realize 18 that these fuels are coming out of markets that there are 19 no set worldwide standards for .5 and it's not readily 20 available and it's -- even where it is, there are -- it 21 may not be part of the specifications. Says a sulfur 22 content between here and here, and it may not be even 23 known to the buyer what it is. And it may change from 24 month to month. 25 So we just think that if we set a specified limit PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 233 1 for the marine gas oil, we could be buying a lot of 2 trouble with future compliance and ease of compliance. 3 BOARD MEMBER GONG: On the other hand, for three 4 years ships could be coming in with 10 percent, 20 percent 5 sulfur -- 6 DEPUTY EXECUTIVE OFFICER SCHEIBLE: No, no -- 7 EXECUTIVE OFFICER WITHERSPOON: That's what I was 8 just talking to staff about. Dr. Gong, we would be 9 requiring them to switch for sure from bunker oil, which 10 is 25,000 ppm sulfur right now, to marine diesel -- excuse 11 me -- marine gas oil, which has a maximum spec of 15,000 12 part per million. But what staff has observed is it's on 13 the market in the 8 to 9,000 ppm. 14 And on average because the range is 2,000 to 8 or 15 9,000, it comes in at 5, you know, if you add all the 16 ships and where they're buying their fuel. So you go from 17 25,000 bunker to 9,000 MDO, worst case, in the three years 18 we're talking about for a single ship coming in. But on 19 average, you're getting ships, some at 2,000, some at 20 9,000, you know, all adding up to 5. So that's for the 21 core regulation. 22 And now talk about the ACP. 23 DEPUTY EXECUTIVE OFFICER SCHEIBLE: And from an 24 emission benefit standpoint, when you switch from bunker 25 to one of the distillate fuels, regardless of the sulfur PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 234 1 content, you're going to get the NOx benefit, you're going 2 to get most of the particulate benefit. And so the only 3 thing, you lose some of the sulfur benefit if it's not on 4 the lower end. And we're -- you know, we're convinced 5 that that will average out and be beneficial and 6 protective. 7 Now, for the alternate compliance and averaging, 8 what we've always envisioned any time there's alternative 9 compliance is that there's a clear way to enforce the 10 regulation. And it would be similar to our consumer 11 products regs, where you want to have one product that's 12 higher than the limit and another product that's lower 13 than the limit, you have to show us several things. You 14 have to give us an enforceable limit for each product. So 15 in this case it would be each ship would have an 16 enforceable limit. You have to specify the sulfur content 17 and the fuel qualities and the other things in that. And 18 then you'll have to show that you have a feasible plan 19 where the use of the two ships will produce at least as 20 many emission benefits. 21 And if you don't follow either of those two 22 things, you have violated the regulation and then we 23 pursue it as a violation. So there's actually quite a bit 24 of certainty, and the plan never gets approved until it's 25 shown that it's enforceable and equivalent or better. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 235 1 BOARD MEMBER GONG: So -- 2 DEPUTY EXECUTIVE OFFICER SCHEIBLE: And 3 experience has been that in making it equivalent, we 4 always end up getting better to some degree. 5 BOARD MEMBER GONG: Sounds like the Alternative 6 Compliance Plan average is more tight than the core in a 7 sense. But -- 8 DEPUTY EXECUTIVE OFFICER SCHEIBLE: It's known. 9 But we don't anticipate that the fueling practices or the 10 fuel availabilities in the sulfur contents are going to go 11 up with time. They should go down with time. If they go 12 up with time, we'd have to reassess. 13 TECHNICAL ANALYSIS SECTION MANAGER TARICCO: 14 Mike, can we just add: We looked at this issue 15 and we went back to 1995 and looked at the trends in the 16 average sulfur content of MGO worldwide, and there is a 17 definite downward trend. We're not seeing spikes. So we 18 expect that to continue as well. 19 BOARD MEMBER GONG: So you're telling me that the 20 frequency of asthma attacks will probably go down as 21 related to these emissions over the next three years even 22 without a strict cap to it? 23 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Oh, yes. We 24 would -- there's no danger of not getting 90 percent of 25 the anticipated benefits, and we think we'll get 100 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 236 1 percent. But -- because most of the benefits will come 2 from things other than the sulfur content. And that's the 3 only thing that's not set. The move to distillate rather 4 than using bunker gives you most of the benefits. 5 BOARD MEMBER GONG: Thank you. 6 ACTING CHAIRPERSON RIORDAN: Any other questions? 7 Ms. D'Adamo, do you have a question? 8 BOARD MEMBER D'ADAMO: Well, later on I'd planned 9 on making a motion. But it is -- it related to this 10 discussion, so I'm just going to -- not make the motion 11 now, but throw out that when we started this discussion I 12 was pretty uncomfortable about the issue of averaging, 13 about enforcement, alternative compliance and the 14 mitigation fee. And I'm convinced that staff has really 15 thought this through. And the best way, for me anyway, 16 the thing that would give me the most comfort would just 17 be a report back on those issues. And that's where I 18 think I'll be heading with a motion later. 19 ACTING CHAIRPERSON RIORDAN: Thank you. 20 Supervisor DeSaulnier. 21 BOARD MEMBER DeSAULNIER: Would you be willing to 22 act as Chair for that report back? 23 (Laughter.) 24 BOARD MEMBER DeSAULNIER: This is the way the 25 Chair gets away from -- punishes us for asking for PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 237 1 follow-up. She says, okay, you're in charge of being the 2 Chair. 3 DEPUTY EXECUTIVE OFFICER SCHEIBLE: We'd be happy 4 to have the Board member write the report. 5 (Laughter.) 6 BOARD MEMBER DeSAULNIER: Well, in -- 7 ACTING CHAIRPERSON RIORDAN: I haven't gone that 8 far yet. 9 BOARD MEMBER DeSAULNIER: -- in my case, no, you 10 wouldn't -- 11 (Laughter.) 12 BOARD MEMBER DeSAULNIER: -- because you'd never 13 be able to understand it and I'm sure my dog would eat it 14 the day before that it was due. 15 (Laughter.) 16 BOARD MEMBER DeSAULNIER: I just want to agree 17 with Didi. My inclination coming into it was to nail down 18 both compliance, the mitigation and the averaging and the 19 cap. But I really believe that staff has thought it 20 through. And it reminds me of when I went through a 21 similar exercise when we were doing CARB III, I think, and 22 the argument was to bring the cap down and actually. And 23 actually the oil industry has brought it down without us 24 doing the cap. 25 So I do think though, with all kidding aside, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 238 1 because both these issues are so important and are so new, 2 both for the state and for the nation and truly for 3 internationally, that we should bring it back, because I 4 actually assume -- my assumption is it will come back with 5 really good news. 6 ACTING CHAIRPERSON RIORDAN: Very good. 7 Ms. Berg. 8 BOARD MEMBER BERG: Thank you. 9 I wasn't as concerned about the safety coming in 10 to this. But after Dave Smith's report, now I am 11 concerned. And I'm specifically concerned about the 12 letters that were sent from the two agencies that are 13 responsible or it appears to me might have more 14 experience. And I'd like comment on those two inputs, as 15 well as a comment on the recommendation that -- the 16 phase-in for the hoteling for 1/1/2007 and the 17 transmitting and the maneuvering for 1/1/08. 18 EXECUTIVE OFFICER WITHERSPOON: Well, as Mr. 19 Scheible indicated earlier while he was getting the 20 letters, we did read them as somewhat formulaic, that they 21 stated it is their responsibility to assess safety and to 22 put us on notice that it's a crucial issue, and we agree, 23 and then called for in one case a study on navigational 24 safety questions. And what we intend to do is follow up 25 directly with them to understand specifically what PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 239 1 questions they want us to evaluate with what data. And 2 were we to determine we weren't able to accomplish that in 3 the year we've got before the rule takes effect, because 4 they're asking that it be done before implementation, we 5 would come back to you. But first we have to get clear on 6 exactly the kind of study they think we should perform. 7 They did not articulate it in detail in their letter, and 8 we wish to have a face-to-face meeting with them to 9 explore it in greater detail. 10 EMISSIONS ASSESSMENT BRANCH CHIEF DONOHOUE: 11 Pardon me. In the discussion on the -- from the 12 letter from the Office of Spill Prevention Response, Dave 13 did have up there certain quotes, but he left off part 14 that talked about that their concern was that you may lose 15 power in heavily congested traffic and confined waters in 16 California harbors. To the extent that we are making this 17 switch occur 24 miles offshore, we are avoiding that. 18 The other opportunity that is available, since 19 there is fuel currently available, and the regulation goes 20 into effect January 1, 2007, it would behoove the industry 21 to start doing that at dockside right now or in the near 22 future and not have us extend the regulation after 2007 to 23 have that occur. So there isn't anything preventing them 24 from moving forward on that immediately. 25 BOARD MEMBER BERG: I'm in full agreement that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 240 1 the industry should be extremely proactive on this and not 2 delay. In conjunction, I really think it's incumbent upon 3 us to contact specifically these two agencies and at least 4 be able to walk away from the table feeling that they are 5 comfortable as well. Because I would really not like to 6 have something happen and the finger be pointed at us. I 7 think for the 10 percent additional air emissions from the 8 risk -- I understand 90 percent of the risk of the PM 9 comes from hoteling. And I will support the regulation 10 today, but I would err on the side of safety if in fact 11 those two agencies weren't comfortable. And so I think a 12 face-to-face meeting would be -- is a great idea, and I 13 appreciate you taking the lead on that. And I would like 14 to hear back that everybody's on board. 15 EXECUTIVE OFFICER WITHERSPOON: We will follow up 16 with you directly as soon as that meeting occurs. 17 BOARD MEMBER BERG: Thank you so much. 18 ACTING CHAIRPERSON RIORDAN: Other questions? 19 Supervisor Patrick, any questions? 20 BOARD MEMBER PATRICK: No, I'm very comfortable 21 with the direction. It sounds like the motion will be 22 going. 23 ACTING CHAIRPERSON RIORDAN: Okay. Let me close 24 the record then on this agenda item. However, the record 25 will be reopened when the 15-day notice of public PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 241 1 availability is issued. 2 Written or oral comments received after this 3 hearing date but before the 15-day notice is issued will 4 not be accepted as part of the official record on this 5 agenda item. 6 When the record is reopened for a 15-day comment 7 period, the public may submit written comments on the 8 proposed changes, which will be considered and responded 9 to in the final statement of reasons for the regulation. 10 We have ex parte on this particular item. 11 Supervisor DeSaulnier. 12 BOARD MEMBER DeSAULNIER: Thank you, Madam Chair. 13 On November 30th I had a conference call with 14 Diane Bailey from NRDC, Bonnie Holmes-Gen from the 15 American Lung Association, Don Anair from the Union of 16 Concerned Scientists, Candice Kim with the Coalition for 17 Clean Air. All of our conversation and all of the 18 conversations I'm going to mention today were consistent 19 with testimony from either the individuals or the groups 20 they represent. 21 On November 30th I also had a separate phone call 22 with Teri Shore from the Blue Water Network. 23 On December 2nd I had a phone call with 24 representatives from the Western States Petroleum 25 Association, including Cathy Reheis-Boyd, Frank Holmes, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 242 1 Gina Grey, Dan Sinks from ConocoPhillips, and Dave Smith 2 from BP. 3 That's it. 4 ACTING CHAIRPERSON RIORDAN: Okay. Ms. D'Adamo. 5 BOARD MEMBER D'ADAMO: A conference call on 6 December 5th with Todd Campbell, Clean Energy; and Mike 7 Eaves, California Natural Gas Vehicle Coalition. 8 Also on December 5th, conference call with Cathy 9 Reheis-Boyd representing the WSPA; Frank Holmes and Gina 10 Grey, also with WSPA; Dan Sinks, ConocoPhillips; and Dave 11 Smith from BP. 12 And then on December 6th, conference call with 13 Joe Lyou, California Environmental Rights Alliance; Bonnie 14 Holmes-Gen, American Lung Association; diane Bailey, NRDC; 15 Don Anair, Union of Concerned Scientists; Tom Plenys and 16 Candice Kim, Coalition for Clean Air. 17 And those conversations that I had were 18 consistent with the testimony provided today. 19 ACTING CHAIRPERSON RIORDAN: Thank you. 20 Dr. Gong. 21 BOARD MEMBER GONG: Thank you. 22 I spoke with the same people I listed during the 23 first item. Can I just let that sit? 24 And I also spoke on the telephone with Teri 25 Shore, Blue Water Network, on December 1. And our PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 243 1 discussion reflected her discussion today. 2 ACTING CHAIRPERSON RIORDAN: Okay. And for 3 myself, on Monday, December 5th, I spoke with Frank 4 Holmes, Gina Grey, Cathy Reheis-Boyd, Dave Smith, all 5 regarding this particular item. And the testimony 6 mirrored what was covered in that telephone conversation. 7 I spoke also on the 5th with Todd Campbell and 8 Mike Eaves. And again the testimony mirrored what was 9 part of the conversation. 10 And I also spoke with Teri Shore from the Blue 11 Water Network. And her testimony today mirrored what was 12 a part of our conversation. 13 Ms. Berg. 14 BOARD MEMBER BERG: Thank you. 15 On December 5th I had a phone call with WSPA. 16 And that was Cathy Reheis-Boyd, Gina Grey, Dan Sinks from 17 ConocoPhillips, and Dave Smith with BP. 18 On December 6th I had a meeting at Ellis Paint 19 Company with the Coalition for Clean Air, Nidia Bautista; 20 and Tom Plenys and Joe Lyou from the California 21 Environmental Rights Alliance. 22 On December 6th I had a phone call with Teri 23 Shore with the Blue Water Network. 24 ACTING CHAIRPERSON RIORDAN: Okay. Supervisor 25 Patrick. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 244 1 BOARD MEMBER PATRICK: Thank you. 2 On December 2nd I had a phone call from Teri 3 Shore of the Blue Water Network. 4 On December 5th a phone call from Todd Campbell 5 of Clean Energy and Mike Eaves from the California 6 National Gas Vehicle Coalition. 7 On December 7th a phone call with Bonnie 8 Holmes-Gen of the American Lung Association, Don Anair of 9 the Union of Concerned Scientists, and Joe Lyou of the 10 California Environmental Rights Alliance. 11 And on December 2nd I had a phone call with three 12 members of WSPA, Cathy Reheis-Boyd, Frank Holmes and Gina 13 Grey; and also Dan Sinks from ConocoPhillips. 14 And all of those conversations mirrored testimony 15 that was given today. 16 ACTING CHAIRPERSON RIORDAN: And I think I need 17 to also include, and I don't think I did this, Wednesday, 18 December 7th, I did speak with been Bonnie Holmes-Gen, Joe 19 Lyou, Tom Plenys on this particular item. And their 20 testimony mirrored the conversation. 21 22 BOARD MEMBER BERG: Excuse me, Madam Chair. On 23 my meeting on the 5th with WSPA, it did not include Dan 24 Sinks. He was not on the phone call. 25 Thank you. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 245 1 ACTING CHAIRPERSON RIORDAN: Thank you very much. 2 Board members, I believe Ms. D'Adamo was going to 3 offer a motion. 4 BOARD MEMBER D'ADAMO: Okay. I would like to 5 make a motion that we adopt Resolution 05-63 with the 6 following changes: 7 First of all, on the alternative compliance 8 provision, that we adopt language that would be similar to 9 what we proposed earlier in terms of a transparent public 10 process. 11 And then following up on Ms. Berg's questions 12 regarding safety, that staff be directed to follow up with 13 the two agencies that raised safety concerns. And I think 14 that it would be best if we just left it up to staff to 15 determine what type of further analysis, if any, needs to 16 be done. 17 And then the third change would be a report back. 18 I would defer to staff on the appropriate time on this, 19 but report back on a number of items: One, on the safety 20 concerns; secondly, on the mitigation fee; third, on the 21 alternative compliance path; and then, fourth, on 22 enforcement provisions. 23 And then I'd also like to add a report back on 24 the cold ironing issue that was raised, whether it be 25 included in -- and again would defer to staff's PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 246 1 recommendation on that, because it sounds like it's in the 2 works anyway. It seems that this would be an 3 appropriate -- if there's going to be a report back anyway 4 on these provisions, that that would be an appropriate 5 time for us to hear on the progress with that. 6 EXECUTIVE OFFICER WITHERSPOON: We'll be actually 7 before you in the spring with the whole Goods Movement 8 Emission Reduction Plan. And cold ironing is a prominent 9 feature there, so we can certainly talk about it at that 10 time. And we do have a white paper pending on feasibility 11 generally. But we've already gone beyond our white paper 12 in terms of what's available today to what should happen 13 by 2020. 14 In response to when's appropriate safety: 15 Quickly, as soon we've accomplished our meeting and sort 16 of assessed that out. 17 On the other subjects about the actual limitation 18 of this, I would suggest mid-'07. We have six months 19 experience with the new fuel requirements. And on cold 20 ironing first, when we come back with goods movement. And 21 then when we see what the next step after that will be, we 22 can give you another date. 23 BOARD MEMBER D'ADAMO: And I forgot to include 24 fuels on the averaging issue, just how that plays out -- 25 EXECUTIVE OFFICER WITHERSPOON: That would PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 247 1 also -- six months after implementation. 2 ACTING CHAIRPERSON RIORDAN: Okay. 3 ACTING GENERAL COUNSEL JENNINGS: Excuse me. If 4 I might add, I believe that staff had concurred with one 5 other suggestion from a commenter, and that was that staff 6 said that they would take a look at the comments from the 7 U.S. Maritime Administration on whether their vessels 8 should be exempted. 9 BOARD MEMBER D'ADAMO: Thank you. 10 ACTING GENERAL COUNSEL JENNINGS: And so the 11 recommendation there would be for staff to look at it and 12 incorporate changes if they deem it appropriate. 13 BOARD MEMBER D'ADAMO: Thank you. 14 BOARD MEMBER BERG: And I'll second the motion. 15 ACTING CHAIRPERSON RIORDAN: Thank you very much. 16 Motion is before you. 17 Any discussion -- any further discussion? 18 Then all those in favor of the motion please 19 signify by saying aye. 20 (Ayes.) 21 ACTING CHAIRPERSON RIORDAN: Opposed, no. 22 Motion carries. 23 All right. It is about 3 of 3. And it would 24 seem to me that we might take about a ten-minute break and 25 reconvene at about 10 after 3. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 248 1 (Thereupon a recess was taken.) 2 ACTING CHAIRPERSON RIORDAN: This is item 3 05-12-6, the proposed rule for heavy-duty diesel vehicles 4 owned or operated by public agencies and utilities. 5 Board has adopted several diesel control measures 6 since we established a comprehensive risk reduction 7 program in 2000. This particular rule hits close to home 8 for the local elected officials on the Board, requiring 9 the cleanup of diesel on-road trucks operated by the 10 state, federal and local governments. The rule also 11 covers vehicles owned by utilities and operated by 12 utilities. 13 I'm going to ask Mr. Cackette -- am I right? -- 14 in perhaps just introducing this item please. 15 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Thank 16 you, Madam Chairwoman. 17 Two important considerations guided us in 18 developing this proposed regulation for government and 19 utility vehicles. The first is these vehicles often 20 operate in highly populated areas where public exposure to 21 diesel pollution is high. 22 Second, when the implementation of the Diesel 23 Risk Reduction Plan is complete, most owners and operators 24 of diesel engines across the entire state will have had to 25 take actions to clean up their trucks and equipment, which PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 249 1 includes gravel trucks, grocery store delivery trucks, and 2 backhoes used on construction sites. It seems fair and 3 equitable that governments that are leading the charge to 4 clean up our environment also clean up the diesel trucks 5 they operate. 6 The regulation you are considering is modeled 7 after previous rules the Board has adopted, such as the 8 trash truck rule. And like that rule, we have included 9 flexibility to ease implementation and reduce cost. 10 Unique to this proposal is a special provision for 11 smaller, rural counties. We understand the difficult 12 fiscal situation many counties find themselves in, and we 13 recognize that more of their vehicles operate in less 14 polluted areas where public exposure to diesel emissions 15 is less. Thus we are proposing special implementation 16 schedules for small counties and for small cities located 17 in rural areas that provide up to 15 years complete 18 cleanup for their vehicles. 19 We will also share with you several other 20 revisions to the staff proposal that we have developed 21 since the staff report was issued 45 days ago. You may 22 wish to direct staff to include some of these in the final 23 rule after you've heard our testimony regarding these 24 points. 25 I'll now turn the presentation over to Ms. Sharon PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 250 1 Lemieux, who will provide you with the overview of the 2 staff's proposal and recommendations. 3 ACTING CHAIRPERSON RIORDAN: Thank you, Mr. 4 Cackette. 5 (Thereupon an overhead presentation was 6 Presented as follows.) 7 EMISSION RESEARCH SECTION MANAGER LEMIEUX: Thank 8 you, Tom. 9 Good afternoon, Madam Chairman and Board members. 10 We are here to propose a new diesel PM control 11 measure for heavy-duty vehicles owned or operated by 12 public fleets and private utilities. There's a wide range 13 of vehicle types in this category. Examples include dump 14 trucks, lift trucks, flatbed trucks and sweepers. 15 --o0o-- 16 EMISSION RESEARCH SECTION MANAGER LEMIEUX: As 17 you are well aware, exposure to diesel PM causes severe 18 adverse health impacts. Exposure to diesel PM is 19 attributed to thousands of premature deaths a year in 20 California as well as thousands of hospital emissions and 21 hundreds of thousands of asthma attacks and loss days of 22 work. 23 --o0o-- 24 EMISSION RESEARCH SECTION MANAGER LEMIEUX: In 25 1998 this Board identified diesel PM as a toxic air PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 251 1 contaminant and established a goal of reducing diesel PM 2 to the lowest levels possible. Based on the growing 3 evidence of the harmful effect of diesel PM, in 2000 the 4 Board adopted a comprehensive plan called the Diesel Risk 5 Reduction Plan. This plan has very ambitious goals of 6 reducing diesel PM levels by 75 percent from the 2000 7 baseline levels by 2010 and 85 percent by 2020. 8 The plan has four basic strategies to accomplish 9 these goals. They include clean fuel requirements, 10 stringent standards for new engines, ensuring in-use 11 compliance, and substantial emission reductions from 12 in-use engines. 13 The control measure before you today contributes 14 to the reductions needed from in-use engines. The plan 15 includes a specific commitment to develop control measures 16 for on-road public fleets. 17 --o0o-- 18 EMISSION RESEARCH SECTION MANAGER LEMIEUX: 19 Today's proposal applies to on-road vehicles 20 owned or operated by municipalities and utilities that are 21 diesel fueled, over 14,000 in gross vehicle weight rating, 22 with engine model years 1960 to 2006. Leased vehicles are 23 included. 