MEETING BEFORE THE CALIFORNIA AIR RESOURCES BOARD BOARD HEARING ROOM CALIFORNIA AIR RESOURCES BOARD 2020 L. STREET SACRAMENTO, CALIFORNIA THURSDAY, MAY 25, 1995 9:30 A.M. JAMES F. PETERS, CSR, RPR Certified Shorthand Reporter License No. 10063 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 ii MEMBERS PRESENT John Dunlap, Chairman Eugene Boston, M.D. Lynn T. Edgerton M. Patricia Hilligoss John Lagarias Jack Parnell Ron Roberts Jim Silva Doug Vagim Staff: Jim Boyd, Executive Officer Tom Cackette, Chief Deputy Executive Officer Mike Scheible, Deputy Executive Officer Michael Kenny, Chief Counsel Gary Honcoop, Manager, Strategic Analysis & Assessment Group Lynn Terry, Acting Chief, Office of Air Quality and Transportation Planning Robert Barham, Assistant Chief, Research Division Peggy Jenkins, Manager, Indoor Air Quality Program, RD Patricia Hutchens, Board Secretary Wendy Grandchamp, Secretary Bill Valdez, Administrative Services Division PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iii I N D E X Page Proceedings 1 Call to Order 1 Opening Remarks by Chairman Dunlap 1 Roll Call 1 Additional Remarks by Chairman Dunlap 2 Agenda Items 95-5-1 Public Meeting to Consider a Proposed Report to the California State Legislature on Funding Sources of California's Air Pollution Control Districts with Budgets Exceeding $1,000,000 Introductory Remarks by Chairman Dunlap 2 Staff Presentation Jim Boyd, Executive Officer 3 Gary Honcoop Manager, Strategic Analysis & Assessment Group 4 Questions/Comments 12 Public Comments Mr. Robinson Sacramento Metro Air Quality And Management District 20 Motion by Board Member Silva to direct the Executive Officer to forward the report 21 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iv 95-5-2 Public Meeting to Consider a Status Report on the State Implementation Plan (SIP) and the Federal Implementation Plan (FIP) Introductory Remarks by Chairman Dunlap 23 Staff Presentation Jim Boyd Executive Officer 24 Lynn Terry Acting Chief, OAQTP 26 Questions/Comments 40 Motion by Board Member Lagarias to adopt Resolution 95-20 48 Roll Call Vote 49 95-5-3 Public Meeting to Consider Research Proposals Introductory Remarks by Chairman Dunlap 49 Questions/Comments 50 Motion by Board Member Roberts to approve four items 61 Discussion 61 Roll Call vote 65 Adjournment 67 Reporter's Certificate 68 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 1 1 PROCEEDINGS 2 CHAIRMAN DUNLAP: If I could get you to take your 3 seats, we'll begin. 4 We'll call this, the May meeting of the Air 5 Resources Board, to order. 6 I'd like to ask the Board Secretary to please call 7 the roll. 8 MS. HUTCHENS: Boston? 9 BOARD MEMBER BOSTON: Here. 10 MS. HUTCHENS: Calhoun? Edgerton? 11 BOARD MEMBER EDGERTON: Here. 12 MS. HUTCHENS: Hilligoss? 13 BOARD MEMBER HILLIGOSS: Here. 14 MS. HUTCHENS: Lagarias? 15 BOARD MEMBER LAGARIAS: Here. 16 MS. HUTCHENS: Parnell? 17 BOARD MEMBER PARNELL: Here. 18 MS. HUTCHENS: Riordan? Roberts? 19 BOARD MEMBER ROBERTS: Here. 20 MS. HUTCHENS: Silva? 21 BOARD MEMBER SILVA: Here. 22 MS. HUTCHENS: Vagim? 23 BOARD MEMBER VAGIM: Here. 24 MS. HUTCHENS: Chairman Dunlap? 25 CHAIRMAN DUNLAP: Here. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 2 1 Thank you. 2 For those of you that are relatively new to the 3 Board, and would like more information about indoor air 4 quality, you may wish to pick up several publications on the 5 table outside the Board hearing room that were produced by 6 the Board's Indoor Air Quality Program Staff. 7 The items include a program update that describes 8 all of the activities and many of the findings of our indoor 9 air program, two indoor air quality guidelines publications 10 for the public on formaldehyde and indoor combustion 11 pollutants, which is an award-winning booklet; also, one on 12 reducing indoor air pollution and the 1989 staff report to 13 the Board on the regulatory authorities and activities of 14 various state and federal agencies that affect indoor air 15 quality throughout there. So I draw that to your attention. 16 I would like to remind those of you in the audience 17 who would like to present testimony to the Board on any of 18 today's agenda items, to please sign up with the Board 19 Secretary. If you have a written statement, please give 20 20 copies to the Secretary. 21 First item on the agenda today is 95-5-1, a Public 22 meeting to consider a proposed report to the California State 23 Legislature on funding sources on California air pollution 24 control districts with budgets exceeding $1 million. 25 This item is the consideration of a report to the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 3 1 Legislature on the funding sources of California Air 2 Pollution Control Districts. 3 As required the proposed report provides information 4 on district budgets at that $1 million or higher level. For 5 several years the state law has required the Air Resources 6 Board to submit this report biannually in the State 7 Legislature. 8 Recent legislation changed the requirements slightly 9 to add several new elements to the report's contents and 10 requires us to submit the report annually now. As I'm sure 11 the staff will discuss in more detail, state law is very 12 explicit about the information included in this report. The 13 primary requirement is that we document the district's 14 revenue sources, no program evaluation is involved. 15 At this point, I'd like to ask Mr. Boyd to introduce 16 the item and begin the staff's presentation. 17 Mr. Boyd. 18 EXECUTIVE OFFICER BOYD: Thank you, Chairman Dunlap, 19 and good morning Members of the Board. And good morning to 20 the audience. Before the staff begins a detailed 21 presentation, I'd just like to give the Board a very brief 22 little bit of history on this item. 23 This is the third report of this kind we've 24 prepared. The report before you today, like all the previous 25 reports, is frankly a very straight forward presentation of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 4 1 the information about the air district's revenues. And as 2 indicated by the Chairman, this does not and wasn't directed 3 to be an analysis. The staff worked very closely with the 4 local air pollution control districts to compile the required 5 information. And as always, we appreciate the cooperation we 6 received from the districts on this. Each local agency of 7 course has its own budgetary format and approaches. And they 8 all did their best to accommodate our needs and format the 9 information in somewhat of a standard way for us. 10 The 12 districts that are addressed in this report, 11 of course all have the same basic program elements and 12 funding sources. But as I indicated before, it's kind of the 13 manner of reporting the information that is different. 14 Nonetheless, your staff has done its best to streamline both 15 the collection of the data and presentation of the data into 16 a concise presentation. 17 With that, I'll turn the microphone and the 18 presentation over to Mr. Gary Honcoop, who's the Manager of 19 our Strategic Analysis and Assessment Group in the Office of 20 Air Quality and Transportation Planning, that office with 21 which you've become so familiar lately since the SIP, the FIP 22 and everything else has been worked out of that office. 23 So with that, Mr. Honcoop, if you would. 24 MANAGER HONCOOP: Thank you, Mr. Boyd. 25 Good morning, Mr. Chairman and Members of the Board. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 5 1 For the record, my name is Gary Honcoop and I'm the Manager 2 of the Strategic Analysis and Assessment Group. 3 As you've heard the district funding report -- 4 (Thereupon an overhead presentation was 5 presented as follows.) 6 MANAGER HONCOOP: The district funding report you're 7 considering at this time is its third edition. We've 8 submitted previous reports to the Legislature in 1990 and in 9 1992. The report is required by Health and Safety Code 10 Section 42311.1 and 40500.1. The requirement for the report 11 grew out of a desire by the Legislature to see where the 12 districts were getting their funding and what those funds 13 were being used for. 14 As you already know, the report does not evaluate or 15 analyze the districts' budgets. It contains only the 16 information and data required by state law. You should note 17 that the part of state law amending this report was amended 18 recently -- or requiring this report was amended recently by 19 adding several elements to the report and requiring that 20 report to be submitted annually rather than biannually. So 21 this is the first report that we've prepared under the 22 revised mandate. 23 --o0o-- 24 MANAGER HONCOOP: The report addresses the 12 25 districts that had budgets over $1 million in fiscal year PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 6 1 1993, 1994. They range from the larger districts like the 2 South Coast, San Francisco Bay Area and San Joaquin Valley to 3 the smaller ones like Yolo-Solano and San Luis Obispo. 4 Information for this report came from a survey 5 questionnaire we sent to these 12 districts. In many cases, 6 we followed it up with the district staff by telephone to 7 expand upon or clarify information in the questionnaire. 8 And I also would like to acknowledge the assistance 9 of the districts' financial staff because their cooperation 10 was essential for the completion of this report. 11 --o0o-- 12 MANAGER HONCOOP: As I said earlier, state law 13 requires the report and also identifies what that report is 14 to contain. The most important elements are the budget of 15 each district that has a budget over $1 million, the process 16 the districts used in developing their budget, the funding 17 sources, a comparison of the fees paid by different 18 industries, district revenues and how they are allocated to 19 their programs and services, and revenues from enforcement 20 activities. 21 --o0o-- 22 MANAGER HONCOOP: This next section will deal with 23 the heart of the report, which is the information required by 24 state law. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 7 1 MANAGER HONCOOP: First, we have the 12 districts 2 with their budget totals. The six largest, which are listed 3 on this slide, shows, as expected, that the South Coast and 4 San Francisco Bay Area are the top of the list. Next are the 5 San Joaquin Valley, Santa Barbara, San Diego and Sacramento 6 in descending order. 7 I believe it's only fair to point out that 8 of the 8 12 districts include, in their budget totals, monies from 9 motor vehicle registration fee surcharges and other sources 10 that are not used by the district but are passed on directly 11 to other entities. And in fact, three of the eight districts 12 have budgets that are significantly higher because these 13 monies are included. 14 For example, San Joaquin Valley's budget of $20.1 15 million would be reduced to $15.4 million, if pass-through 16 monies were excluded. And Santa Barbara's $10.5 million 17 budget would drop to $4.2 million. 18 --o0o-- 19 MANAGER HONCOOP: This slide shows the budgets for 20 the remaining districts. They are Monterey Bay, Ventura, 21 Great Basin, Mojave Desert, Yolo-Solano and San Luis Obispo. 22 The pass-through also significantly figure in one of the 23 budgets shown here. That one is Monterey Bay, which would 24 drop from the $7.7 million shown to $4.1 million, again, if 25 pass-through were excluded. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 8 1 In summary there is quite a range from over the $100 2 million for the South Coast district to about $1.5 million 3 for San Luis Obispo. 