MEETING BEFORE THE CALIFORNIA AIR RESOURCES BOARD BOARD HEARING ROOM CALIFORNIA AIR RESOURCES BOARD 2020 L STREET SACRAMENTO, CALIFORNIA THURSDAY, MARCH 27, 1997 9:10 A.M. Nadine J. Parks Shorthand Reporter PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 ii MEMBERS PRESENT John D. Dunlap, III, Chairman Lynne Edgerton William Friedman, M.D. M. Patricia Hilligoss Jack C. Parnell Ron Roberts James W. Silva Staff: Michael Kenny, Executive Officer Mike Scheible, Deputy Executive Officer Kathleen Walsh, General Counsel Jim Schoning, Ombudsman Peter Venturini, Chief, Stationary Source Division Don Ames, Assistant Chief, SSD Genevieve Shiroma, Chief, Air Quality Measures Branch, SSD Dean Simeroth, Criteria Pollutants Branch, SSD John Courtis, Manager, Fuels Section, SSD Ray Menebroker, Chief, Project Assessment Branch, SSD Michael Tollstrup, Manager, Project Support Section, SSD Peggy Taricco, SSD Ed Wong, SSD Tony Brasil, SSD Bob Jenne, Senior Staff Counsel Tom Jennings, Staff Counsel Michael Terris Senior Legal Counsel Patricia Hutchens, Clerk of the Board Wendy Grandchamp, Secretary Bill Valdez, Administration Services Division PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iii I N D E X PAGE Proceedings 1 Call to Order 1 Pledge of Allegiance Led by Supervisor Silva 1 Roll Call 1, 2 Opening Remarks by Chairman Dunlap 2 AGENDA ITEMS: 97-2-1 Public Hearing to Consider Adoption of Proposed Amendments Pertaining to Hairspray in the California Consumer Products Regulation Introductory Remarks by Chairman Dunlap 3 Staff Presentation: Michael Kenny Executive Officer 5 Ed Wong Stationary Source Division 7 Questions/Comments 18 Jim Schoning Ombudsman 22 Questions/Comments 24 PUBLIC COMMENTS: Tom Donegan CTFA 30 Jim Bachman DuPont 35 Questions/Comments 37 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iv INDEX, continued. . . PAGE AGENDA ITEMS: 97-2-1 George Brown National Aerosol Association 41 Michael Thompson Chemical Specialties Manufacturers Association, Inc. 44 Questions/Comments 47 Entry into Record of Written Comments 48 Questions/Comments 49 Record on 97-2-1 officially closed by Chairman 50 Disclosure of Ex Parte Communications 51 Closing Comments by Chairman 53 Motion by Parnell to Approve Resolution 97-14 54 Board Action 55 97-2-2 Public Hearing to Consider Amendment to Limit on Propene Content of Liquefied Petroleum Gas Intended for Use in Motor Vehicles Introductory Remarks by Chairman Dunlap 55 Staff Presentation: Michael Kenny Executive Officer 56 Tony Brasil Stationary Source Division 57 Jim Schoning Ombudsman 63 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 v INDEX, continued. . . PAGE AGENDA ITEMS: 97-2-2 PUBLIC COMMENTS: William Platz WPGA 65 Questions/Comments 67 Glenn Keller EMA 69 Questions/Comments 72 Alex Spataro Adept Group 83 Entry of Written Comments into Record 92 Record on 97-2-2 Officially Closed by Chairman 93 Closing Comments by Chairman 93 Motion by Parnell to Approve Resolution 97-15 95 Board Action 95 97-2-3 Public Hearing to consider Adoption of Proposed Regulation to Establish Statewide Portable Equipment Registration Program Introductory Remarks by Chairman Dunlap 96 Staff Presentation: Michael Kenny Executive Officer 97 Michael Tollstrup Stationary Source Division 99 Jim Schoning Ombudsman 112 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 vi INDEX, continued. . . PAGE AGENDA ITEMS: 97-2-3 Questions/Comments 114 PUBLIC COMMENTS: Michael Lewis Construction Industry Air Quality Coalition 115 Robert Shepherd PSA 122 Questions/Comments 124 Frank Caponi L.A. County Sanitation Districts 128 Barbara Lee CAPCOA 130 Questions/Comments 135 Randal Friedman U.S. Navy 143 Doug Allard Santa Barbara APCD 147 Questions/Comments 151 Dan Mullen NASA Dryden Flight Research Center 154 Questions/Comments 156 Edric Guise PS Enterprises 158 Questions/Comments 160 Catherin Reheis WSPA 161 Glenn Keller EMA 164 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 vii INDEX, continued. . . PAGE AGENDA ITEMS: 97-2-3 Terry Elllis Gary Drilling co. 165 Questions/Comments 169 Ross Kauper Lake County AQMD 171 Doug Van Allen BJ Services 174 Larry Miller Halliburton Energy Services 176 Entry of Written Comments Into Record 178 Record Officially Closed 184 Ex Parte Communications 185 Discussion 186 Motion by Silva to Adopt Resolution 97-17 197 Board Action 197 Adjournment 198 Certificate of Reporter 199 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 1 1 P R O C E E D I N G S 2 --o0o-- 3 CHAIRMAN DUNLAP: Will this, the March meeting of 4 the California Air Resources Board, please come to order. 5 Supervisor Silva, will you please lead us in the 6 Pledge of Allegiance? 7 SUPERVISOR SILVA: Please join with me in saluting 8 the flag that represents the United States of America. 9 (Thereupon, all persons in the Hearing 10 Room recited the Pledge of Allegiance.) 11 CHAIRMAN DUNLAP: Thank you, Jim. 12 Pat, will you please call the roll? 13 MS. HUTCHENS: Calhoun? 14 Edgerton? 15 MS. EDGERTON: Here. 16 MS. HUTCHENS: Friedman? 17 DR. FRIEDMAN: Here. 18 MS. HUTCHENS: Hilligoss? 19 MAYOR HILLIGOSS: Here. 20 MS. HUTCHENS: Parnell? 21 MR. PARNELL: Here. 22 MS. HUTCHENS: Riordan? 23 Roberts? 24 SUPERVISOR ROBERTS: Here. 25 MS. HUTCHENS: Silva? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 2 1 SUPERVISOR SILVA: Here. 2 MS. HUTCHENS: Chairman Dunlap. 3 CHAIRMAN DUNLAP: Here. Thank you. 4 I'd like to make a couple brief announcements 5 before we get into the first agenda item. 6 First, we are announcing today the installation of 7 a new system in the Board hearing room to broadcast hearings 8 over the AT & T telephone system. We're using that system 9 to enable staff at our El Monte facility to hear the 10 proceedings here today. 11 Before the hearing is started, a call is made over 12 the new system to AT & T, and they set up a conference 13 session that telephone lines can call into via an 800 14 number. The system is integrated with the existing P.A. 15 system, and I understand the sound quality is quite good 16 over the telephone. 17 So, we welcome El Monte to our Board meeting 18 today, and hope the system works well, as well as 19 anticipated. 20 I'd like to share with my colleagues on the Board 21 and those in the audience that are interested about a letter 22 I received earlier this week that I found quite interesting 23 and gratifying to read. 24 It was a letter from a woman in the Chico area 25 regarding one of our staff here at the Board. Last winter, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 3 1 her ten-year-old son was interested in doing a science 2 project on an air quality issue. After reading one of our 3 bulletins on the subject, she eventually connected with 4 Michael Poore, who is a chief chemist with our Air 5 Monitoring and Laboratory Division. 6 She and her son called upon Mr. Poore several 7 times and found him to be extremely helpful and patient. 8 Eventually, her son's project won first place for his grade 9 at the Chico Science Fair. 10 And Michael Poore's the kind of ARB employee who 11 went out of his way to be helpful. And I'm sure he never 12 entertained the thought that she would write a letter to me 13 and I would mention his name today. But I'm proud to point 14 out how responsive and service-minded Michael Poore and 15 other ARB staff members are. 16 Michael is truly an unsung hero, who I applaud for 17 going above and beyond his regular duties. And I want to 18 thank him for a job well done. 19 So, Mr. Kenny, it appears your staff has come 20 through once again. 21 All right. That'll take us to the first item 22 today, Agenda Item 97-2-1. I would like to remind those of 23 you in the audience who would like to present testimony on 24 any of today's agenda items to please sign up with the Clerk 25 of the Board. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 4 1 If you have a written statement, please give 20 2 copies to the Clerk of the Board as well. 3 The first item is a public hearing to consider 4 adoption of proposed amendments pertaining to hairspray in 5 the California Consumer Products Regulation. These 6 amendments were necessitated by a technical assessment that 7 was conducted by our staff over the past year and a half. 8 Several months ago, the U.S. EPA approved our 9 State Implementation Plan, or SIP, for ozone, which is our 10 blueprint for improving the air quality in California into 11 the next century. 12 The reduction of VOC emissions from consumer 13 products is a central element in California's commitment to 14 attain the State and Federal ambient air quality standards. 15 To date, the Board has adopted rules that reduce VOC 16 emissions from 27 categories of consumer products, including 17 hairsprays, and 35 categories of aerosol coatings. 18 The hairspray category is extremely important. 19 Hairsprays are the single largest source of consumer product 20 VOC emissions. Likewise, the VOC reductions from hairsprays 21 are the largest source of consumer product reductions 22 claimed in our State Implementation Plan. 23 The first consumer products regulation was adopted 24 in 1990, and included a two-tier standard for hairsprays. 25 At that time, the Board directed the staff to work closely PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 5 1 with industry to address implementation issues, and return 2 to the Board with any necessary modifications. 3 In '93, hairspray manufacturers met the first tier 4 limit on time. And more recently, hairspray manufacturers 5 have brought to our attention issues which they believe 6 warrant a delay inn the second tier limit for hairspray, 7 which goes into effect January 1st, 1998. 8 Since this issue was raised in October of '95, 9 staff has worked closely with industry reps and trade 10 organizations to evaluate the issue and to determine if 11 amendments to the hairspray standard were indeed warranted. 12 As a result of this effort, staff believes that 13 changes in the hairspray rules are needed and has prepared 14 some amendments which refine the rule, yet preserve the mos 15 important elements, which are the emission reductions 16 contained in our SIP. 17 After the staff's presentation, the Ombudsman will 18 address the staff's outreach efforts on this item. 19 So, at this point I'd like to ask Mr. Kenny -- and 20 say good morning to him -- to introduce this item. 21 Mike? 22 MR. KENNY: Thank you, Mr. Chair, and members of 23 the Board. The consumer products regulation has been in 24 effect now for about five years. As you know, it's a major 25 component of our strategy to reduce volatile organic PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 6 1 compound emissions in an effort to reduce ozone. 2 When the Board adopted the consumer product 3 regulation, it recognized that some of the future effective 4 standards, such as the 55 percent VOC standard for 5 hairspray, might be technology forcing and would present 6 reformulation challenges for the industry. Therefore, the 7 Board directed the staff at that time to closely monitor the 8 implementation of the measure and to return to the Board 9 with any amendments that might be warranted. 10 Over the past year and a half, staff has assessed 11 the progress in reformulation to meet the 55 percent 12 standard for hairsprays to determine if any changes were 13 necessary. Based on that assessment, we concluded that 14 manufacturers did need additional time beyond January 1st, 15 1998, to develop and bring a 55 percent VOC hairspray 16 product to the market. 17 Therefore, today, we are proposing some changes to 18 the rule. First, to address the commercial feasibility of 19 the standard, we are proposing to postpone the 55 percent 20 VOC standard for 17 months -- from January 1st, 1998 to June 21 1st, 1999. 22 This will provide the needed additional time for 23 manufacturers to develop consumer acceptable hairspray 24 products. Second, we are also proposing to require periodic 25 progress reports from the manufacturers during this period PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 7 1 from January 1st, '98 to June 1st, '99. This will assist us 2 in tracking progress toward compliance. 3 And third, we are proposing to modify the variance 4 provisions to require mitigation of excess VOC emissions 5 from manufacturers that are granted variances from the June 6 1st, 1999 standard. 7 In addition to these amendments, we are also 8 proposing to work with the industry over the next nine 9 months to develop and early reduction credit program to 10 reward those manufacturers who produce and sell 55 percent 11 VOC hairsprays prior to June 1st, 1999. 12 In summary, I'd like to emphasize that it is 13 essential that we maintain the emission reductions projected 14 in the original rulemaking and included in our SIP that was 15 approved by U.S. EPA. The above proposal not only addresses 16 these industry concerns that I've identified, but it also 17 preserves the SIP and the emission reductions. 18 With that, I would like to call upon Mr. Ed Wong 19 of the Stationary Source Division to present to you the 20 proposed amendments to the consumer product regulation that 21 pertain to hairspray. 22 Ed? 23 MR. WONG: Thank you, Mr. Kenny. 24 Chairman Dunlap, and members of the Board, as Mr. 25 Kenny mentioned, we are proposing amendments to the consumer PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 8 1 products regulation that will affect hairspray products. 2 These amendments are the result from a technical assessment 3 conducted over the past year and a half to see how 4 manufacturers were doing as they worked to develop low VOC 5 hairsprays. 6 I'll begin our presentation by providing a brief 7 background on the consumer products regulation and the 8 hairspray category. Next, I'll discuss our technical 9 assessment and the proposed amendments to the hairspray 10 category, followed by a discussion on the potential impacts 11 of the proposed amendments. 12 As you may remember, consumer products are a large 13 source of VOC emissions. With 265 tons per day of emissions 14 in 1990, they represent about 15 percent of the total 15 stationary source emissions. The California Clean Air Act 16 defines consumer products as products used by household and 17 institutional consumers. 18 This category includes many items we all use in 19 our homes, schools, and offices, such as cleaners, 20 hairsprays, and automotive products. 21 The ARB has regulated consumer products since 22 1988, when the Legislature passed the California Clean Air 23 Act. As noted here, special requirements must be met when 24 adopting consumer products regulations. 25 To date, we have taken many steps to comply with PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 9 1 the California Clean Air Act mandate, beginning with the 2 adoption of the antiperspirants and deodorants regulation in 3 1989, to the planned hearing for the midterm measures 4 categories this summer. 5 The consumer products element is a key component 6 of the SIP and is important in meeting the Federal air 7 quality ozone standard. This element is a multifaceted 8 program comprising near-term, midterm, and long-term 9 measures which will be implemented over the next 15 years. 10 Overall, we expect 85 percent emission reduction in 11 emissions from these measures. 12 The near-term measures provide about 30 percent of 13 the total emission reductions from our SIP commitment and 14 include the antiperspirants and deodorants regulation and 15 the Phase 1 and 2 consumer products regulation. These 16 regulations are now federally enforceable. 17 When the first consumer products regulation was 18 adopted, you determined that all the standards were 19 technologically and commercially feasible. You also 20 understood that the future effective standards posed 21 challenges for industry. 22 Because of its lower VOC limit, a future effective 23 standard cannot be met by the majority of manufacturers at 24 the time it is adopted. However, manufacturers may meet the 25 standard through new technologies not yet developed. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 10 1 Because future effective standards may be 2 technology forcing, they're often important tools to 3 encourage industry toward the development of lower VOC 4 products. However, even with good-faith efforts, a future 5 effective standard may not be met by its effective date. 6 Therefore, we have consulted with manufacturers on their 7 progress in meeting the standards, identifying any 8 significant problems, and proposing appropriate regulatory 9 modifications. 10 Thus far, we have conducted two technical 11 assessments on eight product categories with future 12 effective standards. These assessments were presented to 13 you in November, 1995 and 1996. 14 Today, we present our third technical assessment 15 pertaining to hairsprays. The hairspray category is the 16 single largest source of VOCs from consumer products, 17 responsible for about 46 tons per day of emissions, or about 18 17 percent of the total consumer product emissions in 1990. 19 As shown here, reductions in the emissions from 20 hairspray are achieved in two tiers. As a first tier, or 21 interim, the 80 percent standard became effective on 22 January 1, 1993, and has reduced hairspray emissions by 7 23 tons per day. 24 The second tier, or 55 percent future effective 25 standard, currently has an effective date of January 1, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 11 1 1998, and will reduce hairspray emissions by an additional 2 14 tons per day. 3 Now, our technical assessment process: To assess 4 manufacturers' success in meeting the 55 percent standard, 5 we conducted extensive outreach to he regulated community 6 and public. This process was initiated in October, 1995, 7 when several members from the Cosmetic, Toiletry & Fragrance 8 Association approached us with their concerns about their 9 ability to produce 55 percent VOC hairsprays by January 1, 10 1998. 11 Subsequent to that meeting, we worked to gather 12 information on the industry's efforts to comply with the 55 13 percent standard. This included over 140 meetings and calls 14 with manufacturers, distributors, and raw material suppliers 15 which, when combined, represent most of the hairspray 16 market. 17 Additionally, we held two public workshops, 18 discussions trade associations, and conducted reviews of 19 technical and patent literature. 20 What did we find? Manufacturers have expended a 21 significant amount of resources to develop a 55 percent 22 hairspray, and that numerous technology advances have 23 occurred that have furthered the understanding of low VOC 24 hairspray formulas. 25 However, despite their diligent efforts to date PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 12 1 and the technological advances, manufacturers need 2 additional time to produce a commercially viable product. 3 Even though manufacturers have had several years 4 to develop 55 percent formulas, it was only until recently 5 that the developments in resin technologies and the supply 6 of propellant systems have allowed the formulation of 7 realistic 55 percent prototype formulas. 8 Therefore, manufacturers need additional time to 9 further develop and refine prototype formulas using these 10 recent technologies. The additional time allows 11 manufacturers to completely address the characteristics that 12 are important to hairspray performance, such as initial curl 13 droop, curl retention, and dry time. Physical properties 14 that remain a challenge are such properties as the particle 15 size and stability. 16 Based on our findings, we are proposing amendments 17 to the consumer products regulation. We are proposing three 18 amendments to the consumer products regulation: 19 First, we are proposing to delay the effective 20 date of the 55 percent standard by 17 months to June 1, 21 1999. 22 Second, to help us monitor and track 23 manufacturers' progress toward compliance, we are also 24 proposing special reporting requirements for hairspray 25 manufacturers. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 13 1 And third, we are proposing to modify the variance 2 provision to require the mitigation of excess VOC emissions 3 generated during a variance period. 4 In addition to the proposed amendment, we are 5 proposing to develop an early reduction credit program, 6 which will provide credits to manufacturers if they comply 7 with the 55 percent standard early. We plan to develop this 8 program in the upcoming months and bring our final program 9 proposal for the Board's approval by the end of this year. 10 I will discuss this program in greater detail later in our 11 presentation. 12 We're proposing to delay the 55 percent standard 13 by 17 months to ensure that manufacturers can develop 14 commercially viable hairsprays. This delay provides 15 manufacturers the additional time needed too complete their 16 product development and testing, so their products meet 17 customer performance expectations. 18 The additional time is necessary to provide 19 product testing and refinement, converting these prototypes 20 into successful products. We believe that by June, 1999, 21 manufacturers will have developed 55 percent VOC hairsprays 22 that consumers will accept, and the market demand for 23 hairsprays will be met. 24 This proposed amendment will help the staff 25 monitor and track each manufacturer's progress to comply PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 14 1 with the June 1, 1999 deadline. Manufacturers will provide 2 the ARB with an initial compliance plan outlining the 3 specific steps that were taken completing their product 4 development. 5 Once the initial compliance plan is submitted, 6 manufacturers would then submit updates periodically until 7 June, 1999. We will work closely with manufacturers to 8 develop guidance materials to prepare these reports so that 9 the requirement will not unduly burden industry and will 10 provide the information that is truly needed. 11 We are proposing to modify the variance provision 12 to require manufacturers to mitigate excess VOC emissions 13 for any variances granted after May, 1999. This amendment 14 requires the manufacturer requesting the variance to submit 15 a plan with their variance application, demonstrating how 16 they will mitigate the VOC emissions generated during the 17 variance period. 18 In the event this requirement represents very 19 serious hardship on the applicant during the variance 20 period, the Executive Officer may determine the degree and 21 extent of mitigation. We plan to develop this guidance over 22 the next year, so that a manufacturer would know what to 23 expect should they need a variance after May 31st, 1999. 24 In addition to the three proposed amendments I 25 just discussed, we are also proposing to develop an early PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 15 1 reduction credit program that can be used by manufacturers. 2 Our goal is to provide an incentive for manufacturers to 3 come into compliance early and to reward those manufacturers 4 that do develop 55 percent VOC hairsprays prior to June, 5 1999. 6 We intend to work closely with manufacturers to 7 develop this program in the upcoming months, with one of our 8 main goals being to make this program as flexible as 9 possible. We plan to hold the first discussion meeting next 10 month and to bring a complete program proposal for the 11 Board's adoption later this year. 12 Next, I'll discuss some impacts of the proposed 13 amendments. With regard to the State Implementation Plan, 14 the ARB will still meet our SIP commitment for emission 15 reductions for consumer products. This is possible because 16 our SIP commitment relies on the reduction from the 55 17 percent standard beginning the 1999 ozone season. Since we 18 are only postponing the standard, the emission reduction 19 benefits will be preserved. 20 As required by the California Environmental 21 Quality Act, or CEQA, we must consider the potential 22 environmental impacts of any proposed regulation. Our 23 analysis has shown that postponing the 55 percent standard 24 will defer the VOC emission reductions by 17 months, which 25 may have an adverse environmental impact. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 16 1 However, under CEQA, other factors may be 2 considered. And if the Board finds overriding 3 considerations exist, we can proceed. In this case, we 4 believe there are considerations that override the adverse 5 environmental impacts. 6 First, postponing the 55 percent standards 7 provides additional time for manufacturers to comply and 8 ensures the commercial feasibility of the standard, 9 minimizing any adverse impacts in the marketplace. 10 And second, it assures that we are fulfilling the 11 requirements of State law, which requires that any standard 12 be technologically and commercially feasible. 13 If the amendments are approved, we will work with 14 industry and other interested parties in implementing the 15 amendments. First, we will work with industry to develop an 16 early reduction credit program allowing manufacturers to 17 obtain credits for early compliance. 18 We will cover various aspects of the program, 19 including the generation, use, and lifetime of credits, and 20 present our program proposals to the Board late this year. 21 The special reporting guidelines will ensure uniform and 22 simplify reporting of information, and specify only that 23 information which is necessary to monitor progress. 24 We plan to develop this guidance by late summer or 25 early fall of this year, so that manufacturers will be able PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 17 1 to prepare heir initial compliance plans by January 1, 1998. 2 Finally, we will develop variance guidelines by 3 early 1998, so manufacturers will know what to expect should 4 they need a variance after May 31st, 1999. 5 The amendments before you today ensure the 6 technological and commercial feasibility of the standard, 7 and encourages expeditious compliance while preserving our 8 SIP commitments. We believe these amendments strike a 9 balance between the competing interests of the various 10 stakeholders and will allow manufacturers the additional 11 time needed to fully develop and market viable hairsprays, 12 while ensuring that they continually put forth maximum 13 effort to comply with the 55 percent standard in an 14 expeditious manner. 15 We recommend that the Board approve the proposed 16 amendments pertaining to hairspray, and direct the Executive 17 Officer to work closely with all stakeholders to develop the 18 early reduction credit program and to develop the guidance 19 for the reporting requirements and VOC emissions mitigation. 20 This concludes our presentation. At this time, 21 we'd be happy to answer any questions you may have. 22 CHAIRMAN DUNLAP: Thank you very much. 23 Mr. Kenny, do you have anything to add? 24 MR. KENNY: Not at this time, Mr. Chair. 25 CHAIRMAN DUNLAP: Okay. Any questions of staff? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 18 1 Ms. Edgerton. 2 MS. EDGERTON: One of the things that has been 3 very interesting in this is to observe how diligently the 4 staff has worked with all parties to develop a compromise 5 that will hopefully keep us out of litigation and will also 6 ensure that we get the emissions reductions which we're 7 hoping to get. 8 An area of particular interest to me is the 9 proposed guidance, which the staff is going to develop, with 10 respect to mitigating measures if increases are asked -- 11 increase in time is asked. 12 I've read this part carefully. And what I'd like 13 to hear some comment on, if you have any yet, is the way 14 that the relative competitive position of the various -- 15 like chemicals such as 152A, and others which might do the 16 same thing -- the way that this guidance might be sure that 17 the relative position of any of these chemicals is not -- 18 the relative competitive position is not damaged. The 19 people who are -- who have advanced and who are ready are 20 not damaged by the people who are not ready, the 21 manufacturers who are not ready getting extra time, so that 22 they can be selling their product at an amount less than the 23 ones who have done the right thing. 24 In short, obviously, our purpose is to keep a 25 level playing field so that those people who do good do PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 19 1 well. Is there some thought into how to work that into the 2 guidance mitigation? 3 MR. KENNY: Well, I think the details of how we 4 would do that are something we still need to look at. The 5 general concept that we will be pursuing is to provide 6 really sort of a credit to those companies that are out in 7 front. 8 And for those companies that would need variances, 9 for example, after June 1st, '99, what we would do there is 10 to essentially require that they mitigate the emissions that 11 would be associated with the variance. 12 To the extent that there would be a mitigation 13 requirement associated with any variance, there would be, 14 obviously, a cost associated with that. And so that cost 15 associated with that offsetting emissions, would be designed 16 really to maintain a level playing field. 17 So, that would be sort of the conceptual approach 18 of how we would try to implement this. 19 MS. EDGERTON: Well, I'm glad to hear that. I 20 note here that a mitigation fee is a concept that's being 21 discussed. And the concept here, it says, the concept being 22 that the mitigation fee would be tied to the length of time 23 requested for the variance. 24 In that connection, I just want to comment that in 25 my study of this issue, it became clear to me that there was PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 20 1 a strong perceived economic advantage in terms of day-to-day 2 sales for those folks who -- manufacturers who did not want 3 to comply yet, because they are trying to develop their own 4 additive that they maybe patent, and they can make for less, 5 rather than buy somebody else's additive at a higher price. 6 That was my clear take on this issue. So, it 7 looked to me like people who were -- some of the 8 manufacturers who are getting more time are clearly making 9 more money every day they get more time. 10 I just want to be sure that -- if you agree or 11 disagree with that, I don't know. But I just want to be 12 sure that we look that issue directly in the face and make 13 sure that this mitigation fee is in someway tied -- you 14 consider tying that fee to the economic benefit they're 15 getting from delaying. 16 MR. KENNY: We have done actually some mitigation 17 fees in the past, and that was exactly the way that we 18 pursued it in the past with regard to assessing the 19 mitigation fee for the products that were put into the 20 marketplace that were not as costly to produce, for 21 example, as the products that complied with the existing 22 regulatory standards. 23 One of the things we're also trying to do here is, 24 with regard to providing for a credit program that the staff 25 will be developing over the next nine months, is really PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 21 1 providing sort of a benefit to those companies that come 2 into the marketplace early. Because what they'll be able to 3 do is essentially generate credits which can be used to 4 offset really any variances that would be offered or, in 5 fact, that ever did come to pass. 6 Those credits could essentially be purchased from 7 companies that were into the market early on. And so, there 8 would be a financial benefit to those companies that came in 9 early. And then credits could also be used in other 10 fashions, which we'll be looking at. 11 MS. EDGERTON: Well, thank you. In closing, I 12 think people are aware, I was very inclined -- tentatively 13 inclined to support staying with the January 1st, 1998 14 standard, because I think it is very difficult for companies 15 to plan in the midst of moving goal posts. And if one 16 company plans to meet it and actually meets it, and then 17 they find that we've moved the goal post -- 18 CHAIRMAN DUNLAP: Right. 19 MS. EDGERTON: -- so that some other company 20 doesn't have to make it, it's very tough. 21 I have been persuaded to support the compromise by 22 staff, and the wisdom of the Chairman and others. I do, 23 though, want to just put on the record that I'm quite 24 mindful of this as a tremendously important issue for all 25 regulatory agencies. I know all of us are. But I just PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 22 1 wanted to register it as something. And I wanted DuPont to 2 be sure to know that I appreciate very much your work to 3 develop 152A. 4 CHAIRMAN DUNLAP: Well, we're going to hear from 5 them. They're signed up on the witness list. I appreciate 6 those comments. 7 Let me do this. I'll come back to the Board 8 member questions, but let's hear from our Ombudsman, Jim 9 Schoning, to give us an overview about the rule development 10 or the amendment process, because it's important for us to 11 hear that. And I think it'll paint a picture, Lynne, for 12 you and others that have some concerns. 13 Jim? 14 MR. SCHONING: Good morning, Mr. Chairman and 15 members. 