24 A municipality is defined as a city, county, city 25 and county, special district, or a public agency of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 252 1 United States of America or the State of California. This 2 rule is adopted as part -- or this definition was adopted 3 as part of the Solid Waste Collection Vehicle Rule in 4 September of 2003. 5 A utility is newly defined by the rule as a 6 company that provides the same or similar services for 7 water, natural gas and electricity. 8 The rule includes special provisions for fleets 9 located in certain low population counties, which I will 10 go over later in the presentation. 11 --o0o-- 12 EMISSION RESEARCH SECTION MANAGER LEMIEUX: The 13 rule requires that fleet owners apply best available 14 control technology, referred here as BACT, to their 15 vehicles on a certain schedule. The Solid Waste 16 Collection Vehicle Rule previously adopted by the Board 17 uses the same BACT concept. 18 BACT is defined in the proposed rule as: 19 An engine certified to the 0.01 grams per brake 20 horsepower/hour PM standard. This applies to 2007 and 21 subsequent model year engines. 22 An engine certified to the 0.10 grams per break 23 horsepower/hour PM standard that is retrofitted with the 24 highest level of verified diesel emission control strategy 25 available; an alternate fuel, gasoline or heavy-duty pilot PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 253 1 ignition engine certified to the specified standards; or 2 use of an existing engine retrofitted with the highest 3 level verified diesel emission control strategy. 4 --o0o-- 5 EMISSION RESEARCH SECTION MANAGER LEMIEUX: The 6 rule divides engines into three model year groups shown 7 here. Each fleet operator calculates its total fleet 8 every January 1st and determines based upon the formulas 9 provided in the rule how many vehicles in each group must 10 be in compliance by the December 31st deadlines. For each 11 model year group compliance is phased in over a five-year 12 period, except for Group 3 where there's only a two-year 13 phase-in. The first compliance deadline is December 31st, 14 2006, with implementation fully completed by December 15 31st, 2012. 16 The rule provides several compliance extensions. 17 These are available if a fleet implements early, if no 18 diesel emission control strategy is verified or is 19 commercially available, if an engine is dual fuel or 20 bi-fuel, if an engine is near retirement, or if an engine 21 is participating in a diesel emission control strategy, 22 experiment or a demonstration. 23 --o0o-- 24 EMISSION RESEARCH SECTION MANAGER LEMIEUX: As 25 mentioned previously, the rule has special provisions for PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 254 1 fleets located in certain low population counties. Staff 2 recognizes that that these rural areas have less access to 3 revenue sources such as property and road taxes. 4 Therefore, it was reasonable to provide special provisions 5 for fleets located in these areas. The 23 low population 6 counties are listed in the regulation. Fleets in these 7 counties have two options for compliance, both of which 8 provide more time compared to fleets located in larger 9 counties. The options will be discussed in more detail on 10 the next slides. Other special provisions for those 11 fleets include the ability to use a Level 1 diesel control 12 strategy on the oldest Group 1 vehicles instead of 13 replacing the engine. 14 --o0o-- 15 EMISSION RESEARCH SECTION MANAGER LEMIEUX: Shown 16 here is an optional schedule that fleets located in low 17 population counties can elect to follow. Basically these 18 fleets could phase in compliance over nine years starting 19 in 2008 and finishing up in 2017 instead of the five-year 20 schedule applicable to fleets in higher population 21 counties. The exception is Group 3 vehicles whose 22 compliance phase-in period is five years, compared to two 23 years for fleets in larger counties. 24 --o0o-- 25 EMISSION RESEARCH SECTION MANAGER LEMIEUX: While PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 255 1 working with fleets located in low population counties, it 2 became clear that even with an extended implementation 3 schedule, some of these fleets would still have difficulty 4 complying. Therefore staff is also proposing an 5 accelerated turnover option. Basically if a fleet wants 6 to participate in this option, it must notify the 7 Executive Officer and commit to replacing or retiring all 8 its pre-1993 engines and replace these engines with 1994 9 or newer engines by 2020. Then these engines must have 10 BACT applied to them by 2025. This option provides even 11 more time for compliance provided the fleets can plan for 12 replacing all very old engines with cleaner ones. 13 --o0o-- 14 EMISSION RESEARCH SECTION MANAGER LEMIEUX: The 15 baseline and emission benefits in tons per year for the 16 rule are shown here, as well as the percent reduction from 17 the 2006 baseline. The rule benefit peaks in 2010. And 18 when fully implemented the rule will prevent 510 tons of 19 diesel PM from being emitted into the air. 20 --o0o-- 21 EMISSION RESEARCH SECTION MANAGER LEMIEUX: The 22 rule will also prevent 37 premature deaths from occurring 23 by 2020 at a cost of 3 million per death avoided. This is 24 cost beneficial when compared to the U.S. EPA reference 25 value of 5 million to $7 million per death if avoided. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 256 1 Although not calculated, this rule will also 2 prevent numerous other adverse health effects. The rule 3 will also prevent 1,478 tons of hydrocarbon and oxides of 4 nitrogen from being emitted into the air. 5 --o0o-- 6 EMISSION RESEARCH SECTION MANAGER LEMIEUX: The 7 rule will cost 59 million over 5 years, increasing to a 8 total of 213 million over 15 years. The estimated cost 9 effectiveness of the proposed regulation on a cost per 10 emissions-reduced basis is $159 per pound of diesel PM 11 reduced and $11 per pound of NOx plus hydrocarbons 12 reduced. 13 --o0o-- 14 EMISSION RESEARCH SECTION MANAGER LEMIEUX: 15 Remaining issues which you may here today from 16 stakeholders include whether this rule constitutes an 17 unfunded mandate, whether it should be applicable to 18 federal government fleets such as the United States Postal 19 Service, and how the use of biodiesel is affected. And, 20 finally, fleets hope to continue to use Moyer funds to 21 comply with the proposed rule. 22 --o0o-- 23 EMISSION RESEARCH SECTION MANAGER LEMIEUX: The 24 first issue is whether or not the proposed regulation is 25 reimbursable under the California Government Code Section PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 257 1 17500. This section requires that staff determine if the 2 rule requires a new program or an increased level of 3 service of an existing program. It was determined that 4 this was not the case since the rule does not require a 5 new program or level of service. Secondly, staff needed 6 to determine if the cost of this regulation is unique to 7 local governments. The rule's requirements are not unique 8 to local governments because private utilities are also 9 included. 10 --o0o-- 11 EMISSION RESEARCH SECTION MANAGER LEMIEUX: 12 Another issue raised is the applicability of the 13 rules to federal vehicles. 14 For the military, tactical vehicles are exempted 15 from the rule. 16 With respect to non-tactical federal vehicles, 17 Congress waived its sovereign immunity with respect to air 18 pollution control laws. And, thus, the vehicles may be 19 subject to state rules. 20 The United States Postal Service has raised the 21 issue of competitiveness disadvantage since a similar 22 fleet rule is not affecting other package delivery 23 companies. However, these companies that compete with the 24 United States Postal Service will be subject to the 25 private on-road fleet rule scheduled for adoption next PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 258 1 year. And we anticipate implementation on a similar 2 schedule. 3 --o0o-- 4 EMISSION RESEARCH SECTION MANAGER LEMIEUX: Some 5 fleets, especially military fleets, are using biodiesel 6 fuels to improve alternative fuel credits needed to comply 7 with the Federal Energy Policy Act, or EPACT. These 8 fleets were concerned that the rule's implementation could 9 functionally preclude the use of biodiesel, since until 10 recently no diesel emission control strategy was verified 11 to be compatible with biodiesel. 12 Recently Senate Bill 975 was passed, stipulating 13 that up to 20 percent biodiesel blended with commercial 14 diesel, a blend referred to as B-20, could be used in a 15 public fleet vehicle equipped with retrofit devices 16 whether or not the devices were verified to be compatible 17 with its use. Therefore, the ARB will consider fleets 18 using B-20 in compliance with the regulation provided they 19 are using a verified devise. 20 However, if the device is verified to be 21 compatible with B-20 -- if the device is not verified to 22 be compatible with B-20, the ARB cannot require the device 23 manufacturer to carry the state-mandated warranty. 24 One manufacturer, Johnson Matthey, has recently 25 verified the use of its CRT diesel particulate filter with PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 259 1 B-20. It is expected other hardware manufacturers will 2 follow. 3 Fleets have asked that the use of biodiesel fuels 4 be considered BACT since it's been shown that these fuels 5 reduce PM as well as greenhouse gases. Although not 6 considered BACT in this rule, ARB has established a 7 biodiesel working group to develop fuel specifications 8 that could be approved by the Association of Standards and 9 Test Methods. This will help facilitate biodiesel fuel 10 verification. 11 --o0o-- 12 EMISSION RESEARCH SECTION MANAGER LEMIEUX: 13 Several witnesses at the November 2005 Board meeting 14 raised the issue of the Carl Moyer funding availability 15 for this rule. It is the principle of the Carl Moyer 16 program that funds only be used for programs whose 17 emission reductions are a surplus to what is required by 18 law or regulation. In the context of a diesel control 19 measure, such as the one being considered today, this 20 means complying with regulatory requirements well ahead of 21 what is required by the regulation. 22 The guidelines which you adopted have identified 23 actions that comply with the regulation more than three 24 years before a compliance deadline is eligible for Carl 25 Moyer funding. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 260 1 Staff has reviewed the rule before you today and 2 has determined that there are funding availabilities for 3 fleets impacted by this rule if BACT is applied to 4 vehicles in percentages higher than what is required in 5 the schedule. 6 The next slide will give you an example of the 7 funding opportunities for Group 2 vehicles since this 8 model year group makes up 75 percent of this fleet's 9 distribution. 10 --o0o-- 11 EMISSION RESEARCH SECTION MANAGER LEMIEUX: This 12 slide provides a hypothetical example of how many -- how 13 much Moyer funds may be available for fleet operators in 14 large counties. To obtain Moyer funds the operator has to 15 bring 100 percent of its fleet into compliance. In the 16 year in which the operator does so, some of its fleet 17 vehicles may be three or four years away from the 18 mandatory compliance date. For these vehicles Moyer funds 19 are available. For those vehicles less than three years 20 from a mandatory compliance deadline, Moyer funds are not 21 available. 22 The amount of funding available per vehicle that 23 qualifies varies by how much that vehicle is used and how 24 far away the mandatory compliance deadline is, with more 25 money available for vehicles used more and further from PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 261 1 required compliance. 2 For a typical municipal fleet vehicle, the 3 percentage of the compliance costs funded is 6 to 54 4 percent. Thus, if a fleet operator brings all vehicles in 5 this model year group into compliance in 2006 or 2007, 6 from 2 to 21 percent of the cost of compliance for the 7 group as a whole could be eligible for Moyer funds. After 8 2007, no Moyer funds would be available because all the 9 vehicles would be within three years of their mandatory 10 compliance deadline. 11 For low population counties that choose the 12 accelerated turnover option, Moyer funds are available for 13 a much longer period of time. For low population counties 14 the first mandatory deadline is 2020. Thus vehicles in 15 their fleet are eligible for Moyer funding until 2015. 16 From 7 to 46 percent of the cost of the compliance could 17 be covered, depending on whether the fleet buys a new or 18 used vehicle or retrofits. 19 --o0o-- 20 EMISSION RESEARCH SECTION MANAGER LEMIEUX: Next 21 we will summarize some additional issues that have been 22 raised by stakeholders between the release of the staff 23 proposal and the last few days. The issues are grouped 24 into three categories: Rural fleet issues, implementation 25 schedule issues, and early compliance options. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 262 1 Staff has highlighted in green the comments which 2 we believe are reasonable to be incorporated into the 3 rule. 4 --o0o-- 5 EMISSION RESEARCH SECTION MANAGER LEMIEUX: The 6 first set of issues were raised by fleets located in small 7 rural cities in counties that are not defined as low 8 population. These small cities may be under similar 9 budget circumstances as low population counties. One 10 possible change to the staff's proposal is to allow fleets 11 in cities with a population under 50,000 not located in a 12 highly urbanized area to use the longer implementation 13 schedules available to low population county fleets. 14 An example of a fleet that could take advantage 15 of this option would be the City of Ridgecrest, which has 16 a population of about 25,000, but is located in Kern 17 County, with a population of 780,000. 18 A second stakeholder suggestion is to allow 19 counties between 125,000 and 325,000, that are mostly 20 rural but have one or two large cities, to subtract the 21 largest city populations which are serviced by their own 22 fleets, and allow the remainder of the county to qualify 23 for the low population implementation options. And an 24 example of this would be the County of Shasta, with an 25 estimated population of 178,000. If the population of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 263 1 City of Redding, 88,000, is subtracted from the population 2 of the County of Shasta, the remainder of the county would 3 still qualify as a low population county. Fleets located 4 in the City of Redding would still be required to follow 5 the regular implementation schedule. 6 A final recommendation is exempting low 7 population counties altogether, which the staff does not 8 recommend. 9 --o0o-- 10 EMISSION RESEARCH SECTION MANAGER LEMIEUX: 11 Municipal governments have pointed out that 2006 12 deadlines does not allow adequate time for budgets to be 13 modified and approved to fund the cost of this rule. They 14 are requesting a one-year delay in the first compliance 15 deadline for Group 2 vehicles to the end of 2007. On the 16 other side of the spectrum, environmental organizations 17 have suggested that implementation schedule for Group 1 18 vehicles be moved up one year to 2006. Staff does not 19 recommend this change. 20 --o0o-- 21 EMISSION RESEARCH SECTION MANAGER LEMIEUX: 22 Fleets have also requested additional early 23 compliance credits. One suggestion would allow two more 24 years for Group 3 vehicles to comply if early compliance 25 is achieved by Group 1 and Group 2 vehicles. Based upon PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 264 1 the average fleet composition, this would result in up to 2 50 percent increase in emission benefits by 2010 on a 3 fleet-level basis. 4 Another change would allow the Executive Officer 5 to delay implementation schedules for grant credits for 6 BACT when fleets purchase advanced technology vehicles. 7 PG&E is requesting double BACT credits for 8 alternative fuel vehicles purchases made in 2000 to 2003 9 timeframes. Staff thinks that this could establish a bad 10 precedent. 11 Lastly, staff is proposing minor clarifying 12 changes to the record-keeping requirements and 13 applicability. 14 --o0o-- 15 EMISSION RESEARCH SECTION MANAGER LEMIEUX: In 16 conclusion, staff recommends that the Board adopt the 17 proposed regulations and proceed with any modification 18 that the Board deems appropriate based on today's 19 witnesses' testimony and discussion. 20 Thank you. 21 ACTING CHAIRPERSON RIORDAN: Thank you very much. 22 Let me ask Madam Ombudsman, would you like to 23 describe the public participation process please. 24 OMBUDSMAN TSCHOGL: Thank you. 25 Madam Chair, members of the Board. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 265 1 In preparing this rule, staff has worked with 2 many stakeholders over the past two and a half years. 3 Staff held seven public workshops and many focus meeting 4 in Sacramento and El Monte. Attendees included 5 representatives from local, state, and federal public 6 agencies, utilities, environmental organizations, engine 7 manufacturers, diesel emission control manufacturers, and 8 other interested parties. These individuals participated 9 both by providing data, reviewing draft regulations, and 10 by participating in open forum workshops in which staff 11 directly addressed their concerns. 12 In addition to this, staff participated in a 13 Diesel Emission Reduction for Public Agency and Utility 14 Fleets Technical Conference sponsored by the California 15 Air Pollution Control Officer's Association, CAPCOA, in 16 Sacramento on August 15th and 16th in 2005. This 17 conference was attended by over 500 individuals 18 representing the municipal and utility fleet managers, 19 after-treatment device manufacturers, installers, engine 20 manufacturers, fuel producers and environmental groups. 21 The Sacramento workshops were broadcast over the 22 Internet webcast to provide opportunities for stakeholders 23 throughout California to participate. Over 3,000 24 individuals and companies were notified through a series 25 of mailings. In addition, notices were posted to the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 266 1 website and E-mailed to subscribers of ARB's electronic 2 list server. Staff met with a number of stakeholders 3 groups throughout the rule-making process. 4 Representatives from the various agencies mentioned 5 earlier assisted ARB in gathering data about their fleets. 6 Alternatives were suggested to the proposed 7 regulation and explored by staff. The staff met several 8 times with representatives of the Regional Council of 9 Rural Counties -- that's RCRC -- and presented at an RCRC 10 Board meeting on August 11th, 2004, and the North Counties 11 Road Maintenance Supervisor Conference on October 6th, 12 2005, to specifically discuss compliance issues unique to 13 small population counties and what special provisions 14 could be provided in the rule. 15 The staff report and Board hearing notice were 16 released on October 21st, 2005. 17 This concludes my comments. 18 ACTING CHAIRPERSON RIORDAN: Thank you, Madam 19 Ombudsman. 20 Board members, any questions at this time? 21 All right. Here's the situation. I have a 22 number of people who wish to speak. So we're going to be 23 orderly. You're going to have three minutes. But I am 24 going to have you queue up pretty much in those first 25 seven seats so that we can just go one right after the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 267 1 other. 2 And I'm going to begin by saying, Mr. Friedman, I 3 owe you a huge apology, because I had forgotten you'd 4 spoken. You get to go first as a result. And hopefully 5 you can go home after this if you don't wish to stay for 6 the rest. 7 Then we will begin in these seats right in the 8 front row. David Wilson, Rick Sikes, Richard Teebay, Mary 9 Pitto, Ernest Perry, Peter Rei, and Douglas Fini, all 10 please come down. 11 And then, Ms. Berg, did you have a question for 12 staff? 13 BOARD MEMBER BERG: Yes, but I can wait till 14 later. 15 ACTING CHAIRPERSON RIORDAN: Okay. All right. 16 Mr. Friedman, we'll just wait for those people to 17 sit down so you're not interrupted. I want this sort of 18 organized. 19 Thank you. 20 Mr. Friedman. 21 MR. FRIEDMAN: Madam Chair, thank you. And I do 22 not take anything personally these days. 23 I do have to say I am the one non-lawyer from the 24 federal government here today. You'll be hearing from a 25 number of federal agency lawyers. But I'm here to speak PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 268 1 on the biodiesel issue and deferring to my colleagues on 2 the legal issues with the federal government. 3 We are asking for the rather unusual step for us 4 that you defer action on this for a number of issues. But 5 the one I'm talking about is the biodiesel. As your staff 6 identified, we use -- the military is the biggest single 7 user of biodiesel in California, both as a matter of 8 policy from the Secretary of the Navy this June, which 9 said that all nontactical vehicles in California will use 10 B-20, as well as compliance both with EPACT and with 11 federal executive orders. 12 One thing your staff did not mention in this 13 subject is this is not a voluntary measure for us. There 14 is in fact active litigation between environmental 15 organizations and the federal government over EPACT 16 compliance and whether we are vigorous enough in that. So 17 this is in no way optional for us. We have to do this to 18 comply with congressional requirements. And if we don't, 19 there are a of watchdogs out there that will litigate to 20 make sure we're doing this. So our ability to use B-20 is 21 very important to us, not just for policy but for legal 22 reasons. 23 Our concern with your approach with biodiesel is 24 it's essentially a "trust us" approach. You're telling 25 us, the operators of large fleets in this state, that the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 269 1 devise manufacturers will come forward and do the 2 verification. We don't view that as a viable option for 3 us. 4 If I could use China Lake as an example. A year 5 ago, they did not use biodiesel at all on that 6 installation. In compliance with the Secretary of the 7 Navy directive, however, they have replumbed that facility 8 and now exclusively use B-20 for all their vehicles. If 9 device manufacturers don't step forward after January '08 10 when SB 975 expires, what is China Lake supposed to do? 11 Well, maybe some of their vehicles they have verified 12 devices that they can use. But what about the ones where 13 that device won't fit on that engine? It can't be, you 14 know -- we can't pick and choose what we comply with. And 15 at an installation like China Lake where there is only one 16 type of fuel that's available now, we have to know in the 17 long run as fleet managers that there is a viable 18 solution. 19 What I would like to do and suggest is that the 20 staff work -- continue working with us on solutions. And 21 one of those solutions that we identify is -- you have the 22 ability to not be passive in this. You have the ability 23 to go to the manufacturers and say, "Your responsibility 24 is to do the verification both for a conventional diesel 25 and for B-20 and lower," and not leave it optional, or PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 270 1 else give them the option of showing an equivalency. 2 Every technical person I've spoken with had said 3 there is no reason why B-20 will not work in one of these 4 retrofit kits. There's no need to repeat the analysis. 5 They all feel that it's -- it would be a wasted effort, 6 that it can be done just based on equivalency. We would 7 urge you to go that direction and put the burden on the 8 manufacturers and not the users of this equipment, who are 9 trying to do the right thing for the environment, who are 10 trying to obey our masters in Congress, and who are trying 11 to protect this country as well. 12 Thank you. 13 ACTING CHAIRPERSON RIORDAN: Thank you, Mr. 14 Friedman. 