4 --o0o-- 5 MANAGER HONCOOP: Another element we cover in the 6 report is the districts' budget development process. The 7 four steps listed on this slide is a generalized summary of 8 the process, although each district has a specific process. 9 Each district prepares its budget on the basis of current 10 programs and any new state or federal requirements to be 11 addressed in the next fiscal year. The districts also hold 12 at least one workshop with some districts holding several. 13 The public is also given an opportunity to provide input when 14 the proposed budget is presented by district staff to its 15 governing board and at a subsequent meeting, when the 16 governing board approves the final budget. 17 Appendix D of our report contains descriptions of 18 the budget development process provided by each district. 19 --o0o-- 20 MANAGER HONCOOP: When we reviewed the districts' 21 funding sources, we found as expected that each district is 22 unique. Detailed information for each district can be found 23 in Appendix E and in summary form in Tables 4 and 5 in the 24 report. 25 This slide shows the five major sources of funding PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 9 1 for all districts combined. Percentages were calculated from 2 the combined budgets and therefore represent an average for 3 the 12 districts. Now, as shown, an average of 52 percent of 4 all funds come from fees, mainly industrial sources. But by 5 district the contribution of fees to the budget varies, 6 ranging from a high of 74 percent for the Great Basin to a 7 low of 21 percent for Santa Barbara. 8 The next largest source of funds is vehicle 9 registration surcharge fees. They account for about 17 10 percent of funds. And again this percentage is varied by 11 district, from zero percent for Great Basin to a high of 38 12 percent for Sacramento. Additional vehicle registration fees 13 are also collected but these are passed through to other 14 agencies and they're accounted for in that eight percent 15 shown for pass through. You know, the source of funds are 16 federal and state grants, which combined contribute about 17 nine percent of the total funding. 18 The last source listed, local taxes, provide about 19 five percent of the total. However, only three districts, 20 Bay Area, Sacramento and San Luis Obispo receive funding from 21 local taxes. And that leaves about nine percent of the funds 22 coming from a number of miscellaneous sources including fines 23 and penalties. 24 --o0o-- 25 MANAGER HONCOOP: Next we reviewed the fees paid by PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 10 1 different industries. A detailed presentation of the fee 2 payers can be found in Table 6 in the report. 3 The industrial sector providing the highest 4 percentage of fees is oil and gas at 33 percent, with a range 5 of two percent for Mojave to 85 percent for Santa Barbara. 6 Next we see manufacturing at 27 percent, with a 7 range of two percent for Santa Barbara, 34 percent for South 8 Coast. 9 And then we have the gas and electric utilities 10 contributing 10 percent with a range of three percent for 11 Great Basin to 27 percent for Monterey. 12 And finally, services provide about 10 percent with 13 the remaining sectors, such as resource development and 14 transportation being two percent or less. 15 As with the budget development process, all 16 districts set their fees through an open process by 17 soliciting input from the public and affected parties before 18 adoption at a publicly noticed hearing. This process also 19 follows the requirements laid out in state law. 20 --o0o-- 21 MANAGER HONCOOP: The next section presents how 22 districts' revenues are allocated to various programs. 23 Although there are some differences among districts, there 24 are common program elements. The three largest programs on a 25 statewide basis are enforcement, planning and permitting. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 11 1 This is not unexpected since these comprise the primary 2 responsibilities of the district under state law. 3 Included in the report is a series of tables, one 4 for each district's budget, that displays the revenues and 5 programs. We also found that a county practices very 6 significantly from one district to the next, usually 7 reflecting the conventions used by a specific county 8 government. We'll be working with the districts over the 9 next year to standardize the reporting of the budget 10 information for next year's report. 11 --o0o-- 12 MANAGER HONCOOP: A topic that generates some 13 interest at times and is required to be addressed in this 14 report is how much of a district's revenue comes from 15 enforcement activities, that is fines and penalties. As you 16 can see from this slide, no district received more than four 17 percent and the average for all the districts is two 18 percent. 19 --o0o-- 20 MANAGER HONCOOP: That completes my review of the 21 report. We recommend the Board approve the report for 22 submittal to the Governor and the Legislature. 23 I'd be pleased at this time to answer any questions 24 you may have. 25 CHAIRMAN DUNLAP: Thank you, Mr. Honcoop and Mr. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 12 1 Boyd for both the report and the presentation. 2 I'd also like to thank staff for preparing the 3 report and recognize the districts' involvement and for their 4 cooperation in providing all the information needed. 5 Any of my colleagues on the Board have any 6 questions? 7 Mr. Lagarias. 8 BOARD MEMBER LAGARIAS: Mr. Chairman, I just have 9 one question. Since there's such a big difference between 10 the South Coast and some of the smaller districts, why would 11 standard reporting be necessary? Why can't you just accept 12 what they do instead of trying to conform -- have them 13 conform to our guidelines? 14 MANAGER HONCOOP: In terms of being able to present 15 a report that's a little easier to follow across all the 16 districts, we're not hopefully going to be asking them to do 17 a lot of work but try to use a common terminology, common 18 programs when they report that information to us next year. 19 And we'll be working through the CAPCOA to see how we can 20 come up with a better way to provide information in a little 21 bit more consistent format. 22 They could use sometimes the same terminology but 23 have differences in there and it makes it difficult for us to 24 understand exactly what they're doing. 25 BOARD MEMBER LAGARIAS: Well, I can understand PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 13 1 terminology, but I wouldn't make this an opportunity to put a 2 lot of bureaucratese into it and demand more than is 3 necessary for accurate reporting. 4 MANAGER HONCOOP: That's why we hope to work with 5 CAPCOA rather than impose something on them. 6 BOARD MEMBER LAGARIAS: Fine. 7 CHAIRMAN DUNLAP: Supervisor Silva. 8 BOARD MEMBER SILVA: Yes. Thank you, Mr. Chairman. 9 On May the 12th, we had a meeting with the South 10 Coast district and at that time I made a motion to allow 11 businesses to retain some of their money. And I think that 12 each one of you have a copy of that press release, so I hope 13 you get a chance to read it. 14 My motion called for two relief measures for 15 businesses. First, the four percent rebate on annual 16 operating fees that would return over a million dollars to 17 businesses. The second was a moratorium on fees paid by 18 businesses under the market-based program saving businesses 19 an additional $1.4 million for a total of $2.4 million in 20 rebates and fee reductions. 21 To my knowledge, it's the first time rebates for the 22 district have actually given back to the businesses in the 23 history of the agency and I am very happy to report that the 24 Board voted unanimously on my motion. 25 CHAIRMAN DUNLAP: Thank you. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 14 1 BOARD MEMBER SILVA: I'm very pleased. 2 CHAIRMAN DUNLAP: Good news. 3 Supervisor Roberts. 4 BOARD MEMBER ROBERTS: When you were showing the 5 last slide on the enforcement, I thought I understood you 6 said that none of them exceed four percent? 7 MANAGER HONCOOP: Right. 8 BOARD MEMBER ROBERTS: Yet the, and maybe I've read 9 the charts wrong, but it seems like the data in the report in 10 several instances isn't in agreement with that. 11 CHAIRMAN DUNLAP: This may have something to do with 12 the miscellaneous category that you mentioned. Perhaps 13 that's it. 14 MANAGER HONCOOP: I'm not sure. Which table were 15 you referring to, Supervisor Roberts? 16 BOARD MEMBER ROBERTS: Well, maybe I guess it's -- 17 you were looking at the revenue side as opposed to the 18 expenditure side, is that what the comment was directed to? 19 MANAGER HONCOOP: From Table 5, yes. 20 BOARD MEMBER ROBERTS: That's where the discrepancy 21 was coming from. I was looking at the individual budgets and 22 where they were spending the money. You were talking about 23 this as a revenue source? 24 MANAGER HONCOOP: A revenue source. 25 BOARD MEMBER ROBERTS: The only concern I have, and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 15 1 I guess you're working through CAPCOA, is the -- on the 2 revenue side we're able to compare, which I think is useful, 3 but the difference is, and the differences in interpretation 4 in all the categories on the expenditure side, I don't think 5 anybody can draw anything meaningful out of this as a 6 report. 7 So if there's some value to it -- I mean I don't 8 think there's any attempt at uniform reporting. Some of them 9 have overhead, some of them don't have overhead, some of them 10 by definition are using categories that others may have 11 combined in other ways. And I found it very difficult to try 12 to go through and to get some sense in comparing performance 13 from one to another or looking at programs from one to 14 another, who were getting -- drawing any useful conclusions 15 out of it whatsoever with respect to the expenditures. 16 So I would hope that without over-regulating, that 17 if we're going to go to the trouble to have a report, that we 18 end up with something that might be a little more useful in 19 the future. And I -- it may be just me, but I had great 20 difficulty in doing any real -- drawing any conclusions from 21 the expenditure side. 22 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Supervisor 23 Roberts, the staff went through that exact exercise in trying 24 to construct the report and actually put together a central 25 table that would compare district to district common PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 16 1 activities or programs in a fair manner. And we concluded 2 the data that we collected didn't allow for us to do that 3 accurately. The amount of time it would take to get that 4 data and still have a timely report seemed too great. 5 So our commitment is to work through the process and 6 not do it in a way where we say fill out these specific forms 7 in this way. But it's more a question of one district may 8 say laboratory services is a technical support function, 9 whereas in reality 50 percent of that goes for enforcement. 10 We'd like to say how do we work with you to be able to 11 characterize things similarly so we put the various function, 12 air monitoring, laboratory support overhead in a like manner 13 so that the comparisons can truly be made. So that's our 14 commitment for the next time. 15 BOARD MEMBER ROBERTS: Well, I notice in the report 16 you made reference to each district has a different 17 accounting system, if you will, but it still seemed to me 18 there is enough commonality that we could have some basic 19 data that would be useful to us, and I'm relieved to find 20 that it just wasn't me that -- 21 DEPUTY EXECUTIVE OFFICER SCHEIBLE: We had the same 22 debate inside and recognized the problem. 