16 As you have heard already from staff, staff did 17 indeed roll up its outreach sleeves on this particular topic 18 that comes before you today by conducting more 140 19 teleconferences and meetings and two public workshops that 20 were quite extensive -- April 30, 1996, and October 1st, 21 1996. And they were very well attended as well. 22 Representatives were there from DuPont, from I.Q. 23 Products, from the Cosmetics, Toiletry & Fragrance 24 Association, from Redmond Products, and others representing 25 all aspects of the hairspray industry, including small PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 23 1 manufacturers and raw material suppliers, and were given 2 ample opportunity to participate actively in the development 3 of the this proposal which is before you. 4 Both a draft staff report issued on April 30, 5 1996, and the final staff report issued on February 7 of 6 this year, together with the workshops and Board hearing 7 notices, were sent to more 3,000 interested and affected 8 parties, and were made available over the Internet. 9 To evaluate California's manufacturers' capability 10 to meet the January, 1998 VOC standard, Stationary Source 11 Division staff contacted over 48 companies who manufacture 12 hairspray for sale in California, and ten companies that 13 produce the raw materials for that market. 14 The 48 hairspray companies which were contacted 15 represent more than 90 percent of the market share in 1990, 16 of which 16 companies are California based. 17 Staff worked with 18 manufacturers who submitted 18 written comments by responding in writing and meeting with 19 and/or holding private teleconferences to discuss 20 proprietary issues. 21 In conclusion, we believe staff conducted 22 exceptional outreach to the affected stakeholders, 23 identified all potential issues, and promoted the active 24 participation of all interested and affected parties for the 25 development of this proposal before you. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 24 1 CHAIRMAN DUNLAP: Thank you, Mr. Schoning. I 2 appreciate that. 3 Okay. Dr. Friedman. 4 DR. FRIEDMAN: Well, this is the second meeting I 5 have attended in which a proposal has existed for delaying 6 some action or some regulation. And I'm reminded that I 7 have the question here as I had when we discussed the South 8 Coast issue a few months ago. 9 And there's a piece of information that I, as a 10 physician, am missing. And I wonder, in the future -- and 11 this is not a negative comment about the proposal in front 12 of us -- but, in the future, if we could provide information 13 in the following way: 14 I would like to see some attempt made to quantify 15 the illness burden and the medical expensive burden imposed, 16 in this case, by the tons per day and the tons per year -- 17 that's something like 14 tons of emissions a day, and 7600 18 emissions over the course of the full 17 months. 19 I'd like to see some quantification of these 20 burdens which result from the 17-month delay in reducing the 21 VOC standard to 55 percent. And I think that the 22 quantification, however imprecise -- because it can't be 23 exact -- should provide us some range of illness prevalence 24 that's not going to be reduced and, in turn, that can be 25 converted into medical costs, which are increased as a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 25 1 result of that illness burden. I really think that that's 2 the point of what we're trying to do here with reduction in 3 pollution. 4 And I think that there are people, epidemiologists 5 and the like, who can create some models that can give us a 6 ball park notion of what it is we're imposing on the 7 population of California when we do these delays. 8 So, I would ask, if that's possible in the future, 9 that that be a piece of the equation that you all use to 10 allow us to make decisions. 11 Thank you. 12 CHAIRMAN DUNLAP: Mike, I'll be happy to give you 13 and your team an opportunity to comment on it, but I'd just 14 add: I appreciated Dr. Friedman's comment about however 15 imprecise, and appreciate this thorough understanding of 16 that element of trying to quantify such things. 17 But, Mr. Kenny, I certainly would support that -- 18 I'm sure my colleagues would as well -- for you to come up 19 with some relatively simple table with a brief narrative 20 that could be plugged in at any time. We're talking about 21 not just a delay, but any new rulemaking as well that we 22 could consider to serve as a reference point. 23 MR. KENNY: I agree. I think it's a good 24 suggestion. I think the simple question would be how we do 25 it, and we will basically make the effort to try to do it. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 26 1 DR. FRIEDMAN: Thanks. 2 CHAIRMAN DUNLAP: Yes, Mr. Parnell. 3 MR. PARNELL: If we're going to go down that path, 4 and I agree that it should be done, it also should include 5 any offsets. 6 On this particular issue, as I recall, there are 7 some offsets. Our original numbers that we extrapolated 8 from have been changed dramatically just by hairstyles. And 9 I would hope, if we're going to do this in a true sense, if 10 there are offsets, to demonstrate those as well as best we 11 can. 12 DR. FRIEDMAN: I agree. 13 MR. KENNY: And I think what we'll try to do is 14 basically take the latest information we have available to 15 us, both in terms of inventories and in terms of 16 consequences, and put that together in sort of -- and again, 17 I'm going to kind of copy the Chairman's language -- it 18 could be somewhat less than precise, but at least make the 19 effort of doing this. 20 CHAIRMAN DUNLAP: Yes. And on that point, Mike, 21 why don't you convene maybe a meeting with your epi staff 22 and others to run through this, so that you can present some 23 proposals to Dr. Friedman, and we can take it up at the next 24 Board meeting as an informational item at the end. 25 Also, a comment to follow up on Jack's comment PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 27 1 about hairstyles changing, I've noticed in the short time 2 I've been Chairman, some of the hairstyles of our staff have 3 changed as well. 4 (Laughter.) 5 CHAIRMAN DUNLAP: Some thinning of hair for some 6 of the management team in front. 7 MR. SCHEIBLE: I can attest that it's not simply 8 the fact that you're Chairman. 9 CHAIRMAN DUNLAP: Okay. 10 (Laughter.) 11 CHAIRMAN DUNLAP: Thank you for that. 12 Supervisor Roberts. 13 SUPERVISOR ROBERTS: I'm going to end that line of 14 comment, Mr. Chairman. 15 I want to express a concern, but I want to wait 16 until I hear the public testimony. But the notion of not 17 only delaying for 17 months, but then at this time signaling 18 that we're going to have some process for those of you who 19 don't make it after that delay, whereby you can continue to 20 do business as usual, except we'll have a mitigation fee, 21 kind of concerns me a little bit. 22 You know, it's one thing to have the delay, but 23 then to set up kind of an extension to the delay on top of 24 that -- a not just leveling the playing field with respect 25 to the dollars, there could be a difference in the products PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 28 1 themselves, where there might be an incentive that a company 2 might want to give it a level playing field with the 3 dollars, might want to continue using the same -- same 4 product because of the performance or something else of 5 that. 6 So, I have some concerns. And I don't know if the 7 action today was to automatically set the wheels turning for 8 an extension to the extension. I think we need to discuss 9 that. 10 CHAIRMAN DUNLAP: Okay. I will, if I might, we 11 have first up on the witness list Mr. Donegan from CTFA, 12 who's very well-versed. 13 Tom, if I could get you to come forward. And I 14 know you're going to say what you feel you need to say 15 anyways, but if you could address the obligation that we 16 have, Tom, in your view, for variances in your testimony in 17 a minute -- I'll come back to you, Mike. But if you'd do 18 that, Tom, I think it would illuminate things for Supervisor 19 Roberts. 20 Go ahead, Mr. Kenny. 21 MR. KENNY: Also in response to Supervisor 22 Roberts' question. I think one of the things that we're 23 trying to do is exactly the opposite. We're not trying to 24 send a signal that, in fact, it would be business as usual. 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 29 1 In fact, right now, the regulations do provide for 2 variances. What we would be doing today with the proposal, 3 if the Board adopted it, would be strengthening those 4 variance provisions such that, in fact, it is not business 5 as usual. 6 If a variance is necessary after June 1st, 1999, 7 the criteria associated with those variances are enhanced by 8 having these mitigation requirements for offsetting the 9 emissions increases. 10 In addition to that, variances are not essentially 11 open-ended. Variances have specific time frames associated 12 with them as a result of a company showing to us exactly how 13 much time they need to come into compliance with the 14 regulation. 15 The idea there is that if they cannot come in and 16 show due diligence with regard to what they have done up to 17 that particular point in time in trying to come into 18 compliance, they will not be able to get a variance. 19 If they can show due diligence, they are going to 20 have to specifically show us how much additional time they 21 precisely need and why they need that time. And even in 22 obtaining that specific amount of time, they'll have to 23 offset the emissions associated with that. 24 So the burden and the bar are quite high. And in 25 the past, when we've had variance processes in the fuels PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 30 1 arena, the costs have actually been quite high for 2 companies who obtain variances. And generally, what has 3 happened is that they've only been able to get the variances 4 for the minimum amount of time that was appropriate. 5 And they often will try to get off those variances 6 as fast as possible, because it costs them more money. So, 7 the signal we're trying to send is precisely the opposite 8 one. Variances are not business as usual. Variances are 9 the exception. And you really have to make a very solid 10 showing in order to obtain one. 11 CHAIRMAN DUNLAP: Right. And thank you for that, 12 Mike. The reason I called Tom up, Mike, so you didn't think 13 I was slighting you, was to get the industry take on how 14 tough it's going to be, so that he can convey that to Ron so 15 it doesn't look like it's some kind of a giveaway. 16 So, with that, are we okay? We'll move to the 17 witnesses? 18 Okay. Tom, before you begin, Jim Bachman of 19 DuPont, if you'd queue up, sir, and follow Tom? Followed by 20 George Brown, National Aerosol Association, and Michael 21 Thompson, Chemical Specialties Manufacturers Association, 22 Inc. Those are the only four witnesses we have. 23 Good morning. 24 MR. DONEGAN: Okay. Good morning, Chairman Dunlap 25 and members of the Board. Tom Donegan, I'm General Counsel PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 31 1 of the Cosmetics, Toiletry & Fragrance Association, or CTFA. 2 And we're a national trade association that represents the 3 personal care product industry. 4 Let me just address your question right away, 5 Supervisor Roberts, to make sure we don't let it slip. And 6 that is, agreeing with what Mr. Kenny has said, we view the 7 standards for a variance to have been increased. It's going 8 to be tougher to get a variance under this regulation than 9 it has been in the past, because it's clear that guidelines 10 are going to be developed over the next several months. We 11 don't know exactly what those are going to be just yet. But 12 those guidelines will have to be complied with in order to 13 get a variance if a company deems a variance to be 14 necessary. 15 Most important, let me just underscore by saying 16 that the industry views the revised deadline as the target. 17 And we're here to pledge our good-faith effort to come up 18 with reformulated products by June 1, 1999. We're not 19 looking ahead to the next step. We just think it's 20 important, because there's so many things in the research 21 and development process that are unknowns that can happen, 22 particular to smaller companies that don't have the 23 resources. 24 We think it's important that there is a process 25 available for someone to pursue if they run into trouble. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 32 1 But our goal is to get there and not to say this is -- we're 2 automatically moving on to the next step. 3 Let me just tell you a little bit about CTFA. 4 CTFA has over 550 corporate members. Approximately one-half 5 of those are manufacturers and distributors of personal care 6 products, including hairsprays -- obviously the issue here. 7 The other half of our membership -- and this is 8 very important in this context of this product category -- 9 is comprised of suppliers of goods and services to the 10 personal care product industry. And this includes suppliers 11 of raw materials, suppliers of aerosol propellants, and 12 supplies of packaging for aerosol products and others, and 13 suppliers of resins, which are another important component 14 in this effort to get to a 55 percent product. So, we 15 represent that diverse set of interests, and not just the 16 manufacturers. 17 Many of our members in all of those sectors have a 18 very strong interest and investment in the continued 19 vitality of the market for hairsprays in California. 20 Representatives of companies with somewhere around 90 21 percent of the market share of hairsprays have participated 22 in this process with CTFA, and have worked with the staff 23 to try to find a viable compromise to enable us to get 24 commercially and technologically feasible products on the 25 market. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 33 1 These companies have a very large and a very 2 long-term investment in their brand names and in fulfilling 3 the consumers expectation for an effective product. At the 4 same time that we must protect the integrity of our 5 products, we recognize our obligation to do our part to help 6 California achieve cleaner air at the earliest possible 7 dates. And that is a commitment that CTFA has maintained 8 throughout the development of consumer product regulations. 9 And we're committed to that in this product category as 10 well. 11 We believe that the ARB staff recommendation that 12 the industry receive an additional 17 months, until June 1, 13 1999, in which to formulate 55 percent VOC hairspray for 14 sale in California will help to serve all of those goals. 15 The ARB staff has correctly recognized that 55 16 percent VOC hairspray will not be technologically and 17 commercially feasible by January 1, 1998. 18 At the same time, during the discussions and 19 negotiations over the past year -- and it's no secret that 20 this has been a vigorous debate between us and the staff and 21 other members of the industry, the staff has held the 22 industry's feet to the fire to achieve that 55 percent goal 23 as quickly as possible. 24 And we appreciate the thoroughness with which they 25 have looked at this issue, and we accept their PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 34 1 recommendation that the goal be set at June 1, 1999. And, 2 as I said before, we commit, as an industry, to an all out 3 good-faith effort to achieve that goal. 4 We think that the staff has also put together a 5 very good set of standards and criteria for looking at the 6 various unforeseen things that can happen. We note as a 7 condition of granting additional time, for example, that the 8 proposal will impose stringent reporting requirements on the 9 industry. This will enable the staff to keep a close watch 10 on the state of the industry's progress towards a June 1, 11 1999 development, and I think will encourage the kind of 12 dialogue between the industry and the staff that has always 13 led to good results in the past. 14 At the same time, the staff has recognized that, 15 while we're committed to the 1999 goal, one or more 16 companies may encounter difficulties in overcoming a very 17 complex reformulation problem, and they've outlined a 18 procedure a company must follow to obtain a variance -- 19 again, as we said, setting some very stringent criteria that 20 must be met. 21 And we look forward to that process of developing 22 guidelines that will lay out exactly what those criteria are 23 for a variance. So, I think there's a very good balancing 24 act here of providing incentives for early product 25 development, and yet recognizing that there can be a problem PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 35 1 for at least an individual company, and providing a process 2 with appropriate safeguards to enable that company to obtain 3 more time if they can document that they need it. 4 In conclusion, we want to thank the staff and the 5 Board for a very open process in taking into account our 6 industry's concerns. We believe the staff recommendation is 7 a reasonable compromise; that it does not jeopardize 8 California's SIP requirements and commitments. But at the 9 same time, it gives both manufacturers and suppliers -- and 10 again, I underscore suppliers -- a realistic hope that their 11 very substantial investments in new technology can result in 12 the continued sale of safe and effective hairspray products 13 in California. 14 Thank you very much. 15 CHAIRMAN DUNLAP: Very good. Thank you, Tom. I 16 appreciate that. 17 Okay. Any questions of the witness before we move 18 on? Okay. Very good. Thank you. 19 Jim Bachman, DuPont, a supplier and very central 20 to this discussion. 21 Good morning. 22 MR. BACHMAN: Good morning. How you doing? 23 CHAIRMAN DUNLAP: Fine. 24 MR. BACHMAN: My statement will be very brief. My 25 name is Jim Bachman. I'm the North American Marketing PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 36 1 Manager for DuPont propellants and blowing agents business. 2 And so, I'm here to represent DuPont today. 3 DuPont, as you know, is a supplier of aerosol 4 propellants, specifically dimethyl ether, and HFC 152A. I 5 would like to start, rather than finish, by commending the 6 staff and their fine efforts, and the Board as well, on this 7 very important matter. 8 It has been very refreshing to see how input from 9 all interested and impacted parties has been sought at and 10 used in development of the staff's recommendation. 11 Purposeful dialogue has been encouraged throughout the 12 entire process, and for that we're appreciative. 13 Our position on the staff proposal is as follows: 14 As many of you know, DuPont has invested heavily in 15 expanding capacity for a lower cost HFC 152A to help our 16 industry meet the January 1, 1998 55 percent VOC hairspray 17 regulation. 18 Although our strong belief has been that these 19 regulations should proceed as scheduled, our position has 20 evolved after working with our customers and with the ARB 21 staff. 22 In light of, number one, the presence of rigorous 23 reporting and mitigation if variance are sought and, two, 24 assurances that market-based incentives for early conversion 25 will be fully developed -- that is, between 1/1/98 and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 37 1 6/1/99 -- will be fully developed by staff and in place for 2 use by 1/1/98, DuPont now supports the staff proposal to 3 delay implementation of this regulation to June 1, 1999. 4 I'd like to close by saying we remain available 5 and anxious to assist our customers in their efforts to 6 comply with this regulation, and again thank the staff and 7 the Board. 8 CHAIRMAN DUNLAP: Thank you. Thank you for that 9 view. I know that view wasn't always the company position, 10 and I appreciated you working with the staff and with CTFA 11 on finding common ground. 12 Any questions of the witness? Ms. Edgerton, you 13 were concerned about disadvantaging suppliers -- 14 MS. EDGERTON: Yes. 15 CHAIRMAN DUNLAP: -- and about predictability. 16 MS. EDGERTON: Thank you. 17 CHAIRMAN DUNLAP: This is the key supplier here. 18 So, you perhaps should -- 19 MR. BACHMAN: And we appreciate the comments 20 you've already made. 21 MS. EDGERTON: Thank you. Well, I trust that 22 you're supporting this because you find that it's in your 23 best interest. 24 Can you explain to me how you feel it's going to 25 work in terms of your company being able to get the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 38 1 advantages that I believe you deserved as a result of you 2 having developed the 152A -- well, building the new plant 3 with the 152A increased capacity so we could meet our 4 regulations. 5 MR. BACHMAN: Well, I'm quite certain that we will 6 not reap all of the benefits that we thought we would have 7 in making the decision to invest. But, you know, I'll go 8 back just to my statement that we do believe that the staff 9 has done a very thorough job in seeking input from 10 everybody. 11 And their assessment is that the marketplace needs 12 more time to comply with the regulation, and it's hard to 13 argue with all the testimony that's been given and the 14 belief of the staff and their recommendation that this time 15 is warranted. 16 We do believe that the early reduction credits and 17 mitigation will help to ensure that things proceed along as 18 quickly as possible. 19 MS. EDGERTON: Can you tell me whether you're 20 getting contracts, negotiation, from potential manufacturers 21 who want to use your product, since you're a supplier. 22 You're not a manufacturer. 23 MR. BACHMAN: We have regular contact -- 24 MS. EDGERTON: Of hairspray. 25 MR. BACHMAN: -- with the marketers who would be PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 39 1 using our products. Not a lot of our business is under 2 contracts, so I can't tell you that there are contracts 3 being negotiated or in place, but we do sell 152A today into 4 this application. We expect to do that in the future. 5 MS. EDGERTON: And how much of the market that you 6 had anticipated do you now anticipate getting with the 7 change in the date? 8 MR. BACHMAN: It's going to be hard to tell. We 9 believe it will, by and large, come our way. It's just a 10 matter of timing. And so, rather than having it 1/1/98, 11 there'll be some we believe will convert on that date, and 12 there'll be some that take longer to convert. 13 So, it's just a matter of timing in terms of when 14 we think we'll get the payback on the investment we've made. 15 MS. EDGERTON: And how much did you reduce your 16 price? Have you reduced it twice or just once? I know you 17 reduced once from when I talked with you. 18 MR. BACHMAN: We are focused. We've got a lot of 19 efforts focused on reducing costs, not just to manufacturer 20 but of delivering product. And we have passed through a 10 21 cent per pound price reduction. That was done in the fourth 22 quarter of 1996. And that will not be the last. 23 Our focus is truly on delivering something which 24 has high value and use, and at the lowest cost we can 25 possibly deliver it at. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 40 1 MS. EDGERTON: And then my one final question, and 2 this is actually just a concern I have with the members of 3 the Board. And I just want to report that my recollection 4 of when I met with you all was that you said something that 5 struck me as quite important to any regulator. And that was 6 that, if we kept moving our deadlines, DuPont wouldn't count 7 on us anymore. DuPont would not try to make the products 8 that would clean our air, because you wouldn't be able to 9 count on your market for those products, because we kept 10 changing our deadlines. 11 Now, that chilled me to the bone, because we've 12 got to have the cooperation of the manufacturers. And make 13 no mistake, it is because you are supporting this change 14 that -- it is a major factor in my support of the extension 15 of time. 16 Thank you. 17 MR. BACHMAN: It's nice to hear. 18 CHAIRMAN DUNLAP: Appreciate that point, Ms. 19 Edgerton. But you also realize that there are other uses 20 for 152A rather -- 21 MS. EDGERTON: Right. 22 CHAIRMAN DUNLAP: -- than just hairspray, right? 23 MS. EDGERTON: Thank you. 24 CHAIRMAN DUNLAP: And it's been a profitable 25 segment, we've been told, for DuPont of their production. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 41 1 So, thank you. 2 All right. Mr. Brown, National Aerosol 3 Association, and Michael Thompson from Chemical Specialties 4 Manufacturers Association. 5 Good morning. 6 MR. BROWN: Good morning. Mr. Chairman, members 7 of the Board, I'm George Brown, Executive Director of the 8 National Aerosol Association. 9 The National Aerosol Association, NAA, represents 10 various sectors of the aerosol industry, including product 11 marketers, contract fillers, suppliers of valves, 12 propellants, and cans to the companies that manufacturer 13 consumer and industrial aerosol products. 14 Hairsprays are the largest selling consumer 15 aerosol product; therefore, any regulation affecting 16 hairsprays is vitally important to all facets of our 17 industry. A loss in hairspray sales has widespread effects 18 beyond the loss to hairspray manufacturers. It means fewer 19 valves and cans will be manufactured and less propellant 20 will be shipped. 21 In some ways, the perspective of the NAA is 22 unique. While other parties represent both aerosols and 23 pump hairsprays, the NAA represents only products in aerosol 24 packages. It is from this viewpoint that our comments are 25 made regarding the proposed hairspray regulation PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 42 1 modifications. 2 There has been much discussion concerning the 3 effective date for compliance with the 55 percent VOC limit. 4 Some have suggested that industry can meet the January 1, 5 1998 date. We believe that is absolutely not true. 6 Most of the affected industry agrees that more 7 time is needed to reformulate its products with newly 8 evolving technology and chemistry. In an earlier paper 9 addressed to Peter Venturini, the NAA suggested that a 10 proposed delay of 17 months was probably not sufficient for 11 some smaller manufacturers and contract fillers, and that 12 forcing compliance by June 1, 1999, as was then being 13 considered, would force many fillers and manufacturers into 14 a position requesting variances. 15 The ARB staff now recommends that the 55 percent 16 rule be implemented effective June 1, 1999. While we still 17 think some smaller manufacturers and fillers will require 18 additional time and will be forced to request variances, we 19 believe that the ARB staff recommendations will accommodate 20 the reformulation needs of most of the hairspray industry. 21 Therefore, in a motion to achieve accord, we 22 withdraw our request for further postponement of the 55 23 percent VOC hairspray implementation date. We accept the 24 staff recommendation of June 1, 1999. 25 The staff recommendation requiring progress PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 43 1 reports from manufacturers unable to meet the 55 percent VOC 2 limit by the original date of January 1, 1998 seems 3 justified, although somewhat of a burden. 4 However, we are concerned about a lack of details 5 for plans requiring VOC mitigation for companies requesting 6 a variance after June 1, 1999. 7 The same concern holds true for the concept of 8 emission credits for early compliance. Until we hear more 9 details about those plans, we withhold our comment on those 10 recommendations. 11 We would like to thank the ARB staff for their 12 considerable efforts in amending the hairspray regulation. 13 They have been patient, cooperative, and understanding to 14 the needs of industry, while adhering to their mission of 15 improving California's air quality. We are grateful for 16 their attitude and assistance. 17 And finally, we thank the Air Resources Board for 18 the opportunity of participating in the deliberations. 19 CHAIRMAN DUNLAP: Thank you, Mr. Brown. I 20 appreciate that. I appreciate you outlining the evolution 21 of your position. That's important for us to hear. 22 Just a comment to staff. You know, some say the 23 Devil's in the details, and there's some folks interested in 24 seeing those details, not the least of which was Supervisor 25 Roberts a little while ago. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 44 1 So, I'd make sure that whatever process you go 2 through to develop mitigation strategies and variance 3 processes, that you go through the same process you went 4 through for getting us to this point. 5 So, we'll make sure you're included Mr. Brown. 6 MR. BROWN: We'll be there. 7 CHAIRMAN DUNLAP: Okay. Thank you. Last speaker, 8 Michael Thompson. 9 Peter, I'll ask you and maybe Mr. Scheible to talk 10 a bit about your process and give us a clue as to the 11 schedule for some of this paper emerging. I know you've 12 been thinking about it, but I think it'll cause some comfort 13 for some of the folks in the audience and for us. 14 Good morning. 15 MR. THOMPSON: Good morning. My name is Mike 16 Thompson. First of all, I'd like to applaud all of the 17 presentations and discussions that have occurred before me, 18 both those made by the industry and the discussions that 19 have taken place within the Board. I think it's a positive 20 and creative effort, and we look forward to working 21 cooperatively on that. 22 I represent the Chemical Specialties Manufacturers 23 Association, and we have been involved in not just this one, 24 but all of the 27 consumer product categories that have been 25 regulated, along with the activities that will be back to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 45 1 this Board very soon on the midterm measures and other 2 efforts to regulate consumer products. 3 CSMA is a national trade association that 4 represents the manufacturers engaged in the manufacture, 5 formulation, distribution, and sale of consumer and 6 specialty products for household, institutional, and 7 industrial uses. 8 These products include consumer products that are 9 manufactured in many forms, including aerosol products. 10 CSMA has many manufacturers and customers that are located 11 throughout California. 12 CSMA has actively participated and worked with 13 CARB staff in the development of every consumer product 14 regulation over the last decade. We have and will continue 15 to support efforts to analyze all of the 12 future effective 16 dates and the technology forcing standards found within this 17 rule. 18 This industry and CARB have worked both 19 cooperatively and creatively to meet many of these standards 20 and will pledge our support for the development of standards 21 which are technologically and commercially feasible and 22 necessary. 23 Hairspray manufacturers have made reductions and 24 will continue to minimize their VOC emissions while 25 maintaining product efficacy. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 46 1 It's important to recognize the significant 2 contributions made by hairspray manufacturers and other 3 consumer product manufacturers. 4 The compromise presented today to the Board is one 5 which CSMA and our members can support. The State of New 6 York has elected to delay the future effective dates for 7 hairspray to the year 2003, while CARB is proposing today to 8 delay the standard only 17 months. 9 We support the revised California compliance date, 10 and encourage this body to continue to closely monitor the 11 impact of this technology forcing standard. Impacts on 12 California consumers and manufacturers must not be 13 considered lightly. 14 The success or failure of one consumer product is 15 the result of a lengthy testing and marketing process which 16 generally requires several years. A product failure can be 17 found when only one step in a lengthy process fails, while a 18 successful product requires the right ingredients, the right 19 formulation, container, delivery system, along with consumer 20 acceptance and satisfaction. 21 When all of these occur successfully, we have a 22 satisfied consumer. We cautiously move ahead with each 23 consumer product regulation and hope that both consumer 24 product efficacy and a reduction in VOCs will occur. 25 CARB has 12 technology forcing standards, and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 47 1 today we're discussing one of them. The amendments to the 2 special reporting requirements and variance section of this 3 rule clearly state the requirements proposed affect 4 hairspray only. We support this compromise. 5 On behalf of CSMA, I wish to thank CARB staff for 6 their efforts and cooperation with all concerned parties in 7 this area. We appreciate your consideration of our views, 8 and look forward to continuing the good working 9 relationship. 10 CHAIRMAN DUNLAP: Thank you, Mr. Thompson. I 11 appreciate that. 12 MR. THOMPSON: Thank you. 13 CHAIRMAN DUNLAP: Any questions of the witness? 14 Okay. Very good. 15 At this juncture, I'd like -- that'll conclude the 16 public testimony. Anyone else wish to provide testimony on 17 this item? Okay. Thank you. 18 That'll conclude public testimony. Mr. Venturini, 19 will you or your team summarize the written comments you've 20 received on this item by individuals unable to testify in 21 person at this hearing? 