15 I don't know if staff has a response, but let's 16 see here. 17 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 18 HEBERT: Yes, ma'am. 19 We are actively engaged with the device 20 manufacturers right now. And we are working partially off 21 the Johnson Matthey verification. But part of the problem 22 as well is that the device manufacturers as well as us 23 have to be assured that the emission reductions are 24 attained, that the durability is upheld too, they won't 25 cause any operational in-use problems. And that is part PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 271 1 of what is being worked out now. 2 I do expect, now that Johnson Mathey's been 3 verified, that several other of the straightforward 4 hardware devices will follow suit. And I do know that 5 there's another manufacturer doing research right now to 6 determine the B-20 and the operation of their system. So 7 I expect we'd see a lot of the hardware devices become 8 verified in the next few months on B-20. 9 MOBILE SOURCE CONTROL DIVISION CHIEF CROSS: And 10 as the witness mentioned, they can legally use B-20 for 11 non-verified devices through 2008 based on the law which 12 they sponsored, which is -- so they're able to comply with 13 non-verified devices and, if they choose, the verified 14 device. They have some warranty risk with the 15 non-verified devices, which is why we're trying to get 16 them verified. 17 We think that 2008 will be more than enough time 18 for us to sort it out with the military and the device 19 manufacturers, so that either the stuff will be verified 20 or we'll be back to you. 21 ACTING CHAIRPERSON RIORDAN: All right. And I 22 would just ask that you work with Mr. Friedman and others 23 to get this kind of sorted out, because we don't want to 24 be a problem and yet we want the work to be done. So it's 25 just a matter of all of us talking together at the right PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 272 1 time, I suspect. 2 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 3 HEBERT: And I think since it is allowed to be used in 4 combination, that the field testing that's going to be 5 going on with the devices being used with B-20 is going to 6 work a lot towards getting the devices verified. 7 ACTING CHAIRPERSON RIORDAN: Okay. Great. All 8 right. 9 Mr. Wilson. 10 MR. WILSON: Good afternoon, Madam Chairman and 11 the Board. I represent the City of Los Angeles, and who's 12 been -- I consider we've been very proactive in some of 13 these rules that have taken place. I have over 1100 14 after-fit kits on our fleet vehicles. And my refuse fleet 15 is basically 100 percent compliant right now as we speak. 16 Our experience with this program has actually 17 been a pretty good -- most of the time it's been okay. We 18 actually have had a few issues. Most of them have been 19 taken care of by either vendor or manufacturer warranty 20 issues. 21 The other thing that we've had that does alarm me 22 a little bit is the future. I would like to see an 23 exemption for vehicles that were compliant but under 24 warranty issues will not be -- I've had problems with the 25 manufacturer being able to supply. I've had problems with PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 273 1 the manufacturer being able to supply in less than two to 2 three months. And I cannot take a vehicle -- especially 3 if it's a refuse collection vehicle, I can't take it out 4 of service. So what we've been having to do is basically 5 bolt the muffler back on and run it as such until we can 6 get it. But we'd like to have a little bit of teeth in 7 the warranty issues. 8 The other thing is there's been some pressures in 9 business, and some manufacturers have completely gone out 10 of business. Other manufacturers have declined and moved 11 away from the retail business. I believe there's a 12 couple, three vendors or manufacturers right now that 13 looks like pretty solid for the future. But basically 14 warranty issues and then service issues are a problem. 15 Again, I have 1100 pieces. If all of these things were to 16 go bye-bye, I have a problem. Nobody makes a really good 17 service tool to service these units. They recommend -- 18 most of the manufacturers recommend a service interval of 19 about a year. And if you have a vehicle that's running 20 poorly or doesn't get a duty cycle warm enough, they will 21 plug up basically pretty quick. 22 So what we'd like to see language in is that the 23 manufacturer must provide service tools for us to maintain 24 these things. Like I said, overall our operation has been 25 minimally impacted by putting this stuff together. But I PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 274 1 do see some things on the horizon that need to be 2 addressed. 3 ACTING CHAIRPERSON RIORDAN: Okay. Mr. Wilson, 4 if you're finished -- I don't want to interrupt you -- 5 MR. WILSON: Yeah, go ahead. 6 ACTING CHAIRPERSON RIORDAN: -- because you still 7 have a little bit of time there. 8 Staff, I think people who have this real-time 9 experience can offer us some opportunities. And let's 10 take, for example, these service tools. What can we do 11 to -- 12 MOBILE SOURCE CONTROL DIVISION CHIEF CROSS: We 13 can look at it as part of the next round of the 14 verification procedures, which is coming to you very soon. 15 It's coming up in the next few months. 16 ACTING CHAIRPERSON RIORDAN: Okay. 17 MOBILE SOURCE CONTROL DIVISION CHIEF CROSS: It's 18 an issue we've understood. I think L.A. is running up 19 against it partially because of its leadership. They run 20 so far ahead of the curve, that they're starting to 21 identify problems early, which will help us all. 22 ACTING CHAIRPERSON RIORDAN: Right. And so it 23 behooves us to work very closely with them -- 24 MOBILE SOURCE CONTROL DIVISION CHIEF CROSS: 25 Exactly. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 275 1 ACTING CHAIRPERSON RIORDAN: -- so that we can 2 solve their problems, which in turn solves a lot of other 3 problems for the rest of the counties and municipalities 4 that are going to be required to do this. 5 So you're going to be a guinea pig, but in the 6 long run hopefully we can do a lot to help you. 7 MR. WILSON: Yeah, I've worked with your staff 8 before. We basically have a really good working 9 relationship. 10 ACTING CHAIRPERSON RIORDAN: Good. And we sort 11 of know where you are and you know where we are. So -- 12 MR. WILSON: Yeah. We're not going anywhere. 13 ACTING CHAIRPERSON RIORDAN: Well, we're close. 14 I mean El Monte's not that far from some of your yards, 15 I'm sure. 16 MR. WILSON: Absolutely. 17 ACTING CHAIRPERSON RIORDAN: All right. Very 18 good. 19 Thank you, Mr. Wilson. 20 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Madam 21 Chair, if I could add one comment. 22 The concern he had about if they have a 23 warranty -- may have to take a broken part off and it 24 takes a couple of months to get a replacement, I mean I 25 think we'll look at the reg and see if there's some PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 276 1 language that needs to be inserted to cover that. Because 2 that seems like a totally reasonable situation where they 3 might -- and we may already have a provision. I don't 4 know. But if we don't, we'll try to put one in then. 5 ACTING CHAIRPERSON RIORDAN: Okay. Appreciate 6 that, Mr. Cackette. 7 Rick Sikes. 8 MR. SIKES: Good afternoon. I'm Rick Sikes, the 9 Fleet Superintendent for the City of Santa Monica. And 10 I'm here today to represent the city and to go on record 11 supporting these regulations. 12 Santa Monica has a history of using the best 13 technologies available to reduce vehicle emissions. In 14 1996 the city adopted a sustainable city policy which 15 includes using the best technology and alternative fuels 16 where possible. 17 After ten years of aggressively pursuing this 18 goal, we now have over 70 percent of our fleet powered by 19 alternative fuels, mostly CNG. The diesels that we do 20 still have in the fleet are running on B-20, and we 21 haven't had any problems with the B-20 at all. 22 While this is a great accomplishment, it does 23 illustrate how long it takes to change a fleet. Proper 24 training is necessary with all modern vehicle systems. 25 And we have found clean air technologies to be just as PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 277 1 reliable and no more complicated than the other modern 2 conventional systems. 3 We felt it would be a detriment to the health of 4 all Californians to delay adopting these regulations, and 5 we urge you to adopt them. 6 Thank you. 7 ACTING CHAIRPERSON RIORDAN: Thank you, Mr. 8 Sikes. Thank you for taking the time to be here. 9 Richard Teebay. 10 MR. TEEBAY: Madam Chairman, Board. I am Rick 11 Teebay. I'm with L.A. County's Department of Public 12 Works. But I have to issue a disclaimer. I am not 13 representing the County of Los Angeles Department of 14 Public Works today and I am not here at taxpayer expense. 15 That's said, Public Works has more than 500 16 diesel-powered trucks subject to this regulation. Since 17 2002 Public Works has purchased only ultra-low sulfur 18 diesel. Since 2002 replacement trucks have been primarily 19 gasoline powered, and all new diesel-powered trucks have 20 been specified with the best available control technology. 21 Fifty-eight trucks have been retrofitted with passive 22 Level 3 devices, that first installed in February of 2003. 23 We have one of our trucks retrofitted with an experimental 24 active Level 3 device, which was installed in February, 25 and that has worked flawlessly. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 278 1 Thank you for allowing me to comment on the 2 proposed public fleet regulations. I would commend you 3 and especially your staff for your bold and courageous 4 action today. 5 Your staff has listened carefully and worked with 6 stakeholders to craft this regulation and to address the 7 concerns raised. Their work has been heroic and 8 admirable. 9 I'm going to cut to -- I've provided written 10 comments. I'm just going to cut to a couple. 11 One is that we need some flexibility on the first 12 compliance state. And I would support staff's 13 recommendation there. 14 On the Group 1 trucks, a Level 1 device is not 15 approved for the large counties. And I would ask that 16 until there is a funding mechanism for repowering and 17 replacing covered fleets, that a Level 1 device be 18 approved for that group of trucks. I believe a 25 to 30 19 percent reduction from the dirtiest engines is better than 20 no reduction at all. 21 I would also like to see some mechanism for 22 credit for those fleets who are able to purchase 2010 23 compliant engines ahead of that deadline and also for 24 those that purchase hybrid trucks. 25 Another point that I would make is that fleets PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 279 1 need some additional flexibility and some assurances of 2 flexibility. We will experience damage and failures from 3 these devices. We have some very critical pieces -- 4 unique and critical pieces of equipment we have to put 5 back in service. We would like to have some kind -- some 6 mechanism so that when this happens, not if this happens 7 but when this happens, that critical services to the 8 public are not impaired. 9 A comment on record keeping. Most of us are 10 going to be subject to this rule and also the off-road 11 rule. Some cities are also subject to the refuse 12 regulation. City of Los Angeles and Santa Monica are 13 subject to the transit regulation as well. It's critical 14 that we have consistent, simple forms and a compliance 15 procedure that is consistent, so that we can really comply 16 without exorbitant staff costs. 17 Finally, the elephant in the closet of this 18 extraordinary challenge is how we will fund compliance. 19 When I calculated my department's costs to comply with the 20 regulation over five years, it was $4.8 million. And 21 that's factoring in that we'd be able to replace our 22 equipment as planned. 23 ACTING CHAIRPERSON RIORDAN: Mr. Teebay, this 24 is -- your time is up, so I need a concluding statement. 25 MR. TEEBAY: Okay. Well, earlier I commended you PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 280 1 for your bold and courageous action in drafting and 2 implementing this regulation. I would beg that you would 3 be equally bold and courageous in lobbying for funding 4 necessary for covered fleets. 5 Thank you. 6 ACTING CHAIRPERSON RIORDAN: Thank you very much. 7 Mary Pitto. 8 BOARD MEMBER BERG: Madam Chair? 9 ACTING CHAIRPERSON RIORDAN: Yes. Ms. Berg. 10 BOARD MEMBER BERG: I would just like to ask 11 staff about that record-keeping issue, because it does 12 seem to me that certainly in the South Coast Air Quality 13 area we do have a couple of rules that they're already 14 complying with. Is there a way we can go through and just 15 assure that we are not reinventing the wheel and causing 16 more administrative grief? 17 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 18 HEBERT: Yes, ma'am, that's one of the recommended 19 appropriate changes for consideration today, is to 20 streamline record keeping and look at what is absolutely 21 necessary versus, you know, what maybe we can do without, 22 and try and streamline that a bit. So that is one of the 23 things that we'd like to work on with the new process. 24 BOARD MEMBER BERG: Thank you very much. 25 ACTING CHAIRPERSON RIORDAN: Yes, Ms. Pitto. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 281 1 MS. PITTO: Good afternoon, Madam Chair and 2 members of the Board. I'm Mary Pitto with the Regional 3 Council of Rural Counties. 4 Our organization represents 30 of the counties 5 throughout the state. And 9 of those counties have 6 populations of less than 25,000 people. Fifteen of our 7 counties have less than 50,000, which represents less than 8 1 percent of the state's population. 9 We've been working with our member counties and 10 ARB staff to construct a regulation that will improve air 11 quality in our counties, but also one that our counties 12 could reasonably be expected to be able to comply. And I 13 would like to express my appreciation to your staff for 14 all of the work and consideration they have given us and 15 our counties. 16 We recognize the provisions incorporated in the 17 proposed regulation do provide economic relief to many of 18 our counties. However, we still have some counties that 19 feel that it will cause financial distress. And some of 20 these are the counties that are under the 125,000 21 threshold, mostly the small ones under 50,000 and under 22 25,000. And then some of those counties are ones that are 23 over the 125 threshold. 24 Primarily what it impacts is our county road 25 departments. Unlike the solid waste, private sector or PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 282 1 the utility fleets, our county wastes -- our county road 2 departments do not have service fees or charges that they 3 can increase to cover the costs. The equipment does not 4 make the money. They use it to provide a service to the 5 traveling public. 6 Rural county road departments, therefore, will 7 need to divert funds from their existing road maintenance 8 programs or go to the Board and ask for additional General 9 Fund money, which as you know is a scarce resource. 10 Also, the rural counties have a very high 11 percentage of older fleets -- older vehicles in their 12 fleets because they can't afford to buy -- purchase the 13 newer ones, and they try to keep them operating. So the 14 cost of compliance outweighs the actual benefits that 15 they'll receive because of the high cost to meet the 16 requirements. 17 In our letter RCRC asked you to consider three 18 things. That was: 19 To increase the threshold to 325 for a low 20 population county. 21 To provide a financial hardship provision whereby 22 a county who could not comply could at least apply to the 23 Air Resources Board to have an additional extension, but 24 to give you the information necessary to show that they 25 cannot meet the requirements as much as they tried, but to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 283 1 include a provision that they have to come up with a 2 schedule. 3 And the third thing was to expand snow removal 4 operations to include snow-related operations so that ice 5 sanding trucks or other storm-related damage such as 6 flooding could get the same provisions as the snow 7 removal. 8 And what I'd like to just conclude with is again 9 on the staff's recommendation, on the threshold for 325, 10 subtracting out the incorporated cities. That would 11 benefit most of our counties and I'm sure would be very 12 well received. Since we do still have a few counties that 13 feel that they do not have the resources, even the low 14 population, we would ask that you still consider a 15 financial hardship provision. 16 And again I'd like to thank staff. 17 ACTING CHAIRPERSON RIORDAN: Okay. Yes. And I 18 know the staff has worked very hard with you and -- 19 MS. PITTO: Very much. 20 ACTING CHAIRPERSON RIORDAN: -- and I think 21 they've given quite a bit. 22 MS. PITTO: Yes. And we do really appreciate it 23 and our counties do. 24 ACTING CHAIRPERSON RIORDAN: Okay. Thank you. 25 Ernest Perry. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 284 1 MR. PERRY: Good afternoon. My name is Ernest 2 Perry. I work for the county of Del Norte. I'm here at 3 the direction of my Board of Supervisors. 4 It's a beautiful drive down here, but it's 5 somewhat lengthy. Del Norte County is two hours north of 6 Eureka. Most people know where Eureka is, but not a lot 7 of people know where Del Norte is. And of course Eureka 8 is six hours from here. Having said that, don't ask me 9 how long it took me to drive here. It might tend to 10 incriminate me. 11 The population of Del Norte County is 28,000. 12 Your records that's before you will show 31. That's 13 because there's 3 to 4,000 that are wards of the state, 14 and sometimes they're included and sometimes they're not. 15 (Laughter.) 16 ACTING CHAIRPERSON RIORDAN: They're not paying 17 road tax, are they? 18 MR. PERRY: They generate quite a bit of cost 19 locally. 20 ACTING CHAIRPERSON RIORDAN: No, no. But they're 21 not paying road taxes. They're not driving around. 22 MR. PERRY: They pay no taxes. 23 We have square foot -- persons per square mile of 24 27 persons per square mile. We have no deep water port, 25 no natural gas, no rail. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 285 1 We get 6 to 8 inches of rainfall along the 2 coastal plain. We get 20 feet of rainfall on the interior 3 areas. That's where most of our road maintenance takes 4 place. That's where our fleet of 11 vehicles, one of 5 which would receive an exemption, would apply in this 6 area. That's why the County of Del Norte in their last 7 letter to you asked that you consider an exemption for 8 population -- or for counties of population of under 9 50,000 with a density of less than 50 people per square 10 mile. And would be more than willing to agree to an 11 attrition clause so that as vehicles are replaced, they 12 would be replaced with newer equipment. We tend to buy 13 used equipment because that's all we can afford. 14 Of those 11 vehicles, 6 can be retrofitted fairly 15 straightforwardly. Yes, it's going to cost us money; and, 16 no, we don't have it. The other 4 are so old we're not 17 sure how we're going to comply with those standards. 18 I'm afraid that I'm running out of time. So I 19 want to bring one issue to bear that hasn't been brought 20 up. On page 29 you have contractor compliance. And I'm 21 sure that that was intended to keep local governments from 22 contracting out their entire operation in some manner, 23 shape or form to avoid these costs. But the way it's 24 structured and written, I'm concerned that it could be 25 restrictively interrupted to apply to contractors that we PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 286 1 would hire to build projects. 2 And in Del Norte County, our proximity, our 3 economic tie is really to Oregon. Again, we're two hours 4 north of Eureka. So our bidders tend to be from Oregon. 5 And we have two local companies. If that provision is 6 interpreted strictly as it's written, if we go to bid a 7 bridge, bid a culvert replacement, something that's out of 8 the capabilities of our road department -- because we have 9 a very small road department. We don't have all the 10 equipment. We have to bid projects. We've got a road 11 project that's under construction right now that's under 12 bid. If that's strictly interpreted, then we are not 13 going to get those bidders out of Oregon. We are going to 14 be giving a blank check to one company especially, and we 15 just can't afford that. 16 So I'd like you to reconsider the structure of 17 that paragraph. I'm sure that -- I hope that it's 18 intended to keep us from avoiding compliance. My concern 19 is the interpretation of it could come back to haunt us at 20 a bid process. 21 ACTING CHAIRPERSON RIORDAN: Okay. Staff, I 22 don't think that was intended at all, because most of the 23 big road construction projects, bridge projects, even 24 culverts and a whole lot of other things are contracted 25 out. And I don't think we're speaking of that. We're PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 287 1 speaking about the actual fleet, the ownership of the 2 fleet that you're -- you may throw some asphalt in a crack 3 or, you know, a pothole. 4 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: We can 5 look at that and make sure that it doesn't apply to the 6 situation that -- 7 MR. PERRY: Based on the -- excuse me. I'm sorry 8 to interrupt. But based on the gray hair on my head, I've 9 seen provisions like this to come back in a backdoor 10 situation, primarily -- with apologies intended -- through 11 CalTrans that becomes a new bid spec. That will kill us. 12 ACTING CHAIRPERSON RIORDAN: Okay. We'll work to 13 make sure that that doesn't create a problem. 14 MR. PERRY: Do I have any time left? 15 ACTING CHAIRPERSON RIORDAN: I'm sorry, you 16 don't. 17 MR. PERRY: Okay. Thank you. 18 ACTING CHAIRPERSON RIORDAN: Even though you came 19 as far as you came, I have -- everybody's sort of the 20 same. But you can submit any comments or obviously work 21 with staff on a continual basis. 22 MR. PERRY: Well, thank you. 23 ACTING CHAIRPERSON RIORDAN: Thank you very much 24 for coming that distance. 25 BOARD MEMBER BERG: Madam Chair? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 288 1 ACTING CHAIRPERSON RIORDAN: Yes. 2 BOARD MEMBER BERG: I am interested in staff's 3 input. We've kind of -- in the last two speakers have 4 talked about this financial hardship and an exemption 5 given certain parameters. 6 How do you -- I'm sure we're going to hear other 7 people talk about this. How do you suggest we handle 8 this? 9 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Well, I 10 think the way we've -- the preferred way that we've 11 suggested is that we just give enough time that there 12 should be the opportunity to get the funds to bring the 13 vehicles into compliance and use the normal fleet 14 turnover. I mean for a county this size, they don't have 15 to do anything till 2020. Now, that's 15 years away. So, 16 you know, it seems plausible to us that they should be 17 able to develop a plan to replace the vehicles or retrofit 18 them or come up with the funds for 11 vehicles to be 19 retrofitted or modified, you know, given a 15-year 20 horizon. And that's the solution that we tried to give, 21 which apparently has, you know, been received positively 22 by a lot of counties. 23 But -- what? 24 Well, the way we've got it set up now -- I mean 25 for the small counties like here, they qualify for that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 289 1 without any question. And then we've expanded it, as we 2 said in our presentation, so that the ones between 125 and 3 325 can also -- if they have just one big city that does 4 its own services, kick that out. Then they become a small 5 county and they would qualify too. So that's been the 6 approach rather than a flat-out exemption for them. 7 BOARD MEMBER BERG: And so they don't have to 8 do -- they have the full 15 years to figure out what 9 they're going to do with their full fleet? They don't 10 have to turn over 20 percent by a certain time and 40 11 percent, and so it allows them that flexibility? 12 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Right. 13 And as we showed, there's the possibility of some Moyer 14 funds to be available. It's not 50 percent or a hundred 15 percent, but it at least would help towards that. And 16 they've got -- those would be available through 2014 or 17 so, which is the end of the Moyer program as it's in 18 statute right now. 19 BOARD MEMBER BERG: Thank you very much. 20 MOBILE SOURCE CONTROL DIVISION CHIEF CROSS: And 21 the witness also mentioned that they use -- a lot of them 22 purchase used vehicles. I think when you get this far out 23 in time, it's likely that there will be used vehicles that 24 comply with the requirements available. 