23 CHAIRMAN DUNLAP: As follow-up to that, then I'm 24 hearing a commitment, Mr. Boyd, for you to work with the 25 districts and try to come up with perhaps some format that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 17 1 will allow the comparative work to be done more readily? 2 EXECUTIVE OFFICER BOYD: That's correct, 3 Mr. Chairman. As you heard in our presentation, a commitment 4 to work with the local air districts and in their 5 association, CAPCOA, to try to bring this at least to the 6 point of making it meaningful to the audience that reads 7 that. 8 CHAIRMAN DUNLAP: That would be fine. Mr. Scheible, 9 if you wouldn't mind, perhaps follow up with the Supervisor 10 and get some specifics. 11 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Yes, sir. 12 CHAIRMAN DUNLAP: Thank you. 13 Any other? 14 Supervisor Vagim. 15 BOARD MEMBER VAGIM: Thank you, Mr. Chairman. I 16 just wanted to ask. I know it wasn't part of the study, but 17 I do want to know if it was part of any of your discussions 18 or deliberations, and that is the 105 money, any commonality 19 to where that's going or how it's being applied or any 20 discussion on it. It's a million and a half dollars to any 21 district over a million population. 22 MANAGER HONCOOP: No. Since, again, this was just a 23 matter of reporting what the funding sources were, not 24 necessarily how they're being used. 25 At least at this point, that's a matter of straight PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 18 1 forward accounting for these funding sources. 2 BOARD MEMBER VAGIM: No. I wanted to see if it was 3 really going to help in the permitting or going somewhere 4 else or -- I know it's negotiated between EPA and the 5 districts but is it hard to even peer into that or is it such 6 privately held secret negotiation between EPA and the 7 districts the Department doesn't even have an opportunity to 8 peer into it. 9 EXECUTIVE OFFICER BOYD: Well, Mr. Vagim, I was 10 going to -- you made a point that I was going to make, that 11 it is a negotiation between each district and EPA and there 12 is a, let me call it a contract, an agreement between EPA and 13 the district for the use of the money. There's a pre-agreed 14 upon performance criteria for each of the areas. 15 Actually, the ARB does kind of participate -- is 16 knowledgeable of and participate in the discussions relative 17 to the general thrust of work that EPA wants done. And it's 18 kind of a three-sided negotiation between what EPA thinks is 19 the best thing to do and what we all think is the best thing 20 to do. And finally some kind of agreement is reached at each 21 level as to what's the best thing to do. 22 Beyond that though, we don't engage in a review or 23 an audit. I mean it's between EPA and their recipient 24 district as to whether they fulfilled their commitments. And 25 of course we're in that same boat because the State also PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 19 1 receives, although it's not much, does receive some 105 2 money, and we go through the same process. And so we in the 3 districts have had quite a bit of discussion about what we 4 think is the best -- what are the things that need doing in 5 the state that the federal money could be applied to. And 6 then that has to be contrasted with what EPA thinks is the 7 best thing to do and or the strings that they have put on the 8 money in terms of fulfilling our requirements of the Federal 9 Clean Air Act or this, that and the other. 10 It's a negotiation, but beyond that we don't become 11 the auditors and reviewers of that program. 12 BOARD MEMBER VAGIM: What jogged my mind is when I 13 read the South Coast audit, the part that you did in the 14 overview, and you had a bullet in there about the fact that 15 105 should perhaps be a little bit more tweaked towards 16 permits or something like that, was the way you had it. 17 EXECUTIVE OFFICER BOYD: Well, that being a very 18 unusual audit, and a command from the Legislature to dig 19 deep, did cause us to render some opinions therefore and to 20 fulfill our obligation to -- 21 BOARD MEMBER VAGIM: Since you tripped across it 22 there, did it spark any interest that perhaps any other 23 district might have the same kind of problems? 24 EXECUTIVE OFFICER BOYD: It sparked fear but I don't 25 know that it sparked interest. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 20 1 (Laughter.) 2 BOARD MEMBER VAGIM: Thank you. 3 CHAIRMAN DUNLAP: Any other questions or comments? 4 All right. At this time, I'd like to call the first witness 5 who signed up to testify before the Board, Mr. Robinson, from 6 the Sacramento Metro Air Quality and Management District. 7 Good morning. 8 MR. ROBINSON: Good morning, Mr. Chairman, Members, 9 Staff. Just a quick question and clarification hopefully on 10 Table 12. It's page small 19 or large 25 depending on how 11 you want to number it. 12 And if you look on, it says AB 27-66 pass through. 13 And since Sacramento does not fall under that legislation, we 14 have our own enabling legislation, 4355. We'd like that 15 clarified, because it is different in what we do with the 16 money and what we're allowed to do with the money. 17 Secondly, we're not sure what that $250,000 18 signifies, since we don't fall under that program. So we'd 19 like to confer with staff before the final report is 20 submitted and clarify that, if that's possible. 21 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Yes, we will. 22 CHAIRMAN DUNLAP: Mr. Scheible, you'll arrange to 23 speak with Mr. Robinson? 24 DEPUTY EXECUTIVE OFFICER SCHEIBLE: Yes, sir. 25 MR. ROBINSON: Thank you. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 21 1 CHAIRMAN DUNLAP: Very good. Thank you. We 2 certainly want to be accurate. 3 Any other individuals wish to comment before the 4 Board at this time? 5 Okay. This will conclude then the public testimony 6 portion. And for the record I'd like to ask staff if they 7 have any written comments to summarize for the Board? 8 MANAGER HONCOOP: We received no written comments. 9 CHAIRMAN DUNLAP: All right. Very good. 10 Mr. Boyd, does the staff have any further comments? 11 EXECUTIVE OFFICER BOYD: Mr. Chairman, you heard our 12 recommendation asking you just to approve the report before 13 forwarding it to the Governor and the Legislature. No 14 additional comments. 15 CHAIRMAN DUNLAP: Okay. Very good. Is there a 16 motion to direct the Executive Officer to forward the report? 17 BOARD MEMBER SILVA: So moved. 18 BOARD MEMBER VAGIM: Second. 19 CHAIRMAN DUNLAP: Very good. I guess we can call 20 for a voice vote at this time. 21 All those in favor say aye. 22 (Ayes.) 23 CHAIRMAN DUNLAP: Any opposed? 24 Very good. Thank you. Thank you staff for your 25 fine presentation. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 22 1 Before we proceed with the regularly scheduled 2 items, I would like to take this opportunity to introduce two 3 distinguished representatives from the China Orient Group or 4 COG, who are here. Would COG's Chief Executive Officer, 5 Mr. Shang, and their Chief Representative, Mr. Shao, please 6 rise. I think I see them before the pillar there. 7 They are here to meet with the Clean Air Laboratory 8 and Technology Assessment Center or Caltac to discuss media 9 and long-term issues relating to the exportation of 10 heavy-duty vehicles to China. And we have a news clip that 11 was in today's Sacramento Bee that's been circulated. 12 It is our understanding that COG intends to execute 13 a letter of intent regarding the pilot program. And on 14 behalf of the Board, I'd like to welcome you to California 15 and wish you good luck and success in your endeavors. And we 16 enjoyed reading the piece on your efforts. 17 Thank you. 18 Pat, good to see you. 19 CHAIRMAN DUNLAP: I think they wish a photo of you. 20 With that I would again like to remind those of you 21 in the audience who would like to present testimony to the 22 Board in any of the items to be sure to provide written 23 comments to the Board Secretary and sign up to comment. 24 The second agenda item of the Board meeting today is 25 95-5-2, a public meeting to consider the status report on the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 23 1 State Implementation Plan and the Federal Implementation 2 Plan. This item is another in our series of regular updates 3 on the status of both the SIP and the FIP. The Board 4 received its last report on the SIP and FIP in February 5 shortly after U.S. EPA finalized the federal court plan 6 under -- Federal plan under court order. 7 Since that time the administration's appeal, appeals 8 for congressional action have paid off and I am pleased to be 9 able to report that this is the last time staff will meet to 10 report on the FIP. 11 Thanks to the leadership of California's 12 congressional delegation, particularly representatives Lewis 13 and Kim, and a former board member of ours, Brian Bilbray, 14 the Federal Implementation Plan was rescinded on April 10th. 15 And a key factor in securing the bipartisan support and 16 approval for this rescission was this Board's adoption of the 17 California Ozone SIP last December -- November. Excuse me. 18 Since the last major report to the Board, the SIP 19 has passed a major hurdle on the road to U.S. EPA approval 20 and we've begun implementation as well. During our last 21 SIP/FIP update, Ms. Edgerton asked for a schedule on each of 22 the new measures that the Board had committed to develop. I 23 believe the staff are prepared to respond to Ms. Edgerton's 24 questions and requests today and outline the tentative 25 schedule for the SIP measure development. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 24 1 With those thoughts in mind, I'd like to ask staff 2 to update the Board on our progress on the SIP. And Mr. Boyd 3 the time is now yours. 4 EXECUTIVE OFFICER BOYD: Thank you, Mr. Chairman. 5 And your last introduction was serendipitous, and this was a 6 propitious moment, because we'll be meeting with these folks 7 this afternoon in our continuing series of meetings on this 8 subject of the retiring heavy-duty vehicles from the road in 9 California. And that is part of the FIP/SIP dialogue that 10 has taken place for so long. 11 So there's yet another piece of evidence towards the 12 progress being made in carrying out plans. And with that, 13 I'd say it's -- I'd like to indicate to the Board that it's 14 indeed a pleasure to be able to focus our attention and our 15 discussions today on California's own plan for cleaning up 16 its air. As the Chairman indicated, Congress indeed has 17 acknowledged that we did succeed, and this will probably be 18 the last time I get to say this, of SIPping the FIP. And now 19 the FIP is indeed history. It was a long road in reaching 20 this point and I must say indeed it feels good to lay the FIP 21 issue to rest at long last. 22 However, the SIP on the other hand calls for our 23 attention. And there's been a lot happening at your staff's 24 level to keep the SIP approval process moving. And today's 25 report from the staff is indeed intended to update you on the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 25 1 activities that have taken place. U.S. EPA has not 2 identified any major technical problems with the state's 3 SIP. Staff had been working very closely with EPA Region 9 4 to ensure the technical questions are being resolved. 