22 MR. VENTURINI: Ms. Taricco will do that. 23 Before that, let me just, if I may respond to your 24 question process. Our first workshop to begin the 25 discussions on the concept and, as you said, the details is PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 48 1 going to be April 16th. We've talked to people. That's 2 set. And we'll be underway very shortly. 3 CHAIRMAN DUNLAP: Okay. Will Board members be 4 able to come if they desire? 5 MR. VENTURINI: Absolutely. 6 CHAIRMAN DUNLAP: Okay. Ms. Edgerton, if you have 7 nothing going on the 16th of April, you might plan on 8 attending. 9 MS. EDGERTON: Thank you. 10 CHAIRMAN DUNLAP: Okay. Go ahead. 11 MS. TARICCO: Thank you. We have three letters 12 that we would like to read into the record. 13 The first is from Herbalife International of 14 America. This was a letter that they sent to us in early 15 February, stating that they were supporting CTFA's position 16 at that time. 17 As you know, their position has changed. And we 18 spoke with the CTFA representatives today, and they said 19 that they had no reason to believe that Herbalife would not 20 support the position that CTFA voiced here today at the 21 hearing. 22 The second letter is from Procter & Gamble, and 23 they stated that they supported the staff's recommendation. 24 And the last letter is from U.S. EPA. They 25 indicated that they concur with our efforts to make sure PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 49 1 that the regulation meets the requirements of State law, and 2 that we are taking steps to make sure the State 3 Implementation Plan commitment is met. 4 They also indicated that they would work closely 5 with us as we submit these amendments as a SIP amendment 6 later in the year. 7 And those are the three. 8 CHAIRMAN DUNLAP: Okay. Very good. Mr. Kenny, 9 I'm assuming you have nothing else to add? 10 MR. KENNY: Nothing to add. 11 CHAIRMAN DUNLAP: Okay. Yes, Ms. Edgerton. 12 MS. EDGERTON: I appreciate your indulgence. I 13 know I've spoken more than my share of the time on this 14 issue. 15 I would like to ask Mr. Venturini and, Mr. Kenny, 16 if you're -- one of the things that struck me -- and I am 17 supporting this extension. But one of the things that 18 struck me was that this deadline will come around after the 19 next gubernatorial election. 20 And in my own case, I was obviously -- all of us 21 were appointed by Governor Wilson, and so I'm mindful that 22 there will be a new Governor and there may be new Board 23 members by that time. 24 However, I'd like for you all to be sure if, for 25 some reason, I'm not on this Board at that time, I'd like PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 50 1 for you to be sure and let me know when the deadline comes 2 up. I'd be very interested to hear how things are going, 3 and I'd like to schedule into my file of facts, you know, an 4 opportunity to come speak if we need a collective memory of 5 this being taken as seriously as it is. 6 Will you do that for me, gentlemen? 7 MR. VENTURINI: Yes. 8 CHAIRMAN DUNLAP: Reaching beyond the political 9 grave. 10 (Laughter.) 11 MS. EDGERTON: Thank you, Mr. Chairman. 12 CHAIRMAN DUNLAP: Since all testimony, written 13 submissions, and staff comments for this item have been 14 entered into the record and the Board has not granted an 15 extension to the comment period, I'm officially closing the 16 record on this portion of Agenda Item 97-2-1. 17 Written or oral comments received after the 18 comment period has been closed will not be accepted as part 19 of the official record on this agenda item. 20 Just a reminder to Board members of our policy 21 concerning ex parte communications. While we may, of 22 course, communicate off the record with outside persons 23 regarding Board rulemaking, we must disclose the names of 24 our contacts and the nature of the contents on the record. 25 This requirement applies specifically to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 51 1 communications which take place after notice of the Board 2 hearing have been published. 3 Are there any communications which need to be 4 disclosed? 5 We'll just work down the line. Ron? Do you have 6 anything? 7 Mayor Hilligoss? Dr. Friedman? 8 I have several. On February 6th, a meeting with 9 Mr. Mattesich and Mr. Donegan, a meeting of CTFA; a meeting 10 on March 10th with Mr. Carpenter representing DuPont. A 11 meeting also on 3/17 with Mr. Mattesich and a DuPont 12 representative, Mr. Costello. Another meeting on the 17th 13 with Mr. Donegan -- a meeting with Mr. Donegan and I believe 14 Esther Rosenberg also on that date of DuPont. And a final 15 meeting with Mr. Costello and Mr. Boothe of DuPont on the 16 17th, also, of March. 17 Mr. Parnell? 18 MR. PARNELL: I had meetings with Carpenter and 19 representatives from DuPont. And I apologize. I believe 20 that it was on the 7th. I'll get the specific dates to you. 21 And also Mr. Mattesich and others -- I believe it was Mr. 22 Donegan, and we talked about this issue along predictable 23 lines, which are well known, with no conclusions. 24 CHAIRMAN DUNLAP: Okay. 25 MR. PARNELL: Other than a commitment to look at PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 52 1 the issue. 2 CHAIRMAN DUNLAP: All right. Very good. Thank 3 you. Ms. Edgerton. 4 MS. EDGERTON: I don't recall whether -- I think 5 my meetings were all before the 45 days, but just to be 6 careful, I did meet with Mr. Donegan and Mr. Mattesich here 7 at the Air Board and covered a lot of the issues quite 8 extensively. This was before you moved toward your 9 compromise. 10 And I also did meet in El Monte with Mr. Bachman 11 and Esther Feldman -- 12 CHAIRMAN DUNLAP: Rosenberg. 13 MS. EDGERTON: Rosenberg. Feldman. I have a 14 friend named Esther Feldman. I'm sorry. Esther Rosenberg. 15 I think that was before Christmas. Yeah, they're 16 shaking their heads, yes. So I really didn't have to report 17 that. 18 Thank you. 19 CHAIRMAN DUNLAP: Okay. Mr. Silva? 20 SUPERVISOR SILVA: Yes, Mr. Chairman. I met with 21 representatives of some of the companies, but this was 22 probably four or five months ago. 23 CHAIRMAN DUNLAP: Okay. Very good. Ms. Walsh, if 24 you would give us a little bit more descriptive guidance on 25 ex parte communication format, I'm certain that we can go PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 53 1 through it in a less painful way up here. A reminder would 2 perhaps be in order just process-wise. 3 MS. WALSH: Yes. 4 CHAIRMAN DUNLAP: Okay. Thank you. A comment to 5 the audience. I personally devoted some time and attention 6 to this issue, because it's important. As the staff 7 outlined, it's the largest consumer product for VOCs that we 8 have. And it's important for us to be involved. 9 And I'm appreciative of the extensive access that 10 the Board has provided industry reps on this issue. I think 11 it's a good thing. 12 With that, I guess I'll make a quick closing 13 statement, and we'll get to the resolution. Mr. Kenny, 14 thank you. I appreciate the comments made by those who 15 testified today about the thoroughness of the staff's work. 16 It's good to hear. It's important that you reflect that 17 priority of the Board. 18 I'd like again to thank the staff and those who 19 provided time and attention to this issue, and those that 20 provided testimony today. It is apparent that industry has 21 worked extensively and cooperatively with the staff during 22 the development of this proposal. 23 The proposal before us reflects this participation 24 and represents, in my opinion, a fair and reasonable 25 approach to the regulation of hairspray products; even more PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 54 1 importantly, this has been accomplished without compromising 2 the public health protection provided for in California's 3 clean air strategy. 4 And, as Dr. Friedman mentioned, that has to be the 5 primary concern that we have; needs to be public health 6 protection. It's our reason for existing. 7 As a reminder, I'd like to again mention that the 8 emission reductions to be gained from the control of 9 hairsprays and other consumer products are a necessary 10 component of the State Implementation Plan, and the 11 amendments proposed today will not compromise our emission 12 reduction commitment in the SIP. 13 And furthermore, the amendments address the 14 technological and commercial feasibility aspects of the 55 15 percent VOC standard for hairsprays. So, I'm prepared to 16 support the resolution, including the amendments to the 17 consumer products regulation. 18 So, we've had before us for some time a draft 19 resolution. After my colleagues on the Board have had 20 sufficient time to review it, I would certainly entertain a 21 motion to support the resolution before us. 22 MR. PARNELL: I've move the resolution if it's 23 appropriate. 24 CHAIRMAN DUNLAP: There is a motion -- 25 DR. FRIEDMAN: Second. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 55 1 CHAIRMAN DUNLAP: -- by Mr. Parnell and a second 2 by Dr. Friedman for the motion to support the staff 3 resolution. Is there any further discussion that needs to 4 occur on this item? 5 Okay. With that, I think we'll proceed with a 6 voice vote. All those in favor of Resolution No. 97-14, say 7 aye? 8 (Ayes.) 9 Any opposed? Very well. Resolution passes. 10 Thank you very much, staff. 11 Okay. While staff is changing their locale, does 12 our court reporter need a moment? 13 (Thereupon, there was a brief pause in 14 the proceedings.) 15 CHAIRMAN DUNLAP: Please take your seats. Okay. 16 Again, I'd like to remind those in the audience who would 17 like to present testimony to please check in with the Board 18 Clerk to my left. 19 The next item on the agenda today is 97-2-2, a 20 public hearing to consider an amendment to the limit on the 21 propene content of liquefied petroleum gas intended for use 22 in motor vehicles. 23 The limit is contained in Section 2292.6 of the 24 Code of Regulations. This item is in response to a petition 25 from the Western Propane Gas Association. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 56 1 At this point, I'd like to ask Mr. Kenny to 2 introduce the item and begin the staff presentation. But I 3 do believe this is scheduled to be relatively short. Is 4 that correct? 5 MR. KENNY: I hope so. 6 CHAIRMAN DUNLAP: Okay. Very good. Mr. Kenny. 7 MR. KENNY: Thank you, Mr. Chairman, members of 8 the Board. In 1992, the Board adopted specifications for 9 liquefied petroleum gas, also known as LPG or propane. This 10 is sold for use in motor vehicles in California. 11 One element of the specifications is a limit on 12 the amount of propene or propylene, an oil thinning compound 13 in vehicular LPG. 14 Initially, the Board set that limit at 10 percent 15 by volume. The limit was to have decreased to 5 percent in 16 1995. But after a petition by the Western Propane Gas 17 Association, the Board postponed that decrease until January 18 1st, 1997. 19 The basis for that delay was a concern that under 20 a 5 percent limit, there would be a problem in having enough 21 complying fuel for the vehicles that needed LPG. 22 In 1995, the staff expected the changes in oil 23 refining to produce cleaner burning gasoline would 24 substantially reduce the amount of propene in LPG, so that 25 by 1997, the 5 percent limit could be enforced without PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 57 1 causing distribution problems. 2 However, the expected decrease of propene in LPG 3 did not occur, and the Western Propane Gas Association is 4 still concerned about potential supply disruptions if the 5 5 percent limit is enforced. 6 The Western Propane Gas Association consequently 7 petitioned the Board on September 20th, 1996, to maintain 8 the current 10 percent limit for an unspecified period. We 9 are here today for you to consider amending the regulation 10 in response to that petition. 11 Now, I will have Tony Brasil, an engineer with the 12 Stationary Source Division, present the staff's technical 13 analysis in detail. 14 Tony? 15 MR. BRASIL: Thank you, Mr. Kenny. Mr. Chairman 16 and Board members, for my presentation concerning the 17 liquefied petroleum gas specifications for motor vehicles, I 18 will start with the background and history, will review the 19 1996 Western Propane Gas Association's petition, summarize 20 staff's activities, and conclude with our recommendations. 21 Liquefied petroleum gas is a mixture of different 22 gases, but is mostly propane. It is a byproduct of oil and 23 natural gas extraction and gasoline processing. In 24 California, liquefied petroleum gas is typically delivered 25 from a refinery or gas plant by a large transport truck to a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 58 1 bulk storage facility, then distributed by smaller trucks to 2 the retailer's or user's tank. 3 In some cases, the larger transport truck will 4 deliver directly from the source to a large customer. 5 This slide shows the storage tank at the major 6 distribution facility in Northern California. Each of these 7 tanks holds about 20 million gallons or nearly 500,000 8 barrels. 9 Here is a picture of a transport truck at a 10 loading rack. Most wholesaler's bulk tanks can hold only 11 two or three loads from the larger transport truck. 12 Liquefied petroleum gas, commonly referred to as 13 propane, is used in heaters, barbecues, industrial furnaces, 14 and vehicles. 15 As shown on the table, motor vehicles represent a 16 small part of the LPG market at less than 10 percent. The 17 regulation we're considering only affects this part of the 18 market. The rest of the market only requires commercial 19 grade LPG, which does not have a propene limit. It simply 20 requires that the LPG mixture be mostly propane. 21 In 1992, the Board adopted LPG motor vehicle 22 specifications. They included a certification fuel 23 specification for certifying new engines and a specification 24 for in-use motor vehicle fuel. 25 This slide shows the specifications for in-use PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 59 1 motor vehicle LPG, which was based on ASTM standard for 2 special duty propane, which is very similar to HD-5, also 3 shown on the slide. 4 The standard was not based on achieving emissions 5 reductions, but rather to ensure fuel quality for vehicles. 6 The 10 percent propene limit or HD-10 standard shown on the 7 slide was initially adopted and was to change to the 5 8 percent propene limit, or HD-5 standard, in 1995. 9 However, based on a petition by the Western 10 Propane Gas Association in 1994, the Board postponed the 11 final limits until January of this year. 12 They submitted the '94 petition because production 13 of HD-5 was limited and there was an expectation that 14 refinery modifications to produce cleaner burning gasoline 15 would result in increased availability of HD-5 and eliminate 16 distribution problems. 17 Late last year, the Western Propane Gas 18 Association requested a second delay for somewhat similar 19 reasons. The petition only addresses the in-use LPG motor 20 vehicle specification. The certification fuel specification 21 is not addressed by the petition and is not a subject of 22 today's hearing. 23 The second petition was submitted because HD-5 24 production is still limited in Northern California, and the 25 distribution system is still unable to segregate between the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 60 1 motor vehicle and the commercial grade propane. 2 In Northern California, only about 40 percent of 3 the motor vehicle grade LPG produced today meets the 5 4 percent propene limit. In Southern California, the 5 situation is more promising, and that an adequate amount of 6 HD-5 is produced. But there are still some distribution 7 problems that need to be addressed to ensure that HD-5 is 8 consistently delivered to the end user. 9 In response to the petition, staff investigated 10 these issues. We surveyed propane suppliers and marketers 11 and, in December, held a workshop to discuss the petition 12 issues. 13 We also held discussions with suppliers and engine 14 manufacturers and analyzed the emissions and use data. As a 15 result of our activities, we've learned that two main areas 16 of concern are the supply and distribution of in-use motor 17 vehicle LPG complying with the 5 percent propene limit. 18 Supply will increase if some flexibility in the 19 specifications were allowed, particularly if the propene 20 content limit could be higher. 21 A task group was formed to investigate if an 22 alternate specification could be developed that would 23 preserve engine performance and variability, maintain 24 emissions benefits, and improve fuel availability. 25 The task group is comprised of members PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 61 1 representing the auto industry, heavy-duty engine 2 manufacturers, oil companies, the Western Propane Gas 3 Association, and others. 4 Also, as part of our discussions, we found that 5 most producers do not guarantee the propene content. They 6 simply label their LPG as commercial grade LPG, and some of 7 those who produce a higher grade LPG do not guarantee that 8 it will always be available. 9 There's little incentive for producers to label 10 their LPG as a higher grade, because it is only a small part 11 of the market and doesn't command a higher price. 12 In addition to this labeling issue, the problem is 13 further compounded because most marketers and distributors 14 cannot segregate two grades of LPG. 15 A survey of wholesalers show that of a 104 sites 16 currently selling to vehicles, only 38 would still be able 17 to if the propene limit for motor vehicle LPG is reduced to 18 5 percent. 19 During our meetings and discussions, engine 20 manufacturers raised their concerns on specifications other 21 than HD-5. However, they have agreed to work with us to 22 evaluate alternatives. They're concerned with engine 23 performance and durability issues associated with high 24 propene levels, and request that these issues be adequately 25 addressed in recommending an alternate specification. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 62 1 It should be noted that very little work has been 2 done with propane other than HD-5, and there is little 3 information on these other propane mixtures. 4 We are recommending that the Board delay the 5 5 percent limit for an additional two years so that an 6 alternative formulation can be investigated and the 7 distribution issues can be resolved. It is our intent that 8 there will be closure on this issue and that in two years 9 either an alternative equivalent formulation will be 10 recommended for your consideration or the HD-5 specification 11 will be implemented. 12 If a delay is granted, it will have a very small 13 environmental effect. It will not affect the State 14 Implementation Plan, because emission reductions were not 15 claimed in the State Implementation Plan, and the emissions 16 impact for volatile organic compounds and oxides of nitrogen 17 combined is less than one-tenth of a ton per day. 18 In closing, if the delay is granted, we will 19 continue to pursue resolving the labeling and distribution 20 issues, work with the task group to conduct a test program 21 to evaluate alternate motor fuel specifications, and also 22 study the benefits of setting specifications for commercial 23 uses of liquefied petroleum gas. 24 If you have any questions, I'll be glad to answer 25 them. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 63 1 CHAIRMAN DUNLAP: Thank you. 2 Mr. Schoning, why don't we have you comment now, 3 if you would, on this item, please. 4 MR. SCHONING: Thank you, Mr. Chairman, members. 5 This item comes before you in response to a 6 petition from the Western Propane Gas Association, WPGA as 7 it is most commonly referred to, which is a trade 8 organization of LPG marketers. 9 Staff evaluated WPGA's petition for delay for the 10 LPG standard by conducting two surveys. First, a survey to 11 100 LPG marketers associated with the WPGA to assess their 12 capability to market complying LPG. 13 The second survey was of 20 LPG producers in 14 California on LPG quality and sales issues. Responses to 15 these surveys represented industry's issues. 16 Staff conducted follow-up phone calls on LPG 17 quality and sales to clarify the information that was 18 provided by industry. ARB staff met twice with 19 representatives of the WPGA before publishing a proposal, 20 and help a workshop on December 3rd of 1996. 21 Staff worked with the producers of commercial LPG 22 in California, the trade organizations of engine 23 manufacturers and vehicle manufacturers, with individual LPG 24 marketers, and individual vehicle manufacturers, as well as 25 with the Division of Measurement Standards in the California PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 64 1 Department of Food & Agriculture. 2 The notice of the workshop and the final staff 3 report and hearing notice were mailed to more than 600 4 persons with interest in fuels and/or vehicles. Staff 5 established an LPG task force made up of refiners, LPG 6 marketers, and engine manufacturers. 7 Two conference calls, one on February 11 and one 8 on March 17 of 1997, initiated the technical discussions 9 that were intended to lead to an eventual final 10 specification for vehicular LPG. 11 In addition, staff also held a conference call 12 with the alternative fuels committee of the Engine 13 Manufacturers Association. 14 In conclusion, Mr. Chairman and members, it would 15 be our observation there's been ample opportunity for all of 16 the interested stakeholders to participate in the process by 17 which this item comes before you. 18 CHAIRMAN DUNLAP: Thank you, Mr. Schoning. Do any 19 of the Board members have questions before we get into the 20 witness list? 21 Okay. We have two individuals that have signed up 22 to provide testimony on this item, William Platz from 23 Western Propane Gas Association. If you'd come forward, 24 sir. And Glenn Keller, Glenn, if I could ask you to come 25 forward and take a seat in the front row, we'll get to you PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 65 1 shortly. 2 Now, are you the one who started this with some 3 kind of a petition? 4 (Laughter.) 5 MR. PLATZ: I'm the one that's responsible for all 6 of this, sir, yes. I'm sorry, but you know. . . 7 CHAIRMAN DUNLAP: So, tell us why we're here. Why 8 are we here? What do you need us to do? 9 MR. PLATZ: What we need you to do is continue to 10 postpone the situation. The Western Propane Gas Association 11 is a group of people that market propane for a variety of 12 uses. We also utilize propane as a transportation fuel for 13 our own fleets. 14 We are the man in the middle so to speak. The 15 producers, if you start out where our product comes from in 16 the beginning, the producers are the refiners and gas plants 17 of California and the rest of the country. 18 Our product comes into California from -- mostly 19 from California sources, but a lot of propane also comes 20 from out of state. Those of us that market the stuff have 21 no control it, and the producers that produce it look at 22 propane as being the equivalent of sawdust in a furniture 23 factory. They're geared towards making gasoline and diesel. 24 They take that propane, and while we're very good 25 at making a good market for propane, it's 3 percent of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 66 1 barrel. It's a very small piece of their action. They 2 don't even give a darn about what the quality of this stuff 3 is going to be. 4 So here we are, we're talking about trying to make 5 propane a quality product that, you know, only 10 percent of 6 our particular business even goes towards the engine 7 families. So, it gets to the point where you say, well, you 8 know, how much can you polish this stuff before it doesn't 9 make any sense to even try and put it into the engine fuel 10 market anymore. 11 So, we're asking for additional study. We've come 12 before the Board twice before, once when the specification 13 was first adopted; secondarily back in '94, when we were 14 able to get the specification extended. 15 It's not like anything has not been done in the 16 last two years. Staff didn't necessarily mention that 17 there's been a number of emission studies, both by WPGA and 18 by ARCO Southwest Research, that indicate that at least from 19 an emissions standpoint, there may be some beneficial 20 emissions obtained from LPGs of a variety of specifications. 21 Those studies need to be continued. 22 ARCO is continuing to pursue those emissions 23 studies. The engine manufacturers, rightly so, have a 24 problem with whether or not the durability of their engines 25 can be maintained with a variety of specification LPG. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 67 1 Those studies need to be conducted. We haven't done any of 2 that kind of work. 3 So, we're merely asking to, you know, forestall 4 the execution so to speak, and let us look at it some more, 5 and come back to you with some sort of a specification that 6 makes sense, not only for the engine transportation fuel, 7 but for all the uses of LPG. 8 We want to try and bring back that window between 9 HD-5 propane and commercial grade propane into a narrower 10 specification that can work for all uses of propane. 11 CHAIRMAN DUNLAP: Okay. Let me ask -- try to get 12 you on the record on a point here. 13 MR. PLATZ: Okay. 14 CHAIRMAN DUNLAP: When you talk about a temporary 15 delay, and that's what your petition looks like, it's trying 16 for a temporary. Some would say that next time you're here 17 you're going to look for a permanent kind of conclusion. Is 18 that where you're going? 19 MR. PLATZ: That's kind of what we're trying to 20 do. You know, we want to get to a permanent resolution. 21 CHAIRMAN DUNLAP: Permanent resolution, but are 22 you looking this petition to be realized forever? 23 MR. PLATZ: Not necessarily. We really feel that 24 if we get to a point where we have to have nothing but HD-5 25 propane for transportation use, unless there's some reason PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 68 1 for the producer to produce that HD-5 propane either through 2 coercion on a regulatory level or, you know, market demand 3 of some sort, we don't see the transportation use of LPG as 4 being a viable future for our markets. 5 CHAIRMAN DUNLAP: Yeah. Okay. Any questions of 6 the witness? 7 If you don't mind, stay close. We may bring you 8 back. 9 MR. PLATZ: Okay. Thank you. 10 CHAIRMAN DUNLAP: Mr. Venturini or Mr. Scheible, 11 just so I'm clear. We're talking about emissions impact of 12 one-tenth of a ton per day, correct, that we're giving up, 13 right? 14 MR. VENTURINI: That's correct. That's for both 15 VOC and NOx. 16 CHAIRMAN DUNLAP: All right. Mr. Keller. You 17 have a contrary opinion. 18 We have your statement. I appreciate the copy. 19 And you're welcome to read it; you don't need to. But if 20 you'd summarize perhaps the two or three relevant points for 21 us to consider, and then we'll engage in a discussion with 22 you, and I think can make relatively quick work of this 23 item. 24 MR. KELLER: Okay. That's fair. I'll try to do 25 that. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 69 1 CHAIRMAN DUNLAP: Okay. 2 MR. KELLER: I'll introduce myself. I'm Glenn 3 Keller. I'm the Executive Director of the Engine 4 Manufacturers Association. EMA is an industry trade 5 association of worldwide manufacturers of engines used in 6 all applications other than passenger cars and aircraft. 7 Among EMA's members are manufacturers of heavy- 8 duty truck and bus engines as well as industrial and utility 9 engines that use alternative fuels, including liquefied 10 petroleum gas, or LPG. 11 Getting to the point, we oppose the allowance of 12 any further delays. It's our fear here that he temporary 13 extension being considered today may become a permanent one. 14 EMA has participated in discussions with ARB staff and LPG 15 suppliers in which we have expressed our concerns about the 16 WPGA's petition foor extension. 17 Our message here is not that we are contrary to 18 staff's efforts on this at all. If anything, our 19 disappointment is with the gas industry, those that are 20 producing this fuel and the fact that they have not shown 21 progress over the course of time on this. 22 We have a product that we have to make, engines, 23 that must be calibrated and designed to work on a specific 24 range of fuel. And we have designed our engines to do that 25 with expectations that the exemption would have been over PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 70 1 effective January 1, 1997, and it's being extended again. 2 And that's really what the engine manufacturers 3 are dismayed over. We want to have closure on this issue. 4 We're concerned about the adverse effects increased propene 5 content is likely to have on engine performance, excess 6 emissions, but especially on endangering the engine 7 durability. 8 This is of critical concern, especially for the 9 case of lean burn heavy-duty engines designed to operate on 10 HD-5, where the fuel metering and ignition timing are set 11 very close to the engine's knock limits, making these 12 engines very sensitive to the fuel octane number. 13 Since increases in propene content lowers the 14 octane number, fuels with more than 5 percent propene will 15 increase the likelihood of engine knock and the occurrence 16 of engine failure due to the subsequent greater mechanical 17 and thermal stresses. 18 This concern is intensified by the manufacturers 19 lack of engine durability data for LPG fuel mixtures around 20 the 10 percent propene content. 21 This HD-5 standard is not just unique to 22 California. It was developed as a consensus industry 23 standard under the rigorous ASTM process. LPG producers 24 across the country have supported the HD-5 standard for 25 specifying the minimum quality of LPG fuel recommended for PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 71 1 use in motor vehicles. 2 The engine manufacturers have marketed and are 3 designing more advanced low-emission engines for the 1997 4 model year and beyond based on the reliance that this higher 5 quality HD-5 grade fuel would be implemented this past 6 January. 7 If the fuel is not going to be available for the 8 new engines that manufacturers plan to market, those 9 products may not be offered in California or, in the 10 alternative, engine manufacturers may be forced to severely 11 limit the warranties in those areas where HD-5 is not made 12 readily available. 13 In either case, the California consumers could be 14 harmed as well as delivering a setback to California's 15 alternative fuels initiatives. 16 Another very important point that we need to 17 address with the State of California is that because these 18 engines are designed and specified to operate with HD-5 19 grade fuel, then the consumer has got to have a reliable 20 means of identifying what they are buying. 21 For this reason, California must address the need 22 for labeling LPG dispensers immediately. Whether or not the 23 Board approves the delay in the implementation of the HD-5 24 standard, we still have to have labeling so we can identify 25 the proper thing going into the fuel tanks. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 72 1 CHAIRMAN DUNLAP: On that point, we don't have the 2 responsibility for the labels. It's the California Bureau 3 of Standards and Measures, right? 4 MR. KELLER: I certainly understand that. 5 CHAIRMAN DUNLAP: Now, staff, I'm assuming we have 6 a relationship with them, correct? 7 MR. VENTURINI: Yes. 8 CHAIRMAN DUNLAP: Where we could relatively 9 easily, you know, find some agreement with them? 10 MR. VENTURINI: In fact, Mr. Chairman, staff has 11 had meetings already with all the parties to discuss this 12 labeling issue and tried to work together to develop an 13 appropriate labeling mechanism. 14 CHAIRMAN DUNLAP: And our request was received 15 favorably? 16 MR. VENTURINI: Yes. 17 CHAIRMAN DUNLAP: Okay. Glenn, I think we can do 18 that relatively easily. 19 MR. KELLER: That'll be great. 20 CHAIRMAN DUNLAP: Okay. 21 MR. KELLER: I also laud the efforts of staff in 22 trying to make those meetings happen. 23 CHAIRMAN DUNLAP: Okay. Go ahead. You were 24 coming to your second and last point. 25 MR. KELLER: I will. And that is about the fact PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 73 1 that the WPGA has requested the option of adopting 2 alternative LPG specifications that could perform 3 equivalently to HD-5. A test program has been proposed to 4 do that; the engine manufacturers support that objective. 5 We would like to consult in that regard in helping them in 6 supplying some test engines, and giving them support on the 7 technology and things to be done on that. 8 CHAIRMAN DUNLAP: Okay. On that point, does 9 anybody object to that kind of working relationship? Okay. 10 So, we can facilitate that happening, correct, staff? 11 MR. VENTURINI: Discussions are already underway 12 in that area. 13 CHAIRMAN DUNLAP: Okay, Glenn. 14 MR. KELLER: There's one point that we want to 15 make very clear, is that we will only support the test 16 program if they go through a demonstration of engine 17 durability. 18 CHAIRMAN DUNLAP: Okay. Is there any reluctance 19 for that to happen? 