25 ACTING CHAIRPERSON RIORDAN: Okay. Peter Rei PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 290 1 from Tuolumne County. 2 MR. REI: Good afternoon. Thank you very much 3 for the opportunity to speak today. I'm the one who had 4 the handouts that I think I saw your assistant delivering 5 to you. 6 I want to start by saying we have absolutely a 7 lot of respect for your staff. They've worked very 8 diligently with our RCRC and a number of us to try to 9 limit the effect of these regulations. None of us 10 disagree with the intent. I do not want to 11 characterize -- I put it in in opposition. I want to be 12 clear. We're not opposing the idea. 13 I'm here simply to deal with the financial 14 realities of the situation. 15 As you just mentioned and one of your 16 commissioners was mentioning regarding the financial 17 hardship that this causes, I tried to provide you some 18 information. This is basically our road fund budget 19 reduced to -- instead of bringing you a big thick book, I 20 reduced it down to a little piece, which kind of call road 21 fund for dummies in our office. But it works very well to 22 explain it in a very quick sense. 23 I don't want to spend a lot of time at this, but 24 I want to hit a couple of highlights so you see why I'm 25 concerned. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 291 1 On the front page you see our revenues. These 2 are actual revenues by category, by whether they come from 3 federal, state, service charges that we make, our local 4 regional transportation planning authority, or any other 5 source. 6 Two major concerns here. The one at the very top 7 talks about forest receipts. That bill expires next 8 fiscal year. The current indications from Congress are 9 that it is doubtful that that bill will be renewed. If 10 that bill is not renewed in Congress, that number that 11 shows as 1.1 million will revert back to 25 percent, split 12 with schools, of the middle value of timber in a county 13 like ours and others that have timber receipts. Five 14 years ago that number was $175,000. And we're cutting 15 less timber now than we did then. So that number could 16 very really drop a million dollars in a couple of years. 17 When you look down further you'll see a shaded 18 number by Prop 42. As you may know, Prop 42 has been 19 suspended two of the last three years, which is why it 20 shows as zero in the columns to the right. We already 21 know by regulation when Prop 42 was passed that cities and 22 counties get absolutely no money from that source the next 23 two fiscal years. 24 So I have a million and a half dollars out of a 25 seven and a half million dollar budget that very really PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 292 1 may not be there in about another, you know, 16, 18 2 months. 3 The next sheet on the back is one of the 4 divisions. I did not bring all of my divisions, which 5 would include engineering, traffic engineering, 6 development services, et cetera. But if you say I have 7 seven and a half million, where does it go, you can see 8 that 5.27 million of it goes to road maintenance. These 9 are actual expense numbers, from the highest expense being 10 labor, down to the lowest expense. 11 I want to point out some things so that there's 12 no misconception. If you look at the bottom under "Fixed 13 Assets," you will see that we're buying nothing this year. 14 We're not replacing a computer. We're not buying any new 15 equipment, any new vehicles, even cars. Nothing. 16 If you look up, you look at surface treatments 17 for asphalt overlays, we're putting a dollar. Why do I 18 put a dollar there? Because if I put zero there, they 19 take the line item away. 20 There simply is no money to do our basic mission, 21 which is to do some form of surfacing so that we can all 22 drive and get home at night safely. 23 The only choice I have if we have to pay for this 24 is to lay people off. Plain and simple. There's nothing 25 left to cut. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 293 1 What I want to show to you -- the last thing, and 2 then I'll certainly let others speak. There's a couple of 3 pie charts for you. The pie charts show the conditions of 4 the pavement in Tuolumne County in 2004 and our projected 5 pavement conditions in 2014. These are based on the 6 current level of funding over the last several years. 7 It's right out of our pavement management system, which is 8 certified by CalTrans, and so they agree with the 9 conclusions. 10 You'll see that right now about 32 percent of our 11 roads are in very poor or poor condition, meaning they 12 need pretty much total reconstruction. And as I said a 13 minute ago, we have no money to do that. 14 If we don't get any new money and if we can't 15 hold on to the money we have -- this assumes we're holding 16 on to the money we have -- you see that it goes to over 88 17 percent total reconstruction in the next 10 years. It's 18 in that environment the types of regulations that you're 19 proposing are going to have to try to find money. 20 My basic mission is getting people home at night. 21 We had seven people die on the roads this year. That's my 22 main mission, is to try to prevent that from happening. 23 It's very difficult to find the money to do what you're 24 asking even though I philosophically completely support 25 it. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 294 1 ACTING CHAIRPERSON RIORDAN: Okay. Mr. Rei, I'm 2 afraid your time is up. But I think you've made your 3 point. And we thank you for your information. 4 MR. REI: You're welcome. 5 ACTING CHAIRPERSON RIORDAN: How many road miles 6 do you manage? 7 MR. REI: 607. 8 ACTING CHAIRPERSON RIORDAN: 607? 9 BOARD MEMBER BERG: And what's the population? 10 MR. REI: Like the gentleman before me, it 11 depends on whether you include the incarcerated or not. 12 If you include the incarcerated, it's 54,000. If 13 you do not, it's 49,900 and something. So believe it or 14 not, we're right on the border. We may have had a few 15 people move in lately though. We could be over 50,000. I 16 don't know. 17 BOARD MEMBER BERG: Okay. If you qualified for 18 the smaller -- I'm sorry, Madam Chair. Did I just jump 19 right in? 20 ACTING CHAIRPERSON RIORDAN: No, no. Go right 21 ahead. 22 BOARD MEMBER BERG: If you qualify for the small 23 population -- 24 MR. REI: We do. 25 BOARD MEMBER BERG: -- over the 15 years, do you PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 295 1 feel like you could look at this over that period of time? 2 I mean I clearly see what the problem is. There's no 3 question about that. I guess I'm looking for some 4 direction from you. Is it your opinion to throw the baby 5 out with the bath water -- 6 MR. REI: No, it's not. 7 -- or to qualify for the small city and at some 8 point see where we go with it? 9 MR. REI: We do qualify now for the small county. 10 And we appreciate the modifications your staff is 11 presenting to you. Certainly much better than it was. 12 But, again, I just don't know where the money's 13 going to come from. It's one thing to say we're eligible 14 for Carl Moyer. Our experience is that money has to go 15 throughout the entire state. You're not guaranteed you're 16 going to get anything. You might. We hope we do. We're 17 hoping we might get some money from our local air district 18 from their newly approved vehicle license fees. But we 19 have no guaranty. That's a board of supervisors decision. 20 I guess what I'm saying is there's a lot of 21 maybe's. There's no guarantees. 22 One of the things we're being, in essence, 23 penalized for -- I know it's not viewed that way -- is 24 we've been great scrounges, as has been mentioned earlier. 25 We've never bought a piece of new equipment that's a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 296 1 diesel engine that I know of in the seven years I've been 2 there. We've bought third-hand equipment from 3 contractors, CalTrans, PG&E, the military and anybody else 4 who thought they were done with something. And I've got a 5 bunch of great mechanics who can keep them running almost 6 indefinitely. 7 That has always been a benefit because it didn't 8 cost us much. And unfortunately now it turns into a huge 9 liability, because I've got a lot of Group 1 engines. 10 BOARD MEMBER BERG: Yeah, I understand, and I 11 appreciate that information. It helps me. Thank you. 12 MR. REI: Thank you. 13 ACTING CHAIRPERSON RIORDAN: Mr. Fin. 14 And then while Mr. Fini is coming up, I'd like 15 Bob Johnson, Dennis Gage, Lawrence Odle, Barbara Lee, and 16 Tom Addison to come down. 17 And Mr. Fini. 18 MR. FINI: Thank you. My name's Doug Fini. I'm 19 the Equipment Superintendent for Humboldt County. Thank 20 you for the opportunity to address this Board. I'm here 21 on behalf of the County of Humboldt Department of Public 22 Works. 23 The Humboldt County Department of Public Works 24 has reviewed the proposed regulations for particulate 25 matter controls and has the following comments for PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 297 1 consideration by the California Air Resources Board. 2 Number 1: The determination of low population 3 counties should be considered on a density basis, not on a 4 population basis. In the documents that we submitted we 5 have attached a table analyzing the current determination 6 of low volume counties, and believe that Humboldt County 7 should be considered in this category for delayed 8 implementation. It is clear that several of the counties 9 currently considered for delayed implementation have much 10 higher densities of residents than Humboldt County. It 11 only makes sense that the higher density of residents lead 12 to higher risks than in Humboldt and unfairly restricts 13 Humboldt County simply due to our large area. 14 Currently 23 of California's 58 counties are 15 considered to be low population. If CARB were to analyze 16 county population by density, it would clearly show that 17 Humboldt County should be considered low population. Of 18 the current 23 counties included, if they were ranked by 19 population density, Humboldt County included, Humboldt 20 County would be ranked 17th in density, well below several 21 other counties which are considered low population. 22 The majority of Humboldt County population 23 resides in a small portion of the county surrounding 24 Humboldt Bay. The portion of total road miles and work in 25 this area is minor compared to the rest of the county PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 298 1 area, which contains the vast majority of our roads. 2 Number 2: Implement the regulations based on 3 normal vehicle replacement. As with most rural counties, 4 the Humboldt County Department of Public Works has an 5 extremely limited budget for the proper repair and 6 maintenance of infrastructure. As most of our funding is 7 based on state and federal funds, which can easily be 8 diverted to other uses by the funding agencies, such as 9 the recent diversion of Proposition 42 funds, we do not 10 have the ability to plan long-term funding. We replace 11 equipment on a needs and funding available basis. The 12 mandatory time schedule will divert funds from road 13 repairs, which could increase -- which could result in an 14 increase in PM10, as funding would have to come out of 15 money we use to surface roads. 16 We've already projected through are pavement 17 management system that many of our rural roads will have 18 to be reverted to gravel due to a lack of secure and 19 regular funding. The mandatory time schedule will 20 increase the rate at which roads have to be reverted to 21 gravel and result in an increase in dust and PM10, which 22 could result in the implementation of the regulations 23 having the opposite effect that they should. 24 Number 3: Provide funding for the required 25 replacements. Humboldt County Department of Public Works PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 299 1 is very active in environmental controls for the benefit 2 of the entire state. The Humboldt County Department of 3 public works has been on the leading edge of sedimentation 4 control and implementation with our five-county working 5 group and have received -- 6 ACTING CHAIRPERSON RIORDAN: Mr. Fini, I'm sorry 7 to interrupt you. But I need a concluding statement. 8 Your three minutes are up. 9 MR. FINI: Okay. In summary, thank you for the 10 opportunity, and that Humboldt County Department of Public 11 Works supports your clean air requirements and thanks you 12 for the opportunity to comment on these regulations. 13 Funding is, like the other small counties, our 14 big issue. 15 Thank you. 16 ACTING CHAIRPERSON RIORDAN: Mr. Fini, just -- I 17 don't have the chart out in front of me. 18 What is your county's population again? 19 MR. FINI: 137,000. 20 ACTING CHAIRPERSON RIORDAN: And you have, I am 21 assuming, one fairly good sized city in that. 22 MR. FINI: Eureka. 23 ACTING CHAIRPERSON RIORDAN: Yeah. How much 24 would that take out? 25 MR. FINI: About 33,000. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 300 1 ACTING CHAIRPERSON RIORDAN: Okay. So that would 2 qualify you for consideration. 3 MR. FINI: Under the staff recommendations, yes, 4 it would. 5 ACTING CHAIRPERSON RIORDAN: Okay. Very good. 6 Bob Johnson. 7 MR. JOHNSON: Bob Johnson from Glenn County. 8 It's about a hundred miles north of here. And the Oregon 9 border's about another 200 miles north of us, so we're not 10 by the border. 11 Madam Chair, thank you for having us today. I'd 12 also like to thank some of your staff members -- I think 13 four of them are here -- that met at our road 14 superintendent's meeting that we had in Maxwell about two 15 months ago. And we just had another meeting again today. 16 At the previous meeting we had 20 counties represented. 17 Today we had 11. And everybody shares much of the same 18 woes that you've heard already today. 19 For Glenn County we have funding levels that 20 are -- in our road department, excluding the Prop 42 that 21 we just are now getting, we are at 1993 funding levels. 22 In '93 I had 33 employees. Today I'm down to 26. A 23 reduction of over 20 percent. 24 We aren't resurfacing the roads like we used to. 25 I used to chip seal 70 miles of roads. In the last two PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 301 1 years, zero. This next year with Prop 42, about 15 miles. 2 I have 700 miles of paved roads that we try to 3 maintain. And based on our funding that we get, we 4 resurface -- we repave these roads once -- each mile once 5 every 200 years. 6 And on top of that I have 160 miles of dirt -- 7 gravel roads. And I just heard today through our group 8 that there's some regulations pertaining to gravel roads 9 or shoulders in relation to PMs. 10 My -- I'm very possessive of this county. So 11 you'll hear me "my" a lot. 12 (Laughter.) 13 ACTING CHAIRPERSON RIORDAN: That's okay when you 14 work in it. 15 MR. JOHNSON: Ninety percent of our vehicles are 16 in Group 1 -- 90 percent. We did buy -- lease/purchase -- 17 two years ago we got some 2002 models. And we can't 18 hardly keep them on the road because they're in the shop 19 all the time with the problems that they're having with 20 the new injection systems. 21 Prior to that it was 1993 when we bought our last 22 truck. And that one was used. Just as the other counties 23 are buying, we're buying used trucks. So I have 25 trucks 24 that are old. And they're going to be worth junk real 25 soon. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 302 1 So in the last 12 years we've purchased 3 trucks. 2 In fact, I'm still paying on 2 of them. And again, one of 3 those was used. 4 So looking at even giving an extension for us, 5 based on our past history, we can't afford much of 6 anything. 7 I appreciate all the -- I came here a year ago 8 and things were a whole lot different according to the 9 regulations. And the staff has been pretty tremendous in 10 sympathizing and listening to us and we really appreciate 11 that. 12 We're looking at Moyer being maybe the conduit 13 for future -- if there's legislation, I really see Moyer 14 being the place that that will go to. But for our county 15 coming up an '06 January, $200,000 available. And that 16 won't come anywhere near trying to help us fund our 17 problems, let alone the other ones in the county. 18 Thank you. 19 ACTING CHAIRPERSON RIORDAN: Thank you, Mr. 20 Johnson. 21 Dennis Gage. 22 MR. GAGE: Thank you, Madam Chair, Board members. 23 I'm Dennis Gage. I represent the Placer County Department 24 of Public Works. And we're kind of the middle kids here 25 in this thing. We're the largest rural and the smallest PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 303 1 urban county in California. 2 And it occurred to me, despite staff's time over 3 this last year, year and a half, that they didn't think 4 they could ever, you know, get an understanding with kind 5 of a redneck like me about clean air. But I realized last 6 night that it's getting through to me -- as I was standing 7 at a barbecue recognizing that it was propane, and that's 8 a hydrocarbon fuel, and that it was ignited, I started 9 thinking about the PM emissions from my barbecue. And I 10 said, "I think that I finally am beginning to understand 11 clean air." 12 Placer County has been a support of clean air for 13 a long time. We were one of the first to pass clean air 14 ordinances in our own county. We've done that 15 successfully and implemented them and have been very 16 successful all around. 17 However, I would like to make a couple of 18 comments about the very presentation here today. Although 19 it's a supported document, I would support the cities 20 under 50,000 proposal. I also support the adjustment in 21 the unincorporated areas, allowing the removal of the 22 incorporated cities for the 125,000 allowance. 23 I support the delay of two years for the 2007 24 implementation group. I do not support moving group 1. 25 And I would like to mention that I still have a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 304 1 1958 truck in service, even though we're a larger 2 organization. Good news: The rule doesn't apply. The 3 bad news is that we're going to soon celebrate its 50th 4 anniversary. 5 The point being, that whether we have 10 years, 5 6 years or 15 years to implement, the financial implications 7 maybe huge. National Association of Fleet Administrators 8 just conducted a survey and found out that the average 9 first-year costs for 11 fleets was 485,000. Our first 10 year costs is 435. Our six-year cost is 6 million 155. 11 We spent 700,000 on trucks in the last six years. 12 So 700,000 to 6.1 would be the change. That's including 13 retrofits and replacements. 14 Public works departments, as you heard, do not 15 have discretionary funds we go out and obtain. We'd like 16 to again ask for the same consideration on Level one 17 devices or Group 1 trucks because I think, as Mr. Teebay 18 said, immediate results would be great. Provide that 19 hardship clause or other clause to allow special 20 applications to the Executive Officer. 21 And, lastly, I've got a whole bunch of amendments 22 that would be really nice, but I don't think they're 23 important. 24 I would urge your consideration of public works 25 funding issues in implementing this rule. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 305 1 Thank you. 2 ACTING CHAIRPERSON RIORDAN: Thank you, Mr. Gage. 3 Appreciate your comments. 4 Lawrence Odle. 5 And while you're -- if you'd wait just one 6 moment. Let me just go back down the list. Barbara Lee 7 is there to follow. Tom Addison; Barry Wallerstein; Major 8 Jeremy Jungreis; Gary Bigelow, if you'd come forward; and 9 Frank Caponi. 10 Thank you. 11 Mr. Odle. 12 MR. ODLE: Madam Chair, members of the Board. 13 Thank you for the opportunity to comment this morning. 14 Lawrence Odle. I'm the Air Pollution Control Officer for 15 the North Coast Unified Air Quality Management District, 16 which includes Del Norte County, Humboldt County, and 17 Trinity County. 18 The District Board is in support of the concept 19 certainly as an air district of controlling the diesel 20 particulate emissions. This one hits kind of close to 21 home, however. And we do want to express our appreciation 22 to your CARB staff, as others, for almost two years of 23 giving birth to what you have before you today and seeking 24 to try and address some of the rural county issues. 25 Under the proposal that is on before you, two of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 306 1 our three counties fall within the low population county 2 trigger. Under the amendment recommended today, all three 3 counties will do that. 4 You're going to hear two basic issues over and 5 over today. First is going to be lack of funding and the 6 second is going to be the compliance state. Even with the 7 accelerated turnover concept of 2020, there's still going 8 to be an issue of funding. Rural county public fleets 9 are -- and I can tell you this as a former county 10 administrative officer -- funded substantially by gasoline 11 tax dollars. The rural counties do not have any control 12 over the stability of those funds. At a minimum the 13 result will end up additional impacts on the County 14 General Funds, which are already very razor thin in 15 certain areas. 16 Part of our concern is that we don't assume that 17 the dollar issue's going to go away just because we adopt 18 a regulation. However, we understand and are very 19 supportive of the diesel controls. 20 We want to leave you with a couple of very 21 specific recommendations. Consider first increasing the 22 low county population definition or, as an alternative, 23 supporting what your staff proposed today by -- with the 24 incorporated cities being pulled out. 25 Secondly, increase some dedicated Carl Moyer PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 307 1 funds to the districts to the rural counties, which are 2 not matched required. Districts don't have the money. 3 Counties don't have the money to match these Carl Moyer 4 funds, then do the job that has to be done. 5 Require the regulation to come back to this Board 6 in the year 2010 in order to assess and evaluate the 7 status of what has occurred in the Group 2 and Group 1 8 engine changeovers. 9 And also extend the compliance date by one year 10 sort of across the Board, because you're already in the 11 middle of the county budget planning cycles for '06-'07. 12 We need to integrate these -- brings these back into the 13 same standard or system. You're requiring counties to 14 make a -- to define as of December 31st of this year 15 whether or not they're going to participate in the 16 accelerated program. It's just not enough time to handle 17 it. We need at least one more year in order to integrate 18 them into the system. 19 I do want to also support -- 20 ACTING CHAIRPERSON RIORDAN: And, finally, we're 21 running out of time. 22 MR. ODLE: I want to support the financial 23 hardship. 24 And I want to leave you with one final thought. 25 If you were to adopt the proposal, you're not going to get PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 308 1 100 percent compliance with the vehicles. Because a lot 2 of rural counties are looking at snowplows as one way of 3 complying with this. If you require by attrition 100 4 percent of the controls, you will end up with 100 percent 5 control. So one of the things we encourage you to 6 consider is to require by attrition 100 percent control. 7 Thank you. 8 ACTING CHAIRPERSON RIORDAN: Thank you very much. 9 Barbara Lee. 10 MS. LEE: Good afternoon, Madam Chairwoman, 11 members of the Board. I want to be very clear. I am not 12 here on behalf of CAPCOA for these comments. I am here 13 representing the Northern Sonoma County Air Pollution 14 Control District and the county of Sonoma. 15 I want to go on record in stating the air 16 district and Sonoma County are both very committed to the 17 overall goal of reducing exposure to diesel particulate 18 exhaust and the specific goal of requiring public fleets 19 to do their fair share in achieving those reductions. We 20 understand that the burdens have to be borne by all if 21 we're going to achieve success. 