5 In fact U.S. EPA is indicating that there are no 6 show-stopper issues in the California SIP submittal. In the 7 next few days we expect to receive a letter from the U.S. EPA 8 discussing the status of their review of the California State 9 Implementation Plan. 10 With that in mind, I've asked the staff to update 11 you on the progress that has been made towards getting full 12 approval of what's likely to happen next and on the status of 13 our efforts to develop and implement the measures, the state 14 measures in particular, that are contained in that plan. And 15 while the U.S. EPA had been busy with its approval process, 16 your staff has been quite busy also moving ahead with the SIP 17 implementation activities and that's contributed to quite a 18 bit of activity indeed. 19 The presentation highlights some of these 20 activities. And as indicated by the Chairman, we plan to do 21 this on a regular basis. The last thing I want to mention is 22 a SIP issue specific to this region, the Sacramento region. 23 This area's plan includes a very ambitious regional mobile 24 source N-O-x, Oxided Nitrogen component. At last November's 25 board meeting on the state plan, the Sacramento Metropolitan PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 26 1 District indicated that ARB's help would be needed as well as 2 welcomed as this incentive program is being developed. 3 Our presentation to you today will discuss how that 4 program is progressing and it includes a recommendation that 5 the Board formally express its support for these efforts in 6 an effort to assist the local district and ourselves on the, 7 let's say, the national plane in obtaining recognition and 8 help in carrying out that program. 9 And with that, I'll call once again upon Ms. Lynn 10 Terry to give you the details of our presentation. Lynn. 11 ACTING CHIEF TERRY: Thank you, Mr. Boyd. 12 (Thereupon an overhead presentation was 13 presented as follows.) 14 ACTING CHIEF TERRY: Today's update will cover five 15 topics. The rescission of the FIP, very briefly, U.S. EPA's 16 most recent actions on the SIP, the SIP schedule for ARB 17 measures, a progress report on all state measures in the SIP, 18 and finally the status of the unique SIP measure under 19 development in the Sacramento region. 20 --o0o-- 21 ACTING CHIEF TERRY: First, the rescission of the 22 FIP. While it's definitely old news by now, it bears 23 acknowledging just one last time that the FIP is truly gone. 24 --o0o-- 25 ACTING CHIEF TERRY: California was successful in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 27 1 its effort to have Congress enact legislation to rescind the 2 FIP. The President signed the legislation on April 10th. 3 This action permanently eliminates the FIP and its measures. 4 Just to clarify however, the Federal FIP measures are not the 5 same as the national standards assigned to U.S. EPA as part 6 of the SIP. 7 As you have heard many times the Federal measures in 8 the SIP are a critical piece of California's plan. The FIP 9 rescission is not related to our need for federal measures in 10 the SIP. 11 --o0o-- 12 ACTING CHIEF TERRY: Next, what actions has U.S. EPA 13 taken to move the SIP approval process forward. As Mr. Boyd 14 mentioned, the news is good on the SIP front. U.S. EPA 15 formally found the entire SIP to be complete on April 18th. 16 This establishes the plan as adequate for rule making. The 17 completeness finding is the first hurdle in the SIP approval 18 process. Now, the next step is for U.S. EPA to proceed with 19 the approval process. 20 U.S. EPA staff have been reviewing the SIP and we 21 expect the regional office to follow up with a letter 22 outlining any approval issues. This should occur in the next 23 week or so. Based on U.S. EPA staff comments on the SIP thus 24 far, we expect to be able to resolve any approval issues 25 favorably. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 28 1 I'll talk more about that in a moment. The U.S. EPA 2 continues to indicate its commitment to propose action on the 3 SIP in October. This would be through a formal notice of 4 proposed rule making. As is generally the case for U.S. EPA 5 rule making, a final action would be taken several months 6 later. This means final approval would occur some time in 7 1996. 8 --o0o-- 9 ACTING CHIEF TERRY: As I mentioned a moment ago, 10 U.S. EPA staff in Region 9 indicate that a letter is in the 11 works that would outline the status of SIP approval. While 12 this slide calls the items you see, issues, we don't expect 13 any of them to jeopardize approval when all is said and 14 done. 15 --o0o-- 16 ACTING CHIEF TERRY: The first relates to how U.S. 17 EPA will handle credits for national standards that 18 California has assigned to them. The agency has previously 19 confirmed that states may take credit for mobile source 20 control measures that it promulgates under Title 2 of the 21 Clean Air Act. The reductions from additional federal 22 control measures contained in the SIP should be treated 23 similarly. It's up to U.S. EPA as a matter of policy to 24 allow California SIP credit for these reductions. 25 Next is funding for the vehicle scrappage measures PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 29 1 in the SIP. U.S. EPA is hesitant to approve these measures 2 until a funding mechanism is identified. 3 Finally, ARB staff have been working with U.S. EPA 4 to answer questions and provide clarification on technical 5 issues. This should help U.S. EPA complete its formal 6 rule-making activities and clear the way for a speedy 7 approval. 8 --o0o-- 9 ACTING CHIEF TERRY: To elaborate a bit on the 10 national standards issue, this slide shows the categories of 11 emission sources that the SIP identifies as federal 12 responsibilities. So far U.S. EPA has committed to pursue 13 national standards on the first four source categories. 14 Heavy-duty diesel trucks and off-road equipment, 15 locomotives and pleasure craft. A pleasure craft standard 16 was proposed in November 1994. A locomotives' measure is 17 expected to be promulgated by this November, in order to meet 18 Clean Air Act deadlines. U.S. EPA and CARB staff are working 19 together on proposals for the heavy duty on- and off-road 20 categories, which we expect will be adopted in late 1996. 21 The two other source categories on the list, 22 oceangoing marine vessels and aircraft, the U.S. EPA has not 23 yet made public commitments. 24 --o0o-- 25 ACTING CHIEF TERRY: ARB staff has greed to take the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 30 1 lead in developing emission standards for industrial 2 equipment with the expectation that U.S. EPA will adopt the 3 standards nationwide. 4 Next, I'll briefly review ARB commitments in the 5 SIP, then present the schedule for board consideration of SIP 6 measures over the next three years. 7 --o0o-- 8 ACTING CHIEF TERRY: The SIP that the Board approved 9 last November includes a commitment to adopt 13 new measures, 10 nine from mobile sources and four for consumer products. The 11 near-term measures must begin to provide benefits prior to 12 the year 2000 to assure attainment in areas with early 13 attainment deadlines such as Sacramento, Ventura, San Diego, 14 the Southeast desert. 15 The longer-term measures rely on the advanced 16 technology provisions of the act to deliver additional 17 reductions needed in South Coast in later years. 18 --o0o-- 19 ACTING CHIEF TERRY: Several near-term measures 20 address emissions from on-road vehicles. A lower emissions 21 standard for medium and heavy-duty gasoline vehicles, 22 alternative approaches for achieving reductions from 23 heavy-duty diesel trucks, this includes incentives for 24 operational controls and vehicle scrappage programs. 25 On the off-road side there is a near-term measure PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 31 1 for light industrial equipment. Measures for aerosol paints, 2 and new categories of consumer products round out the 3 near-term list. I will discuss progress on these measures in 4 a few moments. 5 --o0o-- 6 ACTING CHIEF TERRY: Longer-term measures to be 7 implemented after the year 2000 include advanced technology 8 for light-duty vehicles, a low NOx standard for diesel 9 off-road equipment, which we will pursue only if adequate 10 national standards are not adopted by the U.S. EPA, and 11 reductions from new mobile technologies and market-based 12 measures sufficient to achieve the mobile source reductions 13 needed in the South Coast. Once again reductions from 14 consumer products will complement the long-term mobile source 15 strategies. 16 We have prepared work plans for development of the 17 SIP measures. Today I'll present the anticipated board 18 hearing schedule for these measures through 1997. We'll 19 begin with this year's agenda. 20 --o0o-- 21 ACTING CHIEF TERRY: The Board has already 22 considered and adopted the first SIP measure, the aerosol 23 paints regulation. As you directed, back in March, the staff 24 will be working with manufacturers to monitor progress toward 25 the new standard. Beginning next month, you'll hear the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 32 1 first two components of the SIP measure to accelerate 2 introduction of cleaner engines in heavy-duty applications. 3 Before the incentive component can be introduced, 4 this Board must first establish what constitutes a 5 low-emission diesel truck. The upcoming proposals in June 6 and July would set optional standards for new engines and 7 retrofits. Engines meeting the standards would then be 8 eligible for the incentive program. 9 This fall staff will propose a tighter NOx standard 10 for medium and heavy-duty gasoline trucks in 1998 combining 11 the SIPs, M3 and M8 measures for these two vehicle classes. 12 --o0o-- 13 ACTING CHIEF TERRY: The first item in 1996 is the 14 incentive component for diesel trucks to encourage early 15 introduction of cleaner engines. Next, if the Legislature 16 acts on the Vehicle Scrappage Bill in 1995, we would bring 17 you the first set of proposed regulations by mid-1996 to 18 establish the initial program. 19 For August of next year, we show board consideration 20 of a South Coast locomotive strategy part of the item 21 assigned to the Federal Government in the SIP. Let me 22 explain how we are involved. The U.S. EPA is on track to 23 promulgate a national locomotive standard by the end of 1995. 24 But we anticipate that both state and federal action will be 25 required to establish the additional programs specific to the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 33 1 South Coast. 2 If you'll recall, the SIP described a fleet average 3 emission standard for locomotives in the South Coast to 4 ensure the cleanest engines are concentrated in that area. 5 In October we'll discuss the options for alternatives to 6 implementing a new diesel truck standard in California in the 7 year 2002, which would be two years ahead of the rest of the 8 country. 9 The SIP relies on the equivalent of a two gram NOx 10 standard for California trucks in 2002, to ensure attainment 11 in Sacramento and Ventura by the 2005 deadline. The Board 12 directed us to explore alternative strategies for achieving 13 these reductions. Staff's report to you will include a 14 recommended course of action. 15 --o0o-- 16 ACTING CHIEF TERRY: Looking up to 1997, the Board 17 agenda begins with regulations to establish the full 18 scrapping program, again dependent on the Legislature's 19 action this year. The SIP's off-road diesel equipment 20 standard has a projected May 1997 board hearing. We expect 21 U.S. EPA to adopt a parallel standard for industrial 22 equipment under federal jurisdiction in a similar time 23 frame. This may eliminate the need for the Board to take 24 separate action. 