20 MR. SIMEROTH: Mr. Chairman, the mission statement 21 for the task group includes a commitment to look at the 22 durability issue. 23 CHAIRMAN DUNLAP: Okay. The definition of 24 durability -- I know there's a lot of definitions. Is 25 Glenn's view of durability -- is it a common view? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 74 1 MR. SIMEROTH: Yes. It was inserted at the 2 request of EMA and the American Association. 3 CHAIRMAN DUNLAP: Okay. It looks like we're three 4 for three, Glenn. So, go ahead, continue. 5 MR. KELLER: Those are all of our requests. 6 CHAIRMAN DUNLAP: Okay. 7 MR. KELLER: We'd like to show that the 8 resolution, as in the presentation, that at the end of the 9 two-year extension period, there should be a judgment made 10 as to whether an alternative fuel specification does exist 11 that could be adopted or, otherwise, we have to adopt HD-5. 12 CHAIRMAN DUNLAP: I understand. And if there's a 13 lesson from the last item, both my Board member colleagues, 14 Supervisor Roberts and Ms. Edgerton, say there need to be 15 certainty for any kind of extension so the people don't 16 think they can go and get continuous extensions; that we can 17 deal with this issue. 18 And so, I certainly would want some assurance from 19 staff. This is the time you nod your heads and say we're 20 not going to allow another extension to occur. We're going 21 to deal with this thing. And that provides you with some 22 certainty, Mr. Keller. I saw a bunch of heads nodded up and 23 down there. 24 MR. KELLER: And we will work with the staff -- 25 CHAIRMAN DUNLAP: Okay. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 75 1 MR. KELLER: -- in helping them with the test 2 program. 3 CHAIRMAN DUNLAP: Okay. Yes. Dr. Friedman asked 4 the question, can the testing be done within the two-year 5 time period, staff? 6 MR. SIMEROTH: Mr. Chairman, we think it can based 7 upon our experiences with the cleaner burning gasoline 8 testing. 9 CHAIRMAN DUNLAP: Okay. Very good. Okay. I 10 understand you oppose, but you will go along with it if this 11 testing is done and we work with standards and measures 12 folks in the State, et cetera, you'll be a team player. 13 Okay? 14 MR. KELLER: Exactly. 15 CHAIRMAN DUNLAP: Very good. Thank you for your 16 candor. I appreciate your willingness to work with us. And 17 I must tell you, I've been very pleased with our working 18 relationship with your organization over the past couple of 19 years as it relates to some of the work Mr. Cackette's done 20 with U.S. EPA and you all. 21 Thank you. 22 MR. KELLER: Very pleased to hear that, and we're 23 going to continue those efforts. 24 CHAIRMAN DUNLAP: All right. Okay. It looks like 25 we have the makings of an arrangement here, staff, that will PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 76 1 work. Let me ask my Board member colleagues if they have 2 any -- Ron, I didn't mean to speak for you, but did I catch 3 the gist there? 4 SUPERVISOR ROBERTS: You were probably picking up 5 part of my concern. 6 CHAIRMAN DUNLAP: Okay. 7 SUPERVISOR ROBERTS: But could I just ask a 8 question? 9 CHAIRMAN DUNLAP: Sure. 10 SUPERVISOR ROBERTS: For whatever reason that some 11 of the information, at least for me, suggests that in 12 Southern California, the standard can be met? 13 MR. SIMEROTH: Supervisor Roberts, in Southern 14 California, the refiners are producing adequate amounts of 15 LPG that can meet the 5 percent. However, they're not 16 consistently doing it, and there's some problems in getting 17 it consistently to the end users. 18 One day it'll be an HD-5 and be fully compliant at 19 the refinery, and the next day they may have something 20 that's off specification. 21 So, we have a distribution problem to sort out is 22 what it comes down to. And we're getting commitments from 23 the refiners that they will work with us in doing that. 24 SUPERVISOR ROBERTS: And the original deadline for 25 this was to be January, 1995? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 77 1 MR. SIMEROTH: That is correct, Supervisor 2 Roberts. And the 1994 petition, it was extended till 3 January, '97. 4 One of the things that happened is the refiners in 5 reconfiguring themselves to produce cleaner burning 6 gasoline, in doing that, they significantly reduced the 7 amount of propene in their LPG and started producing a 8 better quality. That's particularly true in Southern 9 California, and only true of some of the refiners in 10 Northern California. 11 SUPERVISOR ROBERTS: I guess what causes me a 12 concern of having an extension, and now having an extension 13 on the extension doesn't seem to bode well for the action 14 that we took on the previous item. 15 Ms. Edgerton's being able to get that promise of 16 maybe future certainty -- I don't know. It just doesn't -- 17 it doesn't set well, especially so since it's not a problem 18 of the chemistry and the lack of ability to be able to do 19 it. I mean it sounds like everybody knows what needs to be 20 done. 21 It just isn't being done, in spite of having a 22 two-year extension of time in order to get it done. And now 23 we have a situation where we have engine manufacturers who 24 are geared up to do one thing, and we've gone the fuel 25 manufacturers doing something quite different. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 78 1 I don't know. This one doesn't set well with me, 2 Mr. Chairman. I have to tell you that. 3 CHAIRMAN DUNLAP: Mr. Platz, let me put you on the 4 spot again. 5 MR. PLATZ: Okay. 6 CHAIRMAN DUNLAP: It appears that -- I don't mean 7 you personally; I wasn't here then. But it appears you're 8 coming back to the well again. 9 MR. PLATZ: Understand that, yes. 10 CHAIRMAN DUNLAP: So, try to give us some comfort. 11 SUPERVISOR ROBERTS: Well, let me ask a question 12 of staff before you do that. 13 CHAIRMAN DUNLAP: Sure. 14 SUPERVISOR ROBERTS: Is there a major mitigation 15 program that goes along with this like we were promised in 16 the last item? 17 So, here we have an extension on an extension. 18 There's no mitigation. And we're saying maybe we hope that 19 it all happens. I'm real uncomfortable with this, and maybe 20 my colleagues don't feel that. But in view of the previous 21 discussion, I don't see why we're doing this. 22 CHAIRMAN DUNLAP: Mr. Platz, hold on. Mr. Kenny, 23 why don't you seize the moment here and frame this. 24 MR. KENNY: I think the main reason we're looking 25 at this today is that we had a situation in which the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 79 1 distribution network associated with liquefied petroleum gas 2 was in question. If, in fact, the regulation stayed in 3 place as it was currently designed to you, there was a 4 problem with regard to compliance, and the distribution 5 network would suddenly result in essentially less liquid 6 propane gas available throughout the State. 7 From our perspective, less LPG available for these 8 particular vehicles was a net loss. And so, what we were 9 trying to do is basically maintain the infrastructure in 10 such a way that we could have liquid propane gas available 11 in the State while at the same time trying to work with the 12 distribution network and the engine manufacturers, such 13 that, in fact, we could resolve this issue once and for all 14 so that the LPG would be available within the next two-year 15 time frame. 16 If, in fact, we don't have liquid propane gas 17 available, it seems to us that, in fact, the net loss is 18 something that was -- you know, not something that was 19 acceptable. 20 CHAIRMAN DUNLAP: Mike, let me paraphrase that. 21 So, by not providing this delay, it would limit the 22 availability of this fuel. 23 MR. KENNY: Well, right now -- 24 CHAIRMAN DUNLAP: Potentially, right? 25 MR. KENNY: Yes. Right now, this regulation PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 80 1 basically is in effect as of January 1st, 1997. And so, 2 here we are in March of 1997, and the fuel is not available 3 because of distribution problems. 4 So, therefore, if the regulation isn't modified to 5 provide for this two-year delay, we're going to be 6 confronted with those distribution problems because the 7 distribution network won't allow for HD-5 to be made 8 available widely enough. 9 As you saw in the presentation, there are a 10 hundred and some distribution facilities that currently can 11 provide the fuel. However, if, in fact, we go to HD-5, what 12 we do is we drop down to about 30-some of those facilities. 13 And so, what we're trying to do is provide for a 14 mechanism by which we can maintain distribution throughout 15 the State for this fuel. 16 SUPERVISOR ROBERTS: And you have to have two 17 years to do that? You can't work with the industry to get 18 the distribution system up to speed in less time than that? 19 MR. KENNY: I think the two-year period was the 20 period of time that was identified as being appropriate to 21 do this. I haven't heard of a lesser period of time that 22 would be successful. 23 SUPERVISOR ROBERTS: What happens at the end of 24 this year two-year period if things haven't changed? 25 MR. KENNY: I think what we're looking at PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 81 1 basically is coming to some kind of a final resolution. If, 2 in fact, we can't get to a point at the end of the two-year 3 period with regard to HD-5, then we need to determine 4 whether some kind of an alternative spec is the appropriate 5 direction to go, so that we can actually put some kind of 6 permanency to this. 7 Right now, we have permanency to the extent that 8 we have HD-5 on the books, but we have a distribution 9 problem with regard to HD-5. 10 If, in fact, HD-5 is not going to be the approach 11 that is going to be satisfactory for the distribution 12 network, then we need to figure out what is going to 13 actually work. 14 SUPERVISOR ROBERTS: Well, let me ponder a while 15 on that and allow somebody else to ask questions. 16 CHAIRMAN DUNLAP: Jack, did you want to add 17 anything. You had a pretty quick take on this, too. 18 MR. PARNELL: I think Mr. Kenny reiterated my 19 comments to you earlier. And it seems to me that a half a 20 step -- I guess the real issue is, is if we're going to 21 force them to do something that can't be done economically, 22 we then have a huge net loss in terms of air quality. 23 We're giving up one-tenth of a ton per day of NOx 24 and VOC when we extend the time line, but it allows a 25 comfort zone. And I also recognize engine manufacturers' PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 82 1 concerns, but it seems to me that the labeling issue might 2 then tend -- appropriately labeled, might then tend to force 3 some HD-5 into the marketplace where it's needed. 4 So, I assume that, as we give this delay, we're 5 doing some positive things that are going to start to sort 6 the overall issue out and hopefully end up with some knowns 7 as to what can be. 8 MR. KENNY: I agree. And let me add one other 9 thing with regard to the emissions benefit -- or the 10 emissions loss issue. 11 What we're talking about here is basically a tenth 12 of a ton loss. That loss is basically one in which you look 13 at what we have right now with regard to an HD-5 requirement 14 and what would happen if we had the continuation of an HD-10 15 requirement for the next two-year period. 16 If, in fact, however, the distribution problem 17 that we've identified occurs, which is what we think will 18 happen, and you have then a decrease in the amount of LPG 19 available, then they've got to go to a different fuel 20 besides LPG. 21 CHAIRMAN DUNLAP: Right. 22 MR. KENNY: That fuel is going to be a dirtier 23 fuel. And so to the extent that, you know, we're talking 24 about an emissions loss, that analysis is based on 25 HD-5/HD-10. It is not based on HD-10 going to a different PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 83 1 fuel. 2 And so, essentially what we end up with is a 3 worst-case scenario here. 4 CHAIRMAN DUNLAP: Okay. I don't think you're 5 going to be needed at this point. Thank you. 6 We have one more witness. Mr. Spataro, Alex 7 Spataro, who supports the proposal, it says. 8 MR. SPATARO: Thank you very much for allowing me 9 to testify. I'm the president of the Adept Group, an 10 engineering and project management company based in Los 11 Angeles, California. 12 We currently have two programs that we're doing 13 with the air quality management board in Los Angeles, with 14 funding from various other sources from the Canadian 15 Government, the State of Texas, and mass transits throughout 16 the United States and Canada. 17 And in both these projects, we're working with 18 heavy-duty and medium-duty engines that run on propane. 19 These are engines that are certified and would dedicated to 20 running on LPG. 21 And it is fairly to add on to these projects to 22 cover the issues of sensitivities to the content of propene 23 in the propane that's being provided to fuel these engines. 24 So, in terms of the issue of whether or not you're 25 going to be better off two years from now than we are now, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 84 1 it is relatively easy to project that additional work can be 2 done that could answer the questions regarding its knock 3 margin, and that's the issue of durability. 4 So, progress can be made within the time period to 5 answer the very issues that are being debated here on this 6 floor. So, we are better off than we were two years ago, 7 and we can resolve the issues within two years that are 8 being put on the table. That's why I support conducting, 9 allowing the extension, because the answers that you want 10 could be gotten. 11 I think that answers your questions. 12 CHAIRMAN DUNLAP: Okay. 13 MR. SPATARO: Thank you. 14 CHAIRMAN DUNLAP: Thank you very much. Any 15 questions of the witness? 16 Jim, you wanted to make a point? 17 MR. SILVA: I know that we have final deadlines 18 followed by a final deadline. 19 CHAIRMAN DUNLAP: Right. 20 SUPERVISOR SILVA: And I'm sure that we've all 21 been at meetings where they say, well, we'll have a 22 deadline, but if we don't meet that, then we'll create 23 another one, which I think is really confusing the market, 24 in this case, the manufacturers as well as the consumers. 25 I don't want to poison the well, but I also PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 85 1 realize that we have a target that we're shooting at. And I 2 think if we're sending out mixed messages, we're going to be 3 creating more problems on down the line. 4 I will be supporting this, but I do have some 5 reservations. 6 CHAIRMAN DUNLAP: Good point. I think that the 7 framing of this item, though I know staff did a fine job in 8 preparing it -- I know I had my briefing -- it is a little 9 bit confusing, Mike. And it's kind of counterintuitive as 10 the emissions impacts were outlined. 11 But I guess -- let me attempt to summarize this. 12 The framing of this issue and the positioning of it in our 13 minds, we don't like -- I mean, we talk tough for good 14 reason about implementation of the SIP. And we need to 15 implement the SIP. 16 We need to provide the leadership and the steady 17 hand on the rudder as we go down, you know, the channel for 18 clean air, or whatever your appropriate analogy is. 19 This Board does not like to encourage delays, 20 certainly not to support additional extensions of time when 21 one's already been granted. So, I think staff needs to have 22 their sensitivity heightened there. Also, this is an issue 23 where we can engage the parties to provide some leadership 24 and a successful resolution. 25 That needs to be done quickly. So, what I would PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 86 1 propose to you all is this two-year time frame needs to be 2 used wisely. I know you're not in control of this fuel 3 market. I know you're not in control of the players 4 involved. And though we may act as a Board like you are, we 5 also know and we've heard countless witnesses over the 6 course of the last two and a half years during my tenure 7 talk about your great persuasive skills as a staff and your 8 ability to work with people. 9 And I think you need to put those skills to work 10 here and get this thing fixed so that we can provide the 11 certainty in the marketplace, so there can be the labeling 12 so the engine manufacturer can see clearly where people are 13 going, et cetera. 14 So, what I would propose to do at this time, I 15 think, is discuss with my colleagues on the Board any points 16 they'd want to emphasize, and then look at the resolution 17 and move it, but also encourage you all to, move quickly and 18 to get some kind of briefing back to us perhaps in three 19 months about what's going on, and how it's going, and what 20 the time frame is. 21 You don't need to come back specifically to the 22 Board, Mike, but you can put in your report that you give us 23 monthly in a quarter what's going on. Okay? 24 Any other -- did I capture that, Jim, Ron? Did I 25 get the essence of that, or do you want to emphasize PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 87 1 anything further? 2 SUPERVISOR ROBERTS: Mr. Chairman, I'm cognizant 3 of the fact that we don't have a full Board here today. 4 CHAIRMAN DUNLAP: Right. 5 SUPERVISOR ROBERTS: But I would feel better if we 6 had that information before us and see a very tight time 7 schedule in terms of what's going to happen. I don't like 8 the open-endedness of this being an extension on an 9 extension. I would have felt better, you know -- and I 10 hear -- I keep hearing, well, it's a small amount. There 11 may be worse things that could happen to us. 12 We don't have any leverage. We're not gong to 13 have any leverage in two years. I don't see the situation's 14 going to change dramatically in two years. And I think we 15 ought to confront it right now. And I think what we ought 16 to have is a specific plan with a time frame attached. 17 You've got a distribution problem, not a problem 18 with chemistry. And I think that's what ought to be before 19 us, and it shouldn't just be two years and let's see what 20 happens type of thing. I think there needs to be something 21 far more specific than that at this point. 22 And I would not feel comfortable voting for the 23 recommendation that's before us. 24 CHAIRMAN DUNLAP: Mr. Kenny? 25 MR. KENNY: I think basically I understand the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 88 1 level of concern here. But I think it's important to keep 2 in mind that LPG, as an emissions reductions fuel, is better 3 than some of the alternatives that we could actually be 4 confronted with. 5 And so, the benefit here was basically coming from 6 LPG, whether it was HD-5 or HD-10. What became really the 7 center of the debate was the timing for going from an HD-10 8 to an HD-5 specification. The difficulty there really 9 revolves around the distribution network. And to the extent 10 that the distribution network is not set up to basically go 11 from HD-10 to HD-5 in the way we would like, we're 12 confronted with really the issue of do we want to have HD-5 13 out there at about one-third of the facilities that we have 14 right now with HD-10? 15 If that occurs, what the consequence is, is that 16 we have a number of vehicles that essentially switch 17 probably back from LPG to some other fuel, which is 18 potentially dirtier. 19 So, it think what's gotten lost here a little bit 20 is when you look at that one-tenth of a ton, that one-tenth 21 of a ton is on the very small analysis with regard to LPG. 22 It is not on the larger analysis of LPG versus another type 23 of fuel. When you take that other type of fuel into 24 account, it makes sense to basically look at providing for 25 this delay. Because if we don't provide for the delay, we PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 89 1 end up with essentially an alternative fuel, which has 2 higher emissions, and we really end up wit a net emissions 3 loss, not an emissions gain. 4 CHAIRMAN DUNLAP: See, Ron, that's the point. 5 SUPERVISOR ROBERTS: Mr. Chairman, I clearly heard 6 the point the first time Mr. Kenny made it. And I was 7 trying to comment -- I was trying to suggest that I heard i 8 when I made my own comments. 9 But is just seems to me that two years from now 10 the situation doesn't necessarily have to change from what 11 you're confronted with today. And what if in two years you 12 come back in here and you say, well, we still have a 13 distribution problem. But you know what, this is better 14 than if they use this other fuel. 15 I don't see that the situation will have to have 16 changed. I would prefer to see a plan that we can vote on 17 rather than just a deadline shift that ensures that the 18 situation is going to change, and we know that step by step. 19 And that's not what we're getting here today. 20 CHAIRMAN DUNLAP: Ron, just my take. One, again, 21 the point I tried to make earlier is we're not in control of 22 the infrastructure, the industry, how they choose to market. 23 We've got to work cooperatively with another agency, another 24 board, the standards and measures group. 25 We have EMA here willing to work in a testing -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 90 1 extensive testing program to look at durability and the 2 other issues. That's the kind of leadership and certainty 3 that we want to provide. 4 Now, I don't remember this thing coming to me 5 during the time I've been Chairman. Maybe it did. I don't 6 remember. Has it, Dean? When did it come here last? 7 MR. SIMEROTH: Chairman Dunlap, the last time it 8 was here was in the 1994 Board hearing. 9 CHAIRMAN DUNLAP: Okay. Thank you. Now, Ron, 10 we've told the staff we want them to provide the leadership. 11 We want them to move. It's not a huge emissions impact. 12 But we would be cutting our nose off to spite our face if we 13 were to take the firm stand that this is unacceptable as a 14 proposal, because we would be disadvantaging this fuel in 15 other ways, and would limit the people that are using it 16 that are trying to take advantage of it for clean air or 17 other reasons, or economic reasons, and are going to have 18 less places to go to get the fuel if we don't provide this. 19 SUPERVISOR ROBERTS: Mr. Chairman, maybe I'm not 20 making myself clear, but what I was suggesting is maybe we 21 don't act on this today, but rather have the staff bring 22 back that detailed plan on how we're going to get from this 23 Point A to Point B with some time frames attached, so that 24 it doesn't -- it isn't just an issue two years from now. 25 CHAIRMAN DUNLAP: Yeah. I don't know that I PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 91 1 support this. Mr. Parnell and then Dr. Friedman. 2 MR. PARNELL: Well, I was just reviewing the 3 resolution, and I don't know that it totally satisfies 4 Supervisor Roberts' concerns. But in one of the resolves, 5 ". ..it is the intent of the Board that it will not adopt a 6 further postponement of the five percent propene content 7 standard for vehicular LPG, and that by the end of the. . ." 8 I think it is pretty specific what they intend to 9 do, even though there may be -- it says they're either going 10 to enforce it at the end of two years or we're going to 11 determine that it's unenforceable and put something there 12 that is enforceable. 13 It seems to me that a period of time to make those 14 determinations will be one of the roots to be able to make 15 an informed decision. I believe that it's time to vote on 16 the issue, and I think the staff has done an incredibly good 17 job of trying to outline the issue for us. 18 If they really feel it's necessary, it seems to me 19 engine manufacturers have concurred so long as we're 20 proactive. It seems to me that we've done the right thing, 21 and I urge my colleagues to vote -- 22 CHAIRMAN DUNLAP: Thank you. 23 MR. PARNELL: -- aye for the resolution as it's 24 been presented. 25 CHAIRMAN DUNLAP: Thanks, Mr. Parnell. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 92 1 Dr. Friedman. 2 DR. FRIEDMAN: I feel compelled to vote for the 3 resolution, but I must say that the very arguments that Mr. 4 Kenny provided us with fortify Ron's notion that we will 5 have no leverage or no more leverage two years from now, 6 despite any of the tests that Mr. Keller has recommended we 7 do get accomplished. 8 I don't really see how we're approaching an 9 authentic directed conclusion to this from the ARB. And 10 it's a concern of mine. 11 CHAIRMAN DUNLAP: Good point. Okay. Why don't we 12 take a minute and run through the written comments at this 13 juncture that we have. Actually, I think I need to close 14 testimony on this item. We don't have anyone else signed up 15 to testify, so we'll close the item and I'll ask staff, for 16 the record, to summarize written comments we've received. 17 Mr. Simeroth? 18 MR. SIMEROTH: Chairman Dunlap, we received two 19 letters, one from Shell Oil Company supporting the staff's 20 proposal, and indicating their agreement to work with us in 21 implementing the proposal and the test plan. 22 The other one is from the American Automobile 23 Manufacturers Association, saying that they're disappointed 24 that a waiver extension is necessary, but they strongly 25 support the CARB staff efforts to get this program back on PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 93 1 track as soon as possible, and indicating their willingness 2 to work with us. 3 CHAIRMAN DUNLAP: All right. Is that it, Mr. 4 Simeroth? 5 MR. SIMEROTH: Yes, Chairman Dunlap. 6 CHAIRMAN DUNLAP: Okay. Mr. Kenny, any further 7 staff comments? 8 MR. KENNY: None. 9 CHAIRMAN DUNLAP: All right. Since all testimony, 10 written submissions, and staff comments for this item have 11 been into the record and the Board has not granted an 12 extension of the comment period, I'm officially closing the 13 record on this portion of Agenda Item No. 97-2-2. 14 Written or oral comments received after the 15 comment period has been closed will not be accepted as part 16 of the official record on this agenda item. 17 Just a reminder on ex parte communication, we need 18 to disclose any outside discussions we've had on this item. 19 Do we have anything to report on this item? 20 Okay. I don't have any. 21 All right. A closing comment or two on my part. 22 The staff is recommending three actions: First, to adopt a 23 delay until January 1, '99, of the 5 percent propene limit; 24 second, to endorse the staff's effort to work with concerned 25 parties to develop a consensus standard for vehicle LPG; PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 94 1 thirdly, to instruct the staff to investigate with air 2 quality districts the extension of the LPG specs to 3 stationary source fuel. And the purpose of the second and 4 third recommendations is to develop a solution to the 5 current dilemma between the fuel quality needed by LPG 6 vehicles and the economics of providing LPG that meet 7 standards set to ensure that quality. 8 I want to make it clear that if we approve this 9 request today, that I don't expect to see in two years a 10 request for another delay. I think that point's been made. 11 The purpose of any additional delays is to provide time for 12 determining if there are changes to the LPG specs only, 13 which would allow the fuel to remain compatible with new and 14 existing engines, preserve those engines' performances and 15 durability, maintain emissions benefits, and be more easily 16 available in the marketplace. 17 If this isn't possible, then the 5 percent propene 18 limit should be allowed to take effect. And I expect staff 19 to ensure that this occurs and we do not end up with another 20 request for a delay for this specification. 21 Again, you know, my compliments to the staff for 22 trying to work through this. There's a bit of frustration 23 on this Board again, Mr. Kenny, as I said, about it 24 appearing like we're not being true to the emissions 25 reduction goals that we have. That is the basis, in my PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 95 1 opinion, of the Board's concern. And I think you've got 2 that point. 3 Mr. Roberts also brings up a very good point, as 4 does Mr. Silva, that we need to be sensitive about signals. 5 We need to be consistent, and we need to not willy-nilly 6 allow people to come in here -- even for what seems on the 7 surface to be good reasons to get us to compromise our 8 principles, or goals, objectives -- so, let's make certain 9 that before we bring something like this again, this has 10 been dealt with in a way that you can fully explain and 11 frame it so we can grasp what is at stake. 12 So, with that, I'd carton entertain a motion to 13 move the resolution that we have before us, and again 14 express my sensitivity to the comments of my Board member 15 colleagues on this item. 16 MR. PARNELL: Move Resolution 97-15. 17 CHAIRMAN DUNLAP: There's a motion by -- 18 SUPERVISOR SILVA: Second. 19 CHAIRMAN DUNLAP: -- Mr. Parnell, second by 20 Supervisor Silva. Any discussion that needs to occur? 21 With that, I think we'll do a voice vote. All 22 those in favor, say aye? 23 (Ayes.) 24 Any opposed? 25 SUPERVISOR ROBERTS: No. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 96 1 CHAIRMAN DUNLAP: Okay. Motion appears to carry. 2 Was it 5-1? 3 MS. HUTCHENS: Yes. 4 CHAIRMAN DUNLAP: Okay. Very good. Thank you. 5 All right. Thank you to staff. 6 Okay. We'll take a couple minute break. 7 (Thereupon, a brief recess was taken.) 8 CHAIRMAN DUNLAP: Okay. We'll reconvene. The 9 next agenda item is Agenda Item No. 97-2-3, public hearing 10 to consider the adoption of a proposed regulation to 11 establish a statewide portable equipment registration 12 program. 13 This item is the consideration of a new regulation 14 which would establish a statewide portable equipment 15 registration effort. Health and Safety Code Sections 41750 16 through 41755 require the ARB to adopt a regulation by July 17 1, '97 to establish a uniform system for the registration 18 and regulation of portable equipment. 19 Portable equipment registered under the ARB 20 program would be able to operate throughout the State of 21 California without authorization or permits from air quality 22 management or air pollution control districts. 23 This regulation would preempt districts from 24 permitting, registering, or setting emission standards or 25 emission limits for portable equipment registered with the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 97 1 Air Resources Board. However, districts would be required 2 to enforce the regulation, the requirements of the statewide 3 registration program. 4 At this point, I'd like to ask Mr. Kenny to 5 introduce the item and begin the staff's presentation. 6 Mike? 7 MR. KENNY: Thank you, Mr. Chair, and members of 8 the Board. 9 Portable equipment has historically been permitted 10 under local air district rules and regulations. The 34 air 11 districts treat portable equipment differently, having a 12 wide variety of independent permit requirements and fee 13 structures. 14 As a result, owners of portable equipment must pay 15 fees, obtain permits, and adhere to different sets of 16 regulations as they move portable equipment between 17 districts. 18 Previous attempts to create a statewide 19 registration program at the district level have been 20 unsuccessful. Today, we'll be presenting a statewide 21 registration program that established, as required by State 22 law, uniform requirements for the registration and 23 regulation of portable equipment. 24 Once registered with the Air Resources Board, the 25 statewide registration program would provide for the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 98 1 operation of registered equipment throughout the State of 2 California. 3 The proposed statewide registration program is 4 expected to have a beneficial impact on California business 5 and industry. Participants in the program would no longer 6 need to seek and pay for permits in each district in which 7 they wish to operate or to comply with different emission 8 limits and control requirements each time the equipment is 9 operated in a different district. 10 Most portable equipment owners would have the 11 option to participate in a statewide registration program or 12 to remain with the existing district program. The statewide 13 registration program is not expected to have any adverse 14 environmental impacts. 15 Rather, overall, the proposed regulation would 16 have a positive environmental impact and would not interfere 17 with the attainment or maintenance of State or Federal 18 ambient air quality standards. 19 This is because he proposed regulation would 20 establish emission controls and emission limitations to 21 minimize emissions from the portable equipment. 22 Furthermore, because the regulation promotes early 23 replacement and over time total replacement with cleaner 24 technologies, emission reductions are expected to be beyond 25 those that are obtained from existing district programs. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 99 1 Now, Mr. Mike Tollstrup of the Stationary Source 2 Division will explain our proposal to you. Mike? 3 MR. TOLLSTRUP: Good morning, members of the 4 Board. For this agenda item, staff will present a proposed 5 regulation for a statewide program to register and regulate 6 portable engines and their associated equipment. The 7 regulation is required by recently enacted State 8 legislation, which I will discuss in greater detail later in 9 the presentation. 