22 We also understand that this program is going to 23 be the foundation for future rule-making efforts by the 24 State Board. And with that in mind, we have some 25 implementation recommendations for you that we believe PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 309 1 will enhance the implementation of this rule, lead to 2 better success, and form a better platform for future 3 rules. 4 Our first recommendation is to adjust the 5 compliance schedule -- the entire schedule by one year. 6 Staff has proposed adjusting the schedule for only Group 2 7 engines. The schedule as it is without that Group 2 8 adjustment has been carefully designed to stagger the 9 implementation costs so that in no implementation year do 10 they stack up in an unreasonable fashion. We believe that 11 that spacing needs to be maintained. A five-year overall 12 compliance schedule is not a lot of time. And we believe 13 that the entire schedule should be shifted by one year. 14 This accommodates existing budget processes. It 15 aligns the compliance schedule with the 2000 cleaner 16 engine standards. It also provides time for staff to 17 develop and make available important compliance assistance 18 tools. 19 Second, we believe that the Air Resources Board 20 should develop a heavy-duty vehicle scrappage program or 21 allow the air districts to do so consistent with the Carl 22 Moyer statutes. And I have to apologize. My letter 23 omitted the reference. On page 3 it ought to say Section 24 44229 paragraph B4. 25 The statutes do specifically allow the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 310 1 establishment of such a program. It's consistent with the 2 goals of the Carl Moyer program, because this regulation 3 does not prohibit the general use of these engines. It 4 only prohibits the use by municipalities and utilities. 5 So those engines could be resold. 6 The better environmental option would be to scrap 7 those engines. The counties lose a significant investment 8 if there is no scrappage program available. But I think 9 some incentive in that area would get you better emission 10 reductions and would go a long way to easing that 11 implementation. 12 Three, we recommend that you provide flexibility 13 for the Executive Officer to approve compliance plans that 14 deviate from the proposed schedule or the one-year 15 extension specifically allowed in the rule under specific 16 circumstances. We believe this is important because it's 17 not clear right now if a single year as provided in the 18 regulation will be adequate to address some of the 19 compliance constraints that may arise. These would -- 20 ACTING CHAIRPERSON RIORDAN: Barbara, I need you 21 to wind up. 22 MS. LEE: We're also asking that you develop and 23 provide necessary compliance tools, and that includes a 24 user interface that allows operators to search your 25 verification database using their engine number instead of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 311 1 by each executive officer verifying the technology. It's 2 important so that folks know ahead of time what they're 3 going to have to do for their engines and can keep track 4 of changes more easily. 5 I appreciate the opportunity to comment. I had 6 one more issue. It is in my written testimony -- or my 7 written letter for you. 8 ACTING CHAIRPERSON RIORDAN: And we'll note it. 9 Thank you very much. 10 Tom Addison. 11 MR. ADDISON: Good afternoon. Yet again Tom 12 Addison with the Bay Area Air Quality Management District. 13 The hour is late. I will be brief. 14 We're here to speak in support of the regulation. 15 You've heard a lot of concerns. Let me just 16 point out two things in this regulation that the Bay Area 17 Air District is quite supportive of. We think the 18 decision to include utility fleets is completely sound. 19 We think the decision to include federal vehicles is also 20 sound. 21 There's no doubt that the costs of this 22 regulation are real, they're significant, and you're 23 hearing concerns about those costs. I would just note 24 that in the Bay Area for the last 13 years we have spent 25 substantial local air quality funds primarily to clean up PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 312 1 public fleets. So one of the things that we think you'll 2 see in the Bay Area is a pretty good rate of compliance. 3 Those funds remain available to public fleets and we will 4 continue to work with them as we have to encourage them to 5 move towards cleaner choices. 6 And with that, I'm done. 7 ACTING CHAIRPERSON RIORDAN: Thank you very much. 8 We appreciate your comments. 9 Major Jungreis. 10 MAJOR JUNGREIS: Yes, ma'am. I appreciate the 11 opportunity to address the Board again. 12 This rule's a little tougher for us. It actually 13 has some things from a legal perspective and also from 14 a -- on the biodiesel issue, it really causes problems, as 15 Mr. Friedman already brought to the Board's attention. 16 Since I have a limited time to speak here, I'd ask the 17 Board to please review our written comments we provided. 18 We have extensive comments in there. 19 I'll just hit the major themes here. The first 20 one, the question of the federal government complying, 21 sovereign immunity -- the private fleet's not part of the 22 regulation at this point. During the testimony today 23 we've heard they're going to be soon. And that's a good 24 thing. I think a lot of -- you'll get a lot more 25 emissions from that. It's difficult for us to comply PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 313 1 until they are brought in. So you may want to consider 2 postponing adopting this regulation until private fleets 3 are part of it. 4 We're supportive of the regulation. We'd support 5 what you all are trying to do. It's just -- it's very 6 difficult for federal fleets to comply until private 7 fleets are brought in. If that happens soon, hopefully 8 the problem goes away. Just want to make you aware of -- 9 and I addressed it more thoroughly in the comments I 10 provided to you in writing. 11 Tactical vehicles, I'd ask you -- I appreciate 12 you addressing that. There is one -- a couple things you 13 need to tinker with there. It's not -- there's some 14 references there probably need to be tinkered with. It's 15 in the written comments. Hopefully staff can address 16 that. 17 B-20. That's a significant issue for us. As 18 the -- and we've heard today, and I believe staff is 19 sincere about this, that they're going to address the 20 problem, that maybe verification's on the way. What I'd 21 like you all to consider is is the regulations are 22 currently drafted. SB 975 expires January 1st, 2008. If 23 I retrofit tomorrow, I'd be fine -- if I put a retrofit on 24 tomorrow, SB 975 would cover me. What happens on January 25 2nd, 2008, if what I installed on my vehicle is not PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 314 1 verified? 2 There's nothing that provides for that. There's 3 a policy memo from -- I guess it came out a couple days 4 ago. January 6th, it says, under SB 975 you're allowed to 5 continue to use biodiesel. Of course there's warranty 6 issues. But I guess our concern, we have to look -- as 7 Mr. Friedman mentioned, we have to look long term. We're 8 going to have problems. We need to be able to be assured 9 that there's going to be enough verified devices on 10 January 1st, 2008, where our fleets will continue to 11 operate. Right now that's not happened. 12 One thing you can consider doing, and we would 13 urge you to consider, is to look at your verification 14 procedures and see if there's a way you could structure it 15 so that there's a -- so there's not a separate 16 verification that has to occur with B-20. From what we've 17 understood from the engineering perspective, there's no 18 reason to believe B-20 wouldn't work with all of these 19 DCSs that are being approved. And we've suggested a way 20 that could be done in our written comments. 21 The job just -- to illustrate the point, the 22 Johnson Matthey -- and we appreciate you following through 23 with the verification for Johnson Matthey. However, as it 24 stands right now, most of our vehicles in the military 25 couldn't use it because of the temperature and the duty PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 315 1 cycles involved. 2 Just as an illustration, right now if we had to 3 comply, there's nothing we could comply with. And all we 4 use is B-20, so we've got a real conundrum. 5 So that has to be addressed or we're going to 6 have real problems in a year or so. 7 ACTING CHAIRPERSON RIORDAN: Okay. And I need 8 kind of a concluding statement from you. 9 MAJOR JUNGREIS: Yes, ma'am. I appreciate you 10 listening to us. And we have written comments which 11 illustrate our concerns. And thank you for your time. 12 ACTING CHAIRPERSON RIORDAN: Thank you very much. 13 Gary Bigelow. 14 And then let me have the following people come 15 down to the front row: Frank Caponi, who's already there. 16 Howard Gollay, Deanna Haines, Sven Thesen, Michael Eaves, 17 Bob Lucas and Todd Campbell. 18 All right. Mr. Bigelow. 19 MR. BIGELOW: Yes. Thank you, Madam Chair. 20 It was observed earlier that federal attorneys 21 outnumber the federal engineers and fleet managers. And I 22 just wanted to let you know that at one time I was trying 23 to get a Ph.D. in Environmental Engineering. So maybe I 24 could be double counted. 25 (Laughter.) PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 316 1 MR. BIGELOW: My name's Gary Bigelow and I'm from 2 the U.S. Postal Service Law Department. 3 I will not go through our written comments in 4 dealing with the sovereign immunity issues. I think 5 they're outlined in our comments. But I would ask the 6 Board to consider the procedure and process and policy 7 that Mr. Wallerstein and his staff at the South Coast AQMD 8 did with their clean fleet rules. They have a policy that 9 their existing rules will not be enforced or made 10 applicable to the federal government fleets. And that's 11 under the understanding that if a private sector rule 12 comes into play, then the federal government fleets would 13 be obligated to comply under the Clean Air Act. 14 And we've heard that the private sector rule will 15 be developed. And so what I ask the Board to consider is 16 that if you want to enact this rule, that the rule not be 17 made applicable to the federal government until the 18 comparable private sector rule is enacted next year. And 19 that process on the same procedure. 20 And that's about the only comments I have. 21 Thank you. 22 ACTING CHAIRPERSON RIORDAN: Okay. Thank you. 23 Appreciate your comments. 24 Howard Gollay. 25 MR. GOLLAY: Howard Gollay. Good afternoon, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 317 1 everyone. And it's late, so I'll try to -- I will be 2 brief. I'm a manager of the Southern California Edison 3 Company's Corporate Environmental Policy Group. I'm here 4 along with Walt , Manager of Edison's Fleet Asset 5 Management Division today to provide our comments on this 6 proposed rule. 7 Let's be clear first that we're pleased to 8 support the proposed PM control measure with the 9 recommended changes proposed by the CARB staff. We 10 believe that this initiative is an important part of the 11 diesel risk reduction plan to reduce the health risk 12 benefits of toxic air contaminants. 13 And, by the way, this measure we believe is 14 consistent with Edison's long history of promoting 15 environmental solutions for the communities in which we 16 serve. 17 I would like to thank the CARB staff at this time 18 for their excellent work in addressing this issue. I mean 19 for over a year Southern California Edison has worked 20 diligently looking at this item and trying to look at -- 21 figure out what the impact on the system would be and 22 trying to figure out ways in which it could work. And we 23 believe that by working closely with CARB staff we have 24 been able to help refine or adjust slightly the rule 25 language to address specific issues, while maintaining the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 318 1 intent of the proposed measure. 2 And specifically I at this time I'd like to 3 commend Bob Cross and Annette Hebert, Sharon Lemieux for 4 their efforts on this initiative. 5 And in closing I'll just mention two or three 6 areas that we think are important. The first area 7 which -- and these are highlighted in green in the staff 8 report. 9 First of all, we believe in refining the record 10 keeping requirement language to allow essential record 11 keeping. This just makes it easier for us to maintain the 12 records. 13 The second part is extending the implementation 14 period for two years for Group 3 in exchange for 15 accelerating the replacement of Group 1 -- Groups 1 and 2. 16 And for Southern California Edison, we will be replacing 17 essentially all our Group 1 and 2 vehicles with newer 18 cleaner vehicles, which will be classified as Group 3, by 19 2006. 20 So we will have all these new vehicles, but they 21 will not be retrofitted to the point of meeting 2007 22 standards. By extending the period for two years, it 23 gives us the flexibility to actually purchase new vehicles 24 that would be cleaner than the ones that you would have by 25 just retrofitting the older vehicles. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 319 1 And, finally, we also encourage you to include 2 the incentives to pursue advanced technologies like hybrid 3 vehicles, which not only hold the promise of further 4 improved, but -- I mean they would actually -- if these 5 things work and given a chance, you would have lower 6 emissions than under 2007 and 2010 vehicles. 7 And that concludes my comments. 8 ACTING CHAIRPERSON RIORDAN: Thank you. And that 9 was perfect timing, because your time was up. 10 Mr. Caponi. 11 MR. CAPONI: Good evening, Madam Chair. My name 12 is Frank Caponi. I am representing the L.A. County 13 Sanitation Districts. I'm also here today representing 14 SCAP, the Southern California Alliance of POTWs. The 15 Sanitation Districts and SCAP certainly support this rule. 16 And I have a few comments. 17 First, the L.A. County Sanitation Districts has 18 really been on the forefront of working with ARB, AQMD, 19 the engine manufacturers, as well as equipment 20 manufacturers to further the state of the art of engines 21 as well as control devices. 22 We support the green language that staff has put 23 forward. And one item in particular I would like to 24 support is the extension on the implementation schedule. 25 Clearly a 2006 date for Group 2 engines is just -- it's PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 320 1 just too soon and it's going to be a burden for I think 2 most of the agencies out there. 3 You know, bear in mind that there's more out -- 4 more engines that are coming under regulation than just 5 the on-road rule, where you have the upcoming off-road 6 rule. There's the stationary source engine rule as well 7 as various other rules. In my agency alone we have over a 8 thousand engines that are coming under regulation within 9 the next five years. So we would ask for your 10 consideration on that. 11 And in our letter we had asked just for the Group 12 2 extension. And I also would like to support what 13 Barbara Lee said and make that across the board. I think 14 that makes sense in terms of equity. 15 One issue we have and it was just briefly talked 16 about has to do with duty cycle. This is a big concern of 17 ours. Even the TX report, which is on the ARB website, 18 suggests that a number of the fleet vehicles in the 19 municipal fleets will not be able to meet the regulations 20 because of duty cycle. And this is especially a severe 21 situation for the Group 1 engines. 22 And what we would like to see is an extension of 23 the compliance considerations for Group 1 engines where 24 there's a case of duty cycle issues. Right now a Group 1 25 engine could only get a one-time extension. We would like PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 321 1 to see in the case of if there's duty cycle issues that 2 those extensions too go out to 2011. 3 In terms of implementation, I also wanted to -- 4 there's been a lot of discussion of biodiesel. And I 5 would like to support a number of the -- the testimony 6 that's already been presented on biodiesel. And I'll just 7 briefly say that clearly there's a legislative intent both 8 on a state and local level to support biodiesel. And I 9 would ask the staff and the Board to find ways to work 10 with industry to make that happen. 11 ACTING CHAIRPERSON RIORDAN: And that is -- your 12 time is up except for a concluding sentence. 13 MR. CAPONI: In conclusion, I said that we 14 generally support the rules that are before you today. 15 And I would also like to extend our appreciation to the 16 staff that has been a terrific bunch of people to work 17 with. 18 Thank you. 19 ACTING CHAIRPERSON RIORDAN: Thank you very much. 20 Deanna Haines. 21 MS. HAINES: Good afternoon, Madam Chairwoman and 22 members of the Board. My name is Deanna Haines. I'm the 23 Environmental Services Manager for the San Diego Gas & 24 Electric Company and Southern California Gas Company. I'm 25 here on behalf of the two utilities to provide oral PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 322 1 testimony regarding ARB's proposal to adopt this rule. 2 Our written comments on the proposed rule were 3 submitted to ARB on November 22nd, 2005. The purpose of 4 my presentation today is just to reiterate SoCal Gas's and 5 San Diego Gas & Electric's support of the intent of this 6 rule and to convey some significant considerations and 7 suggestions that we would like ARB to adopt in the final 8 control measure. 9 Before I proceed I would lick to provide the 10 Board with a brief description of our fleet. San Diego 11 Gas & Electric has 529 vehicles subject to this rule. 12 Southern California Gas Company has 468 vehicles. These 13 vehicles are essential to maintaining our infrastructure 14 for 21 million Californians. 15 I would like now to briefly discuss our 16 recommendations and proposed changes to the control 17 measure that will enable us to implement the rule in the 18 most efficient and effective manner. 19 Our first significant recommendation is related 20 to the staggering of implementation schedules. The move 21 to alternative and cleaner burning fuels requires a 22 long-term strategy with a secured funding plan. We have 23 estimated the compliance cost for this rule to be 24 approximately $23 million. 25 Currently the utilities are in the middle of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 323 1 their general rate cases, which is their mechanism to 2 recover their costs. We've asked in our comments that the 3 California Air Resources Board support the utilities in 4 allowing flexibility in their compliance schedules to 5 optimize with their general rate cases. 6 We also recommend staggered implementation 7 schedules to accommodate our unique equipment that require 8 custom engineering. Many of our vehicles would require 9 custom engineering. A lot of these products that are off 10 the shelf will not fit our vehicles. And we will need 11 some additional time for that. 12 Finally, we recommend staggered implementation 13 schedules to keep costs from unnecessarily escalating due 14 to demand surges in the market. The sheer volume of 15 vehicles needing retrofits, coupled with the competition 16 from other companies for equipment and installation 17 vendors, will create a surge on demand in the market that 18 will escalate prices unnecessarily for the utilities and 19 ultimately the rate payers. 20 Our second significant recommendation is related 21 to the implementation of best available control 22 technology. One of the concerns of the utilities is that 23 they will develop a strategy to comply based on their 24 current knowledge of controls and engage in contracts, 25 only to discover a vendor suddenly claims they have a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 324 1 better mouse trap. And they convince the agency that it 2 must be considered the new BACT. 3 This vendor game has been played in the 4 stationary source control world many times and has created 5 substantial uncertainty for business, which escalates 6 costs unnecessarily. 7 The vendor has nothing to lose but everything to 8 gain, while the regulated entity now has to make the 9 showing that this new vendor's technology may or may not 10 work for their equipment. 11 To solve this problem, we recommend an addition 12 to the rule that clearly states that once a utility has 13 contracted for a particular BACT, that it remains fixed 14 and is not subject to a moving target if another control 15 technology becomes available during the time of 16 installation. 17 In summary -- 18 ACTING CHAIRPERSON RIORDAN: Oh, good. You're 19 summarizing. That's because you're out of time. 20 MS. HAINES: In summary, staggering the schedules 21 for each utility to better coordinate with their general 22 rate cases will add needed flexibility. The 23 recommendations by staff of the green recommendations will 24 accommodate that request. 25 In conclusion, I would like to thank you for the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 325 1 opportunity to participate in the regulatory process and 2 the opportunity to provide written comments. 3 And if you have any questions, I'm available. 4 ACTING CHAIRPERSON RIORDAN: Thank you very much. 5 Appreciate it. 6 Sven Thesen, followed by Michael Eaves, followed 7 by Bob Lucas, Todd Campbell, Joe Kubsh and Tim Taylor. 8 MR. THESEN: Madam Chair, members of the Board. 9 My name's Sven Thesen. I represent Pacific Gas & 10 Electric. 11 We have 2800 vehicles subject to this rule, of 12 which unfortunately no one is the same. And we estimate 13 costs to comply with this regulation to approximately be 14 over $40 million. 15 We have submitted written comments, including 16 suggestions on improving the record keeping and 17 administrative requirements of this rule, especially the 18 on-vehicle record-keeping requirements. 19 The good news is Big Picture. We along with our 20 sister utilities support this proposal, plus the staff 21 proposed changes, who have worked very hard on this 22 regulation. 23 Just as Alan Lloyd, who's in Montreal right now 24 however, boldly setting precedents on California's global 25 warming reductions and how to reduce our global warming PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 326 1 footprint, I'd like the Board to support the concept of 2 incentives for early and beyond compliance. 3 Board Member Patrick today said the cows left the 4 barn. And that's what this regulation does. It gets 5 those cows that have left the barn back in the barn; that 6 is, we've got diesel particulate emissions that we have to 7 clean up, and they're active out there -- this is a 8 retrofit rule -- when we could have years ago gone with 9 cleaner vehicles and never had this problem to begin with. 10 And some fleets took incremental steps when they read 11 about the diesel risk reduction plan back in 2000 to 12 actually try to clean up their fleets, not so much 13 potentially for a regulation but just to see if it could 14 be done. 15 And of the roughly 30,000 vehicles addressed by 16 this regulation, roughly 400 went alt fueled and are in 17 compliance right now ahead of the regulation, improving 18 our air quality right now. We want to reward those cows 19 that never left the barn. 20 Now, not only do we want to reward the cows that 21 never left the barn. There's a future barn. And that's 22 the private fleet rule. And that barn has the Safeway's, 23 the Costco's, those private fleet managers right now who 24 are incrementally replacing their fleet vehicles. And 25 they're looking at us and what you say is part of this PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 327 1 rule. And if you say, "Well, if someone goes into 2 compliance early, we will reward them by changing slightly 3 their flexibility on implementation," they may opt to 4 comply early. They may opt to improve air quality right 5 now versus waiting for a command and control. And they're 6 looking at us and you for that guidance. 7 We want to send a signal to them that it's in 8 their best interests to comply now rather than later when 9 the command and control regulation hits them. 10 We've had these -- roughly of those 400 vehicles, 11 PG&E's proud to have had roughly 40 clean vehicles running 12 for the last three years. And they've driven thousands of 13 miles, and they haven't emitted any diesel PM. They've 14 reduced our global warming footprint. And they have done 15 great things for petroleum dependency. And there are 400 16 other vehicles like that right now. Let's set precedence 17 by saying to future rules and this one, "We will reward 18 you if you come into compliance early." 