25 We envision presenting the remaining near-term SIP PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 34 1 measures in mid-1997. These are the three-way catalyst 2 standard for industrial equipment fuelled with gasoline or 3 LPG and controls on previously unregulated categories of 4 consumer products. 5 You can certainly anticipate a full agenda in the 6 next several years as staff brings you specific proposals to 7 implement the Board's commitments in the SIP. As you have 8 come to expect, all of these proposals will be crafted with 9 extensive participation from the affected industry and other 10 interested parties. 11 --o0o-- 12 ACTING CHIEF TERRY: As I move on to highlight 13 progress in developing upcoming SIP measures, I'll describe 14 some outreach as well. I'll begin with the mobile sources. 15 --o0o-- 16 ACTING CHIEF TERRY: First, the lower NOx standard 17 for medium and heavy-duty gasoline vehicles. This would 18 affect primarily large sport-utility vehicles, motor homes 19 and smaller shuttle busses and delivery vans. Both the 20 American Automobile Manufacturers Association and the Engine 21 Manufacturers Association are supporting the proposal. 22 At a workshop earlier this week comments were 23 equally positive. On the diesel truck strategies many ideas 24 are being discussed by the heavy-duty ad hoc working group. 25 This group which came together in response to the FIP is now PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 35 1 refocused on the SIP's incentive strategies for cleaner 2 diesel trucks. 3 Members from the trucking industry, engine 4 manufacturers, the environmental community and ARB staff all 5 participate. To explore other ideas for funding incentive 6 programs without public monies, the staff is planning a 7 series of round table forums in coming months. As I 8 mentioned, earlier legislation on scrappage is pending. 9 Now let's move to consumer products. 10 --o0o-- 11 ACTING CHIEF TERRY: During testimony on the 12 consumer products element of the SIP last November, the Board 13 directed staff to implement two of industry's specific 14 recommendations for follow up. 15 First, ARB established a working group to improve 16 coordination and communication with the industry, 17 environmental groups, air districts and the U.S. EPA. And 18 second that we would investigate if it would be appropriate 19 to consider relative reactivity in regulating emissions of 20 Volatile Organic Compounds, VOCs, from consumer products. 21 ARB staff have begun both activities. 22 On April 11 and 12 Chairman Dunlap welcomed over one 23 hundred participants to the kick-off meeting of the Consumer 24 Products Working Group. The major industry working groups 25 attended and expressed support for the round-table approach PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 36 1 used by staff. 2 We expect membership of this group to be fluid, 3 changing as to the issues. The first two sub-groups 4 established will focus on identifying the next product 5 categories for regulation under the mid-term measure and on 6 exploring the relative reactivity issue. These sub-groups 7 will reconvene in July. 8 I'd also like to give you an update on what's 9 happening at other state agencies with SIP responsibilities. 10 --o0o-- 11 ACTING CHIEF TERRY: On pesticides, the Department 12 of Pesticide Regulation clarified its commitment for 13 regulatory action by mid-1997, if anticipated reductions do 14 not materialize. On smog check, the Bureau of Automotive 15 Repair recently released a notice of hearing on June 15th to 16 consider regulations to implement the Legislature's 17 enhancements to the state program. 18 BAR must adopt and ARB must submit these regulations 19 to U.S. EPA before June 30th to avoid triggering a sanctions 20 clock. Upon completion of the BAR hearing, California will 21 be on track to meet that deadline. 22 --o0o-- 23 ACTING CHIEF TERRY: Those are the highlights of 24 activities related to other state SIP measures. Now let's 25 move on to spotlighted measures specific to the Sacramento PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 37 1 region. 2 --o0o-- 3 ACTING CHIEF TERRY: I'll take a few minutes to 4 describe the progress on the SIP measure in the Sacramento 5 region that's a key component of this mobile source NOx 6 program. 7 In the Sacramento region the vast majority of NOx 8 emissions are from local sources. As a region moves towards 9 attainment of the federal ozone standard, heavy-duty diesel 10 trucks and off-road equipment clearly dominate the NOx 11 emission inventory. 12 --o0o-- 13 ACTING CHIEF TERRY: The planned ARB measures will 14 provide substantial NOx reductions, but Sacramento's 2005 15 attainment date prevents the area from fully realizing the 16 benefits due to slow vehicle turnover especially in these 17 applications. This timing problem has created a gap in 18 Sacramento's attainment strategy. To fill the gap, a joint 19 state and local SIP strategy was necessary to address mobile 20 NOx emissions in the five-district region. 21 --o0o-- 22 ACTING CHIEF TERRY: The regional mobile NOx 23 program focuses on heavy-duty diesel trucks and off-road 24 equipment. The program is designed to accelerate the 25 introduction of below NOx engines. The other component of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 38 1 the program is to encourage retrofit where feasible. 2 There is broad community and industry support for 3 the program. Businesses and fleet operations in the area 4 have expressed interest in participating. The mobile NOx 5 program is voluntary to be accomplished primarily with 6 incentives. The challenge of course is to secure funding. 7 The Sacramento district is taking the lead in 8 developing the regional program and they have identified a 9 promising funding opportunity. 10 --o0o-- 11 ACTING CHIEF TERRY: The Federal Congestion 12 Mitigation and Air Quality Improvement Program, known as 13 CMAQ, provides funds to non-attainment areas to finance 14 transportation related projects which assist in the 15 attainment effort. The implementation of SIP measures is 16 considered a high priority for funding. 17 The Sacramento Area Council of Governments or SACOG 18 administers the local CMAQ program. And nominations for 19 projects to be funded are due in July. Staff view this 20 effort as a critical element of this region's SIP. This is 21 by far the single largest NOx strategy at the regional 22 level. 23 Two things are needed to make the strategy 24 successful. One is the availability of low NOx technologies. 25 The ARB is playing its part by developing optional standards PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 39 1 as part of the SIP measure we refer to as incentives for 2 cleaner engines. The other piece of the puzzle is the 3 availability of local funding. That's where the CMAQ 4 proposal fits in. 5 --o0o-- 6 ACTING CHIEF TERRY: I will close with staff's 7 recommendation. The Sacramento district is requesting CMAQ 8 funds for the regional mobile NOx measure and the SIP. We 9 believe that the district's proposal is an excellent 10 candidate for funding under CMAQ, given the SIP commitment 11 and the significant air quality benefits that will result. 12 Consequently, we are recommending that the Board 13 consider a resolution to support the Sacramento district's 14 application to SACOG for CMAQ funds to administer this joint 15 state and local SIP measure. 16 --o0o-- 17 ACTING CHIEF TERRY: To wrap up, all in all, the 18 status of California's SIP is very positive. The FIP is 19 gone. Our prospects for SIP approval are excellent. This 20 Board has a full but feasible agenda for the next few years 21 as it considers the commitments in the SIP, and we are 22 progressing well with the development of the state SIP 23 measures. With that, I'll conclude my presentation. 24 Thank you very much. 25 CHAIRMAN DUNLAP: Thank you. Thank you, Ms. Terry. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 40 1 Any questions of staff after that comprehensive presentation 2 and overview? 3 Ms. Edgerton. 4 BOARD MEMBER EDGERTON: Yes. Thank you for the 5 update. 6 I was interested in your comment, Ms. Terry, that 7 U.S. EPA has indicated that they think we can get through the 8 credit for national standards issue and the funding for 9 scrappage programs. Can you be more specific or is it -- I'm 10 aware of the general goodwill on that as has been expressed, 11 but is there anything concrete behind that yet? 12 ACTING CHIEF TERRY: I think on the first issue that 13 Mr. Kenny can provide some clarification since he's been 14 working especially closely with legal counsel. 15 CHIEF COUNSEL KENNY: With regard to the credit for 16 national standards, we have been working with legal counsel 17 for EPA in trying to craft a mechanism by which they could 18 recognize in the SIP their obligation to achieve emission 19 reductions. We have not reached a resolution on that yet. 20 We are continuing to discuss it. 21 We are hopeful that we can reach a resolution, but 22 we don't have a specific mechanism actually identified. We 23 have provided at least our thoughts to Region 9 and to the 24 Office of General Counsel in D.C. with regard to how we think 25 it can legally be accomplished. And they are reviewing PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 41 1 that. And then we've had ongoing discussions to determine 2 whether or not the mechanisms that we have suggested are 3 acceptable to them. 4 They do have concerns because of the fact that it 5 has not been done in the past. And so they are treading, I 6 guess, very softly because of the national implications that 7 they see associated with what we are trying to do. 8 BOARD MEMBER EDGERTON: So if I understand you, 9 their concern is that obviously once they give us credit for 10 emission reductions, which are called out by the Clean Air 11 Act, to be put in place by U.S. EPA for California, they have 12 to give it to all the other states. 13 CHIEF COUNSEL KENNY: Well, I think they're 14 concerned about the fact that the other states haven't taken 15 the same tack that we have. But that to the extent that they 16 recognize our tack in some sort of general fashion, that 17 other states will take advantage of that same kind of an 18 approach. 19 So they are trying to craft an approach that might 20 be more limited. We have suggested to them that there are 21 statutory sections that exist in the Federal Clean Air Act 22 that they can rely upon, either for a national approach or 23 for a more limited California approach. And so those are the 24 kinds of discussions that we are in. 25 BOARD MEMBER EDGERTON: So if I understand PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 42 1 correctly, there is an option that we have charted a way they 2 can do it for California without -- 3 CHIEF COUNSEL KENNY: We think so. 4 BOARD MEMBER EDGERTON: Yes. Thank you. 5 EXECUTIVE OFFICER BOYD: Ms. Edgerton, this is an 6 age old perennial problem we've had with EPA over the years 7 in implementing our program vis a vis the federal law of the 8 fact that we're, by the severity of our problem, seemingly 9 always out in front of the pack, has always worked against 10 us, because of the fear EPA has of making an exception for 11 California, and then others quote "Taking advantage of it." 12 Of course, I consistently maintain that they ought 13 to be able -- we working with them ought to be able to craft 14 some kind of means test for anybody to qualify for whatever 15 they do to California, which I think by definition would be 16 so far beyond what anyone else has done, that should they 17 meet the means test they'd be welcome to participate. But 18 nonetheless, we go through this agony and unfortunately the 19 INM program is the first example I think of their 20 shortsightedness. 