10 Before I begin the presentation, there are a 11 couple of items I would like to mention. First, we have 12 some examples of portable equipment on display in front of 13 the building. We have two portable generators and a 14 military tactical support turbine. And I would like to 15 thank the parties who arranged to have this equipment here 16 for our convenience. 17 Also, please note that copies of the staff's most 18 recent proposed amendments to the regulation are available 19 in the back of the hearing room. 20 To begin, the regulation defines a portable engine 21 as an internal combustion piston engine that is designed and 22 capable of being moved from one location to another. A 23 portable engine can also be an internal combustion engine 24 used in conjunction with the following types of portable 25 operations: PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 100 1 Military tactical support, which by State law does 2 include turbines; power generation equipment, compressors, 3 pumps, and dredges. 4 Associated equipment is defined as a portable 5 piece of equipment that is driven solely by a portable 6 engine and emits pollutants in addition to those of the 7 portable engine. Associated equipment subject to this 8 program primarily emits PM10. 9 Examples of associated equipment include rock 10 crushing, confined and unconfined abrasive blasting, and 11 concrete batch plants. In addition, a fuel tank necessary 12 for the operation of a portable engine would qualify as 13 associated equipment. 14 The following slides show a couple of examples of 15 equipment covered by the statewide registration program. 16 This is an example of a portable generator that is typically 17 used. This is a rock crusher, which is a good example of 18 associated equipment. 19 And this is an example of a military tactical 20 support turbine, which we have one out in front of the 21 building. 22 There are types of sources that are not eligible 23 for the statewide registration program. They include 24 sources that propel motor vehicles or mobile equipment, are 25 used in agricultural operations, associated equipment that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 101 1 is part of a stationary source which is permitted by a local 2 district, engines and associated equipment that are subject 3 to federal new source performance standards, maximum 4 achievable control technology standards, or national 5 emission standards for hazardous air pollutants. 6 It is our understanding that the U.S. EPA is 7 investigating the possibility of developing a MACT standard 8 for internal combustion engines. And should the U.S. EPA 9 promulgate a MACT standard that is applicable to portable 10 engines, ARB staff will work with affected industry to 11 determine the proper course of action with regards to the 12 statewide registration of this equipment in California. 13 The issue of whether offshore oil and gas 14 operation sources should participate in the program was just 15 recently brought up. Because of a conflict with federal 16 law, staff is recommending that portable engines and 17 associated equipment located in federal waters not be 18 eligible for registration. 19 As for offshore sources located in State 20 territorial waters, staff is recommending that they not be 21 included in the program as well. The State waters exclusion 22 is recommended because staff did not consider the potential 23 impacts nor determine control technology requirements for 24 this source category during the course of developing the 25 proposed regulation. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 102 1 Staff will continue the dialogue between the 2 affected districts and industry and, if appropriate, will 3 come back to the Board with a proposal to include offshore 4 gas and oil operations in State territorial waters at a 5 later date. 6 Now that we have defined portable defined portable 7 engines and associated equipment and determined which 8 sources are ineligible for the program, I now want to 9 provide the Board with a brief background on the legislative 10 mandates that require or relate to the program, and give 11 them an overview of the design of the program based on those 12 legislative mandates. 13 The ARB is required by State law to develop the 14 proposed regulation. Assembly 531, enacted in 1995, 15 requires the ARB to adopt a uniform statewide system to 16 register and regulate portable engines. Assembly Bill 2635, 17 enacted in 1996, expands the scope of the portable engine 18 regulation to include portable equipment associated with and 19 powered by portable engines. 20 This bill also requires the ARB to adopt a 21 regulation by July 1, 1997. Both AB 531 and 2635 were 22 sponsored by Assemblymember Morrissey. Senator 1880 by 23 Senator Lewis was intended to align the State definition of 24 portable engine with federal law. 25 These three bills have been codified in Health and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 103 1 Safety Code Sections 41750 through 417555. 2 Now, ARB staff took care to ensure that the 3 requirements and provisions of the proposed regulation did 4 not conflict with federal law. 5 The Federal Clean Air Act amendments of 1990, gave 6 U.S. EPA authority over the regulation of new nonroad or 7 off-road engines, and preempt States from adopting emission 8 standards or other requirements for these sources. However, 9 Congress recognized California's unique air pollution 10 problems and provided special authority for U.S. EPA to 11 grant California authority to adopt standards and 12 regulations for nonroad engines, with the exception of those 13 engines rated at under 175 horsepower which are used in farm 14 and construction operations. 15 In 1994, U.S. EPA promulgated a regulation for new 16 nonroad engines which defined a nonroad engine as those 17 manufactured after July 18th, 1994. After a court challenge 18 by the affected industries, U.S. EPA now has to establish a 19 new date to define nonroad engines. 20 That date has still not been determined. For the 21 purposes of this regulation, ARB needed to determine a date 22 and decided on a conservative approach by defining nonroad 23 engines and those manufactured after November 15th, 1990, 24 which is the date the 1990 Federal Clean Air Act became 25 effective. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 104 1 Upon final adoption and approval of the proposed 2 regulation, ARB will seek authorization from the U.S. EPA to 3 apply California's program fully to nonroad engines. 4 The Federal Clean Air Act arguably preempts air 5 districts from adopting and enforcing emission standards and 6 other requirements for any new nonroad engine. However, air 7 districts may permit and establish operational controls such 8 as daily or hourly emission limits or fuel use restrictions 9 for nonroad engines. ARB staff is seeking clarification 10 from the U.S. EPA as to the extent of the federal 11 preemption on local districts. 12 If a district's program is federally preempted, 13 there is a provision in the regulation which provides the 14 Executive Officer with the authority to make the regulation 15 mandatory for portable engines in the affected district. 16 This provision, however, would only be invoked if 17 it has been determined that a district's program has been 18 preempted by federal law. The purpose of this provision is 19 to maintain the integrity of the SIP. 20 At this point, I will discuss the major 21 requirements for the program required by State law. First, 22 the program will be voluntary for most engines and all 23 equipment units. Most sources will have the option to 24 participate in the State's program or comply with local 25 district programs. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 105 1 District's are prohibited from permitting, 2 registering, or regulating portable engines and equipment 3 units registered with the Air Resources Board. 4 This prohibition also precludes districts from 5 establishing in-use operational controls for recordkeeping 6 and reporting requirements. Portable engines and associated 7 equipment not registered with the ARB would continue to be 8 subject to district permit requirements. 9 However, State law requires that districts be 10 responsible for enforcing the statewide regulation, and that 11 the regulation allows the district to charge a fee to cover 12 the costs of enforcement related to ARB's program. 13 Also, State law requires ARB to establish by 14 regulation a uniform enforcement fee statewide. Staff is 15 recommending that the statewide enforcement fee be $75 per 16 unit inspected per district per year. 17 In developing the regulation, staff was faced with 18 balancing the requirements of State law with industry, local 19 district, and federal concerns. The overall goal was to 20 develop a program that would ensure that portable engines 21 and associated equipment registered with the ARB would not 22 jeopardize commitments contained in the SIP. 23 In addition, the State's program needed to provide 24 for a simplified transition from district permitting 25 programs. ARB staff in November, 1995, formed the portable PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 106 1 equipment registration work group to assist in developing 2 the proposed regulation. 3 The work group consisted of local, State, and 4 federal air quality representatives and a broad a range of 5 representatives from the portable equipment industry, such 6 as oil services, well drilling, construction, sanitation, 7 movie, rental, and manufacturing industries. 8 The proposed regulation was drafted considering 9 extensive input from the work group and its subgroups who 10 worked on specific issues, such as definitions, emission 11 limits, incentives, control technology, legal, and 12 recordkeeping and reporting requirements. 13 As part of this effort, staff held 23 meetings 14 with work group members, conducted 30 conference calls, and 15 had over 400 telephone calls with individual members. In 16 addition, staff and the work group held two public workshops 17 on the proposed regulation. 18 Now, I will briefly discuss the requirements 19 proposed in the regulation. Portable engine requirements 20 are separated by category depending on whether the portable 21 engine is determined to be resident, nonresident, exempt, or 22 those meeting State or federal offroad or nonroad standards. 23 Under State law, the following requirements apply 24 to these source categories: Resident engines are those 25 currently operating or residing in California. Resident PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 107 1 engines would be subject to control technology requirements 2 that are technologically and economically feasible in 3 California. 4 Nonresident engines are new engines or engines 5 that have no previous history of operation. Nonresident 6 engines would be subject to best available control 7 technology requirements which are based on a compilation of 8 the most stringent district BACT requirements in effect on 9 January 1, 1995. 10 Any portable engine which meets an applicable 11 emission standard established in State or federal offroad or 12 nonroad regulations is not subject to any additional 13 technology requirements. Pursuant to State and federal 14 statutes, military tactical support equipment in nonroad 15 engines rated at less than 175 horsepower used in farm and 16 construction operations are exempt from all technology 17 requirements established in the proposed regulation. 18 An important requirement in the proposed reg 19 requires owners and operators to replace or modify existing 20 engines over time to realize an overall air quality benefit 21 for this program. These requirements would be phased in 22 over time to allow long-term planning on the part of 23 affected businesses. 24 The specific requirements are as follows: Any 25 portable engine or a replacement engine registered after PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 108 1 January 1, 2001, must meet the applicable State or federal 2 new engine emission standards. 3 No later than January 1, 2010, all portable 4 engines registered with the ARB must meet the applicable 5 State or federal new engine standards. 6 Staff in consultation with the portable equipment 7 work group developed provisions with incentives to encourage 8 the replacement of older, higher-emitting portable engines 9 with newer technologies. Staff believes that by providing 10 incentives for early voluntary cleanup of engines, that 11 owners would turn over existing engine fleets much quicker 12 in exchange for the ability to operate with fewer 13 restrictions. 14 The two major incentives provided in the statewide 15 registration program would provide relief from daily and 16 annual emission limits and recordkeeping and reporting 17 requirements. A permanent exemption would be provided for 18 engines that meet State or federal emission standards. 19 Temporary relief would be provided to the owner or 20 operator of an existing registered engine who agrees to 21 replace or modify that engine to meet State or federal 22 emission standards within 18 months. 23 In summary, I will explain the environmental and 24 economic impacts, staff's proposed amendments to the 25 regulation, and staff's recommendation. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 109 1 The environmental impacts of the proposed 2 regulation include a small short-term emissions increase in 3 the South Coast Air Quality Management District. Staff 4 currently estimates a maximum of four tons per day in NOx 5 emission increases from the year 2000 through 2005. This 6 potential impact could occur because of the timing between 7 the implementation and phase-in of the statewide 8 registration program, and the existing South Coast District 9 Rule 1110.2. 10 However, this impact may be significantly reduced 11 depending on the future regulatory actions of the South 12 Coast District. Further, by the year 2005, the State's 13 program with the phase-in of cleaner technologies will 14 offset and begin to provide air quality benefits for the 15 South Coast District through the year 2010. 16 Statewide, the ARB's proposed regulation 17 establishes emission control and emission limitations to 18 reduce emissions from portable engines and associated 19 equipment. Further, the regulation also promotes early 20 replacement of older existing engines to provide emission 21 reductions above and beyond existing districts' programs 22 through the year 2010. 23 As a consequence, the proposed regulation is 24 expected to provide an overall air quality benefit 25 statewide. Therefore, the staff has concluded that the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 110 1 proposed regulation will not result in any significant 2 adverse environmental impacts. 3 The proposed regulation is expected to have a 4 beneficial on California business by providing cost savings 5 and regulatory flexibility. The economic impacts of the 6 regulation include: Participants in the program will no 7 longer need to seek permits when moving from one district to 8 another or for relocations within a district. 9 Most owners would have the option to participate 10 in the program. Where participating is mandatory, the owner 11 would typically experience a reduction in operational costs 12 and be subject to a single set of requirements. The 13 registration fees would be equal or less than fees assessed 14 by districts for permit processing or registration. 15 For example, San Diego and Yolo-Solano's 16 registration program fees are $200 versus the $90 proposed 17 for the State's program. Typical district permit costs 18 range from $100 to over $3,000 per piece of equipment. 19 Districts may lose revenues from those engine 20 owners who choose to participate in the State's program. 21 However, the districts would have a corresponding reduction 22 in workload because they would no longer be permitting these 23 units. 24 As I mentioned before, the districts will remain 25 responsible for enforcing the State's program and would be PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 111 1 able to recover inspection costs specified in the proposed 2 regulation. 3 Now, I'd like to summarize staff's proposed 4 amendments to the regulations based on comments received 5 after the initial proposal was distributed to the public. 6 These proposed amendments are subject to the 7 Board's approval and followed by a 15-day comment period. 8 As I mentioned previously, staff is proposing to exclude 9 sources located in State and federal waters from the 10 program. 11 In the event the Executive Officer makes the 12 statewide program mandatory for certain engines, staff is 13 proposing to allow the option of transferring district by 14 district permit conditions in lieu of the statewide 15 program's requirements for daily and annual emission limits. 16 Where the temporary 18-month exemption is granted 17 for replacing older engines, staff is proposing to exempt 18 the engine being replaced during that time period from 19 recordkeeping and reporting requirements. 20 Staff is proposing to add a provision that will 21 allow the Executive Officer to require modeling of CO 22 impacts for spark ignition engines where deemed appropriate. 23 And for nonroad engines greater than 750 horsepower, staff 24 is proposing to replace the existing 100 pounds per day NOx 25 limit with a 12-hour per day operational limit. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 112 1 To conclude, ARB staff recommends the Board adopt 2 the proposed regulation with the staff's proposed amendments 3 to establish a statewide portable equipment registration 4 program in California. 5 Further, staff recommends that the Board direct 6 staff to seek U.S. EPA approval of the control requirements 7 applicable to nonroad engines prior to making these 8 requirements enforceable. 9 Also, as I mentioned earlier in the presentation, 10 staff will follow up on whether to include offshore sources 11 located in State territorial waters in the program. 12 Finally, let me reiterate the staff's proposed 13 amendments that are subject to a 15-day comment period are 14 available to the public at the back of the room. 15 I thank the Board for its time to hear this 16 presentation. I would be glad to respond to any questions 17 you might have about the proposed regulation. Thank you. 18 CHAIRMAN DUNLAP: Thank you, Mr. Tollstrup. 19 Mr. Ombudsman, would you please take a moment and 20 run us through the process that the staff went through to 21 get it to this point. 22 MR. SCHONING: Thank you, Mr. Chairman and 23 members. 24 This item comes to your attention following an 25 extensive effort to advise interested parties of the scope PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 113 1 and nature of the proposed regulatory changes. Over the 2 course of the past year, staff has worked with members of 3 the affected industry, the Department of Defense, the United 4 States Environmental Projection Agency, local air pollution 5 control districts, and many other interested parties through 6 numerous meetings, conference calls, and other contacts. 7 This effort has led to a better understanding 8 among all parties of the intent of the legislation driving 9 this regulation, the effect of the actual proposed 10 regulation, and it's also identified areas for further 11 program improvement. 12 As staff has already indicated, part of this 13 process included two formal workshops held to review draft 14 regulations. One was in Southern California on July 9, 15 1996, and other here in Sacramento on July 11th, 1996. 16 Approximately 100 persons attended these workshops out of 17 more than 1600 invited to participate by a notice which was 18 mailed on June 3rd 1996. 19 A diverse array of participants attended these 20 workshops, including representatives from the construction 21 industry, local governments, the Department of Defense, and 22 the drilling industry, amongst others. Both before and 23 after the July, 1996 workshop, an informal portable 24 equipment work group composed of a cross-section of 25 interested parties, which included industry and local air PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 114 1 districts, held a series of productive meetings to explore 2 proposed regulatory language. 3 These efforts were made to ensure the widest 4 possible public participation prior to proposing the 5 regulations now before you. A formal 45-day rulemaking 6 notice was issued on January 30, 1997, and it was sent to 7 more than 2600 interested parties. It also was posted on 8 ARB's Internet Web Site. 9 In conclusion, this proposal has received 10 extensive public notice, and staff has encouraged and 11 facilitated an ongoing and inclusive dialogue with numerous 12 interested parties. 13 CHAIRMAN DUNLAP: Very well. Thank you, Jim. I 14 appreciate that overview. 15 Okay. Do any of the Board members have questions 16 before we get into the witnesses? I might add that we have 17 some 13 witnesses that have signed up. 18 Ms. Edgerton. 19 MS. EDGERTON: I have reviewed an article from 20 P.S. Enterprises. And I don't if you're all familiar with 21 this letter in which they indicate -- Mr. Soto (phonetic) 22 indicates that the program as proposed would unnecessarily 23 restrict the use of clean fuel portable engines in 24 California. 25 Can you respond to that concern? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 115 1 MR. VENTURINI: Ms. Edgerton, this morning, my 2 staff had a meeting with a representative from that 3 organization, and Mr. Terris will summarize of that 4 discussion and the clarification -- 5 CHAIRMAN DUNLAP: That's good, I appreciate the 6 responsiveness. But just want people to know that Witness 7 No. 9 is from PS Enterprises. And so, we can hear directly 8 from him, Lynne. 9 MS. EDGERTON: Oh, okay. We'll be able to -- 10 CHAIRMAN DUNLAP: That way, we can get a report 11 back -- 12 MS. EDGERTON: Assuming it's the same. Thank you. 13 CHAIRMAN DUNLAP: Okay. Good point. That caught 14 my attention as well, Lynne. 15 Okay. Why don't we get to the witnesses that have 16 come today. I'll call your name, and if you would queue up 17 into the front -- I don't know if there's any room in the 18 front row -- but towards the front, I'd be grateful. 19 Mike Lewis from Construction Industry Air Quality 20 Coalition, followed by Mr. Shepherd from Power Systems 21 Associates, Frank Caponi, L.A. County Sanitation District, 22 and then Barbara Lee from CAPCOA, and Mr. Broadbent from the 23 South Coast District. 24 Good morning, Mike. 25 MR. LEWIS: Good morning. How are you? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 116 1 CHAIRMAN DUNLAP: Fine. Thank you. 2 MR. LEWIS: Thank you for taking the time to deal 3 with this issue today. My name is Mike Lewis. I'm the 4 senior vice president of the Construction Industry Air 5 Quality Coalition. We were the sponsors of this 6 legislation. Went to Assemblyman Morrissey in 1995 to 7 create a statewide registration program. 8 Our coalition is made up of the four major 9 construction associations in Southern California -- the 10 Building Industry Association, the Southern California 11 Contractors Association, the Engineering Contractors 12 Association, and the Associated General Contractors. 13 We also have as members the Southern California 14 Rock Products Association and the California Rental 15 Association, which represents the rental companies that 16 provide a lot of the equipment to the construction industry. 17 In total, we probably have about 2500 member 18 companies representing about 250,000 employees. This 19 legislation followed what was really a two-year effort on 20 our part to try and come up with a standard rule at the 21 local level that could be used by the air districts or 22 adopted by the air districts to aid the construction 23 industry that moves its equipment all over the State, in and 24 out of air basins quite regularly in their various 25 construction activities. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 117 1 When that failed to gel, we decided to pursue this 2 legislation to create a statewide program. 3 I want to take a moment and compliment your staff, 4 if I can, first of all for their diligence in supervising 5 what's been an 18-months effort with a pretty diverse group 6 of folks and, secondly, for their patience in dealing with 7 that very diverse group and their very unique problems. 8 We're satisfied I think today that we have a 9 workable solution for certainly the construction industry, 10 and probably that we've gone about as far as we can today to 11 come up with a statewide program that will at least get us 12 off the ground in terms of a working solution for everybody 13 who has portable equipment. 14 We have a couple of issues that we still think 15 needs some work and some clarification. And I'd like to 16 present those to you quickly, and hope that perhaps, if we 17 can't del with them today, we can deal with them in some 18 forum subsequently. 19 First of all, we do support the adoption of this 20 rule. We do so in particular with supporting the language 21 that your staff has added as a result of our discussion with 22 them last week regarding operating limits for engines in 23 excess of 750 horsepower. 24 Currently, because of the federal regulation and 25 the exemption, engines of that size purchased between today PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 118 1 and the year 2000 would be -- have a four-hour per day limit 2 applied to them. We think that that's unrealistic, given 3 that they would be new engines; that they would be in the 4 price -- you're talking about a piece of equipment that 5 starts somewhere above $75,000. To try and limit it to four 6 hours a day of operation to keep it under the 10 ton annual 7 limit is not realistic. So, we would support the language 8 that your staff has proposed in that regard. 9 Two issues that we are uncertain about the status 10 of at this point. One of them I would categorize, I think, 11 as a misunderstanding, and something we'd like to get some 12 clarification on, and that is as it relates to the 13 requirement for BACT to be applied to currently permitted 14 engines which would come into the State program. And this 15 would apply to engines between the 100 and 750 horsepower 16 range. 17 We had been, I think, operating under the mistaken 18 assumption that the existing permit conditions in those 19 districts would apply across the board. And I've come to 20 understand only recently that that only applies to the hours 21 of operation and not the requirement for BACT. 22 We have two problems with that. First of all, 23 we're not convinced that BACT is appropriate or feasible for 24 most of that equipment, and think that the effect of that 25 requirement will basically be to keep about 75 percent of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 119 1 equipment that's in the South Coast Basin out of the 2 statewide program. 3 And I think that that -- that will be a problem 4 for all of us in terms of that equipment not having a place 5 to go and I'll elaborate a little bit on that as to why 6 that's a particular problem. 7 The second issue that's unresolved in our mind is 8 the question of the inspection, the frequency of inspection 9 of this equipment. Currently, every district under the rule 10 may inspect the equipment as it moves into the district. 11 Today, most of that equipment isn't inspected at all, 12 frankly. Because there is a fee associated with that and 13 because we are in a very competitive industry that gets its 14 work by and large based on low bid, we like to know as much 15 as we can in advance about what things are going to cost. 16 And what we would propose is that a limit be 17 placed on the fees that can be charged for inspection. We 18 don't have any objection everytime the equipment moves, but 19 we think that having to pay the $75 fee no more than once 20 every six months is not unreasonable, given the frequency 21 with which some of this equipment moves, and the fact that 22 the nature of the equipment doesn't necessarily require that 23 it be inspected anywhere near that kind of frequency, 24 unless, of course, there's some suspicion that there was 25 tampering or some modification of the equipment that was PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 120 1 inappropriate, and the rule already deals with that 2 likelihood. 3 Let me go back now for just one second as to why 4 we're concerned about the BACT requirement. One of the 5 things that our industry has been particularly concerned 6 about is how much equipment is there out there, how is it 7 operated, who owns it, what really are its emissions, and 8 how do we make -- create a level playing field in this 9 competitive industry? 10 Currently, in the South Coast Basin, there are 11 4400 pieces of equipment registered that are construction 12 related. Our industry undertook a considerable review with 13 Booz, Allen, Hamilton a number of months ago, and asked them 14 to try and identify for us how many pieces of equipment 15 there really were, because we did not know. 16 We got the report from them last week. We shared 17 it with your staff. We shared with the district staff. And 18 their indication is that there are, by their best estimate, 19 about 21,000 pieces of equipment operating in the South 20 Coast Air Basin today, construction-related, diesel portable 21 equipment in excess of 50 horsepower. 22 As I indicated, there are only 4400 pieces 23 registered with the district. That means there's 16,000 24 pieces of equipment out there that have not come into the 25 program. They will not come into your program if they have PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 121 1 to have BACT, and they probably won't try to get into the 2 local program, if the district makes the modifications that 3 they've proposed to it, because of the cost and other 4 conditions that the district's looking at under its 1110.2. 5 Obviously, that's not in anybody's interest. It's 6 not in our interest. We would like to see everybody come 7 into compliance. We certainly would like to find the right 8 format and give the options for them to do that, whether 9 it's the State program or the local program. And I guess I 10 would implore you to give careful consideration to the BACT 11 requirement at this time and its impacts, only because I 12 think what we're likely to do is keep that equipment hidden 13 in the bushes wherever it is and not have it come into 14 anybody's program if the conditions are onerous that those 15 small business people who own it -- and they are small 16 business people. 17 The other thing that report indicated is that this 18 equipment is owned by about 10,000 businesses, 70 percent of 19 which are under a million dollars a year in revenue and 20 fewer than 10 employees. So, they're not big businesses. 21 We're talking about equipment that starts about 22 $5,000 apiece, goes up to a hundred thousand, and we'd like 23 to be able to bring them into the program. 24 So, my recommendation to you would be that if we 25 can't correct the BACT thing today, we would like to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 122 1 continue our dialogue with the staff through the committee 2 that we had, the statewide group, to continue to deal with 3 that issue and a couple of the other issues that you'll 4 probably hear about today. 5 So, thank you. 6 CHAIRMAN DUNLAP: Okay. Thank you. Appreciate 7 the info on that survey, Mr. Lewis. I think that's helpful. 8 Peter, if you're putting together a list, why 9 don't you give a commentary on the BACT issue later as we 10 work through the witness list, okay? Because Mr. Lewis 11 brings up a good point about that study and how you bring 12 those people in. 13 Good afternoon. Or good morning still, I guess, 14 Mr. Shepherd. Power Systems Associates. 15 MR. SHEPHERD: Good morning, Chairman Dunlap and 16 Board members. 17 Bob Shepherd, Power Systems Associates. I'm a 18 Caterpillar distributor for Los Angeles and Orange Counties. 19 I'm also here representing the rental industry and 20 construction industry interests, and am part of the same 21 coalition that Mike Lewis is a part of, the Construction 22 Industry Air Quality Coalition. 23 I'd like to compliment staff for all the hard work 24 that they put into this program. I mean there have been so 25 many things on the table, so many concerns, and they've PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 123 1 addressed each and every one of them. And right now, 2 there's just a handful of issues that end up on the table. 3 I really had a pleasure being a part of the work 4 group. I mean that worked out great. I was able to get my 5 issues on the table, so I thank staff for that opportunity. 6 I'm in support of this regulation. However, I 7 feel there are three elements that are essentially that 8 could be changes that would make this program work much 9 better. Mike has alluded to all three of them as well. And 10 that has to do with the BACT issue, the other issue having 11 to do with requiring retarded timing on new engines, a 12 retrofit on new engines. 