19 ACTING CHAIRPERSON RIORDAN: Okay. Thank you 20 very much. 21 I need a concluding sentence. 22 MR. THESEN: In conclusion, PG&E Big Picture 23 supports this rule with the staff recommended changes and 24 asks the Board to add -- to go beyond command and control 25 regulations and reward those who comply early, cleaning up PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 328 1 the air that much sooner, and to reward those who go 2 beyond compliance with advanced technology and clean up 3 the air that much more. 4 Thank you. 5 ACTING CHAIRPERSON RIORDAN: Thank you very much. 6 Michael Eaves. 7 Oh, he left? All right. 8 Bob Lucas, followed by Todd Campbell. 9 MR. LUCAS: Hi. Thank you very much. My name is 10 Bob Lucas. I'm representing the California Council for 11 Environmental and Economic Balance. And I'd like to join 12 the chorus of people in support of staff on this rule. 13 We've been working with them since actually the garbage 14 rule on concepts for this rule and we appreciate their 15 attention to our issues. 16 Our primary concern is adjustment of the 17 implementation schedule. And I think that's already been 18 covered by some of the previous speakers. And we endorse 19 the staff report on that. 20 I would like to endorse Sven Thesen, PG&E's last 21 point about cows in the barn and about compliance 22 pre-rule. They didn't need to do it. They did do it. We 23 think that it is a precedent, but it's a very good 24 precedent. And there are other rules like this coming 25 down the pike, and it would be good to set that precedent PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 329 1 for those rules. 2 Our other concerns that I've raised in our 3 letter: On compliance extensions, you've had some 4 discussion today with various individuals about this. We 5 think that you should reconsider the use of compliance 6 extensions and allow them for issues involving biodiesel; 7 and in those circumstances where a vendor does not meet 8 it's obligations to supply qualifying kits where it's 9 outside the ability of the company. 10 With record keeping -- I know that that has your 11 attention also -- we would urge that you reconsider the 12 requirements for on-board compliance as unnecessary 13 administrative burden. And find ways to relieve the 14 driver of the responsibility to know where fleet ATCM 15 records are located. It's not necessarily a driver's 16 responsibility. 17 And with regard to Moyer, we'd like you to 18 determine the impact of this adoption on surplus emissions 19 that qualify for Moyer, and that you promptly update the 20 Carl Moyer program guidelines to reflect that 21 determination. And when you do that, you involve those 22 people that are interested parties. 23 And one final note on Moyer. When we were 24 working on the legislation that made the significant 25 changes to Moyer a year or two ago, one of the issues in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 330 1 our consideration was this entire set of rules. And we 2 wanted to try to do things that we could to help avoid 3 these rules cratering. And one of the changes that was 4 made in that legislation was to change the eligibility 5 date for Moyer program from the date of rule adoption to 6 the date of compliance. And it is specifically worded 7 that way in statute. We think that you have flexibility 8 with the three-year criteria and that you're now applying. 9 And I see -- Supervisor DeSaulnier, I think we probably 10 will -- 11 ACTING CHAIRPERSON RIORDAN: This is the Chairman 12 of that Committee. Be sure -- he understands that. 13 MR. LUCAS: -- I think we probably will be 14 discussing -- 15 BOARD MEMBER DeSAULNIER: I'm sorry. I'm just 16 getting over the barn story in the last testimony. 17 (Laughter.) 18 BOARD MEMBER DeSAULNIER: I'm conferring with my 19 other expert on agriculture. Why do you let these cows go 20 out and come back in? They should be regulated. 21 (Laughter.) 22 BOARD MEMBER DeSAULNIER: Sorry, Bob. 23 MR. LUCAS: No, no, no. The point I was making 24 is we think that you have flexibility with this three-year 25 criterion that you're using for eligibility under Moyer, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 331 1 that it was corrected under statute to be the date of 2 compliance. We think there are other ways to meet staff 3 concerns about having compliance -- or having the Moyer 4 credit so close to compliance. We think there are other 5 ways of dealing with it than imposing a three-year period. 6 We think you have some room there. And I think it's part 7 of your discussions we'll probably bring this up and 8 see if there's other ways to do it and see if you might be 9 able to use that to help you out. 10 Thank you very much. 11 ACTING CHAIRPERSON RIORDAN: Thank you. 12 BOARD MEMBER DeSAULNIER: I'm sure we'll have 13 several reports back. 14 (Laughter.) 15 ACTING CHAIRPERSON RIORDAN: Yes, on the cows and 16 however you want to do Moyer. 17 Okay. Todd Campbell. 18 MR. CAMPBELL: I don't know how I'm going to top 19 this conversation. 20 ACTING CHAIRPERSON RIORDAN: I know. It's 21 difficult at this late hour. 22 MR. CAMPBELL: Well -- 23 BOARD MEMBER DeSAULNIER: If anyone can, you can. 24 MR. CAMPBELL: Madam Chair, members of the Board. 25 Todd Campbell, Clean Energy. Just want to thank you for PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 332 1 your patience today in ferreting it out. This is a long 2 day. And staff as well. 3 We support this rule. We always support rules 4 that clean up existing fleets. You know, of course we 5 would -- and I feel like I'm beating a dead horse here. 6 But we would always love to see new purchases take 7 advantage of not only cleaner emissions and the BACT 8 standard, the best available controlled technology 9 standard. 10 And I would even go out on a limb and say I would 11 love to see an alt fuel pathway for public fleets, 12 particularly those that are 50 vehicles or greater, 13 marginally because utilities and public agencies have 14 access to electricity and natural gas already. Being a 15 leader of one of the cities myself, we employ -- we used 16 to employ electric vehicles. We loved those. We do 17 natural gas. And we're going to have a hydrogen fueling 18 station coming on line next month. And hopefully maybe 19 we'll have a low sulfur diesel construction equipment part 20 of that too. 21 But the bottom line is is that we would like to 22 see -- we would like to see the Air Resources Board not 23 miss opportunities where we could prevent diesel exposure, 24 we could reduce it by making new purchases. 25 And we also agree with our PG&E colleague that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 333 1 said that early actors should be rewarded. Certainly that 2 is something that we would support, an early adopted 3 credit. 4 So you have my comments. The bottom line is I 5 think CalEPA Chairman Alan Lloyd is on a very important 6 mission this week. And I think that we need to seize the 7 opportunities to diversify our fuel supply, particularly 8 those who provide lower emissions for our transportation 9 fleets. Because it matters when it comes down to 10 greenhouse gases, it matters when it comes down to toxics, 11 and it matters in the sense of durability. My feeling is 12 if you have a cleaner engine to begin with, there's less 13 things to break down, the better off we'll be. 14 So with that, I thank you for your consideration 15 and ask for your support. 16 ACTING CHAIRPERSON RIORDAN: Thank you, Mr. 17 Campbell. 18 Joe Kubsh, followed by Tim Taylor. 19 MR. KUBSH: Thank you, Madam Chairman and members 20 of the Board. Joe Kubsh with the Manufacturers of 21 Emission Controls Association. We also are here to lend 22 our support to this important regulation that the staff 23 has put before you. 24 I'd like to use my time to speak on two points 25 today. One is with respect to the range of retrofit PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 334 1 technologies that's going to be available to help people 2 comply with these regulations. I can tell you that that 3 range of retrofit applications and retrofit technologies 4 is expanding. 5 You're going to hear from Mr. Taylor after me 6 about a new technology that was just verified yesterday, 7 which is an actively regenerated filter system that helps 8 to take the duty cycle out of the picture so that even 9 cold applications will be able to make use of these kinds 10 of technologies. And there's other kinds -- more of these 11 active-type technologies that are in the pipeline to help 12 with some of the problem applications that are out there 13 that passive filters currently can't address. 14 And I also would like to speak briefly about the 15 B-20 issue. Our members are certainly trying to work 16 through the compatibility issues. And I'd like to echo 17 some of the comments that both Mr. Cross and Ms. Hebert 18 spoke to earlier this afternoon. And, that is, there are 19 going to be technologies like oxidation catalysts and 20 passive filters where compatibility should not be a 21 problem with B-20. But this is not going to be the case 22 across the board for all kinds of retrofit technologies, 23 especially those kinds of retrofit technologies that 24 employ fuel injection like, for example, the Cleaire 25 Longview System or active technologies that make use of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 335 1 fuel injection. And our members need the time to work 2 through the issues of durability and performance with B-20 3 to make sure that those systems are compatible. 4 And I agree with Mr. Cross's statement that in 5 this two year horizon or year and a half horizon that we 6 have -- or two year horizon we have in front of us until 7 SB 965 is sunsetted I think our members are going to work 8 through those issues. I expect more compatibility 9 verifications to come forward in that time frame and that 10 there will be plenty of options available for compatible 11 use of B-20 for retrofits. 12 And again I want to thank the staff for all of 13 their efforts in putting this regulation together. We 14 were an active participant in the CAPCOA conference that 15 was held in Sacramento in August. And we look forward to 16 the Board approving these regulations. 17 Thank you. 18 ACTING CHAIRPERSON RIORDAN: Thank you very much. 19 Joe, I'm thinking -- as I turned off my 20 microphone -- you might act as a resource of information. 21 There are some counties who've traveled a great distance 22 who perhaps may not have ever been at one of our hearings 23 before. They may have. I am not sure. But for their 24 benefit, let me just share with you. This gentleman is 25 sort of a -- he's now the executive officer of an PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 336 1 organization that kind of coordinates all of those who are 2 very much involved with the inventions that are necessary 3 to bring about the retrofit programs and whole lot -- a 4 host of other things. But you may want to get his 5 business card so that you can keep in touch with what's 6 happening, the newest thing that might be available. And 7 I think he'd be a wonderful resource for you. And you've 8 not necessarily had contact with him before, but here's an 9 opportunity. So you -- maybe when this concludes you can 10 get his -- at least -- 11 MR. KUBSH: Thank you, Madam Chair. I'd also 12 like to a plug in for a new website, 13 www.dieselretrofit.org -- that's dieselretrofit, all one 14 word, where we hope to be the one-stop shop for all the 15 information about technologies. It's a very easy website 16 to remember the name for. And that's a resource out there 17 that people can use to understand what technologies are 18 available. 19 ACTING CHAIRPERSON RIORDAN: You want to give 20 that plug again one more -- 21 MR. KUBSH: www dot dieselretrofit -- all one 22 word -- dot o-r-g. 23 Thank you. 24 ACTING CHAIRPERSON RIORDAN: Okay. Thank you. 25 Tim Taylor. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 337 1 MR. TAYLOR: Madam Chair, members of the Board. 2 I'm Tim Taylor. I'm with Cleaire Advanced Emission 3 Controls Technology. We are a California-based emission 4 control company, with labs in San Leandro and Richmond and 5 a manufacturing facility in San Diego. Our entire focus 6 is on diesel retrofit technology. 7 Cleaire felt that it was important for your Board 8 to know that we have recently -- in fact, Joe stole my 9 thunder -- yesterday been verified on a retrofit system 10 called the Horizon Electrically Regenerated Particulate 11 Filter. This Level 3 system can be used on any on-road 12 1994 or newer diesel engine regardless of duty cycle. 13 Even engines with the coldest exhaust temperatures can now 14 be retrofitted for Level 3 PM control. 15 Further, the use of ultra-low sulfur diesel is 16 not required. Rather than relying on exhaust temperature 17 and catalysts to regenerate, the Horizon is uncatalyzed 18 and is regenerated using grid electricity to operate an 19 internal heating element. When the light comes on, you 20 plug the device in at the end of the shift. And because 21 it's uncatalyzed, the Horizon actually achieves reduction 22 in NO2 emissions across the device. 23 We're currently working with your staff to extend 24 the verification to all ages of diesel engines so that 25 pre-1994 and even pre-1988 engines will have Level 3 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 338 1 retrofit options. The Horizon has been demonstrated to be 2 very effective on much older engines, and we believe this 3 verification will be in place within the next few months. 4 Cleaire uses the Cummins distribution network to 5 sell, install, service and support our products. In 6 northern and central California the Cummins distributor is 7 Cummins West. In southern California the distributor is 8 Cummins Cal-Pacific. 9 These distributors have fully equipped diesel 10 maintenance facilities. And all technicians who do 11 Cleaire installations are factory certified. 12 In addition to Cleaire-trained technicians, these 13 Cummins distributors also have a complete suite of support 14 services, including filter cleaning systems that meet OSHA 15 standards for worker safety and air district permitting 16 standards for toxics emissions. 17 Finally, Cleaire has worked closely with our 18 distributors to offer a municipal and corporate financing 19 program. Public and private agencies facing budgetary 20 constraints that make the outlay of capital expenditures a 21 challenge now have an option to spread the payments over a 22 number of years. Similarly, any utilities that find 23 themselves in the same situation can use the corporate 24 financing program. 25 Thank you for your attention. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 339 1 ACTING CHAIRPERSON RIORDAN: Well, thank you, and 2 congratulations on your approval. And you've offered some 3 excellent opportunities I think for companies with 4 financing, which I think is a real bonus for some of the 5 people who are sitting in this room who are having 6 financial difficulties. So maybe they can avail 7 themselves of that. 8 I think Candice Kim has left. Am I correct or 9 are we going to have another speaker in her place? 10 MR. SCHLAGETER: She did leave. She was not as 11 hardy as you all and began to wilt. 12 Coalition for Clean Air endures. And if you'll 13 allow me, I'll speak on behalf of Coalition for Clean Air. 14 ACTING CHAIRPERSON RIORDAN: So identify yourself 15 for the record. 16 MR. SCHLAGETER: Martin Schlageter. Thank you. 17 And we're here in support of the proposal. 18 Appreciate the time you've spent on it and the complexity 19 of this matter. 20 We have long advocated that the dirtiest engines 21 need to be cleaned up first, and not yet satisfied fully 22 on that front. But am supportive of the proposal to go 23 beyond the Level 1 controls on those dirtiest engines. 24 And, again, this has been a long time in coming, and so 25 urge your sport and eager to get into the implementation PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 340 1 phase here. 2 So I want to caution against last-minute 3 proposals, last-minute modifications that may not have 4 public health benefits. I'm really eager to get moving 5 forward on this. 6 Thank you. 7 ACTING CHAIRPERSON RIORDAN: Thank you very much. 8 Diane Bailey. 9 MS. BAILEY: Good afternoon again. My name is 10 Diane Bailey. I'm with the Natural Resources Defense 11 Council. I'l try and make my comments brief. I know that 12 it's late. 13 We're very pleased to see this rule move forward 14 after almost three years of rule development, and we urge 15 you to adopt this very important rule today without 16 further delays. 17 However, as you've heard from my colleagues, we 18 do have one request and, that is, that the oldest vehicle 19 group, the Group 1 or pre-1988 vehicles, be moved up in 20 implementation so that they're cleaned up first. 21 Philosophically we just think that it makes sense to clean 22 up the dirtiest, oldest vehicles first. 23 And we've been asking for this change throughout 24 the process. I think we have comment letters dating back 25 to 2003 asking for this. And this is a concern that we PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 341 1 also raised with the Refuse Hauler Rule back in 2003, and 2 the Board ultimately granted our request and agreed that 3 it did make sense to clean up the oldest vehicles first. 4 And so we really hope, despite all the other comments that 5 you've heard today, that you can consider that just in the 6 big picture, that we could clean up the oldest, dirtiest 7 vehicles and get the biggest bang for our buck first, get 8 the biggest emission reductions early. 9 As Martin mentioned, a lot of other modifications 10 have been proposed at the very last minute. And I don't 11 know about all of you, but I couldn't really follow all of 12 the green versus black fast enough. So I'm not quite sure 13 exactly what was recommended by staff. But I would urge 14 you to consider the following criteria as to whether these 15 modifications make sense: 16 When it comes to rural areas, we share the 17 concern that maybe these areas are not very well equipped 18 to deal with this rule and they have special challenges, 19 and we really sympathize with that. 20 But I hope that staff are sure that before any 21 exemptions or delayed timetables are granted, that they 22 know what the changes to the emission benefits of this 23 rule will be, and make sure that we're not taking 24 significantly diminished benefits in order to exempt some 25 areas; and also that we're not accidentally exempting PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 342 1 suburban versus rural areas. I think that we need to take 2 a close look at that. There are a lot of parts of 3 California that used to be rural and that are now much 4 more suburban, and we need to be careful about that. 5 And, lastly, when it comes to modifications to 6 delay or offer some sort of special exchanges or deals, I 7 would hope that staff could provide numbers with certainty 8 that any of those modifications would actually improve the 9 rule as opposed to take away from the emission benefits of 10 the rule. I haven't really seen any of the numbers, and 11 so it's really difficult to consider these modifications. 12 And I hope that you all can ask for that information and 13 consider that before considering adoption of those 14 last-minute proposals. 15 And with that, I thank you. And I hope that you 16 can adopt the strongest rule today as possible. 17 ACTING CHAIRPERSON RIORDAN: Thank you very much, 18 Diane. Good timing. 19 Bonnie Holmes-Gen. 20 MS. HOLMES-GEN: Bonnie Holmes-Gen with the 21 American Lung Association of California. Thank you, 22 Chairperson Riordan and members. 23 I've been cutting and slashing my testimony. The 24 later it gets, the less I'm going to say. 25 So I wanted to say we strongly support the rule. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 343 1 It's been a long time coming. We're pleased to see it 2 before you today. 3 We think the staff has struck a reasonable 4 balance to address the needs of the rural areas. And we 5 believe there's adequate flexibility in the regulation 6 now, especially with the two staff-proposed modifications 7 to further assist the low population areas. So we would 8 not support beyond those two proposed modifications any 9 additional requests -- we would not support any additional 10 request to increase the threshold for low population 11 counties above the 125,000 to provide further exemptions. 12 And we urge you to speed up the compliance for 13 Group 1 engines. Diane Bailey more than adequately 14 covered that base. 15 We would be -- we're very concerned about any 16 proposals, especially very last-minute proposals, to delay 17 compliance. And there is one staff recommendation to 18 delay compliance for Group 2 engines. 19 In general, you know, this -- as I mentioned, 20 this has been three years of workshopping. And in the 21 last three or four days there's been a long list -- you 22 know, a page of modifications. And we don't understand 23 what all the emission impacts of those modifications are. 24 And we think at a minimum that you should ask the staff to 25 back with an assessment of what these modifications will PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 344 1 mean in terms of the emission reductions and the health 2 benefits from this regulation. We want to make sure that 3 we're truly getting the benefits that have been promised 4 in the staff report. 5 That's basically it. Thank you. It's been a 6 long day. And we appreciate your persistence and your 7 commitment to cleaning up the air. 8 ACTING CHAIRPERSON RIORDAN: Thank you, Bonnie. 9 Thank you very much. 10 Don Anair. 11 MR. ANAIR: Hi. Don Anair with the Union of 12 Concerned Scientists again. 13 Diane and Bonnie really highlighted some of the 14 concerns. And I just want to belabor one point a little 15 bit. 16 I'm very supportive of the rule overall and I 17 think the Board should adopt it today. The primary 18 concern is the request to postpone the implementation 19 dates. This rule has been under development since before 20 October of 2003. I actually have some of the drafts. The 21 first draft, October 27th, 2003. Implementation dates: 22 Starting, 2005; full compliance by 2009. This was before 23 the utilities were added. 24 The next one April 28th, 2004. Utilities are 25 included. Implementation dates moved back to 2006, 2007. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 345 1 Final dates, 2010. 2 Okay. Then we move on. Obviously the staff was 3 working with the stakeholders, making compromises. 4 September 22nd, 2004, we end up with the current 5 implementation dates that are before you today. That was 6 over -- almost a year and a half ago. The stakeholders 7 knew then that this regulation was coming. They knew the 8 compliance dates. There's availability of funding that 9 they could apply for from Moyer. And some of them applied 10 for it, I'm sure, in preparation for the regulations. 11 I just wanted to make this point for two reasons: 12 One, that staff has been diligent in working with the 13 stakeholders and are providing adjustments to 14 implementation dates. And also the fact that this has 15 been a long time in coming and it's been a year and a half 16 almost since the final implementation dates were 17 established, and I just want to make sure that the Board 18 knows that the implementation dates at the end of 2006 is 19 not a surprise to anybody and that proactive stakeholders 20 could be applying for funding last year, this year and can 21 continue to do so. 22 And to conclude, I just ask the Board to consider 23 this when making these decisions. I also want to 24 reiterate that it's extremely important that the Board and 25 the public know the emissions impacts and the public PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 346 1 health impacts of these last-minute changes that are being 2 proposed. 3 Thank you very much. 4 ACTING CHAIRPERSON RIORDAN: Thank you, Don. 5 Bill Magavern. 