21 But nonetheless, I'm hopeful that we'll resolve 22 this. There is a new attitude. There is a new view of 23 things. And hopefully that will result in they mutually 24 understanding the importance of the partnership that exists, 25 and the role that they should play thus in helping us do PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 43 1 this. So I'm confident that Mr. Kenny will help them solve 2 their problems. 3 BOARD MEMBER EDGERTON: Thank you. I have 4 confidence in Mr. Kenny's legal skills as well. It is 5 about -- it's my understanding, that it is a make or break 6 issue in terms of -- or tell me if it's your opinion that it 7 is a make or break issue in terms of approval of our SIP, in 8 that about, what, 20 percent, roughly 20 percent, of our 9 emissions reductions, which we claim would come from national 10 standards. 11 CHIEF COUNSEL KENNY: I think your characterization 12 is accurate. The way that the SIP is constructed, basically 13 requires EPA to recognize that they have an obligation that 14 they must fulfill in the context of our SIP. And how they go 15 about doing that is crucial to the approval of the SIP. 16 BOARD MEMBER EDGERTON: So if I understand you 17 correctly, if for any reason that goes along -- for example 18 if they were not to find a comfort point with our arguments 19 we would be -- California would be in the unfortunate 20 position, as a matter of law, trying to go back and have an 21 additional 20 percent more emissions reductions from our own 22 regulations here in the state in our own communities. 23 CHIEF COUNSEL KENNY: Well, correct. We basically 24 do have a certain number of emission reductions that are 25 attributed to EPA activities. We are hopeful that EPA will PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 44 1 basically recognize in the context of the SIP that they do 2 have an obligation to achieve those emission reductions. 3 CHAIRMAN DUNLAP: Rising to the occasion. 4 BOARD MEMBER EDGERTON: I'm hopeful also. 5 EXECUTIVE OFFICER BOYD: I think the good news, if I 6 might, is as some of you know, the Chairman certainly knows, 7 that the EPA has been extremely responsive and responsible to 8 the issues that we left on the table for them and they've 9 been working very actively on the heavy-duty issues. We feel 10 quite good about the work that they're doing and that fact 11 that they still face this legal challenge and this legal 12 hurdle. 13 So it's not as though they're trying to avoid 14 something. They have really picked up the ball and are 15 running with it and we're extremely pleased. And we're 16 pleased with the quality of the work that they're doing as 17 well. And it's not that we didn't tell them for several 18 years, quite frankly, that this was a dilemma and that they 19 should expect the plan that called upon them to do 20 something. This is no midnight surprise. Long ago I think 21 we put them on notice at the staff level that there was no 22 way to do it and to have California do it alone, when there 23 are cost-effective measures that would be much better put in 24 place by day rather than adversely impacting the California 25 common. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 45 1 CHAIRMAN DUNLAP: I have a question, Ms. Terry. I 2 noticed you had locomotives up there. Could you just take a 3 minute and talk about the inter-jurisdictional nature of a 4 locomotive program? Would you do that? 5 CHIEF COUNSEL KENNY: It might be easier if I 6 handled it. 7 CHAIRMAN DUNLAP: Mr. Kenny. 8 CHIEF COUNSEL KENNY: The primary issue that 9 actually exists with regard to locomotives was created by an 10 amendment in the 1990 Act, that allows for a federal 11 preemption of new locomotives. Therefore, we are unable to 12 control those locomotives that are classified under federal 13 law as new locomotives. 14 In the context of that, EPA has been undergoing -- 15 has been having negotiations with the industry and with us to 16 determine exactly what is a new locomotive. And the key 17 aspect there is the definition of new. 18 Vehicles have, for a number of years, been defined 19 as new only to the extent that basically they have not yet 20 been sold. Once they are sold and they are out the door, 21 they are then classified as used within the context of 22 federal law. 23 There's been a debate with regards to locomotives 24 over that because of sort of the special nature of 25 locomotives and the manner in which they are used. That PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 46 1 debate is ongoing. The industry takes the position that 2 locomotives should be classified as new if they are 3 constructed after the date of November 15th, 1990 and they 4 should then retain their status as new in perpetuity. We 5 disagree with that. 6 The industry has also taken the position that a 7 locomotive that is re-manufactured to a certain standard 8 would be classified as new and would retain that status until 9 such time as a re-manufacture would also need to occur. 10 So there is a question there that needs to be 11 resolved. We are continuing the discussions with them and 12 EPA has not yet essentially reached a conclusion with regard 13 to how the definition of new is going to be resolved. 14 CHAIRMAN DUNLAP: In the context, I notice in the 15 slide, I believe it had South Coast as having an August 16 hearing on locomotives. I was just curious as to, is 17 there -- are they planning to do a local measure? 18 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Well, 19 Mr. Chairman, in the SIP, in order to get the additional 20 reductions that were needed in the Los Angeles area, we 21 envisioned two aspects of locomotive control. One was EPA 22 adopting national emission standards. And the second one was 23 a program that the railway industry supported, which was they 24 would modernize, take extra efforts to modernize, the L.A. 25 fleet to use all of these newer, cleaner locomotives by the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 47 1 year 2010. 2 And it's that aspect of the program which is not 3 completely clear as to who and which jurisdictions have to be 4 involved in it. But we're anticipating at this point that 5 either the district ourselves or both would have to be 6 involved as well as EPA to get that. 7 CHAIRMAN DUNLAP: But we will be working closely 8 with them on this? 9 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yes. 10 CHAIRMAN DUNLAP: Okay. Very good. Thank you. 11 Any other questions or comments for staff? 12 There seems to be no one that signed up to comment 13 or testify from the audience. Is there any written reports? 14 ACTING CHIEF TERRY: No. 15 CHAIRMAN DUNLAP: Very good. 16 Ms. Edgerton. 17 BOARD MEMBER EDGERTON: Well, I wanted to just thank 18 you for this report and I want to thank you for all the work 19 that you're doing to implement the plan. 20 I just can't let this go by without remembering how 21 much work goes into this, because I remember when I first 22 joined the Board, they were working on a lot of issues piece 23 by piece, and then we came up to the SIP, which was an 24 enormous effort on behalf of all of the staff and the Board. 25 And we tend to see things when they come right up to the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 48 1 point of the hearing, but the reason why these work is 2 because of this day-to-day hard work on behalf of the staff 3 meeting with everybody and keeping all of these many 4 different pieces going. And I know it and everybody on the 5 Board knows it. And thank you very much. 6 EXECUTIVE OFFICER BOYD: Thank you. 7 CHAIRMAN DUNLAP: Thank you. Since this is not a 8 regulatory item, it isn't necessary to close the record. 9 However, we do have a resolution that expresses support for 10 the use of congestion mitigation and air quality improvement 11 program funding for the Sacramento region SIP measure for 12 early introduction of low NOx heavy-duty engines. So if we 13 would take a moment and look at this resolution, and then 14 come back to you. 15 BOARD MEMBER LAGARIAS: Mr. Chairman? 16 CHAIRMAN DUNLAP: Mr. Lagarias. 17 BOARD MEMBER LAGARIAS: I propose adoption of 18 Resolution 95-20. 19 CHAIRMAN DUNLAP: Okay. 20 BOARD MEMBER VAGIM: Second. 21 CHAIRMAN DUNLAP: Is there any further discussion of 22 the Members of the Board? 23 All right. What I'll do is ask the Board Secretary 24 to call a voice vote. 25 MS. HUTCHENS: Boston? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 49 1 BOARD MEMBER BOSTON: Yes. 2 MS. HUTCHENS: Edgerton? 3 BOARD MEMBER EDGERTON: Yes. 4 MS. HUTCHENS: Hilligoss? 5 BOARD MEMBER HILLIGOSS: Aye. 6 MS. HUTCHENS: Lagarias? 7 BOARD MEMBER LAGARIAS: Aye. 8 MS. HUTCHENS: Parnell? 9 BOARD MEMBER PARNELL: Aye. 10 MS. HUTCHENS: Roberts? 11 BOARD MEMBER ROBERTS: Aye. 12 MS. HUTCHENS: Silva? 13 BOARD MEMBER SILVA: Aye. 14 MS. HUTCHENS: Vagim? 15 BOARD MEMBER VAGIM: Aye. 16 MS. HUTCHENS: Chairman Dunlap? 17 CHAIRMAN DUNLAP: Aye. 18 MS. HUTCHENS: The resolution passes nine, zero. 19 CHAIRMAN DUNLAP: Very good. Thank you. 20 The final items of business before the Board today 21 are five research proposals. Have all members of the Board 22 had an opportunity to review these proposals? 23 All right. Are there any additional concerns or 24 comments by the Members of the Board. 25 BOARD MEMBER BOSTON: Chairman Dunlap? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 50 1 CHAIRMAN DUNLAP: Yes, Dr. Boston. 2 We should take a moment for staff to be able to join 3 us. 4 Is Dr. Homes here today, Mr.Boyd? 5 EXECUTIVE OFFICER BOYD: No. Mr. Barham is acting 6 for him today. 7 CHAIRMAN DUNLAP: All right. Dr. Boston. 8 BOARD MEMBER BOSTON: My only question was on items 9 1 and 2, whether our staff is doing sufficient research to 10 make sure that we're not duplicating other research 11 activities around the country. It seems that I read things 12 in the newspapers all the time regarding these subjects, and 13 I just want to be sure we're not duplicating efforts in this 14 regard, especially with environmental tobacco smoke. It 15 seems like there's a lot going on in that arena right now. 16 ASSISTANT CHIEF BARHAM: Dr. Boston, yes we've very 17 carefully looked at that and particularly with the area of 18 environmental tobacco smoke. You're aware that in our 1807 19 program, the Toxic Air Contaminant Program, we're required to 20 assess exposures to the individual components. And this 21 research will help us do that. This kind of effort has not 22 been done before in that regard. 23 Also, it will allow us to have a better assessment 24 on the effects of some of the more recent legislation and 25 local community activities and requiring that the no smoking PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 51 1 occur in certain areas. So we'll have a before and after 2 kind of snap shot of exposure, which again is important in 3 terms of assessing the overall individual exposure to the 4 compounds that we're concerned about. 5 BOARD MEMBER BOSTON: It seems like there's so many 6 different areas that need to be surveyed in assessing any 7 exposure to environmental tobacco smoke in Southern 8 California and Northern California, to the Valley, to indoor 9 and outdoor. It seems like a tremendous project. 10 ASSISTANT CHIEF BARHAM: That's very correct. And 11 in that regard, what a lot of this effort of number 1 is 12 going to be directed at, is taking information gathered in 13 those studies and doing varied statistical analyses to see 14 how those exposures vary across different situations. 