13 And the third would be the inspection fees that 14 need to be limited in some way. 15 As Mike said, it was our understanding that 16 additional BACT would not be required for equipment that's 17 already got a district permit on it in the South Coast area. 18 Apparently there is a misunderstanding on that. What I did 19 is I actually took an inventory of our over 50 -- about 55, 20 56 engines in our rental fleet. About 30 percent of them 21 would be required to retard the timing. 22 Right now, we are not required to do any timing 23 retard on that equipment. That's just to get into this 24 program. So, they're asking me to do something beyond what 25 I'm doing in the program now. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 124 1 What this does by putting retarded timing on an 2 engine is it will -- and these are rough numbers -- yes, it 3 will drop the NOx about 20 percent. But, yes, it will also 4 raise the fuel consumption about 10 percent and the 5 particulates and hydrocarbons more importantly will rise 6 about 10 percent. 7 It will also decrease your horsepower about 10 8 percent and what t hat means is you can end up having to use 9 bigger equipment to do the same project that I'm already 10 currently permitted to do. 11 So, in that light, what I would like to see -- and 12 again, as Mike said, we can review this later if it doesn't 13 get approved at the end of the day. But what I would really 14 like to see is in Section 2456(e)(5), that an amendment be 15 put in there that states, "an owner may substitute district 16 permit or registration BACT requirements in effect on or 17 before the effective date of the regulation." 18 CHAIRMAN DUNLAP: On that point, could I get a 19 staff reaction to that proposal? 20 The specific language that Mr. Shepherd just 21 outlined, how does staff feel about that? 22 MR. VENTURINI: Let me just start and then I'll 23 ask staff to amplify a little more. 24 Mr. Shepherd's concern on the retard and basically 25 on the permit, basically what we're doing as part of this PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 125 1 program is when an engine comes into the program -- and 2 consistent with the State laws -- requiring that BACT be 3 applied to these engines, we recognize his points regarding 4 the retard. And in the regulation, there is a provision 5 where an applicant for registration can be excused from the 6 four degree retard if there's cause made that it would not e 7 appropriate for that engine. 8 So, that would be a case-by-case determination. 9 CHAIRMAN DUNLAP: Okay. Please continue 10 MR. SHEPHERD: Okay. As far as new equipment, 11 again, the question of retarded timing, again this is brand 12 new equipment. They're buying it off the shelf from a 13 manufacturer. Right now, as you've already seen, over 750 14 is allowed the 12 hours according to the new language that's 15 put in. We thank staff for working with us on that. But 16 also, think about the putting the four degree timing retard 17 or some other point of retard on a brand new piece of 18 equipment, you're asking for a retrofit. 19 For greater than 750 horsepower engines, this can 20 be unfeasible. Yes, there is an emissions limit that you 21 can try to meet. But again, that's 7.0 grams per brake 22 horsepower hour. The emissions limit by the standards that 23 are to be in place for this portable equipment in the year 24 2000 is 6.9. 25 So, 7.0 at this point in time is probably not PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 126 1 achievable for a good portion of this larger equipment. So, 2 now you're stuck with the retarded timing. 3 One comment on new equipment that I would make -- 4 and I refer to Appendix A, subpart A in part 89. Basically, 5 it says the States are not precluded from being able to -- 6 I'll quote anyway. 7 It says, "States are not prevented by Section 209, 8 Clean Air Act, from requiring retrofitting of nonroad 9 engines in certain circumstances." 10 But here's the key. "Once a reasonable time has 11 passed after the engine is no longer new, as long as the 12 requirements do not amount to the standard relating back to 13 the original manufacturer." 14 It goes on to say, and I'm skipping a little bit, 15 but it says, "EPA believes that modest retrofit requirements 16 may be required after a reasonable amount of time." 17 And they give the example. "At the time of 18 reregistration or rebuilding." 19 So, in that light, I look at what they have 20 written in the regulation right now requiring retarded 21 timing on a brand new piece of equipment as contrary to EPA 22 here. 23 I'll step back. I notice that California has a 24 right to go back to the EPA, ask for approval from EPA. But 25 to me, it's very clear as written in Part 89. Written by PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 127 1 EPA. They've already stated what is a reasonable amount of 2 time for requiring this kind of a retrofit. 3 So, I would ask if that part be removed or at 4 least at this point in time that new engines not be required 5 to have the retarded timing. 6 Finally, on my third issue, on the inspections, as 7 Mike said, we move our equipment in and out. As a rental 8 fleet operator, it's at customer's demand. They want the 9 equipment. They need to move the equipment here and there. 10 And a lot of times, I don't know where this equipment goes. 11 So, we could end up in somebody else's district or some 12 other district from our home district for more than five 13 years. 14 It's up to that operator to inform CARB of where 15 it is. So, all said -- and I'm subject to a $75 inspection 16 fee if an inspector goes out there without even knowing I 17 had to budget it in there. 18 So, unknown about of fees can be very difficult 19 can be very difficult to budget for me. It does put me into 20 a noncost-effective situation for the operation of this. 21 All inspections are supposed to go on the CARB 22 bulletin board. And I would consider that such numerous 23 inspections -- if I'm going to be inspected more often than 24 six months and be charged a fee, I'd consider that excessive 25 and beyond what is necessary to keep this program in line. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 128 1 I'm not here to say that I don't want my equipment 2 inspected more often than six months, but what I'd like to 3 do is see a cap on the fees be in place so that no more than 4 one fee can be charged in any six-month period. 5 And certainly, as is already written, no more than 6 one inspection per district. 7 I want to thank the Board for the opportunity to 8 provide these comments. And again, I compliment staff. 9 They've been excellent. 10 CHAIRMAN DUNLAP: Okay. Thanks, Mr. Shepherd, for 11 those specific comments. We'll come back to those later. 12 Thank you. 13 Just as a comment, we have Mr. Caponi coming up, 14 Barbara Lee, Jack Broadbent, Randal Friedman, and Doug 15 Allard. 16 I don't use a timer. I'm not going to cut people 17 off, but we would like to hear from all the witnesses and 18 say what you need to say. So, please, try not to be 19 redundant. And if you can emphasize a point or come up with 20 yet another suggested revision, let us know. Flag it for 21 us, and I'll have staff -- Mr. Venturini's keeping a list. 22 And then we'll come back and we'll discuss those at the 23 proper time. 24 Good morning. 25 MR. CAPONI: Good morning, Mr. Chairman, members PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 129 1 of the Board. My name is Frank Caponi. I'm representing 2 L.A. County Sanitation Districts. I'm also representing a 3 number of local governments in the South Coast Air Basin. 4 I think it's important to be redundant in this one 5 area. I do wish to express my appreciation to the staff for 6 all their hard work in bringing this program to you today. 7 They really should be commended for their effort. And, as a 8 member of the work group, I was able to experience first 9 hand the multitude and the complexity of the problems 10 surrounding the development of this issue. 11 I won't redundant. I just want to support the 12 previous two speakers with regard to the BACT issue. I 13 think that's an area that needs further development. 14 Having said that, I do strongly support this 15 program, because I think it represents an important first 16 step in leveling the playing field in the treatment of 17 portable engines and equipment throughout the State of 18 California. 19 But I think work still needs to take place. Much 20 work still remains. I think there needs to be a strong 21 partnership developed with EPA so that the continued mixed 22 signals from EPA are not sent to the local districts and 23 ultimately the regulatory industry -- the regulated industry 24 regarding the treatment of portable engines and equipment. 25 As a member off the Title 5 ad hoc committee in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 130 1 the South Coast AQMD, I can tell you this is a significant 2 problem. And I won't go into any detail of these problems 3 at this point. 4 I believe ARB can and should take a leadership 5 role in fostering this partnership, so that the ultimate 6 goals of statewide uniformity in the treatment of portable 7 engines and equipment can be realized. 8 And that concludes my comments. Thank you. 9 CHAIRMAN DUNLAP: Okay. Very good. Thank you. 10 Any questions of the witness? All right. 11 Barbara Lee, CAPCOA, followed by Jack Broadbent, 12 South Coast District. 13 Ms. Lee, I believe you sent us a letter; is that 14 correct? 15 MS. LEE: That's correct. You should have before 16 you a copy of a letter submitted by the president of CAPCOA. 17 And I will read for you that letter. 18 CHAIRMAN DUNLAP: You don't need to read it. You 19 could summarize it, and it would be perfectly acceptable to 20 us. 21 MS. LEE: Okay. In that case, what I would like 22 to bring to your attention is that CAPCOA has participated 23 in this coalition that has been referred to by the previous 24 three speakers. And like them, we support the efforts of 25 the ARB and we also support the rule. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 131 1 We also have some concerns that remain with this 2 program. But in the interest of moving forward with the 3 emissions reductions that the staff believes this program 4 will bring about, we do support it, and we would like to 5 have our concerns reviewed in a year. And we propose that 6 the Board resolution be amended to direct staff to review 7 the rule by July of 1988 (sic), and periodically thereafter. 8 In brief, I would like to say our concerns relate 9 to first and foremost the fact that the national ambient air 10 quality standards are changing and we believe that those 11 changes may have some impact on this program. And that if 12 this program is not reviewed in light of those changes, 13 there may be some unfair repercussions on sources outside of 14 this program. 15 Secondly, we have concerns about some of the 16 requirements for local districts implementing this program, 17 and some of the restrictions that are placed on us. And we 18 have discussed those in the work group quite thoroughly. 19 There remain some disagreement, as you probably can guess 20 from the previous speakers on how these issues should be 21 resolved. 22 In the interest of moving forward again, I would 23 say we would like to be able to present to the Board within 24 a year data on the implementation and effectiveness of the 25 program, and address such fees, certification onsite, and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 132 1 notification provisions. 2 With that, I would like to commend the staff, and 3 thank you for your attention. 4 CHAIRMAN DUNLAP: Okay. Very good. Just a 5 comment to give some credit to CAPCOA. I appreciate your 6 willingness to work with us on this process. And I know 7 that you do on a number of issues. 8 We don't always agree, but we get close 9 oftentimes. And I appreciate that and have a great deal of 10 respect for that. 11 Okay. The next witness, Jack Broadbent, South 12 Coast, followed by Randal Friedman, Doug Allard, Dan Mullen, 13 Edric Guise. 14 Good afternoon, Jack. 15 MR. BROADBENT: Good afternoon, Mr. Chairman, 16 members of the Board. My name is Jack Broadbent with the 17 South Coast AQMD. I have a very few brief comments on the 18 program on behalf off the South Coast District where it's 19 believed about half the engines reside in the State. 20 The South Coast has participated in the working 21 group on this program, and also would like to commend the 22 staff for their efforts. 23 We're here today to overall support the program. 24 We believe that the program itself will provide the needed 25 emission reductions from this source category and, in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 133 1 particular, that comes from the proposed interim and final 2 limits that are established in the regulation itself. These 3 limits we feel are an integral part of our SIP in achieving 4 the ozone standard. 5 We do, however, have a few changes, and they're 6 similar to the comments that you've heard by Ms. Lee on 7 behalf of CAPCOA. And I'll be very brief and just summarize 8 our points relative to the program's implementation. This 9 is where we think there could be a few minor changes. 10 Specifically with regard to enforcing the program, 11 we recommend that the registration itself be maintained at 12 the equipment. This will allow our inspector in the field 13 to ensure compliance with the emission limitations that are 14 set forth in the registration itself. 15 CHAIRMAN DUNLAP: Jack, if I can interrupt you 16 there. That would be a piece of paper enclosed in plastic 17 affixed to the unit itself? 18 MR. BROADBENT: That's correct. 19 CHAIRMAN DUNLAP: Okay. 20 MR. BROADBENT: We also would recommend that the 21 notification procedure by which the districts are notified 22 by the engines as they come into their respective districts, 23 that that be centralized with CARB staff and maintained 24 actually, we suggest, through a web site. We think that 25 makes a little bit more sense than to having the respective PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 134 1 districts notified through either faxes or something like 2 that. 3 We think a bulletin board can easily be 4 established and maintained. We believe strongly, though, 5 that a system like that may take time to be able to work 6 through and indeed we'd be very supportive of having the 7 work group look at that issue and maybe come back and 8 revisit with the Board after a given time. 9 A second related point to enforcement has to do 10 with the fees. We think that the proposed $75 registration 11 fee frankly may not be sufficient to cover our inspection 12 and administrative costs associated with the program. We 13 believe the fees also should be centralized and collected by 14 CARB and redistributed back to the districts. 15 I'm not here to tell you what we think the fee 16 should be. Because we think frankly what we need is some 17 time to implement the program. And so, we would recommend 18 that there be a given amount of time to get the program 19 implemented and then revisit back to your Board, Mr. 20 Chairman, with some specific recommendations on what that 21 fee should be. 22 CHAIRMAN DUNLAP: Jack, in light of the success 23 we've had, both our organization and yours, in collecting 24 fees for one another, do you think we'd want to try that 25 again really? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 135 1 (Laughter.) 2 MR. BROADBENT: Well, it's worth a try, Mr. 3 Chairman. 4 CHAIRMAN DUNLAP: All right. I just wanted to 5 check on that point. 6 MR. BROADBENT: Finally, with regard to a point 7 that was made by Ms. Lee with regard to the future 8 particulate matter standard, we believe the program should 9 be periodically reevaluated, particularly in light of this 10 new standard. 11 We think that these kinds of sources are going to 12 be ones we're going to need to be looking at collectively to 13 see indeed what is the appropriate level of control. Also, 14 as we all know, as technology advances, we'd want to make 15 sure that the technology requirements are reviewed in light 16 of advancing technology. 17 That concludes my remarks, Mr. Chairman. 18 CHAIRMAN DUNLAP: Jack, on that last point, 19 because that was a point that Lynne had raised earlier from 20 a letter that we received from PS Enterprises about new 21 technologies. Can you expand on that? Jack, it may be that 22 the program, as it's proposed, may be lacking or may not 23 provide sufficient incentive for new technologies to emerge 24 and be successful. 25 MR. BROADBENT: Yeah, our basic issue here is the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 136 1 fact that you do have these new standards that are being 2 promulgated by EPA and are going to be due out this summer. 3 In light of that, and clearly as these sources, in our minds 4 at least, may be a major contributor to the nonattainment of 5 those standards, we think that they need to be looked at in 6 that light, and that can be done through the SIP process. 7 And then, also, clearly the emission limitations 8 of this program need to be looked at as we all review the 9 technology as it does advance for these engines. 10 And that's the way -- where I'd be coming from. 11 CHAIRMAN DUNLAP: Okay. 12 MR. BROADBENT: I just want to make sure that it 13 represents the best technology that we can be implementing. 14 CHAIRMAN DUNLAP: I don't want to put you on the 15 spot, but is there -- do you have any specific suggestion on 16 what kind of incentive package or credit scenario could be 17 put together that would help nudge that along? 18 MR. BROADBENT: Our two agencies are actually very 19 active in the development of credit programs -- 20 CHAIRMAN DUNLAP: Okay. 21 MR. BROADBENT: -- these days, and we can 22 certainly look to our current credit programs. We have an 23 area source credit program that is before our board next -- 24 in April, our next board meeting. 25 What I'd like to be able to do is maybe have us PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 137 1 take a look at those kind of credit programs and maybe come 2 back to the Board. 3 CHAIRMAN DUNLAP: Okay. Because AB 1777 program's 4 under development now, as I understand, here with our staff. 5 And, Jack, any comments you all might have, go through the 6 normal process. But if you think the Board ought to be 7 aware of it, I'll extend the invitation to you to send some 8 kind of communication back to us. 9 MR. BROADBENT: I appreciate that. 10 CHAIRMAN DUNLAP: Yes, Ms. Edgerton. 11 MS. EDGERTON: Jack, I note here in this letter 12 actually from PS Enterprises that they specifically are 13 concerned about this three-month limitation. Are you 14 familiar? Have you seen this letter? 15 MR. BROADBENT: Unfortunately, I have not. I'll 16 be glad to review that, Mr. Chairman. 17 MS. EDGERTON: Well, they are concerned -- 18 however, the seasonal use provision included in the proposed 19 regulation imposes a three-month limit on how long an engine 20 can operate at any given location. 21 The practical effect of this limit is to 22 discourage the use of clean fuel portable engines. It would 23 seem to me that the -- there might be some possibility of 24 creating an exemption from the three-month -- just as common 25 sense suggests that you might have an exemption for the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 138 1 clean fuel engines from that three-month limit, have you 2 given any thought to that? 3 MR. BROADBENT: I think this is very similar to 4 the Chairman's question about appropriate incentives that we 5 could be developing and implementing to incentivize new 6 technologies. That's certainly at the forefront of our 7 minds these days. 8 And clearly, we have a number of credit programs 9 out under development. Whether they are adequate enough to 10 address the specific points being raised in that letter, I'd 11 have to become a little bit more familiar with what they're 12 looking for. 13 CHAIRMAN DUNLAP: Edric's here, and he'll be up in 14 a moment, Lynne. We keep talking about him, but we'll get 15 him here and hear from him in a minute. 16 MS. EDGERTON: Good. 17 CHAIRMAN DUNLAP: Okay. 18 MS. EDGERTON: Thank you. 19 CHAIRMAN DUNLAP: Thank you. Supervisor Silva. 20 SUPERVISOR SILVA: Yes. Thank you, Mr. Chairman. 21 It's nice seeing you up here, Jack. I always enjoy working 22 with you down the South Coast. 23 The word on the street up here, though, is that 24 you're also a hard worker, your fair, and very 25 knowledgeable. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 139 1 So, with that, I'd like to thank you very much for 2 working with me on the portable engines, and I will make a 3 statement before we vote on that. 4 MR. BROADBENT: Good. 5 SUPERVISOR SILVA: With regards to the engine, 6 would it be possible to use a sticker similar to short 7 registration by the State of California that show the VIN 8 number or the serial number on the equipment, and they would 9 match that on the sticker, and we wouldn't be shuffling them 10 around? 11 MR. BROADBENT: Yeah. That's indeed how we had in 12 mind that this program would be implemented. They would be 13 using a unique identification number on the engines 14 themselves and lining that up with the registration. That's 15 indeed how we plan to implement the program, Supervisor. 16 SUPERVISOR SILVA: Okay. 17 CHAIRMAN DUNLAP: Okay. The only concern I have 18 on that -- and we'll hear from staff at the right time -- is 19 that these things fall off, or by the very nature of their 20 use they get weathered and it's difficult to read. 21 So, whatever kind of identification system would 22 be put on would, of course, be tough enough to withstand the 23 elements and the use of the equipment. 24 So, we'd need to spend some time thinking about 25 that. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 140 1 SUPERVISOR SILVA: Well, the sticker that goes on 2 the hull of a boat I think takes a lot of abuse also. 3 CHAIRMAN DUNLAP: Yeah. That's true. 4 If Mike Lewis were here, he'd talk about the 5 equipment is out in dust storms, and it would be pounded and 6 rubbed up against the earth, et cetera, that might come off. 7 All I'm saying is -- not to belabor the point -- just 8 indicate whatever we do, we need to make sure that it can 9 last. 10 Ms. Edgerton. 11 MS. EDGERTON: Another follow-up question to this 12 fee issue and moving in and out of the district. And, as 13 you know, I live in the district. 14 How often do you find that the equipment that is 15 in the South Coast moves out and moves back in? Is this 16 concern about the $75 fee over, and over, and over again a 17 realistic one? 18 MR. BROADBENT: Frankly -- well, we estimate about 19 4400 engines reside in the South Coast. That's our best 20 estimate. We have a recent report that Mr. Lewis has made 21 us aware of, and we're going to look at it. That number, 22 frankly, may indeed increase. 23 We think, frankly, though, the majority of the 24 engines reside in the South Coast and don't necessarily move 25 in and out. And that's clearly the majority of the engines. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 141 1 But there is a significant number of them, we believe, that 2 will make use of this program and indeed move in and out of 3 the districts. 4 The $75 issue, with respect to the South Coast, 5 really centers around -- is it adequate enough to cover our 6 administrative costs to run the program as CARB has 7 established it, plus also to cover the inspection of these 8 engines themselves. 9 And our own understanding of our costs to date 10 don't -- doesn't look like it would cover it. But because 11 this is a new program and because we're going to be working 12 with CARB staff to implement this, we'd like to have some 13 time to figure out what indeed those costs are and report 14 back to this Board. 15 And we'd just like the opportunity to revisit the 16 regulation at that time, be it a year, 18 months. 17 MS. EDGERTON: Well, let me follow up with one 18 question, too, and maybe the staff wants to make a comment 19 on that as well. 20 We're all familiar with cars degrading over time. 21 We're all familiar with their getting out of tuning -- I 22 mean out of tune, and smog check, and so on. It's not 23 necessarily true that just because a car was checked six 24 months ago, that it's not out of compliance now. 25 These are enormous pieces of machinery, and they PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 142 1 are therefore emitting a great deal of pollutants into our 2 air basin. And in light of -- if you could discuss little 3 bit how quickly these degrade? Have I made a correct 4 analogy here that, you know, because they are so much 5 bigger, it makes sense to be checking them more often, sort 6 of like a very good smog check plan? 7 MR. BROADBENT: I'm going to defer a little bit to 8 your staff. But my understanding is that it really does 9 depend on the operator and on how well they maintain the 10 equipment and what conditions the equipment has been 11 operated under relative to different loads and what field 12 experiences that the engines have come under. 13 But in terms of how fast they degrade, I guess I 14 would -- 15 CHAIRMAN DUNLAP: I'm sure it would depend upon 16 their use, depend upon the durability of the equipment, 17 probably the age. 18 MR. VENTURINI: Let me just mention. As part of 19 the enforcement program which the districts have the 20 responsibility for in this proposal, is they do have the 21 ability to conduct source tests where necessary to ensure 22 that the engines are operating properly, well maintained, 23 and so forth. 24 MS. EDGERTON: In addition to the in and out 25 check, I mean the moving in and out of the area? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 143 1 MR. VENTURINI: Yes. 2 MS. EDGERTON: I mean, I frankly, you know, as 3 someone concerned about the air in the South Coast, I, you 4 know, am concerned that we have moving into our basin be 5 clean. 6 CHAIRMAN DUNLAP: Yeah. Good point. Let's move 7 on to -- we have 10 witnesses left. Jack, appreciate your 8 comments. 9 Randal Friedman, Doug Allard, Dan Mullen, Edward 10 Guise, Catherine Reheis, and then Glenn Keller. And again, 11 the Chair certainly would appreciate brevity and 12 nonredundancy I guess. 13 MR. FRIEDMAN: Chairman Dunlap, Board members. My 14 name is Randal Friedman. I'm here representing Rear Admiral 15 Froman, who is Commander, Naval Base, San Francisco. She 16 also serves as the Department of Defense Environmental 17 Coordinator for California. 18 I've provided a letter, and I believe you've 19 received a letter from General Whaley (phonetic). I won't 20 go into those letters. I will just say this is a very 21 important day for the Department of Defense in California. 22 The issue of portable equipment in the last couple of years 23 has come close to bring operations at several installations 24 in California to a halt. 25 This regulation will provide the needed regulatory PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 144 1 relief that will ensure that the Department of Defense can 2 continue its operations within California. 3 With that, I'd like to just briefly touch on one 4 item that was mentioned in the EPA comment letter, and that 5 concerns the consideration of Section 118(a) and the 6 suggestion that it's not appropriate to treat the Department 7 of Defense differently than other entities in California. 8 I'd like to touch on this twofold. First, we are 9 treated differently already. We are the only major employer 10 in this State that, as a condition of employment, you have 11 to provide compliance with the California smog check 12 program. 13 And if EPA frankly is suggesting that we do not 14 have to comply with this until other employers in California 15 also require this, I can make some installations very, very 16 happy by telling them that they no longer have to implement 17 that program. 18 Obviously, that's not the case. We are treated 19 differently. We're treated differently in our procurement 20 of vehicles. We have much higher standards for procurement 21 of alternative fuel vehicles. We have the requirements that 22 we administer, including for out-of-state active duty 23 military, the smog check program on our bases. So for the 24 suggestion that somehow we have to be treated the same when 25 it suits EPA and we can be treated differently doesn't make PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 145 1 sense under the surface. 2 Regarding the actual exemptions provided in the 3 program, we'd just like to touch briefly on, is there a 4 legitimate public policy to do that? 5 I would say that if you just consider the current 6 events in the last couple of weeks, the latest global flare 7 up is in Albania, where the closing of that government has 8 trapped hundreds of Americans. And the response has been to 9 send in the Marine Corps to evacuate them. The Marines, 10 when they're in a country like that, depend on bringing 11 their equipment. 12 There's no place in Albania to plug in radar 13 communications equipment, the other equipment that is 14 actually vital to the successful mission of the evacuation 15 of the hundreds of Americans. 16 It is this portable equipment, it is equipment 17 similar to the star cart that is in front of the building 18 that has to be airlifted in. Some of it may come from 19 California, some of it may come from Georgia, some of it may 20 come from South Carolina. It has to one standard. It has 21 to be worldwide deployable. It has to be maintained by a 22 technician who may have come from Germany. 23 We simply cannot have a situation where someone 24 gets on an airfield in Albania -- and as you may have seen 25 on the news, there have been times when that evacuation PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 146 1 process has had to cease because of light fire from the 2 forces, while they're sitting there trying to figure out 3 what is this piece of equipment? How come this isn't 4 working? 5 If a portable equipment breaks down on a 6 construction site, yes, everyone is upset. Maybe there's a 7 day's delay. If that equipment breaks down in a place like 8 Albania, there is human life both of the military and the 9 people that they're trying evacuate at stake. 10 With these arguments, with this recognition, I 11 believe the California Legislature acted very wisely in 12 recognizing the uniqueness of this equipment in granting the 13 exemption. INcluding the recognition of the role turbines 14 play in this. 15 I believe it was a proper thing to do. I believe 16 it's proper that CARB treat them differently just as your 17 proposed regulation treats pile drivers differently. There 18 is a valid public purpose, and I believe there is no 19 validity to the EPA's assertion that under Section 118(a), 20 it's inappropriate for you to treat us differently. 21 With that, I would like to again than your staff. 22 In particular, I'd like to thank Mike Tollstrup, who, going 23 on three years now, has been working with us on solving this 24 and some other serious regulatory problems. 25 And, in fact, it was Mr. Tollstrup who brought to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 147 1 our attention AB 531 when it was early in the legislative 2 process that afforded us the opportunity to work with the 3 Legislature on this bill. 4 And with that, I'm available for any questions. 5 We also have staff from McClellan Air Force Base who is 6 responsible for the Start Cart out front if you have any 7 questions about that, what it's used for, what it's power 8 ratings, and some of the considerations of that piece of 9 equipment. 10 Again, thank you very much. This is a very good 11 day for the Department of Defense and our continued 12 operations in California. 13 CHAIRMAN DUNLAP: Great. Thank you very much. 14 Appreciate the comments about the federal role, too. I'm 15 sure Mr. Tollstrup and the staff will stay on top of that. 16 And if there's a way for us to convey some of your concerns, 17 we'll be happy to consider doing that. 18 MR. FRIEDMAN; Thank you. 19 CHAIRMAN DUNLAP: Okay. Any questions of the 20 witness? 21 All right. Doug Allard, Santa Barbara AQMD; Dan 22 Mullen, NASA, Edric Guise. 23 MR. ALLARD: Yes, Mr. Chair, members of the Board. 24 Doug Allard, Santa Barbara APCD. We're not quite an AQMD, 25 still a small district. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 148 1 First of all, at the risk of violating the 2 nonredundancy edict, I want to thank staff and the members 3 of the work group who worked so hard to bring this rule to 4 you today. I'm sure it's a big relief for them to get it 5 here. 6 And also, I want to remind everyone that a lot of 7 other people participated in the development of the CAPCOA 8 model rule, which is sort of the progenitor of this rule. 9 At any rate, we support the need for a 10 coordinated, consistent user friendly way of regulating 11 portable engines, and we generally support this rule. 12 We also support the CAPCOA comments that call for 13 revisitation of many aspects of this rule by July of 1998. 