6 MR. MAGAVERN: Bill Magavern. I just want to put 7 Sierra Club, California, on record in support of this 8 proposal to reduce diesel emissions from utility fleets 9 and also public agencies. And it's interesting that the 10 various diesel emission reduction measures that you've 11 adopted seem to be really spurring the growth of the 12 diesel retrofit industry. So it's good to see that 13 happening. 14 And, finally, I urge you to apply similar 15 emission reduction requirements to private fleets as soon 16 as possible where we will find even more benefits for the 17 air. 18 Thank you. 19 ACTING CHAIRPERSON RIORDAN: Thank you very much. 20 I appreciate that. 21 That concludes our witness list. 22 Staff, we didn't stop periodically. And I think 23 there are some maybe thoughts that you might have. And 24 then of course I'll turn to the Board to ask their 25 questions. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 347 1 EXECUTIVE OFFICER WITHERSPOON: Well, because it 2 has been a long hearing and it's late, it would I think be 3 helpful to refresh you about the changes we are 4 recommending to the regulation. There are three slides 5 that covered that in the staff's presentation. And I've 6 asked -- staff, are you ready to key those up. 7 The first had to do with rural areas and refining 8 both the situation where there are independent city fleets 9 within counties that you could subtract from the 10 population and when the reverse was the case, you know, 11 that the unincorporated part of the county was poor. And 12 so those are two changes that staff is recommending in 13 green. 14 And then the third proposal that came forward -- 15 nobody really dwelled on this much today -- was exempt low 16 population counties altogether. I think it was implicit 17 in the testimony you heard about severely financially 18 stressed counties, who even with 15 years might never get 19 the resources together. 20 And just so you can put that in perspective, we 21 have analyzed what difference it makes to keep them in the 22 rule versus not. And if we were, instead of playing with 23 the 125,000 threshold, to simply exempt every county below 24 that threshold entirely, we would be sacrificing 5 percent 25 of the emission benefits of this rule. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 348 1 And if we went all the way up to 325,000, we 2 would be sacrificing 17 percent of the benefits of this 3 rule. 4 So I'll just leave it at that for you to cogitate 5 on and go on to the next slide. 6 BOARD MEMBER BERG: Well, before you go on to the 7 next slide, could you just tell me what is the population 8 number for the exempt low if we were to do that? What's 9 the population? 10 EXECUTIVE OFFICER WITHERSPOON: A hundred 11 twenty-five thousand. 12 BOARD MEMBER BERG: If we were to exempt the low 13 population counties, it would be -- 14 EXECUTIVE OFFICER WITHERSPOON: -- 5 percent. 15 BOARD MEMBER BERG: -- all the -- but all the 16 counties under 125,000 people? 17 EXECUTIVE OFFICER WITHERSPOON: That's correct. 18 BOARD MEMBER BERG: Thank you. 19 EXECUTIVE OFFICER WITHERSPOON: I'm sorry. I 20 didn't understand the question. 21 Next slide. 22 These are the changes that we recommended to the 23 schedule. One was to take that problematic '06 start date 24 and push it back one year. Because even with as much 25 notice as people have had, expenditures don't get real PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 349 1 until the regulations are real. And so there still is a 2 budgetary process that needs to be taken into 3 consideration. And It will take some months after today 4 to file this regulation with the Office of Administrative 5 Law for it to take effect. So we would move the first 6 year. 7 You were asked also to move the whole schedule, 8 every deadline in the schedule one year out. And we 9 didn't recommend that. 10 And you were also asked, mostly by the final set 11 of witnesses, to bring up the implementation schedule for 12 the very oldest vehicles. And we are not recommending 13 that you do that, not because we disagree with the 14 philosophy, but because there aren't retrofits available 15 for that group of vehicles, so you're accelerating 16 expensive retirement and it's a monetary problem. This 17 would be all counties. This isn't just the rural 18 counties. And we just thought we needed to balance the 19 investment scheme. 20 Next slide. 21 Oh, I'm going to let Annette do this one -- any 22 words. 23 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 24 HEBERT: Okay. The early compliance. The first option 25 basically is if you apply BACT to 100 percent of your PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 350 1 Group 1 and 2 vehicles by the end of 2008, that you're 2 allowed two years of the final compliance deadline of 3 Group 3. So that would spread it out to 2012. And just 4 for your information, we calculated out on an example 5 hundred vehicle fleet that that can actually gain 50 6 percent increase in emission benefits over an example 7 fleet by allowing them to do that. 8 You want me to go to the next one too? 9 Okay. The other one is basically put in there, 10 for people to apply for optional credits are to extend 11 implementation deadlines for the adoption of like advanced 12 technology vehicles submitting, you know, 2007 and 2010 13 early or through electric vehicles or hybrid technologies; 14 if they, you know, purchase a sufficient number of those, 15 that they would get basically some additional either BACT 16 credits or maybe extend the implementation deadline. But 17 that would be through application and evaluation through 18 the Executive Officer. 19 A third option is the cow option that PG&E 20 pushed. An let me see if I can use a -- basically when we 21 started the rule our focus was the diesel PM in the diesel 22 fleet. And that was -- our focus was to reduce the 23 emissions from that. 24 Initially we did not allow alternative fuel 25 vehicles to be counted in the total fleet. You know, so PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 351 1 whenever you would go for the 20 percent reduction, it 2 would only be in which you'd -- from diesel vehicles 3 post-2004. And that was the initial proposal. 4 And when people said, "Well, wait a minute. 5 Alternative fuels. We've done a good thing. We'd like to 6 be counted," et cetera. So what we did to allow credit 7 for going to alternative fuel is we changed it to allow 8 alternative fuels to be counted in the total fleet 9 calculation. So then it applies as being towards BACT 10 even though it wasn't part of our original baseline of 11 diesel vehicles, which was 2004. 12 But now what they'd like is not only to count it 13 once in the total fleet calculation, but to count it 14 double. So if they had 40 alternative fuels in a total 15 fleet calculation, they would like to be able to count it 16 as 80 vehicles complying towards BACT. So that's why we 17 call it double credits. 18 BOARD MEMBER DeSAULNIER: Cows out of the barn 19 there. 20 (Laughter.) 21 ACTING CHAIRPERSON RIORDAN: I don't think we're 22 going to have a discussion back and forth. You can submit 23 something written. 24 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 25 HEBERT: Okay. And then the final one is just some of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 352 1 record-keeping comments that have come up. We've agreed 2 that we probably need to go back and look at simplifying 3 or modifying record keeping to make it more user friendly 4 and more amenable. And then there's just some minor 5 applicability changes that are more like clarifying 6 changes that -- so those don't really affect much other 7 than clarifying or simplifying records keeping. 8 EXECUTIVE OFFICER WITHERSPOON: And -- 9 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 10 HEBERT: And that's one of the things they asked for. 11 EXECUTIVE OFFICER WITHERSPOON: And that would 12 include central records, not at every terminal? 13 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 14 HEBERT: Right. 15 EXECUTIVE OFFICER WITHERSPOON: Over the course 16 of the testimony we agreed to other things, you might 17 recall. If, for example, an emission control device 18 became disabled, allowing them to take it off and put the 19 vehicle back in service, we've encountered that with urban 20 buses and allowed that to go on. And we would do that 21 again here. 22 We stressed our commitment to working through 23 biodiesel issues. There's not a regulatory change that 24 goes along with that, but certainly keeping very close 25 tabs on the issue and returning to see you if we need to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 353 1 before the expiration of the statutory deadline January 1, 2 '08. 3 We were asked to clarify how Carl Moyer plays out 4 with these regs, what's surplus and what isn't. And of 5 course we'll do that. That's become a standard request on 6 every regulation. 7 Anything else? 8 And clarify the issue about Oregon contractors 9 coming over into Del Norte, that this regulation doesn't 10 deal with that, but instead with vehicles that are 11 contracted directly to provide normal services to the city 12 or county. 13 ACTING CHAIRPERSON RIORDAN: All right. Board 14 members, before I close the hearing, do you have any 15 questions for staff at this point? 16 Yes, Ms. Berg. 17 BOARD MEMBER BERG: On the U.S. Postal Service. 18 Their competition is not in this regulation. 19 EXECUTIVE OFFICER WITHERSPOON: Not yet. 20 BOARD MEMBER BERG: No. 21 EXECUTIVE OFFICER WITHERSPOON: Not in this 22 regulation, right? 23 BOARD MEMBER BERG: And we're going to have a 24 similar implementation schedule for the private fleet? 25 EXECUTIVE OFFICER WITHERSPOON: Similar. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 354 1 BOARD MEMBER BERG: Similar. 2 EXECUTIVE OFFICER WITHERSPOON: Probably not 3 identical. But within a year or two, I would say. 4 BOARD MEMBER BERG: So really the U.S. Postal 5 Service should be put in with the private because it's 6 their competition. 7 EXECUTIVE OFFICER WITHERSPOON: We think they 8 should be a leader. 9 (Laughter.) 10 BOARD MEMBER BERG: But when they're trying to 11 figure out how to keep their costs down and stay in 12 competition and get business, they don't mind being a 13 leader as long as Fed Ex is with them and DHL and -- 14 EXECUTIVE OFFICER WITHERSPOON: But they go to 15 the U.S. Congress for an appropriation. They don't have 16 to get it through their direct pricing because they're a 17 government service that's subsidized by the government. 18 BOARD MEMBER BERG: Okay. 19 Okay. That's off the table. 20 I think we dealt with the duty cycles. 21 Did we deal with duty cycles for Group 1 engines? 22 EXECUTIVE OFFICER WITHERSPOON: That issue I 23 think boils down to retrofits aren't going to be available 24 for some of these vehicles. So they're facing the more 25 arduous replacement. And what we've done with that is try PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 355 1 to spread that out as much as we can. 2 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 3 HEBERT: And just to remind you, we did have a witness 4 that testified that they plan on extending the active 5 system to all of on-road -- actually beyond that 6 probably -- to off-road eventually. 7 BOARD MEMBER BERG: Okay. Yeah, that's the 8 testimony I was referring so. So we're pretty comfortable 9 with that? 10 EXECUTIVE OFFICER WITHERSPOON: Yes, we are. And 11 that device, I don't think they have a market price out 12 yet announced. But we think it will be on the order of 13 12,000. So it's far cheaper than replacing a vehicle 14 that's in excess of a hundred or two hundred thousand 15 dollars. 16 BOARD MEMBER BERG: Okay. And another issue I 17 have is the implementation in the rate cases. Is that -- 18 that was talked about by the utilities. 19 EXECUTIVE OFFICER WITHERSPOON: Right. And I saw 20 staff conferring when that testimony was being given about 21 staggering between the two utilities. 22 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 23 HEBERT: I think -- well, we think that existing schedule, 24 while maybe they'll miss the early implementation 25 deadlines if we don't move Group 2 to 2007, that for the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 356 1 majority of it should be included in, you know, the rate 2 cases. 3 BOARD MEMBER BERG: And so if we approve the -- 4 EXECUTIVE OFFICER WITHERSPOON: The Board doesn't 5 move it. But we are recommending that you do move the 6 first compliance deadline. 7 BOARD MEMBER BERG: So if we move it though, then 8 that should take care of the issue? 9 EXECUTIVE OFFICER WITHERSPOON: It should. 10 BOARD MEMBER BERG: Okay. 11 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: That 12 would give two years till the compliance deadline time. 13 So hopefully one funding cycle will be able to be complete 14 for whoever has to find the money. 15 BOARD MEMBER BERG: Okay. And the comment that 16 BACT is a moving target, is that the case? 17 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 18 HEBERT: Okay. Do you want me to answer that? 19 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Well, 20 let me just say first: That's a good thing if we manage 21 it right, because where we have only low efficiency 22 devices now and there's an incentive in the marketplace to 23 get a better efficiency device, a higher rated device, 24 because then you can sell it. So we like the idea that 25 technology evolves. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 357 1 But what we want to make sure we are not doing is 2 when someone puts down their money to buy a Level 2 3 device, that someone can come in, you know, right through 4 the contract before it's installed or something like that 5 and say, "Well, I've got a 3. You've got to throw that 6 contract out and start over again." And I think we have 7 it so that that's not the case. It's based on the 8 contract signing, not on the implementation. It sort of 9 freezes it in. But doesn't freeze it in forever. So that 10 if -- 11 BOARD MEMBER BERG: No, Of course, because we do 12 want them to -- 13 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: 14 -- something better comes along later, we want 15 those that are not retrofitted to be able to use that. 16 BOARD MEMBER BERG: Right. I agree with you, 17 that I think if someone has made a commitment, that we 18 can't keep them in flux. And so as long as we're 19 comfortable that they can move forward -- 20 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: And I'm 21 pretty sure that's the way it is. But the staff will go 22 back and make sure that that is the case. 23 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 24 HEBERT: That is how we're applying the solid waste issue. 25 If a solid waste entity is entered into a contract binding PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 358 1 to buy Level 1, Level 2 devices, and something becomes 2 verified in the interim, they're not required to undo 3 their contract and reevaluate vehicles. 4 We do have -- basically we say, you know, "But we 5 don't want you entering contract for two years." It has 6 to be a reasonable timeframe like, say, six months to 7 evaluate an install, et cetera. 8 BOARD MEMBER BERG: That's great. And I'm glad 9 to see that also in one of your additions is the early 10 compliant. I think it's really terrific that, you know, 11 we are giving some incentive for thinking forward. And so 12 I appreciate that. And great job. It's a complicated 13 issue with very many moving parts, and I really appreciate 14 it. 15 So thank you. 16 ACTING CHAIRPERSON RIORDAN: Any other questions? 17 Okay. Let me close the record on this agenda 18 item. However, the record will be reopened when the 19 15-day notice of public availability is issued. 20 Written or oral comments received after this 21 hearing date but before the 15-day notice is issued will 22 not be accepted as part of the official record on this 23 agenda item. 24 When the record is reopened for a 15-day comment 25 period, the public may submit written comments on the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 359 1 proposed changes, which will be considered and responded 2 to in the final statement of reasons for the regulation. 3 We have some ex parte. 4 Supervisor DeSaulnier, do you want to begin? 5 BOARD MEMBER DeSAULNIER: Yes, I do. 6 November 30th, the same phone call I had on the 7 previous two items with Diane Bailey, Bonnie Holmes-Gen, 8 Don Anair, and Candice Kim, again consistent with their 9 testimony on this agenda item. 10 And then on December 5th I had a phone call with 11 PG&E and others, including Sven Thesen, who's from PG&E; 12 Bert Friel, a supervisor, Fleet Regional Manager, I 13 believe for PG&E; and Les Guliasi; and last, but not 14 least, Lorraine Paskett. And, again, that was consistent 15 with some of the comments by Sven and others about more 16 credits for early advanced technology. 17 That was it. 18 ACTING CHAIRPERSON RIORDAN: Ms. D'Adamo. 19 BOARD MEMBER D'ADAMO: I'm going to have to pass 20 for a moment, because I think I'm missing something here. 21 ACTING CHAIRPERSON RIORDAN: I'll come back to 22 you. 23 Dr. Gong. 24 BOARD MEMBER GONG: The same telephone 25 conversations that I mentioned before on December 1 and 2, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 360 1 same people -- 2 ACTING CHAIRPERSON RIORDAN: All right. 3 BOARD MEMBER GONG: -- as for item one. And our 4 discussion was consistent with their presentations today. 5 ACTING CHAIRPERSON RIORDAN: Okay. 6 For myself, on Monday, December 5th, I spoke with 7 Todd Campbell and Mike Eaves. And their testimony -- or 8 Todd's testimony was similar to what we discussed. 9 And I spoke to Bonnie Holmes-Gen, Joe Lyou, Tom 10 Hines regarding this item. And again it reflected what 11 Bonnie testified to. 12 Thank you. 13 Ms. Berg. 14 BOARD MEMBER BERG: On December 6th on the same 15 conversation as previously stated, Coalition for Clean Air 16 and the California Environmental Rights Alliance. 17 On December 7th, I had a phone call with PG&E, 18 Sven Thesen, Bert Fiel, Les Guliasi, Deanna Haines, and 19 Bernie Orozco. 20 BOARD MEMBER PATRICK: On December 5th I had a 21 phone conversation with Todd Campbell and Mike Eaves. 22 On December 5th I had a phone call with three 23 representatives of PG&E, Sven Thesen, Bert Friel and Les 24 Guliasi. And then also Deanna Haines of San Diego Gas and 25 SoCal Gas was on that conversation. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 361 1 And then on December 7th a phone call with Bonnie 2 Holmes-Gen, Joe Lyou and Don Anair. 3 And the phone conversations were consistent with 4 their written testimony and testimony given today. 5 ACTING CHAIRPERSON RIORDAN: Okay. Thank you. 6 Ms. D'Adamo. 7 BOARD MEMBER D'ADAMO: All I needed to do was 8 turn the page over and find the names that I was missing. 9 Okay. So on December 5th I had a telephone 10 conversation with Todd Campbell, Clean Energy; Mike Eaves, 11 California Natural Gas Vehicle Coalition. 12 On December 5th a phone call with Sven Thesen, 13 PG&E; Bert Friel, PG&E; Les Guliasi, PG&E; Lorraine 14 Paskett, Bernie Orozco with Sempra; and Deanna Haines, 15 Southern California Gas. 16 On December 6th a phone call with Joe Lyou, 17 California Environmental Rights Alliance; Bonnie 18 Holmes-Gen, American Lung Association; Diane Bailey, NRDC; 19 Don Anair, Union of Concerned Scientists; Tom Plenys and 20 Candice Kim, Coalition for Clean Air. 21 And their discussion mirrored their testimony 22 today. 23 Thank you. 24 ACTING CHAIRPERSON RIORDAN: Okay. Thank you 25 very much. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 362 1 Board members, there's a resolution, and 2 obviously there's some suggestions that appeared in the 3 staff report representing a very large county but with 4 some very rural cities. I certainly hope that you would 5 all support the two items that very specifically deal with 6 rural counties and rural small cities. It just seems to 7 me to be reasonable for what we are trying to do, which is 8 to assist and understand their financial difficulties when 9 it comes to funding transportation, and it's primarily 10 transportation where a number of these vehicles are used. 11 So I would certainly encourage a motion to 12 include that amendment. 13 But the resolution is before you and I will take 14 a motion. 15 BOARD MEMBER DeSAULNIER: Madam Chair, I would 16 move Resolution 05-12-6 with the suggested recommendations 17 in today's packet. 18 BOARD MEMBER D'ADAMO: Second. 19 ACTING CHAIRPERSON RIORDAN: Seconded by Ms. 20 D'Adamo. 21 Any further discussion? 22 Ms. Berg. 23 BOARD MEMBER BERG: I would just like 24 clarification if that includes -- are we exempting the low 25 population counties? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 363 1 BOARD MEMBER DeSAULNIER: No, we're going with 2 the green. 3 ACTING CHAIRPERSON RIORDAN: We are giving them a 4 great deal of time to work on their financial of this. 5 BOARD MEMBER BERG: Okay. But we're adding the 6 other items that we talked about, the review of the 7 outside contractor coming back in 2010 for a review and 8 status, and the Carl Moyer playing out, and the review of 9 the biodiesel? 10 BOARD MEMBER DeSAULNIER: Yes. 11 BOARD MEMBER BERG: And then the language to 12 allow flexibility for the parts if we're in the repair 13 process? 14 Are we all on board? 15 ACTING CHAIRPERSON RIORDAN: Yes. And there may 16 be one other item. 17 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yeah, I 18 think staff is. But there are still more that were on the 19 next two slides. So if you want -- 20 EXECUTIVE OFFICER WITHERSPOON: I understood 21 Supervisor DeSaulnier's motion to include all the green 22 recommendations we ran you through. 23 BOARD MEMBER RIORDAN: Right. Yes, which 24 includes -- 25 EXECUTIVE OFFICER WITHERSPOON: Plus my PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 364 1 enumerated list of other things we had agreed to over the 2 course of the testimony. 3 BOARD MEMBER BERG: Okay. 4 BOARD MEMBER DeSAULNIER: That's correct. That's 5 what he meant to say. 6 (Laughter.) 7 But as they say, the cow's out of the barn. 8 (Laughter.) 9 BOARD MEMBER BERG: It's hard counting those 10 cows. 11 BOARD MEMBER DeSAULNIER: And if I hear one more 12 story about cows, I'm going to become a vegan. 13 ACTING CHAIRPERSON RIORDAN: We all knew what you 14 meant, Supervisor DeSaulnier. 15 Thank you very much. 16 Okay. Let me ask then, all those in favor of the 17 motion signify by staying aye. 18 (Ayes.) 19 ACTING CHAIRPERSON RIORDAN: Opposed, no. 20 The motion carries. 21 And I thank you all very much. 22 Those of you who traveled the distance you did, I 23 hope we have been somewhat helpful to you in giving you 24 some ideas. And I'm sure we've given you some more gray 25 hair. But at least we've tried to help. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 365 1 I'd like to take about a five-minute break. And 2 then we will come back for our next item. 3 (Thereupon a recess was taken.) 4 ACTING CHAIRPERSON RIORDAN: Ladies and 5 gentlemen, if you would take your seats please. Or if 6 you're having a good conversation, go outside in the 7 lobby. 8 Sandra's leaving. 9 Obviously the hour is at a point where we need to 10 continue to move on. 11 And so, Ms. Witherspoon. 12 EXECUTIVE OFFICER WITHERSPOON: Sure, I'll just 13 launch in. 14 During the November Board meeting you identified 15 several minor modifications to the guidelines and directed 16 staff to work with CAPCOA to finalize the modified text. 17 We've reached consensus with CAPCOA -- I think we have -- 18 on the final guideline language. 19 You also directed us to organize the Carl Moyer 20 Program Advisory Group, which Supervisor DeSaulnier has 21 graciously volunteered to lead. 22 BOARD MEMBER DeSAULNIER: I never did. 23 ACTING CHAIRPERSON RIORDAN: Yes, you did. 24 (Laughter.) 25 EXECUTIVE OFFICER WITHERSPOON: And we are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 366 1 reporting back to you today on our progress on the issues. 2 And Jack Kitowski will walk you through what's 3 happened since the November Board meeting. 4 ACTING CHAIRPERSON RIORDAN: Okay. Jack. 5 ON-ROADS CONTROLS BRANCH CHIEF KITOWSKI: Thank 6 you, Ms. Witherspoon. 7 Good evening, Madam Chairwoman, members of the 8 Board. This will actually be very short. 9 I'm pleased to provide a brief report on the 10 final modifications to the 2005 program guidelines and on 11 the formation of a Carl Moyer Program Advisory Group. 