15 BOARD MEMBER BOSTON: Should be interesting. 16 BOARD MEMBER SILVA: Mr. Chairman? 17 CHAIRMAN DUNLAP: Yes. Supervisor Silva. 18 BOARD MEMBER SILVA: It seems like there's a 19 statewide ban on smoking in most public places. And I feel 20 that, you know, with money being tight, I think that we have 21 to start looking out for duplication of services. I really 22 question this. I think we're -- the research that's being 23 done out there, I question whether or not we're going in the 24 right direction or not. 25 ASSISTANT CHIEF BARHAM: Well, again, what this PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 52 1 effort is -- much of this effort is directed in taking 2 information that has been gathered in those various studies 3 and looking at it in a way that allows us to tease out 4 individual components and then use that information in an 5 overall exposure assessment that we're mandated to do under 6 statute for identification and control of regulation of Toxic 7 Air Contaminants. So this work is a little different than 8 the efforts that are currently under way. 9 BOARD MEMBER SILVA: So you think the agencies that 10 are collecting this data, you don't think that they're -- 11 ASSISTANT CHIEF BARHAM: No. It's not so much the 12 data collection, it's how the data is looked at in the 13 context of our particular -- in our particular situation. 14 Ours is a little bit unique in comparison to others. We may 15 be picky. Peggy Jenkins, who is the Manager of the Indoor 16 Air Quality Section, maybe can fill in a little bit more. 17 MANAGER JENKINS: Yes. Good morning. This study is 18 really designed to take data that we already have and that a 19 few other agencies and groups have collected and use it 20 really not to determine what tobacco smoke exposures are but 21 rather what our exposures here in California are to some of 22 the 16 of the VOCs, the Volatile Organic Chemicals, that come 23 from tobacco smoke that are listed in our Toxic Air 24 Contaminant list. 25 And so it's really a project targeted more towards PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 53 1 getting a firmer handle on how much tobacco smoke in the 2 recent past and in the future will contribute to California's 3 exposures to these VOCs. And what we intend to do with the 4 results of this study is to use it internally for some 5 further analysis to help us understand really how much of the 6 exposure to these VOCs remains to be addressed. 7 It's our suspicion that there is still quite a bit 8 of exposure to those VOCs that will need to be addressed that 9 does not come from tobacco smoke but comes from other 10 sources. 11 CHAIRMAN DUNLAP: If I may, particularly since there 12 are several of us that are newer board members, I would 13 suggest that there be some brief but pointed survey work done 14 about current research efforts that are out -- that are going 15 on in these key areas and we might have some type of summary 16 that could be circulated amongst my colleagues on the Board 17 prior to these items coming forward. I think it would answer 18 these questions in the future and allow us to be able to make 19 decisions relative to contracts and research study efforts in 20 a more informed manner. 21 So I think as far as a theme, each one of you should 22 take that back and as you bring these forward, let's do that. 23 I don't know that it's necessarily a written part of the 24 Board packet, but certainly something that's shared as 25 information to the Board Members. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 54 1 EXECUTIVE OFFICER BOYD: Mr. Chairman, when we can 2 anticipate this kind of an issue, I think your point is well 3 taken, we'd be glad to. And particularly with reference to 4 environmental tobacco smoke, I would be glad to, after the 5 staff pulls the information together, to provide the Board 6 Members with the long history of this subject. This is a 7 very complex subject and we're not alone in -- I mean, we 8 share responsibility for this subject and it's been a very 9 contentious subject and some of the Board Members who have 10 been here for quite some time can recall that this, 11 environmental tobacco smoke and secondary smoke and what have 12 you, has been an issue that has been with us a long, long 13 time. 14 Under the aforementioned by Mr. Barham, 1807 or the 15 Air Toxic Program of the State, which we are mandated to 16 carry out, and with the advice and counsel of the scientific 17 review panel that's appointed by the Governor and the 18 Legislature, and this Board, we have had discussions for 19 years about this issue, and slowly made progress towards the 20 scientific -- at the scientific review panel's continued 21 request, slowly made progress toward making definitive 22 understandings of the subject matter as it relates to indoor 23 more than outdoor air pollution, but to our responsibility 24 and what actions we might take. 25 There were multiple rushes to judgment on the part PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 55 1 of some to get us to list tobacco smoke and instead we've 2 engaged in a methodical and thorough, and I think, very 3 revealing amount of work and research on the subject. This, 4 as indicated, brings us much closer, and I'd be glad to lay 5 this out in more detail, much closer to the end of that line 6 that the Board has directed us to take for quite a number of 7 years. And it is more statistical analysis as you heard than 8 it is doing any new research. 9 Finally, perhaps we'd be able to result in a 10 recommendation with regard to the listing and then assignment 11 to others perhaps with the responsibility under this. 12 CHAIRMAN DUNLAP: I don't -- Supervisor Silva is 13 certainly capable of speaking on this item for himself, but 14 it would seem to me that it would help us to have more 15 confidence if we knew that this wasn't, not just this effort 16 but others, were not redundant or a duplication. And I think 17 that kind of background information would be helpful, allow 18 us to have more confidence. That would be a follow up, I 19 would suggest. Is that satisfactory? 20 BOARD MEMBER SILVA: Satisfactory. 21 CHAIRMAN DUNLAP: Very good. 22 Mr. Parnell. 23 BOARD MEMBER PARNELL: I asked for and received a 24 briefing from staff on the issue and answered my questions 25 sufficiently. And for that, I'm very appreciative. It is a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 56 1 complex issue. And I want to make just a general statement 2 that in austere budget environments, those of us that are 3 fiscal conservatives, the first thing we want to look at is 4 research budgets. And I would caution ourselves to make 5 certain that we don't do that to a fault. 6 I think there is a legitimate question that requires 7 an answer that staff is trying to get to, and I would be very 8 supportive of the research proposal, as we move forward to a 9 vote. I understand your request and certainly appreciate 10 fully that the Board needs to be advised fully, but the 11 information is there. 12 In my own experience, I tend to say oh, research 13 proposals have good scientific review and therefore I give it 14 less attention than I give other things. And I guess at this 15 juncture, it might behoove all of us to pay closer attention 16 as these proposals come forward, because they are important. 17 And I fully respect the staff and the work that they have 18 done on this and other issues. 19 CHAIRMAN DUNLAP: Thank you. 20 Supervisor Roberts. 21 BOARD MEMBER ROBERTS: Mr. Chairman, were you going 22 in order of the proposals? 23 CHAIRMAN DUNLAP: We can. We can take them as a 24 group or we can take them separately. We can discuss that. 25 BOARD MEMBER ROBERTS: My comment was on the second PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 57 1 one. 2 CHAIRMAN DUNLAP: Okay. Well, please propose it. 3 BOARD MEMBER ROBERTS: This has to do with the 4 indoor materials, vinyl flooring and carpet and what have you 5 and the testing. And I guess we at least were concerned with 6 others and emission rates and such things. The concern that 7 I had in looking over the proposal was the amount of indirect 8 cost and in particular the general administrative expenses as 9 a percentage of the total. 10 Now being from the county government, we're 11 sometimes used to high overhead figures, but these seem to be 12 well in excess of anything I've ever seen associated with any 13 similar proposal. And perhaps staff could explain that? 14 CHAIRMAN DUNLAP: Mr. Boyd. 15 EXECUTIVE OFFICER BOYD: Well, let me give it a 16 policy overview and then let Mr. Barham go into the details. 17 Your concerns have been shared by others including the 18 Chairman, in the review of the research proposals in the 19 past. And historically we've managed to negotiate down the 20 indirect cost rate that the University of California system 21 charges us. 22 Now for whatever reason, and I won't try to defend 23 them, but they have a very high indirect rate. But as a 24 sister state agency and one that we're almost mandated to do 25 business with, over the years, we did get concessions. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 58 1 However, that doesn't apply to the facilities that the 2 University manages for other agencies. And of course this 3 Lawrence Berkeley Laboratory is really run by the University 4 for the U.S. Department of Energy. And they have been very 5 resistant and reluctant to see to our requests for some 6 consideration. 7 However, the Chairman recently renewed that request, 8 and we just received, I mean, I guess within almost the last 9 24 hours, a response from Lawrence Berkeley Laboratory 10 indicating that they want to work with us to try to negotiate 11 something here, that they are concerned that they might lose 12 a valued customer over this issue. And therefore, I think 13 we're going to be able to negotiate a new and more 14 attractive, to the State of California, rate. 15 It still is going to be probably a little higher 16 than we're accustomed to, but I shouldn't forecast the 17 outcome, Supervisor Roberts. The good news is we do have an 18 offer and we will negotiate that before consummating this 19 particular contract. 20 BOARD MEMBER ROBERTS: So we're going to be removing 21 this as far as approving what is concerned today? 22 EXECUTIVE OFFICER BOYD: Well, I would ask the Board 23 that it might -- to approve it on the condition that we 24 get -- that we are able to negotiate down the rate so we can 25 move this forward, but I would leave it to the advice and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 59 1 counsel of the Board. 2 BOARD MEMBER ROBERTS: That movement has got to be 3 measured in light years for me to be comfortable. And I 4 understand the problem. I guess I'm reading and I'm not 5 convinced that this particular study is so important that I'd 6 be willing to -- I don't feel comfortable signing-off on it, 7 I guess, unless I saw some very significant adjustment of 8 those numbers, because this is not one of those things that 9 I'm going to lose a lot of sleep over if we didn't go ahead 10 with it. 11 CHAIRMAN DUNLAP: Mr. Barham, do you think that a 12 30-day delay, a one-month delay, would be sufficient time for 13 these considerations to be worked out? 14 ASSISTANT CHIEF BARHAM: A 30-day delay would not 15 cause a problem with this particular contract. But could I 16 say a couple of other things? 17 CHAIRMAN DUNLAP: Certainly. 