14 And we'd like you to actually put that in your adoption 15 resolution, if you would. I think that's consistent with 16 ideas presented here, not just by agencies, but by industry 17 folks as well. 18 We have three concerns -- application of the rule 19 offshore, lack of simple frequency of use monitoring 20 requirements. We would like those two things addressed 21 today if possible, and lack of project emission caps. We 22 would like this relooked at within a year. 23 With regard to offshore, as you may know, Santa 24 Barbara and Ventura County have over 15 platforms, oil and 25 gas platforms, located offshore in the State tidelands and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 149 1 the outer continental shelf. 2 We support the staff amendments today, recommended 3 amendments that would defer the application of this 4 regulation offshore until more analysis can be done. There 5 has been no analysis of impacts offshore, and I think your 6 staff has acknowledged that, and that it does not meet the 7 minimum CEQA requirements for applying the regulation there. 8 That's critically important to us. Very large 9 engines get used offshore. Numerous engines get used 10 offshore at the same time. And these offshore platforms are 11 right offshore nonattainment areas. 12 Secondly, frequency of use monitoring. Santa 13 Barbara, CAPCOA, and others are agreeing today to defer many 14 of our concerns to a one-year reevaluation period. To make 15 that meaningful, we need some information about how much 16 these engines are used in each county. 17 The recordkeeping requirements in the regulation 18 before you today allow an estimate of the number of hours 19 used on a daily basis. We would suggest it would be better 20 to record hours of operation using simple unresettable hour 21 meters. And we understand that these meters are generally 22 used anyway to determine maintenance requirements for the 23 engines. 24 This would allow us to have data in year's time 25 regarding how much impact each of these engines is having on PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 150 1 air quality in each county. 2 So, those two items we'd like addressed today if 3 possible. 4 The third item is a lack of project emission caps. 5 I liked the model CAPCOA rule of a couple of years ago. No 6 cap on emissions from multiple engines is in the regulation. 7 No hourly cap, no daily cap, no annual cap. 8 Multiple engines could be used at one time, and 9 these could violate the State NO2 standard. We recently -- 10 are in the process now, actually, permitting one portable 11 engine which will fall under this regulation in Santa 12 Barbara County. That one engine nearly violates the NO2 13 standard, even though it emits at a rate considerably below 14 the emissions that the regulation allows. 15 And it nearly violates if one's background is 16 taken into account. We recommend revisiting this issue in 17 one year and providing a project emission cap at that time 18 to protect the NO2 standard. 19 CHAIRMAN DUNLAP: Let me follow up on that. 20 You're saying the operation of this one piece of equipment 21 triggers a violation -- has a potential to trigger a 22 violation of the NOx standard at an air monitoring station 23 close by? 24 MR. ALLARD: Yes. No. In our letter, Attachment 25 A indicates the impact analysis we did. And the engine, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 151 1 which I understand was between 700 and 900 horsepower, had a 2 modeled project NO2 impact of 24 parts per hundred million, 3 assuming a 10 part per hundred million background. 4 It was emitting at 6.5 grams per brake horsepower 5 hour. 6 One other point with regard to fees. $75 an hour 7 is certainly a substantial amount. But, as you can imagine, 8 it won't pay for very many hours of a professional 9 inspector's labor, one and one half hours maximum. That is 10 not sufficient to really inspect an engine, too go out 11 there, look at the certification, look at the conditions, 12 inspect the engine, come back, write up a report. 13 The practical impact of that will be that a lot of 14 these won't get inspected. And so, we're willing to live 15 with it for the time being, but we would discourage your 16 Board from applying some of the suggestions offered today, 17 which is, if an engine comes into my county, I need to go ou 18 and inspect a 700 horsepower hour, but if they can 19 demonstrate it was inspected six months ago in Amador 20 County, I don't get any funds to pay for that inspection. 21 CHAIRMAN DUNLAP: Would you think it would need to 22 be inspected again? 23 MR. ALLARD: I think it would if it was an engine 24 of that size. 25 CHAIRMAN DUNLAP: You understand some industry PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 152 1 concern about that, don't you? 2 MR. ALLARD: Yes, I do. 3 CHAIRMAN DUNLAP: Small engines, relatively easy 4 to assess. People go out and inspect them perhaps when 5 they're not needing an inspection, and then fees being 6 assessed to them willy-nilly. I mean there's some concern 7 about that. 8 MR. ALLARD: I can understand that concern. And 9 it's legitimate. 10 CHAIRMAN DUNLAP: Big engines, I'm with you. 11 MR. ALLARD: I was just going to say. 12 CHAIRMAN DUNLAP: There's a different situation. 13 Okay. Good points. 14 MR. ALLARD: In summary, we recommend excluding 15 offshore sources, just as your staff does, and recording 16 simple hours of use in the regulation, and then really 17 revisiting the regulation in a year, which is probably 18 something we ought to do more frequently for any important 19 regulation. 20 Thank you. 21 CHAIRMAN DUNLAP: Thank you for your comments. 22 Appreciate that. 23 MS. EDGERTON: I thought I heard you say -- I'm 24 sorry. This is a point of clarification. I thought you 25 earlier said that you wanted in this current regulation for PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 153 1 us to defer action on the regulatory part concerning 2 offshore engines. And then just now, as you were getting 3 ready to walk away, I thought you said, "We can live with it 4 now. We want it reviewed in a year." 5 MR. ALLARD: I'm sorry. Perhaps I wasn't clear. I 6 would like now to ensure that regulation of offshore engines 7 under this regulation is deferred, that this regulation 8 should not apply to offshore engines. 9 MS. EDGERTON: The proposal is that it will apply. 10 MR. VENTURINI: It does not apply. 11 CHAIRMAN DUNLAP: Staff is indicating that's 12 consistent with what he said. 13 MR. VENTURINI: That's correct. 14 MS. EDGERTON: Well, there's a difference between 15 saying it doesn't apply and saying --- 16 MR. VENTURINI: Staff is not now proposing to 17 include tideland OCS sources in the program. We've 18 indicated a willingness to discuss this further with the 19 parties -- including the districts -- and determine if it's 20 appropriate to include them in the program. But, as Mr. 21 Allard said, there are a number of issues that would need to 22 be addressed associated with that. 23 That is why we don't think it's --- 24 MS. EDGERTON: (Interjecting) Well, I guess I -- 25 what I understood you to be saying -- my concern from what PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 154 1 was said was that it appeared that the way the staff was 2 proceeding would de facto exclude them. That you were 3 comfortable excluding them. 4 And what I thought you were saying was that 5 actually they are quite significant contributors to 6 pollution in Santa Barbara, and that it is premature to 7 decide to exclude them. 8 MR. ALLARD: I think I can clarify that. We want 9 them excluded from the regulation so we can continue to 10 regulate them till such time as we've solved any problems 11 associated with putting them in the regulation. 12 MS. EDGERTON: Okay. 13 CHAIRMAN DUNLAP: Okay. Very good. Thank you. 14 We're halfway through the witness list. I just would note 15 that. 16 Come forward. Dan Mullen from NASA, Dryden Flight 17 Research Center, followed by Edric Guise, Catherine Reheis, 18 Glenn Keller, Terry Ellis, Ross Kauper. 19 Good afternoon. 20 MR. MULLEN: Good afternoon, Mr. Chairman and 21 members of the Board. My name is Dan Mullen, and I'm the 22 environmental manager for the NASA Dryden Flight Research 23 Center, located on Edwards Air Force Base. 24 You have my letter in front of you along with a 25 package of information describing NASA Dryden. So, I'll PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 155 1 just briefly summarize here. 2 I'm proposing that the draft regulation be amended 3 to include research aircraft support equipment used by 4 federal agencies located on military installations, by 5 definition, military technical support equipment. 6 Part of NASA's mission is to research, develop, 7 verify, and transfer aeronautics technology. This activity 8 services a vital role in the military's mission of air 9 combat readiness. NASA provides technology that allows the 10 development of the military specialized combat aircraft. 11 Also, nearly all of the aircraft and support equipment at 12 NASA Dryden have been loaned or given to us by the U.S. 13 Military. 14 There are 12 NASA centers and facilities in the 15 United States because of the need for research into 16 aeronautical safety and technology. The Dryden Flight 17 Research Center is the only NASA facility that is not 18 currently undergoing reductions in personnel. 19 As a result, Dryden is finding that emissions 20 primarily from aircraft support equipment are pushing us 21 toward the limit set by our local air district. Our goal is 22 to develop a long-term strategy for compliance with air 23 regulations, but also allows NASA Dryden to maximize its 24 economic contribution to Southern California and its 25 technical contribution to the United States military PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 156 1 service. 2 Thank you. 3 CHAIRMAN DUNLAP: Thank you very much. Any 4 questions? 5 DR. FRIEDMAN: Well, I just -- I appreciate the 6 need for research. I appreciate the need for the Dryden. 7 But I don't understand what you mean by long-term strategy. 8 Why can't you provide us with a short-term strategy with 9 respect to air pollution? 10 MR. MULLEN: Well, it certainly has its place, 11 but-- 12 DR. FRIEDMAN: I mean, you know, the fact of the 13 matter is that ou are our government's -- the government we 14 pay for's research center. And it may very well turn out 15 that you're a very substantial polluter of our environment. 16 And I would just like to know why we should put 17 this on a back burner rather than on a forward burner in 18 terms of the magnitude of that potential. 19 MR. MULLEN: We can certainly look at the 20 magnitude of the potential. I wouldn't say that we are a 21 substantial polluter among the federal agencies. 22 DR. FRIEDMAN: Well, I don't know that. If that's 23 the case, fine. But I don't know the contribution of this 24 activity that you want us -- that we all favor -- to the 25 State's air. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 157 1 MR. MULLEN: That's something that we can 2 certainly look at. 3 DR. FRIEDMAN: Well, I think you have to. 4 CHAIRMAN DUNLAP: Dr. Friedman, perhaps I can give 5 you a bit of a more rounded view about that facility. I've 6 been out there, visited it a number of times. That area is 7 in a rapidly growing area. There's some transport. There's 8 also some emissions generated by new households being 9 established there that have impacted that particular 10 facility's ability to meet the criteria established by the 11 Department of Defense relative to visibility and their 12 ability to keep going. 13 I don't mean to suggest that there aren't a lot of 14 flights in and out of there. There are. But the emissions 15 generated from that region are largely not associated with 16 that facility. So, they're hanging on by their fingernails 17 to keep in operation, and are very concerned about DOD 18 requirements as well as attainment designations. 19 So, what I would suggest, for what it's worth, if 20 you wouldn't mind putting together an informational package 21 for us about how things are going, where you see the 22 regional trends and the like, so we might better understand 23 it. 24 But Dr. Friedman's point about making the 25 suggestions that you have without sufficient backup PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 158 1 information or perspective leaves us wondering in a number 2 of areas. 3 So, Mr. Mullen, if you could do that, I think we'd 4 be appreciative, and it would more round out our 5 understanding of your facility and its place as an air 6 quality site, and a contributor to air pollution. 7 MR. MULLEN: Certainly. Would you suggest that I 8 work with Mr. Tollstrup on that issue? 9 CHAIRMAN DUNLAP: That'd be fine. I'll leave it 10 up to Mr. Kenny. If you don't mind, I'll have Mike maybe 11 have someone deal with Mr. Mullen 12 MR. KENNY: That'd be fine. 13 CHAIRMAN DUNLAP: Okay. Thank you. 14 MR. MULLEN: Thank you. 15 CHAIRMAN DUNLAP: Okay. Edric Guise, the most 16 waited testimony of the day. We have your letter. A couple 17 of us have had an opportunity to talk to you. I spoke to 18 you briefly yesterday. 19 It's my understanding you had a meeting with staff 20 earlier. If you don't mind, rather than tell us where you 21 were, tell us where you are, and we'll go from there. 22 MR. GUISE: I appreciate the Board's interest in 23 our issue this morning. PSE is an environmental affairs 24 company specializing in related policy development and 25 community outreach. And we've been working for the past few PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 159 1 months on a clean fuel portable project which we initially 2 were concerned would be unnecessarily thwarted by this 3 regulation. 4 I could get into the details about why that 5 concern was generated, but the short story, giving the 6 Chairman's direction, is that we have reached an agreement 7 with staff about the project. And the agreement is really 8 based on the definition of a seasonal source. 9 This is the component of the definition of 10 portable engines which precludes the operation of an engine 11 for more than three months at any given site on a continuing 12 annual basis. 13 And because of our discussion with staff this 14 morning, we now understand that because the location at 15 which we will be operating the engines is not an existing 16 stationary site, we will not be tripped up by this 17 regulation. And part of discussion this with you this 18 morning, it is our desire to have that openly acknowledged 19 by staff, because we're in the midst of some important 20 contract negotiations for the project. 21 And the reason why that's important for us is 22 because in the development of an alternative fuel 23 application like this, we need an ongoing multiyear 24 contractual commitment that provides economic stability to 25 the project and will help us offset the related R & D costs PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 160 1 for development of the engine and, of course, the 2 infrastructure for fueling and also maintenance as well. 3 So, it's this kind of multiyear, even multimonth 4 application, which is critical for us. 5 CHAIRMAN DUNLAP: Right. 6 MR. GUISE: So, I guess at your discretion, I'd -- 7 MR. TERRIS: We talked to Mr. Guise. And 8 basically, under the registration program, a portable engine 9 would not be exempt under the seasonal source provision if 10 it operates independent of the seasonal source itself. 11 CHAIRMAN DUNLAP: Okay. 12 MR. VENTURINI: We're basically concurring that in 13 the application that he discussed with staff today, there is 14 not a problem with our reg. with his moving ahead. 15 CHAIRMAN DUNLAP: Okay. All right. 16 MR. GUISE: And that is based on the fact that the 17 location where the equipment will operate does not have an 18 existing stationary source. 19 CHAIRMAN DUNLAP: Okay. Good. And also, you 20 want to be included in any discussion about incentives for 21 clean air technology as well, right? 22 MR. GUISE: That's the other side of our 23 presentation this morning is the desire for the development 24 of a clean fuels incentive package related to this engine 25 universe. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 161 1 And specifically related to the seasonal issue, my 2 presentation this morning would be very different if, for 3 instance, there was simply a boiler which was permitted as a 4 stationary source that happened to be at the location, which 5 would, in effect, prevent us from operating for more than 6 three months and threaten the project. 7 CHAIRMAN DUNLAP: Okay. 8 MR. GUISE: That and the Board's wish to develop 9 market incentives, the credit program. 10 CHAIRMAN DUNLAP: So, we'll work on the credit 11 program and you got the answer you needed from staff. 12 Thank you. Appreciate it. 13 Catherine Reheis, Glenn Keller, Terry Ellis, Ross 14 Kauper, Doug Van Allen, and the last witness is Larry 15 Miller. 16 MS. REHEIS: Good afternoon, Mr. Chairman, members 17 of the Board. I appreciate the opportunity to speak with 18 you. 19 My name is Catherine Reheis. I represent the 20 Western States Petroleum Association. And I'm here in a 21 little different capacity today than usual. I'm here really 22 to support the efforts of those folks that are really the 23 folks that work in the field for our clients, and those are 24 the folks that drill wells, do workovers on wells to bring 25 affordable energy to California. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 162 1 And those are the service contractors, which I'm 2 sure you'll be hearing some from today. We are in support 3 of staff's recommendations. We are not pleased particularly 4 with the removal of the OCS issue. However, we are very 5 confident that the staff and our friends at the Santa 6 Barbara Air District will be willing to sit down and 7 continue that dialogue with us. And we're hoping that, as 8 part of this recommendation today, that the working group 9 will continue and that the ARB will be able to commit those 10 resources, which have been rather extensive. 11 I've personally been involved with this issue not 12 two years, not five years, but eight years. We began this 13 in the San Joaquin Valley prior to the formation of the 14 Unified Air District. I personally got on a van about eight 15 years ago to go up the valley to Kings County to talk to 16 Supervisor Kenny at the time about this issue, because we 17 had eight counties where drilling rigs were being required 18 to move between counties and to put on various different 19 controls and various different fee requirements. 20 And so, this was an important issue to us, not 21 only relative to the uniqueness of the equipment, but also 22 relative to the emissions inventory. 23 We looked at the inventory from these types of 24 equipment in the valley for oil field operations and found 25 that the emissions were actually overestimated by four times PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 163 1 and, therefore, we felt that it was appropriate that we look 2 at an alternative here. And that grew, of course, into 3 including many, many more portable equipment in this whole 4 statewide effort. 5 So, we have been involved in this issue from the 6 outset. I would like to commend staff for their patience 7 and diligence in dealing with so many different folks on 8 this. 9 And I think there has been more time spent on this 10 issue than probably the rollout of cleaner burning gasoline. 11 And certainly the impacts are not equivalent to 350 million 12 vehicles (sic) off the road. But, there has just been a lot 13 of time and effort, tremendous communication and education. 14 This is the innovative way to go. This is cleaner, smarter, 15 cheaper. This is voluntary, flexible, all those things that 16 we encourage. 17 We're very supportive and look forward -- and I 18 guess the one recommendation I would have would be that if 19 we do this one year review as part of the recommendation, 20 that in that review, we include the OCS issue. And then we 21 come back to you and look at the impacts that that might 22 have and see if those equipment can or cannot be included. 23 CHAIRMAN DUNLAP: Appreciate that perspective. 24 The OCS issue is one that we want to be cautious of because 25 of the potential there. Those are large, large pieces of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 164 1 equipment that have implications that could make the 2 difference for some marginal air districts relative to 3 attainment. 4 And so, we'll keep an open mind and we'll 5 encourage you to work with the staff, and with the local 6 districts to deal with this. 7 Appreciate it. Thank you. 8 Okay. Glenn Keller. Glenn, you're making a habit 9 out of this. 10 MR. KELLER: I know. I'm back. 11 CHAIRMAN DUNLAP: I'm getting a double bang for 12 the buck. 13 MR. KELLER: I'll be very brief. EMA supports -- 14 I'm Glenn Keller, representing the Engine Manufacturers 15 Association. 16 And EMA supports the proposal before the Board, 17 and we'd like to thank staff for the tremendous efforts they 18 put forth in making sure that all interested parties played 19 an active role in the development of the AB 531 regulation. 20 In addition, the cooperative atmosphere that the 21 team created has led to a solid result we can all take much 22 pride in and hopefully will serve as the model for future 23 regulatory development. 24 We has engine manufacturers really had two major 25 objectives in participating in this rulemaking, and these PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 165 1 were firstly to establish uniform guidelines for operating 2 requirements, registration, and permitting of portable 3 equipment. 4 And secondly, to harmonize the California program 5 with all he federal provisions and definitions which apply 6 to nonroad mobile sources. We feel that every one of these 7 objectives was met. 8 In closing, EMA would urge ARB to give further 9 consideration to the retrofit issues, such as inner cooling 10 and four degree retard that have been raised by the portable 11 equipment operators. 12 Engine manufacturers design these engines with 13 optimal settings to balance the performance needs versus the 14 emissions of NOx, PM, and the smoke emissions of these 15 engines. Readjustment of the fuel injection timing would 16 reduce NOx but also increase the levels of PM and smoke. It 17 may be prudent to analyze more fully the pros and cons of 18 the retrofit adjustment being required by the BACT. 19 Any questions? 20 CHAIRMAN DUNLAP: Any questions of Mr. Keller? 21 Very good. Thank you. 22 Terry Ellis, Gary Drilling Company. 23 MR. ELLIS: Thank you, Mr. Chairman and Board 24 members. 25 My name is Terry Ellis. I'm the regulatory PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 166 1 affairs manager for Gary Drilling Company. I'm also the 2 executive director of the Coalition of Petroleum Services, 3 better known as COPS, the supplier of over 95 percent of 4 portable equipment to the petroleum industry. 5 I was asked to bring a piece of portable equipment 6 today, but I put one up on the State Capitol three years 7 ago, and I've got pictures to show you if you'd like. 8 We are the experts in portable equipment for a 9 number of reasons. We have gin sets, we have pumps, we have 10 lift hoists, but we also have the research and development 11 center with in our complex, and we are partners with Detroit 12 Diesel. We have patents applied for. We have EPA 13 certification in the urban retrofit market for diesel 14 engines, and we are working with CARB staff as we keep on 15 CARB certification of diesel engine technology. 16 So, not only do we have portable equipment and 17 operate portable equipment as a family owned business here 18 in the State, but we are also working towards clean air 19 goals for the State of California. 20 I came here this morning -- I flew in from the 21 Coast on vacation, left my family at the beach, and I came 22 basically to thank staff for such a wonderful job. I, too, 23 have been part of this process for many, many years, more 24 than six, because it was unique to our industry. We were 25 treated as a stationary source, and we were truly not. So, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 167 1 it's been a difficult task for years trying to understand 2 who we are, what we do, and what our needs are. 3 And what I want to do is bring balance to some of 4 the comments you heard this morning. One of the comments 5 talked about some undue fairness that we might gain under 6 the provisions of this program. But I would like to bring 7 to your attention that I pay tens of thousands of dollars 8 every year for permits for districts and a piece of paper 9 where I never go in and emit one gram of emissions. I do 10 this year, after year, after year, because I'm treated as a 11 factory in there. And if I don't get a job in that 12 district, I still pay my fees. 13 So, my question would be, how fair has that been 14 for the decades that we have portable equipment operating in 15 the State. 16 Second, talk about incentives for clean air 17 technology. And I'll touch on our partnership with the 18 largest catalytic converter company and emissions reduction 19 company in the world, Johnson Matty. We have technology 20 that can take a 50-year old diesel engine and make it 21 cleaner than the 2001 CARB standards on both particulates 22 and NOx as we speak. There are plenty of incentives there 23 to change out these engines to get to that point. 24 Can more be included? I'm sure there are. 25 Fees. 17 different districts I operate in on an PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 168 1 annual basis. Sometimes I leave a district on a daily basis 2 and go into others. I am gravely concerned that 17 3 districts everytime I come in and out can come see me. I've 4 been a part of a number of meetings with air districts, 5 which I won't mention, that say that every piece of 6 equipment when it comes in will be inspected everytime. 7 That is of great concern to me. I have over 300 pieces, and 8 you put $75 on top of that everytime I move in and out of a 9 district sometimes on a daily basis, that concerns me. I 10 cannot budget for that. 11 Two closing points. There was concern about being 12 able to smog test. Ms. Edgerton, I need to inform you that 13 in the State of California, there is absolutely no facility 14 that can adequately do an eight-mode steady state offroad 15 test on portable equipment. As a matter of fact, millions 16 of our dollars were spent down in San Antonio, Texas, at 17 Southwest Research, because there is no, in fact, way to 18 accurately test portable equipment to the EPA nonroad 19 standards under Part 89. 20 We have had to take business out of the State to 21 get proper air testing to certify our technologies before 22 EPA and CARB. So, there is no stationary facility, let 23 alone can you go to the field and determine cyclic load, 24 horsepower, emission flow rates, fuel usages, or anything. 25 And that would also address the fuel meter or hour PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 169 1 meter issue, because there are a number of districts that 2 have tried that before, and it is not representative of a 3 load on an engine or emissions as far as hour meters go, nor 4 does it present itself as durable during offroad 5 applications especially. 6 So, I would offer those as a balance to some of 7 the things you've heard today, and I would open myself up to 8 any kind of questions from the Board in regards to portable 9 equipment, because I believe I know it quite well. 10 MR. PARNELL: Thank you, Mr. Ellis. We're pleased 11 that you could be with us and share your thoughts. Are 12 there any questions? 13 MS. EDGERTON: Permit me, Mr. Ellis, to take 14 advantage of your experience. I was troubled that you go in 15 and out of the same district, the same day, several times. 16 What do you think would be a reasonable balance with respect 17 to the movement of these engines in an area such as the 18 South Coast? 19 If it's not sensible to have it tested for $75 20 each day, which strikes me as probably not reasonable, where 21 do you draw the line? Is it six months? Is it two weeks? 22 Where do you draw the line? 23 MR. ELLIS: You mentioned the smog test program. 24 How often is that brought upon a vehicle that travels and, 25 as we all know, is the major contributor to our air PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 170 1 pollution problems here. Once every two years. So, you've 2 heard testimony that there are people willing to go every 3 six months, which is four times that. 4 We are not against inspection of our equipment. 5 And if there is reasonable cause for probable violations, 6 then I have no problem with being inspected. I have a 7 problem with opening the floodgates to charges that I cannot 8 budget for when I have to bid low bidder in order to stay in 9 business and feed my employees' families. 10 I need some sense of control as to the amount of 11 charges that my company will be up against because we are 12 contractors. I need some flexibility in determining what my 13 costs are going to be and to leave an open-ended checkbook 14 to the various districts to come out as often as they wish 15 under this rule concerns me greatly. 16 MS. EDGERTON: Well, I think that's 17 understandable. It seems to me that it just needs to be -- 18 does it make sense to you to have the larger pieces of 19 equipment checked more frequently? 20 MR. ELLIS: On a per horsepower basis, they are 21 basically going to be subject to the same emission 22 requirements. But, yes, because of their horsepower, they 23 have the capability of emitting more in a general area of 24 operation. 25 But, again, the standards are on a gram per brake PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 171 1 horsepower hour limit. And to penalize them because they 2 are so big, I think is very unfair when the standards are 3 set on a per gram per brake horsepower hour limit. 4 MS. EDGERTON: Thank you. 5 MR. PARNELL: Are there any other questions of Mr. 6 Ellis? If not, thank you very much. 7 Ross Kauper, are you here, please? 8 CHAIRMAN DUNLAP: I stepped out for one minute and 9 you only moved one witness? 10 MR. PARNELL: Well, I tried to keep with the 11 precedent that you made. 12 (Laughter.) 13 CHAIRMAN DUNLAP: Good afternoon. 14 MR. KAUPER: Good afternoon. My name is Ross 15 Kauper. I'm the deputy air pollution control officer for 16 the Lake County Air Quality Management District, which 17 happens to be the only district in the State which is in 18 attainment. We have several concerns that I feel like I'm 19 playing maybe a skeptic in this situation. 20 I looked at the staff's report, went over it, and 21 we've submitted a letter on behalf of our staff. Part of 22 our concerns has to do with the site specific findings that 23 need to be made when a piece of equipment -- and more 24 specifically, associated equipment -- is brought on to a 25 site. When you assemble several engines together, the ARB PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 172 1 staff report says that a single engine would possibly equal 2 56 too maybe 84 percent of ambient air quality standard 3 level; when you put two or more engines together, then you 4 have the potential to exceed that level. 5 We're very concerned about ambient air quality 6 exceeds in our county because it would require a significant 7 amount of work in our behalf to get back into that 8 situation. 9 There has not been much said today about the 10 associated equipment part of this regulation, and that is 11 our primary concern. I think engines are fairly well known. 12 Their emission factors are fairly well known. But the 13 associated equipment is pretty much dependent on the 14 material that's being processed. And so, the emission 15 factors for the associated equipment -- a crusher, a 16 screener, the conveyor belts, the stockpiles, the access 17 road, and the yards all contribute to emissions that are 18 part of this temporary project. But the rule does not take 19 into account those emissions. 20 CHAIRMAN DUNLAP: Nor was it intended to. The 21 law, as I understand it. 22 MR. KAUPER: I realize this is probably a 23 thankless task for the -- for your Board, the ARB staff, and 24 most people involved, because it's been obviously 25 frustrating over the number of years that this has been PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 173 1 going on. But these issues are still continuing issues. 2 We had several recommendations. In our county, 3 we're fairly well versed on where the equipment is coming in 4 and going. We do not permit temporary equipment. That 5 comes and goes without much problem in our county. We do 6 not register equipment that;s not part of the stationary 7 source. 8 The CEQA review requires that anytime that a 9 project comes into the county that's deemed significant, it 10 must meet the CEQA requirements. We'd like to see if 11 equipment comes in that's assembled into a project that's 12 got several engines or associated equipment, that a site 13 specific CEQA review has been made, and that it is permitted 14 to be on that site. The way it's set up, we're not going to 15 be notified until five days after the equipment has showed 16 up. And to me, that's not very a proactive way of dealing 17 with a situation. 