12 As you noted, the Board adopted the guidelines 13 brought before you last month with several modifications 14 related to program administration. Specifically staff 15 revised the language related to the conditions by which 16 districts would pay back funds. Staff also provided an 17 additional opportunity for districts to demonstrate the 18 timely expenditure of funds. 19 At the Board meeting, Chairwoman Riordan directed 20 staff to work with CAPCOA to develop specific language. 21 We have done that, and we have CAPCOA's agreement on the 22 final language. 23 We will incorporate these changes as well as any 24 needed technical fixes in the final document, which will 25 be published in January. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 367 1 You also directed staff to convene a Moyer 2 Program Advisory Group to address three issues that are 3 broader and more complex than could be accommodated in the 4 last three weeks. These are: The definition of surplus 5 emission reductions, fuel neutrality, and district 6 administrative fees. 7 I am pleased to report that we are making good 8 progress in getting the advisory group up and running. We 9 have contacted key stakeholders from CAPCOA, industry 10 groups, agricultural groups, fuel providers, and 11 environmental groups to request their participation. 12 The group will reflect the broad coalition behind 13 last year's legislation to expand the program. 14 We have scheduled a scoping discussion before the 15 holidays and have scheduled a roundtable public meeting in 16 Sacramento in early January. We intend to report back to 17 the Board on the results of the advisory group's work in 18 the first half of the year. 19 2006 will be a busy and challenging year for the 20 Moyer program, as the ARB and districts implement the 21 first full year of the expanded program. This will 22 include significantly more funding, new projects and 23 formalized administrative procedures. 24 Staff is committed to continually monitoring the 25 program in order to strike an appropriate balance; a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 368 1 balance that ensures a smooth and efficient process for 2 the districts and especially the applicants, but also 3 ensures real surplus and verifiable emission reductions 4 for all the citizens of California. 5 We look forward to keeping the Board updated on 6 this highly successful program. 7 And that's my three minutes. So I'd be happy to 8 answer any questions. 9 (Laughter.) 10 ACTING CHAIRPERSON RIORDAN: Jack, I'm impressed. 11 Board members -- 12 ACTING GENERAL COUNSEL JENNINGS: Madam 13 Chairwoman, I'd like to raise one thing. 14 Board Member D'Adamo has noted that she did not 15 participate on this item last month because of a conflict 16 and she is not going to participate today. However, this 17 is solely -- and we won't have a quorum. But this is 18 solely an informational item. We're not asking action for 19 the Board. 20 ACTING CHAIRPERSON RIORDAN: No. And we realize 21 that. 22 Other than to affirm, without a vote, Supervisor 23 DeSaulnier's chairmanship. I mean he -- 24 (Laughter.) 25 ACTING CHAIRPERSON RIORDAN: -- keeps trying to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 369 1 dodge this, and it's not going to be dodged. 2 But I'm sure that is in the scope there. 3 Thank you. And -- 4 BOARD MEMBER DeSAULNIER: Somehow I'll get out of 5 this. 6 (Laughter.) 7 ACTING CHAIRPERSON RIORDAN: No, no, no. 8 BOARD MEMBER DeSAULNIER: No, no. I'll be happy 9 to. 10 ACTING CHAIRPERSON RIORDAN: Questions for staff. 11 Any questions at this time? 12 All right. We have some persons who wish to 13 speak on this item. 14 Of course I would -- let's see. Do I have a 15 list? Do I? Where? 16 I have buried the list. Sorry about that. 17 Barbara Lee, Dennis Gage, Barry Wallerstein, Tom 18 Addison, and Larry Greene, you'll start, right? 19 Okay. And if you really want to make points -- 20 MS. LEE: Good evening, Madam Chairwoman and 21 members of the Board. Barbara Lee on behalf of the 22 California Air Pollution Control Officer's Association. 23 Very happy to have been working with staff on 24 getting to consensus on these guidelines. They have 25 addressed our concerns. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 370 1 We look forward to working with Supervisor 2 DeSaulnier on the surplus problem. It is very important. 3 Thank you very much. 4 ACTING CHAIRPERSON RIORDAN: Thank you. Thank 5 you. 6 (Applause.) 7 ACTING CHAIRPERSON RIORDAN: Perfect. We thank 8 you, Barbara Lee. 9 Dennis Gage. 10 MR. GAGE: Thank you, Madam Chair, Board members. 11 I don't think I could match that. But certainly -- 12 ACTING CHAIRPERSON RIORDAN: I don't think you 13 can either. 14 MR. GAGE: Certainly I commend staff on trying to 15 develop a plan for surplus. I think that the surplus 16 versus mandatory issue is much bigger for Carl Moyer than 17 many recognize. And last November when you met on this 18 topic, we discussed the fact that really the mission of 19 mandatory programs is to of course effect some sort of 20 clean air. And to limit Carl Moyer to areas of surplus I 21 think is really detrimental. 22 I'd also like to add a couple of things that 23 we've discussed here today. And that includes the fact 24 that our board will not -- or generally will not commit 25 future funds for any type of project. They don't believe PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 371 1 in spending future years' money for programs, including 2 retrofit programs. And so we need programs that will 3 assist us in funding these types of things, whether it be 4 Carl Moyer or elsewhere. 5 I've been stuck at an 18-month federal process 6 trying to get congestion mitigation air quality money for 7 fleet modernization. I've also been denied Carl Moyer 8 money because we don't travel far enough with our 9 vehicles. 10 So that's part of the continued public fleet 11 problem, as well as what we've discussed today. 12 Thank you very much. 13 ACTING CHAIRPERSON RIORDAN: Thank you very much. 14 Barry Wallerstein. 15 DR. WALLERSTEIN: Good evening. I just would 16 like to say thank you to the staff and the Board for the 17 clarifications. And we too look forward to working on the 18 surplus issue, which is so critical to our district. 19 ACTING CHAIRPERSON RIORDAN: Great. Thank you. 20 Tom Addison. 21 MR. ADDISON: I'll be fast. I can't be quite 22 that fast, I don't think. 23 Tom Addison with the Bay Area Air Quality 24 Management District. 25 We also appreciate the changes that were made as PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 372 1 recently as earlier this week. Some of those issues 2 addressing the whole payback provisions we think were very 3 sound to modify. 4 Just a couple of thoughts. The Carl Moyer 5 guidelines that you have before you are, to understate 6 things, rather voluminous. They are substantial, they are 7 complex. And their intentions are absolutely good. 8 They're trying to make sure that the program is well run, 9 is getting the emission reductions it needs to. 10 Because they are in fact voluminous and they're 11 new and their of level of complexity has increased 12 substantially, the review that will happen is very 13 important, because we want to make sure that the program 14 is working and that folks who need to apply for these 15 funds who may not have the sophistication of companies 16 with on-board environmental staff, we need to make sure 17 that those people are actually getting the funds that they 18 need to. 19 And we also need to make sure that your staff 20 work with us as they have in a cooperative, collaborative 21 way to make sure that the administration of this program 22 is reasonable. 23 So we are counting on your capable staff to be 24 reasonable in their implementation of this program. And I 25 just want to lay that out for you. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 373 1 And we're also looking forward to working through 2 some of the remaining issues in the work group with the 3 Supervisor starting I think December 19th. 4 So that's where we are. We appreciate the 5 changes, think they're quite helpful. And just wanted to 6 highlight some looming issues. 7 ACTING CHAIRPERSON RIORDAN: Okay. And we 8 appreciate that. And I understand, because there are 9 levels of sophistication in seeking these monies. And we 10 need to do everything we can to help people access that. 11 And I think we are trying very hard to assist the local 12 districts. 13 Larry Greene. 14 MR. GREENE: Larry Greene with Sacramento Air 15 District. Madam Chair. 16 I'm just wanting to say that Barbara -- I can't 17 match that either. I concur with her comments. 18 I do want to personally thank the staff for 19 working hard with us over the last couple of weeks to 20 bring some significant issues to ground that were very 21 important to the districts. We are fully in concurrence 22 with the changes that were made. 23 Two other things. We will work on that committee 24 Supervisor DeSaulnier is chairing. We think that's very 25 important. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 374 1 And as Tom mentioned, the small guys out there 2 have the dirtiest vehicles. And we have to be sure we 3 have a system that will get them in through the door and 4 get those smaller guys with the dirty vehicles in and we 5 can change those out. So that's very important to us. 6 And looking at how that works in the system will be very 7 important over the next number of months. 8 Thank you. 9 ACTING CHAIRPERSON RIORDAN: Thank you, Larry. 10 Todd Campbell, followed by Martin Schlageter, 11 Richard Teebay, and Bob Johnson. 12 Todd. 13 MR. CAMPBELL: Good evening, Madam Chair, members 14 of the Board and Chairman DeSaulnier. 15 I wanted to just -- 16 BOARD MEMBER DeSAULNIER: -- getting you -- 17 MR. CAMPBELL: -- really quickly highlight some 18 of the concerns we have. 19 You know, as you know, we're big fans of the Carl 20 Moyer program. But we were concerned about the comments 21 from the Western States Petroleum Association last week -- 22 last month with regards to making this program a SIPable 23 program. The reason why we're concerned is that this 24 program's always been one that's been dedicated towards 25 advancing the cleanest technologies and helping them gain PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 375 1 market penetration and also help the Air Resources Board 2 staff to actually move into tighter rules. 3 The second issue that we had -- and I personally 4 have in my other life -- is we really wish that we would 5 avoid penalizing regional or local decision makers that 6 are trying to be -- or trying to do the right thing. 7 And one thing I just want to point out here, you 8 know, just -- I read this when I came up -- is, you know, 9 it states here in the reduction plan for the goods 10 movement that successful implementation of the Air 11 Resources Board's Emission Reduction Plan will depend on 12 actions at all levels of government and partnership with 13 the private sector, and that several local entities are 14 pursuing elements of emissions reduction -- of the 15 emissions reductions plan through their own ordinances, 16 regulations, lease agreements, environmental mitigation 17 requirements and voluntary efforts. 18 Staff expects all those activities to continue. 19 And I would submit they will continue if they're eligible 20 for the Carl Moyer program. And certainly I hope to -- 21 and I communicated this to many Board members -- that I 22 would hope to actually become part of Chairman 23 DeSaulnier's task force in the coming weeks. 24 Finally, there's something that we just don't 25 understand, and we're hoping that maybe staff could help PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 376 1 us out with, in terms of a technical basis. Tables B-6 2 and Tables B-7, for whatever reason -- and I don't 3 understand them -- they reflect emission standards that no 4 longer are actually being implemented, particularly for 5 diesel. Also the charts -- these two charts describe 6 diesel urban bus emissions and natural gas bus emissions. 7 They don't show ROG or -- or at least they're not parallel 8 charts. And if you look at them, it almost looks like 9 diesel's cleaner than natural gas for several more years. 10 And it's just not true. 11 So it's confusing for us, and we'd like to 12 understand that better. 13 ACTING CHAIRPERSON RIORDAN: Well, what you can 14 do is, right after this, just take a minute and I'm sure 15 they'll meet with you and go over that. Okay? 16 MR. CAMPBELL: Well, it would be helpful to have 17 some sort of written response because -- 18 ACTING CHAIRPERSON RIORDAN: Oh, you want a 19 written response? 20 MR. CAMPBELL: And we submitted this letter as 21 well to the Air Resources Board. 22 ACTING CHAIRPERSON RIORDAN: Well, that's fine. 23 We'll do a written response. 24 MR. CAMPBELL: Because our -- also our grant 25 writers need to understand how that works. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 377 1 ACTING CHAIRPERSON RIORDAN: Right. 2 Let's see if I'm on here. 3 Okay. Martin. 4 MR. SCHLAGETER: Martin Schlageter, Coalition for 5 Clean Air. 6 A quick expression of concern in our 7 understanding of the revision here on Carl Moyer is that 8 it seems to not allow the regional districts to go above 9 and beyond regulations that are here at the Air Board. 10 So Carl Moyer has historically been used to go 11 above and beyond the regulations. And we -- I'm concerned 12 about that. I'm concerned about -- and we'll seek the 13 process that you set up for some clarification on that. 14 And so I'm looking forward to greater clarification. 15 Thank you. 16 ACTING CHAIRPERSON RIORDAN: All right. Richard 17 Teebay. 18 MR. TEEBAY: Madam Chair and members of the 19 Board, once again the disclaimer, I'm not representing Los 20 Angeles County's Department of Public Works on this 21 matter. 22 I had submitted written comments in November and 23 I was disappointed to hear they were not incorporated in 24 the Moyer program. And I'm here to lobby once again for 25 that -- for a specific inclusion. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 378 1 We heard today from the rural counties, who are 2 very strapped for cash and very hard pressed. What I am 3 asking, what I am seeking is that they be included as a 4 targeted group in the Chapter 2 section. And specifically 5 what this would do is stretch the timeframe from three 6 years to five years, which would improve their ability to 7 prove that they're cost effective. 8 Bottom line, what I'm talking about is Penske, 9 Hertz or Ryder cycles their trucks every three to five 10 years. If you could take the drive freight body off of 11 that truck, you could put awe four or five yard dump body 12 on that truck and then retrofit it with best available 13 technology. That would become a compliant vehicle. And 14 it would be well within I think the spirit of Moyer and it 15 would -- and that's what I'm talking about. 16 It would enable these rural counties that don't 17 have the funds to be able to fund replacement equipment. 18 And I guarantee you whatever they -- whatever small amount 19 of money they spend in a year or two will be more than 20 reimbursed in their fuel costs and their maintenance 21 costs. 22 So I would ask that you would include the public 23 agencies and also the schools districts in the rural and 24 most remote areas, where they could take advantage of the 25 cycled school buses that are coming out of like the inner PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 379 1 cities for the contractors from L.A. that cycle their 2 buses every five to seven years. 3 Thank you very much for allowing me to speak. 4 ACTING CHAIRPERSON RIORDAN: You're welcome. 5 Is this something, staff, that can be taken up at 6 the committee? 7 ALTERNATIVE STRATEGIES SECTION MANAGER NEGRETE: 8 Lucina Negrete. 9 We did take care of the rural districts. We are 10 going to give them a -- the low population counties a 11 five -- they're in the five-year targeted vocation for 12 fleet modernization. So we did take care of that. 13 As far as the school buses, we are evaluating a 14 fleet modernization for school buses. And we're going to 15 be meeting with San Joaquin and stakehold -- interested 16 stakeholders, and we'll be reporting back in February on 17 that. 18 ACTING CHAIRPERSON RIORDAN: Okay, fine. Thank 19 you very much. 20 Bob Johnson. 21 MR. JOHNSON: Boy, am I glad to hear that 22 information for the fleet modernization. That's extremely 23 important to all the rural counties. And it's almost like 24 a Christmas present. 25 In the same regard, I'm putting a proposal to you PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 380 1 to support legislation that would raise VLF a few dollars 2 per air pollution control districts and have the funding 3 dedicated to public fleets for this compliance. We're 4 looking for funds. It makes sense that something like 5 this is targeted for the public fleets so that, you know, 6 there's another chance of getting some match monies in 7 there. 8 We're going to try to do some legislative work to 9 get this through. And I would sure like to see the Board 10 and staff as well try to support some legislation to try 11 to help in this funding crunch that we have. It may be a 12 possible solution that really helps the whole district in 13 itself and it helps the rural counties -- or it helps most 14 of the counties. 15 So with that, I would hope that you would help us 16 support that type of legislation. 17 By the way, I'm a farmer. I raise a hundred 18 cows. 19 (Laughter.) 20 MR. JOHNSON: And I'm still looking for the BACT 21 to retrofit them. 22 ACTING CHAIRPERSON RIORDAN: Ms. Witherspoon, do 23 you want to comment on how we go about -- 24 EXECUTIVE OFFICER WITHERSPOON: Quite 25 circumspectly. The Schwarzenegger Administration is very PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 381 1 supportive of the Carl Moyer program and was the first to 2 provide permanent funding at a substantial level, and at 3 the time the 140 million was under consideration 4 understood our needs. We're double that, and do have a 5 commitment to come back around. But what we're unable to 6 comment on is when or through what funding source. And 7 that would be decided within the Governor's office itself. 8 And so, you know, we can certainly support in 9 concept but not support in specifics the notion of 10 expanding Carl Moyer. 11 ACTING CHAIRPERSON RIORDAN: Thank you very much. 12 All right. That concludes those who wish to 13 speak on this particular item. 14 We have one other item left, which is open 15 comment period. 16 BOARD MEMBER PATRICK: Madam Chairman? 17 ACTING CHAIRPERSON RIORDAN: Yes. 18 BOARD MEMBER PATRICK: Before we go on to that, 19 may I just thank Jack and his staff for being so willing 20 to meet with the Valley Air District and other interested 21 air districts on this school bus issue. It's real 22 important to us because we have so many really old ones. 23 And they just really embraced sitting down and talking to 24 folks. And, you know, who knows what will come in the 25 future, whether you'll be able to come to some kind of an PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 382 1 agreement or not. But I really appreciate that you were 2 so willing to do that. 3 And I don't think I said that last time. And so 4 if I did not, I was remiss. Thank you very much. 5 ACTING CHAIRPERSON RIORDAN: Thank you, 6 Supervisor Patrick. 7 And there are some very special issues in certain 8 of the regions, and we need to understand all of them. 9 Barry Wallerstein, under public comment. 10 DR. WALLERSTEIN: Thank you, Madam Chairman, 11 members of the Board. I'll be brief. 12 In early 2003 my board directed me to seek a 13 board-to-board retreat between our organizations. And 14 several times since then by motion of the board, they've 15 directed me to seek such a retreat. And we've 16 communicated that in writing to the Air Resources Board on 17 numerous occasions. So I'm before you this evening, 18 because I suspect my board shortly will be asking me about 19 this again, to request such a retreat as soon as we can 20 after the first of the year, so that our boards can talk 21 about our priorities, our mutual interests, and our 22 approaches so that we can work more cooperatively together 23 at the state and local level. 24 And if there's some unforeseen reason or unknown 25 reasons to us, I would at least appreciate a written PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 383 1 response so that the board knows why this Board can't have 2 a retreat with the South Coast District. 3 ACTING CHAIRPERSON RIORDAN: Well, I think we can 4 certainly have a retreat. And we probably were waiting 5 for a permanent chairman, which I think is very important. 6 And hopefully that will happen sooner than later. 7 EXECUTIVE OFFICER WITHERSPOON: That's exactly 8 right. In 2003 we had a recall and weren't sure who the 9 Chair or Board members were going to be. And then we've 10 been through quite a bit of disruption this year. 11 And as soon as we have a permanent Chair, I think 12 that's when it's important to take up. 13 Can't make any promises about timing either 14 though because one of the first orders of business with a 15 new Chair is to discuss scheduling matters for the whole 16 year and many special items that have to get calendared. 17 But we would certainly make the new Chair aware of that 18 and -- 19 ACTING CHAIRPERSON RIORDAN: And I think -- can 20 we get -- that's a perfect time to talk about this, 21 Catherine, to a new permanent Chair and make that person 22 aware that the request is here, it's been an ongoing 23 request. And we probably should have been more formal in 24 getting back to you. 25 But I really feel that -- you know, it's PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 384 1 difficult to do when you have an interim chairman. And in 2 theory we were -- we always kept hoping for the next month 3 there would be a permanent chairman, permanent chairman, 4 and that just didn't happen. And I'm thinking they are 5 motivated at this point. 6 DR. WALLERSTEIN: I just want to emphasize, this 7 has been a three-year request and -- 8 ACTING CHAIRPERSON RIORDAN: Except I've been 9 here over a year. 10 DR. WALLERSTEIN: And, Madam Chair, you received 11 a letter in July after my board last adopted a resolution 12 requesting such a meeting. 13 BOARD MEMBER DeSAULNIER: The problem is the last 14 permanent Chair didn't want to meet with you. But we'll 15 hope that the next one will. 16 (Laughter.) 17 ACTING CHAIRPERSON RIORDAN: We understand. 18 Okay. Mr. Campbell. 19 MR. CAMPBELL: Just real quickly, because I 20 would -- 21 ACTING CHAIRPERSON RIORDAN: Really quick. 22 MR. CAMPBELL: -- feel bad not mentioning this 23 flying home. 24 I just want to be very clear that the Table B6 25 and 7 that I raised in terms of the Carl Moyer program PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 385 1 guidelines, if they are incorrect, they should be 2 corrected before those guidelines are finalized, because 3 it's very misleading in terms of the emissions. 4 So I just wanted to make sure that was very 5 clear. And now I can fly home. 6 Thank you so much. 7 ACTING CHAIRPERSON RIORDAN: Yes, Yes. All 8 right. 9 Colleagues, I want to wish you all happy 10 holidays. 11 To the staff and -- very happy holidays. And 12 hopefully you'll get a bit of a rest. 13 And to the audience, the happiest of holidays. 14 And I hope you have a safe trip home. 15 And we'll see you in 19 -- 19? -- 2006. Gosh, 16 I'm going backwards. 17 At this late date, that's probably what we should 18 do, go backwards. 19 (Thereupon the California Air Resources 20 Board meeting adjourned at 6:15 p.m.) 21 22 23 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 386 1 CERTIFICATE OF REPORTER 2 I, JAMES F. PETERS, a Certified Shorthand 3 Reporter of the State of California, and Registered 4 Professional Reporter, do hereby certify: 5 That I am a disinterested person herein; that the 6 foregoing California Air Resources Board meeting was 7 reported in shorthand by me, James F. Peters, a Certified 8 Shorthand Reporter of the State of California, and 9 thereafter transcribed into typewriting. 10 I further certify that I am not of counsel or 11 attorney for any of the parties to said meeting nor in any 12 way interested in the outcome of said meeting. 13 IN WITNESS WHEREOF, I have hereunto set my hand 14 this 29th day of December, 2005. 15 16 17 18 19 20 21 22 JAMES F. PETERS, CSR, RPR 23 Certified Shorthand Reporter 24 License No. 10063 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345