18 ASSISTANT CHIEF BARHAM: We recognized, and in fact 19 had the same concern that you had Supervisor Roberts, and 20 were able to negotiate this contract down already by 21 approximately $55,000 in that area. And we certainly will go 22 back in and try to reduce it some more. But I would like to 23 say -- 24 BOARD MEMBER ROBERTS: Are you saying what we have 25 before us has already been reduced? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 60 1 ASSISTANT CHIEF BARHAM: It has been reduced by that 2 amount. 3 BOARD MEMBER ROBERTS: I think you ought to find 4 something new to deal with then. 5 ASSISTANT CHIEF BARHAM: One thing I would like to 6 say is that if you compare the overall cost of this 7 particular contract, although recognizing that the indirect 8 costs are very high, if you compare these costs to a 9 laboratory facility in general, some of our unloaded testing 10 labs, for example like Southwest Research, the overall costs 11 associated with doing the work are very very similar. 12 In general, laboratories -- when you have facilities 13 where it requires laboratory testing, those contracts are 14 generally much more expensive than contracts that don't 15 require that kind of effort. In the case of Lawrence 16 Berkeley Labs, they array their costs in a slightly different 17 way than others do, but you often end up paying for the work. 18 CHAIRMAN DUNLAP: I share the Supervisor's concern 19 that I think in this particular case I would be more 20 comfortable with a 30-day delay, allow you to negotiate, and 21 see what can occur. And perhaps provide a little bit more of 22 the background you just touched upon, about the fact we got 23 good value for other parts of the work other than the 24 indirect rate and that will educate us, allow us to have a 25 comfort level that will serve you well. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 61 1 Yes, Dr. Boston. 2 BOARD MEMBER BOSTON: I think this is another one 3 where we all read about the emissions from carpets and other 4 indoor sources of pollution, and I think the research screen 5 to show us when this comes up would be helpful, as you were 6 talking about to the first item. So maybe something like 7 that could be attached to this type of an item too. I'd also 8 agree that a delay of 30 days would be in order. 9 CHAIRMAN DUNLAP: Okay. That would be fine. Any 10 other comments or questions on any of the remaining, we'll 11 say, the remaining four research proposals? 12 Okay. 13 What I would be looking for would be a motion to 14 approve the other four items holding in abeyance the action 15 on that second item for a 30-day period in which some 16 questions could be answered. 17 BOARD MEMBER ROBERTS: I'd move that, Mr. Chairman. 18 CHAIRMAN DUNLAP: Okay. 19 BOARD MEMBER EDGERTON: I second. 20 CHAIRMAN DUNLAP: Motion and a second. Any further 21 discussion by the Board? 22 Mr. Parnell. 23 BOARD MEMBER PARNELL: I don't have any objection to 24 delaying for 30 days. I certainly support that, if that's 25 necessary. I guess the thing that concerns me is that in the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 62 1 overall, having dealt with the University for many many years 2 as a sister state agency, I think it's very true that in the 3 overall we get pretty good service from them, although it's 4 displayed in a very clumsy way, which leads us to believe 5 they're excessive in one area. But when you go out to 6 private laboratories and try to duplicate the effort, and the 7 quality of work and so forth that they do, ultimately we're 8 going to end up paying a whole lot more dollars to do that 9 privately, I think is a general sense that I have. 10 And I'm just talking out of some experience. So 11 while I'm not opposing 30 days, I think we need to be very 12 cautious that the various entities, particularly state 13 entities, display cost items in a very different way. 14 CHAIRMAN DUNLAP: This matter has been an issue with 15 me, and I would like to call on Mr. Cackette just to take a 16 moment and share with me, and Tom if you would, share with my 17 colleagues on the Board what you told me about some overhead 18 rates from some other private labs for example. 19 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: I think 20 that there's a couple of factors here. And when you look at 21 this package, which is mostly a University of California or 22 has bought University of California contracts, the overhead 23 rate we get from the University of California is far below 24 what their overhead rate is. In other words, they provide a 25 subsidy or extremely low ten percent rate to sister agencies, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 63 1 because of the working relationship within the state system. 2 So we get an abnormally low rate from the University 3 of California. In the case of LBL, as Mr. Boyd said, they 4 are, University of California, is working more as a 5 private-sector service where they've contracted with the 6 federal government to run this laboratory. So they're 7 running that program more like a business. And the kind of 8 overhead rate, which for total indirect costs is, you know, 9 approaches a hundred percent, is not atypical. If you look 10 back over the contracts that we have had with both highly 11 scientific firms and firms that have a lot of laboratory 12 business, it is typical to find an overhead rate of one 13 hundred percent or so. 14 And these overhead rates, you know, we use an 15 approval process that the Federal Government Defense Audit 16 Agency does to make sure that these overhead rates are real, 17 you know, that there's a real cost associated with that, and 18 that they're not just, you know, jamming us with some 19 numbers. And so we look to that to make sure that these are 20 valid rates. But it is not atypical to find a rate this high 21 in the scientific area. 22 CHAIRMAN DUNLAP: Okay. Very good. Thank you. 23 That gives us a context. 24 Is there any further discussion from the Board? 25 MANAGER JENKINS: Chairman Dunlap, I'd like to make PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 64 1 just one comment in response to Dr. Boston's concerns. I 2 just want to assure the Board Members we are up to speed with 3 the research that's going on, particularly at the federal 4 level, in this field and in particular with the carpet 5 research and latex paint research. In fact, we've talked to 6 these people regularly and have talked with them at length 7 prior to bringing this to you. 8 So I just do want to assure you that we do that and 9 I understand that you'd like to be updated on what those 10 folks are doing to assure yourselves that we're not 11 duplicating. But in fact the investigator for the LBL 12 project has done, really, I think the primary research for 13 the federal people as well. So he would build on what he's 14 doing. 15 CHAIRMAN DUNLAP: Right. Okay. Thank you. 16 Dr. Boston. 17 BOARD MEMBER BOSTON: I remember when we moved into 18 this building, we had some similar problems, and I thought 19 maybe you would have done some research at that time. That's 20 why I was wondering if there were other programs on that. 21 EXECUTIVE OFFICER BOYD: Well, Dr. Boston, as you 22 remember, we were cognizant of the problems in the new 23 building. So with the knowledge and research we had, we did 24 a very atypical thing, we cooked this building out for a long 25 period of time. And it became a research facility for this PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 65 1 very issue before we then moved our own employees into it. 2 So it added to the knowledge of the subject matter. 3 CHAIRMAN DUNLAP: I was fortunate enough to have a 4 briefing when I first arrived on the Great CARB Cook Out. So 5 I would encourage any of my colleagues if they wish to know 6 more, please to let Dr. Holmes staff know they did a fine 7 presentation. 8 All right. We have a motion and a second. I'll ask 9 the Board Secretary to do a roll-call vote and we will 10 proceed. 11 MS. HUTCHENS: This will be for the four items? 12 CHAIRMAN DUNLAP: The four items, minus the second 13 item. 14 MS. HUTCHENS: Boston? 15 BOARD MEMBER BOSTON: Yes. 16 MS. HUTCHENS: Edgerton? 17 BOARD MEMBER EDGERTON: Yes. 18 MS. HUTCHENS: Hilligoss? 19 BOARD MEMBER HILLIGOSS: Aye. 20 MS. HUTCHENS: Lagarias? 21 BOARD MEMBER LAGARIAS: Aye. 22 MS. HUTCHENS: Parnell? 23 BOARD MEMBER PARNELL: Aye. 24 MS. HUTCHENS: Roberts? 25 BOARD MEMBER ROBERTS: Aye. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 66 1 MS. HUTCHENS: Silva? 2 BOARD MEMBER SILVA: Aye. 3 MS. HUTCHENS: Vagim? 4 BOARD MEMBER VAGIM: Aye. 5 MS. HUTCHENS: Chairman Dunlap? 6 CHAIRMAN DUNLAP: Aye. 7 MS. HUTCHENS: The four resolutions pass 9 to 0. 8 CHAIRMAN DUNLAP: Thank you. I would ask Mr. Boyd 9 that you bring that 5th item, the second item on our package 10 back next month and give a report on the progress you've made 11 relative to discussions on the overhead rate. And also any 12 other background information you think is relevant on the 13 lines of Mr. Cackette's comments, a comparative data and 14 information. 15 Are there any other items, Mr. Boyd, or any other 16 further business that you'd like to mention to the Board? 17 EXECUTIVE OFFICER BOYD: I would only mention -- 18 there's no further business to bring before the Board today, 19 Mr. Chairman. I would like to mention that next month's 20 agenda is quite heavy and frankly the agenda the last two or 21 three months have been very atypical. Next month we return 22 to the more traditional customary agenda of the ARB, which is 23 seemingly impossible to do in two days. So I just give 24 advanced warning that we have a very heavy workload for our 25 June 29th and 30th meeting here in this building. And you PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 67 1 will be all receiving the usual briefings on the subject 2 areas. But it -- we may have to send out for lunch is what 3 I'm trying to say. 4 CHAIRMAN DUNLAP: Thank you for the heads up -- I 5 should make mention of the fact that Mr. Calhoun was unable 6 to be with us today because of a personal tragedy within his 7 family. He lost his son. But we expect to have him with us 8 next month and I am very concerned about him. And I just 9 wanted to mention this to my colleagues on the Board. 10 With that we will adjourn the meeting. 11 Thank you very much. 12 (Thereupon the meeting was adjourned at 13 11:11 a.m.) 14 15 16 17 18 19 20 21 22 23 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 68 1 CERTIFICATE OF REPORTER 2 I, JAMES F. PETERS, a Certified Shorthand Reporter 3 of the State of California, and Registered Professional 4 Reporter, do hereby certify: 5 That I am a disinterested person herein; that the 6 foregoing California Air Resources Board hearing was reported 7 in shorthand by me, James F. Peters, a Certified Shorthand 8 Reporter of the State of California, and thereafter 9 transcribed into typewriting. 10 I further certify that I am not of counsel or 11 attorney for any of the parties to said hearing nor in any 12 way interested in the outcome of said hearing. 13 IN WITNESS WHEREOF, I have hereunto set my hand 14 this 2nd day of June, 1995. 15 16 17 18 19 20 21 22 23 JAMES F. PETERS, CSR, RPR 24 Certified Shorthand Reporter 25 License No. 10063 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 Please select one of the following: A ... July 21-22,1994 Part 1 B ... July 21-22,1994 Part 2 C ... August 5, 1994 D ... November 9, 1994 E ... November 10, 1994 F ... November 15, 1994 G ... November 29, 1994 H ... December 9, 1994 I ... December 22, 1994 J ... January 26, 1995 K ... February 23, 1995 L ... March 23, 1995 M ... April 27, 1995 N ... May 25, 1995 (MEETINGTRANSCRI) Make your selection (A,B,C,D,E,F,G,H,I,J,K,L,M,N,? for help, or X to exit):