18 We'd much rather have advance notice anyway so 19 that we could at least make the determination that the 20 location that's being planned is an allowable site to have 21 any activity going on. 22 So, there were several recommendations in our 23 letter, and I'd urge the Board to look at those. 24 CHAIRMAN DUNLAP: Okay. Thank you. 25 Any comments or questions for the witness? Okay. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 174 1 Doug Van Allen and Larry Miller. You're the two 2 men between us and taking on this item. 3 MR. VAN ALLEN: Okay. My name is Doug Van Allen. 4 I'm with BJ Services. We're an oil field service company. 5 And I just got a couple issues that I'd like to bring out. 6 There was two things that came up this morning that weren't 7 discussed in the work groups that we've done. And one of 8 them was offshore equipment not being included. 9 And there's something I'd like to point out on 10 that as we have equipment that works in Santa Barbara and 11 Ventura County now that's registered and permitted through 12 those different counties. 13 Santa Barbara's permits for oil field equipment, 14 if you have a drilling rig that's drilling an oil well, that 15 has to be permitted and any associated engines that go with 16 that need to be permitted. 17 However, if we send a workover rig out, we can 18 send the same pump trucks that we sent to the same job for 19 completion of the oil well, we can send those same trucks 20 out without permits because they're not required a permit if 21 it's rework. 22 So, we're using the same equipment to do the same 23 jobs and there's two different things, but one day they need 24 to be permitted and the next day, if they go on a different 25 job, they don't need a permit. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 175 1 So, there's a concern there that we think that 2 needs to be raised. 3 A lot of the equipment that we use onshore, 4 identical equipment, we take offshore and use for short 5 periods of time. So, it needs to be included in this so 6 that we can permit it to use it onshore and still take it 7 offshore to use. 8 So, I'd like you to consider that while you're 9 doing that. 10 On the four degree regard that they talked about 11 on the new engines, I believe that that takes away an 12 incentive to replace the older engines. If I have an older 13 engine that's above 750 horse that is rated at say 12 grams 14 per brake horsepower hour, and it was a 1980 model engine, 15 if I go purchase a brand new engine today from that 16 manufacturer and it's rated at 8.5 grams per brake 17 horsepower hour, then I have to retard because it doesn't 18 meet the reg. So, me, as the end user, I'm being penalized 19 because the engine manufacturers have not yet created one. 20 So, there's no incentive for my company to spend 21 $220,000 to purchase a new engine until 2010. We'll just 22 keep running what we have. 23 Thank you. 24 CHAIRMAN DUNLAP: Any questions for the witness? 25 Thank you for taking the time to be here today. Appreciate PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 176 1 it. 2 Last witness, Larry Miller from Halliburton Energy 3 Services. 4 MR. MILLER: Mr. Chairman, Board, I'd like to 5 thank you for the opportunity to be here today. 6 Halliburton Energy Services employs about 280 7 people in California, primarily to the petroleum industry, 8 but also to geothermal services from El Centro up through 9 the Geysers. 10 We have approximately 250 engines in this group 11 that we call portable equipment. Some of these engines are 12 on five different wells or jobsites in one day, one 24-our 13 period. They truly are portable. 14 Our cost for permitting these engines right now in 15 the State of California, these 250 engines run us about 16 $54,500 per year. We have to permit them in a district 17 whether we're going to work or not. It makes it very 18 difficult. 19 We are in support of this proposed rule. However, 20 we have two concerns that have risen today, and that is with 21 the two amendments. We have many engines over 750 22 horsepower. Under one of these applications, they will run 23 for 12 to 16 hours per day. The majority of this time they 24 are idling. They have to be warmed up. They have to be 25 ready in a moment's notice to go anywhere between 50 percent PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 177 1 to 100 percent of their rated capabilities. The 12 hour 2 limit, I would just like for that to be taken into 3 consideration, you know. 4 They're not running at maximum horsepower emitting 5 this tremendous potential during the majority of that time. 6 It's only for a three or four hour period at max that 7 they're running at this 50 percent to 100 percent. 8 The offshore exclusion, this will require our 9 employees to be familiar with four sets of regulations when 10 operating their equipment -- this CARB ruling, South Coast, 11 Ventura County and Santa Barbara. Some of these people that 12 are trying to comply with these regulations may or may not 13 have graduated from high school. 14 It's very difficult for them to remember which air 15 district they're operating in and what the current rules are 16 for them at that time when they're jumping from one district 17 to the other. 18 I would encourage that as soon as possible, that 19 this be compiled with one rule for these employees. They're 20 trying to do their best. 21 Again, I'd like to thank you for the opportunity 22 to speak on the short notice. 23 CHAIRMAN DUNLAP: Thank you for taking the time. 24 Any questions of our last witness? 25 All right. Very good. I'd like staff -- this PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 178 1 will conclude the public testimony. I'd like staff to 2 summarize the written correspondence we've received on this 3 item. Peter, do you want to take a stab at that? 4 MR. VENTURINI: Yes. Mr. Mike Tollstrup will do 5 that. 6 MR. TOLLSTRUP: We have a number of comment 7 letters that we will briefly summarize for you. The first 8 is from the U.S. EPA. They had a number of issues. The 9 first one, they claim that the regulation does not clearly 10 exclude all sources potentially subject to federal 11 regulation. We discussed this issue with EPA and agreed to 12 handle this issue by including standardized conditions on 13 the registration certificates. 14 In addition, this is a hazardous air pollution 15 issue, portable equipment emitting more than 10 tons per 16 year of any HAP or more than 25 tons per year of any 17 aggregation of HAPs would be considered a major source under 18 federal law and therefore not be eligible for registration. 19 Again, we've discussed this issue with EPA, and we 20 will handle this through conditions on the registration 21 certificates to keep these sources out of federal 22 requirements. 23 There was an issue concerning the language that we 24 had for PSD notification. We included the specific changes 25 that EPA had recommended in the proposed staff amendments. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 179 1 Portable units are by U.S. EPA definition 2 stationary sources that may trigger NSR requirements. The 3 proposed regulation establishes requirements for four 4 separate categories for these -- this is the associated 5 equipment we're talking about, but it doesn't preclude other 6 types of portable equipment from registering. 7 And EPA's comment is that because the regulation 8 does not establish specific requirements for other types of 9 units, they should be excluded from the regulation. 10 Our response is that the regulation is consistent 11 with State law. What we would do, if we had other 12 categories that came in, we would do a case-by-case BACT 13 analysis for each of those and impose the emission limits 14 that we've established in the regulation for associated 15 equipment. 16 EPA commented about military tactical support 17 equipment. They claim that it doesn't qualify as a nonroad 18 engine and therefore it should be treated as a stationary 19 source. The regulation reflects State law, which says that 20 we must include the turbines under that TEE exemption. 21 Sources registered under the statewide 22 registration program remain subject to federally enforceable 23 SIP requirements. While State law requires that ARB in 24 consultation with the districts, amend the SIP if necessary, 25 to conform the SIP to its requirements. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 180 1 That's it for EPA. We received a comment letter 2 from the Bay Area District. Overall, they support the 3 regulation. They did make one comment on the reg., 2451(d) 4 of the regulation. They claim he language was unclear. 5 Staff has since revised that to clarify the language. 6 The remaining comments suggest changes to the 7 staff report itself. 8 Feather River AQMD had one comment, suggesting 9 that Sections 2451(a) and (d) could be misconstrued, when 10 you read them together, as including associated equipment 11 under the mandatory provisions of our regulation. It is our 12 belief that when you read those two sections in concert 13 that, in fact that is not true. 14 Kern County District, they commented that Section 15 3 of the staff report shows the regulation is consistent 16 with the SIP. It does not address CEQA. Section 3 is in 17 the executive summary. The CEQA analysis is contained in 18 Volume 2, the technical support document. 19 We received a comment letter from the San Diego 20 District. They have asked that the ARB make a number of 21 commitments, including reviewing on a periodic basic 22 emission control requirements, the costs, the fee issue that 23 we heard so much about today. And they recommend that we do 24 that every three years. 25 The proposed resolution contains a finding that we PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 181 1 will come back on a periodic basis; in fact, we will come 2 back a year from the effective date and revisit a number of 3 these issues. 4 They've asked us to rephrase Section 2451(d) for 5 clarification. We have included this as part of the 6 proposed staff amendments. And then they had one additional 7 comment on the clarification of the staff report. 8 We had a comment letter from Associated Power, 9 Incorporated. They had actually had two comments. The 10 first was that they claim that the current South Coast regs 11 require permits for engines over 50 horsepower, and the ARB 12 calls for registration for 50 horsepower or greater. 13 The second comment was that where they have 14 equipment operating in an area outside of a district control 15 under a specific permit -- basically, equipment operated in 16 an area outside of that control by a specific district is 17 not required to have a permit. Do we have to change that? 18 Our program is voluntary. If you're not required 19 to obtain a district permit, there's not a necessity to 20 obtain registration through our program. 21 We received a comment from Granite Rock Company. 22 They pointed out that there's a requirement in the reg to 23 duct particulate matter emissions through a fabric dust 24 collector or wet suppression system. Staff has proposed an 25 amendment to this language to take care of this. Basically, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 182 1 the requirement is that we require emissions to be ducted 2 through a fabric dust collector or they equip the system 3 with the wet suppression system. 4 Also, they asked for a two-tiered approach -- this 5 is a similar comment that we received from the California 6 Mining Association -- that we basically set up a system 7 where we have different requirements for the nonattainment 8 areas and other requirements for the attainment areas of the 9 State. 10 This is inconsistent with State law and basically 11 defeats the purpose of the program. 12 We got a letter from the Engine Manufacturers 13 Association, separate from Mr. Keller. It's from Mr. Tim 14 French. Basically EMA supports the program. They had one 15 language clarification that he have incorporated in the 16 suggested amendments to the regulation. 17 We also received a support letter from the 18 California Groundwater Association for the regulation. 19 That concludes the written submissions. 20 CHAIRMAN DUNLAP: Very good. Thank you for that. 21 Okay. Mr. Kenny, do you have anything else you want to add? 22 MR. KENNY: No. 23 CHAIRMAN DUNLAP: I'll now close the record on 24 this agenda item, however, the record will be reopened when 25 the 15 day notice of public availability is issued. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 183 1 Written or oral comments received after this 2 hearing date but before the 15-day notice is issued will 3 not be accepted as part of the official record on this 4 agenda item. 5 Mr. Venturini, do you wish to interrupt me? 6 MR. VENTURINI: We forget one letter that was 7 behind a few others. Sorry. 8 MR. TOLLSTRUP: I'm sorry. This letter is from 9 Ingersoll Rand Company. They have a number of issues. The 10 first concerns nonroad engines subject to federal 11 requirements should be exempt from all additional 12 requirements; under the regulation, we believe that we have. 13 And basically they're talking about fuel 14 restrictions and we believe we have the authority to impose 15 those requirements on these engines. 16 We have another issue with regards to engines that 17 comply with -- engines that are classified as nonroad under 18 federal EPA regulations, and they're not yet subject to a 19 standard. They believe they should be exempt from any 20 further requirements under our regulation. 21 Also they had an issue on rental equipment that it 22 should be exempt from all notification requirements -- this 23 was a compromise that we worked out in the work group where 24 we require that rental equipment over 250 horsepower is 25 subject to notification requirements. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 184 1 Their final comment has to do with reformulated 2 fuels. They do not believe that nonroad engines under EPA 3 regs. should be required to use reformulated fuels under our 4 program. 5 CHAIRMAN DUNLAP: Okay. Very good. Thank you for 6 that. 7 MR. TOLLSTRUP: I want to correct one thing. We 8 mistakenly inserted on revisions back in the back, 9 submissions of comments should be done by April 9th. And it 10 should actually be -- it'll be 15 days from the date after 11 the Board approves this resolution with modifications. 12 CHAIRMAN DUNLAP: All right. I will accept that 13 in my closing comments as you've stated. 14 But I want to close the record and remind those in 15 the audience that are familiar with this, that the record 16 will be reopened for a 15-day comment period. The public 17 may submit written comments on the proposed changes which 18 will be considered and responded to in the final statement 19 of reasons for the regulation. 20 So, everybody comfortable with that on the legal 21 staff? Good. Thank you. 22 What I'd like to do then is make sure that we 23 cover any ex parte communication that we need to report. 24 Jim, do you have any? 25 SUPERVISOR SILVA: Yes, Mr. Chairman. On March PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 185 1 24th, I met with South Coast AQMD, representatives Jack 2 Broadbent and Larry Bowen on the agenda item No. 3. And I 3 discussed their concerns. 4 CHAIRMAN DUNLAP: Okay. Which were reflected in 5 the testimony we heard today. 6 Ms. Edgerton? 7 MS. EDGERTON: I have nothing to report. 8 CHAIRMAN DUNLAP: Mr. Parnell? 9 MR. PARNELL: No. 10 CHAIRMAN DUNLAP: I have several. I had a 11 conference call with Jeb Stewart, Mike Lewis, and Robert 12 Shepherd on the 17th of March. Mr. Lewis reflected those 13 concerns today in his testimony. 14 Also, I had a conversation on the 12th of March 15 with Mr. Lewis, a brief teleconference, had a conversation 16 with Tom Soto and Edric Guise last evening, comments were 17 reflected in their testimony today. Also had a brief 18 conversation with the South Coast staff, Mr. Broadbent, Mr. 19 Bowen, and Mr. Mills yesterday evening. And their comments 20 were reflected in Mr. Broadbent's comments today. 21 Any others? 22 Okay. Yes, Mr. Parnell. 23 MR. PARNELL: If it's appropriate, I'd just like 24 to address a comment to the staff. I'm sensitive to the 25 issues that have been brought forward by those people who PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 186 1 may be subjected to redundant and perhaps unnecessary 2 inspections and the fees that attach and their lack of 3 ability to be able to budget for that. 4 Do you have any sense as to how we might monitor 5 that in the future to make sure that there are no abuses? 6 MR. VENTURINI: Mr. Parnell, me start, and staff 7 can chime in. 8 This was, as you can imagine one of the items that 9 took a considerable amount of discussion with the work 10 group. Basically where we are now is the fee that is 11 proposed is a $75 inspection fee. Concerns have been raised 12 we heard today on one side, excessive amount of inspections; 13 on another side, it might not be adequate. 14 What we think may be appropriate, we'd like to 15 suggest to get this program up and running. We monitor this 16 very closely. And if we see any problems, then we can 17 address it. 18 CHAIRMAN DUNLAP: That's a good point, Peter. I 19 would just suggest -- Mr. Kenny, I'd ask you, if my Board 20 member colleagues agree, to give some kind of report back on 21 what's happening with inspections. It could even be some 22 kind of a report to the Board. It doesn't have to be a 23 specific agenda item where we can see it, and you could also 24 circulate the draft report to people like Mr. Lewis and our 25 friends from some of the local air districts, and some of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 187 1 the folks -- I appreciate the folks today that testified 2 about their individual experiences. One gentleman said, "I 3 am the portable equipment person. I represent them." 4 And I think he and others like him should be 5 consulted to see what's going on. 6 So, if that's okay with my Board member 7 colleagues, Mike, let's give you a year and have you get 8 back to us on that. 9 MR. KENNY: That's fine. And, in act, one of the 10 things that we put into the resolution was the thought that 11 we would actually report back to the Board in a one-year 12 time frame after the implementation of this regulation. 13 The idea really there was to reflect that there's 14 been a lot of thought and a lot of discussion which has gone 15 into the development of this particular regulation and yet 16 there are still some issues. 17 CHAIRMAN DUNLAP: Let me kind of frame it this 18 way. I had asked staff at the outset to kind of keep a 19 list. But I'm more comfortable having heard the range of 20 testimony today. I've been able to track must of it myself 21 and attempted to keep it straight in my mind. 22 I think that this proposal, while not perfect, and 23 while there's some issues that people are concerned about, 24 not the least of which is, you know, possibly expanding the 25 program to new areas, costs. I think Jack Broadbent of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 188 1 South Coast made some good points about tracking and seeing 2 what occurs over time, and then having a better sense about 3 how we might tweak it later. 4 But as I recall -- and Chris Reynolds I think was 5 here, our Lege Director. We didn't seek this authority. 6 This was something a couple forward-thinking legislators 7 thought should be housed here. And that's why we've 8 undertaken this endeavor. It's not that we were looking to 9 disadvantage the districts or take away some authority or 10 responsibility in the program area, but rather to have a 11 uniform program statewide or an option for a uniform 12 program. 13 And so, with that legislative initiative, of 14 course, Governor Wilson signed the bill, we got ourselves 15 into position to put together the best program we can. I am 16 sorry for those people who have testified here today to 17 think this is not all that it can be. But it is I think a 18 good cut, and I think it's something that's going to work 19 and provide some flexibility for people. 20 So, what I would propose, rather than go through 21 the painstaking process of having staff run through every 22 point -- but if my Board members wish to do so or have some 23 specifics they want to talk about, we're certainly open to 24 that. But I'd rather consider the resolution before us. I 25 know Supervisor Silva has a modification he'd like to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 189 1 propose to the resolution that makes some sense too me. It 2 gets to the very point of monitoring for a period of time to 3 see how things are shaping up. So what is your pleasure? 4 SUPERVISOR SILVA: Actually, it is in there. 5 CHAIRMAN DUNLAP: Can you find it, Jim, and maybe 6 call it out specifically, so those in the audience will know 7 your progressive nature in determining this should be 8 included? 9 SUPERVISOR SILVA: On page 8, last paragraph, "Be 10 it Further Resolved that staff is directed to periodically 11 evaluate the control technology, emission standards, program 12 effectiveness, and adequate fees, including enforcement fees 13 that may not be sufficient to cover the reasonable costs of 14 enforcement as required by California Health & Safety Code 15 section 41752(d)(2), and, within one year of the effective 16 date of this regulation, report its finding to the Board 17 with recommended amendments to the regulation as 18 appropriate." 19 CHAIRMAN DUNLAP: Very good. Well, it seems to me 20 that that reflects the sentiment to come back to the Board. 21 So, with that -- Ms. Edgerton, you want to add anything? 22 MS. EDGERTON: Yes. I just would like to discuss 23 for just a moment. I think our proposal in the main is one 24 I may be comfortable with, Mr. Chairman. 25 However, I've just gotten this packet of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 190 1 regulations, so I'm not quite sure what's in it and what's 2 not in the proposed regulation we're going to vote on. 3 CHAIRMAN DUNLAP: Resolution. 4 MS. EDGERTON: Resolution. I want to be sure 5 that-- this is all resolution. Where's the regulation? Oh, 6 the regulation's in the package. 7 CHAIRMAN DUNLAP: Yes. 8 MS. EDGERTON: I don't know how you want to handle 9 it, but -- for example, in the Santa Barbara -- 10 CHAIRMAN DUNLAP: Lynne, I can tell you, if you 11 want to discuss any specific changes, focus it that way 12 first. Bring that up. And then if you have questions, just 13 general background questions, or questions that may end up 14 as suggested changes or revisions. 15 MS. EDGERTON: All right. Well, the things that I 16 thought that seemed that they would contribute to the 17 program changes may be contemplated items for review within 18 the one year. 19 CHAIRMAN DUNLAP: Let's add them. 20 MS. EDGERTON: And I just wanted to be sure that 21 they were. Santa Barbara had suggested looking at whether 22 the regulation should include a daily or hourly emission 23 limit for NOx to be sure the NOx standard is not violated. 24 Basically, most of the things that they had in their letter 25 I thought were things that should be looked at. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 191 1 CHAIRMAN DUNLAP: Let me take that and put it in 2 some operative language if I might. Mr. Kenny, I'm in the 3 amendment that Mr. Silva offered up, if you could add in 4 there that would be some tracking done as far as specific 5 monitoring, exceedances that would occur as a result of this 6 program being implemented; that it would be tracked and 7 reported back to the Board. 8 So, Kathleen you want to add a word or two that 9 would satisfy by Ms. Edgerton? I concur with that language. 10 MS. EDGERTON: It's on page 3 actually, they 11 wanted -- consider the background concentrations, the 12 operation of more than one engine, potential violations of 13 the NO2 standard. ARB should review cumulative impacts when 14 it revisits the issue and consider again the feasible 15 mitigation measures. 16 It's my understanding that the intent of this 17 program and your proposal to return in the years to consider 18 all of the different things that have been raised, I also 19 liked the San Diego -- they suggested a three-year review of 20 the technologically feasible emission control advancements 21 for new equipment, and made some other suggestions. I'm 22 assuming that most of these are making it onto the agenda. 23 MR. KENNY: If I might. I don't think there 24 really is a limitation to the agenda, so I'm not sure we 25 need to specifically identify each of them. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 192 1 Our thought really here is that this regulation 2 has undergone a significant amount of discussion to get to 3 the point where we are today. But there still are issues 4 that really need to be sort of addressed. 5 And the thought is that we would have one year of 6 implementation and one year of data that would go along with 7 that implementation that we could then analyze and discuss, 8 and see what of these issues, no matter how broad they may 9 be, need to be brought back to the Board at that one-year 10 point so that we can basically present to you at that time a 11 more precise way of identifying some of the concerns with 12 those issues and maybe some specific ways of trying to 13 resolve them. 14 So, we're not trying to really exclude anything. 15 MS. EDGERTON: Okay. Well, let me just make sure 16 that a couple of them I want to include, just for the 17 record. I want to be sure, if you look back, that they are 18 considered. I am concerned that the -- I'm glad that the 19 problem raised by PS Enterprises has been solved for 20 purposes of their clean fuel project. 21 I am troubled that it was reported that it's not 22 necessarily a result of the regulation. It could have been 23 a real serious problem if they had happened to have another 24 unit onsite. So, I'd like for the staff to look at the 25 possibility of some kind of variance measure to avoid in any PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 193 1 way conflicting -- causing a problem for clean fuels 2 project, portable project, engine project. 3 And also I like the idea of possibly looking into 4 having this specific host of incentives which Mr. Chairman 5 brought up. I want to officially put that in the record as 6 something that will be considered in a year. 7 I also, I'm sure you'll look at, but I thought the 8 Web Site idea was innovative that the South Coast had 9 brought up as possibly a way to assist in the moving in and 10 out of big engines from one district to another. 11 CHAIRMAN DUNLAP: I think, if I might add on to 12 what Lynne's saying, Mike, I think we need a pretty 13 comprehensive report coming back with these issues. 14 Peter, I'd suggest you run through the list of 15 things Lynne mentioned and others have made on your list. 16 Make sure we can report back on what's been happening as a 17 result. Put it on your agenda, Mike, and come back and give 18 a report to the Board. 19 I want to invite those who testified today in a 20 year, notify them they dan come back. And again, there's 21 going to be, as you develop this report back to the Board 22 and circulate it, get some input from stakeholders and that 23 might be included in what you send back to the Board. 24 Does that suffice Lynne? 25 MS. EDGERTON: I think so, yes. One thing that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 194 1 did concern me, though, is -- another thing I forgot to 2 mention was this particular issue of one big piece of engine 3 equipment moving into the district and throwing it out of 4 compliance. Did I understand that correctly from Lake 5 County? 6 MR. KENNY: Are you referring to Lake County or t 7 he Santa Barbara comments where they had basically one 8 engine that has the potential for high NO2 emissions, and 9 there was a concern because of the fact that there was not a 10 cap on our particular regulation. 11 That is an issue that we will be discussing during 12 the next one-year time frame. 13 MS. EDGERTON: So, the Santa Barbara issue, that 14 issue, and then also the Lake County issue I'd like to think 15 about to. They wanted the five-day advance notice. I don't 16 know if it's something that can be worked out to help them. 17 But I do think if they've made the effort and 18 they're in attainment, we don't want an engine going in 19 there without any notice throwing them out. 20 Thank you. 21 CHAIRMAN DUNLAP: Any other comments before -- 22 yes, Supervisor Roberts. 23 SUPERVISOR ROBERTS: Mr. Chairman, you know, it 24 would probably have given us all maybe a higher degree of 25 comfort if that last paragraph, which I think is a good PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 195 1 paragraph, because it dealt with many of the things I was 2 concerned about and were reflected in some of the letters, 3 maybe we could have just said, though, that maybe what we 4 are looking for is a comprehensive report, including but not 5 limited to those specific items, because it only deals with 6 those specific items. And I would have thought a small 7 language change in that would give us all a greater level of 8 comfort. 9 CHAIRMAN DUNLAP: All right. 10 SUPERVISOR ROBERTS: That took care of about three 11 of the things that I wanted to mention. There was a fourth 12 item that I understood in the comments was taken care of. 13 There was a fifth item. I think it's taken care 14 of, but I'm not sure, and that's actually the registration 15 certificate itself being maintained with the equipment 16 onsite. Is that covered in this? 17 MR. TOLLSTRUP: The regulation currently requires 18 a certificate number. 19 MR. VENTURINI: I think what was requested was 20 beyond that, the conditions and so forth associated. And 21 we'd be willing to look into that. There was some 22 discussion by the group. And if that's workable and doable, 23 we don't see a problem with incorporating that. 24 SUPERVISOR ROBERTS: So how do we consider it 25 workable and doable? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 196 1 MR. VENTURINI: We'll incorporate it into the 2 amendments then. 3 SUPERVISOR ROBERTS: Okay. 4 CHAIRMAN DUNLAP: All right. Good. 5 SUPERVISOR ROBERTS: So that change will become a 6 part of this. 7 CHAIRMAN DUNLAP: It will be reflected. 8 SUPERVISOR ROBERTS: Okay. Then I would, with 9 those two things, is there some simple language that you 10 might suggest, Mr. Chairman? 11 CHAIRMAN DUNLAP: Ms. Walsh, why don't you take a 12 minute and articulate so that we might incorporate it into 13 an amendment to the resolution. 14 SUPERVISOR ROBERTS: I've got a recommendation for 15 you. 16 CHAIRMAN DUNLAP: Please. 17 SUPERVISOR ROBERTS: Just at the end of that 18 paragraph, you list all these particulars and then say, 19 within one year of the effective date of this regulation, to 20 prepare a comprehensive report including but not limited to 21 the above items, to report its findings to the Board with 22 recommended amendments to the regulations as appropriate. 23 CHAIRMAN DUNLAP: I like that. Okay. That's 24 fine. We don't need to specifically list it, Kathleen, do 25 we? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 197 1 MS. WALSH: We'll go ahead, and on the basis of 2 the direction from the Board here today -- 3 CHAIRMAN DUNLAP: Which includes some of the 4 Lynne's comments, the points Ron made, Jim's amendment, and 5 the list that Peter has been putting together, we'll have it 6 encapsuled and then added. Okay. 7 Then, you'll circulate that, Mr. Kenny, to the 8 Board members? All right. Very good. 9 Okay. The Chair would entertain a motion to move 10 resolution 97-16, which would deal with the portable utility 11 engine issue. Is there a motion? 12 SUPERVISOR SILVA: So moved. 13 CHAIRMAN DUNLAP: Okay. So moved. Supervisor 14 Silva. Seconded by Supervisor Roberts. Is there any 15 discussion on this motion? 16 All right. We'll proceed, Madam Clerk, with a 17 voice vote. All those in favor, say aye? 18 (Ayes.) 19 Any opposed? Motion carries. 20 Thank you very much. Okay. We have an open 21 agenda item always at the end of the meeting. Anybody that 22 wishes to provide any comments to the Board is free to come 23 forward to the Clerk of the Board and speak their mind. 24 Has anyone signed up with you, Pat? 25 MS. HUTCHENS: No. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 198 1 CHAIRMAN DUNLAP: All right. Very good. Thank 2 you, staff for a fine job today. With that, the March 3 meeting of the California Air Resources Board is now 4 adjourned. 5 (Thereupon, the meeting was adjourned at 6 1:40 p.m.) 7 --o0o-- 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 199 CERTIFICATE OF SHORTHAND REPORTER I, Nadine J. Parks, a shorthand reporter of the State of California, do hereby certify that I am a disinterested person herein; that the foregoing meeting was reported by me in shorthand writing, and thereafter transcribed into typewriting. I further certify that I am not of counsel or attorney for any of the parties to said meeting, nor am I interested in the outcome of said meeting. In witness whereof, I have hereunto set my hand this 10th day of April , 1996. Nadine J. Parks Shorthand Reporter PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345